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We lead womens lives: we have no choice.
Thus has the Chief Justice of Canada, the Rt Hon Beverley McLachlin, summed up the basic truth that women and men do indeed lead different lives.
How much of this is down to unquestionable biological differences, how much to social conditioning, and how much to other peoples views of what it means to be a woman or a man, is all debateable and the accepted wisdom is perpetually changing.
But what does not change is the importance, even the centrality, of gender in any individuals sense of self.
Over the centuries many people, but particularly women, have bitterly resented and fought against the roles which society has assigned to their gender.
Genuine equality between the sexes is still a work in progress.
But that does not mean that such women or men have not felt entirely confident that they are indeed a woman or a man.
Gender dysphoria is something completely different the overwhelming sense that one has been born into the wrong body, with the wrong anatomy and the wrong physiology.
Those of us who, whatever our occasional frustrations with the expectations of society or our own biology, are nevertheless quite secure in the gender identities with which we were born, can scarcely begin to understand how it must be to grow up in the wrong body and then to go through the long and complex process of adapting that body to match the real self.
But it does not take much imagination to understand that this is a deeply personal and private matter; that a person who has undergone gender reassignment will need the whole world to recognise and relate to her or to him in the reassigned gender; and will want to keep to an absolute minimum any unwanted disclosure of the history.
This is not only because other people can be insensitive and even cruel; the evidence is that transphobic incidents are increasing and that transgender people experience high levels of anxiety about this.
It is also because of their deep need to live successfully and peacefully in their reassigned gender, something which non transgender people can take for granted.
This case is about how the Department for Work and Pensions (the DWP), in administering our complex welfare benefits system, treats people with a reassigned gender, and specifically whether certain policies conflict (1) with the Gender Recognition Act 2004; (2) with the Human Rights Act 1998; or (3) with the Equality Act 2010.
Those policies have undergone change in the course of these proceedings, as have the arguments presented, and so the issues before this Court are in some respects different from the issues before the High Court and the Court of Appeal.
The facts
The appellant has undergone gender reassignment from male to female.
Her transition began in 2003 and she changed her name in 2004.
She has undergone full gender reassignment treatment and surgery, which in her case included facial feminisation surgery, in her words because it was incredibly important to her easily to pass as a woman.
Her gender recognition certificate (GRC) was one of the first to be issued under the Gender Recognition Act 2004.
The Gender Recognition Panel notified both the Inland Revenue (now HMRC) and the DWP of the change.
She was employed in a variety of roles, some managerial, until she became unemployed in June 2010.
Since then, apart from a period of employment in 2015 2016, she has been in receipt of Jobseekers Allowance (JSA), a benefit which is administered by the DWP through Jobcentre Plus (JCP) offices.
As a condition of receiving JSA, she has to attend a JCP office in person every two weeks.
Her principal concern in these proceedings is with the way in which her history is recorded by the DWP and the effect that this can have on her interactions with its officials.
She has had a number of distressing experiences which indicate that DWP policies do not effectively protect the privacy of her status but rather tend to draw attention to it.
The DWP policies and practice
The DWP uses a centralised database, the Customer Information System (CIS), to record information relating to each of its customers and everyone else who has a National Insurance number.
The CIS interfaces or links to a number of other computer systems, including over 40 systems within government and quasi government departments, local authorities and HMRC, as well as to benefit specific computer systems, including the Jobseekers Allowance Payments system (JSAPS) which is used to administer JSA.
About 140,000 persons are authorised to access the CIS.
The information recorded on the CIS about a customer includes his or her current sex, the fact that he or she was previously recorded as having a different sex (if applicable), his or her current name and title, and his or her former names and titles (if applicable), the fact that a person has a GRC, its date of issue and date of notification to DWP, and (where this is the case) the reason for a change of recorded sex being gender reassignment.
These data, including the data recording a change of gender, are held for the life of the individual concerned and for 50 years and one day thereafter.
This has been referred to as the Retention policy in these proceedings.
When these proceedings were begun, as long ago as 2012, the fact of a GRC and the reason for a change of sex being gender reassignment were noted in such a way as to be visible to front line users of the CIS, such as staff at the JCP offices.
This has been referred to as the GRC Noting policy in these proceedings.
As a result of these proceedings and changes to the DWPs IT supplier arrangements, those matters are no longer visible to front line staff and so the GRC Noting policy is no longer under challenge.
However, any previous name, title or gender is visible and in the great majority of cases the reason for a change of name, title and gender will be gender reassignment.
Hence, without an extra layer of protection, front line staff could readily infer that gender reassignment had taken place.
That extra layer of protection is achieved through the DWPs Special Customer Records Policy (referred to in these proceedings as the SCR policy).
This sets out special procedures for dealing with the records of certain categories of customer who require extra protection, for example because unauthorised disclosure of their records could result in substantial distress or physical harm.
The categories of customer to which the policy may be applied include, for example, victims of domestic or honour based violence and people with witness protection orders.
But it is not applied automatically to all such people, as we are told that the great majority of those to whom the policy is applied are transgender.
It is, however, applied automatically to all those recorded on the CIS as having a GRC, unless and until the customer asks for it to be disapplied.
The protection is therefore optional, but without it a persons gender history would be readily discernible by staff who needed to access the CIS.
Under the SCR policy, an individuals CIS record receives a protected marking, ranging (at the material time) from private, restricted, confidential, secret to top secret.
Transgender records were marked restricted.
Persons wishing to access them must be specifically authorised and must have a legitimate business reason for doing so; access is limited to a specific purpose or purposes; and it is time limited for a period not exceeding four hours.
Access to an individuals CIS record is not required for the routine issue of benefit payments, including JSA.
However, an adviser will need to access the CIS in order to make routine changes to relevant information, such as a change of address or contact details.
For an SCR customer, this will require the same authorisation process as described in para 12 below.
Authorisations are monitored, so that inappropriate or unauthorised access can be discovered, and this may result in disciplinary action.
Typically, the administration of claims for JSA requires a JCP adviser to access two systems, the JSAPS and the Labour Market System (LMS).
These are both affected by the SCR policy.
The LMS records information about the steps taken by the customer to obtain employment.
But it does not do so for customers who are subject to the SCR Policy.
Instead, their efforts to find work are recorded manually on paper.
When the customers LMS record is accessed, a warning of additional protection facility from unauthorised viewing will pop up directing the adviser to the paper record, which will only be accessed once authorisation is given.
The JSAPS records information which enables an adviser to assess entitlement to JSA and authorise payment.
When an adviser accesses JSAPS to authorise payment to a customer subject to the SCR policy, an error message pops up warning Sensitive account You are not authorised to view it.
Access is then gained through the authorisation process: this involves applying to the DWPs specialist IT team for temporary access to Special Customer Records.
Access is usually available within an hour but it can take considerably longer.
The adviser is warned again that the account is sensitive and no one else should view it.
On access, the front screen does not display previous names, titles or gender or the issue of a GRC and normally there would be no need to search for historical claim data.
If there is such a need, the historical gender identity data will only be available where a claim was made for JSA under a previous name, title or gender and this claim is still live.
It will not be displayed where the claim was made after the change of gender (as in the case of this appellant).
It follows that any JCP adviser processing a JSA claim is bound to learn that the customer is subject to the SCR policy.
The adviser will not usually know why that is the case, but may well be able to put two and two together.
The operation of the policy causes inconvenience and delay in accessing benefits: delays of an hour are usual and they can be as much as three days.
Late payment is, to say the least, a serious inconvenience to anyone on the tight budget required of JSA claimants.
Ringing up to find out why payment has been delayed can also be a serious inconvenience as the authorisation process has to be followed in order for the telephone advisers to access the account.
The alternatives to physically attending at the JCP offices are very limited.
The appellant has on at least three occasions asked to be allowed to sign on by post but been refused.
The appellant also reports some very distressing incidents in JCP offices.
On several occasions she has overheard references to her transgender status in conversations in open plan offices with other customers present.
Once her status has become known within an office she has felt compelled to transfer to another office to protect her privacy and dignity and, indeed, her physical safety.
She adds that she has had some very positive experiences with individual DWP staff members, but every interaction with them, good or bad, is against that background of insecurity and anxiety.
The evidence she has placed before the courts in these proceedings, both from experts in the field of gender dysphoria and from other transgender customers, shows not only the depth of these concerns but also that she is not alone in having them.
These proceedings
After considerable correspondence exploring possible alterations to the DWPs policies, these proceedings were launched in April 2012.
They were then stayed in order that the DWP could review its policies on data retention and implement any changes.
This review concluded that the DWP needed to improve its treatment of transgender customers but did not propose any change to the Retention, GRC Noting or SCR policies in respect of them.
The claim was heard by Simon J in May 2014: [2014] EWHC 2403 (Admin).
All three policies were challenged as being (1) in breach of articles 8 and/or 14 of the European Convention on Human Rights; and (2) directly and indirectly discriminatory contrary to the Equality Act 2010.
It was common ground that the Retention and Noting policies engaged the right to respect for private life protected by article 8(1).
Simon J held that they were not sufficiently clear, precise and accessible to be in accordance with the law for the purpose of justifying them under article 8(2) and granted a declaration to that effect.
However, he held that they pursued the legitimate aims of enabling accurate calculations of state pension entitlement and of reducing opportunities for identity theft and benefit fraud and were a proportionate means of doing so.
He was more doubtful whether the SCR policy even engaged article 8(2), as it was designed to protect privacy, rather than to interfere with it, although it did tend to have the opposite effect of drawing attention to transgender customers; but he held that it was in any event justified by the need to protect DWP staff.
He rejected the claim based on direct discrimination, because the appellant was not treated less favourably than other customers because of her gender reassignment.
He was prepared to assume that the policies were indirectly discriminatory, in that they put transgender customers at a particular disadvantage when compared with others, but they were justified under the 2010 Act for the same reasons that they were justified under the Convention.
Between the High Court judgment and the hearing of the appellants appeal to the Court of Appeal in December 2015, as already noted, the DWP altered its policy and systems so that the fact of a GRC was no longer visibly noted on the CIS (although other facts from which such an inference could be drawn remained).
The challenge to the GRC Noting policy was therefore no longer a live issue before the Court of Appeal.
Furthermore, the Retention policy had been clarified and was now accessible, so the issue of legality was no longer live.
On 9 February 2016, the appeal was unanimously dismissed.
The only judgment was given by Elias LJ, with whom Patten and Black LJJ agreed: [2016] EWCA Civ 47, [2016] PTSR 1344.
He accepted that article 8 was engaged by both the Retention and the SCR policies, but agreed with Simon J that the interference was proportionate.
He rejected the argument that article 14 required transgender customers to be treated differently from others.
Any indirect discrimination entailed in the SCR policy was justified for the same reasons that the interference with article 8 rights was justified.
A new argument, that the policies were contrary to the requirement in section 9 of the Gender Recognition Act 2004 that where a full gender recognition certificate is issued, the persons gender becomes for all purposes the acquired gender was rejected: this did not require history to be rewritten.
Before this court, the appellant challenges the Retention and SCR policies on three grounds: (1) inconsistency with sections 9 and 22 of the Gender Recognition Act 2004; (2) incompatibility with the rights under articles 3, 8 and 14 of the European Convention on Human Rights (article 3 is raised for the first time in this court); and (3) infringement of section 13, 19 or 26 of the Equality Act 2010 (direct discrimination under section 13 was not pursued before the Court of Appeal but is raised again before this court; harassment under section 26 is an entirely new argument).
The Gender Recognition Act 2004
This Act, as is well known, was passed in response to the judgments of the European Court of Human Rights in Goodwin v United Kingdom (2002) 35 EHRR 447 and the declaration of incompatibility made by the House of Lords in Bellinger v Bellinger [2003] UKHL 21; [2003] 2 AC 467.
It lays down the criteria and the process by which a person born in one gender may be recognised as having acquired a different gender.
Section 9 provides for the consequences: (1) Where a full gender recognition certificate is issued to a person, that persons gender becomes for all purposes the acquired gender (so that, if the acquired gender is the male gender, the persons sex becomes that of a man and, if it is the female gender, the persons sex becomes that of a women). (2) Subsection (1) does not affect things done, or events occurring, before the certificate is issued; but it does operate for the interpretation of enactments passed, and instruments and other documents made, before the certificate is issued (as well as those passed or made afterwards). (3) Subsection (1) is subject to provision made by this Act or any other enactment or subordinate legislation.
Section 22 deals with the disclosure of protected information.
Section 22(1) makes it a criminal offence for a person who has acquired protected information in an official capacity to disclose that information to any other person.
Section 22(2) provides that, once a GRC is issued, protected information includes information which concerns the persons gender before it becomes the acquired gender.
Section 22(3) defines the acquisition of such information in an official capacity in such a way as to cover officials in the DWP, and indeed elsewhere in the civil service and otherwise in connection with the functions of a public authority.
Section 22(4) and the Gender Recognition (Disclosure of Information) (England, Wales and Northern Ireland) Order, SI 2005/635, provide for circumstances in which disclosure is not an offence.
These include: 22(4)(h) the disclosure is made for the purposes of the social security system or a pension scheme.
The appellant accepts that section 9 does not rewrite history.
Thus, in J v C [2006] EWCA Civ 551; [2007] Fam 1, the issue of a full GRC in the male gender to a person who was previously female did not retrospectively validate his prior marriage to another female (at a time when the law did not provide for same sex marriages), with the result that he did not become the father of a child born to the other female as a result of artificial insemination by donor (as would otherwise have been the case under section 27 of the Family Law Reform Act 1987, which provided that the husband of a woman who gives birth as a result of AID was to be treated for all purposes as the father of the child).
But she argues that section 9(1) does require her now to be treated for all purposes as a woman and this includes how she is treated by the DWP for the purpose of claiming and receiving JSA.
Section 22(1) is not an exception to the general principle in section 9(1).
Rather it is an additional protection.
It does not follow from the fact that no offence is committed under section 22 that a policy which is in breach of section 9(1) is lawful.
The problem with this argument is that section 9(1) clearly contemplates a change in the state of affairs: before the issue of the GRC a person was of one gender and after the issue of the GRC that person becomes a person of another gender.
The sections which follow section 9 are designed, in their different ways, to cater for the effect of that change.
Thus, for example, section 12 provides that the acquisition of a new gender does not affect that persons status as the father or mother of a child; section 15 provides that it does not affect the disposal or devolution of property under a will or other instrument made before the appointed day (thus section 9 will apply to dispositions made after that date); section 16 provides that the acquisition of a new gender does not affect the descent of any peerage or dignity or title of honour or property limited to descend with it (unless a contrary intention is expressed in the will or instrument).
There is nothing in section 9 to require that the previous state of affairs be expunged from the records of officialdom.
Nor could it eliminate it from the memories of family and friends who knew the person in another life.
Rather, sections 10 and 22 provide additional protection against inappropriate official disclosure of that prior history.
Section 10 and Schedule 3 deal with birth registration.
In summary, if there is an entry in the UK birth register relating to a person to whom a full GRC has been issued, a copy of the GRC must be sent to the appropriate Registrar General.
He or she must make an entry in the Gender Recognition Register (which is not open to public inspection) which makes traceable the connection between that entry and the entry in the birth register.
The entry is used to create a new birth certificate which records the acquired name and gender.
Anyone who may have a copy of the UK birth register entry of a person who has a full GRC may have a copy of the new birth certificate.
This must not disclose the fact that the entry is contained in the Gender Recognition Register: see Schedule 3, paragraphs 5 and 6.
Section 22, as we have seen, protects from disclosure by officials information concerning a persons gender before it became the acquired gender.
It contains several exceptions, including one for disclosure for the purpose of the social security system or a pension scheme.
Obviously, therefore, section 9 contemplates that the previous history may be kept on record, for otherwise there would be no need for the protection given by section 22.
I conclude, therefore, that the Retention and SRC policies are not inconsistent with, or prohibited by, any provision of the Gender Recognition Act 2004.
But that, of course, is not the end of the story.
The Human Rights Act 1998
The appellant rightly emphasises that the 2004 Act was brought about by developments in the jurisprudence of the European Court of Human Rights.
In Goodwin v United Kingdom (2002) 35 EHRR 447, the court held (i) that the failure of UK law to grant legal recognition, including a new birth certificate, to a post operative transsexual was a breach of her right to respect for her private life under article 8; and (ii) that the failure of UK law to permit her to marry in her acquired gender was a breach of her right to marry under article 12.
I would emphasise two passages from the Courts judgment in relation to article 8: 77.
The stress and alienation arising from a discordance between the position in society assumed by a post operative transsexual and the status imposed by law which refuses to recognise the change of gender cannot, in the Courts view, be regarded as a minor inconvenience arising from a formality.
A conflict between social reality and law arises which places the transsexual in an anomalous position, in which he or she may experience feelings of vulnerability, humiliation and anxiety.
The Court was, of course, speaking of the position before the Gender Recognition Act which sought, so far as possible, to align the legal position with social and psychological reality.
But it makes the important point that this is no small matter.
It is not a minor inconvenience.
It goes to the heart of the persons sense of self.
This is reinforced by a later passage at para 90: the very essence of the Convention is respect for human dignity and human freedom.
Under article 8 of the Convention in particular, where the notion of personal autonomy is an important principle underlying the interpretation of its guarantees, protection is given to the personal sphere of each individual, including the right to establish details of their identity as individual human beings.
In the 21st century, the right of transsexuals to personal development and to physical and moral security in the full sense enjoyed by others in society cannot be regarded as a matter of controversy In short, the unsatisfactory situation in which post operative transsexuals live in an intermediate zone [in] not quite one gender or the other is no longer sustainable.
This puts it beyond doubt that the way in which the law and officialdom treat people who have undergone gender reassignment is no trivial matter.
It has a serious impact upon their need, and their right, to live, not as a member of a third sex, but as the person they have become, as fully a man or fully a woman as the case may be.
In the courts below, the appellant relied only on the right to respect for private life, protected by article 8, and the right to enjoy the Convention rights without discrimination, protected by article 14.
In this court, the statement of facts and issues raises for the first time the question of a possible violation of article 3, the right not to be subjected to inhuman or degrading treatment.
In her submissions, however, article 3 was deployed to make the point that there are positive obligations to protect individuals against such treatment, as indeed there are under article 8.
In Identoba v Georgia (2015) 39 BHRC 510, for example, the Strasbourg court found a breach of article 3 where the authorities had failed to protect LGBTI demonstrators from attack by homophobic counter demonstrators.
One aim of the SCR policy is to protect transsexuals against the risk of physical and verbal abuse.
The complaint, as I understand it, is that it may not go far enough in doing so, whether under article 3 or article 8.
In my view, the article 3 cases serve mainly to underline the importance of the interests at stake here, whether under article 3 or article 8.
The real focus of the argument has been on article 8.
In my view, both the Retention and the SCR policies are an interference with the right of the appellant, and all people who have undergone gender reassignment, to respect for their private lives.
The SCR policy may be designed to protect the privacy of their deeply private information but it has the consequence of drawing the attention of front line staff, and maybe others in the office, to it.
Opting out means that front line staff who need it will have unimpeded access to the CIS, in which the gender history is recorded.
So the customer has the choice between unimpeded access on those occasions when front line staff need to consult the CIS and impeded access which in itself draws attention to the possibility, even the probability, that the claimant has undergone gender reassignment.
This is not a minor interference.
On the contrary, it is a very serious matter.
It goes to the heart of how the appellant, and others in her situation, relate to the world and the world relates to them.
So the real question is whether this interference can be justified by the operational needs of the benefits system.
Two legitimate aims are put forward by the DWP for the Retention policy.
The first is the need to retain the information for the purpose of calculating entitlement to state retirement pension.
A transgender person has pension rights in his or her acquired gender from the date of the GRC: Gender Recognition Act 2004, Schedule 5, paragraphs 7 and 8.
This means that the date of the GRC will be material to the calculation of the entitlement of certain customers (those born before 6 December 1953; female to male transsexuals whose change of gender occurs after they have reached statutory retirement age for women and before equalisation on 6 March 2019; and male to female transsexuals whose change of gender occurs before 6 March 2010 and before they have reached state pension age for a man but after they have reached it for a woman).
The DWP will need to know the date for the purpose of checking entitlement at the time and also for checking and maintaining claims during the customers life expectancy thereafter.
With the equalisation of the pension age, there will eventually come a time when this is no longer necessary, but that is some considerable time in the future.
It is accepted that this does not apply to this particular appellant, but it does apply to approximately one third of transgender customers, whose state pension calculation will be directly affected by their birth gender.
The second legitimate aim put forward is to identify and detect fraud.
There is a particular risk of identity theft in the case of transgender customers.
A fraudster may obtain a birth certificate in the customers original name and use this, along with other evidence, to obtain a national insurance number allocated to that name (two linked examples of this were detected in 2012).
The DWP also argue that front line staff are at the forefront of detecting frauds they can sense when something is not right and need to have access to the information to investigate and detect this.
The appellant accepted that these were legitimate aims in the courts below and the evidence in support of them was not challenged.
In her written case before this court she argues that these objectives are not sufficiently important to justify the limitation of a protected right and that those limitations are not rationally connected to the objectives.
She argues that, now that the fact and date of the GRC is masked on the CIS, it cannot be necessary to retain the visible gender (name and title) history in order to calculate state pension entitlement.
As for fraud detention and prevention, there are other ways of verifying the claimants identity.
Under the new system for Universal Credit, front line staff will no longer have access to this information.
The DWP understandably objects to the introduction of new arguments on matters which were conceded in the courts below, and on which it has not been able to file evidence in rebuttal; but they can be addressed briefly.
In my view, for as long as gender is in any way relevant to the entitlement to and calculation of state retirement pension, it is necessary for the data to be retained on the CIS system and the rational connection between the two is obvious.
The question of whether it should remain visible to some front line staff or whether it is feasible to mask it in some way which nevertheless enables those who need to see it to be able to do so are questions which go to the overall balance between the aims pursued and the means used to pursue them, in other words to the proportionality calculation.
As for fraud detection and prevention, the problem lies, not so much with verifying the identity of the genuine transgender claimant but with verifying the identity of the fraudulent claimant who has stolen that persons previous identity.
The legitimacy of the objectives for which the current computer systems are designed cannot be affected by the development of wholly new computer systems to support a wholly new benefits system.
Once again, the real issue is not the aim, but the overall balance between ends and means which is of the essence of the proportionality calculation.
In addressing that balance, several points must be made: (1) While I would certainly not minimise the depth of the intrusion where it takes place, for the most part there is no need for front line JCP staff to consult the CIS.
Whether or not the SCR policy applies, it is only rarely that they will need to access the CIS and thereby discover the historic information recorded there. (2) The DWP has been engaging with the appellant and those advising her over many years in an attempt to understand and cater for her concerns.
Following the High Court decision, the GRC data were masked on the CIS.
If nothing else, this litigation has taught the DWP the importance of doing what can be done within the existing systems to cater for those concerns. (3) We are here dealing with large computer systems, designed to cater for vast numbers of customers, which interact with one another in complex ways.
It is no simple matter to modify existing systems in a way which will not compromise their efficiency and effectiveness.
It is one thing to devise a completely new computer system, such as that now being developed for Universal Credit, and quite another to modify an old one which has been in operation for many years. (4) The DWPs evidence is that it is not possible to make further adjustments to the CIS system except at inordinate expense.
This court is in no position to question that. (5) Most importantly, it is not for this or any other court to administer the benefits system.
That is the business of the DWP.
The courts can correct individual decisions or actions which violate an individuals human rights: if a DWP official gained unnecessary or unauthorised access to a customers records, or made improper use of the information obtained through authorised access, the customer would have a claim under section 6(1) of the Human Rights Act 1998 against a public authority which had acted incompatibly with her privacy rights.
The courts can also correct legal provisions which violate human rights (unless contained in an Act of the United Kingdom Parliament).
But the courts can only rarely correct the systems set up by the responsible government departments or public authorities to administer the law unless perhaps they systemically and inevitably result in violations of individuals rights.
That is not this case. (6) The courts must inevitably place great weight on the judgment of those whose business it is to design and administer those systems.
They are the experts in administration and we are not.
In my judgment, therefore, the courts below were entitled to reach the conclusion that the CIS Retention policy was a proportionate means of achieving its legitimate aims and I share their view.
In reaching this conclusion, I in no way seek to minimise the importance to the appellant and others in her situation of the intrusion into her privacy which is entailed by the policy.
For her, and for others, it must be good news that the Department has taken their concerns seriously, and that they will be differently catered for when Universal Credit is rolled out throughout the country.
The SCR policy and the Retention policy cannot be considered in isolation from one another.
The SCR policy is designed to restrict access to the CIS to those who are authorised because they have a real need for that access.
This of course has the legitimate aim of protecting the privacy of those SCR customers who need and want it.
This brings with it the problems of delay, with its attendant inconvenience or even hardship, and it may well draw attention to the very matter which it is designed to protect.
But such problems are inevitable if access to the CIS is to be restricted.
They can be avoided if the customer does not want the policy to apply, but at the cost of less restricted access to the CIS.
The real question, therefore, is whether the CIS Retention policy is justified and in my judgment, for the reasons given above, it is.
Discrimination
The appellant relies both on discrimination in the enjoyment of Convention rights, in violation of article 14 of the Convention, and on direct and indirect discrimination in breach of sections 13 or 19 of the Equality Act 2010 respectively.
Gender reassignment is a protected characteristic by virtue of sections 4 and 7 of the Equality Act and is undoubtedly a status for the purpose of article 14.
Her submission on direct discrimination, under both article 14 and section 13, is that the policies treat transgender customers in the same way as other customers when in fact their situations are different and they should be treated differently.
As the Strasbourg court held in Thlimmenos v Greece (2000) 31 EHRR 411, just as like cases must be treated alike, unlike cases must be treated differently.
The problem with this submission is that the DWP policies do treat transgender customers differently from others.
For those who want it, the SCR policy applies.
In this respect, transgender customers are in no different position from any of the other vulnerable groups to whom the policy is applied if wanted and needed.
The admitted problems associated with the SCR policy are the inevitable concomitant of offering them this extra protection for their privacy.
Once again, the real complaint is that, once accessed by those with a reason to do so, the CIS reveals the customers previous name and title, from which an inference of gender reassignment may, but need not, be drawn.
However, it is not clear in what way transgender customers are treated less favourably than others on the CIS because of their transgender status.
The current names and titles, and any previous names and titles, of all customers are recorded.
Customers change their names and titles for a wide variety of reasons, not least because of marriage or divorce.
All are treated in the same way.
Of course, a change of sex may often be readily deduced from a change of name and title, whereas other changes may be more speculative.
But all relate to the customers private (and sometimes family) life.
There is no difference in treatment from others who change their name or title because of the customers transgender status.
For these reasons, in my view, Simon J was right to reject the claim of direct discrimination under both article 14 and section 13 and it is not surprising that the direct discrimination claim under section 13 was not pursued, by counsel then appearing for the appellant, before the Court of Appeal.
The indirect discrimination claim under both article 14 and section 19 of the Equality Act relies upon the particular disadvantage that transsexual customers suffer as a result of the Retention and SCR policies, either together or separately, when compared with other customers, whether in general or those to whom the SCR policy is also applied.
I would be prepared to accept, for the reasons given earlier, that many, if not all, customers who have undergone gender assignment feel a greater need to protect that information from others than do customers who have changed their names or titles for other reasons.
Gender reassignment changes ones identity at a much deeper level than does getting married, getting divorced, being bereaved, adopting a new name, or any of the other reasons why a change of name or title may be recorded.
It may also be the case that justification for an interference with the article 8 right is not invariably justification for discrimination under article 14 or indirect justification under section 19.
However, in this case, the provision, criterion or practice in question, the SCR policy, is a proportionate means of achieving a legitimate aim for the purpose of section 19(2)(d) and, for the same reasons, any discrimination involved in the policies is justified for the purpose of article 14.
For the first time in this court, and somewhat faintly, the appellant argues that the DWPs policies, and specifically the implicit outing involved in the SCR, create a harassing environment contrary to section 26 of the Equality Act 2010.
This allegation was not pleaded in the claim form or argued in the courts below and is not clearly spelled out in the appellants case.
Under section 29(3) of the Equality Act, a service provider must not harass a person requiring the service or a person to whom the provider is providing the service.
Under section 26(1), A person (A) harasses another (B) if (a) A engages in unwanted conduct related to a relevant protected characteristic, and (b) the conduct has the purpose or effect of (i) violating Bs dignity, or (ii) creating an intimidating, hostile, degrading, humiliating or offensive environment for B. This is not an allegation which can sensibly be made in a claim for judicial review of the DWPs policies in relation to transgender people.
It might be made in a substantive claim under the Equality Act in relation to the sorts of incidents of which the appellant has complained (and on occasions received some compensation).
Then there would have to be specific evidence directed towards such a claim and the DWP would have the opportunity of investigating the complaint and putting in evidence in rebuttal.
None of that has happened in this case.
But in any event it is quite clear from the DWPs efforts to understand and to meet the appellants concerns within the bounds of practicality that its policies aim to have the reverse effect: to respect the dignity of transgender customers and to avoid creating an intimidating, hostile, degrading, humiliating or offensive environment for them.
There are disciplinary measures in place for staff who are guilty of such behaviour.
In other words, if such behaviour takes place, it is not the system which is to blame.
Conclusion
In my view, the concerns which the appellant has raised before and during these proceedings are very real and important to her, and no doubt to other transgender customers of the DWP.
The proceedings have already brought about some change in DWP policy and no doubt the DWP will continue to consider how the service it offers to transgender customers could be improved.
The introduction of Universal Credit is an opportunity to do this.
But for all the reasons given earlier the Retention and SCR policies are not unlawful under either the Human Rights Act 1998 or the Equality Act 2010 and this appeal must be dismissed.
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The issue in this appeal is whether certain policies adopted by the Department of Work and Pensions (DWP) in the administration of the welfare benefits system are, when applied to people with a reassigned gender, in breach of the Gender Recognition Act 2004 (the GRA), the Human Rights Act 1998 (the HRA) or the Equality Act 2010 (the EA).
The appellant C has undergone gender reassignment from male to female.
She was issued with a gender recognition certificate (GRC) in 2006.
Since June 2010 she has been unemployed, apart from a period in 2015 16.
In order to receive Jobseekers Allowance (JSA) she has to attend a Jobcentre Plus (JCP) office in person every two weeks.
The DWP uses a centralised database, the Customer Information System (CIS), to record information about each of its customers, including his or her current sex, the fact that he or she was previously recorded as having a different sex (if applicable), his or her current name and title, and his or her former names and titles (if applicable), the fact that a person has a GRC and its date, and the reason for a change of recorded sex being gender reassignment (if this is the case).
These data are held for the life of the individual concerned and for 50 years and a day thereafter (the Retention policy).
This is because gender at birth at present remains relevant to the calculation of state pension entitlement, and in order to detect fraud.
The fact of a GRC and the reason for a change of recorded sex being gender reassignment is no longer visible to front line staff, but any previous name, title or gender is visible.
Access to an individuals CIS record is not required for the routine issue of benefit payments, but it will be required, for example, to make routine changes, such as a change of address.
However, the DWP also has a Special Customer Records policy (the SCR policy) which applies to certain categories of customer who require extra protection for their privacy and is routinely applied to transgender customers unless they ask otherwise.
This requires specific authorisation for access.
This has the effect that there are delays in accessing the account to authorise payment and it alerts the front line staff to the probable reason for the restricted access.
C has suffered distressing incidents at JCP offices when her transgender status has been openly referred to.
After exploring possible alterations with the DWP, C issued proceedings in 2012.
The High Court made a declaration that the Retention Policy was in breach of the right to respect for private life protected by article 8 of the European Convention on Human Rights (ECHR) as it was not sufficiently
clear and accessible to be in accordance with the law.
It has now been clarified.
Her appeal to the Court of Appeal against the dismissal of her other claims was dismissed.
The Supreme Court unanimously dismisses the appeal.
The Retention and SCR policies are not unlawful under the GRA, the HRA or the EA.
Lady Hale gives the only substantive judgment.
Lawfulness under the GRA S 9 GRA provides that where a GRC is issued a persons gender becomes for all purposes the acquired gender.
It does not rewrite history or require the previous state of affairs to be expunged from official records, but other sections offer additional protection against inappropriate official disclosure of that prior history [23 25].
The Retention and SCR policies are not therefore inconsistent with or prohibited by any provision of the GRA [26].
Lawfulness under the HRA The Retention and SCR policies do constitute a very serious interference with the rights of transgender people to respect for their private life protected by article 8 ECHR [31].
The justifications relied on by the DWP the need to retain information for the time being for the purposes of calculating state pension rights, and to identify and detect fraud are legitimate [34] and rationally connected with the policies [35].
The question is whether the policies are proportionate.
In carrying out the balancing exercise it is relevant that front line staff will only rarely have to access the CIS, that the DWP has been engaging with C over many years to try to understand and cater for her concerns, that it is no simple matter to modify existing computer systems designed to cater for vast numbers of customers, which interact with one another in complex ways, and that it is not possible to make further adjustments to the CIS without inordinate expense.
It is not for the courts to administer the benefits system [36].
The Retention policy is therefore a proportionate means of achieving its legitimate aims [37].
The SCR policy cannot be considered in isolation from it.
It has the legitimate aim of protecting the privacy of those customers who need and want it.
The problems associated with it are inevitable if access to the CIS is to be restricted.
It too is justified [38].
Lawfulness under the EA There is no direct discrimination on the ground of gender reassignment [43].
The details of all customers who change their names and titles are recorded on the CIS [42].
Transgender customers who need and want it are treated differently under the SCR policy [41].
They are not treated less favourably as a result of their transgender status.
The claim of indirect discrimination also fails.
The court accepts that gender reassignment changes ones identity at a much deeper level than name changes for other reasons.
However the SCR policy is a proportionate means of achieving a legitimate aim for the purposes of s 19(2)(d) EA and for the same reasons any discrimination is justified for the purposes of article 14 of the ECHR [44].
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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.
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Three prisoners brought appeals concerning the circumstances in which the Parole Board is required to hold an oral hearing.
Osborn was convicted in 2006 following an incident in which he was said to have brandished an imitation firearm at the home of his estranged wife.
He was given a six year prison sentence and was released on licence in February 2009, the halfway point.
He was recalled to prison later that day for breach of his licence conditions [18 29].
Booth and Reilly are indeterminate sentence prisoners who have served their minimum terms.
In 1981, Booth [30 42] received a discretionary life sentence for attempted murder, with a minimum term of six and a half years.
Reilly [43 53] was convicted in 2002 of robbery, attempted robbery and possession of an imitation firearm.
He received an automatic life sentence with a minimum term of six years and eight months, which expired in September 2009.
Both remain in custody.
Each case was considered on paper by the boards single member panel.
It decided not to direct the prisoners release or recommend their transfer to open prison conditions.
Their solicitors made written representations to the board, disputing its findings and requesting an oral hearing in each case, but those requests were refused.
All three sought judicial reviews of the decisions not to offer oral hearings.
Only Reilly succeeded in the High Court, which found that the board had breached its common law duty of fairness, and had acted incompatibly with the appellants rights under article 5(4) of the European Convention on Human Rights1 by failing to offer him an oral hearing.
This was overturned by the Northern Ireland Court of Appeal.
The Supreme Court unanimously allows the appeals and declares that the board breached its common law duty of procedural fairness to the appellants, and article 5(4) of the European Convention, by failing to offer them oral hearings [116]. 1 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.
The judgment, delivered by Lord Reed, emphasises that human rights protection is not a distinct area of the law based on the case law of the European Court, but permeates our legal system.
Compliance with article 5(4) requires compliance with the relevant rules of domestic law [54 56].
The legal analysis of the problem does not begin and end with the Strasbourg case law [63].
Lord Reed sets out guidance (summarised at [2]) on complying with common law standards in this context.
The board should hold an oral hearing whenever fairness to the prisoner requires one in the light of the facts of the case and the importance of what is at stake [81].
By doing so, it will act compatibly with article 5(4) [103].
It is impossible to define exhaustively the circumstances in which an oral hearing will be necessary, but these will often include: (a) where important facts 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 [73 78; 85]; (b) where the board cannot otherwise properly or fairly make an independent assessment of risk, or of how it should be managed and addressed [79; 81; 86]; (c) where it is tenably maintained that a face to face encounter, or questioning of those who have dealt with the prisoner, is necessary to enable his case to be put effectively or to test the views of those who have dealt with him [82]; and (d) where, in the light of the prisoners representations, it would be unfair for a paper decision taken by a single member panel to become final without an oral hearing [96].
The purpose of the oral hearing is not only to assist in the boards decision making, but also to reflect the prisoners legitimate interest in being able to participate in a procedure with important implications for him, where he has something useful to contribute [82].
The likelihood of release or transfer is separate from the question of whether fairness requires an oral hearing [88 89].
When dealing with recalled prisoners cases, the board should bear in mind that they have been deprived of their freedom [83].
For indeterminate sentence prisoners, increased scrutiny should be afforded by the board in assessing whether the risk they present is unacceptable the longer they have spent in prison post tariff [83].
The board must be, and appear to be, independent and impartial [90 91] and guard against any temptation to refuse an oral hearing to save time, trouble and expense [91].
Lord Reed stresses that paper decisions are provisional; the right to request an oral hearing is not an appeal, and the prisoner need only persuade the board that an oral hearing is appropriate [94 95].
The common law duty to act fairly is influenced by the requirements of article 5(4); compliance with the former should ensure compliance with the latter [101 113].
Breach of article 5(4) will not normally result in an award of damages under the Human Rights Act unless the breach has resulted in the prisoner suffering a deprivation of liberty [114 115].
An oral hearing ought to have been offered to the appellants.
Osborn and Reilly had advanced various explanations and mitigations [98] and their requests for an oral hearing were mistakenly characterised as appeals [99 100].
In Booths case, input from his psychiatrist at an oral hearing would have been helpful and it was relevant that he had spent so long in custody post tariff [99].
Reillys claim for damages failed it had not been argued that he had suffered any deprivation of liberty as a result of the article 5(4) breach [115].
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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.
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Between 1954 and March 1959 Percy McDonald attended Battersea power station in the course of his employment as a lorry driver for a firm known as Building Research Station to collect pulverised fuel ash.
Between 1954 and January 1957 he was at the power station approximately twice a month but this fell to about twice every three months from January 1957.
While at the power station as a casual visitor Mr McDonald went into areas where asbestos dust was generated by lagging work.
The lagging work involved mixing asbestos powder with water in order to make a paste, as well as sawing preformed asbestos sections and stripping off old asbestos lagging.
Mr McDonald was diagnosed as suffering from mesothelioma in July 2012 and sadly died at the beginning of February 2014.
His widow, Edna McDonald, took his place as respondent in the appeal.
The National Grid Electricity Transmission Plc (National Grid) is the successor body to the occupiers of the power station.
At trial, Mr McDonald alleged that those occupiers had been in breach of their statutory obligations under regulation 2(a) of the Asbestos Industry Regulations 1931 (the 1931 Regulations) and section 47 of the Factories Act 1937 (the 1937 Act).
He also brought claims in negligence against the successors to his former employers and National Grid, but these claims were dropped before the matter came to the Supreme Court.
The trial judge dismissed all Mr McDonalds claims.
On appeal, the Court of Appeal allowed Mr McDonalds appeal under the 1931 Regulations but dismissed his appeal under the 1937 Act.
National Grid appeals to the Supreme Court in the first appeal and Mr McDonalds representative cross appeals in the second appeal.
The Supreme Court dismisses National Grids appeal and dismisses the cross appeal.
On the appeal, the decision was by a majority of three (Lord Kerr gives the lead judgment and Lady Hale and Lord Clarke give concurring judgments) to two (Lord Reed, with whom Lord Neuberger agreed).
On the cross appeal, the decision was by a majority of four to one, with Lady Hale in the minority.
On the first appeal, the majority conclude that the 1931 Regulations apply to all factories and workshops processing asbestos, not just those dealing with asbestos in its raw, unprocessed condition.
The clear wording of the Regulations indicated this, focusing as they did on the processes in question rather than the nature of the industry. [27, 98, 116] The Secretary of State made these Regulations to
counteract the harm that could be done by the manipulation of asbestos rather than focusing on any particular setting where this might happen [96, 117].
The mixing of asbestos during lagging work at the power station fell within the meaning of paragraph (i) of the Preamble to the 1931 Regulations.
The Secretary of State was alive to the risk posed by mixing asbestos in settings other than a narrowly defined manufacturing context [49, 124].
Lady Hale points out that this interpretation of mixing was compatible with Cherry Tree Machine Co Ltd v Dawson sub nom Jeromson v Shell Tankers (UK) Ltd [2001] EWCA Civ 101, which the Supreme Court unanimously approves in this case [100].
Lord Kerr holds that a worker in a factory or workshop where processing of asbestos took place was within the scope of the 1931 Regulations, even if not mixing asbestos himself or directly employed by the occupiers of the premises where asbestos was being mixed.
The Secretary of State made these Regulations under section 79 of the Factory and Workshop Act 1901 (the 1901 Act), which empowered him to afford protection to workers not involved in the asbestos processing.
The risk of injury which these Regulations sought to protect against arose from inhalation of dust or fumes.
There was therefore no logical reason to exclude those who were liable to exposure despite not working directly with asbestos [53].
Lady Hale concludes that liability under the 1901 Act is imposed on occupiers (rather than employers) to protect people in the premises they occupied, therefore the question was whether a person was employed in the power station, not whether he was employed by the occupier [103 104].
Lord Clarke deems that Mr McDonald was in a real sense working for the purposes of the power station and agrees with Lord Kerr [127].
Lord Reed, with whom Lord Neuberger agrees, undertakes an extensive review of the background to the 1931 Regulations.
They would dismiss the appeal on the grounds that the 1931 Regulations are not engaged as they are intended to apply solely to asbestos processing within the asbestos industry.
They hold that the Regulations were penal legislation which should be construed narrowly [158].
Lord Neuberger, Lord Kerr, Lord Clarke and Lord Reed would dismiss the cross appeal.
They agree that, while the rest of the statutory criteria are met, there is no sufficient evidence to rebut the Court of Appeals conclusion that Mr McDonald had failed to establish that a substantial quantity of dust had been given off by the mixing process, as required by section 47(1) of the 1937 Act [90, 209].
Lady Hale would allow the cross appeal on the grounds that there is evidence upon which it could be determined that a substantial quantity of dust had been given off [108 109].
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The appellants await trial in the Crown Court at Southwark on three counts of an indictment.
Count two charges them with making funds available to Iraq, contrary to articles 3(a) and 11(4) of the Iraq (United Nations Sanctions) Order 2000 and section 1 of the United Nations Act 1946.
The particulars of offence allege that the appellants being directors of Mabey & Johnson Ltd, between 1 May 2001 and 1 November 2002, consented to, or connived in, the making of 422,264 available to the government of the Republic of Iraq, or a person resident in the Republic of Iraq, by Mabey & Johnson, without the authority of a licence granted by the Treasury.
Mabey & Johnson Ltd were in the business of exporting pre fabricated bridges to developing countries and the essential allegation against the appellants is that they consented to the companys entering into an arrangement which facilitated the Iraqi Governments avoidance of international sanctions by allowing it indirectly to access funds held in a United Nations controlled account.
The appellants have pleaded not guilty both to that count and to the other two counts, each of false accounting.
The appellants have sought to have count two quashed on the basis that the Iraq (United Nations Sanctions) Order 2000 (SI 2000/3241) was ultra vires section 1 of the United Nations Act 1946.
In essence they say that such an Order cannot be made under the 1946 Act unless made at or about the same time as the Security Council Resolution which it is implementing is itself made.
This Order was made 10 years after the relevant Resolution.
The argument failed before Judge Rivlin QC, the Recorder of Westminster, at a preparatory hearing at Southwark on 18 June 2010 (conducted pursuant to section 7 of the Criminal Justice Act 1987).
It failed again on an interlocutory appeal (brought by leave of the Recorder pursuant to section 9(11) of the 1987 Act) to the Court of Appeal (Criminal Division), (Hooper LJ, Owen and Roderick Evans JJ) on 22 October 2010: [2010] EWCA Crim 2437.
The Court of Appeal refused leave to appeal but certified two points of law of general public importance: (i) May the power to create criminal offences granted to Her Majesty in Council by section 1 of the United Nations Act 1946 only lawfully be exercised at or about the time of the relevant Security Council Resolution? (ii) If yes, are articles 3(a) and 11(4) of the Iraq (United Nations Sanctions) Order 2000 to the extent to which they create a criminal offence, ultra vires section 1 of the United Nations Act 1946 given that the relevant Security Council Resolution was adopted in 1990? The matter came before this court on 6 December 2010 when, at the outset of the hearing, the appellants were granted permission to appeal; at the conclusion of the hearing the appeal was dismissed for reasons to be given later.
These reasons now follow.
It is convenient at once to set out the most material parts of the three instruments here calling for particular consideration, beginning with the Security Council Resolution (SCR) referred to in the two certified questions. (1) SCR 661 (1990) (SCR 661) was adopted by the Security Council under Chapter VII of the UN Charter on 6 August 1990 (four days after Iraq invaded Kuwait, an invasion condemned that same day by SCR 660 (1990)).
The Council reaffirmed SCR 660; by article 2 they decided to take measures to secure Iraqs compliance with it; by article 3 they imposed an embargo on trade with Iraq and Kuwait; and by article 4 the Council: decides that all states shall not make available to the government of Iraq, or to any commercial, industrial or public utility undertaking in Iraq or Kuwait, any funds or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to that government or to any such undertaking any such funds or resources and from remitting any other funds to persons or bodies within Iraq or Kuwait, except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs. (2) The United Nations Act 1946 (the 1946 Act) provides by section 1(1): If, under article 41 [in Chapter VII] of the Charter of the United Nations . (being the article which relates to measures not involving the use of armed force) the Security Council of the United Nations call upon His Majestys Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied, including (without prejudice to the generality of the preceding words) provision for the apprehension, trial and punishment of persons offending against the Order. (3) The Iraq (United Nations Sanctions) Order 2000, made on 13 December 2000 and coming into force on 14 December 2000 (the 2000 Order), recites: Whereas under article 41 of the Charter of the United Nations the Security Council of the United Nations have, by a resolution adopted on 6 August 1990, called upon Her Majestys Government in the United Kingdom and all other states to apply certain measures to give effect to a decision of that Council in relation to Iraq: Now, therefore, Her Majesty, in exercise of the powers conferred on Her by section 1 of the United Nations Act 1946, is pleased, by and with the advice of Her Privy Council to order, and it is hereby ordered, as follows.
Articles 3 and 11 (the two articles referred to in count 2 and in the second certified question) provide: 3.
Any person who, except under the authority of a licence granted by the Treasury under article 5 (a) makes any funds available to the Government of the Republic of Iraq or any person who is resident in the Republic of Iraq, or, (b) otherwise remits or removes any funds from the United Kingdom to a destination in the Republic of Iraq, is guilty of an offence. 11. (1) Any person guilty of an offence under article 3 . shall be liable (a) on conviction on indictment to imprisonment for a term not exceeding seven years, or a fine, or both . (4) Where a body corporate is guilty of an offence under this Order, and that offence is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate or any person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Essentially the appellants argument comes to this.
The 1946 Act was enacted, and the government was thereby permitted to introduce by executive order highly restrictive measures including new criminal offences and sanctions without a parliamentary majority or even parliamentary scrutiny, specifically so as to enable urgent (prompt, hasty, speedy and immediate were other words used by the appellants in the course of argument) action to be taken to implement article 41 UN Resolutions.
Urgency alone justifies such wide executive power and the bypassing of the ordinary parliamentary processes and safeguards.
The power, therefore, must be construed as subject to there being a need for its immediate exercise and limited, therefore, to its being exercised within a very short time scale.
If not exercised at or about the same time as the Resolution being implemented, runs the argument, the power is lost by the effluxion of time.
The appellants candidly acknowledge that they can find no example of any other power once given expiring by the effluxion of time (absent, obviously, legislation containing express sunset clauses).
They submit, however, that, novel as their argument may be, there is support for it to be found in a number of the speeches made during the parliamentary debates leading to the passage of the 1946 Act and some support too in the judgments of this court in A v HM Treasury [2010] 2 AC 534.
Principal amongst the passages from Hansard relied upon are these: (i) Subsection (4) provides that Orders in Council shall be laid forthwith before Parliament, but it excludes the application of a provision in the Rules Publication Act requiring the publication in the London Gazette of notice of the proposal to make the Order in Council for 40 days before the Order is made, it being obvious that the urgency with which decisions of the Security Council must be carried out renders any such notice quite impracticable. (Lord Jowitt LC, introducing the Bill at its second reading in the House of Lords: Hansard (HL Debates), 12 February 1946, col 376. (ii) [The Lord Chancellor] is fortunate in being able to bring forward a Bill to enable this Government to do things by Order in Council which will, I believe, have the complete, unanimous, and enthusiastic support of everybody in this House.
If this organisation fails, all fails.
If it is to succeed, it must be able to take effective action, and that action must be prompt and immediate.
All the world must know that when it takes a decision, all the member states will be prompt and loyal in giving effect to such a decision.
For the reasons the noble and learned Lord Chancellor has given, this method of Orders in Council is the only effective way by which we can do that. (Viscount Swinton, supporting the Bill at its second reading: Hansard (HL Debates), 12 February 1946, col 377. (iii) Subsection (4) provides that Orders in Council shall be forthwith laid before Parliament, but it excludes the application of a provision in the Rules Publication Act requiring publication in the London Gazette of notice of the proposal to make the Order in Council for 40 days before the Order is made.
It is evident that that must be so, because, if we are to take action at all in pursuance of a decision by the Security Council, it must be taken with the least possible delay.
Therefore, any such notice of 40 days would be really out of the question. (Mr Philip Noel Baker, Minister of State, introducing the Bills second reading before the House of Commons: Hansard (HC Debates, 5 April 1946, col 1516. (iv) The procedure by way of Order in Council under this Bill when it becomes an Act possesses the necessary combination of speed and authority to enable instant effect to be given to these international obligations to which we are pledged. (Mr W S Morrison, supporting the Bills second reading in the House of Commons.
Hansard (HC Debates, 5 April 1946, col 1517).
The terms of these debates, submit the appellants, demonstrate Parliaments clear intention that the powers granted under section 1(1) of the 1946 Act must be used with haste after the passing of the relevant United Nations Resolution requiring implementation.
It was for that reason alone, they contend, that Parliament consented to the summary procedure for which the Act provides.
The power must therefore be exercised speedily or not at all.
As for the recent decision of this court in A v HM Treasury [2010] 2 AC 534, the appellants fix in particular upon passages in the judgments which recognise as had earlier judgments in the House of Lords, most notably in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539 and R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 that a power conferred by Parliament in general terms is not to be taken to authorise the overriding of fundamental human rights or basic legal principles unless unambiguously conferred with that intention.
They rely, for example, upon Lord Hopes judgment at p 626, para 47: I would approach the language of section 1 of the 1946 Act, therefore, on the basis that Parliament did not surrender its legislative powers to the executive any more than must necessarily follow from the words used by it.
The words necessary and expedient both call for the exercise of judgment.
But this does not mean that its exercise is unlimited.
As, however, the appellants rightly recognise, A was concerned with a very different aspect of the scope of the power under the 1946 Act than is under consideration here.
Whereas A was concerned with the proper limits of the content of Orders that can be made under the Act, the present appeal seeks to impose limits upon the time within which the power is properly exercisable.
It is not suggested that an Order precisely in the terms of the 2000 Order could not properly have been made at around the time SCR 661 was adopted on 6 August 1990.
What is contended is rather that, by 13 December 2000, the 1946 Act had long since ceased to be an available legislative route by which to implement the 1990 Resolution; the appellants argue that the new offences created by the 2000 Order could at that stage only have been introduced by ordinary parliamentary legislation.
By the same token that A demonstrates the Order making power under the 1946 Act not to be unrestricted as to content, so too, the appellants submit, this court should now hold it not to be unrestricted as to the time of implementation either.
And certainly, if the urgency of the need to give effect to a United Nations Resolution were indeed a precondition of the right to exercise the power, the strength of the appellants case would be obvious: ten years elapsed before the 2000 Order gave effect to (part of) the measures required by article 4 of SCR 661.
Is, then, the suggested analogy between the situation facing the court in A and that arising here a true one? In our judgment it is not.
The critical feature of the Orders in Council under consideration in A was that they plainly overrode the fundamental rights of those affected.
Orders of that kind, the court held, were impermissible: the 1946 Act had neither expressly nor by necessary implication conferred so extreme a power.
The essential reason why the court in A was prepared, indeed anxious, to examine the parliamentary material surrounding the passage of the 1946 Act was to make sure that there had in fact been nothing said by those introducing the Bill to suggest that the executive power being conferred was intended to permit fundamental human rights to be overridden.
In short, Hansard was being examined to confirm the absence of a clear statement of such intention, the argument there being that a power of the width contended for by the Minister needed to have been conferred unambiguously.
In the present case, by contrast, we can see no good reason to look behind the enactment of the 1946 Act, and a real risk of breaching parliamentary privilege if one does.
As already stated, it is not suggested here that the 2000 Order overrides anyones fundamental human rights or is otherwise ultra vires the order making power conferred by the 1946 Act (save as to the delay in the Order being made).
Obviously it was envisaged that the order making power would ordinarily need to be exercised speedily.
But that is a far cry from saying that it was Parliaments clear intention to confine it to urgent use.
Had that been the intention, one would have expected it to be clearly provided for in the Act.
And inevitably, if it had been, some identifiable limit of time would have been formulated: how otherwise is the Minister, or the court in the event of legal challenge, to determine what precisely is the legal limit of the power?
So far from anything of this kind being found in the legislation, it is entirely silent on the question, there being no hint of any such restriction in the language of the section.
Indeed, it goes somewhat further even than this: section 1(3) of the 1946 Act provides: Any Order in Council made under this section may be varied or revoked by a subsequent Order in Council.
The appellants necessarily, therefore, recognise that some variations may be made to existing Orders by subsequent Orders made perhaps years later.
They are thus constrained to argue rather that this power of variation cannot be invoked to create serious criminal offences.
Once the initial urgency has passed, they must submit, such offences can only be created through the normal legislative process.
Again, however, had Parliament intended to place such limitations upon this power of variation, one would have expected it to say so rather than leave the position entirely uncertain.
We have considered the issue thus far purely as one of principle and on the barest of facts, by reference simply to the long passage of time between the United Nations Resolution requiring measures to be taken and the Order giving effect to it.
The Crown, indeed, have been anxious that we should do so, concerned no doubt lest otherwise anyone wishing to contest the vires of an apparently delayed 1946 Act Order will be able to require an explanation as to how the delay came about.
As will now be apparent, moreover, even on this somewhat blinkered approach, it is our clear conclusion that the appellants argument must fail.
We think it right, however, briefly to sketch in something of the broader context in which the 2000 Order in fact came to be made, partly to show that the case is not simply one of inexplicable tardiness on the part of a negligent government (indeed, succession of governments), but in part also to demonstrate that there may be perfectly good reason to act as the government did here which, of course, assuming that is so, makes it yet more unlikely that Parliament on conferring the power had been intent upon tightly circumscribing the time within which it could lawfully be exercised.
As already indicated, SCR 661 was adopted on 6 August 1990, four days after Iraq invaded Kuwait.
In the meantime, on 4 August, the Treasury had already given directions in exercise of powers conferred by section 2 of the Emergency Laws (Re enactments and Repeals) Act 1964 forbidding (save with Treasury permission) the carrying out of orders by the Government of, or any resident in, Iraq requiring any person to make any payment or to part with any gold or securities or requiring any change to be made in the persons to whose credit any sum is to stand or to whose order any gold or securities are to be held.
To an extent, therefore, these directions anticipated the requirements of SCR 661.
Shortly afterwards, namely two days after SCR 661 and in substantial implementation of the measures required by it, the Government on 8 August made the Iraq and Kuwait (United Nations Sanctions) Order 1990 (SI 1990/1651) pursuant to the 1946 Act power, imposing restrictions (as the Explanatory Note put it) on the exportation of goods from Iraq and Kuwait and on supply of goods to Iraq and Kuwait as well as certain related activities and dealings, including the carriage of such goods in British ships or aircraft.
This Order thus gave effect to the entirety of SCR 661 save just a part of article 4.
It was then amended on 29 August to add a new article 4A so as to ban the payment of any bond given in respect of a contract whose performance was prohibited under any other article: article 4 of the Iraq and Kuwait (United Nations Sanctions) (Amendment) Order 1990 (SI 1990/1768).
There followed a succession of SCRs dealing with the Iraqi situation as it continued to develop over the next ten years.
Putting it very shortly, on 15 August 1991 SCR 706 (1991) authorised the setting up of an oil for food programme, a programme, however, which was then rejected by Iraq on the grounds that it interfered with their sovereignty.
On 14 April 1995 SCR 986 (1995) again authorised such a programme and this finally began to operate at the end of 1996.
Thereafter the programme was extended on a six monthly basis by further Resolutions, each of which re affirmed the terms of SCR 661.
With the passage of time, however, the scale and complexity of the humanitarian programme grew, and oil prices increased, to the point where there was ever greater scope for the manipulation of the programme by the Iraqi government.
By September 2000 there were consistent reports of Iraq demanding a surcharge on all oil sales and on the purchase of all humanitarian goods, to be paid directly or indirectly to the Government of Iraq.
In December 2000 the United Nations 661 Committee agreed that the payment of all such surcharges was illegal and in breach of the UN sanctions imposed on Iraq.
On 5 December 2000 SCR 1330 (2000) was adopted inter alia allow[ing] the Council to take further action with regard to the prohibitions referred to in Resolution 661 .
It was in the context of this ever changing diplomatic and international landscape that on 13 December 2000 the 2000 Order came to be made.
If this brief history establishes nothing else, it demonstrates surely that Security Council Resolutions are not simply one off measures requiring immediate implementation by member states and then receding into history, and that situations can develop in the course of their subsequent enforcement which call for further measures to be taken, sometimes with considerable urgency, to meet emerging problems.
It would be not merely inappropriate as a matter of construction but regrettable as a matter of fact were this court now to stultify the power conferred under the 1946 Act by confining its exercise within an artificially restricted time frame.
For the sake of completeness we record that, since the above judgment was written, the appellants have now been convicted on count 2, the sanctions count.
We have in the result lifted the anonymity order which was earlier imposed in these proceedings.
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This appeal concerns the question whether the power to create criminal offences granted to Her Majestys government by section 1 of the United Nations Act 1946 (the 1946 Act) may only lawfully be exercised at or about the time of the relevant resolution by the Security Council of the United Nations which such order is implementing.
At the time of the hearing of this appeal, the appellants, Forsyth and Mabey, were awaiting criminal trial on a number of charges, of which one is an offence of making funds available to Iraq contrary to the Articles 3(a) and 11(4) of the Iraq (United Nations Sanctions) Order 2000 (the Order).
As a preliminary issue prior to the trial, the appellants sought to establish that the Order creating the offence of making funds available to Iraq was ultra vires section 1 of the 1946 Act.
Section 1 grants power to the government to implement resolutions of the Security Council by an executive order without any parliamentary process.
The appellants argument was that such a wide executive power could be justified only if the resolutions of the Security Council were implemented urgently and the power, therefore, must be construed as subject to its being exercised within a very short timescale.
In essence, the appellants maintained that unless the power to make an order under the 1946 Act is exercised at or about the same time as the relevant Security Council resolution, that power is lost by the passage of time.
The Order in question was made 10 years after the relevant resolution.
The appellants lost both in the Crown Court and the Court of Appeal.
The matter came before this court on 6 December 2010 when, at the outset of the hearing, the appellants were granted permission to appeal; at the conclusion of the hearing the appeal was dismissed for reasons to be given later.
The present judgment contains those reasons.
Lord Brown delivered the judgment of the court which held that the power conferred on the government by section 1 of the 1946 Act cannot be restricted by confining its exercise within an artificially restricted timeframe.
The suggested analogy between the case of A v HM Treasury which was concerned with proper limits of the content of orders made pursuant to section 1 of the 1946 Act and the present appeal seeking to impose limits upon the time within which the power is properly exercisable is false: [9].
Unlike the case of A, where Hansard needed to be examined to confirm the absence of parliamentary intention to permit fundamental human rights to be overridden, there is no good reason to look behind the actual words of the 1946 Act in this case, and indeed a real risk of breaching parliamentary privilege if one does.
Had Parliament intended to confine the order making power to urgent use, one would have expected it to be clearly provided for in the 1946 Act: [10] [11].
Instead, the 1946 Act is entirely silent on the question and indeed provides for a power to vary the existing order without placing any time limitations upon this power of variation: [12].
The history of how the Order in the present case came to be made so long after the UN resolution it was implementing confirms that it would be inappropriate to limit the exercise of the power conferred by the 1946 Act within a restricted timeframe by demonstrating that Security Council resolutions are not simply one off measures requiring immediate implementation by member states which then recede into history: [18].
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On 11 May 2004 there was an explosion at ICLs factory in Glasgow.
Nine people were killed and many others were injured.
Extensive damage was caused to neighbouring properties, including a shop owned by Morrison.
On 13 August 2009 Morrison began the present proceedings, in which it seeks damages against ICL on the basis that the damage to its shop was caused by ICLs negligence, nuisance and breach of statutory duty.
The proceedings are defended on the basis that any obligation owed by ICL to make reparation to Morrison had prescribed before the proceedings began.
The relevant prescriptive period is five years, by virtue of section 6(1) of the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act).
Morrison argues however that the prescriptive period did not begin to run until long after the explosion occurred, since it was not aware, and could not with reasonable diligence have been aware, that the damage had been caused by negligence, nuisance or breach of statutory duty until a much later date.
In that regard, Morrison relies upon section 11(3) of the 1973 Act.
In the courts below, the case proceeded on the footing that section 11(3) was to be interpreted as meaning that the commencement of the prescriptive period was postponed where the creditor in the obligation was not aware, and could not with reasonable diligence have been aware, (1) that loss, injury or damage had occurred, and (2) that it had been caused by the breach of a duty owed to him.
That interpretation was in accordance with a number of authorities.
There was no doubt that Morrison knew that damage had occurred on the date of the explosion.
In order to establish that it also knew or could with reasonable diligence have known at that date, or soon after, that the explosion had been caused by a breach of duty, ICL relied on the principle expressed in the maxim res ipsa loquitur.
The rationale of that approach is not immediately obvious, since the principle res ipsa loquitur is not concerned with the establishment of knowledge on the part of a pursuer, whether actual or constructive.
The principle belongs to the law of evidence, and refers to circumstances from the establishment of which an inference of negligence can be drawn, so as to shift the evidential burden of proof to a defender.
It appears to have been considered relevant in the present context because of a gloss placed in some recent decisions upon the earlier interpretation of section 11(3) as postponing the commencement of the prescriptive period until the creditor is aware, actually or constructively, that the damage has been caused by the breach of a duty owed to him.
In reality, a creditor often cannot be aware of that until the circumstances and their legal consequences have been established after proof.
The earlier interpretation of section 11(3) has therefore been refined in some recent decisions, as I shall explain, so as to postpone the commencement of the prescriptive period until the creditor has sufficient knowledge, actually or constructively, to enable a stateable prima facie claim properly to be advanced.
On that approach, the law of evidence would have a bearing on the matter.
ICL succeeded before the Lord Ordinary, Lord Woolman, on the basis that
the principle res ipsa loquitur applied in the circumstances of the explosion: [2012] CSOH 44; 2012 SLT 813.
Morrison succeeded before the Inner House, on the basis that it did not: [2013] CSIH 19; 2013 SC 391.
ICL then appealed to this court, where it has been permitted to raise the more fundamental issue of the correct interpretation of section 11(3).
The statutory provisions governing prescription Section 6(1) of the 1973 Act provides:
(1) If, after the appropriate date, an obligation to which this section applies has subsisted for a continuous period of five years (a) without any relevant claim having been made in relation to the obligation, and (b) without the subsistence of the obligation having been relevantly acknowledged, then as from the expiration of that period the obligation shall be extinguished.
The obligations to which section 6 applies include any obligation arising from liability to make reparation (Schedule 1, para 1(d)), subject to specified exceptions.
The appropriate date, when the five year period begins to run, is defined by section 6(3) as meaning the date when the obligation became enforceable, subject to specified exceptions, none of which is relevant to the present case.
the 1973 Act provides: In relation to the date when the obligation became enforceable, section 11 of (1) Subject to subsections (2) and (3) below, any obligation (whether arising from any enactment, or from any rule of law or from, or by reason of any breach of, a contract or promise) to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred. (2) Where as a result of a continuing act, neglect or default loss, injury or damage has occurred before the cessation of the act, neglect or default the loss, injury or damage shall be deemed for the purposes of subsection (1) above to have occurred on the date when the act, neglect or default ceased. (3) In relation to a case where on the date referred to in subsection (1) above (or, as the case may be, that subsection as modified by subsection (2) above) the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware.
Section 11(3): the problem
The interpretation of section 11 has to begin with the text itself.
The opening words of section 11(1) (Subject to subsections (2) and (3) below) make it clear that that subsection sets out the general rule, which applies without modification in all circumstances other than those covered by subsections (2) and (3).
The general rule applies to any obligation to make reparation for loss, injury or damage caused by an act, neglect or default.
The general rule is that the obligation is to be regarded as having become enforceable on the date when loss, injury or damage occurred.
The phrase act, neglect or default has appeared in statutory provisions concerned with limitation periods since the Public Authorities Protection Act 1893.
It appeared, in particular, in section 6(1)(a) of the Law Reform (Limitation of Actions) Act 1954 (the 1954 Act), which was the predecessor of section 17(1) of the 1973 Act.
The meaning of the phrase in that context was considered by the House of Lords in Watson v Fram Reinforced Concrete Co (Scotland) Ltd 1960 SC (HL) 92.
Lord Reid construed default as meaning breach of duty (p 109).
Lord Keith of Avonholm was of the opinion that the phrase did not refer to a historical event, as the Inner House had considered in that case, but referred to negligence or a failure of duty (p 111).
Lord Denning, echoing the Book of Common Prayer, stated at p 115: The words act, neglect or default are perhaps a little tautologous: for act in legal terminology often includes an omission as well as an act of commission: and default certainly includes neglect.
But tautologous as they may be, the words are apt to cover all breaches of legal duty, no matter whether it be by leaving undone those things which we ought to have done, or by doing those things which we ought not to have done.
Given that the phrase had been authoritatively determined to have that meaning in legislation which was repealed and replaced by the 1973 Act, Parliament can be presumed to have intended it to bear the same meaning in section 11(1).
So understood, section 11(1) establishes a general rule that an obligation to make reparation is to be regarded for the purposes of prescription as having become enforceable on the date when loss, injury or damage has occurred (traditionally denoted by the Latin term damnum) which has been caused by an act, neglect or default (injuria): in other words, when the relevant right of action arises.
This was explained by Lord Keith of Kinkel in Dunlop v McGowans 1980 SC (HL) 73, 81: The language of section 11(1) affords no warrant for splitting up the loss, injury or damage caused by an act, neglect or default.
An obligation to make reparation for such loss, injury and damage is a single and indivisible obligation, and one action only may be prosecuted for enforcing it.
The right to raise such an action accrues when injuria concurs with damnum.
Some interval of time may elapse between the two, and it appears to me that section 11(1) does no more than to recognise this possibility and make it clear that in such circumstances time is to run from the date when damnum results, not from the earlier date of injuria.
The words loss, injury and damage in the last line of the subsection refer back to the same words in the earlier part and indicate nothing more than the subject matter of the single and indivisible obligation to make reparation.
Section 11(2) then sets out a special rule which applies where as a result of a continuing act, neglect or default loss, injury or damage has occurred before the cessation of the act, neglect or default.
Loss, injury or damage must therefore have been caused by an act, neglect or default, as in subsection (1).
What is special is that the act, neglect or default is of a continuing nature, and that loss, injury or damage has occurred before the cessation of the act, neglect or default.
In that situation, the right of action arises as soon as any material loss is suffered as a result of the default.
The prescriptive period does not however begin to run on that date: the loss, injury or damage is deemed, for the purposes of subsection (1), to have occurred on the date when the default ceased.
For the purposes of prescription, therefore, the loss is deemed to have occurred on a later date than (some of) it actually did.
Section 11(3) sets out another special rule, which applies where, on the date when loss, injury or damage occurred (or, in the case of loss, injury or damage resulting from a continuing act, neglect or default, the date of the latters cessation), the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred.
In that situation, subsection (1) is to have effect as if for the reference to the date when loss, injury or damage occurred there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware.
As Lady Paton observed, in delivering the opinion of the Inner House, section 11(3) might prima facie be thought to refer solely to latent damage (para 29).
Just as section 11(2) reflects the view that continuing damage requires some adaptation of the general approach laid down in section 11(1), on the basis that the date when a right of action arises is not in that situation the appropriate date for the commencement of the prescriptive period, so the same is also true of latent damage.
In that situation, the right of action arises, and may subsist for more than five years, before the creditor is aware that he has suffered damage.
It therefore makes sense to postpone the commencement of the prescriptive period.
Section 11(3) does not however say merely that it applies where the creditor was not aware that loss, injury or damage had occurred: it applies where the creditor was not aware that loss, injury or damage caused as aforesaid had occurred (emphasis added).
The words caused as aforesaid refer back to the words caused by an act, neglect or default in section 11(1).
Does that therefore mean that section 11(3) applies not merely in cases of latent damage, but in every case where the creditor was not aware, at the time when the loss occurred, that it had been caused by an act, neglect or default?
The competing interpretations
Section 11(3) is capable of being read in two different ways.
One possibility is to read the word aware as referring to the loss, injury or damage, and to treat the phrase caused as aforesaid as adjectival.
The subsection is then read as if it said: the creditor was not aware that loss, injury or damage, which had been caused as aforesaid, had occurred.
The creditor has then to be aware only of the occurrence of loss, while the words caused as aforesaid connect the loss to the cause of action.
The other possibility is to read the word aware as referring not only to the loss, injury or damage but also to the fact that it has been caused as aforesaid.
The subsection is then read as if it said: the creditor was not aware that loss, injury or damage had occurred, and that it had been caused as aforesaid.
Since the words caused as aforesaid refer back to section 11(1) and mean caused by an act, neglect or default, the creditor then has to be aware of a composite of fact and law, comprising the occurrence of loss and the act, neglect or default which caused it, actionability being an element of the concept of an act, neglect or default.
Lord Clyde adopted the latter reading of section 11(3) in Greater Glasgow Health Board v Baxter Clark & Paul 1990 SC 237 and Kirk Care Housing Association Ltd v Crerar & Partners 1996 SLT 150, both decisions in the Outer House.
The Inner House expressed their agreement with that approach in Glasper v Rodger 1996 SLT 44, in a judgment delivered by Lord President Hope, although that case did not raise any question as to the effect of the words caused as aforesaid.
Later cases have followed the same approach without further reassessment at the appellate level.
The views of such distinguished judges as Lord Clyde and Lord Hope deserve great weight and respect.
Nevertheless, I have reached a different conclusion as to the proper interpretation of section 11(3), for a number of reasons.
First, I am inclined to think that the first of the interpretations suggested in paras 16 and 17 is the more natural reading as a matter of ordinary English.
I recognise however that others may take a different view.
More significantly, I am inclined to think that, if the draftsman had intended to require awareness of the cause of the loss, injury or damage before the prescriptive period would begin to run, that would have been a matter of such importance that he would have been likely to make that intention clearer.
In that regard, section 11(3) can be contrasted with section 18(3) of the 1973 Act as originally enacted, which postponed the commencement of the limitation period applicable in cases of personal injury where the material facts relating to that right of action were or included facts of a decisive character which were at all times outside the knowledge (actual or constructive) of the pursuer.
Such facts were defined by section 22(2) as being: (a) the fact that personal injuries resulted from a wrongful act or omission; (b) the nature or extent of the personal injuries so resulting; (c) the fact that the personal injuries so resulting were attributable to that wrongful act or omission, or the extent to which any of those personal injuries were so attributable.
Although there are significant differences between prescription and limitation, the point can nevertheless be made that sections 18(3) and 22(2) illustrate that where it was intended that the limitation period was not to run so long as there was a lack of awareness of particular matters, the draftsman made it clear, by express language, what those matters were.
If it had been Parliaments intention, in relation to section 11(3), that the prescriptive period was not to run so long as there was a lack of awareness of matters other than the occurrence of loss, injury and damage, one could reasonably expect that that would have been made equally clear.
The contrast is equally striking if section 11(3) is compared with section 17(2)(b) of the 1973 Act as amended by the Prescription and Limitation (Scotland) Act 1984.
The latter provision postpones the commencement of the limitation period until the pursuer was actually or constructively aware of a number of specified facts, including (ii) that the injuries were attributable in whole or in part to an act or omission.
The effect of Lord Clydes interpretation of section 11(3) is to postpone the commencement of the prescriptive period until the creditor was actually or constructively aware of a more complex matter relating to causation (namely that the loss was caused by an actionable breach of duty) without there being comparably specific statutory language.
The principal counter argument is that the words caused as aforesaid are unnecessary, on the reading which I prefer, and that statutes should be construed so as to avoid tautology.
That is not in my opinion a persuasive argument.
In the first place, as Lord Rodger of Earlsferry remarked, cautious tautologous drafting used to be typical of much of the statute book (Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557, para 107).
Secondly, the words in question are not in my opinion truly tautologous, if section 11(3) is interpreted as I have suggested.
They connect the loss to the cause of action, like the corresponding words in section 11(1) and (2).
As Lord Keith explained in Dunlop v McGowans, there is a legal nexus between the loss which is the subject matter of the obligation to make reparation and the default causing the loss.
The words caused as aforesaid make it clear that it is only knowledge of loss caused by the default relied upon by the creditor (as distinct from loss arising from any other cause) which is relevant in determining whether the obligation has prescribed.
Two other counter arguments were accepted by Lord Clyde in the Greater Glasgow Health Board case.
One was that the logic of the scheme points to a requirement of knowledge that the right of action exists before the obligation is deemed to be enforceable.
Lord Clyde did not however explain what he considered the logic of the scheme to be, or the basis on which he arrived at that view.
The second counter argument was that it was difficult to give much content to the reference to reasonable diligence, if it applied only to knowledge that loss had occurred.
It is true that the greater the range of matters of which the creditor must be aware, the greater the scope for diligent inquiry.
That does not however entail that section 11(3) must be given an expansive interpretation.
Reasonable diligence is an appropriate standard by which to attribute constructive knowledge of the fact that loss, injury or damage has occurred.
The interpretation of section 11(3) which I prefer is also consistent with my initial impression that the subsection is intended to deal with latent damage.
So understood, section 11(3) follows the same approach as section 11(1) and (2).
The general rule laid down by section 11(1) focuses on the occurrence of loss: the timing of its occurrence determines the date on which the prescriptive period begins.
Section 11(2) addresses the problem which could otherwise arise where loss results from a continuing default, by providing a deemed date for the occurrence of loss, which is to be used instead of the actual date for the purposes of section 11(1).
Section 11(3) addresses the problem which could otherwise arise where there is latent damage, namely that the creditor is unaware of its occurrence, by requiring the date of actual or constructive knowledge of its occurrence to be used instead for the purposes of section 11(1).
If section 11(3) is so interpreted, all three subsections share a common focus upon the occurrence and timing of loss.
There are two further, and in my opinion compelling, reasons for rejecting the interpretation of section 11(3) favoured by Lord Clyde.
The first is the sheer oddity of postponing prescription according to the creditors knowledge that an act or omission is actionable.
If he has to be aware that the loss was caused by an act, neglect or default, then it follows from Watson v Fram that he has to be aware that there has been a breach of a legal duty owed to him, as was accepted in the Greater Glasgow Health Board case and the other authorities I have mentioned.
As it was put in Glasper v Rodger at p 47, the lack of awareness which requires to be established for the purposes of section 11(3) is a lack of awareness that a loss has occurred caused by an act, neglect or default which gives rise to an obligation to make reparation for it.
That however results in a number of unlikely consequences.
It means, in the first place, that prescription will run more or less quickly
according to the creditors awareness of the law.
If he receives accurate advice from his solicitor, it will begin on one date; if the advice is inaccurate, it will begin on another.
If there are a number of creditors who suffer loss as a result of the same event, their claims may prescribe on different dates, depending on the legal advice which they receive.
That runs contrary to the legal certainty which is the objective of prescription, and seems unlikely to have been the intention of Parliament.
More fundamentally, in what sense can the creditor be aware that there has been a breach of duty, in advance of a judicial determination of the issue? Does being aware require certainty of success in a claim, or probability, or something less? In practice, even if the creditor has received legal advice, he is likely, at best, to be aware only that he has good prospects of success.
If the advice has been less optimistic, he may be aware that he has reasonable prospects of success, or that he has an arguable case.
Some recent decisions in the Outer House have sought to address this difficulty by glossing the phrase aware . that loss, injury or damage caused as aforesaid had occurred as meaning aware that a stateable prima facie claim could properly be advanced against someone (AMN Group Ltd v Gilcomston North Ltd [2008] CSOH 90; 2008 SLT 835, para 58; Pelagic Freezing (Scotland) Ltd v Lovie Construction Ltd [2010] CSOH 145, para 111).
This test is however much less precise than one would expect in a context in which certainty is important, relying as it does on such uncertain standards as what may be regarded as stateable and what could properly be advanced.
The gloss also seems to me to be reading more into the statutory language than it will bear.
On the other hand, without some such gloss, it is difficult to see how the problem raised in para 28 can be addressed.
An approach to the interpretation of section 11(3) which leads to impalement on one branch or other of Mortons Fork is not an attractive starting point.
Lord Hodge and Lord Toulson, while agreeing with Lord Clyde that section 11(3) requires the creditor to be aware that loss was caused as aforesaid, depart from Lord Clydes approach by not relating those words back to the words caused by an act, neglect or default in section 11(1).
Instead, they interpret the words caused as aforesaid as meaning caused by an act or omission, without any implication that the act or omission is actionable.
They suggest that this approach is consistent with the policy of the provision.
This approach seems to me to be one which might be recommended for adoption as a matter of law reform: indeed, recommendations to that effect were included among those made by the Scottish Law Commission in its Report on Prescription and Limitation of Actions (Latent Damage and Other Related Issues) (1989) (Scot Law Com No 122), paras 2.36 and 2.55.
Those recommendations have not however been implemented by Parliament.
It is not possible in my opinion for this court to reach the same result by interpretation of the words used in section 11(3).
In the first place, Lord Clyde and Lord Hope were in my opinion correct to construe the words caused as aforesaid as referring back to the phrase caused by an act, neglect or default in section 11(1).
That is to my mind the only possible meaning of the words as aforesaid, since section 11(1) contains the only prior reference in the section to causation.
If Parliament had intended caused as aforesaid to mean caused by an act or omission, it could not have said as aforesaid, since there are no words with that meaning elsewhere in section 11.
It also seems to me that it would make little sense to postpone the
commencement of the prescriptive period until the creditor was aware of one fact which was critical to his bringing proceedings in respect of his loss, namely that it had been caused by an act or omission, but unaware of another, namely the identity of the person responsible.
Such an arbitrary result would in my view serve no discernible policy.
While Lord Hodge and Lord Toulson consider that it would be strange if the prescriptive period were to run before the creditor had sufficient awareness of the facts about what had caused him to suffer loss to be able reasonably to raise an action, it would seem to me to be stranger still to postpone the running of time until he knew what had caused him to suffer loss, but not who.
In so far as Lord Hodge and Lord Toulson suggest that their interpretation is consistent with the policy which they attribute to the provision, I would also comment that I cannot see any basis for inferring such a policy other than their interpretation of section 11(3) itself.
Such a policy cannot in particular be inferred from the report of the Scottish Law Commission which preceded the 1973 Act: see its report on Reform of the Law Relating to Prescription and Limitation of Actions in Scotland (1970) (Scot Law Com No 15), para 97, and its later memorandum, Prescription and Limitation of Actions (Latent Damage) (1987) (No 74), paras 2.9 and 4.6.
Legal certainty
Although all the members of this court agree that the interpretation hitherto placed on section 11(3) does not correctly reflect the intention of Parliament, careful consideration nevertheless has to be given to the overturning, with immediate effect, of an interpretation of a statutory provision relating to prescription which has been followed for many years.
That is because of the potential impact on persons who may have conducted their affairs on the basis of the existing interpretation and might be prejudiced by the change.
In the present context, however, counsel were agreed that parties with claims
falling within the scope of section 11(3) were unlikely to have been advised to delay in initiating proceedings in reliance upon the existing authorities.
It is also fair to observe that, although the approach adopted in the authorities I have mentioned has been followed for many years, it rests on slender foundations for a matter of such importance (as I have explained at para 18), and its correctness has not gone unquestioned: see, for example, Ghani v Peter T McCann & Co 2002 SLT (Sh Ct) 135; Adams v Thorntons WS 2005 1 SC 30; and particularly Johnston, Prescription and Limitation, 1st ed (1999), para 6.97, 2nd ed (2012), para 6.96 (this interpretation has been adopted in the face of cogent argument to the contrary).
Like Lord Hodge, I would not regard it as settled law.
Res ipsa loquitur
It follows that, on a correct interpretation of section 11(3), the principle expressed by the maxim res ipsa loquitur is of no relevance to the application of the subsection.
I am however in agreement with Lord Hodges observations on that subject.
Conclusion
LORD NEUBERGER
I agree with the judgment of Lord Reed and would accordingly allow this
appeal.
However, in the light of the fact that a different conclusion has been reached by Lord Hodge and Lord Toulson as to the interpretation of section 11(3) of the Prescription and Limitation (Scotland) Act 1973, I will express my reasons on that issue in my own words.
In these circumstances I would allow the appeal.
The history of this case is set out by Lord Hodge in paras 59 63, but the basic facts are these.
A serious explosion at ICLs premises occurred on 11 May 2004, and extensively damaged adjacent premises owned by Morrison.
Morrison obtained access to its premises in June 2004, and contends that it could not have obtained a reliable expert report on the cause of the explosion until after mid August 2004.
In August 2007 ICL pleaded guilty to breaches of the health and safety legislation, and in July 2009 a report was published identifying the explosion as an avoidable tragedy resulting from a number of failures by ICL.
Morrison issued the current proceedings for reparation for the damage to its property and for lost profits against ICL on 13 August 2009.
ICL admit that, but for one point, it would be liable to pay Morrison such reparation (although the question of quantum is not agreed).
That one point is that Morrisons claim was extinguished as it was raised more than five years after the date when it could have raised its claim.
That argument raises a short issue, namely the meaning of section 11, and in particular the meaning of the expression loss, injury or damage caused as aforesaid in section 11(3), of the 1973 Act.
Section 6(1) of the 1973 Act by virtue of section 6(2) and para 1(d) of Schedule 1, applies to any obligation arising from liability to make reparation.
It provides that (subject to certain irrelevant exceptions) where such an obligation has subsisted for a continuous period of five years without a claim being brought or a relevant acknowledgment having been made, then as from the expiration of that period the obligation shall be extinguished.
Section 11 of the 1973 Act is set out in para 66 of Lord Hodges judgment and in para 8 of Lord Reeds judgment.
Section 11(1) provides that, [s]ubject to subsections (2) and (3), for the purposes of section 6 any obligation to make reparation for loss, injury or damage should be regarded as having become enforceable on the date when the loss, injury or damage occurred.
Section 11(2) provides that where as a result of a continuing act, neglect or default loss, injury or damage occurs, the loss, injury or damage should be deemed to have occurred when the act, neglect or default ceased.
Section 11(3) applies to a case where on the date referred to in subsection (1) the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred.
In such a case, section 11(3), provides that section 11(1) has effect as if the date there referred to was when the creditor first became, or could with reasonable diligence have become, so aware.
It is, rightly, common ground that, subject to subsections (2) and (3), under section 11(1), ICLs obligation . to make reparation for loss, injury or damage arose on 11 May 2004, the date of the explosion, as that was the date on which the loss, injury or damage occurred.
It is also, again rightly, common ground that section 11(2) has no application: the explosion was by no stretch of the imagination a continuing act.
Accordingly, subject to it being able to rely on section 11(3), Morrisons claim became extinguished on 11 May 2009, and hence it started its claim three months too late.
The issue therefore turns on section 11(3).
ICL contends that Morrison must have been aware that loss, injury or damage had occurred on the very day that the explosion took place (or possibly a day later), and, if for some reason it had not been so aware, it seems clear that it could with reasonable diligence have [been] so aware), and accordingly section 11(3) is of no assistance to Morrison.
Morrison, on the other hand, lays stress on the words caused as aforesaid after the words loss, injury or damage, and contends that those words carry with them a requirement that that the creditor knows the cause of the loss, injury or damage, and that this could not have happened until late August 2004 at the earliest, when a promptly instructed expert would have reported.
The issue therefore is whether the words caused as aforesaid have the effect contended for by Morrison.
On ICLs case, the three words merely describe or identify the loss, injury or damage of which the creditor has to be aware.
On Morrisons case, the three words extend the scope of the creditors required awareness from the loss, injury or damage to the cause of that loss, injury or damage.
As a matter of ordinary language, the three words simply amount to an adjectival phrase, which serves to describe the words which precede them, rather than being words which add a requirement of causation to the scope of the creditors required awareness.
The words aware . that loss caused as aforesaid had occurred simply do not naturally mean aware that loss had occurred and that it had been caused as aforesaid.
They mean aware that loss, which had been caused as aforesaid, had occurred.
That reading is reinforced by the point that, if the drafter had intended a creditor to be aware of the cause of the injury before time began running, one would have expected that intention to have been spelled out clearly.
That is not, of course, necessarily the end of the matter, as interpretation of statutes is not merely an exercise in linguistics.
While the natural meaning of an expression or a provision is as good a place as any (and very often the best place) to start, it is seldom, if ever, the only factor to take into account.
I would accept that if there were other good reasons to do so, it may well be appropriate to depart from the natural meaning of section 11(3), and in particular the words caused as aforesaid, and to give those words the less natural meaning for which Morrison contends.
I turn to consider the various reasons put forward by Morrison.
First, there is the point that the words caused as aforesaid are surplusage on ICLs case.
I am unimpressed with that point.
A cautious drafter of the 1973 Act could easily have thought it appropriate to emphasise that in section 11(3) he was referring only to loss, injury or damage which had been caused as described in section 11(1).
Cautious drafters of statutes and contracts often include protective or qualifying words which are not strictly necessary, and it would hinder clarity and certainty in the law, and seriously risk subverting the parliamentary or contractual intention, if judges started giving such expressions unnatural meanings simply to avoid them being surplusage.
A second and similar point is that, if the drafter intended the words to have the effect contended for by ICL, he would have simply said the aforesaid loss, injury or damage rather than the more cumbersome and specific loss, injury or damage caused as aforesaid.
I consider that that argument suffers from the same sort of problem as the first point.
In addition, the drafter may well have thought that the more simple formulation (which anyway only has one less word) could lead to an ambiguity, as it might be argued that it referred to the immediately preceding reference to loss, injury or damage, namely that in subsection (2).
By using the phrase that he did, including the word caused, which is not found in subsection (2), the drafter made it clear that he was referring to the loss, injury or damage mentioned in subsection (1).
A third point is the contrast between section 11(2), which simply refers to loss, injury or damage and section 11(3), which refers to loss, injury or damage caused as aforesaid.
I am not impressed with that point either.
It is a big jump to conclude that the distinction justifies a significant and non natural meaning being given to the words caused as aforesaid.
But, quite apart from that, the very different ways in which subsections (2) and (3) are structured satisfies me that it is unsafe to draw any conclusions from the inclusion of the three words in the latter subsection when they are not in the former.
In particular the words as a result of in subsection (2) tie the loss, injury or damage to the continuing act, neglect or default, and so, even a cautious draftsman would have regarded it as unnecessary to include the words caused as aforesaid in subsection (2).
Fourthly, there is section 17, whose provisions are set out and explained by Lord Hodge in para 67.
Morrison contends that its interpretation of section 11(3) has the merit of consistency of approach with section 17 of the 1973 Act.
I see no reason why the same principles should apply to prescription under section 11 and section 17: they relate to different types of claim and have different primary prescription periods.
Indeed, in my view, far from supporting Morrisons case, section 17 assists ICLs case.
Where the legislature wishes to provide that time does not start running for limitation or prescriptive purposes until an injured party knows or should know that an injury was caused by a defenders act or omission, it is spelled out in clear terms.
Fifthly, there is the argument as to what, on Morrisons case, a creditor has to be aware of before times starts to run.
In that connection, the clear provisions of section 17 highlight a problem with Morrisons interpretation: the words caused as aforesaid are ambiguous on its case, as they could mean caused by some actionable wrong or they could mean caused by some act or omission, which may or may not turn out to be an actionable wrong.
This sort of uncertainty is reflected in the discussion in paras 81 94 of Lord Hodges judgment, as well as in paras 27 29 of Lord Reeds judgment.
Sixthly, there are policy issues.
Both parties advanced arguments based on policy, and I am unimpressed with those arguments in this case.
The imposition of prescription and limitation periods inevitably involve balancing competing public and individual interests.
In particular, it involves balancing the public interest in valid claims being litigated and legal wrongs being righted with the public interest in claims not lingering over the heads of potential defenders and claims not being difficult to dispose of justly due to their antiquity.
Similarly, it is an area which throws up another, familiar, tension: on the one hand, it is desirable to have general and clear rules about limitation, even if they occasionally appear to produce a harsh result; on the other hand, it is sometimes appropriate to have specific exceptions to avoid too many unfairnesses.
I see no particular policy reasons for adopting either interpretation in the present case, as each of them seems to me to result in a defensible and appropriate outcome.
Seventhly, and connected with the sixth point, there is the alleged unfairness on a potential pursuer if time runs against him from the date he knows of the injury, even though he may not know of the identity of the person who caused the injury or what the cause of the injury was.
In my view, the legislature could perfectly reasonably have assumed that in almost every case, five years from the date of discovery of loss, injury or damage would represent plenty of time for the injured party to discover all he needs to know to bring proceedings.
The fact that there may be a very rare case where five years may not be enough is simply an example of the inevitable consequence of the compromise which limitation law involves.
After all, even under the interpretation favoured by Lord Hodge there could be potential unfairnesses in individual and unusual cases, sometimes to pursuers and sometimes to defenders.
Finally, there is the fact that there is a number of cases where Scottish judges have held that the interpretation advanced in these proceedings by Morrison is correct.
Those decisions are discussed by Lord Hodge in paras 69 and 70.
There are occasions when it is right for a court to accept that a statute should be accorded a meaning which would not otherwise appear to the court to be right, because that meaning has been generally accepted.
However, in the present case, there is simply the fact that, since 1985, Scottish courts have held that section 11(3) has a certain meaning.
This is not a case, for instance, where it can be said that Parliament has impliedly approved that interpretation, or assumed that it is correct.
I do not consider that the mere fact that, over some decades, successive judges, however eminent, have come to, or assumed, a conclusion which a superior court thinks is wrong, justifies that court holding that that meaning is correct.
Indeed, in the present case, as Lord Hodge explains in para 68, the leading textbook on the topic of prescription and limitation makes it clear, and would have made it clear to practitioners, that the interpretation of section 11(3) is a live issue.
I also note that as long ago as 1987, the Scottish Law Commission suggested that the interpretation being adopted by the Scottish courts was not in accordance with the Commissions views Consultative Memorandum No 74 (1987).
For these reasons, which are little more than a summary of Lord Reeds reasons, and differing with diffidence from Lord Hodge and the other distinguished Scottish judges who have consistently taken the opposite view, I would allow this appeal.
LORD HODGE (dissenting, with whom Lord Toulson agrees)
This appeal raises two questions concerning the Scots law of prescription, which extinguishes obligations through the passage of time.
First, what is the nature of the actual or constructive awareness required of a pursuer in order to start the running of the prescriptive period? Secondly, of what is the pursuer to be aware? A third and subordinate question concerns the doctrine of res ipsa loquitur.
Background facts
On 11 May 2004 a serious explosion occurred at the factory premises of the appellants (ICL) at Grovepark Mills, Maryhill, Glasgow, causing the substantial collapse of the building.
Nine people were killed and others were seriously injured.
The shop owned by the respondent (Morrison), which was adjacent to ICLs premises, suffered extensive damage.
After the accident the police sealed off the area around ICLs premises, including Morrisons shop.
Morrison was not allowed access to its premises until June 2004 and had then to deal with its damaged stock and the risk of asbestos contamination.
ICLs premises remained under the control of the Crown Office.
On about 21 June 2004 ICL petitioned the Court of Session for judicial review of the procurator fiscals decision to refuse it access to its premises to investigate the cause of and legal responsibility for the explosion.
The Crown Office released ICLs premises from its control on 12 July 2004.
Morrison avers that it was unlikely that, having ascertained that the premises had been released, it could have arranged for experts to inspect the fire damaged premises and have obtained an expert report on the cause of the explosion so as to be able to commence legal proceedings before 13 August 2004.
Morrison avers that speculation about a number of possible causes of the explosion continued and that in late 2005 the media were still reporting that the cause of the accident had not been established.
In February 2006 the Crown Office announced its intention to bring criminal proceedings against two of the appellants (ICL Plastics Ltd and ICL Tech Ltd), and on 17 August 2007 those companies pleaded guilty to breaches of the Health and Safety at Work etc Act 1974.
On 1 October 2007 the Lord Advocate announced that a public inquiry would be held into the explosion.
That inquiry, which Lord Gill chaired, reported in July 2009.
It pointed to a number of failures, including by ICL companies, which led to what was an avoidable tragedy.
On 13 August 2009 Morrison raised this action, in which it seeks reparation for the damage to its property, and for lost profits and other costs.
ICL admitted that it had had a liability to make reasonable reparation to Morrison but pleaded that its obligation to do so had prescribed.
According to ICL, Morrison had sufficient knowledge to raise an action against it on the day of the explosion, more than five years earlier.
The legislation
The Prescription and Limitation (Scotland) Act 1973, as its title shows, covers both prescription and limitation.
The rules of negative prescription (both the five year short negative prescription and the twenty year long negative prescription) are rules of substantive law and involve the extinction of rights through the passage of time.
Limitation on the other hand is a procedural rule relating to personal injury claims.
It has to be pleaded as a defence and a defender can waive it.
If the plea is successful, it bars an action from proceeding in court after the lapse of the statutorily specified time.
Negative prescription and limitation are thus conceptually different.
But the sections of the 1973 Act on the short negative prescription, with which we are concerned in this appeal, and the provisions in that Act on limitation both address the circumstances in which a pursuers lack of actual or constructive knowledge postpones the starting of a clock.
The basic relevant rule of the short negative prescription, in section 6 of the 1973 Act, is that if an obligation has subsisted for five years after the date when it became enforceable, without a relevant claim having been made or the subsistence of the obligation having been relevantly acknowledged, that obligation is extinguished as from the end of that period.
That rule applies to any obligation arising from liability (whether arising from any enactment or from any rule of law) to make reparation (para 1(d) of Schedule 1 to the 1973 Act).
Section 11 sets out the relevant rules in relation to such obligations to make reparation.
It provides so far as relevant: (1) Subject to subsections (2) and (3) below, any obligation (whether arising from any enactment, or from any rule of law or from, or by reason of any breach of, a contract or promise) to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred. (2) Where as a result of a continuing act, neglect or default loss, injury or damage has occurred before the cessation of the act, neglect or default the loss, injury or damage shall be deemed for the purposes of subsection (1) above to have occurred on the date when the act, neglect or default ceased. (3) In relation to a case where on the date referred to in subsection (1) above (or, as the case may be, that subsection as modified by subsection (2) above) the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware. (my underlining) Thus subsection (3) postpones the start of the five year prescriptive period where the pursuer does not have the specified actual or constructive awareness.
Section 17 of the Act, which deals with the limitation of personal injury actions, establishes as a general rule that the action must be commenced within a period of three years after the date when the injuries were sustained or, if later, the date when the act or omission, to which the injuries were attributable, ceased (section 17(2)(a)).
This general rule is again qualified by a provision which postpones the start of the period of limitation when the pursuer does not have the specified actual or constructive knowledge.
While section 17(2)(b), like section 11(3), uses the concept of awareness, it is much more explicit as to what the pursuer must be aware of.
It provides that no action shall be brought unless it is commenced within a period of three years after: the date (if later than any date mentioned in paragraph (a) above) on which the pursuer in the action became, or on which, in the opinion of the court, it would have been reasonably practicable for him in all the circumstances to become, aware of all the following facts (i) that the injuries in question were sufficiently serious to justify his bringing an action of damages on the assumption that the person against whom the action was brought did not dispute liability and was able to satisfy a decree; (ii) that the injuries were attributable in whole or in part to an act or omission; and (iii) that the defender was a person to whose act or omission the injuries were attributable in whole or in part or the employer or principal of such a person.
Unlike section 11(3), this provision makes it clear that the pursuers awareness is of specified factual matters.
Section 22(3) confirms the irrelevance of legal knowledge of the actionability of the act or omission: see para 80 below.
The English Law Reform Committee in its 24th report, Latent Damage (November 1984, Cmnd 9390) recognised (at para 4.7) the possibility that section 11(3) might not cover such matters.
It decided to model what became section 14A of the Limitation Act 1980 on section 14 of that Act rather than section 11(3) of the Scottish Act because it was arguable that section 11(3) did not cover lack of knowledge of the causation of the damage or the identity of the persons responsible.
Similarly, in its Report on Prescription and Limitation of Actions (Latent Damage and Other Related Issues) (Scot Law Com No 122), the Scottish Law Commission recorded in 1989 that, notwithstanding the first case that I mention below, there was doubt whether the discoverability formula in section 11(3) required knowledge of the cause of the damage.
It recommended that the law be clarified by amending the legislation to state expressly that the discoverability formula included knowledge (a) that the loss, injury and damage was attributable in whole or in part to an act or omission and (b) of the identity of the defender.
There has been no legislation to implement that report.
David Johnston QC in his impressive book, Prescription and Limitation (2nd ed. 2012), also recognises that there are several ways in which section 11(3) can be read: he suggests that it might require awareness of (a) the facts of the loss, its cause and the identity of the defender, or (b) only the fact of the loss, or (c) the facts of the loss and of its being caused by negligence (para 6.96).
The resolution of this uncertainty is the main issue in this appeal.
Nonetheless, there has for almost 30 years been a consistent line of Scottish case law which has treated the words caused as aforesaid not as merely adjectival but as imposing a requirement of knowledge of causation.
The first case was Dunfermline District Council v Blyth & Blyth Associates 1985 SLT 345, in which Lord McDonald said, obiter, that the creditor had to know that the loss which he had suffered occurred in circumstances giving rise to an obligation upon someone to make reparation to him.
Lord Clyde adopted the same approach in Greater Glasgow Health Board v Baxter Clark & Paul 1990 SC 237 (GGHB), again in an obiter discussion.
He held that the ordinary and natural meaning of the phrase caused as aforesaid included the distinct ingredient of causation by negligence (p 251).
This was consistent with the logic of the statutory scheme, which was that a right of action was enforceable only once the pursuer could know that it existed (p 252).
He also expressed the view that if the section required only knowledge of loss, there would be little content to the reference to reasonable diligence in the discoverability formula.
But he was not persuaded that that formula required knowledge of the person on whom the obligation lay (also p 252).
Lord President Hope, delivering the opinion of the First Division in Glasper v Rodger 1996 SLT 44, approved Lord Clydes decision in GGHB and suggested that section 11(3) looked for an awareness, not only of the fact of loss having occurred, but of the fact that it is a loss caused by negligence (p 47G).
In Kirk Care Housing Association Ltd v Crerar and Partners 1996 SLT 150, Lord Clyde reiterated his view, rejecting a challenge by counsel for the defenders that section 11(3) was concerned only with awareness of loss, a matter of fact, and not with matters of legal liability.
The courts have applied an interpretation consistent with the approach in GGHB and Glasper in several other cases, including an Extra Division of the Inner House of the Court of Session in Beveridge & Kellas WS v Abercromby 1997 SC 88, Lord MacFadyen in Britannia Building Society v Clarke 2001 SLT 1355 and Lord Menzies in Pelagic Freezing Ltd v Lovie Construction Ltd [2010] CSOH 145.
In Ghani v Peter T McCann & Co 2002 SLT (Sh Ct) 135 Sheriff Principal Bowen expressed doubts about the soundness of the discussion in GGHB because he considered that knowledge that the loss was caused by negligence was not knowledge of fact and suggested that knowledge of loss was sufficient for time to run.
Nevertheless, he followed GGHB and Glasper.
More recently, in AMN Group Ltd v Gilcomston North Ltd 2008 SLT 835, Lord Emslie, addressing an argument that section 11(3) did not require knowledge that the causal act or omission was actionable, held (in para 32) that a construction of the statutory phraseology importing actionability has now been settled law . for nearly a quarter
of a century
The Scottish courts have thus required knowledge, actual or constructive, of more than the occurrence of loss.
But there are doubts at the margins.
First, there is a question whether awareness of causation extends beyond factual causation to the actionability of the causative act or omission (as in Ghani).
Secondly, concerns have been expressed whether it is correct that the pursuer need not know of the identity of the defender before time starts to run.
In Adams v Thorntons WS 2005 1 SC 30 two of the three members of an Extra Division (Lord Marnoch and Sir David Edward) reserved their opinion on whether in section 11(3) the pursuer had to have actual or constructive knowledge not only of his loss and its causation but also of the identity of the wrongdoer.
David Johnston QC, commenting on the first instance decision in this case (para 72 below), suggested (at para 6.96) that the approach that time runs against a pursuer who does not know the identity of the defender produced what might be thought to be unsatisfactory results.
The proceedings in this action
On 9 March 2012 the Lord Ordinary (Lord Woolman) upheld ICLs plea of prescription after a legal debate in which Morrisons averments were taken pro veritate.
He accepted as correct the approach of the Scottish courts, which I have discussed, as did ICLs counsel at that stage.
In particular, Lord Woolman held that in section 11(3) it was for the pursuer to show that it did not have actual or constructive awareness that loss caused by negligence had occurred.
He held (in para 24 of his opinion) that the question was whether Morrison knew, or could using reasonable diligence have found out, that it had a stateable prima facie claim arising out of the explosion.
The identity of the obligant, the prospects of success and the precise extent of the damage were not relevant.
Taking that approach, he concluded that the explosion within ICLs factory gave rise to a presumption of negligence in accordance with the principle of res ipsa loquitur.
In the absence of any explanation for the explosion, Morrison was entitled to infer that the owner and occupier was responsible for the explosion.
He took a similar approach to Morrisons alternative case of nuisance.
Thus he held that, from the moment of the explosion, Morrison had the requisite knowledge and the prescriptive period began to run immediately.
An Extra Division (Lady Paton, Lord Mackay of Drumadoon and Lady Smith) on 14 March 2013 recalled his interlocutor and allowed a proof before answer on prescription and the effect of section 11(3).
They followed the approach in GGHB and Glasper but rejected the submission that the fact that there had been an explosion in a building meant that it had been caused by negligence.
Because the maxim of res ipsa loquitur applied where the cause of the accident was not known, an action based on the maxim was the antithesis of the requirement in Glasper, namely awareness, not only of the fact of loss having occurred, but of the fact that it is loss caused by negligence.
This appeal
ICL seeks to challenge the established approach of the Scottish courts.
Its case is that the period of the short negative prescription began to run on the date of the explosion.
Its primary case is that all the pursuer needs to know, or constructively know, is that he has suffered loss.
He needs no awareness of what had caused that loss and whether anyone has any legal liability to him for it.
As a fall back, Mr Keen QC submits that if the Scottish case law were correct, Morrison had constructive knowledge that it had a prima facie case of negligence against the factory owners or someone because of the operation of the doctrine of res ipsa loquitur.
Morrisons primary case, which adopts the approach of existing case law, is that time did not run against it until it had actual or constructive knowledge that it had suffered loss caused by some actionable wrong.
As a fall back, Mr Howie QC submits that the requisite knowledge was factual, namely that Morrison had suffered loss, that there had been an act or omission and that there was a causal link between that act or omission and that loss.
This appeal therefore raises sharply the question of which if any of the three possible interpretations of section 11(3) (para 11 above) is correct.
Discussion
(i) The discoverability test
ICL submits in its written case that when interpreting section 11 it is important to consider the purpose of prescription.
I agree.
The law seeks to prevent stale claims both as a question of public interest and also as a matter of balancing the interests of the parties.
Delay can diminish the quality of justice through both the loss of evidence and the diminution in the quality of the extant evidence.
There is a public interest in dealing with disputes promptly.
There is also a need for legal certainty.
Thus the 20 year long negative prescription runs against a person whatever the state of his actual or constructive knowledge and despite any legal disability (sections 7 and 11(4) of the 1973 Act).
In balancing the interests of the parties the law seeks to avoid keeping a defender in suspense as to his liability long after the events which might have given rise to such liability.
It also allows people, including insurers, to organise their affairs and use their financial resources on the basis that after a certain period a claim relating to a past event will not be made.
The importance of those policy justifications is underlined by the present case.
They apply equally to the law of limitation in relation to personal injuries: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, McHugh J at pp 552 553.
The law, by introducing discoverability tests in section 11(3) and section 17(2)(b) of the 1973 Act, has also recognised the injustice of cutting off a claim before the pursuer had or could with reasonable diligence have had sufficient information for a sufficient period to allow him to obtain legal advice and instruct the necessary investigations to raise legal proceedings to assert his right.
The Scottish law of limitation in relation to actions for damages for personal injury and claims arising out of death through personal injury is a relatively modern innovation.
Perhaps because claims for personal injury have generated greater political interest than claims for damage to property or financial loss, the Scottish law of limitation has had a different and more extensive history of legislative amendment.
It was first enacted in section 6 of the Law Reform (Limitation of Actions, etc) Act 1954.
A discoverability test was introduced by the Limitation Act 1963 and was retained and expanded in the 1973 Act.
In 1980 section 19A was introduced into the 1973 Act, giving the court an equitable discretion to override the limitation period.
The Prescription and Limitation (Scotland) Act 1984 amended the discoverability test and abolished the longstop of the 20 year long negative prescription in relation to claims for personal injuries.
While since 1954 the limitation period has been three years, in 2007 the Scottish Law Commission in its Report on Personal Injury Actions: Limitation and Prescribed Claims (Scot Law Com No 207) recommended assimilating the limitation period with the five year prescriptive period.
That recommendation has not been implemented.
Notwithstanding the different legislative histories, there is in my view no obvious policy reason for the legislature to adopt radically different approaches to the substance of a pursuers knowledge in the discoverability tests applicable to claims for damage to property on the one hand and personal injury claims on the other (in sections 11(3) and 17(2)(b) respectively).
Before 1984 the test for postponing the start of the limitation period was contained in section 18(3) of the 1973 Act.
It was that the material facts relating to [the] right of action [which] were or included facts of a decisive character were outside the knowledge (actual or constructive) of the pursuer.
In section 22(2) material facts were defined to include among others the fact that personal injuries resulted from a wrongful act or omission and the fact that they were attributable to that wrongful act or omission.
Like section 11(3) this provision could be construed as referring to both factual and legal matters.
This gave rise to conflicting judicial opinions.
But in McIntyre v Armitage Shanks Ltd 1980 SC (HL) 46 the House of Lords determined that the legal consequences of a defenders act or omission were not a material fact of decisive character.
In other words, the relevant facts did not include the existence of a right of action arising from the defenders act or omission.
The provision was concerned with matters of fact, namely (i) the existence of injuries, (ii) their nature and extent and (iii) their cause.
This exclusion of legal knowledge from the test was confirmed in the 1984 Act, which re worded section 17 of the 1973 Act (para 67 above) and also amended section 22(3) of that Act to provide that knowledge that any act or omission was or was not, as a matter of law, actionable, is irrelevant.
(a) The meaning of awareness
Both section 11(3) and section 17(2)(b) speak of the pursuer being actually or constructively aware of certain things.
While the earlier tests in relation to limitation spoke of the pursuers knowledge, there does not seen to be any substantive difference between that and awareness.
The word, awareness is a term of colloquial speech and its meaning is to be understood by reference to its context and to the policy of the legislature.
In Borella v Borden Co (1945) 145 F 2d 63, 64 Justice Learned Hand spoke of words of colloquial speech having fringes of connotation, and unlike the terminology of science, deliberately fabricated for its definite outlines, it is to be expected that interpretation will vary. legislators, like others concerned with ordinary affairs, do not deal in rigid symbols, so far as possible stripped of suggestion, and do not expect their words to be made the starting point for a dialectical progression.
We can best reach the meaning here, as always, by recourse to the underlying purpose, and, with that as a guide, by trying to project upon the specific occasion how we think persons, actuated by such a purpose, would have dealt with it, if it had been presented to them at the time.
Such an approach is appropriate here.
The policy is to fix the time when the pursuer is aware, or could have been aware if he exercised reasonable diligence, of sufficient information to take steps to pursue his claim.
In AMN Group Ltd (above) Lord Emslie (at para 73) said that awareness went beyond surmising the relevant facts as a mere possibility.
In Pelagic Freezing Ltd (above), a case which concerned defects in a building, Lord Menzies, in applying the approach set out in GGHB, spoke (at paras 110 and 111) of knowledge of material damage and knowledge that the relevant loss was actionable.
In relation to the latter he stated that It is not necessary for the [expert] report to link defaults to specific defects any more than it is necessary for the report to explain or identify in minute detail the mechanism of [the] defects.
Similarly, in the case law on limitation, the courts have drawn a distinction between an awareness of a possibility (which is not sufficient to cause time to run) and awareness of the relevant facts (which is).
In Comer v James Scott & Co (Electrical Engineers) Ltd 1978 SLT 235 (a case which concerned the wording of the test before it was altered in 1984) Lord Maxwell stated (at p 240): [W]hether a person knows a fact seems to me to involve a question of degree.
I do not consider it advisable to attempt to define it, but at least I think it involves something approximating more to certainty than mere suspicion or guess.
Moreover, in my opinion, some information, suspicion or belief falling short of knowledge is not transformed into knowledge if it happens to be correct.
I accept that a person cannot be said to know a fact if the thing which he believes with whatever conviction is not in accordance with the truth.
But I do not think that the converse is correct.
I do not think that any information or belief, however uncertain, necessarily amounts to knowledge merely because it happens to coincide with the truth.
In Nicol v British Steel Corporation (General Steels) Ltd 1992 SLT 141, a case under the current section 17(2)(b) of the 1973 Act, Lord Coulsfield adopted a similar approach in relation to a pursuers awareness of the cause of his injuries.
He held that a pursuers awareness that an accident might be attributable to an act or omission of one of a group of persons, as only one of a number of possibilities where there was no reason to choose between them, was not sufficient to start time running against him.
He also warned against too prescriptive an approach, stating, at p 144: Beyond that, it does not seem to me to be possible to generalise and the question whether the pursuer was aware, or whether it was reasonably practicable for him to become aware, of sufficient facts and circumstances to start the triennium running must depend on the particular facts and circumstances.
In Agnew v Scott Lithgow Ltd (No 2) 2003 SC 448 an Extra Division held that a pursuer, who had vibration white finger, ought to have made enquiry about his condition once he heard former colleagues talking about making claims arising out of having contracted that condition and time started to run then.
In the provisions relating to limitation, therefore, a modest level of awareness of the causal link between the act or omission and the injury suffices.
In my view, awareness in both section 11(3) and section 17(2)(b) does not require certainty but it needs more than mere knowledge of possibilities.
The pursuer must know the specified facts with sufficient confidence for him to be able to take the necessary steps to prepare a legal claim based on them, by obtaining appropriate legal and other advice and collecting evidence of those facts to present to a court or other tribunal.
It is not appropriate to draw too much on the English law of limitation,
is a different statutory regime.
But I think that the approach to the nature of awareness or knowledge as a starting point when time begins to run is similar in both jurisdictions: see Halford v Brookes [1991] 1 WLR 428, Lord Donaldson MR at p 443E G.
The question then is: what are the specified facts? (b) Awareness of what?
I have come to the view that the correct interpretation of section 11(3) is that there needs to be actual or constructive awareness of both (i) loss, (ii) its factual cause through an act or omission.
I consider that there are three reasons to support this view which is essentially Mr Howies fall back case.
First, like Lord Clyde in GGHB, I think that the statutory language of section 11 of the 1973 Act points towards giving content to the words, caused as aforesaid.
In para 9 above I have underlined the words used in sub sections (1) and (2) which refer back to the loss, injury or damage caused by an act, neglect or default.
All that was required for that reference back was the use of the definite article.
The words, caused as aforesaid are not needed for that purpose and Parliament must have intended them to have a meaning.
I also think that section 11(3)s reference to the awareness which the pursuer could acquire through exercising reasonable diligence points to knowledge of more than the fact of loss, injury or damage.
Secondly, the purpose of the discoverability test in section 11(3) is to ascertain the point at which the pursuer is, or should have been, justified in preparing or instructing the preparation of his legal case.
It seems to me that this points towards the pursuers knowledge of facts rather than legal rules.
The starting point should not depend on the competence of the legal advice which he receives.
Were it otherwise, the pursuer could defeat a plea of prescription on the basis that he had received incompetent legal advice.
Section 11(1) establishes the general rule that the obligation to make reparation becomes enforceable when the pursuers right of action arises: see Watson v Fram Reinforced Concrete (Scotland) Ltd 1960 SC (HL) 92, Lord Reid (p 109), Lord Keith of Avonholm (p 111) and Lord Denning (p 115); Dunlop v McGowans 1980 SC (HL) 73, Lord Keith of Kinkel (p 81).
It uses the words act, neglect or default in the context of its description of the obligation to make reparation.
Those words characterise the acts or omissions that give rise to the obligation to make reparation because they are a breach of statutory duty, a delict or a breach of contract.
I do not see that characterisation as relevant to the pursuers knowledge in section 11(3).
It seems to me that in section 11(3) the phrase, loss caused as aforesaid, refers to actual or constructive knowledge of loss caused by an act or a failure to act and not the legal characterisation of the act or omission.
Thirdly, the object of section 11 is to identify the date when the defenders obligation to make reparation became enforceable.
It would be strange if prescription were to run before the pursuer had sufficient awareness of the facts (actually or constructively) about what had caused him to suffer loss to be able reasonably to raise an action.
I do not go so far as Mr Johnston in his first interpretation of the subsection
(in para 68 above): while there is, as he has said, much to be said for such a policy, on reflection, I do not think that the statutory words extend to require the pursuer to have knowledge of the identity of the defender before the clock starts.
Clearly, when the pursuer instructs the raising of an action, his legal advisers will have to identify a person or someone within an identified class of persons (such as the employees of an employer) as the person who has caused him loss.
This should not be difficult if there is awareness of the act or omission.
If the claim is for breach of contract or breach of promise, there should be little difficulty in identifying the defender.
In cases of negligence if there is knowledge of the act or omission, the pursuer can readily use section 1 or 1(1A) of the Administration of Justice (Scotland) Act 1972 (the 1972 Act) to apply to recover documents or for the disclosure of information as to the identity of persons who might be the defenders.
I am comforted by the thought that the interpretation which I favour is not likely significantly to bring forward or postpone the starting point of the prescriptive period from that set by the established line of case law to which I have referred and thereby upset the expectations of litigants.
The prescriptive period will usually start to run at about the same time as it does on the established line of case law as the pursuer will usually seek legal advice once he has the requisite factual knowledge.
In any event, the pursuers constructive knowledge is measured objectively.
By contrast, the start of the prescriptive period would be brought forward significantly in most cases if all that a pursuer needed to know was that he had suffered loss.
While counsel debated whether the discussion by the Inner House in Glasper was obiter, a point which we need not decide, many in the legal profession have acted on the understanding that section 11(3) required more than knowledge of loss.
I would not go so far as Lord Emslie in AMN by saying that it was settled law, but I can foresee that some pursuers might suffer loss as a result of this courts acceptance of Mr Keens attractively presented primary submission.
In reaching my view on this matter I have not attached weight to the
recommendations of the Scottish Law Commission in their report in 1970, Reform of the Law Relating to Prescription and Limitation of Actions.
I recognise that the Commission addressed the mischief of latent damage, but they did not prepare a Bill with their report to give effect to their recommendations.
The courts task is to construe the words which Parliament used unaided by those recommendations.
(c) Summary
In summary, the pursuer must have actual or constructive knowledge (in the sense set out in para 84 above) (i) that he has suffered more than minimal loss, and (ii) of the acts or omissions which caused that loss.
With that awareness he would be justified in preparing or instructing a solicitor to prepare legal proceedings, and the law gives him five years to commence those proceedings.
In most cases that knowledge would be combined with or readily lead to knowledge of the identity of the defender and, as I have said, there are procedures under the 1972 Act to assist him to acquire that further knowledge.
I think that the Inner House was correct to require a proof before answer on the issue of prescription and the pursuers knowledge under section 11(3) as Morrisons averments (paras 60 63 above) raise issues of fact about both the state of its actual knowledge and the background against which the court may assess what it could have known in the exercise of reasonable diligence.
(ii) Res ipsa loquitur
On this approach, the applicability of the doctrine of res ipsa loquitur to the facts of the case does not arise.
But as it was the principal matter that engaged both the Lord Ordinary and the Inner House, I comment on it briefly.
Section 11(3) is concerned with the factual knowledge of the pursuer which justifies his preparation of the legal action: an awareness that an identified persons act or omission caused him loss.
Res ipsa loquitur is an evidential rule for finding facts.
Where the facts give rise to an inference of negligence by the defender, the evidential burden shifts onto the defender to establish facts to negative that inference.
But it is of no relevance if one does not know who the defender is.
Toulson LJ summarised the doctrine in Smith v Fordyce [2013] EWCA Civ 320, in which he stated (at para 61): The doctrine expressed in the maxim res ipsa loquitur is a rule of evidence based on fairness and common sense.
It should not be applied mechanistically but in a way which reflects its underlying purpose.
The maxim encapsulates the principle that in order for a claimant to show that an event was caused by the negligence of the defendant, he need not necessarily be able to show precisely how it happened.
He may be able to point to a combination of facts which are sufficient, without more, to give rise to a proper inference that the defendant was negligent.
A car going off the road is an obvious example.
A driver owes a duty to keep his vehicle under proper control.
Unexplained failure to do so will justify the inference that the incident was the drivers fault.
In the words of the Latin tag, the matter speaks for itself.
In such circumstances the burden rests on the defendant to establish facts from which it is no longer proper for the court to draw the initial inference.
To show merely that the car skidded is not sufficient, because a car should not go into a skid without a good explanation.
In Barkway v South Wales Transport Co Ltd [1949] 1 KB 54 the court took the same view about a tyre burst.
A properly maintained vehicle ought not to suffer a tyre burst.
It is therefore not surprising that the court held that in such circumstances: the defendants must go further and prove (or it must emerge from the evidence as a whole) either (a) that the burst itself was due to specific cause which does not connote negligence on their part but points to its absence as more probable, or (b) if they can point to no such specific cause, that they used all reasonable care in and about the management of their tyres.
I agree.
On the pleadings it appears that, when the explosion occurred, the source of the flammable material which caused it was not known.
In an urban environment there might have been several possible causes involving the responsibility of different people or bodies.
The fact of the explosion might cause a reasonable pursuer to suspect that something done or omitted to be done by the owners or occupiers of the factory where it occurred had caused it.
But, for the reasons I set out when discussing the nature of the needed awareness, suspicion is not enough.
If, contrary to my view, the doctrine were relevant to ascertaining the starting point of the prescriptive period, I do not think that it could be invoked against Morrison until there was evidence that the facts indeed spoke for themselves against ICL.
Morrisons case is that the cause of the explosion was capable of being ascertained but that it was not able to carry out the necessary enquiries before 13 August 2004.
For the same reason I do not accept ICLs argument that Morrison could infer fault on its part to support its case of nuisance.
Conclusion
I would therefore dismiss the appeal.
My view is a minority view.
It is 25 years since the Scottish Law Commission produced its 1989 report on prescription and limitation to which I referred in para 68 above.
If the Commissions recommendations had been acted upon, Morrison would have been able to pursue its present claim.
In the light of the decision in this case, which has changed the law as it was previously understood, I would urge that those recommendations should be given fresh consideration.
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On 11 May 2004 an explosion occurred at ICLs factory in Glasgow.
Nine people were killed and many others injured, but the present case has no bearing on the claims made by or on behalf of those persons.
Morrisons shop was among a number of properties damaged.
On 13 August 2009 Morrison began the present proceedings, seeking damages against ICL on the basis that the damage to its shop was caused by ICLs negligence, nuisance and breach of duty [1].
Under section 6(1) of the Prescription and Limitation (Scotland) 1973 Act, an obligation to make reparation is extinguished through the operation of prescription if a claim has not been made or the subsistence of the obligation not acknowledged within five years of the relevant obligation having become enforceable [6 7].
Section 11(1) provides that an obligation to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 as having become enforceable on the date when the loss injury or damage occurred.
ICL accept that they had an obligation to make reparation to Morrison, but argue that it prescribed long before the action was raised [63].
Morrison dispute this, relying on section 11(3).
It postpones the date from which the prescriptive period begins to run where the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred until a later date [2; 8].
Morrison argue that it was unlikely that, having ascertained that ICLs premises had been released, they could have investigated the cause of the explosion so as to be able to commence legal proceedings before 13 August 2004 [60].
In line with a number of authorities, the case proceeded in the courts below on the footing that under section 11(3) the commencement of the prescriptive period was postponed where the creditor was not aware, and could not with reasonable diligence have been aware, (1) that loss, injury or damage had occurred, and (2) that it had been caused by the breach of a duty owed to him.
There was no doubt that Morrison knew damage had occurred on the date of the explosion.
In order to establish that they also knew, or could with reasonable diligence have known, at that date or soon after that the explosion had been caused by a breach of duty, ICL relied on the principle expressed in the maxim res ipsa loquitur (the thing speaks for itself) [3].
ICL was successful before the Lord Ordinary, but the Inner House overturned his decision, holding that res ipsa loquitur did not apply.
In its appeal to this Court, ICL has been permitted to raise the more fundamental issue of the interpretation of section 11(3) [5].
Lord Neuberger, Lord Sumption and Lord Reed agree that the appeal should be allowed.
Lord Hodge and Lord Toulson dissent and would not have allowed the appeal.
Lord Reed, with whom Lord Neuberger and Lord Sumption agree, considers that the words caused as aforesaid in section 11(3) are adjectival: they describe the loss with which the provision is concerned, but they do not have the effect of postponing the running of time until the creditor was aware that the loss had been caused by a breach of duty.
Properly construed, section 11(3) is concerned with latent damage [15 17].
This is consistent with a natural reading of the provision in its context [19; 47].
If the draftsman had intended to require awareness that the loss had been caused by an actionable breach of duty, before the prescriptive period began to run, then he would have made this clearer [19], as he had done elsewhere in the Act in relation to the limitation period [20 22].
Lord Reed identifies a number of problems which would arise if the creditor had to be aware that there had been a breach of a legal duty owed to him.
Prescription would run more or less quickly according to creditors awareness of the law [27].
In what sense could a creditor be aware of a breach of duty in advance of a judicial determination? [28] Describing awareness by reference to the creditors ability to advance a stateable prima facie case, as some recent Scottish decisions had done, would undermine legal certainty and go well beyond the language of the statute [29].
Lord Neuberger concurs, considering that the legislature could reasonably have assumed that in almost every case, five years from the date of loss, would be plenty of time for the creditor to discover all he needs to know to bring proceedings [55].
While careful consideration has to be given to the overturning of an approach followed for many years, Lord Reed points out counsels agreement that parties were unlikely to have been advised to delay initiating proceedings in reliance on the existing authorities.
The approach previously followed rests on slender foundations for a matter of such importance, and has not gone unquestioned.
The Justices agree that is not settled law [37].
Lord Hodge, with whom Lord Toulson agrees, also disagrees with the interpretation previously followed by the Scottish courts, but considers that section 11(3) should be construed as meaning that for time to begin to run there needs to be actual or constructive awareness of (i) more than minimal loss and (ii) its factual cause through an act or omission, but not (iii) that it is due to a breach of duty [87; 95].
He notes the Scottish Law Commissions 1989 recommendation (not implemented) that the legislation should be amended to require knowledge (a) that the loss, injury and damage was attributable in whole or in part to an act or omission and (b) of the identity of the defender [68].
All members of the Court agree that res ipsa loquitur has no application on a proper interpretation of section 11(3), and the majority agrees with Lord Hodges observations on that subject [37; 97 99].
In the light of the decision in this case, Lord Hodge urges that fresh consideration be given to the 1989 recommendations of the Scottish Law Commission.
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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.
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The Appellant Mark Roberts and his brother John Roberts were beneficiaries of a will made by their grandmother, Mrs. Alice Roberts.
A clause in the will provided that if John Roberts paid all the inheritance tax due on Mrs. Roberts death then a property known as the Lower Hellingtown Farm would pass to him, and another property known as the Coppice would pass to the Appellant.
The considerable value of the farm meant that it would be to the advantage of John Roberts if he complied with the clause.
Upon the death of Mrs Roberts on 27 July 1995, John Roberts was granted the right to administer the estate in the place of Mrs Roberts executors, who had decided not to take up office.
In order to obtain his position as administrator, John Roberts paid some of the inheritance tax due on the estate, but not all of it.
In July 1996, John Roberts, as administrator, transferred ownership of Lower Hellingtown Farm to himself as beneficiary and in 1997 the property was sold.
The majority of the proceeds of sale were paid to John Roberts, the remainder being used to discharge some of the estates liabilities.
Two firms of solicitors advised John Roberts.
The First Respondent, Gill & Co, advised John Roberts on the transfer of the property and the Second Respondent, Whitehead Vizard, advised him on the sale of the farm.
On 30 October 2000, John Roberts was replaced as administrator by the Appellants solicitor.
In a claim brought on 27 November 2002, the Appellant brought proceedings against the First and Second Respondents for negligence, alleging broadly that they had assisted, in breach of the provisions in the will, in the transfer and sale of the property without John Roberts having paid all the inheritance tax due.
The claim was, however, framed in such a way as to allege that the duty of care owed by the firms of solicitors was owed to the Appellant personally.
The correct legal position (which was not disputed by any of the parties on appeal), was that a firm of solicitors advising a person administering an estate does not owe a duty of care to the beneficiaries of that estate personally; rather the duty of care is owed to the estate of the dead person.
Normally the proper person to bring any claim for negligence, therefore, would be the person administering the estate.
A beneficiary of a will may bring a claim on behalf of the estate, but only where special circumstances exist.
On 25 August 2006, the Appellant applied to amend his claim so as to continue it both in his own personal capacity and on behalf of the estate.
The First and Second Respondents resisted the
application on the grounds (a) that the amendment was barred as being out of time under section 35 of the Limitation Act 1980 (the Act) and rule 19.5 of the Civil Procedure Rules (the CPR), and (b) that there were no special circumstances which entitled the Appellant, as a beneficiary, to continue the claim on behalf of the estate.
The High Court refused the application, holding that there were no special circumstances.
The Court of Appeal held by a majority that there were special circumstances but that the amendment was time barred.
The Appellant appealed.
The Supreme Court unanimously dismissed the appeal.
Lord Collins gave the leading judgment, dismissing the appeal on the basis that the amendment was time barred.
Lords Rodger and Walker agreed with the entirety of Lord Collins judgment.
Lords Hope and Clarke declined to decide the case on the grounds that the amendment was time barred but nonetheless ruled in favour of the First and Second Respondents on the ground that there were no special circumstances which entitled the Appellant to carry on the claim on behalf of the estate.
The main question in relation to ground (a) was whether, in order to be able to carry on his claim, the Appellant would need not only to alter the claim so that he was suing on behalf of the estate, but also to add the administrator as a defendant.
If he did have to add the administrator, a further question arose: did he have to add him at the time at which he altered his claim, or could he do so later? [para 44].
Rule 19.5 of the CPR stated that a new party could be added after the limitation period only where to do so was necessary for the determination of the original litigation.
The addition of the administrator was clearly not necessary for determining the Appellants personal claim: there was no possible basis for any suggestion that the administrator would be a proper or necessary party [para 43].
If the Appellant was able to make the application to change the capacity in which he sued first, that would then enable him to subsequently add the administrator as a party, as it would then be necessary for the determination of the proceedings brought on behalf of the estate for the administrator to be joined [para 44].
The Appellant therefore needed to be able to demonstrate either that the administrator did not need to be added at all, or that he could be added after the Appellant had successfully altered the claim.
Neither was possible.
The administrator needed to be added at the outset of the proceedings [paras 63, 71] and it would be contrary to principle for the court to grant permission to alter the claim first before considering the addition of the administrator [para 71].
The appeal would accordingly be dismissed on ground (a) [paras 77, 86, 95].
Although ground (b) did not directly arise for decision given the conclusion on ground (a), there were no special circumstances that would entitle the Appellant to carry on a claim on behalf of the estate.
The judge had a wide latitude in evaluating whether there were special circumstances, had taken all the relevant circumstances into account, and had conducted the enquiry in a way with which an appellate court should not have interfered [para 76].
Lords Hope and Clarke, in the minority on ground (a), disagreed that the rule that the administrator must be joined was quite as absolute as Lord Collins suggested [paras 79, 115].
The rule could be departed from if it was necessary to avoid injustice [paras 84, 116].
While on the facts of the case it was difficult to justify a departure from the rule [para 84], Lords Hope and Clarke both preferred to decide the case on the basis that there were no special circumstances [paras 78, 114].
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The appellant, Raphael Geys, is a Belgian national.
He is in dispute with his former employer, Socit Gnrale, London Branch (the Bank), about the amount due to him following his summary dismissal from his employment.
His case is that he was dismissed on 6 January 2008, and that he is entitled to a sum contractually due to him in the form of a termination payment amounting to more than 12.5m and to damages for breach of contract.
The Banks case is that the appellant is entitled to a termination payment of no more than 7m, as he was dismissed on 29 November 2007 or at the latest 18 December 2007.
It also maintains that, having regard among other things to the terms of his employment contract, it is not open to the appellant to claim damages.
The case went to trial before Mr George Leggatt QC sitting as a Deputy High Court Judge.
On 25 March 2010 he found that the appellant was dismissed on 6 January 2008.
He gave judgment for the appellant in a sum to be assessed, with a payment on account by 1 April 2010 of 11m, less tax and national insurance contributions, together with interest on all sums due at 1% above base rate from 3 February 2008: [2010] EWHC 648 (Ch), [2010] IRLR 950.
The Bank appealed against that decision on various grounds.
The first two related to the date of the appellants dismissal.
For reasons that will be explained later, the choice of date has significant consequences for the amount that is contractually due to the appellant as a termination payment.
The first ground raised the question as to whether, in the context of employment law, a repudiatory dismissal of an employee will by itself terminate the contract even if its repudiation is not accepted.
The second raised the question as to when, having regard to the relevant provision in the contract, the right to terminate was validly exercised.
The effect of its submissions on these issues, if sound, is that the appellants employment was terminated at the latest on 18 December 2007.
The third ground related to the construction of a paragraph in the appellants employment contract which obliged the Bank to ensure that any bonus award made to the appellant was made in as tax efficient a manner as was possible.
The fourth and fifth grounds related to the construction of provisions in the employment contract for the entering into by the appellant of a termination agreement in the event of his employment with the Bank being terminated.
The Banks case is that the contract provided for a clean break when the employment was terminated and excluded the possibility of claiming damages.
The Court of Appeal (Arden, Rimer and Pitchford LJJ) dismissed the Banks appeal on the first and fifth grounds, but allowed its appeal on the second, third and fourth grounds and found that the appellant was dismissed on 18 December 2007.
It dismissed a cross appeal by the appellant as to the date of his dismissal: [2011] EWCA Civ 307, [2011] IRLR 482.
The appellant now appeals to this court on the issues raised by the second and third grounds.
The Bank cross appeals against the dismissal of its appeal on the first ground.
The facts
On 9 February 2005 the appellant commenced employment with the Bank as the managing director of its European Fixed Income Sales, Financial Institutions Division.
He was provided with a written contract of employment.
It was offered to him by a letter dated 28 January 2005 with which there were enclosed, among other things, two copies of a contract of employment (the Contract) and a copy of the Staff Handbook of the SGUK Group (the Handbook).
He indicated his acceptance of the offer in the way that the letter required of him and, having done so, commenced his employment.
The Contract, in which the Bank was referred to as the Company, contained the provisions that a contract of this kind would be expected to set out as to commencement, job title, remuneration, working hours and duties, overtime, holiday, notice, restrictions upon and after termination of employment, disciplinary rules, choice of law and confidentiality.
There was also, in paragraph 5, an elaborate section which extended to more than eleven pages dealing with the employees entitlement to participate in bonuses under the Banks Fixed Income Sales Scheme (FISS) referred to in paragraph 5.2.
It included provision for the making of a termination payment in the event of the termination of the employment, in consideration for which the employee was to enter into a termination agreement in the terms set out in a schedule.
Various events that might give rise to a termination were provided for in paragraph 5.
Paragraph 13, under the heading of Notice, was in these terms: Your employment can be terminated on the expiry of 3 months written notice of termination given by you to the Company or by the Company to you.
In paragraph 5.14 it was provided that, if the Company were to terminate his employment in circumstances other than those contained in sub paragraph 5.6(b)(i) (iv) (which did not apply in this case): the Company will, within 28 days after such termination of your employment, make a payment to you (the Termination Payment) as specified in paragraph 5.15.
By paragraph 5.15 it was provided that the Termination Payment was to be equal to the aggregate of (a) the value of the proportion of any award by way of bonus that had been made to the employee but retained by the Company and not yet released, and (b) a Compensation Payment calculated by reference to the date of the termination of his employment.
The relevant sub paragraphs are as follows: (iii) if your employment terminates after 31 December 2006 but before 1 January 2008, the Compensation Payment shall be 0.65 x (S divided by 2) where S is the aggregate of any award or awards made to you under the FISS and the Scheme (whether or not subject to the Deferral under paragraph 5.7) in respect of the calendar years ending 31 December 2005 and 31 December 2006; (iv) if your employment terminates after 31 December 2007 but before 1 January 2009, the Compensation Payment shall be 0.65 x (T divided by 2) where T is the aggregate of any award or awards made to you under the FISS and the Scheme (whether or not subject to the Deferral under paragraph 5.7) in respect of the calendar years ending 31 December 2006 [and] 31 December 2007.
The difference between the payments that would be due to the appellant under sub paragraphs (iii) and (iv) respectively, depending on the date of his dismissal, has not been precisely identified in these proceedings.
But it is common ground that it is substantial.
So the answer to the question as to the date when the appellants employment was terminated will have a significant bearing on the amount to which he is entitled by way of a termination payment under the contract.
Section 1 of the Handbook, in which the Bank was referred to as SG, contained a number of additional terms and conditions of employment.
Among them was the following paragraph:
Notice Periods 8.1 Your Right to Notice Your entitlement to written notice of termination from SG is the longer of: The period set out in your Contract; or 1 week for each complete year of service up to a maximum of 12 weeks notice after 12 years continuous service.
No notice or payment in lieu of notice will be given where SG is entitled to dismiss you immediately without notice or payment in lieu of notice Notice given by SG in writing shall be deemed to have been given by SG upon either being handed to you or sent to your home address (as last notified by you to HR).
If such notice is sent by post, it shall be deemed to have been received by you on the second day after posting. 8.2 Giving Notice You are required to give SG the period of written notice set out in your Contract.
Without prejudice to any other contractual rights and duties relating to your employment, if you fail to give the correct period of notice, SG may require you to give the correct period of notice as required by your Contract.
If SG does, at its absolute discretion, accept less than full notice from you: You shall not be entitled to payment in respect of salary or to receive contractual benefits for the period of notice not worked; You may only be entitled to accrued but untaken holiday pay in respect of that holiday year at SGs discretion; and You will remain subject all contractual and legal restrictions and obligations. 8.3 Termination by SG and Payment in Lieu of Notice SG reserves the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period) based upon the value of your: Basic annual salary; and Flexible benefits allowance; for your notice period (or, if notice has already been given, the balance of your notice period).
Paragraph 17 of the Contract, under the heading General Information, 8. was in these terms: This contract is in conjunction with the offer letter, the Staff Handbook of the SGUK Group (as amended from time to time) and the SGUK Compliance Manual which, together with this letter, form the written particulars of employment as required by law.
However, in the event of any conflict of any terms set out in this Contract and those contained in the Handbook the terms of this contract will prevail.
On 29 November 2007 the appellant was called to a meeting at which he was handed a letter which had been written on the Banks behalf and was in these terms: Termination of Employment I am writing to notify you that Socit Gnrale, London (SG) has decided to terminate your employment with immediate effect.
In accordance with the terms of your employment contract with SG dated 28 January 2005, SG will arrange for the appropriate termination documentation to be provided to you and your legal adviser.
The appellant was escorted from the building and did not return to it.
But he did not let the matter rest there.
He consulted his solicitors after his summary dismissal.
They wrote to the Bank on 7 December 2007 asking for further information about the sums that it was offering to pay following the termination of his employment, but also saying that the appellant reserved all his rights.
On 10 December 2007 the Banks legal department sent the appellant a severance agreement which was said to have been prepared in line with the relevant provisions of his employment contract, together with another letter of the same date which contained a list of the payments that it was proposed should be made to him in consideration of his entering into that agreement.
He was asked to agree the terms that were set out in that letter by returning a signed copy, but he declined to do so.
On 18 December 2007 the Bank paid 31,899.29 into the appellants bank account.
This was the equivalent of his basic salary and flexible benefits allowance for three months.
It is agreed that this was a payment that satisfied the monetary requirements of paragraph 8.3 of the Handbook as it was the amount which the appellant would have received had he been given three months notice.
The appellant became aware of this payment at some point before 2 January 2008 which has not been precisely identified but which the judge found was probably before the end of December 2007.
The Bank then sent the appellant a payslip, accompanied by a P45, which set out the various elements of the payment of 18 December 2007 including in lieu pay amounting to 37,500 before deductions.
The appellant first saw it on 7 or 8 January 2008 when he returned to London from Belgium where he had spent most of his Christmas and New Year holiday.
He said in his evidence that, while he could not be sure what the payment was for, the best guess he could have was that it was intended to be a payment in lieu of notice.
Meantime, on 21 December 2007 the appellants solicitors wrote in reply to the Banks letter of 10 December 2007 asking for further information, in particular about how the proposed payments had been calculated.
They again stated that the appellants rights in relation to his employment contract remained reserved.
On 2 January 2008 they wrote to the Bank saying that the appellant had decided to affirm his contract of employment.
Referring to the payment of 18 December 2007, they said that they reserved his position in relation to those monies until they understood what they constituted.
On 4 January 2008 the Banks Human Resources Director wrote to the appellant with regard to his employment with the Bank.
The first four paragraphs of that letter were as follows: I write further to your meeting with Fred Desclaux and Nigel Holmes on 29 November 2007 to confirm the details of the termination of your employment.
Please accept my apologies for the delay in sending these details to you. 1.
Notice Entitlement Under your terms and conditions of employment, you are entitled to 3 months notice of termination of your employment.
Socit Gnrale gave you notice to terminate your employment with immediate effect on 29 November 2007 (your Termination Date) and will pay you in lieu of your notice period.
This payment will be calculated in accordance with section 1/8.3 of the Socit Gnrale CIB Staff Handbook. 2.
Final Salary Payment Your notice payment was credited to your bank account on 18 December and your final salary slip and P45 was sent to your home address.
This amount was paid to you with deduction of income tax or employee NICs. 3.
Pension Benefits Your active membership of the SG International Pension Plan (IPP) will cease on 29 November 2007.
He was also told that the outstanding balance in respect of his annual travel insurance policy would be deducted from his final salary payment and that the policy would continue until 31 March 2008.
Having regard to paragraph 8.1 of the Handbook the appellant must be deemed to have received the Banks letter of 4 January 2008 on 6 January 2008.
The judge held that this was the first occasion when the Bank notified the appellant that it had exercised its right to terminate the contract under paragraph 8.3.
The Court of Appeal held that the contract was terminated on 18 December 2007 when the amount of the payment in lieu of notice was paid into the appellants bank account.
The Banks primary argument was that the contract of employment was terminated on 29 November 2007 when the appellant was summarily dismissed.
This was rejected by the Court of Appeal, which held that it was bound by the decisions of the Court of Appeal in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448 and Boyo v Lambeth London Borough Council [1994] ICR 727, in which the principle that a repudiatory breach must be accepted was applied to contracts of personal service.
Rimer LJ said in para 18 that permission to appeal had been given on this issue solely to keep open the possibility of an appeal to the Supreme Court so that this area of the law could be reconsidered.
The issues
Four issues are before the court in this appeal.
The first two, which are of general public importance, bear directly on the question as to the date when the appellants employment was terminated.
The third and fourth are directed solely to the proper construction of provisions in the contract.
They can be summarised as follows: (1) Does a repudiation of a contract of employment by the employer which takes the form of an express and immediate dismissal automatically terminate the contract or as was held in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448 and Boyo v Lambeth London Borough Council [1994] ICR 727 does the normal contractual rule that the repudiation must be accepted by the other party apply equally to that case? [the repudiation issue] (2) When, in the events that happened and having regard to the terms of paragraph 8.3 of the Handbook, was the contract of employment terminated? [the termination issue] (3) Is there any conflict, within the meaning of paragraph 17 of the Contract, between the provision for termination on three months notice in paragraph 13 of the Contract and the provision in paragraph 8.3 of the Handbook which gives the Bank the right to terminate the employment at any time with immediate effect by making a payment in lieu of notice? [the conflict issue] (4) On a proper construction of paragraph 5.16 of and Schedules 1 and 2 to the Contract, is the employee entitled to maintain a claim for damages for wrongful dismissal and an alleged breach of the tax efficiency provision in paragraph 5.5 or is he to be taken to have waived those claims? [the paragraph 5.16 issue]
The repudiation issue
For the reasons given by Lord Wilson, I too would hold that the elective theory is to be preferred that a partys repudiation terminates a contract of employment only if and when the other party elects to accept the repudiation.
I am persuaded by his careful analysis of the authorities that provide support for his conclusion that the view that repudiation of a contract of employment terminates the contract without the necessity of acceptance by the other party was not as authoritative or as consistent as Lord Sumption indicates in para 128 below.
I also think that there are cases, of which this case is a good example, where it really does matter which of the two theories is adopted.
The automatic theory can operate to the disadvantage of the injured party in a way that enables the wrongdoer to benefit from his own wrong.
The law should seek to avoid such an obvious injustice.
Where there is a real choice as to the direction of travel, the common law should favour the direction that is least likely to do harm to the injured party.
I agree that we should be very cautious before reaching a conclusion whose result is that a breach is rewarded rather than its adverse consequences for the innocent party negatived: see para 66.
Was Sir John Donaldson clearly right when he declared in Sanders v Ernest A Neale Ltd [1974] ICR 565 at p 571 that an unaccepted repudiation brought a contract of employment to an end? Lord Sumption says that this was an accurate summary of the position as it then stood: paras 128 and 139, below.
But I find it hard to disagree with Buckley LJs observation in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448, 466 that Sanders v Ernest A Neale Ltd was the first case in which the automatic theory was part of the basis for the decision in an employment case.
In Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 Sir Robert Megarry V C in his review of the authorities also took that case as his starting point.
He described it as the high water mark of the doctrine of automatic determination, but said that the authorities on the point were in a state that was far from satisfactory.
Shaw LJ, in his dissenting judgment in Gunton, referred to the field that Buckley LJ had covered in his review of the authorities as dubious.
He said that, as a result of the ebb and flow of the tide of judicial opinion, the court was left in the slack water of first principles.
Only a few months later, in London Transport Executive v Clarke [1981] ICR 355, the majority view in the Court of Appeal was in favour of the position that Sir Robert Megarry V C adopted in Marshall.
The fact has to be faced that there is still a degree of oscillation between the two theories: David Cabrelli and Rebecca Zahn, The Elective and Automatic Theories of Termination at Common Law: Resolving the Conundrum? (2012) 41 Industrial Law Journal 346, 349.
In any case, the question which of the two theories should be adopted is an open question at our level.
Which result is, in principle, the most desirable? One must be careful not to assume that, just because in practice the employee may have little choice but to accept the repudiation, he has in law no alternative but to do so.
I would endorse Ralph Gibson LJs criticism in Boyo v Lambeth London Borough Council [1994] ICR 727, 743 of Buckley LJs observation in the Gunton case that in a case of wrongful dismissal the court should easily infer that the innocent party has accepted the guilty partys repudiation of the contract.
If the law requires acceptance of the repudiation, the requirement is for a real acceptance a conscious intention to bring the contract to an end, or the doing of something that is inconsistent with its continuation.
So the question is whether there are sound reasons of principle for holding that the general rule of law that requires acceptance of a repudiation does not apply.
The fact that an application of the automatic theory may produce an injustice is, for me, the crucial point.
The question that Sir John Donaldson asked himself in Sanders v Ernest A Neale Ltd [1974] ICR 565, 571 is at the heart of the issue: why should the employee not sue for wages if it is the act of the employer which has prevented his performing the condition precedent of rendering his services? There may be grounds for thinking that the court is less reluctant than it once was to give injunctive relief in such cases, but I would not rest my decision on that point.
It is the objection that the party who is in the wrong should not be permitted to benefit from his own wrong that is determinative.
The timing of the repudiation may be crucial, and if the automatic theory were to prevail an employer may well be tempted to play this to his advantage by getting in first before a rise in pay or pension entitlement takes place or, as in this case, a rise in the entitlement to bonuses.
I note too that, as Professor Douglas Brodie has pointed out, it is not always true that work is the counterpart of the entitlement to wages.
In some contracts wages are given to employees for holding themselves available for work: The Contract of Employment (2008), para 18 09.
The essential difference between the two theories may be said to be that under the automatic theory the decision as to whether the contract is at an end is made beyond the control of the innocent party in all circumstances, whereas under the elective theory it is for the innocent party to judge whether it is in his interests to keep the contract alive.
Manifest justice favours preferring the interests of the innocent party to those of the wrongdoer.
If there exists a good reason and an opportunity for the innocent party to affirm the contract, he should be allowed to do so: London Transport Executive v Clarke [1981] ICR 355, 367, per Templeman LJ.
I need not elaborate on these and the other points that favour the elective theory, as they have been dealt with so thoroughly by Lord Wilson.
I respectfully agree with the conclusion that he reaches in para 97.
The termination issue
For the reasons given by Lady Hale, I too would hold that it was not until 6 January 2008, when the appellant must be deemed to have received the Banks letter of 4 January 2008, that the contractual right to terminate under paragraph 8.3 of the Handbook by the PILON (payment in lieu of notice) method was validly exercised and his employment with the Bank was terminated.
The conflict issue
This issue directs attention to the provision in paragraph 13 of the Contract which provided that the employment can be terminated on the expiry of three months written notice of termination given by either side, and to paragraph 8.3 of the Handbook (the PILON provision) under which the Bank reserved the right to terminate the employment at any time with immediate effect by making a payment to the employee in lieu of notice.
The judge held that there was no conflict between these provisions when the contract was construed as a whole.
Paragraph 13 of the Contract could not be read as giving the appellant an unqualified right to three months notice of termination because other provisions in the contract such as paragraph 5.8 contained express rights to terminate it with immediate effect.
So paragraph 8.3 of the Handbook qualified paragraph 13 of the Contract but was not in conflict with it.
Rimer LJ said in para 29 that in his judgment the judges answer to this question was obviously correct.
Mr Cavender QC for the appellant said that his primary case was that there was no conflict between these two provisions.
He described his argument that there was a conflict as a fall back position.
He said that there did not have to be a complete conflict to bring paragraph 17 into effect.
Furthermore the way the Bank dealt with this case suggested that it was not its intention initially to rely on paragraph 8.3 of the Handbook.
It only did so retrospectively.
The termination of the appellants employment should be seen as having been on the basis that he was being given three months written notice of termination as provided for by paragraph 13.
It is not obvious that these two provisions are inconsistent with each other.
Paragraph 13 of the Contract set out one way of terminating the contract, but it did not say that it is the only way.
It used the word can, which suggests that it is a course of action that the Bank might take if it wants to.
But the Bank reserved the right, as paragraph 8.3 of the Handbook put it, to use the PILON method.
The provision in the Handbook can be read as qualifying the provision which is set out in the Contract.
In any event the courts duty, when confronted with two provisions in a contract that seem to be inconsistent with each other, is plain.
It must do its best to reconcile them if that can conscientiously and fairly be done: Pagnan SpA v Tradax Ocean Transportation SA [1986] 2 Lloyds Rep 646, 653 per Steyn J.
That approach, which was endorsed by Bingham LJ in the Court of Appeal [1987] 2 Lloyds Rep 342, 350, does not seem to me to give rise in this case to any difficulty.
I would therefore hold that this case must be approached on the basis that it was open to the Bank to use the PILON method which it had reserved to itself by paragraph 8.3 of the Handbook, and that this was what it was seeking to do when the appellant was called to the meeting on 29 November 2007 at which he was handed a letter which had been written on the Banks behalf.
The paragraph 5.16 issue
The question to which this issue is directed is whether it is open to the appellant to maintain a claim or claims of damages against the Bank in view of the provisions of paragraph 5.16 of and Schedules 1 and 2 to the Contract by which, in consideration of the termination payment provided for by paragraph 5.15, the employee was to waive all contractual and statutory claims against the Bank.
The relevant provisions in paragraph 5.16 are as follows: In consideration for the Company making the Termination Payment you will enter into a termination agreement with the Company (in the form of the draft termination agreement in Schedule 1 of this letter but amended to take account of any payments due to you under this letter and to take account of relevant legislative developments) under which you will waive all contractual and statutory claims against the Company and any Group Company (save for any pension rights accrued to the date of termination of your employment, any personal injury claims that you may have against the Company or any Group Company and save for any accrued rights you may have under the Deferral scheme and any share incentive scheme which will be dealt with subject to and in accordance with the rules of any such scheme) arising out of your employment with the Company and its termination If the Company and you wish to amend the form of draft termination agreement further than as set out above, such amendments must be agreed within 28 days after the date on which your employment terminates , failing which you and the Company will enter into the termination agreement in the form of the draft termination agreement in Schedule 1 of this letter only amended to take account of any payments due to you under this agreement and to take account of relevant legislative developments. [emphasis added]
Schedule 1 is a draft letter addressed to the appellant which sets out the terms of the termination agreement referred to in paragraph 5.16.
Paragraph 1 provides that he will receive his normal salary and benefits up to the termination date.
Paragraph 2 provides that, subject to the other provisions of the letter, SG will make various payments to him.
His entitlement to pay in lieu of notice, if appropriate, is preserved by paragraph 2(i).
Paragraph 2(ii) is in these terms: [SG shall] pay you an amount of (less such deductions as SG is required by law to make) as [compensation for the termination of your employment REWORD AS APPROPRIATE TO INCLUDE SUCH OF THE PAYMENTS REFERRED TO IN SCHEDULE 2 OF THE LETTER AGREEMENT BETWEEN YOU AND THE COMPANY DATED [INSERT DATE] JANUARY 2005 TO WHICH YOU ARE ENTITLED IN ACCORDANCE WITH THE TERMS OF YOUR EMPLOYMENT DEPENDING ON THE CIRCUMSTANCES IN WHICH YOUR EMPLOYMENT TERMINATES] (this includes any entitlement you may have to a statutory redundancy payment) Schedule 2 sets out the payments that the Bank would make to him in the event of his employment being terminated by the Company in four alternative circumstances.
In paragraph 3, which applies to the circumstances of this case, five sums which the appellant would have earned or to which he would have been entitled under the Contract on its termination are listed, including a compensation payment calculated in accordance with paragraph 5.15(b) of the Contract and a replacement bonus calculated in accordance with paragraph 5.24.
The total amount, when computed, is to be inserted in paragraph 2(ii) of Schedule 1.
Paragraph 7(a) of Schedule 1 sets out a number of matters that the appellant is to be taken to have represented and warranted, including that he may have statutory claims for unfair dismissal and a redundancy payment, referred to as the Alleged Claims.
Paragraphs 7(b) and (c) state: (b) You hereby unconditionally and irrevocably waive the Alleged Claims, and neither you nor anyone else on your behalf will repeat, refer to or pursue the Alleged Claims. (c) You accept the payment to be given to you pursuant to this letter in full and final settlement of: (i) the Alleged Claims; and (ii) all other claims and rights of action howsoever arising, which you (or anyone on your behalf) have or may have against SG, and/or any Group Company arising from or connected with your employment by SG and/or any Group Company or its termination, with the exception that this paragraph 7(c) will not apply to any pension rights or pension benefits which have accrued to you up to the Termination Date or to any personal injury claim you may have.
You represent and warrant that you are not aware of any personal injury claim subsisting at the date of this letter not [sic] aware of any basis on which you could bring any personal injury claim.
Paragraph 7(e) sets out, as a fundamental term of the letter, that the payments to be given to him will at all times be conditional on his refraining from pursuing claims against SG or a Group Company and that, if he subsequently pursues such claims in breach of the letter, the payments made to him under the letter will be repayable to SG forthwith on demand.
This is to be without prejudice to SGs right to seek damages from him for the breach referred to and any other breach of the letter.
Mr Jeans QC for the Bank submitted that the purpose of these provisions was to achieve a clean break in the event of termination.
It provided for a full and final settlement, the scope of which was defined by the draft agreement set out in Schedule 1.
The appellant had the option not to comply with paragraph 5.16, if he thought that he would be better off by not doing so.
In that event his claims against the Bank would not have been waived.
The words under this letter in paragraph 5.16 (which I emphasised when setting out that paragraph in para 27, above) were to be read as referring to the Schedule 1 letter.
That was the sense in which the words pursuant to this letter in paragraph 7(c) of Schedule 1 were to be read, so the words in paragraph 5.16 of the Contract should be read in the same way.
The words in capital letters in paragraph 2(ii), read together with paragraph 3 of Schedule 2, set out all the sums to which the appellant was entitled by way of an amendment to the letter.
All other claims, save for those specifically referred to in paragraph 5.16, were waived.
The judge disagreed with the Banks interpretation of these provisions.
He said that he saw nothing self evidently logical about an arrangement whereby the appellant could not be entitled both to accept the termination payments and to sue the Bank for damages for breach of contract: [2010] IRLR 950, para 98.
It was not obvious why the appellant should be required to abandon a claim for breach of the tax efficiency obligation in paragraph 5.5 of the Contract in order to be entitled to a termination payment which he would equally have been entitled to receive if the Bank had performed its contractual obligation.
To require him to give up the claim seemed to the judge to produce a windfall for the Bank, and the implications of its argument were even more unmeritorious in relation to a claim for damages for wrongful dismissal.
The consequence of its argument was that the appellant could not pursue his claim for the losses he has suffered without losing his right to the termination payment to which he would equally have been entitled if the contract had been terminated lawfully.
That would allow the Bank to profit from its own wrong a result that seemed to him wholly unreasonable.
The Court of Appeal said that the answer to this issue depended on the correct interpretation of the Contract and its Schedules 1 and 2, and in particular on the relationship between paragraph 5.16 and paragraphs 7(c) and (e) of Schedule 1: [2011] IRLR 482, para 74.
On its approach, the words any payments due under this letter in paragraph 5.16 referred to the payments referred to in Schedules 1 and 2.
On this reading, it was no part of the scheme of paragraph 5.16 that the termination agreement should include damages as part of the severance package.
Paragraph 5.16 was to be interpreted as imposing a mutual obligation on the parties to enter into a termination agreement in the form of the Schedule 1 draft as appropriately amended by reference to Schedule 2.
Once any disputes as to the amounts due under it are resolved, the parties are under an obligation to sign the termination agreement.
When it is executed the paragraph 7(e) guillotine will fall, with the effect that the appellant will have to cease the pursuit of any pending claims for breach of contract against the Bank whether for wrongful dismissal or otherwise, or else forfeit the termination payments and face a claim for their repayment.
The appellant will issue and pursue any new claims at his peril: para 89.
I agree with the Court of Appeal that paragraph 5.16 is to be interpreted as imposing a mutual obligation on the parties to enter into a termination agreement in the form of the draft set out in Schedule 1.
As I read that paragraph, the appellant does not have an option not to comply with it as I understood Mr Jeans to have suggested.
Paragraph 5.14 provides that, within 28 days after termination of the appellants employment, the Company will make a payment to you (the Termination Payment) as specified in paragraph 5.15.
The opening words of paragraph 5.16 tell the appellant what he must do in return: In consideration for the Company making the termination payment . you will enter into a termination agreement with the Company (in the form of the draft termination agreement in Schedule 1 of this letter but amended to take account of any payments due to you under this letter and to take account of relevant legislative developments).
It seems to me to be plain that these are mutual obligations binding on both parties to the agreement.
The Bank is under an obligation to make the termination payment referred to in paragraphs 5.14 and 5.15.
The appellant, for his part, is under an obligation to enter into the termination agreement.
There is no provision on which he can rely which would entitle him to waive that obligation.
If he fails to enter into the termination agreement, he will be in breach of contract and liable to the Bank in damages.
But I cannot agree with the Court of Appeals construction of paragraph 5.16.
The crucial question is whether the words under this letter refer to the draft letter in Schedule 1 or to the entire agreement to which the appellant was invited by the letter of 28 January 2005 to indicate his acceptance.
Mr Cavender said that those words should be read in the broader sense, with the result that the draft termination agreement in Schedule 1 was to be amended to take account of all payments due under and in consequence of the agreement, including claims for damages for wrongful dismissal and for a breach of paragraph 5.5.
Mr Jeans, on the other hand, supported the meaning attached to those words by the Court of Appeal.
He said that the words under this letter were to be read as referring to the draft letter in Schedule 1 without amendment, which made it plain that such claims were to be taken as waived.
Two phrases that appear in paragraph 5.16 tend to support Mr Cavenders argument.
The first is to be found in the words which immediately precede the words under this letter which we have to construe: the draft termination agreement in Schedule 1 of this letter.
In that phrase the words of this letter must mean of the letter of 28 January 2005 and the contract enclosed with it, to which Schedule 1 is attached.
It would be odd if the same words which follow so closely afterwards were to mean something different.
The use of the words the letter in the second sentence of paragraph 17, which in that context must mean the letter of 28 January 2005, supports this interpretation.
Then there is the phrase amended to take account of any payments due to you under this agreement which appears at the end of paragraph 5.16.
The phrase in which the words I have emphasised appear contains a restatement of the amendment provision at the start of the paragraph where the word letter is used.
The use of the words under this agreement at the end of the paragraph suggests that these words mean the same thing as the words under this letter were meant to convey.
This does not, to say the least, fit easily with the submission that where the word letter is used it means the draft letter in Schedule 1.
For these reasons I am inclined to read the words this letter in the sense contended for by Mr Cavender.
A desire for finality appears to have been the reason for the provisions in paragraph 5.16 on either of the two competing constructions.
The termination letter would serve equally well as a definitive record of all the outstanding financial issues on the construction which I favour, although some of the more difficult issues will no doubt take longer to finalise.
I am reinforced in taking this view by two other points which, taken together, seem to me to put the matter beyond doubt.
The first is the unreasonable nature of the arrangement, if the Bank is right, for the reasons that the judge identified which I need not repeat but would respectfully endorse: see para 31, above.
The second, which is closely linked to the first, raises an issue of principle.
The effect of paragraph 5.16, on the Banks interpretation, is to exclude any liability it may have to the appellant in damages for wrongful dismissal and for breach of the tax efficiency obligation in paragraph 5.5 as a consequence of his entering into the termination agreement, which he is bound to do.
The approach that ought to be taken to the construction of clauses of this kind is well established.
In Canada Steamship Lines Ltd v The King [1952] AC 192, 208 Lord Morton of Henryton quoted with approval the principles applicable to clauses which purport to exempt one party to a contract from liability for negligence which were stated by Lord Greene MR in Alderslade v Hendon Laundry Ltd [1945] KB 189, 192.
In summary, these principles are (1) that if the clause expressly exempts the party in whose favour it is made (the proferens) from liability for negligence, effect must be given to it; (2) if there is no express reference to negligence, the court must consider whether the words used are wide enough to cover it; and (3) if a doubt arises on this point it must be resolved in favour of the other party and against the proferens.
As Lord Dunedin said in W & S Pollock & Co v Macrae 1922 SC (HL) 192, 199, in order to be effective such clauses must be most clearly and unambiguously expressed.
In Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd [1983] 1 WLR 964, 969H Lord Fraser of Tullybelton said that it was an ordinary principle that such conditions must be construed strictly against the proferens.
The principle is commonly applied in cases where the contract which the other party has entered into with the proferens is in a standard form or in terms set out by the proferens which were not negotiable.
The more improbable it is that the other party would agree to excluding the liability of the proferens, the more exacting the application of the principle will be.
The position in this case was that the terms of the employment contract were the product of negotiation between the parties.
Nevertheless the exclusion clause was conceived in favour of the Bank.
The provisions under which the appellant was required to waive all contractual and statutory claims against it, and thus to exempt the Bank from any liability in damages for breach of contract, are at first sight all embracing.
But they are not without qualification.
The critical words are those that indicate that the draft termination agreement in Schedule 1 may be amended to take account of payments due to you under this letter.
In order to be effective to achieve what the Bank says it was meant to achieve the agreement had to be clearly expressed.
At the very least for the appellant, for the reasons given above, the wording that was chosen was ambiguous.
In this situation the ordinary principle must be applied.
Any doubt that the wording gives rise to must be construed in favour of the appellant and against the Bank.
I would therefore hold for these reasons that, on a proper construction of paragraph 5.16 and Schedules 1 and 2 of the Contract, the appellant is entitled to maintain against the Bank a claim for damages for wrongful dismissal and a claim for an alleged breach of the tax efficiency provision in paragraph 5.5 and that, if he were to do so, he would not be in breach of the terms on which he is entitled to payment of the termination payment specified in paragraph 5.15.
Conclusion
was made by the Deputy High Court judge.
I would allow the appeal, dismiss the cross appeal and restore the order that
LADY HALE
Lord Hope has identified the four issues in this appeal at paragraph 14 of his judgment.
On the first issue, the repudiation issue, which is much the most important point in the appeal, I agree with everything which Lord Wilson says in support of the elective rather than the automatic theory of the termination of an employment contract for repudiatory breach.
I also agree with the additional reasons given by Lord Hope for supporting that view.
The automatic theory simply cannot work in cases of repudiatory breach which do not amount to express dismissal or resignation.
Distinguishing between the two types of repudiation is both impracticable and unprincipled.
On the third and fourth issues, the conflict and paragraph 5.16 issues, I agree with the conclusions reached by Lord Hope.
Paragraph 5.16 is not easy to construe, as demonstrated by the different constructions favoured in this court and in the courts below.
I therefore share Lord Hopes view that it was for the Bank, as author of the document which the appellant had to accept if he was to accept the job, to make the position crystal clear.
I turn, therefore, to the second issue, the termination issue.
When was the contract terminated in accordance with its terms? In particular, having unsuccessfully attempted to dismiss the appellant summarily on 29 November 2007, when did the Bank succeed in operating the provision for payment in lieu of notice (the PILON clause)?
Amid the welter of case law and academic commentary upon the subjects of both wrongful and unfair dismissal, there appears to be remarkably little discussion of the requirements for a lawful dismissal under the terms of the employment contract.
Ever since indefinite terms of employment became the norm, the courts have implied a term that either party may bring it to an end by giving notice (see S Deakin and GS Morris, Labour Law, 6th ed, 2012, paras 5.13, 5.14).
In 1963, statute intervened to lay down minimum periods of notice to which the employee is entitled and a lesser period to which the employer is entitled (see now, Employment Rights Act 1996, sections 86 et seq).
But the parties are, of course, free to provide expressly in their contracts for longer periods of notice.
Statute also permits either party to waive his right to notice on any occasion or to accept a payment in lieu of notice (1996 Act, section 86(3)).
Statute is, however, silent as to the manner in which such notice is to be given.
Notice is, of course, an ambiguous term.
It can refer to the period between the time when an employer or employee is notified that the contract is to be terminated and the expiry of the specified period.
Or it can refer to the notification itself.
Or both.
The statutory provisions focus upon the period of notice required.
This is clear from section 86(6), which provides that the section does not affect the right of either party to treat the contract as terminable without notice by reason of the conduct of the other party.
Clause 13 of the Contract of employment between the Bank and the appellant, as is usual, dealt with both the manner of notification and the period of notice required: Your employment can be terminated on the expiry of 3 months written notice of termination given by you to the Company or by the Company to you.
The Contract itself contained no provision for payment in lieu of notice (a PILON clause).
Clause 17 stated that the contract is in conjunction with the offer letter, the Staff Handbook of the SGUK Group (as amended from time to time) and the SGUK Compliance Manual which, together with this letter, form the written particulars of employment as required by law.
Clause 18 stated that the Contract, Part 1 of the Staff Handbook of the SGUK Group and the SGUK Compliance Manual contain the entire understanding between you and the Company.
The wording of these two clauses leaves open the possibility that the Staff Handbook is not, in fact, a contractual document, but rather part of the employers rules by which the employee has agreed to abide.
This is an interesting question of academic debate, but the point has wisely not been taken on either side in this case.
We have proceeded on the basis that the Handbook does indeed form part of the contract between them.
Paragraph 8 of section 1 of the Handbook is set out in full at paragraph 7 of Lord Hopes judgment.
Paragraph 8.1 deals with the employees right to notice.
In relation to the period of notice, it adds nothing to what would otherwise be the position: the employee is entitled to whichever is the longer of the period specified in his contract or the statutory minimum (the Handbook does not state this in exactly the same terms as section 86(1) of the 1996 Act, but it comes to the same result).
In relation to the manner of notification, however, it does add something.
It refers to your entitlement to written notice and provides for when such notice is deemed to have been given.
Even if there were no entitlement to notice in writing in the Contract, therefore, there would clearly be an entitlement to notice in writing under the Handbook.
Paragraph 8.2 deals with the employees obligation to give notice.
Unlike paragraph 8.1, it is drafted on the assumption that the Contract will provide for the period of written notice to be given by the employee.
It does not set out the statutory position as a default.
But in both cases the notification given has to be in writing.
Paragraph 8.3 deals with termination by the Bank and payment in lieu of notice.
Such PILON clauses are very common in contracts of employment and no doubt this clause is in a form which is also common.
Its object is to dispense with the period of notice.
The employer reserves the right to terminate your employment with immediate effect by making a payment to you in lieu of notice.
It says nothing about whether and how the employee is to be notified that his employment is at an end.
Is it enough that the payment in lieu is actually made? Or is something more than that required? And if so, what? The resolution of these questions is of great importance to the large numbers of employees and employers who are party to PILON clauses in this form.
Mr Cavender, for the appellant, argues that paragraph 8.3 is dealing only with the period of notice.
It allows the Bank to cut this short.
It does not deal with the manner of notification.
It cannot operate in isolation from clause 13 of the Contract and must be construed alongside that clause.
It does nothing to detract from the requirement in clause 13 (and in every other clause of the Contract and Handbook dealing with notification of termination of employment) for notification in writing.
Payment into the bank account was not enough, because it was not accompanied by notification in writing that the Bank was terminating his employment by making a payment in lieu of the notice period.
The letter of 29 November (set out at paragraph 9 of Lord Hopes judgment) was not enough to cure that omission, because it did not notify the appellant that that was what the Bank intended to do (indeed, it is not clear that that is what it intended to do on that day).
In any event, it could not put the burden upon him of checking whether and when the money had reached his bank account.
It had a duty to notify him at that time.
The first proper notification which the Bank gave him was the letter of 4 January 2008, set out at paragraph 12 of Lord Hopes judgment.
This was the first time that he was told, clearly and unambiguously and in writing, that the Bank had exercised its right to terminate his employment with immediate effect by making him a payment in lieu of notice.
He accepts, therefore, that his contract was validly terminated on 6 January when he was deemed to have received that letter.
In support of his argument, Mr Cavender relies on the general principle that notices to determine contracts should be unambiguous and unequivocal and leave the recipient in no doubt as to the contractual right being invoked.
He relies in particular upon the well known passage in the opinion of Lord Steyn in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, 768: Making due allowances for contextual differences, such notices [under a break clause in a lease] belong to the general class of unilateral notices served under contractual rights reserved, eg notices to quit, notices to determine licences and notices to complete: Delta Vale Properties Ltd v Mills [1990] 1 WLR 445, 454E G.
To those examples may be added notices under charter parties, contracts of affreightment, and so forth.
Even if such notices under contractual rights reserved contain errors they may be valid if they are sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate: the Delta case at p 454E G, per Slade LJ and adopted by Stocker and Bingham LJJ; see also Carradine Properties Ltd v Aslam [1976] 1 WLR 442, 444.
That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised.
It acknowledges the importance of such notices.
The application of that test is principled and cannot cause any injustice to a recipient of the notice.
Although that case was concerned with the effect of a mistake in an otherwise clear and unambiguous notice, the principle is clear.
The reasonable recipient has to be told that the right is being exercised, how and when it is intended to operate.
This was not done in this case.
Mr Jeans, on behalf of the Bank, argues that paragraph 8.3 is simplicity itself.
The act of making payment brings the employment to an end.
There is no requirement of notification.
But in any event, Mr Geys knew from the letter of 29 November and later correspondence that the Bank was sacking him, although this did not spell out the basis upon which it was doing so.
He knew of the payment into his account before the end of December.
The trial judge found that he had probably guessed that the most likely explanation for the credit was that it was a payment in lieu of notice.
So even if there is some requirement of notification, this was enough.
So his employment ended before the end of 2007, which is the crucial date for the calculation of his termination payment.
In my view, it is quite clear that paragraph 8.3 is not dispensing with whatever requirement there is that the employee be notified of the termination of his employment.
The words in brackets (or, if notice has already been given, the balance of your notice period) draw a clear distinction between the notice period and notification of the termination of employment and thus strongly suggest that the word notice which precedes them also refers to the notice period.
The question therefore becomes, to what notification was the employee entitled under the express or implied terms of his contract of employment?
In this connection, it is important to distinguish between two different kinds of implied terms.
First, there are those terms which are implied into a particular contract because, on its proper construction, the parties must have intended to include them: see Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988.
Such terms are only implied where it is necessary to give business efficacy to the particular contract in question.
Second, there are those terms which are implied into a class of contractual relationship, such as that between landlord and tenant or between employer and employee, where the parties may have left a good deal unsaid, but the courts have implied the term as a necessary incident of the relationship concerned, unless the parties have expressly excluded it: see Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555, Liverpool City Council v Irwin [1977] AC 239.
A great deal of the contractual relationship between employer and employee is governed by implied terms of the latter kind.
Some are of long standing, such as the employers duty to provide a safe system of work.
Some are of more recent discovery, such as the mutual obligations of trust and confidence.
This was referred to by Dyson LJ in Crossley v Faithful and Gould Holdings Ltd [2004] IRLR 377 as an evolutionary process.
He also described the necessity involved in implying such terms as somewhat protean, pointing out that some well established terms could scarcely be said to be essential to the functioning of the relationship.
At para 36, he said this: It seems to me that, rather than focus upon the elusive concept of necessity, it is better to recognise that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations.
There is much to be said for that approach, given the way in which those terms have developed over the years.
Whatever the test to be applied, it seems to me to be an obviously necessary incident of the employment relationship that the other party is notified in clear and unambiguous terms that the right to bring the contract to an end is being exercised, and how and when it is intended to operate.
These are the general requirements applicable to notices of all kinds, and there is every reason why they should also be applicable to employment contracts.
Both employer and employee need to know where they stand.
They both need to know the exact date upon which the employee ceases to be an employee.
In a lucrative contract such as this one, a good deal of money may depend upon it.
But even without that, there may be rights such as life and permanent health insurance, which depend upon continuing to be in employment.
In some contracts there may also be private health insurance.
A person such as Mr Geys, going on holiday over Christmas and the New Year, needs to know whether he should be arranging these for himself.
At the other end of the scale, an employee who has been sacked needs to know when he will become eligible for state benefits.
It is necessary, therefore, that the employee not only receive his payment in lieu of notice, but that he receive notification from the employer, in clear and unambiguous terms, that such a payment has been made and that it is made in the exercise of the contractual right to terminate the employment with immediate effect.
He should not be required to check his bank account regularly in order to discover whether he is still employed.
If he does learn of a payment, he should not be left to guess what it is for and what it is meant to do.
This is not an unreasonable requirement to place upon an employer (or indeed upon an employee giving notice).
When an employer sacks an employee it ought to know what it is doing: is it with immediate effect or on notice? If it is with immediate effect, is it because of some misconduct on the part of the employee or in the exercise of a PILON clause? It is not good enough to purport summarily to dismiss the employee without stating a cause and without making a payment, then to realise that there is no right to do that, but that there is the right to terminate under a PILON clause, and so decide to exercise that right without telling the employee that the right is being exercised and the payment has been made.
Given that such a notice is a necessary incident of the relationship, a wise employer would take care to give it in writing.
But if the contract does not require writing, it would be possible for an employer to hand over the correct money and clearly state at the same time that this brings the employment to an immediate end, in place of the notice period to which the employee would otherwise be entitled.
In the days when wages were normally paid in cash, this would have been a common practice.
But if, as is now common, payment is made direct to the employees bank account, the employees bank is his agent for the receipt of payment, but it is not without more his agent for the receipt of notification of what the payment is for.
That notification has to be given to the employee.
On any view, such clear and unambiguous notification was not given in this case.
The Bank could easily have done things properly.
But for whatever reason they did not do so.
Subject, therefore, to the repudiation issue, it was not until 6 January 2008, when Mr Geys must be deemed to have received the Banks letter of 4 January 2008, that the contractual right to terminate under the PILON method provided for by paragraph 8.3 of the Handbook was validly exercised and his employment with the Bank came to an end.
LORD WILSON
In para 14 above Lord Hope helpfully identifies the four issues before the court.
I agree with his proposed resolution of the third issue (the conflict issue) and the fourth issue (the para 5.16 issue).
I also agree with the resolution of the second issue (the termination issue) proposed by Lady Hale.
I address the first issue (the repudiation issue).
In the absence of any direct authority of real weight at this level, the court is required to make a difficult and important choice between a conclusion that a partys repudiation (albeit perhaps only an immediate and express repudiation) of a contract of employment automatically terminates the contract (the automatic theory) and a conclusion that his repudiation terminates the contract of employment only if and when the other party elects to accept the repudiation (the elective theory).
It is common ground that, whichever theory be chosen, it should apply equally to wrongful repudiations by employers (i.e. wrongful dismissals) and wrongful repudiations by employees (i.e. wrongful resignations); and it is only for convenience, and because it is reflective of the facts of the present case, that I will, at times, refer to the wrongful repudiator as the employer and to the innocent party as the employee.
In light of the fact that a central incident of the automatic theory is that, upon the automatic termination of the contract, the innocent party has a right to damages, the first question must be whether it matters that the contract is terminated forthwith upon repudiation or, instead, survives until some further, terminating, event? The answer is that sometimes it does matter.
It depends on the terms of the contract.
The date of termination fixes the end of some contractual obligations and, sometimes, the beginning of others.
An increase in salary may depend on the survival of the contract until a particular date.
The amount of a pension may be calculated by reference to the final salary paid throughout a completed year of service or to an aggregate of salaries including the final completed year.
An entitlement to holiday pay may similarly depend on the contracts survival to a particular date.
In some cases an award of damages will compensate the employee for any such loss.
But often it will fail to do so.
Such failure flows from application of the least burdensome principle, namely that damages should reflect only the losses sustained by the employers decision to repudiate the contract unlawfully rather than by his having hypothetically proceeded, in the manner least profitable to the plaintiff, and the least burthensome to the defendant, to terminate the contract lawfully: see Cockburn v Alexander (1848) 6 CB 791, 136 ER 1459, at pp 814 and 1468, (Maule J), and McGregor on Damages, 18th ed (2009) para 8 093.
So, where under the terms of the contract it had been open to the wrongfully repudiating employer to have taken a course which would have terminated the contract quickly as well as lawfully, the damages will be small.
These propositions are well demonstrated by the facts of the present case.
Lord Hope explains in para 6 above why the appellants termination payment would be substantially increased if his contract of employment were to have terminated after 31 December 2007.
Had the effect of the Banks wrongful repudiation been to terminate it on or prior to that date, his damages would not cover his loss of the increase in payment.
For, as Lady Hale observes in para 61 above, it would have been easy for the Bank lawfully to have operated the PILON clause in para 8.3 of the Handbook.
Indeed it could, by proper operation of that clause, lawfully have dismissed the appellant on 29 November 2007 itself.
So his damages for the Banks unlawful repudiation of the contract on that date would, by application of the least onerous principle, be no more than nominal.
Superficially, however, it may be said to be paradoxical that the principle should demand a hypothesis that the Bank would have operated the PILON clause immediately and validly in circumstances in which in fact it delayed its attempted operation of the clause until 18 December 2007 and thereafter, until 6 January 2008, it operated it invalidly.
The central task in this part of the appeal is therefore to identify the date when the appellants contract terminated; and, in my respectful view, it is not, as Lord Sumption suggests in para 120 below, to analyse the enforceability of what he calls the core obligations.
He proceeds to suggest in para 140 below that the application of the elective theory, of which the result, of course, would be to exclude a conclusion that the contract terminated on 29 November 2007, would give rise to significant injustice in this case.
There, with respect, I part company with Lord Sumption.
Before I consider the detail of the authorities, I find it helpful to stand back and to remind myself of the overall effect of the automatic theory.
It is to reward the wrongful repudiator of a contract of employment with a date of termination which he has chosen, no doubt as being, in the light of the terms of the contract, most beneficial to him and, correspondingly, most detrimental to the other, innocent, party to it.
We must, I suggest, be very cautious before turning basic principles of the law of contract upon their head so that, in this context, breach is thus to be rewarded rather than its adverse consequences for the innocent party negatived.
It is, says Professor Freedland in The Personal Employment Contract, 2003, at p390 a matter of concern if the common law of wrongful dismissal functions so as to invite opportunistic breach of contract.
My view of the location of the justice of the case is opposite to that of Lord Sumption: it is that, in that the Bank failed to operate its own PILON clause lawfully until after 31 December 2007, it should not be able to revert to its unlawful act on 29 November as the reason why the contract did not survive for the final 32 days of the year.
In the jurisprudence of England and Wales prior to the decision in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448, the fullest analysis of the rival advantages of the automatic and the elective theories, in the light of such earlier relevant authority as existed, was conducted by Sir Robert Megarry VC in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227.
As Warner J observed in Irani v Southampton and South West Hampshire Health Authority [1985] ICR 590, 598, the Vice Chancellors analysis was powerfully reasoned.
There it was the employee who, following various breaches of contract on his part, wrongfully repudiated it by purported resignation half way through its fixed term.
The employer sought interlocutory injunctions that he should neither solicit its customers nor use information confidential to it.
Towards the end of his analysis, which begins on p 236, the Vice Chancellor said, at p 243: Above all, I think the courts must be astute to prevent a wrongdoer from profiting too greatly from his wrong. [W]hy should the courts inability to make a servant work for his employer mean that as soon as the servant refuses to do so the court is forthwith disabled from restraining him from committing any breach, however flagrant, of his other obligations during the period of his contract? I would wholly reject the doctrine of automatic determination.
The Vice Chancellor thereupon proceeded, at p 247, to make both of the requested injunctions on the basis that they were in support of the employees implied duty of fidelity and good faith which, as the Vice Chancellor had expressly noted at p 243, bound the employee only for as long as the contract subsisted.
Contracts of employment often include provisions which are expressed to bind the parties following the termination of the contract: Rhys Harper v Relaxion Group plc [2003] UKHL 33, [2003] ICR 867, para 36 (Lord Nicholls).
For example, they may oblige the employee not to compete with the employer for a specified period nor to use information which he has obtained in confidence during the period of his employment.
Or, as in the present case, they may oblige the employer, within a specified period following termination of the contract, to make to the employee a termination payment, to be calculated in accordance with terms specified in it, and may oblige the employee, in consideration of the payment, to enter into a termination agreement on terms also therein specified.
Such provisions of the contract are, by their terms, enforceable following its termination.
The enforceability of, for example, a restrictive covenant by the repudiator against the innocent party is now the subject of some debate: Rock Refrigeration Ltd v Jones [1997] ICR 938.
There is no problem about the enforceability of such provisions against the repudiator.
But authorities to that effect shed no light on the issue between the elective and the automatic theories because the provisions do not depend on the survival of the contract.
By contrast, however, authorities in which, following an unaccepted wrongful repudiation, provisions which do not survive the termination of the contract have been enforced against the repudiator must, in my view, be taken to be examples of the operation of the elective theory.
Adoption by this court of the automatic theory would leave them unjustifiable.
For example, the Thomas Marshall case was far from being the first example of the enforcement of a covenant against competition during the contract and following its wrongful repudiation.
Thus, in Lumley v Wagner (1852) 1 De GM & G 604, 42 Eng Rep 687, Miss Wagner agreed to sing operatic roles for Mr Lumley for the months of April, May and June 1852, at Her Majestys Theatre and not to sing elsewhere during that period.
She wrongfully repudiated the contract and proposed, instead, to sing for Mr Gye at the Royal Italian Opera, Covent Garden.
The Lord Chancellor, Lord St Leonards, acknowledged, at pp 619 and 693, that he could not order Miss Wagner to sing for Mr Lumley.
But he held that he could, and should, order her not to sing for Mr Gye; and it is clear from Mr Lumleys pleading, set out at pp 607 and 689, that the injunction was to endure only during the existence of the agreement, i.e. until 30 June 1852.
In Whitwood Chemical Co v Hardman [1891] 2 Ch 416, Lindley LJ observed, at p 428, that he regarded the decision in Lumley v Wagner as an anomaly to be followed in cases like it, but an anomaly which it would be very dangerous to extend.
He made clear that the danger was that its extension might represent a movement towards the specific performance of a contract of employment.
He did not suggest that there was any anomaly in the analysis that Miss Wagners contract had continued notwithstanding her repudiation of the contract.
Indeed in William Robinson and Co Ltd v Heuer [1898] 2 Ch 451 the Court of Appeal, in a constitution over which the same judge, then Master of the Rolls, presided, made an injunction, analogous to that made against Miss Wagner, against an employee who had wrongfully resigned after three of his five contractual years of service and who was breaking his covenant not, during this engagement, to work for any rival business.
The court expressly, held, at p 458, that the employees engagement continued; and it made an injunction against his working for a rival business for the remaining two years.
In Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209 Bette Davis had, in 1934, entered into a contract of employment with Warner Brothers which, at their option, could continue until 1942.
In 1936 she repudiated the contract and proposed to break her covenant not, during its currency, to participate in any other film for any other company.
Branson J, at p 222, enjoined her from doing so during the continuance of the contract or for three years from now, whichever period is the shorter.
Into a different, yet equally significant, category fall cases in which an employer wrongfully repudiates a contract of employment in circumstances in which its terms require him to have implemented a disciplinary procedure.
The law is clear that an injunction may issue so as to enforce the requirement; and the absence of a right to claim damages for breach of a duty to follow a disciplinary procedure (see Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2011] UKSC 58, [2012] 2 AC 22) makes the availability of the injunction particularly precious.
But it is self evident that, had the wrongful repudiation already automatically terminated the contract, an injunction would not issue so as to require observance of a procedure designed to determine whether the employer was entitled to terminate it.
Thus in Jones v Lee [1980] ICR 310 the managers of a Roman Catholic school wrongfully dismissed its headmaster following his divorce and remarriage to a former teacher at the school.
The dismissal was wrongful because it was in breach of a term of his contract of employment which gave him the right to a hearing before the local education authority prior to his dismissal.
The Court of Appeal enjoined the managers from dismissing him or purporting to dismiss him prior to any such hearing.
In the Irani case, cited above, Warner J made an analogous injunction.
In Robb v Hammersmith and Fulham London Borough Council [1991] ICR 514 the claimant, who was Hammersmiths director of finance, had been responsible for speculative, indeed unlawful, investments of its funds.
Hammersmith invoked a contractual disciplinary procedure with a view to dismissing him for lack of capability but it abandoned the procedure and wrongfully dismissed him with immediate effect.
Morland J granted him an injunction so as to restrain Hammersmith from giving effect to its purported dismissal of him and, as the judge explained at p 523, so as to restore his entitlement to the ventilation of his defence through the disciplinary procedure.
In my view the proponents of the automatic theory fail to explain how the competition and the disciplinary cases are consistent with it.
To describe them as examples of the enforcement only of collateral obligations would, I believe, be to fail to engage sufficiently with their significance.
How and when did the automatic theory take hold? To what extent has it taken hold? To what extent should it take hold?
Equity took the view that the remedy of specific performance, or analogous injunction, should not be available so as to require an employee who had wrongfully resigned to go back to work or to require an employer who had wrongfully dismissed the employee to take him back. [T]he courts, said Sir George Jessel, Master of the Rolls, in Rigby v Connol (1880) 14 ChD 482, 487, have never dreamt of enforcing agreements strictly personal in their nature, whether they are agreements of hiring and service, being the common relation of master and servant, or .
In Chappell v Times Newspapers Ltd [1975] ICR 145 Geoffrey Lane LJ explained, at p 178, that if one party has no faith in the honesty or integrity or the loyalty of the other, to force him to serve or to employ that other is a plain recipe for disaster.
This has made a contract of employment into a special case but only in terms of remedies.
Indeed where, notwithstanding an employers wrongful repudiation, trust and confidence between the parties have not been forfeit, an injunction, analogous to specific performance, may be granted to restrain implementation of its purported notice: Hill v CA Parsons & Co Ltd [1972] Ch 305.
The big question whether nowadays the more impersonal, less hierarchical, relationship of many employers with their employees requires review of the usual unavailability of specific performance has been raised, for example by Stephenson LJ in the Chappell case, at p 176, but is beyond the scope of this appeal.
Where did the unavailability of specific performance leave the wrongly dismissed employee? Specifically, could he sue for his wages on the basis that at any rate he had remained ready, able and willing to resume his work for the employer? The Victorian work ethic helped to provide a negative answer.
In Goodman v Pocock (1850) 15 QB 576, 117 ER 577, Erle J said at pp 583 584 and 580: I think that the servant cannot wait till the expiration of the period for which he was hired, and then sue for his whole wages on the ground of a constructive service after dismissal.
I think the true measure of damages is the loss sustained at the time of the dismissal.
The servant, after dismissal, may and ought to make the best of his time; and he may have an opportunity of turning it to advantage.
Ever since then the law has been clear that, save when, unusually, a contract of employment specifies otherwise, the mere readiness of an employee to resume work, following a wrongful dismissal which he has declined to accept, does not entitle him to sue for his salary or wages.
He cannot, as Salmon LJ said in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699, 726, sit in the sun.
The law takes the view that it is better for the employee (as well, of course, as for the employer) that his claim for loss of wages or salary should be confined to a claim for damages and therefore be subject to his duty to mitigate them by taking all reasonable steps to find other work.
This principle is not without its critics.
In Boyo v Lambeth London Borough Council [1994] ICR 727, 747 Staughton LJ observed that, unconstrained by authority, he would not have accepted it; and, in his dissenting judgment in Cerberus Software Ltd v Rowley [2001] ICR 376, Sedley LJ suggested, at p 386, that it was one of the great unresolved questions of employment law.
But, even if the question can be said to be unresolved, this court is not invited to resolve it.
The facts of this appeal leave no room for an attack on the principle.
It has added to the making of a contract of employment into a special case but, again, only in terms of remedies.
Until 1955 there was no suggestion in the jurisprudence of England and Wales or elsewhere in the world of the common law that a wrongful repudiation of a contract of employment automatically brought it to an end.
The need for the innocent party to elect whether to accept the repudiation, in accordance with general principles of the law of contract, was taken as read: see, for example, Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339, 365 (Bowen LJ) and General Billposting Co Ltd v Atkinson [1909] AC 118, 122 (Lord Collins).
Then came the important decision of the High Court of Australia in Automatic Fire Sprinklers Proprietary Ltd v Watson (1946) 72 CLR 435.
Its clear indorsement of the elective theory still holds sway in Australia: Byrne v Australian Airlines Ltd (1995) 131 ALR 422.
In the Automatic Fire Sprinklers case the employers purported dismissal of the employee was wrongful for two reasons.
First, it was in breach of contract.
Second, it was in breach of a war time regulation which prohibited his dismissal without the consent of the Director General of Man Power.
The employee did not accept the wrongful repudiation and sued for his salary for the year which followed it.
In relation to the first issue the court was unanimous: it was that, although at common law the contract was not at an end, the employee was nevertheless not entitled to sue for his salary.
But the way in which it expressed that conclusion may, in retrospect, have been significant: for it said that, although the contract was not at an end, the relationship was at an end.
Thus Latham CJ, who was in the minority only on the second issue, said, at p 451: Thus the wrongful dismissal determines the relationship of master and servant created by the contract, even though the servant may not have accepted his dismissal as entitling him to regard the contract as discharged.
Any other view would in effect grant specific performance of a contract of personal service, a remedy which the courts have always refused in such a case.
The second issue related to the effect of the breach of the regulation; the majority held that its effect was to preclude the termination even of the relationship of master and servant, with the result that the employee was entitled to recover his salary.
The High Courts reference to the termination of the relationship of master and servant, as distinct from the termination of their contract, was no more than its convenient short hand for the common laws long rejection of a claim for wages or salary.
Some subscribers to the elective theory have considered the distinction useful.
Thus in the Gunton case, [1981] Ch 448, Brightman LJ explained, at pp 474 475, that although a wrongful dismissal, if not accepted, left the contract in being, the status, or relationship, of the parties to it no longer existed and that obligations not necessarily dependent on the existence of the relationship might alone survive.
But other subscribers to the elective theory have criticised the distinction.
In Dietman v Brent London Borough Council [1987] ICR 737, Hodgson J referred to it, at p 753, as a little difficult to understand.
In their article entitled Theories of Termination in Contracts of Employment: the Scylla and Charybdis, (2003) 19 JCL 134, Hough and Spowart Taylor described it, at p 144, as deeply problematic.
I myself regard the distinction as unhelpful, indeed confusing.
It has offered easy pickings for proponents of the automatic theory, whom it enables to argue, with superficial force, that, if the wrongful repudiation terminates the relationship, it must also then terminate the contract.
The automatic theory made its appearance in the jurisprudence of England and Wales in 1955 almost in parenthesis.
The case of Vine v National Dock Labour Board [1956] 1 QB 658 (CA) and [1957] AC 488 (HL), concerned a registered dock worker employed by the Board on terms set by a statutory scheme.
The Board wrongfully dismissed him and the House of Lords, reversing the majority decision of the Court of Appeal, held, by reference to the terms of the scheme, that the trial judge had been entitled to declare that his dismissal had been invalid.
In his dissenting judgment in the Court of Appeal, Jenkins LJ, at p 674, contrasted the effect of the scheme with the ordinary case of master and servant in which so he proposed the repudiation or the wrongful dismissal puts an end to the contract, and the contract having been wrongfully put an end to a claim for damages arises.
In the House of Lords Viscount Kilmuir LC, said, at p 500: This is an entirely different situation from the ordinary master and servant case; there, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract.
Here, the removal of the plaintiffs name from the register being, in law, a nullity, he continued to have the right to be treated as a registered dock worker with all the benefits which, by statute, that status conferred on him.
It is therefore right that, with the background of this scheme, the court should declare his rights.
Although there may be some ambiguity in his use of the word effectively, the Lord Chancellor is generally there taken to have indorsed the proposition of Jenkins LJ in support of the automatic theory.
The basis of the proposition which, as will already be clear, played no part in the reasoning of the decision of the House had been, and remained, unexplained.
In its recent affirmation of the elective theory in Paper Reclaim Ltd v Aotearoa International Ltd [2007] 3 NZLR 169, the Supreme Court of New Zealand referred, at para 18, to the difficulty of the proposition as a statement of law, as opposed to a statement of practical consequence for the employee.
Two months after its decision in the Vine case the appellate committee heard McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594.
The respondent had given six months notice of termination of the appellants employment as a clerk.
But, in the absence of her gross misconduct, incapacity or ill health, there was no express provision in the contract for the respondent to terminate it, whether on six months notice or reasonable notice or otherwise.
The majority of the committee held that such a provision could not be implied; and accordingly it declared that her contract had not been validly terminated.
No reference was made to the decision in the Vine case.
The elective theory was applied without argument to the contrary.
Mr Jeans presents the judgment of the Privy Council in Francis v The Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411 as an example of the application of the automatic theory.
There is no doubt that the employee, wrongfully dismissed, was confined to a claim for damages.
But part of the Boards analysis was inconsistent with the theory.
Lord Morris of Borth y Gest said, at p 1417 1418: In their Lordships view, when there has been a purported termination of a contract of service a declaration to the effect that the contract of service still subsists will rarely be made.
This is a consequence of the general principle of law that the courts will not grant specific performance of contracts of service.
Special circumstances will be required before such a declaration is made. there are no circumstances in the present case which would make it either just or proper to make such a declaration.
In Decro Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361, the defendant had contracted to be the exclusive marketeer in the UK of tiles manufactured by the claimant in France.
So it was a contract for the provision of services.
One of the questions before the Court of Appeal was whether, as the claimant contended, its own wrongful repudiation of the contract had automatically brought it to an end.
The claimant relied on dicta of Lord Reid in White and Carter (Councils) Ltd v McGregor [1962] AC 413, 428 and 429, which (so the claimant said) suggested that, where, following a wrongful repudiation of a contract for the provision of services, the completion of the contract by the innocent party would have required the repudiators cooperation, the repudiation automatically brought the contract to an end.
The court explained that Lord Reids remarks could not bear the weight thus sought to be placed on them and that, in the passage quoted by Lord Sumption at para 114 below, Lord Hodson, with whom Lord Tucker had agreed, had expressly reaffirmed the survival of the contract beyond repudiation until acceptance and irrespective of the availability of specific performance: see p 370 (Salmon LJ), p 375 (Sachs LJ) and p 381 (Buckley LJ).
It is, said Sachs LJ at p 375, the range of remedies that is limited, not the right to elect.
Salmon LJ, at p 370, and Sachs LJ, at p 376, also, in passing, expressed their provisional rejection of the application of the automatic theory to a contract of employment but Buckley LJ, at p 381, left that point open.
In paragraphs 114 and 115 below, albeit under the rubric only of The general law, Lord Sumption lays stress on Lord Reids dicta in the White and Carter case.
I agree with the Court of Appeals treatment of them in the Decro Wall case.
In particular Lord Reid was not addressing the enforceability of terms of a contract of employment which are not dependent on mutual cooperation and thus, in that context, the wider question of the proper treatment of a wrongful repudiation.
In Sanders v Ernest A Neale Ltd [1974] ICR 565 the National Industrial Relations Court, of which the President was Sir John Donaldson, dismissed an appeal by employees against the conclusion of an industrial tribunal that their dismissals had not been attributable to redundancy.
The first question was when their dismissals had occurred.
The court assumed that the employer had wrongfully repudiated their contracts.
It held that it had thereby automatically terminated them; and it proceeded to conclude that the tribunal had been right to hold that the terminations had not been attributable to redundancy.
At pp 570 571 Sir John addressed the validity of the proposition that a servant cannot sue for wages if he has not rendered services, and the wrongful dismissal prevents him rendering services.
He proceeded as follows: It being admitted that a wrongful dismissal does prevent a servant from so suing, there must be some other explanation.
The obvious, and indeed the only, explanation is that the repudiation of a contract of employment is an exception to the general rule.
It terminates the contract without the necessity for acceptance by the injured party.
Six years later, in the Gunton case, Buckley LJ was to observe, at p 466, that, to the best of his knowledge, the Sanders case was the only ordinary employment case in which the automatic theory was part of the basis of the decision.
But if, as also appears to me, it was in that sense the high water mark of the automatic theory, it was scarcely the result of a flood tide.
Sir John Donaldsons reasoning was to jump from the absence of some remedies to the absence of all rights, heedless in particular of contractual rights other than to payment of wages or salary.
As Deakin and Morris state in Labour Law, 2012, 6th ed, para 5.38, application of the automatic theory is a case of the tail wagging the dog.
I am a late convert to the clich as an effective means of explaining a point; and another, apt to the context, would involve babies and bath water.
In his article entitled Remedies for Breach of the Contract of Employment [1993] CLJ 405, Professor Ewing wrote, at pp 410 411: So the rights of the parties are to be driven and determined by the availability of remedies; the contract is automatically terminated by the unilateral repudiation of either party, simply because it is not capable of specific performance.
As such the argument is hopelessly circular.
The circularity is that there is no remedy so there is no right so there is no remedy.
The professor proceeded, at p 415, to describe the automatic theory as a bastard doctrine, which is difficult to reconcile with the general principles of contract law.
In Treitel: The Law of Contract, 13th ed, 2011, at para 18 006, Professor Peel identifies other types of contract, such as a sale of goods or a charter of a ship, in which, following a wrongful repudiation, the innocent party may be unable to require full payment under the contract yet in which no doubt is raised about the continuation of the contract pending his election.
In the Gunton case [1981] Ch 448 the employer wrongfully repudiated the employees contract of employment by dismissing him for disciplinary reasons without complying with the contractual disciplinary procedure.
The Court of Appeal held that, if (which Shaw LJ doubted) the termination of the contract depended upon his having accepted the wrongful repudiation, the employee had nevertheless done so.
Therefore the question of his obtaining an injunction analogous to that in Jones v Lee [1980] ICR 310 did not arise; and the decision related to the appropriate measure of his damages.
But there was a discussion about the automatic theory, which Shaw LJ favoured, and the elective theory, which Buckley and Brightman LJJ favoured.
Shaw LJ referred to the basic principle of the common law, which afforded to the innocent party a right to elect whether to accept a wrongful repudiation and claim damages or to call for performance in accordance with the contract.
He proceeded, at p 459: This practical basis for according an election to the injured party has no reality in relation to a contract of service where the repudiation takes the form of an express and direct termination of the contract in contravention of its terms.
There may conceivably be a different legal result where the repudiation is oblique and arises indirectly as, for example, where the employer seeks to change the nature of the work required to be done or the times of employment; but I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out and out dismissal by the employer or a complete and intended withdrawal of his service by the employee.
It has long been recognised that an order for specific performance will not be made in relation to a contract of service.
If the only real redress is damages, how can its measure or scope be affected according to whether the contract is regarded as still subsisting or as at an end? To preserve the bare contractual relationship is an empty formality.
But Buckley LJ said, at pp 468 469: Why should the doctrine operate differently in the case of contracts of personal service from the way in which it operates in respect of other contracts? I for my part can discover no reason why it should do so in principle.
It cannot be because the court will not decree specific performance of a contract of personal service, for there are innumerable kinds of contract which the court would not order to be specifically enforced, to which the doctrine would undoubtedly apply. [But] in a case of wrongful dismissal in the absence of special circumstances the damages recoverable on the footing of an accepted repudiation must, I think, be as great as, and most probably greater than, any damages which could be recovered on the footing of an affirmation of the contract by the innocent party and of the contract consequently remaining in operation. So. a wrongfully dismissed servant really has, in the absence of special circumstances, no option but to accept the masters repudiation of the contract.
It consequently seems to me that, in the absence of special circumstances, in a case of wrongful dismissal the court should easily infer that the innocent party has accepted the guilty partys repudiation of the contract.
I do not think, however, that it is impossible that in some cases incidental or collateral terms might cause the injured party to want to keep the contract on foot.
In the course of the affirmation of the elective theory by the Saskatchewan Court of Appeal in Smart v Board of Governors of South Saskatchewan Hospital Centre (1989) 60 DLR (4th) 8, Bayda CJS commented on the observations of Buckley LJ, at p 17: This position of being better off to accept the repudiation in which the innocent employee so often finds himself in practice and the courts commensurate readiness to find acceptance have, in my respectful view, tended to seduce some legal analysts into concluding that the innocent employee is obliged in law to accept the repudiation, or, alternatively, does not have the option in law to treat the contract as continuing.
But, as.
Buckley [LJ] explicitly pointed out, that conclusion is erroneous.
It is important to remember that there are times when it is in the innocent employees practical interest to continue the contract in law.
But Buckley LJs suggestion that acceptance of a wrongful repudiation should easily be inferred and his consequent dilution of the effect of the theory which he himself was commending has attracted powerful criticism, not least by Professor Brodie in The Contract of Employment (2008), para 18.10, and by Ralph Gibson LJ in the Boyo case [1994] ICR 727, 743.
There is certainly no point in conferring upon a party an election to which some other principle of law is applied so as to deprive it of real value; and in my view Buckley LJs suggestion should be treated cautiously.
Ralph Gibson LJ proceeded to accept that, following a wrongful repudiation, contractual obligations which did not depend on the existence of the relationship of master and servant, such as terms as to disciplinary procedures and competition, continued to exist.
But, subject, so he said, to that qualification, he would, in the absence of the binding authority of the Gunton case, have preferred the automatic theory.
I do not understand how a theory can be preferred subject to a qualification which is entirely inconsistent with it.
Apart from the decision in 1994 in the Boyo case, cited above, in which the employee represented himself and the court felt reluctantly obliged to apply the elective theory in accordance with the decision in the Gunton case, the most recent domestic decision of significance is London Transport Executive v Clarke [1981] ICR 355.
Its date demonstrates that, for an entire generation, the issue between the two theories has been substantially quiescent.
The employee went to Jamaica for seven weeks contrary to the terms of the contract and to the employers express instructions.
So it was a repudiatory breach falling short of purported resignation.
On the contrary, the employee wished to resume his employment upon his return.
While he was away, however, the employer told him, by letter, that his employment was at an end.
The first question posed by his complaint of unfair dismissal to the industrial tribunal related to the identity of the party who had terminated the contract.
Lord Denning MR, evidently prepared to apply the automatic theory even to a repudiatory breach falling short of purported resignation, held, at p 366, that, upon his departure, the employee had himself terminated the contract.
But Templeman and Dunn LJJ held that the termination had occurred only when, by its letter, the employer had accepted his repudiatory breach.
So he had indeed been dismissed, albeit (so they proceeded to hold) not unfairly.
Templeman LJ, with whose reasoning Dunn LJ agreed, said at pp 366 367: The general rule is that a repudiated contract is not terminated unless and until the repudiation is accepted by the innocent party. [C]ontracts of employment cannot provide a general exemption to that rule because it would be manifestly unjust to allow a wrongdoer to determine a contract by repudiatory breach if the innocent party wished to affirm the contract for good reason.
Thus in Thomas Marshall (Exports) Ltd v Guinle [1978] ICR 905, which contains a full discussion of principles and of the conflicting authorities, a contract of employment was repudiated by the employee.
The court could not enforce specific performance of the contract for personal services, but Sir Robert Megarry VC enforced against the wrongdoing employee at the behest of the innocent employer who had not accepted the repudiation a confidentiality and non competition obligation which was only effective during the continuance of the contract.
Repudiation cannot determine a contract of service or any other contract while there exists a reason and an opportunity for the innocent party to affirm the contract.
Templeman LJ added, at p 368, that the suggested exception was contrary to principle, unsupported by authority binding on this court and undesirable in practice.
Such might have been good quotations with which to conclude my judgment.
For I entirely agree with them and cannot improve on them; and they seem particularly apt to the present case, in which the appellant had an obvious reason and in my view a good reason for not accepting the Banks wrongful attempt to terminate his contract until after 2007.
But another big question remains: how far would any application of the automatic theory extend? Mr Jeans suggests that the theory should be applied only to wrongful dismissals and resignations which are express and immediate or outright.
The suggestion is somewhat analogous to that made by Shaw LJ in the Gunton case, in the passage quoted in para 90 above, in which he would have limited the application of the theory to an express and direct or out and out wrongful termination, as opposed conceivably to an oblique and indirect repudiation.
Any proponent of the automatic theory needs to be able to draw the contours of its application and to justify them logically.
The following questions arise: (a) (b) (c) (d) Should purported dismissals and resignations be treated differently according to whether they are express or to be implied from words and/or conduct? If so, why? Should purported dismissals and resignations which are immediate be treated differently from those which are delayed (for example by the giving of some notice, albeit that it was too short, as in the Hill case [1972] Ch 305).
If so, why? Should purported dismissals and resignations be treated differently according to whether they are outright or something less than outright? If so, why? In any event is the distinction workable? Is it enough for Mr Jeans to submit that, like elephants and post boxes, one can recognise an outright dismissal when one sees it? If, as was held by the House of Lords in Rigby v Ferodo Ltd [1988] ICR 29, a fundamental breach other than by way of purported dismissal (namely in that case, the employers unilateral reduction in wages below the contractual level) does not in any event attract application of the automatic theory, what would be the rationale for treating other fundamental breaches (namely purported dismissals and resignations) differently? Why should wrongful actions more clearly designed to strike at the continuation of the contract be crowned with that significant degree of legal success? As Cabrelli and Zahn suggest in their article entitled The Elective and Automatic Theories of Termination at Common Law: Resolving the Conundrum (2012) 41 ILJ 346, 354, any such difference would be counterintuitive.
Is the Rigby case not inconsistent with the implied suggestion of Lord Sumption in para 129 below that the automatic theory should extend to constructive dismissals? Inherent in the notion of a constructive dismissal is resignation in response to fundamental breach: Western Excavating (ECC) Ltd v Sharp [1978] QB 761, 769, 770 (Lord Denning MR).
So is there not inherent in it the need for acceptance which the Rigby case establishes? (e) (f) Would the automatic theory extend to wrongful repudiations of contracts of services as well as of contracts of employment? The provision of numerous services pursuant to contract take, by way of easy examples, those of an accountant, a dentist and a builder depends upon the cooperation of the other party.
If the rationale behind the automatic theory is both the unavailability of specific performance and the inability to claim the contractual remuneration rather than damages, why should it not extend to contracts of services to which the law attaches those same two consequences? Mr Jeans was wise to decline to answer this question.
In proposing that the court should indorse the automatic theory, the Bank invites it to cause the law of England and Wales in relation to contracts of employment to set sail, unaccompanied, upon a journey for which I can discern no just purpose and can identify no final destination.
I consider, on the contrary, that we should keep the contract of employment firmly within the harbour which the common law has solidly constructed for the entire fleet of contracts in order to protect the innocent party, as far as practicable, from the consequences of the others breach.
LORD CARNWATH
I agree that the appeal should be allowed and the order of the Deputy Judge restored as proposed by Lord Hope.
I add a few words of my own in recognition of the main points of difficulty.
I have nothing to add on the conflict issue, on which I agree entirely with Lord Hopes analysis.
The most significant issue, which has divided the court, is the repudiation issue.
Lord Sumptions historical analysis of the development of the law in this area is powerful and of great interest.
However, I am not in the end persuaded that it should provide the answer to this case.
That review, like Lord Wilsons equally powerful response, shows how both courts and academics have grappled with, and sought to reconcile, the apparently conflicting rules and remedies which judicial pragmatism has devised to meet the special features of employment contracts.
In choosing between them, I attach particular weight to the fact that, in spite of the force of the criticisms directed at the election theory, and at some of the reasoning of the majority in Gunton [1981], the law as there stated has stood for 30 years, apparently without evidence of practical difficulty or injustice.
That in turn drew on the characteristically comprehensive review of the subject by Sir Robert Megarry VC in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227.
It also followed settled authority in the High Court of Australia dating back to 1946 (Automatic Fire Sprinklers), which has since been reaffirmed at that level (Byrne v Australian Airlines Ltd (1995) 131 ALR 422) and, as we were told, followed consistently elsewhere in the common law world: see, most recently Paper Reclaim v Aotearoa [2007] 3 NZLR 169 (New Zealand Supreme Court).
That approach seems apt also to the particular context of paragraph 5.15, under which the termination payment arises.
I am not persuaded that a general distinction can be drawn, as Lord Sumption suggests, between the existential (obligations which go to the continued existence of the employment relationship); and the collateral.
Nor do I find it helpful (as in some of the submissions before us) to talk of the continuation of a mere shell or husk contract.
As in any other case, the nature and extent of the contractual remedies at any time must depend on the context, the terms of the contract, and the circumstances of the breach.
In the present case, the contract provided a detailed code for what was to happen during and after the period of service.
The elaborate provisions for termination were an important part of the contractual rights provided to the employee.
Paragraph 5.15 fixed the amount of the termination payment by reference to when your employment terminates.
I see no reason why, for the purposes of that clause, the employer should not be held to the date of termination in accordance with the contract, rather than permitted to advance that date by repudiatory breach.
On the termination issue, after some hesitation, I have come to the conclusion, for the reasons given by Lady Hale, that the payment on 18 December 2007 did not effect a lawful termination.
It is true that on the facts of this case, that may seem somewhat formalistic, and the consequences disproportionate.
The employee can have been in no doubt by that stage that his employment was at an end, and could no doubt readily infer the purpose of the payment once he became aware of it.
However, as she says, it is not unreasonable to expect an employer relying on a PILON clause to make the position clear.
Although no formal written notice was required, it was necessary for the employer to ensure that the payment was unequivocally identifiable as an exercise of the power under para 8.3.
That was not done.
Accordingly, I agree that the contract was not lawfully terminated until 6 January 2008.
Turning finally to the paragraph 5.16 issue, I have seen more force than my colleagues in the respondents case.
I find Rimer LJs reasoning on the construction of the termination agreement (para 77) persuasive.
Arguably, the clearest thing about paragraph 5.16 is the contrast between the payments due to you under this letter (or under this agreement) to which (subject to agreed amendments) the employee is entitled, and all contractual and statutory claims arising out of your employment and its termination, which he is required to give up.
On ordinary principles of contractual interpretation, the former would not be read as including the latter.
I accept that, if one starts from the premise (following the Court of Appeal) that the termination agreement was mandatory, in the sense that the employee was compelled to enter the agreement and take the payment, the result could be said to be unreasonable.
On that view, I agree with Lord Hope that there is a strong case for applying the principle that an agreement purporting to exclude liability for breaches of contract should be narrowly construed contra proferentem.
However, it can be looked at the other way round.
The companys obligation to make the termination payment, and that of the employee to enter the termination agreement, are not expressed as mutual, concurrent obligations.
The first obligation is that of the employer to make the payment.
The employees obligation to enter the agreement is expressed as one undertaken in consideration for the making of the termination payment.
Arguably that could be construed as leaving the employee free to waive the payment, and thus avoid the obligation to enter the agreement.
Such a construction would also avoid an unreasonable result, and might be thought to strain the language less than that proposed by Lord Hope.
It is also consistent with the last sentence of the Schedule 1 letter, which appears to assume that the offer is one which can be accepted or rejected.
However, in view of the unanimity of my colleagues on this issue, and since it does not appear to be a point of any more general significance, I see no purpose in carrying my doubts to the point of dissent.
LORD SUMPTION
Background
Mr Geys is a lucky man.
He had a responsible and highly paid job with an entitlement to participate in a profit sharing bonus scheme dependent on the performance of his division, in addition to discretionary bonuses.
The other side of the coin was that he had no contractual job security.
Under his contract of employment, his employers, Socit Gnrale (SG), were entitled to dismiss him at any time without cause either upon three months notice or with immediate effect by making a payment to you in lieu of notice.
This is what happened to Mr Geys.
He was called to a meeting on 29 November 2007 and given a letter informing him that SG had decided to terminate his employment with immediate effect and that the appropriate termination documentation would follow.
In accordance with the time honoured ritual, he was then taken to clear his desk and escorted from the building by security staff.
There could not have been the slightest doubt that his employment relationship with SG was at an end.
He cannot have supposed that he had been dismissed for cause, for no cause was stated.
The only reasonable inference was that SG was purporting to dismiss him summarily without cause, as they were entitled in principle to do.
Fortunately for Mr Geys, SG did not understand their own contract.
It is common ground that if they had handed him a cheque for his payment in lieu of notice at the meeting on 29 November, his dismissal would have taken effect according to his contract at once.
Because the right to terminate with immediate effect is exercisable by making a payment in lieu of notice, it is common ground that the purported dismissal with immediate effect on 29 November was a repudiatory breach of contract by SG.
They were not entitled to dismiss him with immediate effect from 29 November, but only with effect from the payment in lieu.
It was, however, a repudiation of the most technical kind.
There was no doubt about SGs right to dismiss him with immediate effect if they set about it in the right way.
For this reason, as I understand the majority to accept, SGs mistake in itself caused him no loss.
It made a practical difference of only three weeks and a legal difference of just over five.
It made a practical difference of three weeks because the payment in lieu was in fact received on 18 December by Mr Geys bank on his behalf.
If knowledge of the payment by Mr Geys himself was required (which I doubt), he had it by his own admission when he consulted his account on line some time in late December.
As he accepted in cross examination, he saw the payment from SG and realised that it had to be thought would probably be, yes, compensation pay of in lieu.
That is the best guess one could have.
In the circumstances, it could not have been anything else.
SGs mistake made a legal difference of just over five weeks because the majority of this Court is of the opinion that the payment, although received by Mr Geys bank on his behalf on 18 December, was by a term to be implied into the contract ineffective to bring it to an end until 6 January, when SG unequivocally told him what he had already appreciated in late December, namely that the payment was in lieu of notice.
The result is that although the employment relationship was dead for all practical purposes from 29 November, and Mr Geys contributed nothing to SGs fortunes after that date, he is in a position to argue that technically the contract limped on as a formal shell or husk (to use the terms deployed in argument) into January 2008.
The financial consequences of this, if it is right, are considerable.
The effect of paragraph 5.15(b)(iii) and (iv) of the contract is that if Mr Geys employment terminates after 31 December 2007, he is entitled to a Compensation Payment assessed by reference to the aggregate of his bonus awards for the calendar years 2006 and 2007, whereas if it terminates on or before that date, it will be assessed by reference to his awards in 2005 and 2006, which were substantially lower.
The figures are disputed, but the result is likely to be that SGs breach, although it has caused Mr Geys no substantial loss, will have brought him a windfall amounting to several million euros.
Rarely can form have triumphed so completely over substance.
Accordingly, the main question on this appeal can be shortly stated.
If an employer repudiates a contract of employment, does it end forthwith, leaving the employee to claim damages so far as the repudiation has caused him any? Or does it end only if and when the employee elects to accept the repudiation as bringing the contract to an end?
The general law
The law of employment is based partly on contract and partly on statute.
The interface between the two can sometimes give rise to difficulty.
But not in this case.
It is common ground that the present issue depends entirely on the common law.
It follows that the starting point is to examine the relevant general principles of the law of contract.
The general rule is that the repudiation of a contract does not necessarily bring the contract to an end.
The innocent party has a right to choose either (i) to accept the repudiation, thus bringing the primary obligations in the contract to an end but leaving him with a right to enforce the secondary obligation to pay damages for the loss of the bargain; or (ii) to treat the contract as subsisting and claim any sums falling due under it as and when they fall due, together with any damages for the repudiating partys failure to perform as and when performance should have occurred.
These principles had been applied for many years by the time that they were first articulated in Hochster v De la Tour (1853) 2 E & B 678 in England and Howie v Anderson (1848) 10 D 355 in Scotland, as the citations in the former case show.
Their most recent and authoritative restatement is to be found in the speech of Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827.
The concept was memorably expressed by Asquith LJ in Howard v Pickford Tool Co Ltd [1951] 1 KB 417, 421, when he described an unaccepted repudiation as a thing writ in water.
This is sometimes called the elective theory of repudiation.
The expression is, however, misleading because it suggests that the innocent partys right to treat the contract as subsisting necessarily follows from the unilateral character of the other partys repudiation.
In fact, the right to treat the contract as subsisting has never been absolute.
It is subject to important exceptions and qualifications.
These can be illustrated from older cases, but were first coherently articulated by Lord Reid, delivering the leading judgment for the majority in White & Carter (Councils) Ltd v McGregor [1962] AC 413.
The facts of this case are well known.
White & Carter contracted with the Respondent to put advertisements for his garage on litterbins.
The Respondent purported to cancel the contract without any right to do so, but the company chose to ignore the cancellation, continued to perform as if nothing had happened and sued for the agreed price of their services, which was much greater than the damages that they would have suffered had they accepted the repudiation.
The Appellant succeeded because of what Lord Reid called the peculiarity that the contract could be performed without any co operation from the Respondent.
Lord Reid said at p 429: Of course, if it had been necessary for the defender to do or accept anything before the contract could be completed by the pursuers, the pursuers could not and the court would not have compelled the defender to act, the contract would not have been completed and the pursuers' only remedy would have been damages.
Lord Hodson (with whom Lord Tucker agreed) appears to have agreed with this.
At p 445, he observed: The true position is that the contract survives and does so not only where specific implement is available.
When the assistance of the court is not required the innocent party can choose whether he will accept repudiation and sue for damages for anticipatory breach or await the date of performance by the guilty party. [Emphasis added].
Lord Reids qualification about co operative agreements has subsequently been accepted and applied.
The most significant decisions are Hounslow London Borough Council v Twickenham Garden Developments Ltd [1971] Ch 233, and Attica Sea Carriers Corporation v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Lloyds Rep 250.
It has also been treated as good law in other cases where it nevertheless was found not to apply on the facts, because properly analysed the contract could be performed without the co operation of the repudiating party: see Isabella Shipowner SA v Shagang Shipping Co Ltd [2012] EWHC 1077 (Comm), paras 37 41.
These decisions are authority for a general rule that the innocent party to a repudiated contract cannot treat it as subsisting if (i) performance on his part requires the co operation of the repudiating party, and (ii) the contract is incapable of specific performance, with the result that that co operation cannot be compelled.
The purpose of the right to treat a repudiated contract as subsisting is to enable it to be performed at the option of the innocent party.
It is difficult to see why the law should recognise such a right in a case where the contract cannot be either performed or specifically enforced.
The rationale for all this is closely connected with the reasons for the laws reluctance to grant specific performance of certain kinds of contract.
Specific performance, like any equitable remedy, is discretionary, but in the present context the discretion is largely determined by well established principles.
These have always been influenced by a strong pragmatic aversion to the specific enforcement of contractual obligations in circumstances where they sterilise productive resources or lead to their wasteful allocation.
In his dissenting judgment in the Court of Appeal in Co operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1996] Ch. 286, 304, Millett LJ put the point in this way: The competing arguments in the present case, and the difference in the views of the members of this court, reflect a controversy which has persisted since the dispute between Sir Edward Coke and Lord Ellesmere LC.
Sir Edward Coke resented the existence of an equitable jurisdiction which deprived the defendant of what he regarded as a fundamental freedom to elect whether to carry out his promise or to pay damages for the breach.
Modern economic theory supports Sir Edward Coke; an award of damages reflects normal commercial expectations and ensures a more efficient allocation of scarce economic resources.
The defendant will break his contract only if it pays him to do so after taking the payment of damages into account; the plaintiff will be fully compensated in damages; and both parties will be free to allocate their resources elsewhere.
Against this there is the repugnance felt by those who share the view of Fuller CJ in Union Pacific Railway Co v Chicago, Rock Island and Pacific Railway Co (1896) 163 US 564, 600 that it is an intolerable travesty of justice that a party should be allowed to break his contract at pleasure by electing to pay damages for the breach.
English law has adopted a pragmatic approach in resolving this dispute.
Equitable relief is discretionary and exceptional.
Courts of equity have never enforced the performance of all contracts, whatever their nature.
Over the centuries rules of practice have evolved so that the parties can know in advance which contractual obligations will be specifically enforced and which sound in damages only.
The leading principle is usually said to be that equitable relief is not available where damages are an adequate remedy.
In my view, it would be more accurate to say that equitable relief will be granted where it is appropriate and not otherwise; and that where damages are an adequate remedy it is inappropriate to grant equitable relief.
Millett LJs dissent was subsequently upheld in the House of Lords [1998] AC 1, where Lord Hoffmann observed at pp. 15 16: From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on business at a loss if there is any plausible alternative by which the other party can be given compensation.
It is not only a waste of resources but yokes the parties together in a continuing hostile relationship.
Application to contracts of employment
Subject to the intervention of statute, contracts of employment are governed by the same principles as other contracts, except in those cases where their subject matter gives rise to compelling policy considerations calling for a different approach.
But the relationship of employer and employee is especially liable to give rise to policy considerations of this kind, because its incidents have significant social and economic implications.
They affect a high proportion of the adult population and have a profound impact both on their personal lives and on their relationships with others.
When it comes to enforcing an unwanted relationship of employer and employee, there are altogether more sensitive considerations involved than those governing most other more contractual bargains.
As Fry LJ put it in De Francesco v Barnum (1890) 45 Ch D 430, 438, the courts are very unwilling to extend decisions the effect of which is to compel persons who are not desirous of maintaining continuous personal relations with one another to continue those personal relations.
Historically, there have been three main reasons for this.
The first is that the relationship of employer and employee was traditionally regarded as a highly personal one.
In an age of large corporate enterprises many of whose employees perform routine jobs, the personal character which was once typical of employment relationships has lost much of its former importance.
But employment is nonetheless a relationship based on mutual trust and confidence, a factor which has assumed growing importance in the way that the law has developed over the past thirty years.
Second, the difficult and litigious history of industrial relations in the United Kingdom in the late nineteenth and early twentieth centuries reinforced the sensitivity which the common law had always had about any intervention by a court which might force the parties to continue in a relationship which has been described as at once interdependent and oppositional: The Oxford History of the Laws of England, vol xiii (2010), p 623.
This is why the common law rule against injunctions requiring an employee to work has for many years been statutory: see, currently, section 236 of the Trade Union and Labour Relations (Consolidation) Act 1992.
This makes it more difficult to justify intervening in a way that forces an employer to employ someone if the law is to maintain the ordinary principle that remedies should operate mutually or not at all.
Third, legal thinking in this area has always been influenced by a concern for the productive use of resources, including labour.
This is evident in the development of the common law relating, for example, to restrictive covenants and, at a more macro economic level, to the economic torts of interference with contractual relations and procuring a breach of contract and aspects of the law of conspiracy.
It is reflected in the abiding concern of the common law to ensure the terminability of contracts of employment, without prejudice to the subsequent regulation of the financial consequences by an award of damages.
The harsher consequences of this approach for individuals have been mitigated in the last half century by a parallel scheme of statutory protection of employment, operating within defined limits and administered by specialised statutory tribunals with limited jurisdiction over purely contractual disputes.
But the statutory protection of employment overlays the common law without necessarily altering it.
Indeed, it makes the development of a more stringent standard of employment protection at common law unnecessary and perhaps inappropriate.
That much is apparent from the decision of the House of Lords and this court that the employers obligation to maintain mutual trust and confidence does not apply to or survive a wrongful dismissal: Johnson v Unisys Ltd [2003] 1 AC 518, Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2012] 2 AC 22.
The traditional insistence of the courts that contracts of employment are not specifically enforceable has not, at least in the last half century, been dogmatically applied to every obligation under such contracts.
It is important to distinguish between the core obligations which provided the original rationale of the rule, and what for want of a better word I will call collateral obligations.
In my respectful opinion the difficulties which the majority find with the automatic theory of termination as applied to contracts of employment are largely attributable to their failure to make this distinction.
The core obligations are those which are fundamental to the continued existence of the employment relationship, essentially the obligation of the employee to work and the concomitant obligation of the employer to continue to employ and pay him.
When courts say, as they always have, that a contract of employment is not specifically enforceable, they are almost always talking about obligations of this kind.
The present appeal is about the core obligations under Mr Geys contract of employment.
We are concerned with the question whether, in any legally meaningful sense, it can be said that Mr Geys had an obligation to work after 29 November 2007 or SG an obligation to pay him in respect of the period after that date.
If the answer to these questions is No, it must be difficult to suggest that there was any subsisting contract of employment between them.
What follows is directed only to those obligations under a contract of employment which determine whether the relationship created by it is to subsist.
I shall return to the question of collateral obligations later.
The law on these core obligations dates back to the early nineteenth century.
In a previous age, Lord Mansfield had held that a wrongfully dismissed employee was entitled to his wages accruing after termination, on the principle that the employer should not be allowed to take advantage of his own wrong: Temple v Prescott (1773), cited in The Oxford History of the Laws of England, vol xiii (2010), p 645.
But this view was decisively rejected in all the subsequent case law.
The rule that the innocent party to a repudiated contract of employment was not entitled to treat it as subsisting or recover wages accruing after dismissal was established after a difference on the point had arisen between Lord Ellenborough and Lord Tenterden.
In Gandell v Pontigny (1816) 4 Camp 375, 171 ER 119, a merchants clerk was unlawfully dismissed and declined to accept the repudiation, notifying his employer that he held himself available to work for him.
Lord Ellenborough awarded him his full salary, for practical purposes a decree of specific performance.
But in Archard v Hornor (1828) 3 Carr & P 349, 172 ER 451, Lord Tenterden limited the award in a comparable case to damages representing the dismissed employees wages up to the time of his unlawful dismissal.
His view was consistently accepted thereafter in preference to Lord Ellenboroughs: see Snelling v Lord Huntingfield (1834) 1 CM & R 20, 149 ER 976, Fewings v Tisdal (1847) 1 Exch 295, 154 ER 125 (where the history is reviewed in the successful argument of Greenwood).
In French v Brookes (1830) 6 Bing 354, 130 ER 1316, the law was said to have been settled in this sense for many years.
The facts were sufficiently close to the present case to repay attention.
John Oliver French was employed for three years as the manager of a mine in South America on terms that he might be dismissed either on a years notice or on payment of a years salary and the cost of his passage home.
Half way through the term the local agents of the company decided to make economies by suppressing Mr Frenchs post and dismissed him without either notice or the years salary in lieu.
He declined to accept the validity of his dismissal, declared his intention of carrying on and sued for a sum which although described as damages was in fact the total amount that he would have received had the contract subsisted.
The jury awarded him only his actual loss.
Dismissing his claim for the balance, Tindall CJ said, at pp 360 361: [Sergeant] Wildes motion stands on the construction of the agreement: he argues, that the contract between the parties not having been determined in the mode pointed out by the agreement, it must be considered as subsisting for the whole time originally contemplated.
But this action, like others of the same sort, is brought because the contract has been violated; and the case has been correctly dealt with if the jury have given damages for the breach.
The jury, therefore, have not erred if they have put the plaintiff in the same situation as if the directors, upon dismissing him, had paid at the time twelve months' salary, and a reasonable sum towards defraying his expenses from South America to England.
If any special damage had been alleged and proved, as resulting from the directors not having paid the year's salary at the time of the dismissal, the jury might have found for that.
The modern law starts with a trio of cases in which the Plaintiff was dismissed by a public authority or an organ of a public authority without the power to do so: Vine v National Dock Labour Board [1957] AC 488, Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411, and Ridge v Baldwin [1964] AC 40.
In each of these cases, there was either a contract of employment or a relationship regarded as legally analogous.
But all three cases had the distinctive feature that the decision to dismiss was not only repudiatory in the contractual sense but was, as a matter of public law, a nullity.
In each of them, however, the position in the ordinary contractual context was considered, whether by way of either contrast or analogy.
Since these are decisions of high authority and it is implicit in the majoritys view that they were wrongly decided, or at least wrongly reasoned, it is I think worth examining them.
In Vine v National Dock Labour Board [1957] AC 488 the House of Lords held, overruling the Court of Appeal, that a docker was entitled to a declaration that he had been unlawfully dismissed by the Board.
He had been dismissed by a committee which had no power to do so under the relevant regulations.
The decisive consideration was that his dismissal was a nullity as a matter of public law.
Viscount Kilmuir LC (p 500), adopting the reasoning of the dissenting judgment of Jenkins LJ in the Court of Appeal, observed: This is an entirely different situation from the ordinary master and servant case; there, if the master wrongfully dismisses the servant, either summarily or by giving insufficient notice, the employment is effectively terminated, albeit in breach of contract.
Lord Keith of Avonholm (p 507) said: This is not a straightforward relationship of master and servant.
Normally, and apart from the intervention of statute, there would never be a nullity in terminating an ordinary contract of master and servant.
Dismissal might be in breach of contract and so unlawful but could only sound in damages.
Lord Morton (p 504) and Lord Cohen (p 507) both adopted the judgment of Jenkins LJ, the former expressing himself content to adopt, without qualification, everything that he said on the point.
Lord Somervell (p 513) agreed on this point with Lord Morton.
These remarks were obiter.
But they were clearly considered statements of principle, which formed an integral part of the reasoning.
In Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411, Mr Francis was dismissed by the Kuala Lumpur Council on 1 October 1957 from his position as a clerk.
The Council had no power to do this, because regulations conferred the power on the president of the Council alone.
Mr Franciss case was that the decision was a nullity, and that accordingly he remained in the Councils employment, just as Mr Vine remained an employee of the National Dock Labour Board.
Lord Morris, delivering the advice of the Privy Council, distinguished Vines case on grounds which are unclear but for present purposes do not matter.
The relevant point is that they proceeded by analogy with an ordinary contract of employment and held that the dismissal, although wrongful, had been immediately effective to terminate Mr Franciss employment.
Lord Morris expressed the Boards reasons (p 1417) as follows: Their Lordships consider that it is beyond doubt that on October 1, 1957, there was de facto a dismissal of the appellant by his employers the respondents.
On that date he was excluded from the council's premises.
Since then he has not done any work for the council.
In all these circumstances it seems to their Lordships that the appellant must be treated as having been wrongly dismissed on October 1, 1957, and that his remedy lies in a claim for damages.
It would be wholly unreal to accede to the contention that since October 1, 1957, he had continued to be, and that he still continues to be, in the employment of the respondents.
Ridge v Baldwin [1964] AC 40 concerned the dismissal for misconduct of a chief constable, not technically an employee but a public officer.
The dismissal was a nullity as a matter of public law.
Lord Reid (at p 65) contrasted the position under a contract of employment, where it would not have been a nullity: The law regarding master and servant is not in doubt.
There cannot be specific performance of a contract of service, and the master can terminate the contract with his servant at any time and for any reason or for none.
But if he does so in a manner not warranted by the contract he must pay damages for breach of contract.
These statements of principle were accepted in a succession of cases which arose in a purely contractual context, without the public law element: see Barber v Manchester Regional Hospital Board [1958] 1 WLR 181, Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293, 1304 1305; Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699; Ivory v Palmer [1975] ICR 340, 354 (Browne LJ).
The most significant of them is Denmark Productions.
The case arose from the repudiation by a pop group of its contract with its manager.
The issue was whether the manager was entitled to claim an account of profits on the footing that his contract had never lawfully been terminated, or was limited to a claim for damages for loss of the bargain.
The contract was not a contract of employment but a contract for services.
However, the Court of Appeal held by analogy with the law relating to employment contracts that the manager could not claim his remuneration on the footing that the contract subsisted.
Salmon LJ said (p 726): It has long been well settled that, if a man employed under a contract of personal service is wrongfully dismissed, he has no claim for remuneration due under the contract after the repudiation.
His only money claim is for damages for having been prevented from earning his remuneration: Goodman v Pocock; French v Brookes; Fewings v Tisdal.
A managing director, for example, engaged at 10,000 a year, who has ten years of his service agreement to run, is dismissed without cause.
He cannot sit in the sun for ten years drawing his salary on the basis that he is ready, able and willing to serve as managing director if only the company would allow him to do so.
His sole money claim is for damages and he must do everything he reasonably can to mitigate them.
Harman LJ in the same case said, at p 737: I am, therefore, of opinion, and in this I concur with my brother Salmon, that the true cause of action of the plaintiffs was for damages for wrongful dismissal and that the action as framed for an account is misconceived.
An employee dismissed in breach of his contract of employment cannot choose to treat the contract as subsisting and sue for an account of profits which he would have earned to the end of the contractual period: he must sue for damages for the wrongful dismissal and must, of course, mitigate those damages so far as he reasonably can.
In 1974, Sir John Donaldson P reviewed the case law in the National Industrial Relations Court in Sanders v Ernest A Neale Ltd [1974] ICR 565 and concluded (p 571) that the repudiation of a contract of employment terminates the contract without the necessity for acceptance by the injured party.
As a summary of the position as it then stood, this was clearly right.
There was a long, authoritative, and broadly consistent consensus in favour of the principle that an unaccepted repudiation of a contract of employment which terminated the relationship also brought the contract to an end, in law as well as in fact.
Even the apparent exceptions were consistent with the underlying principle.
Leaving collateral obligations aside for the moment, most of them are cases in which, unusually, the repudiation did not bring an end to the relationship of employer and employee.
Such cases are quite different from the case of a dismissal or resignation, actual or constructive, which bring the relationship to an end.
Thus in Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293, Roskill J acknowledged in terms the general rule which treated the contract as at an end upon an unaccepted repudiation, but said that he would not have applied it in the case before him because both parties ignored the event said to constitute the repudiation.
The relationship continued, not just as a legal construct but in fact.
The employee went on working and the employer continued to pay him.
In Hill v CA Parsons & Co Ltd [1972] Ch 305, the Court of Appeal declined to treat the contract as at an end in the exceptional circumstances of that case.
These were that the dismissal notice was invalid and the employee retained the confidence of the employer.
It had only dismissed him at the insistence of a trade union, which had imposed a closed shop agreement of a kind which was about to become unlawful.
As Lord Denning pointed out at p 314B, In the ordinary course of things, the relationship of master and servant thereupon comes to an end: for it is inconsistent with the confidential nature of the relationship that it should continue contrary to the will of one of the parties thereto.
The position was very similar in Rigby v Ferodo Ltd [1988] ICR 29, where the repudiation consisted in the employers unilateral imposition of a reduction in wage rates but the relationship did not end.
The employer wished to go on employing the whole workforce, and had indeed imposed the reduction in order to make that possible.
The employee for his part continued to work and receive wages, albeit reserving his rights and protesting about their reduced amount.
Lord Oliver, delivering the sole reasoned speech in the House of Lords, expressly reserved his opinion on what the position would have been if there had been an outright dismissal or walk out: see pp 33D, 34E F, 35B C.
In my view, this is the true rationale of the cases in which the courts have specifically enforced contractual disciplinary procedures, As Ralph Gibson LJ pointed out in Boyo v Lambeth London Borough Council [1994] ICR 727, 743H, such procedures do not depend on the continued existence of the relationship of employer and employee.
They are, in the terminology that I have been using, collateral.
The courts, developing a principle originally derived from public law, have been willing to enforce them even if the effect is to prolong the period of employment.
This does not impinge on the traditional objections of the common law to the specific enforcement of the employment relationship, because of the collateral character of the disciplinary procedures and because the possibility that an internal disciplinary procedure may result in the employees reinstatement makes it premature to regard that relationship as at an end.
Sir John Donaldson also observed in Sanders that the principle which he regarded as well established in the field of employment represented an exception to the general rule of the law of contract allowing the innocent party to elect whether to accept the repudiation or affirm the contract.
In my view this was a fundamental misunderstanding of the position which, although often repeated, has had an unfortunate effect on more recent developments in this area of law.
In fact, the rule which Sir John Donaldson applied, far from being an exception to the ordinary principles of the law of contract, exemplified the ordinary operation of those principles.
The general principle is that the innocent party to a repudiated contract cannot treat it as subsisting unless he can either perform it without the co operation of the other party or compel that co operation.
In the case of a contract of employment, neither condition is satisfied.
All of the cases which I have cited, as well as those to which I shall come, are agreed that the employers refusal to allow the employee to earn his wages by excluding him from work does not give rise to a right to recover the wages, but only to a claim for damages.
Moreover, the courts have never applied to contracts of employment the doctrine of deemed performance endorsed by the House of Lords in Mackay v Dick (1881) 6 App Cas 251, according to which a party who is prevented by the non co operation of the counterparty from satisfying a condition precedent to his right to receive remuneration may be deemed to have earned it notwithstanding the condition.
Why have the courts been so absolute in their refusal to contemplate a claim by a wrongfully dismissed employee for his wages? The reason is sometimes said to be that he has not earned it because under a contract of employment the obligation of the employee is to do the work, not just to hold himself available to do it.
But this is certainly not a general principle of employment law, as the old cases on sick pay (before it became statutory) and the more recent ones on go slows and other forms of partial industrial action tend to show: see Cuckson v Stones (1858) 1 E & E 248, 256 (Lord Campbell CJ), Miles v Wakefield Metropolitan District Council [1987] AC 539, 561B C (Lord Templeman) and the discussion in Freedland, The Personal Employment Contract (2003), 212 223.
Another possible explanation is that to allow the employee to recover his wages after a wrongful dismissal would be a form of specific enforcement of the contract, and that the problem is the unavailability of that particular remedy.
That, however, hardly seems more satisfying.
After all, if the contract subsists, the wages are a debt.
It is hard to see why any of the objections to making the remedy of specific performance available to enforce a contract of employment should apply to the recovery of an accrued debt.
If there were such an objection, it would apply equally to an action for wages accrued under a contract which had not been repudiated, but it is clear that it does not.
The only rational explanation of the rule that a wrongfully dismissed employee cannot sue for his wages is that once the employee has been dismissed, albeit wrongfully, there is no longer a contractual obligation to pay the wages, and therefore no debt on which to sue.
This can only be because the contract terminated upon the dismissal.
It terminated because the contract is a co operative agreement whose performance requires the engagement and mutual confidence of both sides.
It is therefore not possible for the employee to treat it as subsisting once the employer has repudiated it and brought their de facto relationship to an end.
The consequence, as the editors of Chitty on Contracts, 30th ed (2008), vol 1, para 24 032, point out with reference to co operative contracts generally, is that the party not in default may be compelled to treat the prevention of performance as a repudiation of the contract and to sue for damages for the breach.
Decro Wall, Thomas Marshall and Gunton
This consensus was first seriously challenged by way of dictum in Decro Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 and Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227, and finally as part of the ratio in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448.
Decro Wall was not about a contract of employment.
It concerned an oral contract between a manufacturer and his exclusive distributor in the United Kingdom.
It was held that upon the repudiation of the contract by the manufacturer, the distributor was entitled to treat the contract as subsisting.
The contract was essentially a framework agreement which precluded the manufacturer from selling to any one else in the United Kingdom and the distributor from distributing any one elses competing products, but imposed no obligation on the distributor to buy any goods.
The distributor therefore had no obligation which required the manufacturers co operation.
He had no more than a right (in effect an option) to buy goods from the manufacturer, which would in principle have been specifically enforceable.
The Court of Appeal therefore considered that the case was governed by the actual decision in White & Carter and not by Lord Reids qualification to it concerning co operative agreements.
None of the members of the court regarded the arrangement as having any analogies with a contract of employment.
For these points, see pp. 369H, 370F G (Salmon LJ), 376B (Sachs LJ), 381D F (Buckley LJ).
For present purposes, the case is mainly important for a dictum of Salmon LJ at pp 369 370, responding to the citation in argument of his own judgment (see above) in Denmark Productions Ltd v Boscobel Productions Ltd [1969] 1 QB 699.
Salmon LJ said that he doubted whether an unaccepted repudiation could bring an end to a contract of employment in law although no doubt in practice it does.
In law, he thought that the position was (i) that the contract continued in being, (ii) that it would not, however, be specifically enforced because the employee had not worked and had not therefore earned his remuneration; (iii) that the employees only remedy was to sue for his lost wages as damages for the employers breach in preventing him from earning them (presumably from time to time as they would have fallen due); and (iv) that the only thing that prevented the employee from sitting idle for the rest of the contractual term and collecting damages equal to his lost wages was the condition that he should have taken reasonable steps to mitigate his loss by finding alternative employment.
Sachs LJ (at p 375H) appears to have taken the same view, observing that In such cases it is the range of remedies that is limited, not the right to elect.
In Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227, Sir Robert Megarry V C was concerned with an express covenant in the contract of the Plaintiffs managing director against using or disclosing its confidential information during or after his employment.
The managing director had resigned before the end of the contractual term.
It was submitted that this was a repudiation which brought the contract to an end and with it any obligation to observe the restrictive covenants.
The Vice Chancellors main concern about this submission was that if correct it meant that the employee could bring an end to his own primary obligations under the information covenant by unilaterally renouncing the contract.
He reviewed the case law and, adopting the dicta in Decro Wall, rejected the submission on the ground that the employer had elected to treat the contract as subsisting.
In his view, therefore, it continued to bind the employee.
It seems to me that the result was clearly right for an altogether simpler reason.
The covenant in question expressly bound the employee both during and after his employment.
It was therefore irrelevant when the employment relationship or the contract embodying it ended.
The statements in these two cases were adopted and expanded as a matter of decision by the Court of Appeal in Gunton v Richmond upon Thames London Borough Council [1981] Ch 448.
Richmond Council had dismissed Mr Gunton from his employment as a college registrar on disciplinary grounds and excluded him from work, but without properly following the disciplinary procedure incorporated into his contract.
This failure was found by the Court of Appeal to have caused him no prejudice, because he had exercised a right of appeal and had received a fair hearing on the appeal, albeit that his appeal failed.
Mr Gunton sued on the footing that his employment had not been terminated in law.
He claimed damages and a declaration that he was entitled to remain in the councils employment until he retired or was lawfully dismissed.
His original claim was essentially a claim in public law, for a declaration that the decision to dismiss him was a nullity, which came before the Chancery Division in the last period of the integration of public and private law, before the new Order 53 separated the streams.
In the Court of Appeal, however, the issue was analysed in private law terms.
By a majority (Buckley and Brightman LJJ), the Court of Appeal made the declaration and awarded him damages equal to his losses from the time of his exclusion from work until the expiry of one months notice notionally served on the day when a proper disciplinary proceeding could have been concluded.
The striking thing about Gunton, however, is that both judges in the majority endorsed the common laws long standing recognition that the employment relationship was thereafter at an end.
Both of them accepted the traditional refusal of the common law to allow any remedy other than damages.
However, both treated the contract as having a continuing vestigial existence.
Buckley LJ accepted that the employee could not sue in debt for his remuneration in respect of any period after his exclusion from work, because the right to receive remuneration and the obligation to render services are mutually interdependent p. 468E.
Nonetheless, he concluded that the contract must have a continuing existence in order to give effect to the employees right to elect whether to accept the repudiation or affirm the contract.
This right was part of the general law of contract and there were no principled reasons for applying a different rule to contracts of employment: pp 467 468.
He offers no explanation of how a contract can be said to subsist in spite of the absence of any obligation on either side to perform its core obligations.
Like Buckley LJ, Brightman LJ also accepted that there was no right to sue for wages after the employers repudiation, although he expressed the reason for this differently at p 473B: An employee's remedy, if he is unlawfully dismissed by his employer, is damages.
He cannot obtain an order for specific performance because it is not available to compel performance of a contract of service against an unwilling employer.
Unlike Buckley LJ, he did produce a rationalisation of the continued existence of the contract, by positing a distinction between Mr Guntons status as an employee, which was terminated when he was excluded from work, and the contract of employment, which subsisted until it was lawfully terminated.
His analysis, at pp 474 475, is sufficiently important to be worth quoting in full: It is clear beyond argument that a wrongfully dismissed employee cannot sue for his salary or wages as such, but only for damages.
It is also, in my view, equally clear that such an employee cannot assert that he still retains his employment under the contract.
If a servant is dismissed and excluded from his employment, it is absurd to suppose that he still occupies the status of a servant.
Quite plainly he does not.
The relationship of master and servant has been broken, albeit wrongfully by one side alone.
The same would apply to a contract for services, such as an agency.
If a two year agency contract is made between principal and agent, and the principal wrongfully repudiates the contract of agency after only one year, quite plainly the agent cannot hold himself out as still being the agent of the principal.
He is not.
The relationship of principal and agent has been broken.
I do not think it follows, however, from the rupture of the status of master and servant, or principal and agent, that the contract of service, or the contract of agency, has been terminated by the wrongful act of the master or the principal.
What has been determined is only the status or relationship.
So in the result the servant cannot sue in debt for his wages, which he is wrongfully deprived of the opportunity to earn; or for his fringe benefit, such as the house which the carpenter in Ivory v Palmer [1975] ICR 340 had the right to occupy as part of his emoluments.
As the relationship of master and servant is gone, the servant cannot claim the reward for services no longer rendered.
But it does not follow that every right and obligation under the contract is extinguished.
An obligation which is not of necessity dependent on the existence of the relationship of master and servant may well survive; such as the right of the master in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 that the servant should not during the term of the contract deal on his own account with customers of the plaintiff company.
The distinction made by Brightman LJ between the employees status and his contractual rights, the one terminating on the employers repudiation and the other subsisting, was new to the English case law, but it was not entirely new to the common law.
It had previously been accepted by the High Court of Australia in Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, 454 (Latham CJ), 469 (Dixon J); cf.
Byrne v Australian Airlines Ltd (1995) 131 ALR 422, 432.
It is right to point out that if Gunton was rightly decided on this ground, then Mr Geys will not be entitled to recover his profit related bonus based on the calendar years 2006 and 2007, because his right to such a bonus depends on Clauses 5.15(b)(iii) and (iv) of the contract, which depend on when his employment terminates, and not (if it is different) on when the contract terminates.
Shaw LJ dissented, essentially on the ground that the continued vestigial existence of an unperformable contract was an artificial fiction devoid of any connection with the true state of affairs.
His reasons are sufficiently summed up in the following passage from p 459 of his judgment: .
I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out and out dismissal by the employer or a complete and intended withdrawal of his service by the employee.
It has long been recognised that an order for specific performance will not be made in relation to a contract of service.
Therefore, as it seems to me, there can be no logical justification for the proposition that a contract of service survives a total repudiation by one side or the other.
If the only real redress is damages, how can its measure or scope be affected according to whether the contract is regarded as still subsisting or as at an end? To preserve the bare contractual relationship is an empty formality.
The servant who is wrongfully dismissed cannot claim his wage for services he is not given the opportunity of rendering; and the master whose servant refuses to serve him cannot compel that servant to perform his contracted duties.
In this context remedies and rights are inextricably bound together.
It is meaningless to say that the contract of service differs from other contracts only in relation to the availability of remedies in the event of breach.
The difference is fundamental, for there is no legal substitute for voluntary performance.
In my opinion, Shaw LJs reasoning is unanswerable.
The consensus as it had stood up to the 1970s was correct, and Gunton was wrongly decided.
My reasons are as follows: (1) It was contrary to a rule which, on the weight of authority, had been regarded as settled for at least a quarter of a century before it was decided and, so far as can be seen, for more a century before that.
The only authority of any substance in support of the majoritys analysis in Gunton is to be found in the obiter dicta of Salmon LJ and Sachs LJ in Decro Wall and the judgment of Megarry V C in Thomas Marshall. (2) Much of the discussion of this question in the cases and text books is bedevilled by the persistent fallacy that under the general law of contract the employee would have had an unfettered election to treat the contract as subsisting and that the same must apply to contracts of employment unless a special exception can be carved out for such contracts.
Buckley LJs sole ground of decision in Gunton was that the doctrine [of election] does apply to contracts of personal service as it applies to the generality of contracts: p 468D.
If he had applied the general law of contract as it really is, he could not have reached the conclusion that he did.
White & Carter was cited to the Court of Appeal in Gunton, but it was ignored by all three members of the court.
It had similarly been ignored by Sir Robert Megarry V C in Thomas Marshall, although cited to him as well.
It is not clear why.
In Decro Wall, Salmon LJ (at p 370E) thought that Lord Reids qualification to the right of election in the case of co operative contracts was only a restatement of Counsels argument.
It is possible that Sir Robert Megarry V C and the majority in Gunton tacitly took the same view.
But it is difficult to take that view today.
Lord Reids qualifications upon the right of election as applied to co operative agreements has subsequently been accepted as a correct statement of the law.
It is not possible to accept this part of the reasoning in Decro Wall, Thomas Marshall or Gunton without either treating Lord Reids qualification as wrong, together with the subsequent judicial statements accepting it, or else treating contracts of employment as a special case to which Lord Reids qualifications do not apply. (3) Lord Reids qualifications to the innocent partys right of election are consistent with principle.
The innocent party cannot meaningfully be said to have a right to treat the contract as subsisting if he cannot perform it and the law will not allow him to enforce it.
In cases where the contract cannot be performed without co operation, and co operation is neither forthcoming nor compellable, the contract is in balk unless it comes to an end.
The actual decision in White & Carter was inevitable given that a party cannot be required to mitigate contractual performance (such as a debt).
But it involved a waste of resources which could have been avoided if the parties had been left to their remedy in damages.
If Lord Reids qualifications to this proposition are ignored, this unattractive consequence will be gratuitously extended, at least in the context of contracts of employment, to cases where there can be no contractual performance, because the relationship is dead and all that survives is the husk or shell of a contract devoid of practical content. (4) Brightman LJs distinction between the status of an employee or the relationship of employer and employee, which terminate upon a unilateral repudiation by the employer, and the contract of employment which continues is one way of explaining why, if the contract subsists, wages are not recoverable under it.
But it is in my view difficult to accept.
The whole purpose of the contract of employment is to confer the status of employee, and its whole content is the relationship of employer and employee.
What does it mean to say that the contract continues if the status and the relationship which are its entire subject matter have come to an end together with all of the core obligations that go with that status? (5) The result in Gunton leaves the position in relation to mitigation of loss in an uncertain and most unsatisfactory state.
It seems that the employee, having no more than a right to damages, must mitigate them.
But in principle, the only damages which he can be required to mitigate are the damages for the employers breach of each successive obligation as it would have fallen due for performance if the contract was being performed.
If the employee is entitled to treat the contract as subsisting, there can be no question of his recovering damages for the loss of the bargain, and therefore no question of mitigating that loss.
So what is the employee supposed to do? Salmon LJ in Decro Wall and Buckley LJ in Gunton considered that he should obtain alternative employment.
Yet as Buckley LJ recognised (p 468F) this will normally put it out of his power to perform his contract with his former employer.
In effect, the recognition in both Decro Wall and Gunton that only damages will ever be recoverable after an exclusion from work, coupled with the recognition in both cases that those damages are subject to mitigation, means that the employee must either accept the repudiation or else be compelled in practice to mitigate the loss of his bargain when in law it has not been lost.
The position seems equally unsatisfactory for the employer, who is left with a penumbral contractual liability, the duration of which is uncertain and the extent of which depends on the inherently uncertain question whether he can show that the employee has failed to satisfy the (relatively light) burden of mitigating his loss.
Much of Mr Cavender QCs excellent argument on this point was directed not so much to justifying Gunton as to persuading us that whatever doubts we might entertain about its correctness, it had stood for thirty years without apparently creating problems or giving rise to any injustice.
The law, he submitted, should be left as it is rather than disturbed for the sake of mere doctrinal purity.
There are certainly cases where that is the right way of dealing with settled but legally anomalous decisions.
But this is not one of them.
In the first place, Gunton has always been a controversial decision.
It was the decision of a divided court.
It was recorded in Rigby v Ferodo Ltd [1988] ICR 29, 34 that the Court of Appeal had given leave to appeal to the House of Lords with a view to its correctness being determined, although in the event the appeal was resolved on another point.
Two years later, in Octavius Atkinson & Sons Ltd v Morris [1989] ICR 431, 436B C, Sir Nicholas Browne Wilkinson V C observed that the correct legal result unhappily remains unresolved.
Gunton was followed with strong and express misgivings by the Court of Appeal in Boyo v Lambeth London Borough Council [1994] ICR 727, some of which foreshadowed the argument before us.
Ralph Gibson LJ said that if it had been open to him he would have preferred the analysis of Sir John Donaldson in Sanders v Ernest A Neale Ltd [1974] ICR 565, and Staughton LJ declared a preference for the dissenting judgment of Shaw LJ.
Even in 2012, its position has been described as far from assured: Cabrelli and Zahn, The elective and automatic theories of termination at common law: Resolving the conundrum?, Industrial Law Journal vol 41 (2012), 346, 354 355.
Secondly, there is no basis for Mr Cavenders assertion that the decision in Gunton has given rise to no difficulty or injustice.
Its application would give rise to significant injustice in this case, for reasons which I have sought to explain at para 110.
It cannot, with respect, be an answer to say, as the majority do, that their approach is required in order to prevent SG from profiting from its own wrong and to negative the impact of that wrong on Mr Geys.
These are proper functions of an award of damages.
Mr Geys problem is that the particular feature of SGs conduct which was wrongful, i.e. the temporal separation of the dismissal and the payment in lieu of notice, has not caused him any significant loss.
It is no part of the purpose of the law to reflect moral indignation about SGs conduct, even assuming that SGs mistake calls for moral indignation, which I doubt.
Third, and more generally, it is always dangerous to allow the law to part company with reality in this way.
It leads to unexpected and highly technical results, which businessmen and employees are unlikely to anticipate unless they are particularly well advised.
In this case, even a mighty corporation like SG misunderstood the position.
How are more modest enterprises to do so? We cannot know what other problems the decision in Gunton has thrown up since it was decided, because it is binding at every level below this one and has therefore had to be borne in silence by any one who lacked the stomach to embark on litigation with a view to taking the issue to the House of Lords or the Supreme Court.
Fourth, the law as it was stated in Vines case made for certainty in a way which is not true of the law stated in Gunton.
If the contract subsists after the employees exclusion from work, it will often be extremely difficult to determine with any confidence when it terminates.
This will depend on the often ambiguous facts said to constitute an acceptance of the repudiation, or on highly technical questions about the validity of notices and payments such as those which arise in this case.
I have already drawn attention to the additional uncertainty associated with the question of mitigation.
By comparison, if the contract ends when the employment relationship ends, the position is clear.
There is no reason to believe that we would be inviting unforeseeable difficulties by recognising the termination of the relationship.
Why should they be any greater now than they were during the very long period before the 1970s when that was thought to be settled law?
Collateral obligations
A good deal of attention was devoted in the course of argument to the implications for other contractual obligations of concluding that an employee cannot treat the contract of employment as subsisting after a repudiation which terminates the employment relationship de facto.
In my opinion, this question has very little bearing on the present issue, once it is appreciated that we are concerned only with those obligations which go to the continued existence of the employment relationship.
In Gunton itself, at p 475, Brightman LJ envisaged that the extinction of the relationship of employer and employee might well be survived by any obligation which is not of necessity dependent on the existence of the relationship.
Echoing this view, Lord Oliver pointed out in Rigby v Ferodo Ltd [1988] ICR 29, 34D that even if Gunton was wrongly decided and the contract terminated with the relationship of employer and employee, that would not necessarily bring an end to those contractual obligations which do not of necessity depend on the existence of the relationship of master and servant.
I think that this is right, and significant.
In many contracts of employment, and perhaps in most modern ones, there is a large number of obligations which do not depend on the existence of the employment relationship.
One example is the specific enforcement after a repudiation of express or implied covenants against competition, as in Lumley v Wagner (1852) 1 De G M & G 604, 42 ER 687.
In appropriate cases, this may be subject to the proviso that the repudiation was not by the party in whose favour the covenant was included: see General Billposting Co Ltd v Atkinson [1909] AC 118.
Another example is a covenant against the disclosure of confidential information, such as the one considered in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227.
Whether collateral obligations of this kind continue to bind after the termination of the contract or the underlying relationship will normally depend on the construction of the contract, or the exact nature of the implication if the obligation in question is implied.
This is not the place for a general review of the kind of obligations which survive termination of the contract and are sufficiently collateral to warrant specific enforcement.
What is clear is that it is not necessary to prolong the life of a repudiated contract of employment in order to justify this body of law.
It follows that it will not be affected one way or the other by the outcome of this appeal.
Conclusion
I would allow SGs cross appeal on the ground that the contract terminated on 29 November 2007, when it was repudiated by SG and Mr Geys was excluded from work.
On that footing the question raised by Mr Geys appeal whether, if the contract subsisted after that date, it came to an end upon the crediting of payment in lieu into his bank account or upon his noticing the payment later in December, does not arise.
For my part, I would have held that if Mr Geys (contrary to my opinion) was entitled to affirm the contract after the unequivocal notice of dismissal given to him on 29 November, then all that was required to satisfy Clause 8.3 of the Handbook was the making of the payment in lieu.
That seems to be more consistent with both the reality of the situation and the approach of the Court of Appeal in Abrahams v Performing Right Society [1995] ICR 1028 and the Employment Appeal Tribunal in Cerberus Software Ltd Rowley [2000] ICR 35.
On the so called full and final settlement issue, which turns on the construction of paragraph 5.16 of the letter agreement, I agree with Lord Hope.
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Mr Geys was employed by Socit Gnrale, London Branch (the Bank) as Managing Director of European Fixed Income Sales from 9 February 2005.
He had a written contract and further terms were incorporated into it by the Banks Staff Handbook.
The contract contained a provision permitting either party to terminate his employment by giving 3 months notice.
The Handbook contained a payment in lieu of notice (PILON) clause.
It reserved the Banks right to terminate his employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period).
If exercised, the contract required the Bank to make a termination payment including a Compensation Payment.
This was to be calculated by reference to the date when the employment terminated.
If the date was after 31 December 2007, Mr Geys was entitled to a Compensation Payment reflecting awards made to him for the calendar years 2006 and 2007.
If it was before that date, it would be assessed by reference to his awards in 2005 and 2006, which were significantly lower.
On 29 November 2007 Mr Geys was summarily dismissed in breach of the terms of the contract.
On 18 December 2007 the Bank paid into his bank account the correct sums due to him under the PILON clause.
The Bank then sent Mr Geys a payslip and P45 setting out the payments.
He first saw them on 7 or 8 January 2008.
On 2 January 2008 Mr Geys solicitors wrote to the Bank saying Mr Geys had decided to affirm his contract and requesting further details on the termination and associated payments.
On 4 January 2008 the Bank wrote to Mr Geys giving further details.
George Leggatt QC (sitting as a Deputy High Court Judge) held that the date when Mr Geys received the Banks letter (deemed to be 6 January 2008) was the first time it notified him that it had exercised its contractual termination rights.
The Court of Appeal (Arden, Rimer, Pitchford LLJ) held that it had been terminated on 18 December 2007 when the PILON was made into his account.
The Banks primary case was that the contract was terminated on 29 November 2007 when Mr Geys was summarily dismissed.
This was rejected by the Court of Appeal, who were bound by Gunton v Richmond upon Thames London Borough Council [1981] Ch 448.
In that case the common law principle that a repudiatory breach terminated a contract only if and when it was accepted was applied to contracts of personal service.
Four issues came before this Court: (1) Does a repudiation of an employment contract, which takes the form of an express and immediate dismissal, automatically terminate the contract (this is the automatic theory) or as was held in Gunton does the normal contractual rule apply that repudiation must be accepted by the innocent party (this is the elective theory)? (2) When in accordance with the PILON clause was Mr Geys contract terminated? (3) Is there any conflict between the 3 months notice provision in the main contract and the PILON clause in the Handbook? (4) Is Mr Geys entitled to claim damages for wrongful dismissal and for a breach of the tax efficiency provisions in the contract, as well as the termination payment, or is he required by the terms of the contract to have waived those claims?
The Supreme Court allows Mr Geys appeal by a majority of 4:1 (Lord Sumption dissenting).
On the first issue, the majority upheld the elective theory that a wrongful repudiation terminates the contract only if and when accepted by the innocent party.
The automatic theory rewarded a wrongful repudiator of an employment contract, allowing him to select a termination date that suited him to the detriment of the innocent party.
The theory also failed to explain cases where, following an unaccepted repudiation, provisions that did not survive the termination had been enforced against the repudiator, such as those relating to competition or disciplinary procedures [69, 75].
Nor had it been applied in the employment context to the extent that its proponents suggested [CA 83 86, 88 89].
There was a circularity in the premise that there is no remedy so there is no right so there is no remedy. [89] Concerns are expressed about how far the automatic theory, if valid, would extend [95 6]: Should dismissals/resignations be treated differently if they are (1) express or implied; (2) immediate or delayed; or (3) outright or less than outright, and is the distinction workable? (4) If a fundamental breach other than by dismissal does not attract the automatic theory, why should breaches for dismissal, which strike more clearly at the continuation of the contract? (5) If extended to constructive dismissals, it is inconsistent with the notion that resignation is in response to a fundamental breach, as well as the inherent need for acceptance. (6) The theory could be extended to contracts for services with similar consequences.
Lord Sumption held that Gunton was contrary to the consensus existing up the 1970s.
Innocent parties did not have an unfettered right to treat the contract as subsisting.
He drew attention to Lord Reids qualification in White & Carter (Councils) Ltd v McGregor [1962] AC 413 that a repudiated contract can only continue with the co operation of both parties.
Innocent parties cannot treat contracts as subsisting if they cannot perform or enforce it and its subject matter and core obligations have ended.
It creates problems of mitigation, it compels an employee to accept repudiation or mitigate loss of his bargain when in law it has not been lost, and it leaves an employer with penumbral liability for an uncertain duration.
The elective theory in this case produces an unjust result giving Mr Geys a windfall, despite suffering no substantial loss measurable in damages [110].
On the second issue, the majority held that it was not until 6 January 2008, when Mr Geys received the Banks 4 January 2008 letter, that the right to terminate under the PILON clause was validly exercised [61].
The PILON clause did not dispense with the requirement for an employee to be notified of termination [54, 61].
The employment relationship required the other party to be notified in clear and unambiguous terms that the right to end the contract was being exercised, and how and when it is intended to operate.
An employee should not be required to check his bank account to discover if he is still employed [58].
The employees bank is not his agent for the receipt of notification of what the payment is for [60].
On the third issue, the Court was unanimous.
It saw no inconsistency between the 3 months notice contractual provision and the Handbooks PILON clause.
The contract set out one method of termination, but it was not the only method.
The PILON clause could be read as a qualifying provision to the contract.
A court, in the face of two seemingly inconsistent provisions, must try to reconcile them conscientiously and fairly [25].
On the fourth issue too the Court was unanimous.
It held that Mr Geys could claim for damages for wrongful dismissal and for breach of the tax efficiency provisions.
The contractual provisions imposed mutual obligations on both parties: the Bank was obliged to make the termination payment and Mr Geys was obliged to enter into the termination agreement.
There was no provision entitling Mr Geys to waive that obligation so that he could preserve his claims.
If he failed to enter into it, he would be in breach of contract and liable to the Bank for damages [33].
The provisions purporting to require Mr Geys to waive his right to claim damages conceived in favour of the Bank, and any ambiguity must be construed in Mr Geys favour [39].
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These proceedings raise, for the first time in the courts of the United Kingdom, the question how the concepts of sufficiency and infringement are to be applied to a patent relating to a specified medical use of a known pharmaceutical compound.
An important objective of modern pharmaceutical research is the discovery of new medical uses for known molecules.
This commonly involves expensive research programmes, which will not be rewarded and will therefore not happen unless patent protection is available.
Patent protection for second use medical patents is, however, difficult to accommodate within the traditional scheme of patent law.
Traditionally, there were two legal obstacles.
First, both the product and the process by which it was prepared were known from the original patent and therefore failed the test of novelty.
Secondly, its use for a new therapeutic purpose was not itself patentable because article 52(4) of the European Patent Convention (the EPC) and section 4(2) of the UK Patents Act 1977 prevented the grant of patents for a method of treatment of the human or animal body.
As is now well known, in 1984 the Swiss Federal Intellectual Property Office issued a statement of practice that it would be prepared to grant patents for second use medical patents in the following form: the use of compound X in the manufacture of a medicament for the treatment of indication Y: [1984] OJ EPO 581.
Hence the expression Swiss form patents for patents granted in this form.
The Enlarged Board of Appeal of the European Patent Office adopted this approach shortly afterwards in EISAI/Second Medical Indication G 05/83 [1979 85] EPOR B241.
It ruled, at para 23, that it was legitimate in principle to allow claims directed to the use of a substance or composition for the manufacture of a medicament for a specified new and inventive therapeutic application, even in a case in which the process of manufacture as such does not differ from known processes using the same active ingredient.
Swiss form patents were not product patents, but purpose limited process patents.
They surmounted both obstacles because the invention is identified as neither a product nor a method of treatment but a manufacturing process for a novel purpose.
This development responded to a real problem, namely the difficulty of obtaining patent protection for second uses that may have been truly inventive and involved costly research.
But it has given rise to formidable analytical problems as a result of the need to apply to Swiss form patents a statutory scheme which was not designed to accommodate them.
For this reason they were regarded with suspicion as intellectually impure by patent lawyers in the United Kingdom.
In John Wyeth and Brother Ltds Application [1985] RPC 545, they were adopted with express misgivings by the Patents Court in the interests of uniformity among states party to the EPC.
But in spite of the misgivings, they have achieved a secure place in United Kingdom patent law, and neither party to this appeal challenges them in principle.
Some of the difficulties associated with them were resolved when the EPC was revised in November 2000 to provide for (among other things) the grant of purpose limited product patents: see article 54(5) of the revised Convention.
Corresponding changes were made to the Patents Act 1977 by the Patents Act 2004.
Once these changes came into effect, in 2011, Swiss form patents ceased to be issued by the European Patent Office.
EPC 2000 patents give rise to difficulties of their own, some of which are very similar.
But this appeal is not concerned with them.
The patent in suit
Warner Lambert is a company in the Pfizer Group.
It is the proprietor of European Patent No 0641330 for Isobutylgaba for the treatment of seizure disorders, notably epilepsy.
Pregabalin is a derivative of Isobutylgaba, which is also referred to by its chemical name (S) 3 (aminomethyl) 5 methylhexanoic acid.
It is marketed by Warner Lambert under the brand name Lyrica.
Patent No 0641330 expired in the United Kingdom on 17 May 2013.
The present appeal concerns a second European Patent, EP(UK) No 0934061, entitled Isobutylgaba and its derivatives for the treatment of pain, with a priority date of 24 July 1996 (the Patent).
The claims of the Patent are all purpose limited.
Those which are principally relevant are Claims 1, 2 and 3, which are in the following terms: 1.
Use of (S) 3 (aminomethyl) 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof for the preparation of a pharmaceutical composition for treating pain. 2.
Use according to Claim 1 wherein the pain is inflammatory pain. 3.
Use according to Claim 1 wherein the pain is neuropathic pain.
It is common ground that the skilled person to whom the Patent is deemed to be addressed is a team consisting of a neuroscientist and a clinician specialising in the treatment of pain.
To explain what the skilled team would understand by the terms used in the claims, it is necessary to say something about what was known at the priority date about the physiology of pain.
The second edition of Classification of Chronic Pain Syndromes and Definitions of Pain Terms, published in 1994 by the International Association for the Study of Pain, defined pain very broadly.
It is an unpleasant sensory and emotional experience associated with actual or potential tissue damage or described in terms of such damage.
At the priority date, pain was classified into a number of different types.
The distinctions between them were neither absolute nor consistently understood.
But it was generally recognised that pain fell into two broad categories: nociceptive and neuropathic pain.
Nociceptive pain is produced by noxious external stimuli such as heat, extreme cold, intense mechanical pressure or chemicals.
These stimuli stimulate fibres known as nociceptors, which transmit impulses via the spinal cord to the brain, where they are perceived as pain.
Nociceptive pain has a bio protective function.
It alerts the brain to the presence of noxious stimuli so that appropriate avoidance measures can be taken.
This type of pain resolves with treatment of the underlying cause.
Inflammatory pain is a type of nociceptive pain.
The bodys response to an injury involves the release of chemical mediators which increase the sensitivity of nociceptors causing pain both at the site of the injury or in the surrounding area.
Like other nociceptive pain, inflammatory pain resolves with the treatment of the underlying cause.
In 1996, well known and efficacious treatments were available for treating inflammatory pain.
They included analgesics (eg paracetamol), non steroidal anti inflammatory drugs (eg aspirin, ibuprofen) and opioids of various strengths.
Neuropathic pain, unlike nociceptive/inflammatory pain, is pathological.
It has no bio protective function.
It is caused by damage to the nervous system itself.
Neuropathic pain was defined in the second edition of the IASPs Classification of Chronic Pain as pain initiated or caused by a primary lesion or dysfunction of the nervous system.
The nervous system comprises the central nervous system, ie the brain and spinal cord, and the peripheral nervous system, ie the nerves outside those structures.
Critical to the issues in these proceedings is the distinction between peripheral neuropathic pain, which arises from damage or dysfunction of the peripheral nervous system; and central neuropathic pain, which is rarer and arises from damage or dysfunction of the central nervous system, for example as a result of a stroke, multiple sclerosis or spinal cord injury.
The symptoms of neuropathic pain (of either kind) are more severe than those of nociceptive/inflammatory pain.
They include perceptions of burning, shooting pain and electric shock pain.
Moreover, unlike nociceptive/inflammatory pain, neuropathic pain is persistent, sometimes for years or for life.
It was in 1996, and still is, notoriously difficult to treat neuropathic pain.
In particular, treatments which were efficacious against nociceptive/inflammatory pain, such as non steroidal anti inflammatory drugs, were not regarded as effective for the treatment of neuropathic pain.
Finally, it is necessary to mention allodynia and hyperalgesia, two terms which feature prominently in the evidence.
Both are symptoms of pain.
Allodynia is pain experienced in response to a stimulus that would not normally be expected to cause pain.
Hyperalgesia is an increased response to a thermal or mechanical stimulus that one would normally expect to be painful, but less so.
It may be primary hyperalgesia (occurring at the site of an injury) or secondary hyperalgesia (occurring in the area surrounding the site of the injury).
Lyrica received a marketing authorisation in the European Union for the treatment of peripheral neuropathic pain and epilepsy in July 2004 and for the treatment of central neuropathic pain in September 2006.
It is also authorised for the treatment of generalised anxiety disorder (or GAD).
Lyrica is one of four first line treatments recommended by NICE for neuropathic pain.
It is one of the Pfizer Groups most successful drugs in the United Kingdom.
The present proceedings
Generics (UK) Ltd (trading as Mylan) and Actavis Group PTC EHF are pharmaceutical companies that are mainly engaged in marketing generic pharmaceutical products.
Actavis markets a generic pregabalin product under the brand name Lecaent, which was launched in February 2015.
Caduceus Pharma Ltd hold the marketing authorisation for Lecaent in the European Union.
For convenience I will refer to Actavis and Caduceus together as Actavis.
Lecaent is marketed under a skinny label, ie for the treatment of some indications only.
The Summary of Product Characteristics prepared for the purpose of obtaining marketing authorisation and the Patient Information Leaflet included in the packet state that the conditions for which Lecaent is indicated are epilepsy and GAD, for which patent protection has expired.
In these proceedings, Mylan and Actavis claimed the revocation of the Patent on the ground of lack of inventive step and insufficiency, and Warner Lambert claimed against Actavis for infringement of Claims 1 and 3.
The judge, Arnold J [2015] EWHC 2548 (Pat), rejected the arguments based on lack of inventive step, and these are no longer in issue.
But he held that Claim 1 (pain) and Claim 3 (neuropathic pain) were invalid.
In summary, this was because he found that there was sufficient disclosure in the specification to support the claim that pregabalin was efficacious in the treatment of inflammatory pain and peripheral neuropathic pain, but not central neuropathic pain.
Since the judge construed Claim 1 as extending to all pain and Claim 3 as extending to all neuropathic pain, including central neuropathic pain, both claims failed for insufficiency.
It followed that Claim 4 (cancer pain), Claim 6 (phantom limb pain) and Claim 14 (fibromyalgia), all of which in the judges view either were or could involve central neuropathic pain, failed on the same ground.
Claim 13 (idiopathic pain, ie pain of unknown origin) failed on a more fundamental ground: there was nothing whatever in the specification which appeared to support it.
The result of the judges decision was to remove patent protection for the manufacture of pregabalin for the treatment of neuropathic pain, save for those subsidiary claims directed solely to peripheral neuropathic pain.
The judge rejected as an abuse of process an application after judgment to amend the patent by narrowing the claims in terms which would arguably have made them valid.
The Court of Appeal (Floyd, Kitchin and Patten LJJ) [2016] EWCA Civ 1006 upheld the judges findings, except that they considered that fibromyalgia was not neuropathic pain but an idiopathic pain.
Since they agreed that the claim relating to idiopathic pain was invalid, this made no difference to the outcome.
The Court of Appeal upheld his decision on abuse of process.
It followed that infringement did not arise, neither of the claims said to have been infringed being valid.
The judge and the Court of Appeal differed on the test for infringement in a case where the monopoly conferred by the patent was confined to manufacture for a particular use.
The judge held that if Claims 1 and 3 had been valid, they would not have been infringed.
The Court of Appeal held that he had applied the wrong test, and declined to decide the point in the absence of the findings of fact which, on their preferred test, would have been required.
On the present appeals, Warner Lambert contend that all the claims of the Patent were valid, although they have made no effort to justify Claim 1 (pain), Claim 13 (idiopathic pain) or Claim 14 (fibromyalgia).
Their real object is to establish the validity of their claims in relation to neuropathic pain or, if they cannot achieve that, then at least those claims which relate to peripheral neuropathic pain, which is by far the commonest type.
Actavis and Mylan for their part cross appeal in support of their case that none of the claims in relation to neuropathic pain are valid.
The only claims whose validity they accept are those which are limited to inflammatory pain, for which there is currently no marketing authorisation.
In these circumstances, the issues in the present appeal fall under four heads: (1) The construction of the claims, and in particular Claim 3 (neuropathic pain). (2) The sufficiency of the disclosure in the specification. (3) Amendment and abuse of process. (4) The test for infringement of a patent for a manufacturing for a limited use.
For reasons which will become apparent, on the view which this court takes of the law, not all of these issues arise in the circumstances of this case.
However all of them raise unresolved questions of considerable general importance, which have been fully argued not only by the parties, but by the Secretary of State and other interveners potentially affected by statements of principle in the courts below.
It is therefore proposed to deal with all of them.
Since we are not all agreed on every point, it may assist if I summarise the conclusions of the court at the outset: (1) The court unanimously affirms the view of both courts below that Claim 1 extends to all pain and Claim 3 to all neuropathic pain, whether peripheral or central.
It unanimously affirms Arnold Js decision rejecting Warner Lamberts application to amend the patent so as to limit the scope of these claims. (2) The court holds by a majority (Lord Sumption, Lord Reed and Lord Briggs), that the disclosure in the specification supports the claims so far as they extend to inflammatory pain but not to any kind of neuropathic pain.
It follows that Claims 1 and 3 fail for insufficiency, and that Warner Lamberts appeal must be dismissed and Actaviss and Mylans cross appeal allowed. (3) I hold, together with Lord Reed, Lord Hodge and Lord Briggs, that if Claims 1 and 3 had been valid, they would not have been infringed.
We differ, however, as to the reasons.
I consider, together with Lord Reed, that the intention of the alleged infringer is irrelevant and that the sole criterion of infringement is whether the product as it emerges from the manufacturing process, including any labelling or accompanying leaflet, is presented as suitable for the uses which enjoy patent protection.
The judge found (paras 443 447) that Lecaent was sold with patient information leaflets to the effect that it was for the treatment of seizure disorders and GAD.
Lord Mance agrees that the test depends on the objective appearance and characteristics of the product as it is prepared, presented and put on the market, but leaves open the possibility (i) that in rare cases the context may make it obvious that these are not to be taken at face value, and (ii) that there may be circumstances in which the generic manufacturer should positively exclude use for the patent protected purpose.
Lord Hodge and Lord Briggs prefer the view of Arnold J that the test is whether the alleged infringer subjectively intended to target the patent protected market.
Arnold J found (para 661) that they did not.
This paragraph has been approved by the authors of all the other judgments.
Construction and amendment
Claim 3 claims use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain.
The question is whether neuropathic pain in its context means all neuropathic pain, including central neuropathic pain (as Actavis and Mylan contend), or only peripheral neuropathic pain (as Warner Lambert say).
I will call these the broad and narrow constructions respectively.
Both the judge and the Court of Appeal decided without, it seems, much difficulty, in favour of the broad construction.
I agree with them.
In my opinion they were plainly right about this.
Lord Briggs has dealt fully with the reasons, in terms with which I agree, and I shall not lengthen this judgment by repeating them.
I also agree, for the reasons which he gives, that the judge was right to reject Warner Lamberts attempt to amend the patent so as to confine Claim 3 to peripheral neuropathic pain.
For reasons which will become apparent in the following section, the amendment would not have saved Claim 3 even if it had been allowed.
Sufficiency and plausibility
Elementary as it is, it is worth reminding oneself at the outset of the juridical basis on which patents are granted, sometimes called the patent bargain.
The inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired.
The point was succinctly made by Lord Mansfield in Liardet v Johnson (1778), quoted in Hulme, On the History of Patent Law, (1902) 18 LQR 280, 285: The condition of giving encouragement is this: that you must specify upon record your invention in such a way as shall teach an artist, when your term is out, to make it and to make it as well by your directions: for then at the end of the term, the public shall have benefit of it.
The inventor has the benefit during the term, and the public have the benefit after .
The principle remains the foundation of modern patent law, and is recognised in the case law of both the United Kingdom and the European Patent Office.
In EXXON/Fuel Oils (T 409/91) [1994] OJ EPO 653, at paras 3.3 and 3.4, the EPO Technical Board of Appeal observed that it was the general legal principle that the extent of the patent monopoly, as defined by the claims should correspond to the technical contribution to the article in order for it to be supported, or justified.
This means that the definitions in the claims should essentially correspond to the scope of the invention as disclosed in the description.
Although the requirements of articles 83 and 84 are directed to different parts of the patent application, since article 83 relates to the disclosure of the invention, whilst article 84 deals with the definition of the invention by the claims, the underlying purpose of the requirement of support by the description, insofar as its substantive aspect is concerned, and of the requirement of sufficient disclosure is the same, namely to ensure that the patent monopoly should be justified by the actual technical contribution to the article The principal conditions of validity, novelty, inventive step, industrial application and sufficiency are all, in one way or another, directed to satisfying the principle thus expressed.
Sufficiency is a condition of validity relating not to the underlying science but to its disclosure in the patent.
Section 14 of the Patents Act 1977 provides: (3) The specification of an application shall disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the article (5) The claim or claims shall (a) define the matter for which the applicant seeks protection; (b) be clear and concise; (c) be supported by the description; and relate to one invention or to a group of inventions (d) which are so linked as to form a single inventive concept.
These provisions correspond to EPC articles 83 and 84, which read: 83.
The European patent application shall disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the article 84.
The claims shall define the matter for which protection is sought.
They shall be clear and concise and be supported by the description.
Section 72(1) of the Act, which corresponds to EPC article 138, mirrors section 14(3).
It provides for the revocation of the patent, inter alia on the ground that the specification of the patent does not disclose the (c) invention clearly enough and completely enough for it to be performed by a person skilled in the article
Lord Mance has expressed the view that sufficiency is a rule of judge made law.
It would I think be more exact to say that it is a statutory rule, which is fundamental to the public interest that justifies the issue of the patent.
The contribution of judges has been to work out principles on which it can be applied to Swiss form patents.
Section 14 of the Patents Act and the corresponding provisions of the EPC assume that an invention will be sufficiently disclosed if the specification enables it to be performed.
In the case of a patent for a new product or process, that assumption is almost always correct.
The skilled person will discover that it works by replicating it in accordance with the specification.
But the assumption is not correct in the case of a second use patent.
The invention is not the compound or the process of its manufacture.
The skilled person already knows how to make the product from the prior art disclosed in the original patent.
The invention consists in the new purpose for which the product is to be manufactured.
If sections 14(3) and 72(1)(c) are read literally and as an exhaustive statement of the requirement of sufficiency, all that needs to be disclosed is the new purpose, which is enough to enable it to be administered to a patient suffering from the relevant condition.
The skilled person does not need to know how or why the invention works in order to replicate it.
The result would be that the knowledge which made the identification of the new purpose inventive need not be disclosed at all.
The main problem about this result is that it would enable a patent to be obtained on a wholly speculative basis.
Without some disclosure of how or why the known product can be expected to work in the new application, it would be possible to patent the manufacture of known compounds for the purpose of treating every conceivably relevant condition without having invented anything at all, in the hope that trial and error might in due course show that the product was efficacious in treating at least some of them.
For that reason, both Arnold J and the Court of Appeal concluded that it was not enough simply to refer to a known compound and assert that it was efficacious for treating a specified condition.
The patentee must disclose some reason for regarding this assertion as plausible.
In their view, this requirement was not exacting.
The Court of Appeal (para 46) put the point as follows: The EPO and domestic cases do, however, indicate that the requirement of plausibility is a low, threshold test.
It is designed to prohibit speculative claiming, which would otherwise allow the armchair inventor a monopoly over a field of endeavour to which he has made no contribution.
It is not designed to prohibit patents for good faith predictions which have some, albeit manifestly incomplete, basis.
Such claims may turn out to be insufficient nonetheless if the prediction turns out to be untrue.
A patent which accurately predicts that an invention will work is, however, not likely to be revoked on the ground that the prediction was based on the slimmest of evidence.
Thus, the claims will easily be seen not to be speculative where the inventor provides a reasonably credible theory as to why the invention will or might work.
The same is true where the data in the specification is such that the reader is encouraged to try the invention.
Warner Lamberts primary case is that even this undemanding test is an impermissible addition to the text of the Patents Act and the European Patent Convention, and that the sole criterion of sufficiency is that the invention can be performed by the skilled person.
Alternatively, they accept that some such test is necessary in order to exclude purely speculative claims, and to that extent they are prepared to add something to the literal language of sections 14(3) and 72(1)(c) of the Patents Act and EPC articles 83 and 138(1)(b).
But they take issue with the courts below on two points.
First, the courts below held that the patentee must show that his prediction of therapeutic efficacy was plausible in relation to everything falling within the scope of any claim if that claim was to be valid.
Secondly, they held that the patentee may not demonstrate the plausibility of his prediction to the required standard by reference only to later published data.
Mr Mitcheson QC, who appeared for Warner Lambert, disputed both propositions.
The Court of Appeals reference to armchair inventors suggests that what they meant by speculative claiming was claiming by persons who had done nothing new or inventive at all but had simply sought to patent abstract possibilities.
That may well be a particular risk in the case of patents for new uses of known compounds, especially when they are commercially successful in their existing use.
In reality, however, speculative claiming of this kind is simply one of a number of ways in which a patentee may attempt to claim a monopoly more extensive than anything which is justified by his contribution to the article Other ways in which this can happen include claiming a monopoly wider than the disclosure in the patent can support.
An over broad claim will not necessarily be speculative.
The inventor may really have invented something corresponding to the full breadth of the claim.
Research may subsequently demonstrate this.
But the claim will still exceed his contribution to the art if that contribution is not sufficiently disclosed in the patent.
The concept of plausibility originates in the case law of the EPO as a response to over broad claims, in particular claims to whole classes of chemical compounds supported by a description which fails to show which compounds can be expected to work.
The Technical Board of Appeal treats the condition of sufficiency under EPC article 83 as satisfied if it is possible to work the invention across the scope of the claim from the information in the specification, interpreted in the light of common general knowledge at the priority date.
It addresses the broader question whether the disclosed contribution to the art is commensurate with the monopoly claimed under EPC article 56, in the context of inventive step.
In that context, its case law requires the formulation of a problem which the claims of the patent could be said to solve: see T 939/92 AGREVO/Triazole sulphonamides [1996] EPOR 171.
It imports a requirement that the patent should disclose not just what the invention is and how to replicate it, but some reason for expecting that it will work.
Plausibility was the standard to which the patentee was expected to demonstrate this.
Thus in JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor 9 (T 1329/04) [2006] EPOR 8, the hypothetical problem calling for solution was whether a claimed polynucleotide was a member of the TGF beta superfamily.
The only evidence to support the contention that it was, consisted of material published after the priority date.
The patent was held invalid for want of an inventive step.
The Board observed at para 12: The definition of an invention as being a contribution to the art, ie as solving a technical problem and not merely putting forward one, requires that it is at least made plausible by the disclosure in the application that its teaching solves indeed the problem it purports to solve.
Therefore, even if supplementary post published evidence may in the proper circumstances also be taken into consideration, it may not serve as the sole basis to establish that the application solves indeed the problem it purports to solve.
See also the Boards observations to the same effect in BRISTOL MYERS SQUIBB/Dasatinib (T 0488/16) (1 February 2017, unpublished), at para 4.9.
English law diverges from this approach, although the divergence is more a question of labels than of substance.
It distinguishes between so called classical insufficiency (where the skilled person is unable to perform the invention from the information disclosed in the specification) and so called Biogen insufficiency (where the claim is said to be too broad, because it exceeds the disclosed contribution to the art).
It deals with both under section 14(3), the statutory analogue of EPC article 83.
The expression Biogen insufficiency is derived from the decision of the House of Lords in Biogen Inc v Medeva Plc [1997] RPC 1.
The patent in suit in that case claimed a class of products, namely a molecule defined partly by the way that it had been made (by recombinant DNA).
The trial judge and the EPO Technical Board of Appeal had found that the disclosure was sufficient to enable the invention to be performed across the whole scope of the claim, and the Appellate Committee proceeded on the basis that that was so.
But the specification described only one method of making the molecule by recombinant DNA, whereas other methods were possible which owed nothing to the matters disclosed.
The patent therefore claimed more than the inventors contribution to the art warranted.
The House of Lords imported into section 14(3) of the Act a concept similar to the former requirement of fair basis in section 32(1)(i) of the Patents Act 1949 (that any claim of the complete specification is not fairly based on the matter disclosed in the specification).
It held that if the claim extended beyond the technical contribution to the art disclosed in the patent, it failed for insufficiency independently of any objection based on want of an inventive step and notwithstanding that the skilled person could perform the invention across the whole scope of the claim.
Lord Hoffmann, delivering the leading speech, said at p 50: But the fact that the skilled man following the teaching of Biogen 1 would have been able to make HBcAg and HBsAg in bacterial cells, or indeed in any cells, does not conclude the matter.
I think that in concentrating upon the question of whether Professor Murrays invention could, so to speak, deliver the goods across the full width of the patent or priority document, the courts and the EPO allowed their attention to be diverted from what seems to me in this particular case the critical issue.
It is not whether the claimed invention could deliver the goods, but whether the claims cover other ways in which they might be delivered: ways which owe nothing to the teaching of the patent or any principle which it disclosed.
He went on to make the same point in the context of the objection of insufficiency.
Adopting the statement of principle cited above from EXXON/Fuel oils, he pointed out, at p 54, that the purpose of requiring sufficiency of disclosure could not be limited to enabling the public to work the invention after the patent had expired: Section 72(1)(c) of the 1977 is not only intended to ensure that the public can work the invention after expiration of the monopoly.
It is also intended to give the court in revocation proceedings a jurisdiction which mirrors that of the Patent Office under section 14(3) or the EPO under article 83 of the EPC, namely, to hold a patent invalid on the substantive ground that, as the EPO said in Exxon/Fuel Oils (T 409/91) [1994] OJ EPO 653, para 3.3, the extent of the monopoly claimed exceeds the technical contribution to the art made by the invention as described in the specification.
Lord Hoffmann was not, in these observations, addressing the question of second use patents.
But such patents raise a similar problem.
If it is enough to disclose how to make a known compound and for what conditions, the patentee has acquired a monopoly without adding anything to the sum of knowledge.
He will have satisfied the condition of sufficiency but without satisfying its purpose.
The answer to this anomaly in the case of Swiss form patents was supplied by a series of decisions in which the EPO Technical Board of Appeal held that there was to be implied into a purpose limited claim an assertion of efficacy for the designated purpose, and that this was an intrinsic technical feature of the claim.
This proposition was originally established in purpose limited patents for non medical uses.
In two decisions published on the same date in 1989, G2/88 MOBIL/Friction reducing additive [1990] OJ EPO 93, at para 9, and G 6/88 BAYER/Plant Growth Regulating Agent [1990] OJ EPO 114, at para 7 the Board drew attention to the Protocol on the Interpretation of EPC article 69, which required a patent to be interpreted as defining a position which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties.
From this they concluded that with such a claim, where a particular technical effect which underlies such use is described in the patent, having regard to the Protocol, the proper interpretation of the claim will require that a functional feature should be implied into the claim, as a technical feature; for example, that the compound actually achieves the particular effect.
The principle was first applied to patents for new medical uses in T 158/96 PFIZER/Obsessive compulsive disorder (28 Oct 1998, unpublished), at para 3.1.
In Prendergasts Applications [2000] RPC 446, 448 Neuberger J arrived independently at the same conclusion.
It followed that the specification must include some basis for supposing that the claim to therapeutic efficacy was true: In relation to a Swiss type application, it appears to me that, in the absence of any practical evidence of the idea working (that is the idea of using a well established drug for the treatment of a condition for which it has not so far been used), the absence of any evidence of the idea working involves the absence of a description. [W]hether or not there is a description or an adequate description, for the purposes of section 14(5)(c) of the 1977 Act, must be judged by reference to the nature of the application.
There is obvious force in the contention that, where you have a claim for the use of a known active ingredient in the preparation of a medicament for the treatment of a particular condition, the specification must provide, by way of description, enough material to enable the relevantly skilled man to say this medicament does treat the condition alleged, and that pure assertion is insufficient.
The implications of this approach for sufficiency were considered by the EPO Technical Board of Appeal in SALK INSTITUTE FOR BIOLOGICAL STUDIES/AP I complex (T 609/02) (27 October 2004, unpublished).
At para 9, the Board observed: Where a therapeutic application is claimed in the form allowed by the Enlarged Board of Appeal in its decision G 5/83 (OJ EPO 1985, 64), ie in the form of the use of a substance or composition for the manufacture of a medicament for a defined therapeutic application, attaining the claimed therapeutic effect is a functional technical feature of the claim (see G 2/88 and G 6/88, OJ EPO 1993, 93 and 114, Headnote III.
And point 9 of the reasons, for non medical applications, see also T 158/96 of 28 October 1998, point 3.1 of the reasons).
As a consequence, under article 83 EPC, unless this is already known to the skilled person at the priority date, the application must disclose the suitability of the product to be manufactured for the claimed therapeutic application.
The Board went on to mitigate this principle so as to reflect the fact that in the case of purpose limited medical patents definitive evidence of therapeutic effect would not be available until clinical trials had been carried out.
Since these would have to be disclosed, it was practically inevitable that the patent application would have to be made before any trials.
This implied that sufficiency could be demonstrated by the disclosure of material supporting the claimed therapeutic effect which was less than definitive: The patent system takes account of the intrinsic difficulties for a compound to be officially certified as a drug by not requiring an absolute proof that the compound is approved as a drug before it may be claimed as such.
The Boards of Appeal have accepted that for a sufficient disclosure of a therapeutic application, it is not always necessary that results of applying the claimed composition in clinical trials, or at least to animals are reported.
Yet, this does not mean that a simple verbal statement in a patent specification that compound X may be used to treat disease Y is enough to ensure sufficiency of disclosure in relation to a claim to a pharmaceutical.
It is required that the patent provides some information in the form of, for example, experimental tests, to the avail that the claimed compound has a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se.
Showing a pharmaceutical effect in vitro may be sufficient if for the skilled person this observed effect directly and unambiguously reflects such a therapeutic application (T 241/95, OJ EPO 2001, 103, point 4.1.2 of the reasons, see also T 158/96 of 28 October 1998, point 3.5.2 of the reasons) or, as decision T 158/96 also put it, if there is a clear and accepted established relationship between the shown physiological activities and the disease (loc cit).
After discussing the potential value of in vitro tests for this purpose, the Board observed, at para 10: This means that the skilled person is made aware of the structure of the active ingredient proposed for the pharmaceutical composition as well as, in technical terms, of a definite link between the ingredient and the mechanism allegedly involved in the disease state.
The presence of a cause/effect relationship is, thus, made plausible.
It was somewhat tentatively suggested to us by Mr Mitcheson that this principle did not justify the application of a plausibility test beyond the application stage, or authorise its use as a ground for revocation.
But the correspondence between EPC articles 83 and 138 makes this kind of argument difficult to accept.
Mr Mitchesons main submission under this head was a different one.
This was that the subsequent case law of the EPO indicates that the SALK principle applies only where the therapeutic effect suggested in the patent is inherently implausible.
The argument is that it is necessary for the patentee to disclose reasons for regarding the claimed therapeutic effect as plausible only when the skilled person reading the patent would be sceptical about it in the absence of such disclosure.
This submission is consistent with some turns of phrase in the cases.
But it would have been a strange thing for the Technical Board of Appeal to have meant.
It would be inconsistent with the reason why plausibility of the claimed therapeutic effect is required, namely to support the implied claim to therapeutic efficacy and to justify the monopoly by reference to the patentees contribution to the article If Warner Lamberts argument were sound, it would mean that if nothing was known either for or against the claimed therapeutic effect, no disclosure need be made in support of it.
The leading case relied on in the jurisprudence of the EPO is T 0578/06 IPSEN/Pancreatic cells (29 June 2011, unpublished).
This concerned a compound for extending the functional life of pancreatic islet cells.
The patent comprised no experimental data supporting the drugs claimed therapeutic effect, but it did contain a technical explanation of its effect and an experimental methodology by which this could be verified: see para 11.
The Board was concerned with the circumstances in which the specification could be sufficient without experimental data.
It held, at paras 14 15: 14.
The Boards of Appeal have indeed dealt with cases where, in the context of the assessment of inventive step, there could only be an invention if the application made it at least plausible that its teaching did indeed solve the problem it purported to solve and in which to establish plausibility the disclosure of experimental results in a patent application, or, under certain circumstances, by post published evidence, was considered necessary (see decision T 716/08 of 19 August 2010, points 14 to 16 for a summary of the case law). 15.
The board re emphasises in this context however that this case law considers the establishment of plausibility only relevant when examining inventive step if the case at hand allows the substantiation of doubts about the suitability of the claimed invention to solve the technical problem addressed and when it is thus far from straightforward that the claimed invention solves the formulated problem.
This decision is authority for the proposition that plausibility can be demonstrated in the specification without experimental evidence, if there is no substantiated doubt about the theoretical case made for the efficacy of the invention.
This is the only relevant proposition for which it is authority.
As the Board observed in INTERVET/Infectious salmon anaemia virus vaccine (T 0716/08) (19 August 2010, unpublished), para 15, (the case cited in the passage quoted above from IPSEN), common general knowledge at the priority date may be used to interpret the teaching in an application or a patent, but there must be something in the patent to interpret.
This is no more than the Board had said in SALK itself.
These principles may be illustrated by the decisions of the Board in T 1437/07 ALLERGAN/ Botulinum toxin for treating smooth muscle spasm (26 October 2009, unpublished), and T 950/13 BRISTOL MYERS SQUIBB/Dasatinib in the treatment of chronic myelogenous leukaemia (3 February 2017, unpublished).
In ALLERGAN, it is unclear from the report what technical information was disclosed in support of the claim to therapeutic efficacy, except that it did not include any experimental data.
The recital of the arguments shows that the sole ground on which the disclosure was said to be insufficient was that the absence of experimental data was alone enough to make the claim to therapeutic efficacy not credible.
The Board dealt with this objection as follows: 38.
The respondents argue that it was not credible that the therapeutic effect could be achieved because the treatment disclosed in Example 9 had not actually been carried out. 38.1 However, article 83 EPC stipulates that an invention must be disclosed in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art (emphasis added by the board).
Thus, article 83 EPC does not stipulate that a claimed invention must have actually been carried out by the applicant or the inventor.
Moreover, according to rule 42(1)(e) EPC, even the presence of an example is not mandatory.
Therefore, just because a patent discloses an effect which has not in reality been achieved, there is no reason in the absence of convincing evidence that the effect cannot be achieved for the board to doubt that the effect can be achieved.
Thus, the respondents argument does not convince the board.
The decision, like the decision in IPSEN, is authority for the proposition that experimental data are not essential to sufficiency unless it is being positively alleged with convincing supporting evidence that the invention does not work.
In that event it may be necessary for the patentee to point to experimental data to rebut the allegation.
But this does not mean that the specification is sufficient if there is neither experimental data nor any other reason to deduce from the specification that the claim to therapeutic efficacy is plausible.
The decision is not authority for saying that the objector has the onus of showing that it is implausible.
Sufficiency turns on what the patentee has disclosed.
It must always be necessary for the patentee to demonstrate that he has included in the specification something that makes the claim to therapeutic efficacy plausible.
Otherwise a mere assertion of efficacy would be enough.
The same point was made by the Board of Appeal in BRISTOL MYERS SQUIBB.
The compound the subject of the patent was dasatinib for the treatment of chronic myelogenous leukaemia.
The patent taught that dasatinib worked by inhibiting certain protein tyrosine kinases associated with chronic myelogenous leukaemia.
No experimental data were disclosed in the specification.
At para 3.6, the Board observed: The disclosure of experimental results in the application is not always required to establish sufficiency, in particular if the application discloses a plausible technical concept and there are no substantiated doubts that the claimed concept can be put into practice.
The objection was that there were substantial doubts about the products efficacy for the designated purpose in the absence of either (i) experimental data, or (ii) a coherent theory which could explain such an effect, ie what the Board called a plausible technical concept.
The Board of Appeal upheld the patent because it disagreed on point (ii).
It thought that there was a coherent theory.
This was because it was common general knowledge in the art that the inhibition of certain kinases associated with chronic myelogenous leukaemia was an effective way to treat that condition.
Dasatinib had significant functional and chemical affinities with another kinase inhibitor known to be effective.
This was more than a mere assertion of efficacy.
The patent disclosed a coherent theory to support it in the light of common general knowledge.
All of these judgments deal with highly fact specific issues arising from objections or potential objections on the ground of insufficiency.
When reading them, it is important not to miss the wood for the trees.
The fundamental principle which they illustrate is that the patentee cannot claim a monopoly of a new use for an existing compound unless he not only makes but discloses a contribution to the article None of them casts doubt on the proposition that the disclosure in the patent must demonstrate in the light of the common general knowledge at the priority date that the claimed therapeutic effect is plausible.
On the contrary, they affirm it: see ALLERGAN at paras 26, 37, and BRISTOL at para 3.2.
The Court of Appeals statement of the effect of the plausibility test has already been quoted (para 20 above).
They considered that the threshold was not only low, but that the test could be satisfied by a prediction based on the slimmest of evidence or one based on material which was manifestly incomplete.
Consistently with that approach, they considered (paras 40, 130) that the Boards observations in SALK laid down no general principle.
I respectfully disagree.
The principle is that the specification must disclose some reason for supposing that the implied assertion of efficacy in the claim is true.
Plausibility is not a distinct condition of validity with a life of its own, but a standard against which that must be demonstrated.
Its adoption is a mitigation of the principle in favour of patentability.
It reflects the practical difficulty of demonstrating therapeutic efficacy to any higher standard at the stage when the patent application must in practice be made.
The test is relatively undemanding.
But it cannot be deprived of all meaning or reduced, as Floyd LJs statement does, to little more than a test of good faith.
Indeed, if the threshold were as low as he suggests, it would be unlikely to serve even the limited purpose that he assigns to it of barring speculative or armchair claims.
Plausibility is not a term of art, and its content is inevitably influenced by the legal context.
In the present context, the following points should be made.
First, the proposition that a product is efficacious for the treatment of a given condition must be plausible.
Second, it is not made plausible by a bare assertion to that effect, and the disclosure of a mere possibility that it will work is no better than a bare assertion.
As Lord Hoffmann observed in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] RPC 28, para 28, it is hard to see how the notion that something is worth trying or might have some effect can be described as an invention in respect of which anyone would be entitled to a monopoly.
But, third, the claimed therapeutic effect may well be rendered plausible by a specification showing that something was worth trying for a reason, ie not just because there was an abstract possibility that it would work but because reasonable scientific grounds were disclosed for expecting that it might well work.
The disclosure of those grounds marks the difference between a speculation and a contribution to the article This is in substance what the Technical Board of Appeal has held in the context of article 56, when addressing the sufficiency of disclosure made in support of claims extending beyond the teaching of the patent.
In my opinion, there is no reason to apply a lower standard of plausibility when the sufficiency of disclosure arises in the context of EPC articles 83 and 84 and their analogues in section 14 of the Patents Act.
In both contexts, the test has the same purpose.
Fourth, although the disclosure need not definitively prove the assertion that the product works for the designated purpose, there must be something that would cause the skilled person to think that there was a reasonable prospect that the assertion would prove to be true.
Fifth, that reasonable prospect must be based on what the TBA in SALK (para 9) called a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se.
Sixth, in SALK, this point was made in the context of experimental data.
But the effect on the disease process need not necessarily be demonstrated by experimental data.
It can be demonstrated by a priori reasoning.
For example, and it is no more than an example, the specification may point to some property of the product which would lead the skilled person to expect that it might well produce the claimed therapeutic effect; or to some unifying principle that relates the product or the proposed use to something else which would suggest as much to the skilled person.
Seventh, sufficiency is a characteristic of the disclosure, and these matters must appear from the patent.
The disclosure may be supplemented or explained by the common general knowledge of the skilled person.
But it is not enough that the patentee can prove that the product can reasonably be expected to work in the designated use, if the skilled person would not derive this from the teaching of the patent.
principles which I have considered, they can be addressed quite briefly.
I turn to Warner Lamberts alternative arguments.
In the light of the general
The first argument is that whatever standard of plausibility is applied, the Court of Appeal were wrong to say that it had to be demonstrated across the whole scope of the claim.
In my opinion, they were not wrong.
As I have said, plausibility is not a distinct condition of validity, but one element in the test of sufficiency.
As such, its application is governed by the same principles which apply to sufficiency generally.
In a case such as this, where the claim is said to exceed the disclosed contribution to the art, it is of the essence that the specification must justify the full extent of the claim to the requisite standard.
Where a feature of the claim is an assertion of therapeutic efficacy for a given condition, a monopoly is being claimed for the process of manufacturing the compound for the treatment of that condition.
This does not mean that it must work for all patients suffering from that condition, or work on every occasion when it is applied by way of treatment.
But it does mean that where the condition identified embraces a number of different pathologies, and the claim is construed as asserting the efficacy of the product for each of them, the assertion must be plausible in relation to them all.
It must, as Kitchin LJ put it in Regeneron Pharmaceuticals Inc v Genentech Inc [2013] RPC 28, para 100 be possible to make a reasonable prediction the invention will work with substantially everything falling within the scope of the claim or, put another way, the assertion that the invention will work across the scope of the claim must be plausible or credible.
Warner Lamberts second argument is that the courts below were wrong to reject later published data as relevant.
This submission also is contrary to the legal basis of this particular head of insufficiency.
We know that pregabalin works for the treatment of both peripheral and central neuropathic pain, because like any other medicament on the market, it underwent demanding clinical trials after the priority date, the results of which were made public.
On that basis it received marketing authorisation for all neuropathic pain.
This is always the case for a commercially valuable medicament, and no other kind will be worth litigating about.
The question is not whether it works but whether the contribution to the art consisting in the discovery that it can be expected to work has been sufficiently disclosed in the patent.
The inherent difficulty of demonstrating this before clinical trials is taken into account in the modest standard (ie plausibility) which is applied to test it.
This point was made by the EPO Technical Board of Appeal in SALK, at para 8: Sufficiency of disclosure must be satisfied at the effective date of the patent, ie on the basis of the information in the patent application together with the common general knowledge then available to the skilled person.
Acknowledging sufficiency of disclosure on the basis of relevant technical information produced only after this date would lead to granting a patent for a technical teaching which was achieved, and, thus, for an invention which was made, at a date later than the effective date of the patent.
The general principle that the extent of monopoly conferred by a patent should correspond to, and be justified by, the technical contribution to the art, has to be kept in mind.
This does not mean that subsequent data is never admissible in a dispute about sufficiency, but the purpose for which it is admitted is strictly limited.
Where the asserted therapeutic effect is plausible in the light of the disclosure in the patent, subsequent data may sometimes be admissible either to confirm that or else to refute a challengers contention that it does not actually work: see, for example, ASTRAZENECA/Omeprazole Na (T 1677/11) (27 November 2012, unpublished), MERCK, SHARP & DOHME/Pharmaceutical nanoparticulate composition of a Tachykinin receptor antagonist (T 0210/11) (17 July 2014, unpublished).
But it cannot be a substitute for sufficient disclosure in the specification.
As the EPO Technical Board of Appeal observed in JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor 9 (T 1329/04) [2006] EPOR 8 at para 12, (cited above), it cannot be a substitute for sufficient disclosure in the specification.
Application to the present case
to the judgment of Arnold J.
The empirical data disclosed in the patent in support of the claim to therapeutic efficacy consisted of references to a number of pre clinical animal models used to test drugs for various kinds of pain.
The following facts about these models are either agreed or found by the judge: In what follows, unless otherwise stated, references to paragraph numbers are 1.
The most significant model was the rat paw formalin test.
This involves the injection of a noxious agent (formalin) into a rats paw.
The rat is monitored for the next hour and the amount of time that it spends licking or biting the paw is recorded.
There are two phases.
The first phase, which lasts about ten minutes, models the acute nociceptive pain caused by the injection itself.
The second phase, which lasts about 45 minutes, models inflammatory pain.
Nonsteroidal anti inflammatory drugs were not effective for neuropathic pain, but were known to be efficacious in the second phase.
The Patent specification accordingly recorded that the test results showed that pregabalin was effective in treating inflammatory pain.
At the trial Warner Lambert contended that nonetheless it was common general knowledge that the second phase could also be predictive of efficacy in treating neuropathic pain.
The judge found, at para 235, that the evidence did not establish this. 2.
The carrageenin test also models inflammatory pain.
Carrageenin, an inflammatory agent, is injected into the sole of a rats paw and tests are carried out to determine the extent of thermal or mechanical hyperalgesia.
The Patent specification recorded that test results showed that pregabalin was effective in treating inflammatory pain.
There is nothing in the literature to suggest that the carrageenin test could be used to predict efficacy for neuropathic pain, either on its own or in conjunction with the rat paw formalin test. 3.
The post operative pain model tests for pain responses following surgery.
The rats paws plantaris muscle is incised under anaesthetic.
After 24 hours the rat is assessed for mechanical hyperalgesia and tactile allodynia.
Both are referred to in the Patent as nociceptive responses.
Nothing in the literature suggests that this model can be used to predict efficacy for neuropathic pain, either on its own or in conjunction with the rat paw formalin test. 4.
The specification also refers to two well known models for peripheral neuropathy, the Bennett model and the Kim and Chung model.
However, no data are presented from either model.
It follows that the experimental data in the specification was predictive of efficacy for the treatment of inflammatory pain.
But the specification does not claim that the experimental data presented makes it plausible that pregabalin is effective for the treatment of any kind of neuropathic pain.
In these circumstances, the specification supported Claim 3 only if it would have suggested to the skilled person that there was some unifying principle which made it plausible that pregabalin would also work with neuropathic pain.
The judge had already found, at para 161, in the context of the challenge for obviousness, that the skilled person would not have considered that there was any reasonable basis for thinking that an anticonvulsant like pregabalin, known to be effective for the treatment of epilepsy, would for that reason alone be effective for treating neuropathic pain.
Warner Lambert identified the relevant unifying principle as central sensitisation, a phenomenon discovered by Professor Clifford Woolf, one of their expert witnesses at trial, and published by him in 1983.
Central sensitisation was a well known concept at the priority date.
It refers to the sensitisation of neurons in the dorsal horn to peripheral painful stimuli.
For present purposes it is unnecessary to describe the detailed physiological processes involved.
Essentially, pain signals originating in injury at the periphery are transmitted to the spine and intensified, resulting in allodynia and secondary hyperalgesia.
The experts were agreed that central sensitisation is common to inflammatory pain and peripheral neuropathic pain but was not known to be causative of either (para 191).
Moreover, there is no necessary correlation between allodynia and secondary hyperalgesia on the one hand and either central sensitisation or neuropathic pain on the other.
The judge found (para 205) that allodynia and secondary hyperalgesia were present in a large majority of patients suffering from neuropathic pain, but there was a significant minority of cases in which they were not present.
Moreover, although allodynia and secondary hyperalgesia involved central augmentation, in some cases this would be central sensitisation, in others not.
Central sensitisation is not the only mechanism of central augmentation (para 61).
A significant part of the evidence at trial was concerned with the role of central sensitisation in the second phase of the rat paw formalin test.
This, as I have pointed out, models inflammatory pain.
The judge found (para 235) that it was not known to be predictive of efficacy for neuropathic pain.
The evidence established that central sensitisation played a role in the pain experienced in the second phase.
But the judge found that it was not generally understood to be a dominant role (paras 211, 213 214).
By this I understand him to have meant (since this was the issue between the experts) that it amplified but did not cause the pain experienced in the second phase.
Against this background, the judge dealt first with central neuropathic pain.
He rejected the suggestion that central sensitisation could serve as a unifying principle embracing it.
This was because although central sensitisation was understood to contribute to inflammatory pain and peripheral neuropathic pain, both of which originate in the peripheral nervous system, it cannot contribute to central neuropathic pain, which has nothing to do with damage to the peripheral nerves (paras 193, 348).
There was an issue at trial about the correct classification of fibromyalgia and phantom limb pain.
They were said to be exceptions to this proposition.
But the judge (para 194) was not satisfied that this was common general knowledge.
These findings are fatal to the argument that central sensitisation can serve as a unifying principle embracing central neuropathic pain.
The judges reasons for rejecting that argument seem to me to be unanswerable.
The judge refused to allow Warner Lambert to argue by way of alternative that the presence of hyperalgesia or allodynia itself served as a unifying principle embracing central neuropathic pain, because it had not been pleaded, advanced in evidence or put to the relevant witnesses.
But in any event he considered (para 349) that the evidence did not support it, mainly because it was difficult to reconcile with the fact that nonsteroidal anti inflammatory drugs were known to be effective for the treatment of inflammatory pain but not neuropathic pain.
Turning to peripheral neuropathic pain, which is the subject of Actavis and Mylans cross appeal, the judge evidently found this to be a difficult issue.
He considered the evidence to be finely balanced, but concluded on balance (para 351) that the specification enabled a plausible prediction to be made that pregabalin would be effective for treating peripheral neuropathic pain.
His reasoning was as follows: In addition to the general points made above, Warner Lamberts case suffers from the problem that it has not been established that it was common general knowledge that the rat paw formalin test was predictive of efficacy for neuropathic pain.
Moreover, as discussed above, Professor Woolf accepted that the carrageenin and post operative pain models did not assist in this regard.
Nevertheless, I have concluded on balance that, given that plausibility is a relatively low threshold, the data contained in the specification, when read with the common general knowledge, just make it plausible that pregabalin would be effective to treat peripheral neuropathic pain.
This is because the common general knowledge as to (i) the involvement of central sensitisation (at least as an amplifying mechanism) in both inflammatory pain and peripheral neuropathic pain and (ii) the role played by central sensitisation in the rat paw formalin test would have suggested to the skilled team that it was possible that a drug which was effective for inflammatory pain, in particular as modelled by the second phase of the formalin test, would also be effective in peripheral neuropathic pain, although this would not necessarily be the case.
This conclusion is supported by the evidence not only of Professor Woolf, but also of Dr Scadding and Professor Wood in cross examination.
Dr Scadding said that, when he read the Patent, he thought that it could be the case that pregabalin would be effective for (peripheral) neuropathic pain, although a demonstration of that was missing.
Professor Wood more or less accepted that it was a credible suggestion, although he made it clear that he would want to test it experimentally.
An appellate court should not normally interfere with conclusions of a trial judge which depend on his evaluation of a substantial body of expert evidence: see Biogen Inc v Medeva Plc [1997] RPC 1, 50 (Lord Hoffmann).
I consider, however, that Actavis and Mylan are entitled to succeed on their cross appeal, not because there was anything wrong with the judges findings, but because those findings do not support his conclusion that the specification makes it plausible to predict that pregabalin will be efficacious for treating neuropathic pain.
The question, it must be remembered, is not whether it is plausible but whether the specification discloses something that would make it so in the eyes of the skilled person.
The starting point was pointed out by the judge himself (para 255) in the context of the challenge based on obviousness.
Because the only evidence of therapeutic efficacy presented in the specification is the results of the four animal models, the skilled person would understand that the patentee was relying on these as being predictive of efficacy.
Those results were, however, predictive only of efficacy for inflammatory pain.
The specification does not in terms claim more than this.
No data are presented for the two recognised models of neuropathic pain, the Bennett model and the Kim and Chung model.
There is no mention of central sensitisation, or indeed of any unifying principle that might embrace any condition other than inflammatory pain.
This is an unpromising basis for a submission that there is a unifying principle which enables any kind of conclusion about efficacy for neuropathic pain to be derived from results of the animal models.
The judges analysis of the implications for peripheral neuropathic pain of the data presented in the specification was based entirely on the common general knowledge that central sensitisation was involved in both inflammatory and peripheral neuropathic pain.
The judge concluded from this that it was possible that a drug which the specification showed to be effective for the first would also be effective for the second, although this would not necessarily be the case.
In my opinion this is a logical non sequitur.
The reason for seeking a unifying principle embracing neuropathic as well as inflammatory pain is that the unifying principle may suggest a common cause or metabolic mechanism embracing both, whose operation may be affected by the drug.
That might in turn suggest that a drug which was effective for one condition might also be effective for the other.
The involvement of central sensitisation in both inflammatory and peripheral neuropathic pain does not prove or even suggest that they have a common cause.
Indeed, it is clear that they do not.
The involvement of central sensitisation in both inflammatory and peripheral neuropathic pain does suggest that there may be a common metabolic mechanism at work, at least in intensifying the pain.
But neither the specification nor the common general knowledge of the art supplies any reason for supposing that pregabalin affects the operation of that mechanism or even that it might well do.
In particular, there is nothing to suggest, even as a hypothesis, that pregabalin works with peripheral neuropathic pain by blocking central sensitisation.
The information presented in the specification about the rat paw formalin test does not assist on this point.
The rat paw formalin test, as I have said, models inflammatory pain.
It shows a diminution of pain in the second phase, associated with the administration of pregabalin.
But in the absence of anything in the specification about the effect of pregabalin on the mechanism of pain, there is no reason to suppose that the diminution of pain is associated with its effect on central sensitisation as opposed to its effect on any other agent of inflammatory pain.
The judge had found (paras 211, 214) that central sensitisation was not the dominant factor in the second phase of the test.
If, notwithstanding the involvement of central sensitisation in both inflammatory and neuropathic pain, the rat paw formalin model is not predictive of efficacy for neuropathic pain, I find it difficult to see how the model can assist in making such a prediction plausible.
The judge was obviously conscious of the logical inconsistency, and believed that he had found a way of resolving it.
With respect, I do not think that he had.
More generally, it cannot in my view be enough to justify a monopoly that it is possible a priori that a drug which was effective for inflammatory pain would also be effective for neuropathic pain, in the absence of any reason to suppose that the possibility had some scientific basis or that it was more than speculative.
Everything is possible that is not impossible, but not impossible is very far from being an acceptable test for sufficiency.
Plausibility may be easy to demonstrate, but it calls for more than that.
Floyd LJ said (para 133) that he was fortified in his conclusions by a further consideration, which the judge had not relied on, namely that it was established through the evidence that the skilled team would be encouraged by the data in the patent to carry out simple tests (which are themselves identified in the patent) to confirm the suitability of pregabalin for peripheral neuropathic pain.
I would have thought, on the basis of that evidence (as I think the judge did) that the specification had thereby made a contribution to the art which would justify a claim to peripheral neuropathic pain.
The simple tests that Floyd LJ was referring to were the Bennett and the Kim and Chung tests for peripheral neuropathic pain; and the evidence that he had in mind was that of Dr Scadding, the expert clinician called by Actavis and Mylan: see paras 119 120 and 127.
Dr Scadding had accepted that the skilled person would be encouraged by the data in the patent to ask the neuroscientist to test pregabalin for neuropathic pain.
Professor Wood, the expert neuroscientist called by Actavis and Mylan who would notionally have been asked to carry out these tests, gave more guarded answers when he was asked to deal with the point in cross examination: Day 2, pp 265 269.
His evidence, in summary, was that there were no data whatever about neuropathic pain in the patent, but that he would be encouraged by the broad terms of the claims to try many tests, including the Bennett and the Kim and Chung tests.
There were, he said, many different pain mechanisms that can give apparently similar symptoms, for which there were different models, and it would be necessary to test for all of them.
Some were difficult to test for.
It was put to him that even the Bennett and the Kim and Chung tests would not provide definitive proof of efficacy, because it was a step by step process.
His final answers on this point fairly reflect the tenor of his evidence, so far as one can judge from the transcript: A.
So one would just carry out an analysis of all these different models, to see where the drug had better utility than present medication.
The data in the patent would give you sufficient motivation to carry out further tests and step by step you would reach the stage where you have demonstrated that pregabalin was effective for the treatment of pain? A.
It would certainly inspire you to analyse its activity in a broad range of pain models.
Of course, this would be useful for the clinician attempting to exploit the drug in treating various different types of human pain.
Animal models are not ideal, but they are always a useful pointer for the clinician.
Q. A useful starting point? A. Absolutely.
I am conscious of the danger of an appellate court analysing extracts from a transcript of evidence on complex and inter related technical questions, where so much depends on the impression that the witnesss evidence as a whole has made on the trial judge.
But in the absence of any discussion of this point by the judge, I feel unable to attach the same importance to it as Floyd LJ did.
There is, however, a more fundamental objection to it, which is well brought out by the evidence which I have cited from Professor Wood.
In classical insufficiency cases, where the question is whether the disclosure in the patent enables the skilled person to perform the invention, the skilled person may be assumed to supplement the disclosure by carrying out simple tests.
In cases like this one, where the invention is novel but the objection of insufficiency is that the claim exceeds the disclosed contribution to the art, the role of hypothetical simple tests is necessarily more limited.
As the EPO Technical Board of Appeal observed in JOHNS HOPKINS, at para 12, the specification can be said to contribute to the art if it solves a problem, but not if it merely poses one.
Or as Lord Hoffmann observed in a passage that I have already quoted, the notion that something is worth trying cannot be enough without more to justify a monopoly.
The specification in the present case says nothing about neuropathic pain of any kind.
It says nothing about central sensitisation, which is said to provide a link between neuropathic and inflammatory pain.
The mere fact that the skilled team, faced with an apparent discrepancy between the breadth of the claims and the absence of supporting data in the specification, would be encouraged to fill the gap by carrying out tests of its own, serves only to confirm the absence of any disclosed contribution to the article
I conclude that Claim 3 of the patent and the other claims relating to neuropathic pain were invalid for insufficiency.
The disclosure did not contribute any knowledge of the art capable of justifying a claim to a monopoly of the manufacture of pregabalin for the treatment of neuropathic pain of any kind.
Decisions in other jurisdictions
Mr Mitcheson reminded us more than once in the course of his submissions that if we were to hold Claim 3 insufficient we would be the only court to do so in the various jurisdictions party to the EPC.
In issuing the Patent, the EPO had rejected the suggestion that it might be insufficient, albeit without giving detailed reasons.
Warner Lambert also rely on decisions of the courts of France, Germany and Sweden, all of which have subsequently upheld Claim 3 as sufficient.
This is more than a forensic point.
If courts in other jurisdictions have upheld Claim 3, that may serve as a reality check against my own, less favourable conclusions.
Other things being equal, it would be unfortunate if different jurisdictions party to the EPC arrived at different conclusions concerning the same patent.
However, other things are rarely equal, and the force of this point depends entirely on how far the factual and technical evidence before the foreign court was the same as the material before Arnold J, and how far their domestic statutes were comparable.
In France, the Tribunal de Grande Instance of Paris published its judgment on 8 July 2016.
They appear to have had before them transcripts of at least part of the evidence given to Arnold J.
They held that the Patent was sufficient because the occurrence of allodynia and hyperalgesia provided a unifying principle embracing both neuropathic and nociceptive pain.
There are difficulties about this theory, as Arnold J pointed out (para 349), but for present purposes it is enough to say that this was the alternative argument which he refused to allow Warner Lambert to run, a ruling which was not challenged before us.
In Germany, the Federal Patent Court ruled on 24 January 2017 that the Patent was invalid for lack of inventive step.
It dealt only briefly with the objection of insufficiency, holding that it was probable that the disclosure was sufficient to enable the invention to be carried out.
The court does not appear to have grappled with what in England would be called Biogen insufficiency.
This judgment is also under appeal.
In Sweden, the Stockholm District Court, sitting as a Patent Court, gave judgment on 12 August 2016.
This decision is final.
The District Court came closer than those of France and Germany to grappling with the issues before us, but it received expert evidence which was not before Arnold J.
The court applied the classic sufficiency test, asking whether the claim was plausible across the whole scope of the claim.
It considered that the mere mention of Bennett and the Kim and Chung test made the assertion of efficacy for treating neuropathic pain plausible, but it did not distinguish for this purpose between central and peripheral neuropathic pain.
The Court of Appeal in the present case disagreed, on the ground that these were tests for peripheral neuropathic pain which could not justify a claim to efficacy for all neuropathic pain.
I also disagree, both for that reason and for the wider reasons which I have already given.
After the argument was completed, we were supplied with the recent decision of the Full Court of the Federal Court of Australia on 23 February 2018.
Australia is not, of course party to the European Patent Convention, and the court expressed reservations about applying the case law of the EPO Technical Board of Appeal or decisions under the United Kingdom Patents Act 1977 in an Australian statutory context.
The court analysed the question solely in terms of classical insufficiency.
It was therefore concerned only with the question whether the invention could be performed by the skilled man on the basis of the disclosure in the patent.
None of these decisions cause me to doubt the conclusions that I have reached as a matter of English law, in the light of the evidence given and the facts found in these proceedings.
Infringement: general
Patent infringement is a statutory tort.
Section 60 of the Patents Act 1977 (so far as is relevant) provides as follows: 60.(1) Subject to the provisions of this section, a person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without the consent of the proprietor of the patent, that is to say (a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise; (b) where the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent; (c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise. (2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention 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 in the United Kingdom.
Some general points should be made at the outset about section 60 of the Patents Act.
First, although liability for infringement is often said to be strict, section 60 of the Patents Act distinguishes between those heads of infringement which require proof of a mental element and those which do not.
In short, under section 60(1)(a) and (c), there is no mental element.
Liability, as Lord Hoffmann observed in Merrell Dow Pharmaceuticals Inc v HN Norton & Co Ltd [1996] RPC 76, 92, is absolute.
It depends upon whether the act in question falls within the claims and pays no attention to the alleged infringers state of mind.
On the other hand, an allegation of infringement under section 60(1)(b) (at any rate by offering the process for use in the United Kingdom), or an allegation of indirect infringement under section 60(2), on the other hand, requires proof of knowledge.
In both cases, the knowledge required is encapsulated in the phrase when he knows, or it is obvious to a reasonable person in the circumstances .
Secondly, section 60 uses a consistent conceptual approach to the relationship between the words product, process and invention.
Invention is a class with only two members, product and process, and the invention in question is the subject matter of one or more claims in the patent.
Thus, for the purposes of section 60, phrases about using the process, product or invention, or working the invention or putting the invention into effect need to be understood and applied by reference to the claim (or claims) in the patent alleged to be infringed.
Direct infringement: section 60(1)(c)
It is common ground that Swiss form claims are purpose limited process claims.
Claim 3 of the patent in suit is not a product claim, because the product is not novel.
It is a process claim because it protects the process of preparation (or manufacture) of a medicament containing pregabalin.
It is purpose limited because it only protects that process so far as it is undertaken for treating neuropathic pain.
The monopoly claimed is a monopoly of preparation or manufacture of the product for the designated purpose.
It is not a monopoly of the subsequent use of the product for that purpose.
This is the basis on which Claim 3 is consistent with the prohibition of patents for methods of treatment or diagnosis.
It follows that Warner Lamberts allegation of direct infringement is and must be based on section 60(1)(c).
Section 60(1)(c) is concerned with cases where a product is obtained directly by means of the patented process.
Infringement occurs whenever a person disposes of that product, offers to dispose of it, uses or imports it, or keeps it, whether for disposal or otherwise.
The infringer may be, but need not be, the same as the person who makes the product.
The section also applies to anyone in the downstream generic market, including wholesalers and pharmacists.
Liability is strict.
Provided only that the product has been obtained directly by means of the process, it extends to subsequent dealings with all and every such product irrespective of knowledge.
The current regime in the United Kingdom for the prescribing and dispensing of medicines is described in admirable detail by the judge, but the following summary will suffice.
Unless there is good reason to do otherwise, doctors usually prescribe generically, by reference to the international non proprietary name of the drug (the INN), rather than by brand or proprietary name.
Thus, doctors would usually prescribe pregabalin rather than either Lyrica or Lecaent, regardless of whether they were treating a condition for which the original patent had expired, such as epilepsy, or a condition such as neuropathic pain for which patent protection still subsisted.
Doctors do not usually include on their prescriptions any description of the condition (or indication) being treated.
Pharmacists are free to respond to generic prescriptions by dispensing either a branded or a generic product.
Generic products are usually much cheaper than the branded product and, for that and other reasons, pharmacists have an incentive to dispense generic products where possible.
They usually do so without knowing the indication for which the drug has been prescribed.
Many prescriptions are collected by someone other than the patient.
Patients may not know precisely the indication to which the prescription relates, in particular if they are using several drugs to address a combination of indications.
It is usually impracticable for the busy pharmacist to contact the busy doctor to find out the indication for which pregabalin was prescribed.
The result is that the pharmacist will not know whether the prescription addresses an indication which is patent protected.
The manufacturer and the supplier of generic pregabalin is even further removed from any actual knowledge of the use for which his product is being prescribed.
He knows only what can be inferred from published statistics about the market for different uses of pregabalin, and his own share of that market.
Because doctors commonly prescribe generically and the pharmacist generally does not usually know what indication is being treated, the use of skinny labels specifying the purpose of the generic product cannot reliably prevent the pharmacist from dispensing the generic product for a patent protected use.
Dispensing pharmacists know that Lyrica and Lecaent are identical, and the same dosage regime can be used for all indications for which pregabalin has received marketing authorisation.
In March 2015, shortly after Lecaent came onto the market, the judge gave directions as a result of which the NHS in England, Wales and Northern Ireland (but not apparently in Scotland) issued guidance to doctors to prescribe Lyrica rather than pregabalin for neuropathic pain, and to pharmacists to dispense Lyrica in response to a prescription for generic pregabalin if told that the prescription was for the treatment of pain.
It is by no means clear that it will always be appropriate to meet problems arising in relation to second medical use patents by guidance of this kind.
Mr Silverleaf QC for the Secretary of State told us on instructions that the established conventions about prescribing generically had evolved for good reason, and could not lightly be discarded.
In particular the use of INNs rather than proprietary names in prescription records served as clear and valuable guidance to other practitioners taking over the care of patients from the prescribing doctor.
There was some evidence before the judge at the trial that his guidance had been effective in limiting the scale of the problem.
What is, however, clear is that whatever steps are taken to limit the leakage of generic pregabalin into the patent protected market, it is foreseeable that some generic pregabalin will be supplied in good faith by pharmacists to meet prescriptions which are intended by the prescribing doctors for the treatment of neuropathic pain.
At the hearing before us, the parties were agreed that there was a mental element in infringement under section 60(1)(c).
This was not because of the terms of the section itself, which provides for strict liability.
It was said to be because a mental element was intrinsic to the claim said to have been infringed.
The preparation of the compound must be for the treatment of the designated condition.
This cannot mean suitable for that purpose, for a claim thus framed would lack novelty: the product was just as suitable for the newly discovered purpose before the priority date, even if this was not generally known.
Therefore, it was said, it must mean that the manufacturer must make the product with the intention that it be used for that purpose, if the product is to fall within the confines of section 60(1)(c).
The difference between the parties concerned the test of intention.
Actaviss case was that the test of the manufacturers intention was subjective.
The manufacturer must make the product with intent to target the patent protected market.
Arnold J accepted that submission.
Warner Lamberts primary case was that the test of the manufacturers intention was objective, and that a manufacturer must be taken to intend the foreseeable consequences of his actions.
It was therefore enough to support a case of infringement of Claim 3 under section 60(1)(c) that it was foreseeable to the manufacturer that a more than de minimis amount of it would in due course be used for the treatment of neuropathic pain.
The Court of Appeal broadly accepted Warner Lamberts submission subject to two qualifications.
First, the downstream use for treating pain had to be intentional rather than accidental.
By this they meant only that patients would receive the drug for treating their pain, rather than for example for treating epilepsy, with a coincidentally beneficial effect upon pain from which they happened also to suffer.
The second qualification was more important.
Floyd LJ held that the requisite mental element could be negatived if the manufacturer had taken all reasonable steps to prevent the downstream use of his drug for treating pain.
At para 208 Floyd LJ said this: The intention will be negatived where the manufacturer has taken all reasonable steps within his power to prevent the consequences occurring.
In such circumstances his true objective is a lawful one, and one would be entitled to say that the foreseen consequences were not intended, but were an unintended incident of his otherwise lawful activity.
In his judgments on the application for an interim injunction [2015] EWCA Civ 556 (at paras 74 92) and the substantive appeal (paras 190 191), Floyd LJ considered another possibility, which he called (not entirely accurately) the only packaging will do approach.
This approach, which he associated with the case law of the German courts, treats the question whether a product was manufactured for a designated purpose as depending only on whether there was some outward manifestation of that purpose in the manufacture itself, including any information about its purpose contained in the accompanying label or patient information leaflet.
He rejected it because he considered that it gave insufficient protection to the patentee.
Before us, Warner Lambert maintained their primary case, but adopted the Court of Appeals qualified version of it as a fall back.
The Secretary of State, and other interveners with a stake in the market for treating the non patented use, supported Actavis case.
No one adopted the only packaging will do approach.
But after the hearing, the parties addressed it in writing, at the invitation of the court.
Actavis adopted it by way of alternative to their primary case that the test required proof of subjective targeting.
Warner Lambert and the Secretary of State maintained their respective original positions.
It is clearly correct that this issue depends not on the meaning of section 60(1)(c) of the Patents Act but on the construction of the relevant claims in the patent.
The question is what, as a matter of construction, does it mean to claim in a patent the use of pregabalin for the preparation of a medicament for treating neuropathic pain.
In my view, most of the difficulty in answering this question arises from the view of both courts below that Claim 3 (and any other purpose limited claim in Swiss form) includes a mental element, namely the intention of the manufacturer, as part of the definition of the monopoly.
This view is perhaps invited by the common use of the phrase purpose limited to describe a claim in Swiss form.
The expression is convenient, but it elides a number of different concepts, not all of which involve a mental element.
I think that a test for infringement which depended on intention, whether objective or subjective, would be contrary to principle and productive of arbitrary and absurd results.
It is first necessary to say something about the distinction between subjective and objective intention, which is legally fundamental.
Subjective intention is a state of mind, ascertained as a matter of fact.
A person may subjectively intend X if, for whatever reason, he deliberately does an act which is liable to bring X about, desiring it to happen.
The degree of probability of X occurring may be relevant to the question whether it should be inferred as a fact that such a desire existed, but that is a question of proof and not of principle.
Objective intention by comparison is not so much a matter of fact as an artificial construct for attributing legal responsibility.
A person is taken to intend the ordinary and natural consequences of his acts.
He objectively intends those consequences if they were foreseeable to a reasonable person, whether or not they were actually foreseen by him.
Policy considerations may determine the degree of probability with which the consequence must be foreseeable if legal responsibility is to be attributed on that basis.
The first point to be made applies to any test of infringement based on intention, whether subjective or objective.
A Swiss form patent protects the process of manufacture of a product for the treatment of the designated condition.
The hypothesis is that some of a generic manufacturers output will be prescribed or dispensed for the treatment of the patent protected indication and that the manufacturer intends this, subjectively or objectively.
But it is not suggested that different parts of his output can be appropriated at the manufacturing stage to distinct therapeutic uses.
If the manufacturers intention is the touchstone, then the only intention that can realistically be attributed to him is that his output will be applied to the treatment of neuropathic pain as well as seizure disorders.
If that intention is proved, the entire output will be tainted, including that part of it which is in fact prescribed and dispensed for the treatment of seizure disorders for which patent protection has expired.
It will all have been prepared with the relevant intention on the part of the manufacturer.
It follows that a distributor supplying or a pharmacist dispensing generic pregabalin will be dealing in a product obtained by means of a patented process within the meaning of section 60(1)(c) of the Act, and I deal first with the hypothesis that the test is subjective intention. will incur liability for infringement even if it has been prescribed for epilepsy rather than pain, because of the manufacturers intention that it should be used for either or both.
The interventions in the present appeal show that pharmacists are well aware of this risk.
Their only safe course will be to refuse to deal with the generic product at all.
This will in turn impact on generic manufacturers.
They will be dissuaded from producing generic drugs even for treating the original indication which is no longer entitled to patent protection.
First, a patent is a public document.
It is autonomous, in the sense that it is supposed to define exhaustively what the product or process is which is the subject of the legal monopoly.
For the scope of the monopoly to be dependent on some extraneous fact not ascertainable from the patent but dependent on the state of mind of the manufacturer, is an extraordinary concept.
It is not easy to see how it could be said to comply with the requirement of section 14(5)(a) of the Act that the claim in the patent application should define the matter for which the applicant seeks protection.
The same is true of the corresponding provision of EPC article 84.
It is fair to say that a person can infringe a patent under section 60(1)(c) by handling a product obtained by the patented process, although it is not apparent from the product that it was obtained by the patented process.
But that cannot be a reason for piling Pelion upon Ossa by holding that the patent need not even exhaustively define what the process is.
Secondly, if subjective intention is relevant, then liability under section 60(1)(c) extends to a person who infringes a purpose limited patent by virtue not of his own intentions but of the intention of someone else, namely the generic manufacturer.
I know of no other legal context in which the wrongfulness of an act can depend on the state of mind of someone other than the actor, to which the actor is not necessarily privy.
Thirdly, subjective intention implies choice.
This is in particular true of the form of intention proposed by Actavis as relevant, namely targeting the patent protected market.
What the manufacturer of the generic product must intend is its use for the patent protected purpose by prescribing physicians and dispensing pharmacists.
Their practices are outside his control.
He cannot meaningfully be said to choose that they will prescribe or dispense pregabalin for the treatment of pain merely by manufacturing it.
A hope that they will do so is not the same as an intention.
Fourthly, the practical problems of applying a test based on subjective intention are striking.
Suppose that the generic manufacturer makes pregabalin intending it to be used for (inter alia) the treatment of pain, but that objective is not achieved? Does the mere intention taint the entire production run, even if it is all used for conditions such as epilepsy for which patent protection has expired? Suppose that the manufacturer makes more of the product than he believes can be sold for the treatment of seizure disorders or takes active steps to encourage its use for the treatment of pain.
Is the liability of the importer, wholesaler or pharmacist to depend on whether the manufacturer resolved to take those steps at the time of manufacture or afterwards? No rational scheme of law could depend on such considerations as these.
And all of this of course assumes that the manufacturers state of mind can be proved.
In the great majority of cases it would have to be inferred from his overt acts.
In practice, the most that one can usually say is that use for the patent protected purpose is an objectively foreseeable consequence of the manufacture of the product for distribution and sale.
I turn therefore to Warner Lamberts hypothesis that that is the test.
The foreseeability test has the merit of being objective, but there is in my view little else to commend it.
Foreseeability is, as I have pointed out, a device for attributing legal responsibility to the person who should have foreseen the objectionable consequences of his acts, whether or not he actually did so.
Its use as the basis for attributing legal responsibility to someone else seems to me to be entirely arbitrary.
There are other difficulties about it.
Since it is common ground that some more than de minimis leakage of generic pregabalin into the market for treating neuropathic pain is foreseeable whatever reasonable steps are taken, the simple foreseeability test means that all stocks of generic pregabalin will have been manufactured by use of the patented process regardless of the manufacturers subjective intention.
Consequently, any subsequent dealing with those stocks by importers, distributors or pharmacists will constitute infringements under section 60(1)(c).
The result would be to give the patentee a de facto extension of the expired patent for the original use until the expiry of the patent for the new one.
Warner Lambert recognised that this was likely to be an unacceptable result, and submitted that it could be mitigated by a flexible approach to remedies.
Injunctions could be refused, they suggested, and financial recovery limited by confining the patentee to an account of the infringers profits, based upon an assessment of the proportion of generic pregabalin dealt with by any infringer which is actually used for the treatment of pain.
These concessions to reality may have been forensically necessary, but in my view they are no more satisfactory than the unqualified foreseeability test.
First, they assume that dealers in generic pregabalin going about a lawful business of supplying it for its non patented use are infringers.
But they are entitled to conduct their trade lawfully, as no doubt most would wish to.
The courts cannot properly adopt a solution that makes that impossible.
Secondly, while the court may be able to withhold an injunction as a matter of discretion, damages are not a discretionary remedy.
The patentee has, in principle, a right to elect between damages and an account of profits.
They are alternative remedies, but the choice is not the courts.
Thirdly, an election by the patentee for damages would expose the infringer to liability for the loss of the patentees profit margin on lost sales of the branded product.
That will generally be much higher than the profit margin on the generic product, since it has to cover the patentees research costs.
Warner Lamberts alternative case is that the foreseeability test should be applied subject to the qualification proposed by the Court of Appeal, namely that the infringer had taken all reasonable steps to prevent leakage of generic pregabalin into the market for the patented use.
The problem about this is while there are steps available to a manufacturer to limit the scale of the leakage of generic pregabalin into the market for the patent protected use, there are no reasonable steps which will eliminate it entirely.
Although the Court of Appeal described the taking of steps by the manufacturer as sufficient to negative intention to manufacture pregabalin for the patent protected purpose, it will not in fact negative it if the test of intention is foreseeability.
This is because the manufacturer will be taken to intend the foreseeable leakage notwithstanding the steps taken to reduce its scale.
In reality, what the Court of Appeal has proposed is not a way of negativing intention.
It is a non statutory defence to infringement.
Such a defence may or may not be desirable.
But Parliament has not provided for one, and it is not the function of the courts to invent non statutory defences to statutory torts.
Least of all is it their function to invent a non statutory defence to a statutory tort of strict liability, which is subject to limited express statutory defences none of which applies.
It is right to add that the Court of Appeals compromise is likely to be legally uncertain and practically unworkable.
How are distributors or pharmacists to know what steps have been taken by the manufacturer to prevent leakage, or whether they will be regarded by the court as reasonable? Warner Lambert do not suggest that the reasonable steps required of the generic manufacturer will be limited to skinny labelling or some other precaution visible to users of the generic product.
The claims fall to be interpreted, in accordance with the Protocol on the interpretation of article 69 EPC, on a basis which combines a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties.
What is fair or reasonable for these purposes falls to be considered in the light of the central objectives of this area of law.
It is possible to identify four such objectives.
They are: 1.
To provide reasonable protection to the second medical use patentee, so as to reward and to incentivise the complex and expensive processes of research and testing necessary to bring these valuable uses to the market.
That protection needs, as far as is consistent with competing policy objectives, to protect the patentee against the invasion of his monopoly by competitors. 2.
To allow the public the benefit of the product for its original therapeutic use, unconstrained by any patent rights once the patent covering that use has expired.
As Sir Donald Nicholls VC famously observed in Merrell Dow Pharmaceuticals Inc v H N Norton & Co Ltd [1995] RPC 233, 238, patents exist today to reward and thereby encourage inventors; they are not intended to make it possible to take out of public use processes or products already made available to the public.
The patentee has had the reward of his invention for the original use and should not obtain, by a side wind, an effective continuing monopoly in relation to the original use after the expiry of the patent protection for it. 3.
To provide reasonable legal certainty for those engaged in the manufacture, marketing and prescribing of the generic drug for the non patented use, that their conduct is lawful.
This policy objective is expressly recognised by the Protocol and, without it, the second objective is unlikely to be achievable. 4.
To protect the autonomy of clinical judgments.
The prohibition in EPC article 52(4) (now article 53(c)) and section 4(2) of the Patents Act) of patents for methods of treatment or diagnosis has been described by the EPO Technical Board of Appeal as securing that medical and veterinary practitioners are free to use their skills and knowledge of the best available treatments to achieve the utmost benefit for their patients uninhibited by any worry that some treatment might be covered by a patent: G 0001/07 MEDI PHYSICS/Treatment by surgery [2010] EPOR 25 at para 3.3.6.
The foreseeability test, in either its qualified or unqualified form, would achieve objective 1 but frustrate objectives 2, 3 and 4.
The subjective targeting test would probably achieve a reasonable balance between objectives 1 and 2, but it would not serve objectives 3 and 4.
I conclude that the intention of the manufacturer, whether subjective or objective, is irrelevant to the question of infringement.
In my opinion, in a purpose limited process claim, the badge of purpose is the physical characteristics of the product as it emerges from the relevant process, including its formulation and dosage, packaging and labelling and the patient information leaflet which in EU (and other) countries will identify the conditions for whose treatment the product is intended.
I shall call this, for want of a better phrase, the outward presentation test.
I adopt it for the following reasons.
First, it provides an objective test, which is not dependent on proof of the internal cogitations of the manufacturer.
The patient information leaflet is not just a public statement of the use for which the product is made, but one which is directly addressed to the potential user, ie to those persons whose acts are potentially within section 60(1)(c), namely importers, distributors, pharmacists and patients.
Accordingly, it avoids the unacceptable anomalies associated with a test based on the manufacturers subjective intention.
Secondly, as the EPO has recognised (see para 26 above), in a purpose limited claim, the designated purpose is an inherent characteristic of the invention.
The outward presentation test is consistent with this notion.
A test based on intention is not.
This is because the manufacturers state of mind in exploiting the process is not a characteristic of the invention.
It is a characteristic of the inventor, coming into being after (usually long after) the invention has been made and the patent granted.
Likewise, the market conditions which may make some consequence of manufacture objectively foreseeable are not a characteristic of the invention.
They arise from subsequent facts.
Third, the outward presentation test properly reflects the critical feature of Swiss form patents, namely that the patent is for the process of manufacture, not for the subsequent use that may be made of the product.
The physical presentation of the product is generally part of the process of manufacture.
Subsequent activities of the manufacturer in marketing the product are not.
Fourth, it provides legal certainty, in particular for those downstream of the manufacturer who deal in the product.
Fifth, and critically, it strikes a fair balance between the public interest in rewarding the invention by allowing the patentee to exploit his monopoly and the public interest in the free use of the invention for therapeutic uses which do not have, or no longer have, patent protection.
In my opinion, it satisfies all four policy objectives governing the interpretation of patent claims which I summarised at para 82 above.
Finally, the outward presentation test derives some support from the case law of the EPO Technical Board of Appeal.
The Board does not of course deal with infringement claims, but it has construed purpose limited claims as referring to the purpose identified by reference to the characteristics of the product.
In T 1673/11 GENZYME/Treatment of Pompes disease [2016] EPOR 33, the patent claimed use of human acid alpha glucosidase in the manufacture of a medicament for the treatment of infantile Pompes disease.
In opposition proceedings, the Board (para 9.1) defined the scope of the claim as limited to the manufactured medicament which contains as an active substance human acid alpha glucosidase in the 100 110 kD form and which is packaged and/or provided with instructions for use in the treatment of infantile Pompes disease. (Emphasis added)
Outward presentation is a rough paraphrase of the German sinnfllige Herrichtung which is the major part of the test of infringement applied to purpose limited patent claims by the German courts: see Antivirusmittel (Case X ZR 51/86) (Bundesgerichthof, 16 June 1987), (1987) GRUR 794, at para 18; Chronische Hepatitis C Behandlung/Ribavirin I (Case 4a O 145/12) (Landgericht Dsseldorf, 24 February 2004); Chronische Hepatitis C Behandlung/Ribavirin II (Case 4a O 145/12) (Landgericht Dsseldorf, 14 March 2013); Cistus Incanus (Case I 2 U 53/11) (Oberlandesgericht Dsseldorf, 31 January 2013).
This is why Floyd LJ associated what he called the only packaging will do test with German law.
It is, however, important to guard against the over ready transfer of concepts from one legal system to another, in which the legal context may be different.
For the purpose of determining infringement, German law does not distinguish between product and process claims in the clear cut way that the United Kingdom Patents Act does.
In either case, the monopoly claimed may be treated as extending to the use made of the product after its manufacture: Patentgesetz, section 9 and Dexmedetomidin (Case I 2 U 30/17) (Oberlandesgericht Dsseldorf, 1 March 2018), (BeckRS 2018, 2410, at paras 41 43).
Moreover, many of the anomalies considered above are avoided in German law by the limitation of monetary remedies for infringement to cases of deliberate or negligent infringement, although negligence will readily be assumed: Patentgesetz, section 139(2).
This background explains why the German courts, while applying an objective test, have been prepared on appropriate facts to find infringement of purpose limited claims on a wider basis than the mere presentation of the product: see strogenblocker (Case I 2 W 6/17) (Oberlandesgericht Dsseldorf, 5 May 2017) at para 39, and Dexmedetomidin (Case I 2 U 30/17) (Oberlandesgericht Dsseldorf, 1 March 2018) at para 44.
However, whether or not it is soundly based on German law, Floyd LJs objection to the only packaging will do test deserves to be considered on its merits.
His main point was that once it was accepted (as it was, by both parties before him) that there was a mental element in a purpose limited claim, there was no reason to limit the evidence of the manufacturers intention to the physical presentation of the product.
As he pointed out (para 191), packaging may be a means of demonstrating the necessary mental element, whatever that is, but it cannot possibly be the only means of doing so.
I accept that there is force in this point, which is one reason why I reject the importation of a mental element in the claim.
It falls away if the mental element is discarded.
More pertinent is Floyd LJs objection that an outward presentation test gives insufficient protection to the patentee.
One can imagine circumstances in which the labelling and the patient information leaflet of a generic manufacturer might be regarded as a charade.
He might, for example, manufacture pregabalin with the intention of supplying an unexceptionable label and patient information leaflet but then encouraging dealers and pharmacists to supply it for the treatment of pain.
To the extent that this is a realistic scenario, the outward presentation test may be imperfect.
But I cannot regard the existence of such imperfections as decisive, for two reasons.
In the first place, the patentees interest, although important, is not the only consideration.
As I have pointed out by reference to the Protocol on the interpretation of EPC article 69, the interpretation of a claim requires the court to take account both the reasonable protection to which the patentee is entitled and the need for legal certainty for third parties.
Broader policy objectives, including the public interest in the free exploitation of a product for a patent expired use, are also relevant.
This may involve, as it does in this case, a compromise between opposing and incommensurate factors.
It may be thought anomalous that the manufacturer of the generic product should be free of liability if he markets it for a patent protected use provided that he labels it as being for a non protected use.
But to my mind it is a far greater anomaly that in a charade case the generic manufacturers intention exposes to liability not just himself but any pharmacist who handles his product even if he scrupulously supplies it only for a non protected use.
Secondly, the imperfect nature of the protection conferred by an outward presentation test arises, as it seems to me, from a limitation inherent in a Swiss form patent.
A persons exposure to liability for infringement depends on the purpose for which the patent protected product was manufactured.
The patentees protection is therefore necessarily incomplete.
A test which treated the claim as extending to the promotion of the product after its manufacture appears on the face of it to ignore this limitation.
There is no perfect solution to this problem in the absence of a general defence of good faith available to third parties, such as exists in Germany in the case of claims to monetary remedies.
But we are not in a position to add such a defence to the UK Patents Act.
I consider that the outward presentation test is less imperfect than any other.
The evidence does not enable us to say how serious the problem identified by Floyd LJ really is.
The legislation was not drafted with purpose limited products in mind, and if it proves to be serious it must be for the legislature to address it.
Indirect infringement: section 60(2)
Warner Lamberts alternative case of infringement, based on section 60(2) can be shortly dealt with.
Section 60(2) is concerned with indirect infringement, ie with cases where a person incurs liability for infringement by knowingly supplying to a primary infringer the means of putting the invention into effect.
There is a mental element in indirect infringement, for knowledge is expressly required.
But it is unnecessary on this appeal to explore what that entails.
Lecaent is manufactured by Balkanpharma in Bulgaria to the order of Actavis, which then imports and markets it in the United Kingdom.
This case has proceeded at all levels on the basis that Actavis can be treated as if they were the manufacturer.
The infringement case under section 60(2) is that, in supplying Lecaent in the United Kingdom, Actavis are knowingly supply[ing] in the United Kingdom a person with means, relating to an essential element of the invention, for putting the invention into effect.
The argument is that the invention is the use of pregabalin to treat neuropathic pain, and that it is put into effect when a pharmacist dispenses a pack of Lecaent against a prescription written by a doctor for neuropathic pain.
Therefore by supplying Lecaent (directly or indirectly) to pharmacists Actavis supply them with the means for putting the invention into effect.
The short answer to this is that the invention protected by Claim 3 is the manufacture of pregabalin for the designated use, and not the subsequent use of the product for treating patients.
This is what the Court of Appeal decided, correctly in my view, in Menashe Business Mercantile Ltd v William Hill Organisation Ltd [2003] 1 WLR 1462: see para 24 (Aldous LJ).
It was the ground on which the judge struck out the indirect infringement claim on the interlocutory application of Actavis.
It was re instated by the Court of Appeal as arguable.
At trial, Arnold J held that the argument was bad.
In the Court of Appeal, Floyd LJ adhered to his earlier view.
He accepted that Menashe was authority for the proposition that the invention in section 60(2) was the process identified in the relevant claim.
But he considered that the preparation referred to in the claims might still not be put fully into effect until the pharmacist had dispensed the medicament and affixed a sticker with the patients name on it.
He warned against the danger of translating section 60(2) into infringement limited to acts upstream of manufacture.
In my view Arnold J was right about this.
The whole purpose of the Swiss form for purpose limited medical use claims is to avoid the problem of lack of novelty associated with product claims and the statutory provision which makes a method of treatment unpatentable.
It is well understood that the degree of protection available from a Swiss form claim may be more limited than that available from standard product claims.
These essential features of purpose limited patents are fatal to any attempt to construe Claim 3 as extending to steps taken by the pharmacist.
Disposal
For these reasons, I would dismiss Warner Lamberts appeal and allow the cross appeal of Actavis and Mylan on insufficiency.
LORD BRIGGS:
Overview
I am grateful to Lord Sumption for his introduction to this difficult appeal.
In bare outline, and adopting his classification of the issues, I consider that the Court of Appeal was correct on the issues as to construction, amendment and abuse of process, for reasons which I shall shortly give.
I agree with Lord Sumptions reasons for concluding that both the judge and the Court of Appeal were wrong on the issue of sufficiency.
But I have reached a different conclusion from his on the issue about infringement.
We both agree that the Court of Appeals test for infringement was wrong, as is the test proposed by the appellants.
For the reasons given below I have concluded that the judge and the respondents in their primary case were broadly right, on the test for infringement of a patent for a purpose limited process claim.
Construction
Claim 3 claims use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain.
The question is whether neuropathic pain in its context means all neuropathic pain, including central neuropathic pain (as Actavis and Mylan contend), or only peripheral neuropathic pain (as Warner Lambert say).
I will call these the broad and narrow constructions respectively.
Both the judge and the Court of Appeal decided without, it seems, much difficulty, in favour of the broad construction.
I agree with them.
There is no issue about the basic principles of construction.
Section 125(1) of the Patents Act 1977 provides that the claim must be: interpreted by the description and any drawings contained in that specification, and the extent of the protection conferred by a patent or application for a patent shall be determined accordingly.
Section 125(3) provides that: the Protocol on the Interpretation of article 69 of the European Patent Convention (which article contains a provision corresponding to subsection (1) above) shall, as for the time being in force, apply for the purposes of subsection (1) above as it applies for the purposes of that article.
The Protocol provides: 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 the 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.
The Claims must be construed in their context in the patent as a whole, including its summary and detailed description and the teaching which it discloses.
A course must be steered between the Scylla of slavish literalism and the Charybdis of pure purposiveness, a task which recent English cases about construction generally suggest requires a constant hand on the tiller.
The object is to interpret them as they would be understood by a person skilled in the art, with all the common general knowledge available to such a person as at the priority date.
The only substantial difference between the parties about the principles of construction arose from Lord Pannick QCs submission on behalf of Warner Lambert that patents should be construed on the principle of validating construction.
In other words, where possible, a construction should be preferred which results in the relevant claim be treated as valid (ut res magis valeat quam pereat).
The principle is well established as applied to the construction of contracts and subordinate legislation.
But there is some English authority for its application to patents.
In Parkinson v Simon (1895) 12 RPC 403, which was decided long before the Protocol was adopted, Lord Davey observed, at p 411. if the language of a claim be ambiguous, and if it be fairly capable of two constructions, the court would be disposed to adopt that construction which would uphold the patent, and not that which would render it invalid.
More recently, the same point was made by Neuberger J in Kirin Amgen Inc v Roche Diagnostics GMBH [2002] RPC 1, para 286.
There is also substantial support for it in other common law jurisdictions.
It was adopted by the Supreme Court of the United States in Turrill v Michigan Southern Railroad Co (1863) 68 US (1 Wall) 491 and Klein v Russell (1873) 86 US (19 Wall) 433.
And more recently by the Full Court of the Federal Court of Australia in H Lundbeck A/S v Alphapham pty Ltd (2009) 177 FCR 151.
Emmett J observed in that case, at para 52: A specification must be given a purposive rather than a purely literal construction and must be construed in a practical common sense manner, avoiding a too technical or narrow construction in favour of a construction under which the invention will work, as against one according to which it may not work.
In Letourneau v Clearbrook Iron Works Ltd (2005) FC 1229 in the Federal Court of Canada there are dicta to much the same effect, at para 38.
Nonetheless, in my opinion, validating construction will not usually have a significant place in modern patent law.
The main problems about it were well stated by Sedley LJ (with whom Aldous LJ agreed) in Smithkline Beecham plcs Patent [2003] RPC 49, at para 103.
Because the law has historically been suspicious of monopolies for well known reasons of public policy, there is no useful analogy between a patent and a deed or a written contract.
The latter two will have been drafted for a purpose which, assuming it not to be illegal or contrary to public policy, the law will do what it properly can to uphold.
A patent, by publicising an invention, makes it the patentees sole property for 20 years, so that the patentees immediate interests are in opposition to those of the rest of the world.
It is in societys longer term interests that, by setting the two things in balance, genuine innovation should be protected and rewarded without stifling further invention.
Lord Daveys approach, and any analogue of it, would reward opaque drafting as objectionably as the infringers defence in cases like Edison Phonograph seeks out opacity where, on a fair minded reading, there is none.
The Convention and Protocol place such exercises off limits in a way which, it seems to me, our law well understands and which sits comfortably with the wording and intent of section 125(1).
Lord Daveys statement in Parkinson v Simon was a thing of its time.
Validating construction was developed as a principle of interpretation during the 19th century as a counter weight to strict grammatical construction at a time when the latter was otherwise the dominant rule.
Its importance in modern times has been greatly diminished by the emergence of purposive construction, as applied to contracts and legislation as well as to patents: see Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183, HL(E).
Validating construction is now often mentioned as if it were but one aspect of that modern approach.
It is also right to remember that until 1919 the courts power to amend a patent was extremely limited and that it did not assume its present wide form until 1977.
In Lord Daveys time and for many years thereafter, it was natural to apply to patents the same principle of validating construction which applied to contracts and delegated legislation, neither of which could be saved except by striking out severable provisions (the so called blue pencil test).
The principles of construction embodied in the European Patent Convention will not necessarily correspond to those applied in the law of the United States and other common law countries.
The Protocol strikes a careful balance between the conflicting interests involved: between literal and purposive construction, between maintaining competition and rewarding invention, and between fair protection for the proprietor and reasonable legal certainty for potential competitors.
The latter consideration is reinforced by the express requirements of clarity and definition in section 14(5)(a) and (b) of the Patents Act 1977 and the corresponding provisions of EPC article 84.
A presumption in favour of validity would cut across the legal policies underlying patent protection in all of these respects.
These considerations apply to all patents, but they are perhaps particularly important in relation to second medical use patents.
There is a positive public interest in the active ingredient becoming available to be used freely for the original use after the patent for that use has expired, because that is the quid pro quo for the prior 20 years monopoly granted to the patentee.
It follows that there is a particular need for legal certainty in fixing the dividing line between the original use and the new one.
There are therefore sound reasons of policy for requiring clarity in the claims of patents of this kind.
None of this means that claims are to be construed with a predisposition to find fault, or the description read with a mind that is not willing to learn.
But it does require that an issue as to the construction of a claim should be addressed, as far as possible, by deciding what it really does mean, rather than by too easily accepting that there is ambiguity, and resolving it by inventing a meaning which saves the claim from invalidity.
construction on the following main grounds: I turn to the meaning of Claim 3.
Warner Lambert argues for the narrow 1.
There was no settled usage among those skilled in the art at the priority date as between the broad and the narrow meaning, so that its meaning in the context of the Patent has to be derived from its detailed contents. 2.
The specification, particularly in paragraphs 3 and 6, points to the narrower construction, both as a matter of definition and because it cites examples of peripheral neuropathic pain only, making no mention of the main examples of central neuropathic pain, so that the phrase neuropathic pain in Claim 3 should be construed eiusdem generis. 3.
In the event that (1) and (2) leave the meaning ambiguous, the validating principle should be applied, in favour of the narrow construction.
Ground (1) is correct up to a point.
It is common ground that the skilled team would at the relevant time have known of the definition of neuropathic pain by the International Association for the Study of Pain (IASP) in its publication The Classification of Chronic Pain as including both peripheral and central neuropathic pain.
The note to the definition (Peripheral neuropathic pain occurs when the lesion or dysfunction affects the peripheral nervous system.
Central pain may be retained as the term when the lesion or dysfunction affects the central nervous system.) shows that the distinction between the two was well understood.
This is not inconsistent with the evidence given by some but not all of the experts that a skilled team might use the phrase neuropathic pain in a broader or narrower sense, depending upon the context.
Given the distinction between the two kinds of neuropathic pain, and the need for precision in the drafting of the Claims, the use in Claim 3 of the global expression is significant.
Ground (2) calls for a careful examination of paragraphs 3 and 6 of the description against the background of the full list of claims.
Paragraphs 3 and 6 of the description are in the following terms: The instant invention is a method of using a [0003] compound identified below in the treatment of pain, especially for treatment of chronic pain disorders.
Such disorders include, but are not limited to, inflammatory pain, postoperative pain, osteoarthritis pain associated with metastatic cancer, trigeminal neuralgia, acute herpetic and postherpetic neuralgia, diabetic neuropathy, causalgia, brachial plexus avulsion, occipital neuralgia, reflex sympathetic dystrophy, fibromyalgia, gout, phantom limb pain, burn pain, and other forms of neuralgic, neuropathic, and idiopathic pain syndromes. [0006] The instant invention is a method of using (S) 3 aminomethyl 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof as an analgesic in the treatment of pain as listed above.
Pain such as inflammatory pain, neuropathic pain, cancer pain, postoperative pain, and idiopathic pain which is pain of unknown so origin, for example, phantom limb pain are included especially.
Neuropathic pain is caused by injury or infection of peripheral sensory nerves.
It includes, but is not limited to pain from peripheral nerve trauma, herpes virus infection, diabetes mellitus, causalgia, plexus avulsion, neuroma, limb amputation, and vasculitis.
Neuropathic pain is also caused from chronic alcoholism, human by nerve damage immunodeficiency virus infection, hypothyroidism, uraemia, or vitamin deficiencies.
Neuropathic pain includes, but is not limited to pain caused by nerve injury such as, for example, the pain diabetics suffer from.
The full list of claims is as follows: 1.
Use of (S) 3 (aminomethyl) 5 methylhexanoic acid or a pharmaceutically acceptable salt thereof for the preparation of a pharmaceutical composition for treating pain. 2.
Use according to Claim 1 wherein the pain is inflammatory pain. 3.
Use according to Claim 1 wherein the pain is neuropathic pain. 4.
Use according to Claim 1 wherein the pain is cancer pain. 5.
Use according to Claim 1 wherein the pain is postoperative pain. 6.
Use according to Claim 1 wherein the pain is phantom limb pain. 7.
Use according to Claim 1 wherein the pain is burn pain. 8.
Use according to Claim 1 wherein the pain is gout pain. 9.
Use according to Claim 1 wherein the pain is osteoarthritic pain. 10.
Use according to Claim 1 wherein the pain is trigeminal neuralgia pain. 11.
Use according to Claim 1 wherein the pain is acute herpetic and postherpetic pain. 12.
Use according to Claim 1 wherein the pain is causalgia pain. 13.
Use according to Claim 1 wherein the pain is idiopathic pain. 14.
Use according to Claim 1, wherein the pain is fibromyalgia pain.
Warner Lambert argues that the third sentence of paragraph 6 of the description is a definition of neuropathic pain as peripheral pain, because it identifies the peripheral sensory nerves as the location of its cause.
They say that such of the long list of particular types of pain in paragraphs 3 and 6 as can be fitted within neuropathic pain are all examples of peripheral neuropathic pain.
They point out that the two best known types of central neuropathic pain, namely stroke and multiple sclerosis, are not mentioned anywhere in the description or the claims.
These points are also correct, up to a point.
However, I do not accept that the third sentence of paragraph 6 of the description is a general definition of neuropathic pain for the purposes of the remainder of the patent, or that paragraphs 3 and 6 as a whole implicitly limit the invention to peripheral neuropathic pain.
My reasons are as follows: 1.
The starting point is paragraph 3 of the description, which contains the summary of the invention.
The list of conditions to be found there is expressly described as non exclusive (include, but are not limited to).
Paragraph 6 of the specification is an expansion of paragraph 3.
It is headed Detailed Description and describes an invention for the treatment of pain, as listed above. 2.
Although the third sentence of paragraph 6 would support the narrow definition if read on its own, it is in fact one of three descriptions of the causes of neuropathic pain in paragraph 6.
Its function is simply to introduce the next sentence which contains illustrative examples of peripheral neuropathic pain.
The second place where neuropathic pain is described includes vitamin deficiencies, which can cause both central and peripheral neuropathic pain.
The third is deliberately expressed in non exclusive terms (includes, but is not limited to).
It is correct that there is no express reference to pain from strokes or multiple sclerosis, but these are by no means the only types of central neuropathic pain. 3.
Claim 3 appears in a list of claims which begin at the broadest level of generality and then descends by stages to the more particular.
Claim 1 covers all pain, without exception.
Claims 2 and 3 then divide pain into two classes of pain which cover substantially the whole field except for idiopathic pain, the subject matter of Claim 13.
Thus Claim 2 covers all kinds of inflammatory pain while Claim 3 covers all kinds of neuropathic pain.
All the remaining claims, apart from Claim 13, relate to more narrowly defined types of pain which fall within either of Claim 2 or Claim 3. 4.
The descriptions in paragraphs 3 and 6 of the specification have to be read as addressing all the claims, rather than focussing on particular claims by way of narrowing their scope.
They repeatedly use words of inclusion rather than exclusion.
Bearing in mind that the skilled team would have been aware that a well known published classification of neuropathic pain was a broad one which included both central and peripheral elements, they would not be prompted by the language of paragraphs 3 and 6 to look for some sign that neuropathic pain was being used in a narrower sense than it appears to have in the hierarchy of the Claims. 5.
Paragraphs 3 and 6 are in my view an example of torrential drafting designed to make the widest possible assertions of the utility of pregabalin for pain relief, ahead of a set of claims deliberately designed to go first for the broadest classes of use monopoly, (Claims 1 to 3), with more narrowly drawn fall back claims (Claim 4 and following) if the broad classes should prove invalid.
Turning to Warner Lamberts Ground 3, even if the validating principle has some limited role to play in construing a patent, I would not have regarded Claim 3 as an occasion for applying it, because Claim 3 is not in my view ambiguous.
Ambiguity is the necessary condition for applying an interpretative presumption of this kind.
The principle does not authorise the construction of the patent so as to create an ambiguity which can then be resolved in favour of validity.
In the result, I arrive at the same conclusion as the courts below, even if their emphasis on particular points may not be identical to mine.
The judge may have been wrong, as the Court of Appeal said he was, to describe fibromyalgia and phantom limb pain as types of central neuropathic pain, but this does not undermine the central thrust of his analysis of the construction of Claim 3.
Amendment and abuse of process
Arnold J handed down his trial judgment on 10 September 2015.
Warner Lambert responded to their failure on sufficiency in relation to central neuropathic pain by applying on 1 October 2015 to amend Claim 3 by adding to the end the words caused by injury or infection of peripheral sensory nerves.
Following previous Court of Appeal guidance that applications to amend a patent should be decided by analogy with the principles applicable to the amendment of pleadings, the judge refused the application.
He concluded that it would give rise to issues (of clarity, added matter and sufficiency) requiring a further trial, that this could have been avoided by an application to amend (if necessary in conditional terms) before or even during the trial.
He thought that it was an abuse of process to leave the application until after the handing down of judgment.
The Court of Appeal agreed.
Warner Lambert challenge this decision before us on three main grounds.
First, they submitted that the assimilation of the principles governing the amendment of a patent to those governing the amendment of pleadings wrongly denied the patentee the benefit of the right to amend conferred by section 75 of the Act and article 138(3) of the EPC.
Secondly, it is said that Claim 3 had been found to be partially valid, so that an amendment should have been allowed as of course, to bring it into line with the judges decision on validity.
Thirdly, it is submitted that the judges decision, even applying English procedural jurisprudence concerning the amendment of pleadings, involved a disproportionate penalty, because any prejudice to Actavis and Mylan of having to participate in a second trial could be addressed by an appropriate order for costs.
Given our majority conclusion that the patent is insufficient for want of support in the specification for the efficacy of pregabalin for treating any neuropathic pain, it will be apparent that the proposed amendment will not save Claim 3.
However, the matter having been argued, I think it right to deal with it.
Warner Lamberts first ground raises an important question of law.
If they are right, it would be necessary to overrule a number of decisions of the Court of Appeal.
There was originally no power in England to amend a patent.
A discretionary power of the court to allow amendment of a patent by way of disclaimer in an action for infringement or proceeding for revocation was first introduced by section 21 of the Patents and Designs Act 1907.
The power was subsequently extended by the Patents and Designs Act 1919 to include amendment by way of correction or explanation.
The power thus conferred was continued by the Patents Act 1949.
Meanwhile the EPC, in its original form, introduced a provision for amendment, in article 138(2): (2) If the grounds for revocation only affect the European patent in part, revocation shall be pronounced in the form of a corresponding limitation of the said patent.
If the national law so allows, the limitation may be effected in the form of an amendment to the claims, the description or the drawings.
Its language reflected the fact that, at that time (in 1973) some contracting states did, but others did not, provide for amendment of patents.
Section 75(1) of the Patents Act 1977, responding to the EPC and its ratification by the United Kingdom, continued a discretionary power of amendment in the following terms: In any proceedings before the court or the comptroller in which the validity of a patent is put in issue the court or, as the case may be, the comptroller may, subject to section 76 below, allow the proprietor of the patent to amend the specification of the patent in such manner, and subject to such terms as to advertising the proposed amendment and as to costs, expenses or otherwise, as the court or comptroller thinks fit.
The EPC 2000 modernised the convention provision for amendment by adding article 138(2) and (3) as follows: (2) If the grounds for revocation affect the European patent only in part, the patent shall be limited by a corresponding amendment of the claims and revoked in part. (3) In proceedings before the competent court or authority relating to the validity of the European patent, the proprietor of the patent shall have the right to limit the patent by amending the claims.
The patent as thus limited shall form the basis for the proceedings.
Section 75 of the Patents Act 1977 was then amended by the Patents Act 2004 by the introduction of a new subsection (5): (5) In considering whether or not to allow an amendment proposed under this section, the court or the comptroller shall have regard to any relevant principles applicable under the European Patent Convention.
The main change wrought by the EPC 2000 was that amendment was no longer subject to the presence or absence of the necessary power in national law.
The amended Convention provided for a Europe wide right to amend.
The question is whether that change was intended not merely to require all contracting states to have a power of amendment, or went one stage further, elevating what had previously been a discretionary power in the national court into a right enjoyed by patentees, unqualified by any discretion afforded to national courts by their own law.
To that question the Court of Appeal has thus far provided a clear answer.
In Nikken Kosakusho Works v Pioneer Trading Co [2005] EWCA Civ 906, [2006] FSR 4, it drew a sharp distinction between (a) pre trial patent amendments, (b) post trial patent amendments to delete claims which had been found invalid, and (c) post trial patent amendments designed to set up a new claim which had not been adjudicated upon at trial.
If a type (c) amendment would provoke a validity challenge which required a further trial then, generally, both the principle in Henderson v Henderson (1843) 3 Hare 100 and the Overriding Objective in the Civil Procedure Rules would militate against giving permission to amend, if the new claim could have been put forward by amendment in time for the first trial.
In Nokia GmbH v IPCom GmbH & Co KG [2011] EWCA Civ 6; [2011] FSR 15, the Court of Appeal took the opportunity to consider whether either Johnson v Gore Wood & Co [2002] 2 AC 1 or article 138(3) of the EPC (as amended in 2000) required the principles laid down in the Nikken case (the Nikken principles) to be reconsidered.
Jacob LJ held, at paras 108 109 that there was nothing in Johnson v Gore Wood inconsistent with the Nikken principles.
Although the test was one of abuse of process and the onus on the person alleging abuse, vexing a defendant with two trials about the same patent by means of a post trial amendment was prima facie abusive, if the amendment could have been made in time for all issues about the patent to be adjudicated upon at a single trial.
As for article 138(3), the creation of a right to amend was simply designed to ensure that all contracting states provided for amendment of patents.
It was not designed to override the national law of each state about the timing, grant or refusal of amendments, and certainly not to legitimise what would otherwise be the abuse of a contracting states process: see paras 127 129.
Nikken and Nokia were followed and applied both by the judge and by the Court of Appeal in the present case.
Faced with submissions that several European states took a more relaxed view about amendment after a trial at first instance, Arnold J said this [2015] EWHC 3370 (Pat); [2016] RPC 16, para 23: Secondly, and more fundamentally, any assessment of abuse of process must depend upon the procedural rules applicable in the relevant jurisdiction, which will reflect the procedural philosophy applicable in that jurisdiction.
But the EPC Contracting States differ not merely in their procedural rules, but also in their procedural philosophies.
Thus there are different conceptions of procedural economy.
The traditional English conception is that it requires the first instance court to adjudicate upon all essential points in dispute, certainly all points that require findings of fact or evaluation.
In that way, if there is an appeal, the Court of Appeal is in a position to deal with any issues of law that may then arise and dispose of the case without either a re hearing or remitting it to the first instance court.
By contrast, there are many civil law jurisdictions where the view is taken that the correct approach to procedural economy is for the first instance court only to decide the issues which are sufficient to enable that court to dispose of the case, and to leave other issues undecided.
In the following two paragraphs he made similar observations about differing procedural philosophies at the appellate level.
An approach which treats procedural issues about amendment in national patent proceedings as turning upon national procedural law and philosophy is not just an English eccentricity.
In High Point SARL v KPN BV (15 September 2017) 16/00878 ECLl:NL:HR:2017:2363 the Hoge Raad of the Netherlands held, at [4.1.6 4.1.7] that EPC article 138(3) was designed only to ensure that all contracting states made sure that their national laws made provision for amendment of patents, with no objective to achieve greater harmonisation than that.
Procedural requirements for that purpose remained a matter for the national law of each state.
Cross reference to passages in the Advocate Generals Opinion cited by the court show that in reaching that conclusion it had in mind the application of the abuse principle by the judge in this very case, following Nokia.
It is of course open to this court to adopt a different position on this question than either the series of decisions in the Court of Appeal, or the views of the Supreme Court of the Netherlands.
But I can see no good reason why we should do.
First, no authority to the contrary, here or elsewhere in Europe, was cited to us.
Secondly, I find the analysis of Arnold J of the reasons why different contracting states should have different procedural rules and principles about amendment, cited above, to be compelling.
Thirdly, nothing in the language of article 138 suggests that the Court of Appeal and the Supreme Court of the Netherlands have got its purpose and effect wrong.
Finally, matters of procedure are pre eminently a matter for the Court of Appeal, and this court is slow to interfere in a consistent development of procedural principle by that court unless persuaded that it is clearly wrong.
I can deal briefly with the second ground, namely that this was an amendment to a partly valid patent.
That is literally true, even given our conclusions on insufficiency, since the claims relating to different types of inflammatory pain have survived.
But it misses the point of the Nikken principles.
They distinguish between (i) amendments merely to delete claims and related material which have been found to be invalid, and (ii) amendments designed to make good a claim not thus far advanced in the amended form.
The proposed amendment of Claim 3 is not to excise parts found to be invalid.
The whole of Claim 3 was held invalid.
Furthermore it is common ground that it would require a further trial to test the validity of the amended Claim 3.
The submission that the refusal was disproportionate, even applying the Nikken principles and Johnson v Gore Wood, was based on the assumption (shared by the judge) that a further trial need not take longer than two days, that the cost of this would be modest compared with the value of the amended Claim 3, that an order for costs would deal with any prejudice to Actavis and Mylan, and that the amendment, even if late, was a response to a late raising by Actavis and Mylan, shortly before trial, of an invalidity argument based upon the absence of sufficiency in a claim for central neuropathic pain.
These are essentially case management points, and all of them were deployed before the judge and the Court of Appeal.
Both courts reached the same conclusion in rejecting them.
Both courts consisted of judges experienced in the trial of patent cases, three of whom had, in turn, been the judge in charge of the specialist Patents Court.
In those circumstances this court would interfere only if the courts below had erred in law, left significant matters out of account, taken into account irrelevant matters, or gone clearly wrong.
The submissions made to this court came nowhere near surmounting those steep hurdles.
It is plain, as the judge held, that the occasion to consider whether to make an amendment to Claim 3 (which could have been conditional on that claim being found otherwise invalid) occurred at the very latest when Actavis and Mylan raised their plausibility case about central neuropathic pain shortly before trial.
Instead Warner Lambert chose to run a case for a narrow construction of Claim 3, to meet exactly the same potential problem.
There was ample material upon which the judge and the Court of Appeal could properly have concluded that the attempt to make a post trial amendment was an abuse of process, and no basis upon which this court could properly interfere, harsh though the consequences might have been if the cross appeal had failed.
Infringement
Infringement was originally alleged in relation to Claims 1 and 3.
There has been no attempt to challenge the finding of invalidity in relation to Claim 1.
The consistent decisions of the courts below, with which this court agrees, that Claim 3 is invalid and cannot be saved by amendment, mean that the issues about infringement are therefore of no consequence in relation to the Patent.
Nonetheless they have been fully and fiercely argued at all levels, and a significant disagreement about the tests for infringement of second medical use patents has divided the courts below.
The Secretary of State for Health has intervened in writing and by counsel, and there have been no less than nine written interventions by other stakeholders, large and small, for all of which I wish to express the courts gratitude.
The submissions of the parties and the interveners raise an important and difficult question of law, likely to be applicable to all Swiss form patents.
The answer may have consequences for all purpose limited claims, but that will have to be decided in future cases, as they arise.
Although Swiss form claims are now a closed class (because they have been replaced for the future by purpose limited product claims under article 54(5) of the EPC 2000) there are sufficient still in force for the issues as to infringement to have potentially wide ranging consequences.
I therefore propose to deal with the infringement issues in full, on the assumption (contrary to what we have concluded) that Claim 3 is valid in relation to all forms of neuropathic pain.
Infringement of a patent is, in the UK, a statutory tort.
Both the scope of the tort (ie the conduct of the defendant sufficient to constitute him an infringer) and the nature and extent of the remedies available to the patentee against the infringer are aspects of the national law of each contracting state.
Nonetheless the question whether there has been an infringement may, and does in this case, depend critically upon the construction of the relevant claims in the patent, for which purpose Section 125(3) of the Act incorporates reference to the Protocol, as already described in the Construction section of this judgment.
The need to strike a fair balance between the need to incentivise and reward inventors on the one hand and the need to provide legal certainty for third parties, to enable them to pursue lawful competition on the other, gives rise to particular difficulties in relation to alleged infringement of Swiss form second medical use patents, to such an extent that the parties were substantially agreed that there is no ideal solution.
The choice lies between defining infringement so widely that manufacturers will be dissuaded from producing generic drugs even to fulfil the original (no longer patented) use, and defining it so narrowly that patentees are inadequately protected from the invasion of their newly patented second use by generic manufacturers.
Warner Lambert contends for a wide definition which it says can be tempered by the court taking a restrained approach to remedies.
Actavis say that any inadequacies for patentees in what they submit is the correct narrower definition are the necessary consequence of the judicial fudge which has enabled Swiss form claims to thrive at all, and must be endured if the generic market for the original use, which is itself an important public good, is not to be killed off altogether.
Actavis assert that the modern replacement EPC 2000 patents for second medical use will cure most of the problems associated with the Swiss form in the longer term.
Whether that is right remains to be seen.
The starting point is (again) the express terms of Claim 3: use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain.
It is now common ground, at least between the parties, that this is a purpose limited process claim.
It is a process claim because it protects the process of manufacture of a medicament containing pregabalin.
It is purpose limited because it only protects that process if it is undertaken for the purpose of treating neuropathic pain.
The purpose limitation lies at the heart of the claim, because the use of pregabalin in the manufacture of a medicament lacked novelty at the priority date.
It is the discovery that pregabalin based medicaments treat neuropathic pain which was alleged to be (and must for this analysis be assumed to be) the relevant contribution to the article
It was also common ground until the end of the hearing in this court that a purpose limitation of this kind necessarily imports some kind of mental element, actual or imputed.
It was assumed that doing something for a particular purpose inevitably does.
The question whether the manufacturer is an infringer begins by asking for what purpose is he using pregabalin for the preparation of a medicament.
In outline, the rival contenders for the requisite mental element on the part of the manufacturer were foreseeability and intention.
Warner Lambert and the Court of Appeal favoured foreseeability.
Actavis and the judge favoured intention.
More recently, and in response to a request from the court for further written submissions, Actavis has suggested, in the alternative, that the search for a mental element should be abandoned, in favour of a test of purpose which depends entirely upon the physical characteristics of the product as it emerged from the manufacturing process, including any information about its purpose contained in the accompanying label or patient information leaflet, an approach described by Floyd LJ in the Court of Appeal as only packaging will do.
As will appear, it derives from the jurisprudence of the German courts, where it is labelled sinnfllige Herrichtung, usually translated into English patent jargon as manifest making up.
But these are little more than headings for more detailed concepts.
Before unwrapping them, it is necessary first to lay out both the context and the statutory definition of infringement.
The context consists of the current regime within the UK for the prescribing and dispensing of medicines.
It is described in admirable detail by the judge, and I am content to adopt, without repeating, Lord Sumptions summary of it.
The end result is that the use of labelling on a generic form of pregabalin stating that it is not for the prevention of pain will not in fact prevent it being dispensed for that purpose, because the pharmacist does not generally know what is the condition for which pregabalin has been prescribed, and the generic manufacturer can be in no better position.
Furthermore, as Lord Sumption explains, recent NHS guidance does not constitute a satisfactory long term precedent for resolving the problem, even though it may have been of real assistance in this case.
The statutory tort of patent infringement is defined by section 60 of the Patents Act 1977 (so far as is relevant) as follows: 60.(1) Subject to the provisions of this section, a person infringes a patent for an invention if, but only if, while the patent is in force, he does any of the following things in the United Kingdom in relation to the invention without the consent of the proprietor of the patent, that is to say (a) where the invention is a product, he makes, disposes of, offers to dispose of, uses or imports the product or keeps it whether for disposal or otherwise; (b) where the invention is a process, he uses the process or he offers it for use in the United Kingdom when he knows, or it is obvious to a reasonable person in the circumstances, that its use there without the consent of the proprietor would be an infringement of the patent; (c) where the invention is a process, he disposes of, offers to dispose of, uses or imports any product obtained directly by means of that process or keeps any such product whether for disposal or otherwise. (2) Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention 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 in the United Kingdom.
Warner Lambert pursues its infringement case under section 60(1)(c) and, separately, under section 60(2).
Each needs to be addressed separately but, at the outset, it is convenient to make some observations about section 60, viewed as a whole.
First, although liability for infringement is generally said to be strict, the section makes a clear distinction between those parts of the multi headed definition of infringement which do, and which do not, require proof of a mental element.
In short, the definitions in section 60(1)(a) and (c) do not, but section 60(1)(b) does, at least in relation to offer of the process for use in the UK, and 60(2) does as well.
In both the latter definitions the knowledge requirement is the same, encapsulated in the phrase when he knows, or it is obvious to a reasonable person in the circumstances .
Secondly, section 60 appears to use a consistent conceptual approach to the relationship between the words product, process and invention.
It is clear from section 60, read as a whole, that invention is a class with only two members, product and process, and that the invention is the subject matter of one or more claims in the patent.
Phrases about using the process, product or invention, or working the invention or putting the invention into effect need to be understood and applied by reference to the claim (or claims) in the patent alleged to be infringed.
Thus, while it may be appropriate in other circumstances to refer to the invention, or to putting the invention into effect, in wider or narrower terms than as set out above, it is not appropriate to do so in the context of section 60.
Turning to section 60(1)(c), this focuses upon a product obtained directly by means of the patented process.
Infringement then occurs, as in section 60(1)(a), whenever a person disposes of that product, offers to dispose of it, uses or imports it, or keeps it, whether for disposal or otherwise.
Under section 60(1)(c) the infringer may be, but need not be, the same as the person who makes the product.
Liability for the prohibited conduct is strict, provided only that the product has been obtained directly by means of the process, and it then extends to dealings with all and every such product.
By contrast with section 60(1)(a), the infringement liability for making the product obtained from the patented process is not addressed by section 60(1)(c).
That liability must arise, if at all, from section 60(1)(b), which includes a necessary mental element, when using the process to make the product.
But what if the patented process is, according to the relevant claim, one which itself involves a mental element? In the language of section 60(1)(c) a product will not be obtained directly by means of that process if the required mental element is inapplicable to the manufacturer, all the more so if, as with Swiss form claims, it is the manufacture or preparation of the medicament that is sought to be protected.
It would appear to follow that if A keeps or disposes of a product manufactured by B without B having the requisite mental element, then A will not infringe even if his intention is to use or dispose of the product with a view to its being used for the purpose identified in the claim.
Similarly, A in the above example will not escape liability for infringement if B manufactured the product for the purpose identified in the claim, however innocent A may be of Bs state of mind, and regardless of the use to which A puts the product.
This is precisely because section 60(1)(c) imposes strict liability, and is therefore blind to As state of mind.
It was not suggested that any of the exceptions in section 60(5)ff could be prayed in aid by A.
In short, the question whether dealings with the product after its manufacture give rise to infringement depends entirely on whether the product itself was tainted at the time of manufacture by having been obtained by a process (and therefore in this context for a purpose) within the claim.
It may well be doubted whether section 60(1)(c) can have been formulated with purpose limited process claims in mind.
It appears to place an unrealistic burden on those wishing to deal in good faith with the relevant product downstream of the manufacturer, such as importers, distributors and dispensing pharmacists, because it may be impossible for the dealer to form any reliable view about the manufacturers state of mind.
Furthermore the dealer will not escape liability by distributing or dispensing the product only for indications outside the claim, such as for indications for which earlier patent protection has expired.
Their only safe course, as emphasised by many of the intervening stakeholders, will be to refuse to deal with the generic product at all.
Section 60(2) does not distinguish between product and process inventions.
It applies equally to both.
But recognition that the invention is something circumscribed by the scope of the claim means that the critical phrase putting the invention into effect is likewise constrained.
If, as here, the claim is to protect the process of manufacture, then the invention is fully put into effect once the process of manufacture is complete.
The claim cannot include dispensing pursuant to a prescription or treating, as part of the process, because those activities cannot be patented.
In short, Swiss form claims have been deliberately formulated so as to be limited to manufacture, to avoid falling foul of that restriction.
The conduct prohibited by section 60(2) is supplying or offering to supply something to someone not entitled to work the invention.
I think it plain that, in relation to process claims which are limited to manufacture, section 60(2) is concerned with activity upstream of manufacture, whereas section 60(1)(c) is concerned with conduct downstream of manufacture.
These may conveniently be labelled respectively as supplying the means and dealing in the product, provided that those phrases are used for convenience rather than by way of definition.
Manufacture itself is caught only by section 60(1)(b), by the phrase uses the process.
It is convenient to address Warner Lamberts case under section 60(2) first, because I think that it is susceptible to the relatively easy answer which Lord Sumption provides at the end of his judgment, with which I fully agree.
In particular it does not depend upon the answer to the very difficult question about the requisite mental element in a purpose limited process claim.
I can therefore return to the issues about mental element which arise from the infringement case under section 60(1)(c).
I have explained my view that this has nothing to do with the question whether section 60(1)(c) itself imposes a mental element as a requirement for infringement liability.
It plainly does not.
The real question is: what, if any, mental element is built into this purpose limited process claim? That is a question of construction of the claim, not a question about UK patent infringement law.
I have summarised the rival contentions of intention, foreseeability and (now) no mental element at all, but it is necessary to describe them, and their potential consequences, in more detail.
Warner Lambert originally submitted that it was enough to bring manufacture of a drug containing pregabalin within Claim 3 if it was foreseeable to the manufacturer that a more than de minimis amount of it would in due course be used for the treatment of neuropathic pain.
The Court of Appeal broadly accepted this submission, subject to two qualifications.
First, the downstream use for treating pain had to be intentional rather than accidental.
By this it meant only that patients would receive the drug for treating their pain, rather than for example for treating epilepsy, with a coincidentally beneficial effect upon pain from which they happened also to suffer.
The second qualification is more important.
Floyd LJ held that the requisite mental element could be negatived if the manufacturer had taken all reasonable steps to prevent the downstream use of his drug for treating pain.
I refer to pain because the Court of Appeal was proceeding on the hypothetical assumption that both Claims 1 and 3 were valid.
At para 208 he said this, at para 44: The intention will be negatived where the manufacturer has taken all reasonable steps within his power to prevent the consequences occurring.
In such circumstances his true objective is a lawful one, and one would be entitled to say that the foreseen consequences were not intended, but were an unintended incident of his otherwise lawful activity.
Before this court Warner Lambert adhered to their pure foreseeability submission, using the Court of Appeals more nuanced approach as a fall back.
On their primary case the taking of reasonable steps might be relevant to remedies but, if leakage of Actavis generic product into the market for relieving neuropathic pain was still foreseeable after the taking of all reasonable steps to prevent it, infringement would still be the consequence.
Actavis submission was that the requisite mental element is intention, by which they mean that it must be shown that the manufacturer was targeting the drug for use in treating pain.
The Secretary of State, and many of the other interveners with a stake in the market for treating the non patented use, supported Actavis case, pointing out that Warner Lamberts case would cast the net so widely and unpredictably for dealers in, including dispensers of, generic forms of pregabalin that they would be deterred from having anything to do with it, even for the non patented indications.
In written submissions responsive to the courts request following the hearing Warner Lambert and the Secretary of State maintained their previous positions, both rejecting the abandonment of any mental element as conceptually wrong, and because it loaded the policy balance unjustly against the Swiss form patentee.
Actavis added a no mental element alternative to its original position, without expressing a clear preference for either, on the basis that both intention and manifest making up reflected the requirement to identify the purpose limitation equally well.
The parties drew from three main sources in advancing their competing cases.
The first was English authority on the meaning of intention in the law of tort.
The second was European authority on Swiss form patents.
The third was policy considerations.
The English common law of tort uses the concept of intention in a spectrum of different ways, depending upon context.
Fish & Fish v Sea Shepherd UK [2015] AC 1229 was a case about the liability of joint tortfeasors.
This court held that there had to be demonstrated a common design by the persons alleged to be liable to do, or to secure the doing of, the acts which constituted the tort.
Dissenting, but not on this point, Lord Sumption said this, at para 44: Intent in the law of tort is commonly relevant as a control mechanism limiting the ambit of a persons obligation to safeguard the rights of others, where this would constrict his freedom to engage in activities which are otherwise lawful.
The economic torts are a classic illustration of this.
The cases on joint torts have had to grapple with the same problem, and intent performs the same role.
What the authorities, taken as a whole, demonstrate is that the additional element which is required to establish liability, over and above mere knowledge that an otherwise lawful act will assist the tort, is a shared intention that it should do so.
In OBG Ltd v Allan [2008] AC 1, a case about the economic torts of procuring a breach of contract and causing loss by unlawful means, Lord Hoffmann said this, about the first of those torts, at paras 42 43: 42.
The next question is what counts as an intention to procure a breach of contract.
It is necessary for this purpose to distinguish between ends, means and consequences.
If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach.
Mr Gye would very likely have preferred to be able to obtain Miss Wagners services without her having to break her contract.
But that did not matter.
Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice.
It is usually to achieve the further end of securing an economic advantage to themselves.
As I said earlier, the Dunlop employees who took off the tyres in GWK Ltd v Dunlop Rubber Co Ltd 42 TLR 376 intended to advance the interests of the Dunlop company. 43.
On the other hand, if the breach of contract is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended.
That, I think, is what judges and writers mean when they say that the claimant must have been targeted or aimed at.
Later, at para 62, he applied the same test to the second of those torts.
By contrast, in Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716; [1985] 3 WLR 1027, Oliver LJ said, at 777H: If an act is done deliberately and with knowledge of its consequences, I do not think that the actor can sensibly say that he did not intend the consequences or that the act was not aimed at the person who, it is known, will suffer them.
That was a case about breach of statutory duty and misfeasance in public office.
Oliver LJs dictum was approved by the House of Lords in Three Rivers District Council v Governor and Company of the Bank of England [2003] 2 AC 1, which was also a case about misfeasance in public office.
I do not derive from this source any compelling guidance for the identification by way of construction of the mental element in a purpose limited process claim, for the following reasons.
First, the search is not here for the requisite element in a tort at all.
The tort of infringement created by section 60(1)(c) does not require any mental element.
Rather the search is for the mental element, if any, by which what would otherwise be an invalid process claim is limited by the requirement that the manufacture be for a purpose.
It defines the scope of the monopoly claimed, not (separately at least), the state of mind of the infringer.
Secondly, all the various and different types of intention set out by the English authorities are context dependent.
They apply in different ways to different torts.
Even if this had been a search for the mental element required of an infringer (otherwise than because of the limited scope of the claim) the English authorities give no guidance about where patent infringement lies on the spectrum which they describe.
The Court of Appeal conducted its own review of the relevant European authorities about infringement of Swiss form patents, first during the interim appeal in May 2015 and again during the appeal from the trial judgment, in October 2016.
Floyd LJ concluded, correctly in my view, that they provide no clear or settled answer to the problem.
But they do tend to show that a broad foreseeability test of the kind proposed by Warner Lambert has not found favour.
In summary, the German courts have concluded that the patentee will only be able to show that an alleged infringers process is for the patented use if there is some outward manifestation of that purpose in the presentation of the manufactured product, for example in its packaging: see the decision of the German Federal Court of Justice in Carvedilol II (Case X ZR 236/01) (decision of 19 December 2006); the decision of the Landgericht Dusseldorf in Chronic Hepatitis C Treatment (Case 4a O 145/12) (decision of 14 March 2013); the decision of the Oberlandesgericht Dusseldorf in Cistus (Case I 2 U 53/11) (decision of 31 January 2013); and the decision of the Landgericht Hamburg in Warner Lambert Co LLC v Aliud Pharma GmbH (Case 327 O 140/15) (decision of 2 April 2015).
Floyd LJ called it the only packaging will do approach.
He noted that the recent decision of the EPO in T 1673/11 GENZYME/Treatment of Pompes disease [2016] EPOR 33 appeared to follow the German lead.
The underlying rationale of those decisions appears to be that the purpose designated by a Swiss form patent was an inherent property of the product which emerged from the manufacturing process, rather than something to be found in the mind set of the manufacturer.
In recent written submissions Warner Lambert point out that the latest decisions of the German courts have modified this rigorous focus upon the packaging by admitting proof of infringement by reference to foreseeability, for example in strogenblocker (Case I 2 W 6/17) (5 May 2017), para 39, and Dexmedetomidin (Case I 2 U 30/17) (1 March 2018), (BeckRS 2018, 2410, paras 42 44).
The Spanish courts have taken a slightly more generous approach to patentees, looking for some authorisation or encouragement by the manufacturer directed at strengthening the use of the product for the patented indication: see the decision of the Madrid Court of Appeal in Wyeth v Arafarma Group SA (Case C 539/07) (16 April 2008).
In France, Floyd LJ detected a still more flexible approach in the preliminary decision of the Tribunal de Grande Instance dated 26 October 2015 in Warner Lambert Co LLC v SAS Sandoz (Case 15/58725), Vice Presiding Judge Marie Christine Courboulay, whereby the court was prepared to take fully into account steps taken by the defendant generic manufacturer to discourage the use of its product for the patented indication.
That was a case about this very Patent.
The report of the full merits hearing in the same case, in August 2016 (Case 16/57469) dismissing the infringement claim, was made available to this court.
I do not think that it really addresses the question as to the mental element built into the purpose limitation of the claims in this Patent, as a question of construction of the claim.
In a helpful appendix to its printed case, Warner Lambert note that the courts of the Netherlands have tended successively to follow the differing leads given by Arnold J and then by the Court of Appeal in this case.
They do not therefore provide significant independent guidance.
I have not carried out my own intense review of the European authorities on this point, because counsel did not suggest that either the summary of them, or the conclusion that they provided no clear answer, as set out by Floyd LJ, was wrong.
There appears to be a spectrum of differing approaches to the question of the relevant mental element built into a purpose limitation in a process claim.
It may well be that the courts in different contracting states will reach solutions which differ because the particular aspects of their national law on infringement, and the structure of their relevant markets, mean that striking a fair balance between protection of patentees and legal certainty for the lawful activities of third parties produces a different result in each jurisdiction.
That may be unfortunate, since the construction of claims in a European patent ought to be consistent across all contracting states, but there is nothing which this court can do about it, save to proceed with due regard to the decisions of those states courts.
We were pressed by counsel for Warner Lambert with dicta about knowledge and intention in the joint judgment of Jacob and Etherton LJJ in Grimme Landmaschinenfabrik GmbH & Co KG v Scott [2010] EWCA Civ 1110; [2011] FSR 7, at paras 112 114.
That was an infringement claim under section 60(2), which has its own built in knowledge requirement.
The patent in issue was for a product rather than a process, and was neither medical nor in Swiss form.
It therefore provides no assistance in the present context.
Policy considerations formed a, if not the, main plank in the submissions both of the parties and of the interveners.
I have already summarised the main battle lines above.
Policy is, to an extent, a perfectly legitimate factor to be taken into account on what is, for the reasons explained, essentially a question of construction of the purpose limitation in Claim 3.
Policy considerations inevitably underlie the striking of the balance required by the Protocol.
In my view, the central policy objectives are: 1.
Providing reasonable protection to the second medical use patentee, both to reward and to incentivise the complex and expensive processes of research and testing necessary to bring these valuable uses to fruition.
That protection needs, as far as is consistent with competing policy objectives, to protect the patentee against the invasion of his monopoly by competitors. 2.
Protecting the public against the loss of the patent free use of the relevant drug for treating the indications for which it was originally developed.
This means that the patentee for the new use should not obtain, by a side wind, an effective continuing monopoly in relation to the old use, after the expiry of the patent protection for it.
This policy objective preserves for the public the enjoyment of the quid pro quo for the grant of the now expired monopoly for the original use, in the form of very much cheaper generic forms of the drug becoming available for those uses. 3.
Providing reasonable legal certainty for those engaged in the manufacture, marketing and prescribing of the generic drug for the non patented use, that their conduct is lawful.
This policy objective is expressly recognised by the Protocol and, without it, the second objective is unlikely to be achievable.
I am satisfied by the evidence, and by the submissions of the parties and the interveners, that the simple foreseeability test primarily contended for by Warner Lambert would prioritise the first policy objective at an unacceptable cost to the achievement of the second objective.
This is because, it being common ground that some more than de minimis leakage of generic pregabalin into the market for treating neuropathic pain is foreseeable regardless of the taking of all reasonable steps within the generic manufacturers power to prevent it, all stocks of their generic forms of pregabalin will have been manufactured by use of the patented process, such that any subsequent dealing with those stocks will constitute infringement under section 60(1)(c).
For as long as doctors prescribe pregabalin for pain generically, without specifying that the relief of pain is the purpose of the prescription, pharmacists will always risk dispensing a generic form of pregabalin for pain, unless they confine themselves to dispensing Lyrica to meet all pregabalin prescriptions.
That is why some leakage is foreseeable.
The result is that pharmacists would have to desist from dispensing generic pregabalin at all, if they wish to avoid infringement.
This is not merely because of the risk of dispensing the generic product for pain, but, as I have explained above, because all dealings in a generic product (including prescription) will be an infringement under section 60(1)(c), even if the pharmacist knows that the prescription is for treating a non patented indication.
If foreseeability is the test, then all generic pregabalin will be tainted product from the point of manufacture, such that any dealing with it will be an infringement.
A fair balance between competing policy objectives is not struck by preferring the complete achievement of one by a construction which completely prevents the achievement of the others.
Accordingly I consider that policy considerations are strongly opposed to Warner Lamberts main case.
In partial recognition of this difficulty counsel for Warner Lambert submitted that the adverse effect of a simple foreseeability test could be mitigated by a flexible approach of the court towards remedies.
Injunctions could be refused, and patentees confined to an account of the infringers profits, based upon an assessment of the proportion of generic pregabalin dealt with by any infringer which is actually used for the treatment of pain.
I consider that there are a number of insuperable objections to this approach.
First, it tacitly assumes that dealers in generic pregabalin going about a lawful business of seeking to supply the market for its non patented use are infringers.
The prospect that they would be subjected only to a modest financial sanction is simply no answer to a person who wishes to conduct a lawful trade or profession.
Nor would it provide any protection at all from the cost, stress and uncertainty of the litigation of infringement claims.
Secondly, while the court may be able to withhold an injunction as a matter of discretion, the patentee has, in principle, a right to elect between damages and an account of profits.
They are not alternative discretionary remedies, between which the court is free to choose.
Thirdly, an election by the patentee for damages would expose the infringer to the patentees much larger lost profit margin per pack than the profit typically made by a manufacturer of, or dealer in, a generic product.
Fourthly, the patentees loss of profit would not be limited to sales lost for the treatment of pain, but to sales lost for all treatment because, as I have explained, sales or dispensing of tainted generic product for non patented treatment would also be acts of infringement.
The result therefore is that policy considerations firmly militate against Warner Lamberts primary case.
Warner Lamberts secondary case, namely foreseeability tempered by negativing intent by the taking of all reasonable steps, is the compromise solution preferred by the Court of Appeal.
While it may go some way towards avoiding the destruction of the second policy objective, at acceptable cost to the achievement of the first, it also faces serious objections, both in principle and practice.
First, if the basic test for the requisite mental element is foreseeability, it is simply not the case that the taking of all reasonable steps by the generic manufacturer to prevent leakage into the market for the patented use will necessarily make that leakage unforeseeable.
It does not appear to do so at present.
Leakage does appear to have been substantially reduced during the period before the trial, but this appears to have been attributable mainly to steps taken by the NHS, at the behest of the court on the application of Warner Lambert, to encourage doctors and pharmacists to prescribe and dispense Lyrica rather than a generic alternative for pain.
Although the Court of Appeal described the taking of steps by the manufacturer as sufficient to negative intention to manufacture pregabalin for the patented purpose, in the context of foreseeability it sounds more like the erection of a non statutory defence to infringement.
However desirable, that is not the function of the court in the context of a statutory tort.
The main practical objection to this apparent compromise between policy objectives 1 and 2 is that it is achieved, if at all, at the expense of objective 3, namely legal certainty for dealers in, and dispensers of, generic pregabalin.
How are they to know what steps have been taken by the manufacturer to prevent leakage, or whether the steps taken will eventually be regarded by the court as reasonable? Warner Lambert do not suggest that the reasonable steps requirement will be satisfied merely by skinny labelling, or limited to things visible to all users of the generic package.
As noted above, if the mental element test for the purpose limitation gives rise to serious legal uncertainty among dealers and dispensers of the generic drug as to whether the product is or is not tainted by having been manufactured within the scope of the claim in the patent, they will be likely to decline to use the generic drug at all, in order to avoid the risk of infringement.
I have considered whether the difficulties in finding an appropriate solution to the infringement issue ought to be regarded as flowing from the parties original concession (now withdrawn by Actavis) that the purpose limitation in this Patent (and in any Swiss form claim) necessarily involves some kind of mental element.
The German approach, of treating the purpose of the manufacture of a product as inherent in the physical characteristics of the product, and decisively determined by the form of its presentation in fully manufactured form, well serves the policy objective of providing legal certainty for the market, and mitigates the rigour of the strict liability imposed in the UK upon dealers by section 60(1)(c).
Its weakness, on an assumption that a mental element is required, is that it cannot realistically be the only way of proving infringement, namely the manufacture of the product for the patented use.
The latest German cases, as described above, appear to acknowledge that weakness by introducing an alternative basis for proving infringement, based upon the mental element of foreseeability.
Following the hearing we considered whether an alternative approach would be to abandon the search for an appropriate mental element altogether.
It would treat the identification of the purpose for which the product was manufactured as conclusively determined by a review of the fully manufactured product, including its packaging, labelling and enclosed patient instructions, upon the conceptual basis that the relevant purpose was an aspect of the physical characteristics of the product emerging from the manufacturing process.
It would place the downstream dealer in a generic product (importer, distributer or pharmacist) in as good a position as the court to determine whether the product was tainted by an illegitimate purpose in its manufacture, and therefore to be avoided for fear of liability under section 60(1)(c).
It would maximise legal certainty, and the use of the generic products for the non patented indications.
It would have the powerful advantage of avoiding the unusual (perhaps even unique) legal result of penalising a class of users as infringers by reference only to the state of mind of other persons (the manufacturers) of which that class could not reliably be aware.
We were of course conscious of the fact that this solution was not proposed either by the parties or by any of the interveners, and that we could not properly adopt it without calling for further submissions, in particular from Warner Lambert, because it would deprive Swiss form patentees even of the protection afforded by their ability to prove the requisite intent on the part of the manufacturer by evidence other than that constituted by the appearance and content of the fully manufactured product.
In the event no party other than Actavis favoured that solution, and even they regarded it only as an alternative to their primary case, based upon intention.
The Secretary of State considered that it did not strike the appropriate policy balance.
I have, not without some reluctance, come to the conclusion that this is not an available alternative.
My reasons follow.
First and foremost, I think that the original concession that the purpose limitation in a Swiss form claim necessarily involves a mental element of some kind on the part of the manufacturer was rightly made.
When we speak of someone making something for a particular use, and conclude as we must that for means something more than suitable for, it must point to something in the mind of the manufacturer.
Even if the manufacturer is a corporation using a factory entirely staffed by robots, if the manufacturing process is only protected by the patent if it is carried out for a particular purpose, the requirement to identify a mental element on the part of the manufacturer is simply inescapable.
The court is well versed in identifying the governing mind of a corporation and, when the need arises, will no doubt be able to do the same for robots.
By contrast I do not think that treating the purpose for which something is manufactured as inherent in the physical characteristics of the resulting product, truly reflects the role which the purpose limitation plays in defining the monopoly created by a Swiss form patent.
The fact is that, in its essentials, the Pregabalin based medicament sought to be protected by the Patent has exactly the same physical characteristics as Pregabalin based medicaments used to treat epilepsy and GAD.
That is not to say that the form in which the product of a manufacturing process is presented to the market will not often, or indeed usually, be decisive evidence, one way or the other, of the manufacturers intended purpose, leaving aside the occasional cases where other evidence may prove that the presentation is in fact a charade.
Subjective intent is routinely proved by objective evidence of conduct.
Secondly, I do not consider it safe to conclude that the apparent German lead in this direction can simply be followed in this different jurisdiction.
I agree with Lord Sumptions analysis of the way in which German law differs from UK law in making a less significant distinction between purpose and product claims.
I have not been able to agree with Lord Mances analysis, which seems to me to follow the German lead in treating the purpose as limiting the product, by focusing solely on the way it is packaged and marketed, while at the same time acknowledging that, in English law, the patent protects the process.
I agree that it does, but the purpose limits the process which is protected.
We know nothing about the particular features of the German systems for prescribing and dispensing medicines, about its regime for patent infringement, or about the market conditions within which a fair balance has to be struck.
The fact that German, French, Spanish and Dutch courts have all taken different approaches to this issue strongly suggests that differing legal, market and structural factors within each jurisdiction have been influential, and perhaps even decisive, but we have no sufficient knowledge of those factors, save within the UK.
Thirdly, it is striking that neither Actavis nor those interveners with an interest in maximising generic use for non patented purposes together with legal certainty have put forward this more rigorous solution to their difficulties at any stage in this litigation, until prompted by this court to consider whether to do so, after the hearing.
This may be simply because they all acknowledged that some mental element is implicit in a purpose limitation, or because they recognised that it would not strike a fair balance between their interests and those of patentees.
Fourthly, I think that this solution would not indeed strike a fair balance.
The Court of Appeal regarded the only packaging will do solution as plainly affording inadequate protection for patentees.
At para 191 Floyd LJ said: These matters arise as a matter of interpretation of the word for.
The parties are agreed that the word imports a mental element.
Packaging may be a means of demonstrating the necessary mental element, whatever that is, but it cannot possibly be the only means of doing so.
There is force in this objection.
A generic manufacturer might well demonstrate the requisite purpose by flooding the market for pregabalin beyond the sector of it which treats the non patented indication, or by covertly encouraging dealers and pharmacists to use it for the treatment of pain, regardless of what appears on the label.
Or a smoking gun internal document might reveal that the manufacturers packaging for the non patented use was just a charade, because its corporate purpose was indeed to profit by its distribution and use for the patented indications.
All these forms of evidence might prove the requisite intent, even if the packaging did not.
Finally, the principal driver towards this alternative is the concern that section 60(1)(c), in conjunction with Swiss form patents, imposes draconian strict liability on dealers in generic products, without giving them the ability to find out whether the manufacturer has an intention that taints its products in their hands.
It is tempting to try to fashion an answer to this difficulty by creating some sort of bona fide purchaser defence for dealers in the generic drug, downstream of the manufacturer, so that they could avoid liability for infringement under section 60(1)(c) unless they were on notice of the true (infringing) purpose of the manufacturer, in cases where it was not revealed by the packaging.
It would fill a lacuna in legislation which cannot have been drafted with purpose limited product claims in mind.
But that would be another illegitimate attempt to create a non statutory defence to a statutory tort.
Nonetheless the sense of injustice engendered by that acknowledgment of the potential for unfairness of UK legislation about infringement ought not to lead to straining the essential meaning of a purpose limitation beyond its proper limits, by what is really a legal fiction that it involves no mental element of any kind.
The so called subjective intent test favoured by Actavis would I think accommodate all forensic means whereby a purpose of the generic manufacturer to serve (and profit from) the market for neuropathic pain could be proved, including but not limited to the packaging on the product.
Anything from which the court could properly find that the manufacturer had such a purpose could be relied upon, including targeted disclosure, during litigation, of documentary records of the manufacturers decision making processes.
I call it a so called subjective test because a persons intention is as much a matter of fact as the state of his digestion, and this is true of corporate persons as much as of individuals.
It may be proved objectively by words, conduct and even inactivity, and the court is well versed in treating a decision not to enquire about something suspected as probative of blind eye knowledge.
I acknowledge that this solution is a compromise like any other.
It certainly falls short of providing complete protection to patentees from the invasion of their monopoly.
It appears that it would not cause the complete destruction of the generic market for pregabalin for the treatment of the non patented indications, although exposure of pharmacists to strict liability where the manufacturer is proved to have had the requisite intent may still discourage some pharmacists from using the generic product.
The departure from the German only packaging will do solution by permitting any means of proof of the manufacturers purpose (but well short of mere foreseeability) will provide less than perfect legal certainty for those who deal in and dispense the generic versions of pregabalin.
Nonetheless, as I have said, the packaging, labelling and patient instruction leaflets will in most cases be the best evidence of the manufacturers intention.
But the Proviso requires only the striking of a fair balance.
It was submitted for Actavis that to the extent that their proposed test for the mental element fell short of providing full protection to patentees, this should be regarded as a necessary consequence of the judicial fudge constituted by the recognition of Swiss form patents in the first place.
There is something in this point, but it does not absolve the court from seeking a construction of the purpose limitation which strikes as fair a balance as possible.
Nor do policy considerations mean that the court can do otherwise than choose between available meanings of the claim as a matter of construction.
The claim cannot just be re written.
But I consider that a test for the manufacturers purpose based upon determining his intent, in the manner described above, is well within the ambit of legitimate construction.
That is the construction which I consider to be correct.
Conclusion
I would therefore dismiss the appeal, and allow the cross appeal.
LORD HODGE:
I agree with Lord Sumption and Lord Briggs on the construction of Claim 3 for the reasons which they give.
I also agree with them that Arnold J was entitled to refuse to allow Warner Lambert to amend that claim after he had handed down his trial judgment on 10 September 2015, again for the reasons they give.
I therefore would dismiss Warner Lamberts appeal.
There are only two matters on which I wish to add any comment.
The first is the test for insufficiency in the context of Swiss form patents, and in particular the meaning of the plausibility test which has been developed to take account of the inability of the applicant for such a patent to establish the claimed therapeutic effect of the medicament by clinical trials before applying for the patent.
The second relates to the test for direct infringement under section 60(1)(c) of the Patents Act 1977.
Sufficiency: the plausibility test
The general principle that the extent of a patent monopoly defined by the claims should correspond to, and be justified by, the applicants technical contribution to the art underpins the requirement of sufficiency of disclosure.
It justifies the existence of the boundary between an educated and educating prediction of efficacy for the designated therapeutic purpose on the one hand and mere speculation on the other, which is addressed by the plausibility test which the EPO Technical Board of Appeal (the Board) has developed in a series of decisions.
But the general principle tells one little about where the plausibility test draws that boundary.
It is necessary to look to those decisions to discover that boundary.
There are four principal decisions of the Board SALK (27 October 2004), ALLERGAN (26 October 2009), IPSEN (29 June 2011) and BRISTOL MYERS SQUIBB (3 February 2017) which assist in this exercise.
I agree with Lord Sumption (paras 33 34) that those decisions do not place an onus on an objector to show that the implied assertion of therapeutic efficacy is implausible.
I also agree with his view (paras 35 37) (a) that the patentee must disclose in its patent, when read in the light of the common general knowledge, the contribution to the art which justifies his monopoly and, to that end, (b) that the specification must disclose some scientific reason for thinking that the medicament might well have the claimed therapeutic effect.
Where I differ from Lord Sumption is that, in agreement with Lord Mance, who has analysed the three cases of ALLERGAN, IPSEN and BRISTOL MYERS SQUIBB, I do not interpret those principles as requiring the patentee to demonstrate within its patent a prima facie case of therapeutic efficacy.
In my view the recent decisions of the Board (a) require that the therapeutic effect of the medication appears plausible from the data in the patent interpreted in the light of the common general knowledge, (b) do not require that the patent discloses experimental evidence to demonstrate that plausibility unless there is an allegation, supported by sufficient evidence, that the invention does not work, but (c) allow the plausibility to be reinforced by considering evidence which post dates the patent (although later published data are not admissible if they alone render the therapeutic effect plausible), (d) take account of the ease with which the therapeutic effect can be ascertained using straightforward tests which are known in the prior art, and (e) where the data in the specification have made the claimed therapeutic effect plausible, place a burden on an objector to substantiate doubt that the desired effect can be achieved.
Adopting the lower standard of plausibility which the recent decisions support, I am inclined to think that Arnold J, who heard and analysed the expert evidence on this matter, including that of Professor Woolf, Dr Scadding and Professor Wood, did not err in his evaluation of that evidence when he concluded that Warner Lambert had done just enough to satisfy the plausibility test in relation to peripheral neuropathic pain.
The result of the rat paw formalin test demonstrated that pregabalin reduced inflammatory pain at phase 2.
There was expert evidence which treated as credible the suggestion that the efficacy of pregabalin in reducing pain which that test revealed would not be confined to inflammatory pain and that the medication would also be effective in relation to peripheral neuropathic pain.
As Arnold J stated (para 351), it was common general knowledge that central sensitisation was involved (at least as an amplifying mechanism) both in relation to inflammatory pain and in relation to peripheral neuropathic pain and that it played a role in the rat paw formalin test.
The patent had not demonstrated that pregabalin had an effect on central sensitisation and a prima facie case had not been made out.
But the plausibility test does not require that standard.
The patents contribution to the art, which Arnold J found, was not only the demonstration that pregabalin reduced inflammatory pain but also, because of the involvement of central sensitisation which was common general knowledge, a credible assertion that the drug would also reduce peripheral neuropathic pain.
In my view it was not necessary, in order to overcome the relatively low hurdle of plausibility, for the patent to demonstrate by experiment or by scientific theory, that pregabalin blocked or reduced central sensitisation.
In agreement with Lord Mance, I do not see the example which the Board gave in para 9 of SALK, which Lord Sumption quotes at para 29 and founds on in his fifth point in para 37, as establishing a sine qua non of plausibility.
I would add that the patent also identified the Bennett and Kim tests, which were straightforward tests and were available to the reader of the patent to test the claims that pregabalin was effective to treat peripheral neuropathic pain.
The teaching could be tested without undue burden.
Subsequent tests established the efficacy of pregabalin in treating pain, including peripheral neuropathic pain.
That later evidence is, as I have said, not admissible if there were no data from which one could make predictions about the efficacy of the medication in relation to peripheral neuropathic pain: T 1329/04 JOHNS HOPKINS UNIVERSITY SCHOOL OF MEDICINE/Growth differentiation factor [2006] EPOR 8, para 12.
But the plausibility test allows the court to have regard to such later evidence to make good the prediction if there is some basis for the prediction in the patent.
Floyd LJ in the leading judgment in the Court of Appeal (para 133) treated the outcome of these tests as fortifying the judges conclusion that the patent had contained a plausible prediction.
I agree.
I would therefore have dismissed the cross appeal and have upheld Claims 10, 11 and 12.
Infringement
I agree that Warner Lambert have no claim under section 60(2) of the Patents Act 1977 for the reasons which both Lord Sumption and Lord Briggs give.
The difficulty in finding a satisfactory answer to the interpretation of Claim 3 in the context of an infringement claim under section 60(1)(c) is the result of the shoe horning of the judge made law, namely the Swiss form claims, into a statutory scheme in section 60 of the Patents Act which was not framed with such purpose limited process claims in mind.
The problems so caused are particularly acute in relation to prescribed medicaments as section 60(1)(c) imposes strict liability on suppliers and pharmacists who may have no reliable knowledge of the intention of the generic manufacturer and who operate in a context in which doctors, for sound therapeutic reasons, normally prescribe drugs generically but also do not usually specify the medical condition or conditions which the medicament is intended to treat.
I agree that the test of foreseeability which Warner Lambert promote and the qualified version of foreseeability which the Court of Appeal favoured should not be adopted for the reasons which both Lord Sumption and Lord Briggs advance.
The disagreement between Lord Sumption and Lord Briggs is whether, as Lord Sumption advocates, to adopt an approach, which has (at least until recently) found favour in the German courts, confining evidence of the purpose of an alleged infringing manufacturers process to the outward manifestation of that purpose on the product itself, including its packaging, labelling or in an accompanying patient information leaflet, or, as Lord Briggs suggests, to assess that manufacturers actual intention in producing the medicament by taking account also of other manifestations of that manufacturers purpose.
The approach of the German courts has the serious disadvantage of giving inadequate protection to the patentee of the Swiss form patent against a generic manufacturer who uses skinny labels and patient information as a charade behind which it exploits the second use market.
The approach which Lord Briggs favours may expose dealers in the generic product and dispensing pharmacists to strict liability for infringement as a result of matters over which they may have neither knowledge nor control.
Both approaches are far from perfect.
I confess to having been strongly attracted by the tidiness and consistency with the principles of tort law which Lord Sumptions approach involves.
That approach also reduces the risk that suppliers and pharmacists will decline to deal in generic products after a patent has expired if there is a second medical use patent.
But in my view Lord Briggs approach creates a fairer balance between the central policy objectives which he sets out in para 160 of his judgment.
Principally for that reason but also for the other reasons which he advances, I agree with Lord Briggs judgment on this matter.
If, on this approach, section 60(1)(c) were to cause serious problems to operators in the downstream market for generic products or to pharmacists, which in turn cause them to refuse to handle such generic products, it will be for the legislature to address those problems.
LORD MANCE:
I have read with benefit the judgments that have been prepared by Lord Sumption and Lord Briggs.
Construction
I would myself have been tempted by Warner Lamberts case that, on a true construction of the patent, Claim 3 should be understood as limited to peripheral neuropathic pain.
I would have been impressed by the statement in para 6 of the description that Neuropathic pain is caused by injury or infection of peripheral sensory nerves, by the instances given which are of peripheral neuropathic pain and by the absence of any reference to any obvious instances of central neuropathic pain, such as pain from strokes and multiple sclerosis.
I would also question whether the point made in para 104(3) of Lord Briggs judgment is entirely sound.
Claim 2 (use for inflammatory pain) and Claim 3 (use for neuropathic pain) are not sub divisions covering the whole territory of Claim 1 (use for treating pain), since Claim 2 is itself commonly (but not I think necessarily) associated with an unmentioned category viz nociceptive pain.
However, interpretation involves ascertaining the meaning of the claims as they would be understood by a person skilled in the art, in accordance with the principles set out in paras 92 to 98 of Lord Briggs judgment, with which I am in agreement.
The points made by Lord Briggs in para 104(4) and (5) of his judgment also have some force.
All my colleagues are persuaded that the skilled person would understand Claim 3 as extending to central as well as peripheral neuropathic pain.
Their reasonable opinion carries weight.
I am not in the circumstances prepared to press my reservations to a conclusion that they are wrong.
Amendment and disposition of appeal
I also agree with Lord Sumption and Lord Briggs, for the reasons they give, that Arnold J was, in the circumstances of this case, entitled to refuse to allow Warner Lambert to amend Claim 3 after he had handed down judgment.
It follows that I agree that Warner Lamberts appeal fails.
Sufficiency or plausibility and its application
Where I do feel it necessary to disagree with the approach taken in Lord Sumptions judgment is in relation to the concept or test of sufficiency adopted in paras 26 to 37 in reaching it.
This is a point of general importance.
Swiss form claims for the manufacture of a known compound for a novel use are a construct of courts, which was aimed at meeting a commercial need, but was not envisaged by the language of the European Patent Convention (before its 2000 amendment came into force) or of the United Kingdom statutory scheme.
Sufficiency or plausibility, in the sense presently relevant, is a court invented pre condition to validity.
It has been constructed by courts, principally to attach some limit to the Swiss form claims for manufacture of compounds for uses which could otherwise be presented on a purely speculative basis.
In the circumstances, there is every reason why the pre condition should be narrowly understood, and should represent a low threshold to overcome.
In my view, Lord Sumptions analysis imposes too high a threshold, and imposes a burden on a patentee which the case law of the Board of Appeal of the European Patent Office does not justify.
I prefer the approach advocated by Mr Mitcheson, but rejected by Lord Sumption in para 30 of his judgment.
The case law of the Board of Appeal of the European Patent Office also seems to me to establish a reasonably clear position, which cannot be dismissed as some turns of phrase (para 30 of Lord Sumptions judgment).
Taking the cases discussed in paras 31 to 34 of Lord Sumptions judgment: 1.
T 1437/07 ALLERGAN (26/10/09): The relevant paragraphs in the judgment read: 38.
The respondents argue that it was not credible that the therapeutic effect could be achieved because the treatment disclosed in Example 9 had not actually been carried out. 38.1 However, article 83 EPC stipulates that an invention must be disclosed in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art (emphasis added by the board).
Thus, article 83 EPC does not stipulate that a claimed invention must have actually been carried out by the applicant or the inventor.
Moreover, according to rule 42(1)(e) EPC, even the presence of an example is not mandatory.
Therefore, just because a patent discloses an effect which has not in reality been achieved, there is no reason in the absence of convincing evidence that the effect cannot be achieved for the board to doubt that the effect can be achieved.
Thus, the respondents argument does not convince the board.
Again, it is notable that the Board of Appeal was prepared to proceed on the basis that a claimed effect was sufficiently disclosed in the absence of convincing evidence that it could not be achieved. 2.
T 0578/06 IPSEN (29/6/11): Lord Sumption, after quoting paras 14 and 15 of the judgment in IPSEN, concludes: This decision is authority for the proposition that plausibility can be demonstrated in the specification without experimental evidence, if there is no substantiated doubt about the theoretical case made for the efficacy of the invention.
This is the only relevant proposition for which it is authority.
That is not in my opinion a correct paraphrase of paras 14 and 15 in, or supported by a full reading of, IPSEN.
In para 15 the board took pains to re emphasise that the case law considers the establishment of plausibility only relevant when examining inventive step if the case at hand allows the substantiation of doubts about the suitability of the claimed invention to solve the technical problem addressed and when it is thus far from straightforward that the claimed invention solves the formulated problem.
Para 13 in IPSEN is also relevant: The board notes that the EPC requires no experimental proof for patentability and considers that the disclosure of experimental data or results in the application as filed and/or post published evidence is not always required to establish that the claimed subject matter solves the objective technical problem.
This is in particular true in the absence of any formulated substantiated doubt as is the case here.
Paras 20 to 23 of the judgment in IPSEN underline this, by making clear that the onus is on the objector to demonstrate that there are doubts. 3.
T 950/13 BRISTOL MYERS SQUIBB (3/2/17): (a) This is the most recent of all decisions, and particularly significant for that reason and because it examines the scope of T 609/02 SALK INSTITUTE FOR BIOLOGICAL STUDIES, relied upon in paras 28 to 29 of Lord Sumptions judgment.
Again, in my opinion, the draft undervalues its significance.
The principal claims in BRISTOL MYERS SQUIBB related to a compound of a formula for dasatinib or a salt thereof for the manufacture of a medicament for the oral treatment of cancer, wherein the cancer is chronic myelogenous leukaemia (CML) (Claim 1) or for use in the oral treatment of cancer, wherein the cancer is [CML] (Claim 4).
Lord Sumption in para 34 explains BRISTOL MYERS SQUIBB as a case where Dasatinib had significant functional and chemical affinities with another kinase inhibitor [viz imatinib] known to be effective. 4.
However, the objection was that the functional affinity was no more than an assertion that dasatinib functioned in the same way as imatinib.
See in particular the patentees case on Sufficiency of disclosure set out in paragraph IX and the opponents case set out in paragraph X.
Ultimately, it appears that, although this was true, the possibility that dasatinib would function in the same way as imatinib and the ease with which this could be ascertained using methods known in the state of the art, supported by post published documents combined to make Claims 1 and 4 plausible.
A further claim that dasatinib went further than imatinib, and operated as an inhibitor in imatinib resistant situations was however insufficiently plausible. 5.
The Board of Appeal approached BRISTOL MYERS SQUIBB on the basis that it was commonly known in the art that the single causative abnormality in CML was the BRC ABL oncogene, the protein of which was a tyrosine kinase responsible for the malignant transformation, that CML could be treated by inhibiting the BRC ABL kinase and that imatinib did this and had been approved for the treatment of CML (paras 3.4 and 3.5).
The application contained no experimental evidence for dasatinibs BRC ABL inhibitory activity, but the disclosure of experimental results in the application is not always required to establish sufficiency, in particular if the application discloses a plausible technical concept and there are no substantiated doubts that the claimed concept can be put into practice. (para 3.6) 6.
The application certainly drew an analogy between imatinib and dasatinib (para 3.6), but the Board of Appeals reasoning shows that the furthest the application went in this regard was to point out that there was evidence that dasatinib inhibited certain protein tyrosine kinases (PTKs) other than the BRC ABL kinase, that it was not uncommon for a protein kinase inhibitor to inhibit more than one [PTK] and that this can be explained by the fact that in all [PTKs] the ATP binding site and the transfer domains are to a certain extent similar (para 3.8).
The Board of Appeal placed weight on the fact that assays and methods of testing to establish the activity of dasatinib as an inhibitor of PTKs, including BRC ABL were known in the art (para 3.8).
The teaching that dasatinib was suitable for the treatment of CML was not rendered implausible by the fact that it may not have been obvious in view of the prior art (para 3.8).
Further, at para 3.10.4, in these circumstances: post published documents may be used as evidence that the invention was indeed reproducible without undue burden. 7.
The Board of Appeal drew a careful distinction between the position in BRISTOL MYERS SQUIBB and the position in the earlier case of SALK.
It pointed out (para 3.9.1) that the Board of Appeal in SALK, at para 11, had summarised the situation as one where the claimed subject matter covers limitless and untried downstream developments in relation to yet to be demonstrated molecular mechanisms.
In the boards judgment, it amounts to no more than an invitation to set up further research programs for which no guidance is forthcoming.
In contrast, the Board said, the position in BRISTOL MYERS SQUIBB was that a structurally well defined compound and a plausible concept for its suitability in the treatment of CML has been disclosed.
Similarly, in rejecting the opponents case that the skilled person was left to guess whether dasatinib exhibited any PTK inhibitory activity, let alone against BCR ABL kinase, the Board pointed out, at para 3.10.2, that this disregards that the present application clearly teaches that dasatinib is suitable in the treatment of CML, which is tantamount to dasatinib being a BRC ABL kinase inhibitor.
Hence, . the skilled person was not left to guess, which of the various PTKs was inhibited by dasatinib.
Accordingly, no further research programme was necessary in order to carry out the invention.
The allegedly observed failure of some compounds according to formula I to inhibit the protein kinase Lck or the poor or reduced oral absorption properties of other compounds falling within the scope of formula I is irrelevant in this context.
Equally irrelevant is the low activity of dasatinib on certain other PTKs such as HER1 or HER2 kinase.
The [opponents] arguments may have been relevant, if the application had been limited to the general disclosure relied on by the [opponent], ie the provision of an extremely broadly defined group of compounds for the treatment of a plethora of diseases or disorders based on the inhibition of different types of PTKs with no further guidance at all as to which compounds inhibits [sic] which PTK.
However, as set out above this is presently not the case. 8.
In summary, being told that there was a functional analogy between dasatinib and imatinib in that they both inhibited BRC ABL kinase was sufficient information for the skilled reader to consider dasatinibs suitability in the treatment of CML to be a plausible teaching.
For these reasons, I consider that it puts the test too high to suggest that the specification must disclose some reason for supposing that the implied assertion of efficacy in the claim is true (Lord Sumptions judgment, para 36).
That amounts on its face to, or certainly risks being read as, a requirement that the plausibility of the claim must appear to be established prima facie through scientifically cogent reasoning or experimental evidence set out in the specification.
Admittedly, Lord Sumption goes on in para 36 to suggest that the test is relatively undemanding.
But he continues in para 37 to say that it is sufficient if the specification would cause the skilled person to think that there was a reasonable prospect that the assertion would prove to be true, and then that [the] reasonable prospect must be based on what the [Board of Appeal] in SALK (para 9) called a direct effect on a metabolic mechanism specifically involved in the disease, this mechanism being either known from the prior art or demonstrated in the patent per se.
It also explains that, in so far as no experimental data is produced, it can be: demonstrated by a priori reasoning.
For example, , the specification may point to some property of the product which would lead the skilled person to expect that it might well produce the claimed therapeutic effect; or to some unifying principle that relates the product or the proposed use to something else which would suggest as much to the skilled person.
Despite the use of phrases such as reasonable prospect and might well produce, there is a real risk that the test as described by Lord Sumption would amount to, or be understood as, involving a requirement to establish a prima facie case on the material contained in the specification.
In my opinion, the authorities analysed above do not put the standard so high.
They certainly reject speculative or wide ranging unsubstantiated claims.
But they accept as sufficient a tailored claim which appears scientifically possible, even though it cannot be said to be even prima facie established, without for example testing or assays according to the state of the article Only if a person skilled in the art would have significant doubts about the workability of the invention would it, in such a case, fail for insufficiency of disclosure.
I therefore consider that Lord Sumptions judgment puts the test of sufficiency of disclosure too high.
I agree with the way in which Lord Hodge puts the position in para 181 of his judgment.
I am also persuaded that, applying the correct test, Arnold J cannot be said to have erred in concluding there was enough material just [to] make it plausible that pregabalin would be effective to treat peripheral neuropathic pain (para 351).
My reasons correspond with those given more fully by Lord Hodge in paras 182 to 184 of his judgment, which I have had the benefit of reading since writing a first draft of my own.
Infringement
I turn finally to infringement.
I need add nothing to what Lord Sumption and Lord Briggs have said on indirect infringement under section 60(2) of the Patents Act 1977.
They are agreed that the prescription, dispensing or use of generic pregabalin to treat neuropathic pain does not put into effect the patented invention, or involve any supply to doctors, pharmacists or others of the means of putting it into effect.
The patented invention is, under English law, the process completed by manufacture of the composition for the patent protected use.
Any subsequent use is not itself patented.
On the subject of direct infringement under section 60(1)(c), the other members of the court are however equally divided.
Lord Sumption, with whom Lord Reed agrees, is on the one side and Lord Briggs and Lord Hodge are on the other.
I am the swing voice, and it is with some unwillingness that I pronounce on the issue at all.
All our remarks on it will be obiter, and it is often better to leave a truly contentious and difficult issue to a case where it matters.
I also confess that my own view has swung between the two sides.
Nevertheless, I will, in the circumstances, express my present conclusions.
The issue has been fully argued, and it may at least diminish, though I fear not exclude, the prospect of further litigation if some indication is given to resolve the split of views exposed in this court.
The issue remains relevant to old style Swiss patent cases though it will not arise in the same form, and we will not be addressing the position, under article 54(5) of the European Patent Convention.
Patentability under article 54(5) is of a product (a substance or composition) for any specific use, whereas English law regards patentability under a Swiss form patent as attaching to a process, namely the process of manufacture of a product for a specific purpose.
Both sides agree that the issue whether infringement of a Swiss form patent involves any and if so what mental element depends on the construction of such a patent.
Claim 3, which it is in this connection relevant to consider, relates to: use of [pregabalin] for the preparation of a pharmaceutical composition for treating neuropathic pain.
The second word for must under such a claim relate to one of two different subjects.
First, it may attach to the process consisting of the use of pregabalin for the preparation of the composition or product.
Alternatively, it may attach to the pharmaceutical composition or product, as prepared, presented and put on the market.
Whichever approach is taken, some relevance will attach to how the pharmaceutical composition is presented and put on the market.
But, if one reads the claim in the first way, it is natural to enquire into the subjective intention of the manufacturer in preparing the composition.
If one reads it in the second, it is natural to focus on objective appearances or characteristics, and in particular on the way in which the composition is prepared, presented and marketed.
In deciding what protection a Swiss form patent offers and what will constitute infringement, it is appropriate to consider the implications of each interpretation, against the background of the legislative aim of striking a fair balance between the opposing desiderata of incentivising and rewarding inventors and enabling manufacturers to compete lawfully and pharmacists and end users to carry on their affairs without incurring unbargained for liabilities against which they cannot sensibly protect themselves.
The risk that anyone will actually pursue any liability claim against any particular pharmacist and/or end user may be slight in any individual case.
But, if liability exists, some may well be pursued, to demonstrate the risks of dealing in generic goods, and all will be affected by the resulting deterrent effect.
In any event, one would not as a matter of principle expect the law to involve uncovenanted and unavoidable liabilities.
Each way of reading the claim identified in para 201 gives rise to questions.
What is meant by subjective intention? And what circumstances would fall to be considered, in order to ascertain how a product is prepared, presented and marketed? As to subjective intention, Lord Sumption and Lord Briggs agree that mere foreseeability that some generic pregabalin would be used for treating neuropathic pain could not suffice to render the maker of the composition an infringer.
A Swiss form patent entitles the maker to prepare the composition for the new purpose identified in it.
The subsequent use of the composition involves persons outside the makers control.
Lord Sumption and Lord Briggs also agree in rejecting the Court of Appeals solution of adding a qualification, so that foreseeability would suffice, if a generic manufacturer failed to take reasonable steps to prevent intentional use of the generic pregabalin by downstream prescribers or users for the treatment of neuropathic pain.
I have nothing to add to their agreement on these points.
So, if subjective intention is the test, it must be found in something more positive than foreseeability, that is in some form of design or desire on the part of the manufacturer.
It seems unsatisfactory that patent infringement should depend on investigation of a subjective intention, internal to the manufacturer.
That would also leave open the possibility of entirely blameless pharmacists and end users being liable under section 60(1)(c) for, say, disposal or use of generic pregabalin made by a manufacturer, whose subjective intentions the pharmacist and user would have had no means of gauging.
It is true that section 60(1)(c) of the Patents Act 1977 has inherent in it the possibility of unwitting liability of a third party for disposing of, offering to dispose of, or using or importing a product made by a manufacturer by an infringing process.
But the thinking behind section 60(1)(c) was certainly not focused on the later invented Swiss form patent.
Rather it was, one supposes, assumed that the process by which a product was made would generally be obvious or easily ascertainable.
In the case of a Swiss form patent, it would be far from obvious or easily ascertainable whether there had been infringement, if the test were whether manufacture (use for the preparation) of the composition had taken place by the manufacturer with the subjective intention that the composition be used for the specific purpose identified in the claim (ie here, for treating neuropathic pain).
Further, if subjective intention were the test, what would this mean? Suppose that a manufacturer were deliberately to make more pregabalin than could be required for patent free uses, there would be no means of saying whether any particular batch would be used for patented or for patent free use.
Would this mean that all manufactured batches infringed? So it would seem.
These and other consequences are discussed by Lord Sumption and, I understand, recognised by Lord Briggs (see his para 171).
They are to my mind powerful reasons for rejecting subjective intention as the test in any form.
What then of a test focused on the way in which the pharmaceutical composition is prepared, presented and marketed? This must include in particular its packaging and the instructions given for its use, since the actual pharmaceutical composition is by definition identical to that produced by the patented process which it is said to infringe.
Again, it is necessary to consider what such a test would mean.
Here, some guidance is, in my view, available from German authority, identified by Lord Sumption in para 85 and by Lord Briggs in para 149.
The German authority must be read with the understanding that a Swiss form patent is under German law regarded as protecting a purpose limited product, not (as under English law) a purpose limited process.
Accordingly, the protection is treated as arising under section 9(1) of the German Patentgesetz, the German equivalent of section 60(1)(a) of the Patents Act 1977 (rather than under section 60(1)(c)): see Pemetrexed (Case No X ZR 29/15) (14 June 2016) in the Bundesgerichtshof (BGH), para 84, strogenblocker (Case I 2/W 6/17) in the Dsseldorf Oberlandesgericht (OLG), para 38 and Dexmedetomidin (Case I 2 U 30/17) (Dsseldorf OLG) (1 March 2018), (BeckRS 2018, 2410, paras 41 to 43).
Swiss form patents are therefore treated in Germany on the same basis as the ordinary patents of a product for a specific use (where such patents are otherwise permissible) which were considered in Antivirusmittel (Case X ZR 51/86) (16 June 1987) (BGH): see the reference made to Antivirusmittel in the Swiss form patent case of Chronic Hepatitis C Treatment (Case 4a O 145/12) (14 March 2013) (Dsseldorf OLG), paras 51 to 54.
Since the German analysis treats a Swiss form patent as protecting a product, rather than a process, it follows that third parties disposing of or using a generic product for the patented use are potentially exposed to liability under article 9(1) of the Patentgesetz: see also Chapter A, para 342 of Khnen, Handbuch der Patentverletzung, 10th ed (2017), a work extensively cited in Dexmedetomidin.
However, under article 139(2) of the German Patentgesetz, damages for patent infringement are only available against a person who has deliberately or negligently committed the infringement.
German law could not therefore expose a doctor, pharmacist or end user to potential liability to damages in the way that section 60(1)(c) of the English Act would on Warner Lamberts case. (Such a person could however still be injuncted against further infringement under article 139(1) of the German Patentgesetz.)
If the protection sought by a Swiss form claim is treated, as English law treats it, as arising under section 60(1)(c), but is, at the same time, seen as operating in the second way identified in para 201 above (ie as attaching to the pharmaceutical composition as prepared, presented and marketed), then, despite the differences identified above, the German approach appears to me capable of illuminating what it would mean.
Essentially, a Swiss form claim would, under English law, still be understood as protecting a process, but the scope of the protection would depend not on the subjective intention with which the process was undertaken, but on the objective characteristics of the resulting composition or product, judged by reference to the way in which it was packaged and marketed.
The German authorities originally took a narrow view of what that could embrace, speaking in Chronic Hepatitis C Treatment, Cistus (Case I 2 U 53/11) (31 January 2103) (Dsseldorf OLG) and Warner Lambert Co LLC v Aliud Pharma GmbH (Case 327 O 140/15) (2 April 2015) (Hamburg OLG) of sinnfllige Herrichtung, ie manifest outward presentation.
This approach was echoed by the Technical Board of Appeal in GENZYME/Treatment of Pompes disease [2016] EPOR 33, where the Board distinguished purpose limited product claims from Swiss form process claims, treating the latter (contrary to the view taken by the German courts) as falling within article 64(2) of the European Patent Convention (which equates with section 60(1)(c) of the Patents Act 1977).
The distinction it drew was that the former offered protection whenever the patented product was used for the patented purpose, whereas the latter offered protection only in respect of a product which was produced by the patented process and was, in the instant case, packaged and/or provided with instructions for use in the treatment of infantile Pompes disease (para 9.1).
In drawing this general distinction, the Board of Appeal was not however concerned with the precise limitations of the requirement under a Swiss form claim that, to achieve protection, the product produced by the process should be for the patented use.
As Lord Sumption and Lord Briggs point out, the more recent German authorities, strogenblocker and Dexmedetomidin, take a broader view of the protection generated by a Swiss form patent.
They do not focus on the external presentation (including the instructions for its use) of the allegedly infringing product, but rather on its inherent suitability for the patented use.
However, they underline an additional requirement of any infringement, viz that the distributor needs to take advantage of circumstances which in a similar way to an active obvious preparation ensure that the purpose related therapeutic use of the preparation offered or sold actually takes place. and The latter requires a sufficient and not just occasional use according to the patent in suit, as well as the suppliers respective knowledge, or at least its bad faith ignorance thereof: See strogenblocker para 39 and Dexmedetomidin (BeckRS 2018, 2410, para 44).
The example given in the latter case is use in practice of the generic product for the patent protected indication to a considerable extent in most cases due to a corresponding prescription by a doctor, in circumstances of which its supplier is or should have been aware, and which it still exploits for itself by supplying its distributors: para 44.
The limitation relating to knowledge, bad faith taking advantage or exploitation, introduced in para 39 of strogenblocker and para 44 of Dexmedetomidin, appears as a pre condition to any infringement, rather than as a reflection of the general limitation of damages claims provided by article 139(2) of the Patentgesetz, to which I have referred in para 209 above.
In my view, the preferable starting point under English law is to view a Swiss form claim in the second way identified in para 201 above.
In other words, it protects the process of manufacturing a composition or product, which, as prepared, presented and put on the market, can be said objectively to be for the patent protected use.
A process leading to a composition or product, which does not make clear that its permitted use is limited will infringe.
In the light of submissions received from counsel on this judgment as circulated in draft in the usual way before issue, I prefer however to leave open whether there might be some circumstances in which a generic manufacturer could or should be expected to go further, by a notice positively excluding the patent protected use.
All I would say in relation to the present case is that (i) although the parties appear, now, to differ on whether this would be either permissible or permitted, this is only the result of a very belated objection by Warner Lambert to a note filed by Actavis at the courts request as long ago as 23 February 2018 and (ii) at trial and in the admittedly slightly different context of the steps that Actavis should reasonably have taken to avoid being treated as intending to infringe, Warner Lambert did not even pursue any suggestion that such steps should have included the attachment of a notice recording, for example, that the generic product was not authorised, and was not to be used, for the treatment of neuropathic pain: see Arnold Js judgment, paras 526 527 and 586 589.
That is a very unpromising basis for any suggestion by Warner Lambert that such a notice could or should have been given on the facts of this case, in order to avoid a conclusion that the generic product Lecaent was for the patent protected use of countering neuropathic pain.
The delicate and difficult question is how far surrounding circumstances or general knowledge may be relevant, if in their light it is obvious or easily ascertainable that the process results in a product which, despite packaging and instructions making clear that it is for the non patent protected use, is destined for such use.
For reasons already given, neither foreseeability nor subjective intention can be accepted as appropriate tests of liability.
The recent German authorities do not appear to give any direct answer to the question what a manufacturer is supposed to do, if it acquires the awareness of a practice of the sort mentioned in para 212 above.
Dexmedetomidin (BeckRS 2018, 2410, para 44) says that it will be justified to hold it liable if it still exploits this practice for itself by supplying its distributors.
If that means that it must stop manufacturing and supplying any generic product, it involves an extreme solution which is too favourable to the patent holder, since it excludes competition by the generic product even in patent free areas of use.
Another possibility is to read the German authorities as implying tacitly that the generic manufacturer should take (presumably, reasonable) steps to ensure that pharmacists and end users do not use the generic product for patented use.
That would equate with the Court of Appeals approach in this case, which constructs a pre condition to legitimate manufacture and trade for which no basis, in my view, exists.
There is however a further possibility, which appears to have the support of paras 351 and 353 of Khnens work already cited, namely that, since a generic manufacturer has no contractual relationship with and cannot give directions to a third party such as a doctor prescribing drugs, the most that can be expected of such a manufacturer is that it makes clear on the product that it is not for the patent protected use.
It would seem to me also appropriate under English law to hold a generic manufacturer responsible in similar circumstances, if it was not made clear, in one way or another, that the product resulting from its manufacturing process was for the non patent protected use.
However, although the context was again somewhat different, I note here the rejection by Arnold J, in paras 443 447 of his judgment, of Warner Lamberts submission that Actavis must be taken to have foreseen the use of Lecaent for the treatment of neuropathic pain because of the inclusion of warnings as to adverse effects if it was so used or because of blue box wording to the effect that it might be prescribed to treat other conditions not listed in the leaflet.
Because context is all in the law, I also think that we should be careful about committing ourselves in obiter remarks in relation to other extreme cases not now before us.
It may be going too far in favour of generic manufacturers to suggest as an absolute rule that a generic product, prepared, presented and put on the market, must always be viewed in isolation by reference only to its own packaging and instructions, and without regard to the realities or of the market for which it is prepared and into which it is being released.
Take a situation where the circumstances make it obvious that a product, ostensibly limited in its permitted use by its packaging and instructions, was in fact destined for wider use; suppose that the manufacturer were to point out in separate studies, reports or advertisements that the composition resulting from its manufacturing process was pharmaceutically identical with that made by a manufacturer operating under a Swiss form patent; or suppose a generic manufacturer were to produce and supply quantities of the pharmaceutical composition for a distributor in a context which only made sense if they were destined for the patent protected use.
Even then, the question could arise whether it was sufficient that this was obvious as between the generic manufacturer and its buyer or whether it would also have to be obvious more generally, and in particular to persons dealing in or using the composition down the chain in view of their potential exposure in the event of any infringement by the manufacturer.
The wide and unqualified grasp of section 60(1)(c) (see para 205 above) might leave third parties with some exposure in a remote situation such as I am currently postulating.
I prefer to say no more, and to leave open, the position in this type of remote situation.
Normally, a generic manufacturer, and it follows others such as doctors, pharmacists and end users, should be protected from infringement of a Swiss form patent if the manufacturer ensures that the generic product resulting from its manufacturing process is produced, prepared and marketed with a clear limitation to patent free uses.
As Khnen observes, a generic manufacturer cannot control the activities of doctors, pharmacists and end users, with which it is in no contractual relationship.
The protection afforded by a Swiss form patent, analysed as protecting a process in the way that English law analyses it, is valuable, but necessarily limited.
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This appeal raises the question of how the concepts of sufficiency and infringement are to be applied to a Swiss form patent relating to a specified medical use of a known pharmaceutical compound.
The Appellant (Warner Lambert) is part of the Pfizer group of companies.
It is the proprietor of European Patent No 0641330 for Isobutylgaba.
This is used for the treatment of seizure disorders, including epilepsy.
Pregabalin, a derivative compound of Isobutylgaba, is marketed by Warner Lambert under the Lyrica brand.
Patent No 0641330 expired on 17 May 2013.
This appeal concerns a second European Patent No EP(UK) 0934061 entitled Isobutylgaba and its derivatives for the treatment of pain, with a priority date of 24 July 1996 (the Patent).
The claims of the Patent (which define the scope of the patent protection) are all purpose limited.
Most relevant are Claims 1 3 on the use of pregabalin for treating (1) pain, (2) inflammatory pain and (3) neuropathic pain.
Lyrica has marketing authorisation in the EU for treatment of peripheral and central neuropathic pain, epilepsy and generalised anxiety disorder.
It is one of Pfizers most successful drugs in the UK.
The First Respondent (Mylan) and the Second Respondent, Actavis Group PTC EHF (Actavis), are pharmaceutical companies mainly engaged in marketing generic pharmaceutical products.
Actavis markets a generic pregabalin product under the brand name Lecaent, launched in 2015.
In these proceedings, Mylan and Actavis claimed the revocation of the Patent on the grounds of lack of inventive step and insufficiency.
Warner Lambert claim that Actavis infringes Claims 1 and 3 above.
At first instance, Arnold J rejected the arguments based on lack of inventive step.
These are no longer in issue.
Further, he held that Claim 1 (pain) and Claim 3 (neuropathic pain) were invalid because he construed Claim 1 as extending to all pain and Claim 3 as extending to all neuropathic pain.
He found that there was sufficient disclosure in the specification to support the claim that pregabalin was efficacious in the treatment of inflammatory and peripheral neuropathic pain, but not central neuropathic pain.
Both claims therefore failed for insufficiency.
The result of the judges decision was to remove patent protection for the manufacture of pregabalin for the treatment of both peripheral and central neuropathic pain.
Arnold J also rejected as an abuse of process an application concerning an amendment to narrow the Patent.
The Court of Appeal (Floyd, Kitchin and Patten LJJ) upheld the judges findings, so far as relevant to this appeal, and his decision on the amendment application.
The judge and Court of Appeal differed in their approach to infringement in patent cases confined to manufacture for a particular use.
On appeal to the Supreme Court, Warner Lambert contend that all the claims of the Patent were valid.
Their main aim is to establish the validity of their claims relating to neuropathic pain or, at least, peripheral neuropathic pain.
Actavis and Mylan cross appeal, arguing that none of the claims as to neuropathic pain are
valid.
They only accept as valid the claims limited to inflammatory pain, for which there is no marketing authorisation.
This gives rise to four issues on appeal: (i) the construction of the claims (in particular, Claim 3 as to neuropathic pain); (ii) the sufficiency of the disclosure in the specification; (iii) amendment and abuse of process; and (iv) the test for infringement of a patent in relation to manufacturing for a limited use.
The Supreme Court dismisses the appeal and allows the cross appeal (Lord Mance and Lord Hodge dissenting in part on whether there was sufficient disclosure in the specification for Claims 1 and 3).
Lord Sumption gives the leading judgment, with which Lord Reed, Lord Hodge and Lord Briggs agree, save on some issues specified in the separate judgments of Lord Briggs, Lord Hodge and Lord Mance.
Issues (i) and (iii) Construction of the claims and amendment/abuse of process: The court unanimously affirms (for reasons given by Lord Briggs): (1) the view of both courts that Claim 1 extends to all pain and Claim 3 to all neuropathic pain, whether peripheral or central, and (2) Arnold Js decision rejecting Warner Lamberts application to amend the Patent to narrow it [15(1), 16 (Lord Sumption); 99 106, 118 120 (Lord Briggs); 181 (Lord Hodge); 195 196 (Lord Mance)].
Issue (ii) Sufficiency of disclosure in specification for Claims 1 and 3: The court holds, by a majority (Lord Sumption, Lord Reed and Lord Briggs), that the disclosure in the specification supports the claims in relation to inflammatory pain, but not neuropathic pain, whether peripheral or central.
Claims 1 and 3 therefore fail for insufficiency.
Thus, the appeal is dismissed and the cross appeal allowed [15(2), 43 54].
The majoritys approach requires the patentee to demonstrate that the specification discloses some scientific reason why the implied assertion of efficacy in the patent claim may well be true [36 37].
More than a bare assertion or mere possibility of therapeutic efficiency is required, though a priori reasoning (not necessarily only experimental data) may suffice [37].
This respects the principle that the patentee cannot claim a monopoly of new use for an existing compound without real disclosure [35].
Lord Hodge (dissenting) proposes an alternative approach to sufficiency, preferring a lower standard of plausibility, and would have dismissed the cross appeal [186 190].
Lord Mance agrees with Lord Hodge on this issue, concluding that the majoritys approach imposes too high a threshold [198 201].
Issue (iv) Correct test for infringement of patent manufactured for a limited use: The court unanimously holds that if Claims 1 and 3 had been valid, they would not have been infringed by Actavis [15(3)].
The reasons for arriving at this agreed result differ substantially.
Lord Sumption and Lord Reed consider that the intention of the alleged infringer, whether subjective or objective, is irrelevant and that the sole criterion of infringement is whether the product as it emerges from the manufacturing process, including any labelling or accompanying leaflet, is presented as suitable for the uses which enjoy patent protection the outward presentation test [15(3), 71 86].
On the facts of this case, it is not disputed that Lecaent was sold with labels and patient information to the effect that it was for the treatment of seizure disorders and general anxiety disorder [8, 15(3)].
Lord Mance agrees that the test depends on the objective appearance and characteristics of the product as it is prepared, presented and put on the market, but considers that in rare cases the context may make it obvious that these are not to be taken at face value [15(3); 218 223].
Lord Briggs and Lord Hodge prefer the view of Arnold J that the test is whether the alleged infringer subjectively intended to target the patent protected market (Arnold J found they had not so intended) [15(3); 170 177 (Lord Briggs); 193 (Lord Hodge)].
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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
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The Appellant is an Ethiopian national who was the subject of a control order.
This confined him to a flat for 16 hours a day in a Midlands town away from his family in London.
AP 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 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.
He was then 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.
This control order at first required AP to live at an address in North London.
APs family, friends and associates had always lived in the London area.
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 this modification that led to APs appeal.
On 12 August 2008 the High Court allowed APs appeal against the modification, quashing the obligation to live in the Midlands.
It rejected APs case under article 8 of the European Convention on Human Rights (ECHR) 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.
When the matter was before the Court of Appeal there was again no dispute about the need for a control order, only about its terms.
The Court of Appeal by a majority reversed the decision of the High Court.
AP appealed.
The outcome of this appeal is no longer currently relevant to AP himself.
APs control order was revoked on 2 July 2009.
The Secretary of State has again decided that AP should be deported on
national security grounds and since 20 July 2009 he 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.
However the points of law raised by APs appeal were said to be of some general importance with regard to control orders.
The three issues the Supreme Court had to reach a decision on in this appeal were as follows: Whether conditions which are proportionate restrictions upon article 8 rights to respect for private and family life can tip the balance in relation to article 5 (which guarantees the right to liberty and security), 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.
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.
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.
The Supreme Court unanimously allowed the appeal, set aside the decision of the Court of Appeal and restored the High Courts order.
Lord Brown gave the leading judgment.
Lord Rodger and Sir John Dyson SCJ delivered concurring judgments.
By way of introduction, Lord Brown noted that the majority in the House of Lords in Secretary of State for the Home Department v JJ [2008] 1 AC 385 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. (para [1]) In relation to the first issue, Lord Brown considered that the answer was 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 in this case. (para [12]) Lord Brown was of the view that the Secretary of State was wrong to contend 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.
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 opportunities open to them to visit AP and 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 the APs isolation.
It is not
suggested by the Secretary of State that APs 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. (para [15]) In relation to the third issue, having considered the relevant parts of the High Courts judgment, Lord Brown held that there was no contradiction between them. (paras [1618])
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Ms Reilly, the head teacher of a primary school, is in a close relationship with Mr Selwood but it is not sexual and they do not live together.
Mr Selwood is convicted of making indecent images of children.
Ms Reilly has previously been unaware of his criminal activities.
She fails to inform the schools governing body of his conviction with the result that, when it learns of it, her employer summarily dismisses her.
The Employment Tribunal (the tribunal) decides that, save in an irrelevant procedural respect, her dismissal has not been unfair.
Should the tribunals decision stand?
The school is now an academy but at the relevant time it was maintained by Sandwell Metropolitan District Council (Sandwell), which is the respondent to Ms Reillys appeal to this court.
Before the tribunal the schools governing body was a second respondent to her claim but, when it became an academy, the governing body ceased to exist and its liabilities were transferred to Sandwell.
This court orders an end to its ghostly presence as a second respondent to the appeal.
Ms Reilly appeals against an order of the Court of Appeal dated 19 July 2016, [2016] EWCA Civ 766, [2016] IRLR 779, in which she was referred to as A and Sandwell was referred to as B local authority.
By a majority (Black and Floyd LJJ, the dissentient being Elias LJ), the court dismissed Ms Reillys appeal against an order of the Employment Appeal Tribunal (the EAT) dated 20 February 2014.
The EAT (Wilkie J presiding) had dismissed Ms Reillys appeal against the order of the tribunal disseminated on 2 November 2012 that, save in the irrelevant procedural respect, her dismissal had not been unfair.
Ms Reilly qualified as a teacher in 1987 and, prior to becoming the head teacher of the school, she had been a deputy head teacher in two other primary schools and an acting head teacher in two others.
Her disciplinary record was exemplary.
Ms Reilly met Mr Selwood in 1998 and they became close friends.
In 2003 they bought a property as an investment in their joint names and set up a joint bank account out of which to pay the mortgage instalments.
Mr Selwood lived there without making any payment to Ms Reilly.
She never lived there with him but she sometimes stayed there overnight.
One such night was 24 February 2009.
Thus it was that, early the following morning, she was witness to the arrival at the property of the police, to their search of it and to their arrest of Mr Selwood on suspicion of having downloaded indecent images of children online.
One month previously Ms Reilly had applied for the post of head teacher at the school.
During the progress of her application in the following months Ms Reilly never disclosed Mr Selwoods arrest to Sandwell.
It is possible that at first she considered him to be innocent of the allegations against him.
But there clearly came a time, not identified in the evidence, when she realised that he was guilty and likely to be convicted; and nothing turns on when that time came.
Ms Reilly was duly appointed to be head teacher of the school and she took up the position on 1 September 2009.
On 1 February 2010 Mr Selwood was convicted of making indecent images of children by downloading them onto his computer.
On a rating system under which level 5 is the maximum, the images were graded at levels 1 to 4.
He was made the subject of a three year community order; and of a sexual offences prevention order, which included a prohibition on his having unsupervised access to minors and a requirement to participate in a sex offender programme.
Ms Reilly became immediately aware of Mr Selwoods conviction but in the following months she decided not to disclose it to the governing body of the school or indeed to Sandwell.
Her close friendship with him continued.
In April 2010 they went on holiday together.
He named her as an authorised driver on his motor insurance policy.
In June 2010 Sandwell learnt of Mr Selwoods conviction and of Ms Reillys close relationship with him.
It suspended her on full pay and in due course it summoned her to attend a disciplinary hearing to answer an allegation that, in having failed to disclose her relationship with a man convicted of sexual offences towards children, she had committed a serious breach of an implied term of her contract of employment, which amounted to gross misconduct.
In May 2011 the disciplinary hearing took place.
The panel consisted of the chair of the governors of another primary school and two governors of the school.
Ms Reilly was represented by a solicitor.
The panel upheld the allegation to which I have referred and, particularly in the light of her continuing refusal to accept that her relationship with Mr Selwood might pose a risk to pupils at the school and that her failure to disclose it had been wrong, it decided that she should be summarily dismissed.
On 11 May 2011 Sandwell confirmed her dismissal with immediate effect.
She appealed to an appeal panel which, in July 2011, dismissed her appeal.
In August 2011 Ms Reilly presented a claim to the tribunal that her dismissal had been unfair.
The substantive hearing of her claim took place over four days in September 2012, at which Ms Reilly had the benefit (which she has continued to have) of representation by Mr Palmer.
In its written judgment the tribunal analysed with care the evidence placed before the disciplinary panel.
It noted that in her written statement to the panel Ms Reilly had said that in 2009 and 2010 she had asked numerous people, including a police officer, probation officers and officers of other local authorities, whether she had a duty to disclose her relationship with Mr Selwood to the governing body and that their answer had been that she had no duty to do so.
The tribunal found, however, that her evidence to it in this regard had been unclear; it noted that two of the probation officers identified in her statement had given statements in which they had denied that their advice to her had been as she had alleged; and it observed that, shortly after Mr Selwoods conviction, a third probation officer had, by letter, advised her that it would be wise to disclose her relationship with him.
The tribunal found that the reason for Sandwells dismissal of Ms Reilly was that she had that Sandwell genuinely believed that the non disclosure amounted to a) failed to disclose her relationship with a convicted sex offender; b) misconduct; c) that there were reasonable grounds for Sandwells belief in that it was obvious that for a head teacher to have failed to disclose such information to her governing body whether it is expressed in her contract of employment or not is a matter of misconduct; and that, notwithstanding Ms Reillys exemplary disciplinary record but d) in the light, among other things, of her continuing refusal to accept that her non disclosure had been wrong, her dismissal had been within the range of reasonable responses open to Sandwell.
Nevertheless the tribunal proceeded to find that the hearing of Ms Reillys appeal by the appeal panel had been so unsatisfactory as to render her dismissal procedurally unfair.
In the light, however, of its conclusion that, even had the hearing been satisfactory, there was a 90% chance that her appeal would still have been dismissed, it directed that her compensation be reduced by 90% in accordance with the approach indorsed in Polkey v A E Dayton Services Ltd [1988] 1 AC 344.
But the tribunal went further: pursuant to section 123(6) of the Employment Rights Act 1996 (the Act), it also concluded that she had contributed to her dismissal by blameworthy conduct and it assessed her contribution at 100%.
Although, including in her appeal to this court, she has challenged the tribunals conclusions in both these respects, Ms Reilly accepts that the challenge would become live only if the court were to set aside the tribunals decision that, substantively, her dismissal was not unfair.
A tribunals inquiry into whether a dismissal is unfair is governed by section 98 of the Act.
The first part of the inquiry, governed by subsections (1) to (3), is whether the employer has shown both the reason for the dismissal and that the reason relates to the employees conduct or falls within another part of subsection (2) or otherwise justifies dismissal.
In this case the employer showed the reason for the dismissal, namely the non disclosure, and that it related to Ms Reillys conduct.
The case turns on the second part of the inquiry, governed by subsection (4) of section 98 of the Act.
It provides that the tribunals determination of whether a dismissal is unfair (a) depends on whether in the circumstances the employer acted reasonably or unreasonably in treating [the reason shown by it] as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.
A tribunals inquiry into whether the employer acted unreasonably in treating the reason as sufficient for dismissal seems simple enough in principle, albeit no doubt often difficult in application.
The later reference to a determination in accordance with the merits of the case might have suggested that the tribunal somehow had a more direct function in appraising the dismissal; but any such suggestion was dispelled in the judgments of the Court of Appeal in Orr v Milton Keynes Council [2011] EWCA Civ 62, [2011] ICR 704, at paras 62 to 64 and 91 to 98.
At all events the proper approach to the inquiry under subsection (4) is now firmly established at the level of the Court of Appeal; and the parties to this appeal do not invite this court to review it.
The proper approach to the inquiry under what is now subsection (4) has long been regarded to have been set out in the judgment of the EAT (Arnold J presiding) in British Home Stores Ltd v Burchell (Note) [1980] ICR 303.
In the present case Elias LJ described it as the classic formulation of the employers obligation in misconduct cases.
In the passage of the judgment at p 304 frequently cited, the EAT, through Arnold J, held that the tribunal had to be satisfied first that the employer believed that the employee was guilty of misconduct; second that it had reasonable grounds to sustain its belief; and third that, prior to forming its belief, it had carried out a reasonable amount of investigation into the matter.
It is at once apparent that the three requirements identified by Arnold J do not well fit the inquiry mandated by what is now section 98(4).
It is indeed clear that, on the contrary, they were directed to the first part of the inquiry under what is now section 98(1) to (3).
Unlike in the present case, in which the conduct the non disclosure is an agreed fact, the employees alleged conduct is often disputed.
So it was in the British Home Stores case.
The issue there was whether, which she denied, the employee in the store had dishonestly abused her right to buy its goods at a discount.
To the tribunals resolution of that disputed issue relating to her conduct, Arnold Js three requirements, which all related to belief in the employees guilt, fitted perfectly.
Applying them, the EAT held that the store had reasonable grounds for its belief that the employee had conducted herself dishonestly and which was not separately considered because it followed so obviously that therefore, under a precursor to section 98(4), it had been reasonable for the store to treat her conduct as a sufficient reason for her dismissal.
But, although the judgment of Arnold J on behalf of the EAT in the British Home Stores case did not relate to the inquiry mandated by what is now section 98(4) of the Act, the Court of Appeal has for long applied it to that inquiry.
Thus, in Foley v Post Office [2000] ICR 1283 Mummery LJ, with whom the other members of the court agreed, stated at 1287 1288 that the tripartite approach there explained by Arnold J governed not only the reason for a dismissal but its reasonableness or unreasonableness.
Since then the Court of Appeal has consistently adopted the same view of the breadth of Arnold Js judgment: see for example Turner v East Midlands Trains Ltd [2012] EWCA Civ 1470, [2013] ICR 525, para 1.
Nevertheless, so far as I can see albeit in the absence of full argument, no harm has been done by the extravagant view taken of the reach of the judgment of Arnold J in the British Home Stores case.
In effect it has been considered only to require the tribunal to inquire whether the dismissal was within a range of reasonable responses to the reason shown for it and whether it had been preceded by a reasonable amount of investigation.
Such requirements seem to me to be entirely consonant with the obligation under section 98(4) to determine whether, in dismissing the employee, the employer acted reasonably or unreasonably.
On any view it is clear that the tribunal is at one remove from answering the direct question: was the dismissal unfair? Instead it must answer the question: was the dismissal within the range of reasonable responses to the reason shown for it by the employer? Indeed all appellate bodies, namely the EAT and, in this case, also the Court of Appeal and this court, are at two removes from answering the direct question.
For, under section 21(1) of the Employment Tribunals Act 1996, an appeal against the tribunals decision lies only on a point of law and therefore, in the absence of procedural error, can succeed only if for some reason the tribunals decision was not open to it or, in other words, only if the tribunal had not been entitled to reach it.
Thus, in the present case, the EAT correctly identified the question to be whether the tribunal had been entitled to conclude that this was a case in which dismissal did fall within the range of reasonable responses.
The exercise required of an appellate body is not always easy.
It might, for example, be an intellectual struggle for it to conclude: left to ourselves, we would not have considered that the dismissal fell within the range of reasonable responses but the tribunal was entitled to conclude that it did so.
But those of us required to determine these appeals must conduct the exercise as best we can.
Ms Reillys challenge to the tribunals decision rests primarily upon a challenge to its acceptance of the panels conclusion that she was under a duty to disclose her relationship with Mr Selwood.
Sandwell responds that the tribunal was correct to accept that she was under that duty.
It seems that an employees conduct within the meaning of section 98(2)(b) of the Act can precipitate a fair dismissal even if it does not constitute a breach of her contract of employment: see the observation of Phillips J on behalf of the EAT in Redbridge London Borough Council v Fishman [1978] ICR 569, 574, adopted by the EAT in Weston Recovery Services v Fisher UKEAT/0062/10/ZT at para 13.
But in the present case Sandwell contends that the duty of disclosure did arise under Ms Reillys contract of employment.
Section 175(2) of the Education Act 2002 provides: The governing body of a maintained school shall make arrangements for ensuring that their functions relating to the conduct of the school are exercised with a view to safeguarding and promoting the welfare of children who are pupils at the school.
Ms Reillys job description included a requirement to advise, assist and inform the Governing Body in the fulfilment of its responsibilities and to be accountable to the Governing Body for the maintenance of the safety of all pupils.
She was therefore, as she accepts, under a contractual duty to assist the governing body in discharging its duty to exercise its functions with a view to safeguarding the pupils.
Indeed the disciplinary provisions in her contract of employment identified a failure to report something which it was her duty to report as being an example of conduct which might lead to disciplinary action.
But (asks Ms Reilly) where was the evidence which suggested that her particular relationship with Mr Selwood engaged the governing bodys safeguarding functions? The panel proceeded on the basis that the evidence existed.
The tribunal observed that it was obvious that her relationship engaged its functions.
The EAT held that the tribunals view was open to it, as did Black and Floyd LJJ.
Elias LJ, on the other hand, held that the answer to Ms Reillys question was that there was no such evidence.
As it happens, Parliament has itself recognised that sexual offenders towards children can represent a danger to children not only directly but indirectly by operating through those with whom they associate.
The Childcare Act 2006 and regulations made under it contain a good example, albeit not cited to the tribunal.
Sections 34(1) and 53(1) require those providing childcare in specified circumstances for children aged under eight to be registered.
Regulation 4 of the Children (Disqualification) Regulations 2009 (SI 2009/1547), made under section 75(2) of that Act, would, subject to waiver, disqualify Mr Selwood from registration.
But what is significant for present purposes is regulation 9, which disqualifies from registration a person who lives in the same household as a disqualified person or in a household in which a disqualified person is employed.
Although the registration provisions do not apply to maintained schools and, even if they did apply, would not have led to the disqualification of Ms Reilly, who did not live in the same household as Mr Selwood, they illumine the democratic judgement about the danger posed to children by such an offender in operating through his close associates.
Although no doubt in some cases the offender can persuade his associates consciously to assist him to gain access to children, they can, as in her judgment Black LJ observed, be quite unaware of the use which he makes of them in order to gain access.
The particular case of Ms Reilly is that of a head teacher, likely to know more than any other member of staff about the pupils, their circumstances at home, their personalities, their routines at school and their whereabouts from day to day; and indeed likely to be more able than any other member of staff to authorise visitors freely to enter school premises.
The tribunal found that Ms Reilly herself knew that she was subject to a duty to disclose because she would not otherwise have made enquiries as to the circumstances in which disclosure was triggered.
The proposition is, with respect, illogical.
Nevertheless her wide ranging inquiries show how near to the border line even she, with understandable reluctance, recognised her case to be.
The objective decision makers on the panel, all school governors, ruled that the case fell on the side of the line which required disclosure.
Mr Selwood was the subject of a serious, recent conviction.
The basis of his sentence was that he represented a danger to children.
His relationship with the head of the school created, to put it at its lowest, a potential risk to the children.
The risk required assessment.
It was not for Ms Reilly to conduct the assessment; it was a function of the governors.
As head teacher, she represented, as Ms Hannett on behalf of Sandwell submits, the eyes and ears of the governors in the school.
Had she disclosed her relationship to them, it is highly unlikely that she would have been dismissed, still less that the tribunal would have upheld any dismissal as fair.
Far more likely would have been the extraction by the governors of promises by Ms Reilly that she would not allow Mr Selwood to enter the school premises and perhaps, for example, that outside the school she would not leave information about pupils, for example stored electronically, in places where he might be able to gain access to it.
In my opinion the tribunal was entitled to conclude that it was a reasonable response for the panel to have concluded that Ms Reillys non disclosure not only amounted to a breach of duty but also merited her dismissal.
For her refusal to accept that she had been in breach of duty suggested a continuing lack of insight which, as it was reasonable to conclude, rendered it inappropriate for her to continue to run the school.
So I would dismiss the appeal.
LADY HALE:
I agree entirely, for the reasons given by Lord Wilson, that Ms Reilly was in breach of her contract of employment by not informing her employers of her connection with Mr Selwood.
Ms Reilly had a duty to advise, assist and inform the Governing Body in the fulfilment of its safeguarding responsibilities towards the schools pupils.
Those who are guilty of sexual offences against children pose a risk to the safety of other children both directly and indirectly.
There are many ways in which Mr Selwood, should he choose to do so, might have used his friendship with Ms Reilly to gain access to the schools pupils: not only through being allowed to visit the school but also through finding out information about the pupils.
Reporting the connection would have enabled a serious discussion to take place about how those risks might be avoided.
There is no reason to think that it would have been a resigning matter.
Issues could have been identified and solutions found.
It is the absence of that full and frank disclosure and discussion which was the cause for serious concern.
And it is the absence of any acknowledgement of what she should have done which makes the decision to dismiss her reasonable, indeed some might think it inevitable.
The case might have presented an opportunity for this court to consider two points of law of general public importance which have not been raised at this level before.
The first is whether a dismissal based on an employees conduct can ever be fair if that conduct is not in breach of the employees contract of employment.
Can there be conduct within the meaning of section 98(2)(b) which is not contractual misconduct? Can conduct which is not contractual misconduct be some other substantial reason of a kind such as to justify the dismissal within the meaning of section 98(1)(b)? It is not difficult to think of arguments on either side of this question but we have not heard them we were only asked to decide whether there was a duty to disclose and there clearly was.
Nor have we heard any argument on whether the approach to be taken by a tribunal to an employers decisions, both as to the facts under section 98(1) to (3) of the Employment Rights Act 1996 and as to whether the decision to dismiss was reasonable or unreasonable under section 98(4), first laid down by the Employment Appeal Tribunal in British Homes Stores Ltd v Burchell (Note) [1978] ICR 303 and definitively endorsed by the Court of Appeal in Foley v Post Office [2000] ICR 1283, is correct.
As Lord Wilson points out, in para 20 above, the three requirements set out in Burchell are directed to the first part of the inquiry, under section 98(1) to (3), and do not fit well into the inquiry mandated by section 98(4).
The meaning of section 98(4) was rightly described by Sedley LJ, in Orr v Milton Keynes Council [2011] ICR 704, at para 11, as both problematical and contentious.
He referred to the cogently reasoned decision of the Employment Appeal Tribunal (Morison J presiding) in Haddon v Van den Burgh Foods [1999] ICR 1150, which was overruled by the Court of Appeal in Foley.
Even in relation to the first part of the inquiry, as to the reason for the dismissal, the Burchell approach can lead to dismissals which were in fact fair being treated as unfair and dismissals which were in fact unfair being treated as fair.
Once again, it is not difficult to think of arguments on either side of this question but we have not heard them.
There may be very good reasons why no one has challenged the Burchell test before us.
First, it has been applied by Employment Tribunals, in the thousands of cases which come before them, for 40 years now.
It remains binding upon them and on the Employment Appeal Tribunal and Court of Appeal.
Destabilising the position without a very good reason would be irresponsible.
Second, Parliament has had the opportunity to clarify the approach which is intended, should it consider that Burchell is wrong, and it has not done so.
Third, those who are experienced in the field, whether acting for employees or employers, may consider that the approach is correct and does not lead to injustice in practice.
It follows that the law remains as it has been for the last 40 years and I express no view about whether that is correct.
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The Appellant, Ms Caroline Reilly, is the former head teacher of a primary school which was, at the relevant time, maintained by the Respondent, Sandwell MBC (the local authority).
Approximately ten years before Ms Reilly became the head teacher of the school, she met a man named Ian Selwood, who became her close friend.
They were not, however, in a sexual or romantic relationship.
In 2003 they bought a property as an investment in their joint names and set up a joint bank account to pay the mortgage instalments.
Mr Selwood lived in the property and Ms Reilly sometimes stayed there overnight.
In January 2009 Ms Reilly applied for the position of head teacher at the school.
On 25 February 2009, having just stayed overnight at their jointly owned property, she witnessed Mr Selwoods arrest by the police on suspicion of having downloaded indecent images of children.
Ms Reilly was subsequently appointed to be head teacher and took up the position on 1 September 2009.
Mr Selwood was convicted on 1 February 2010 of making indecent images of children by downloading them onto his computer.
Although Ms Reilly became immediately aware of Mr Selwoods conviction, she decided not to disclose it to the governing body of the school.
Her close friendship with Mr Selwood continued, and in April 2010 they went on holiday together.
In June 2010 the local authority learnt of Mr Selwoods conviction, and of Ms Reillys friendship with him.
It suspended Ms Reilly and subsequently summoned her to a disciplinary hearing in May 2011.
At that hearing, the panel upheld the allegation that, by having failed to disclose her relationship with a man convicted of sexual offences towards children, Ms Reilly had committed a serious breach of an implied term of her contract of employment which amounted to gross misconduct.
The panel were particularly concerned by Ms Reillys continuing refusal to accept that her relationship with Mr Selwood might pose a risk to pupils and the school, and that she should therefore have disclosed it to the governors.
Ms Reilly was, as a result, summarily dismissed.
Ms Reilly subsequently brought proceedings for unfair dismissal and sex discrimination in the Employment Tribunal, maintaining that she had been under no obligation to disclose the information.
The Tribunal held that, save for an irrelevant procedural element, the decision to dismiss her had not been unfair.
Her sex discrimination claim was also dismissed.
Ms Reilly thereafter appealed to both the Employment Appeal Tribunal and the Court of Appeal on the unfair dismissal point, but was unsuccessful on both occasions.
The Supreme Court unanimously dismisses the appeal.
Lord Wilson gives the judgment with which Lord Carnwath, Lord Hughes and Lord Hodge agree.
Lady Hale gives a concurring judgment.
An inquiry into whether a dismissal is unfair is governed by s.98 of the Employment Rights Act 1996.
In summary, this requires that the employer show (i) that there is a reason for the dismissal, (ii) that that reason relates to the employees conduct or is similarly justifiable, and (iii) that they acted reasonably in treating the reason as sufficient for the dismissal [16 18].
On this latter point, i.e. the reasonableness of the employers conduct, the courts have for many years employed the test set out in the case of British Home Stores Ltd v Burchell [1980] ICR 303 [19].
This has been considered, in effect, to require the tribunal to inquire whether the dismissal was within a range of reasonable responses to the reason shown for it, and whether it had been preceded by a reasonable amount of investigation [22].
In this case, Ms Reilly was under a contractual obligation to assist the governing body in discharging its duty to safeguard the pupils, and the question was whether her relationship with Mr Selwood engaged the governing bodys safeguarding functions [25 26].
Parliament has previously recognised (for example via the Childcare Act 2006 and the regulations made under it) that sexual offenders towards children can represent a danger to children not only directly but also indirectly by operating through those with whom the children associate.
Mr Selwood was the subject of a serious, recent conviction and the basis of his sentence was that he represented a danger to children.
As head teacher, Ms Reilly was likely to know important information about her pupils, including their whereabouts, their routine and their circumstances at home.
She was also likely to be able to authorise visitors to enter the school premises.
Mr Selwoods relationship with Ms Reilly therefore created a potential risk to the children at the school.
This risk required the assessment of the governors [27 28].
In these circumstances, the employment tribunal was entitled to conclude that it was a reasonable response for the disciplinary panel to have concluded that Ms Reillys non disclosure of her relationship with Mr Selwood not only amounted to a breach of duty, but also merited her dismissal.
Ms Reillys continuing refusal to accept that she had been in breach of her duty suggested a lack of insight which, it was reasonable to conclude, rendered it inappropriate for her to continue to run the school [29].
Lady Hales Concurring Judgment Lady Hale agrees, and for the reasons given by Lord Wilson, that Ms Reilly breached her contract of employment by not informing her employers of her connection with Mr Selwood.
She also agrees that Ms Reillys continuing failure to acknowledge that this information should have been disclosed made the decision to dismiss her reasonable [31].
Notwithstanding this, Lady Hale wishes to note that this case might, if argued differently, have presented an opportunity for the Supreme Court to consider two points of law of general public importance which have not been raised at this level before.
Namely, (1) whether a dismissal based on an employees conduct can ever be fair if that conduct is not in breach of the employees contract of employment [32], and (2) whether the approach laid down by the Employment Appeal Tribunal in British Homes Stores Ltd v Burchell is correct [33].
In the absence of any such argument, however, the law remains unchanged, and Lady Hale expresses no view as to whether that is correct [35].
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The issue ultimately to be determined on this appeal is whether the First tier Tribunal (Ft T) was entitled to make an order debarring the Commissioners for HM Revenue and Customs (HMRC) from defending an appeal concerning liability for VAT brought by three companies in the BPP Group of companies (to which, save where it is important to distinguish between those companies, I shall refer generically as BPP).
The factual and procedural background
Between 1999 and 2006, BPP Holdings Ltd supplied education and books to students.
Following a corporate rearrangement in 2006, one company, BPP Learning Media Ltd, supplied books and another company, BPP University College of Professional Studies Ltd, supplied education.
BPP took the view that there were now two separate supplies by separate companies, one of education (which is standard rated for VAT purposes), and the other of books (which is zero rated).
Accordingly, BPP did not account for VAT on the supplies of books.
However, HMRC did not agree with this and contended that BPPs analysis was flawed, or in the alternative that the changes made in 2006 represented an abuse. (The law has been changed by section 75 of the Finance Act 2011).
In November 2012, HMRC issued two VAT assessments, prepared on the basis that BPP should have accounted for VAT at the standard rate on the supplies of books from 2006.
Pursuant to a request from BPP, HMRC also issued a decision to that effect on this issue in December 2012, which related to the VAT treatment of BPPs supplies from 19 July 2011.
In May 2013, BPP raised appeals to the Tax Chamber of the Ft T against the two assessments and the decision.
Following directions from the Ft T, HMRC served its statement of case on 21 October 2013, which was 14 days late, and applied for an extension of time, which BPP did not oppose.
Disclosure was ordered for 17 December and HMRC provided it a few days late.
Meanwhile, BPP considered that HMRC should provide further information of their case, and made a request to that effect on 11 November 2013.
After some written and telephone exchanges between the parties, BPP applied to the Ft T on 22 November for an order that HMRC supply the information in 14 days from the making of the order, failing which BPPs substantive appeals should be allowed.
HMRC then offered to supply the information by 31 January 2014, but, because they would not agree to the sanction sought by BPP, there was a hearing of BPPs application (together with a directions hearing) on 9 January 2014.
At that hearing Judge Hellier made an order which included the following directions in relation to BPPs application: UPON the respondents having agreed to provide by 31 January 2014 replies to each of the questions identified in the appellants request for further information dated 11 November 2013; AND UPON hearing Counsel for the parties, the following Directions are made: 1.
If the respondents fail to provide replies to each of the questions identified in the appellants request for Further Information by 31 January 2014, the respondents may be barred from taking further part in the proceedings The order also included directions for the future conduct of the appeals including an order for the filing of disclosure statements and lists of documents by 30 April, and a provision for a seven day hearing.
On 31 January 2014, HMRC served a response to BPPs request.
On 14 March, the same day as it served its response to HMRCs statement of case, BPP issued an application for an order barring HMRC from taking further part in the proceedings (a debarring order) on the ground that the 31 January response did not in fact reply to each of the questions identified in [BPPs] request for further information.
On 24 April 2014, HMRC informed BPP that they were withdrawing the two assessments and therefore conceding two of BPPs three appeals, but, as they were not withdrawing the decision, the third appeal proceeded.
Meanwhile, HMRC supplied a defective disclosure statement and list of documents some eight days late on 8 May, and did not apply for an extension of time in that connection until four weeks later; they subsequently agreed to give a new list of documents.
BPP maintained its claim for a debarring order in relation to the surviving appeal, and its application came before Judge Mosedale on 23 June 2014.
In a reserved judgment given on 1 July 2014, Judge Mosedale granted BPPs application and made a debarring order [2014] UKFTT 644 (TC).
Following a further hearing in July, in a judgment given on 25 September 2014, Judge Herrington refused HMRCs application to lift the debarring order, but gave HMRC permission to appeal against Judge Mosedales decision [2014] UKFTT 917 (TC).
That appeal was heard by Judge Bishopp in the Tax and Chancery Chamber of the Upper Tribunal (UT) in October; after a two day hearing he allowed HMRCs appeal for reasons given in a judgment on 3 November 2014 [2015] STC 415.
Following the grant to BPP of permission to appeal against his order, the Court of Appeal (Moore Bick V P, Richards and Ryder LJJ) allowed BPPs appeal and restored Judge Mosedales debarring order for reasons given by Ryder LJ, who is the Senior President of Tribunals [2016] 1 WLR 1915.
The issue to be decided
The case comes before this Court as an appeal from the Court of Appeal, but the ultimate issue for us is whether Judge Mosedales decision to make a debarring order can be justified.
Accordingly, it is unnecessary to address all the criticisms of the reasoning of the UT and of the Court of Appeal, which have been raised by Ms Simor QC in her careful argument on behalf of HMRC.
In those circumstances, it is right to record that, while, for the reasons given below, we agree with the conclusion reached by the Court of Appeal, we should not be taken as approving all its reasoning.
The procedures of the various chambers of the Ft T are governed by rules, and it is common ground that the relevant rule for present purposes is rule 8 of the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273).
This rule (which appears to be in the rules which apply to at least some of the other chambers of the Ft T) provides, so far as relevant: (1) The proceedings, or the appropriate part of them, will automatically be struck out if the appellant has failed to comply with a direction that stated that failure by a party to comply with the direction would lead to the striking out of the proceedings or that part of them. (3) The Tribunal may strike out the whole or a part of the proceedings if (a) the appellant has failed to comply with a direction which stated that failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them; If the proceedings, or part of them, have been struck out (5) under paragraph (1) or (3)(a), the appellant may apply for the proceedings, or part of them, to be reinstated. (7) This rule applies to a respondent as it applies to an appellant except that (a) a reference to the striking out of the proceedings must be read as a reference to the barring of the respondent from taking further part in the proceedings; and (b) a reference to an application for the reinstatement of proceedings which have been struck out must be read as a reference to an application for the lifting of the bar on the respondent from taking further part in the proceedings.
It will be noted that by its application of 22 November 2013 BPP sought an order which substantially reflected the terms of rule 8(1) read together with rule 8(7)(a), whereas the order made by Judge Hellier in the Ft T on 9 January 2014 reflected the terms of rule 8(3)(a) read together with rule 8(7)(a).
The reasoning of Judge Mosedale
The reasons for Judge Mosedales decision are self evidently best appreciated by reading her careful judgment, but it is right to summarise its contents in order to explain our decision on this appeal.
In paras 2 to 36 of her judgment, Judge Mosedale set out the facts more fully than I have done.
In the course of doing so, she said in para 22 that HMRCs statement of case made hardly any reference to facts, so far as the third appeal was concerned, so it followed that she concluded that BPPs request of 11 November 2013 was justified.
In paras 33 to 36, she referred to the earlier failures of HMRC to comply with time limits.
In paras 37 to 54 of the judgment she then addressed the question whether HMRC were in breach of their obligation to comply with the Unless order, ie to provide the further information which they were recorded as having agreed to provide in the Order of 9 January 2014.
Judge Mosedale concluded that they were.
In effect, she said, by the end of January 2014 hardly any further information had been supplied by HMRC.
Judge Mosedale then turned to consider the appropriate sanction.
She analysed the guidance given in the Court of Appeal case of Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795, which she said had been held to be applicable by analogy to the Tribunals in the UT decision, Revenue and Customs Comrs v McCarthy & Stone (Developments) Ltd [2014] UKUT 196 (TCC); [2015] STC 973 and in the Ft T decision, Compass Contract Services UK Ltd v Revenue and Customs Comrs [2014] UKFTT 403 (TC).
However, in paras 59 to 60, she accepted the submission on behalf of HMRC that [s]trictly those cases were not in point as they concerned cases where, as in Mitchell, the order under consideration stated that the party concerned will be debarred if he did not comply.
By contrast, as she said, the order in this case was that HMRC may be debarred if they did not comply (ie they were rule 8(1) cases or their equivalents in the court system rather than rule 8(3) cases, as in the instant case).
In other words, she accepted that HMRC were not applying to be relieved from a debarring order which had automatically come into effect as a result of the earlier order: rather BPP was seeking to have a debarring order imposed, when such an order had been foreshadowed by the earlier order.
Nonetheless, she concluded in para 61 that while Mitchell is not strictly relevant, nevertheless it contains some useful guidance that when considering the overriding objective of dealing with cases fairly and justly.
She concluded that: [I]n considering whether to grant the appellants application to bar HMRC from further participation in this appeal I must consider all relevant factors.
I will include in my consideration factors (a) and (b) from CPR 3.9 and accord them significant weight as part of my consideration of the overriding objective to deal with cases fairly and justly.
CPR 3.9 is a rule which applies in the courts of England and Wales and it provides that, when considering an application for relief from sanctions (such as relief from a debarring order) the court would consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.
In paras 67 to 72, Judge Mosedale then concluded that HMRC had, at least arguably, finally provided the information required by the unless order in the skeleton argument prepared by counsel, Mr Singh, for HMRC, served shortly before this hearing, but the fact remained that, until that point, HMRC had not provided the information ordered.
In para 73, she described the prejudice to the appellants as very clear, as BPP had the right to be put in the position so that it can properly prepare its case.
In the following paragraph, she explained that the real prejudice to the appellant is in the delay in that HMRCs continued failure to make a proper statement of their case has delayed the progress of this appeal by about eight months.
In paras 75 to 80, Judge Mosedale then turned to the reason for default and said that she had no clear understanding of why this default had occurred and added that it should have been obvious to a lawyer that the Reply delivered on the due date did not comply with Judge Helliers Order.
She was unimpressed with HMRCs suggestion that it ought not to have been required to state every fact and matter on which it relied, not least because the Reply failed to state any fact or matter on which HMRC relied.
In paras 81 and 82, she said that HMRC does not appear in this appeal to have appreciated the importance of adhering to directions.
Judge Mosedale then turned to the proposed debarring order which she described in para 83 as a draconian remedy, but added that it was virtually the only sanction that the Tribunal has, because [n]o one suggests in this case that costs would be an adequate remedy.
In para 85 she rejected Mr Singhs submission that debarring order should only be made where the breach was incapable of remedy or had not been remedied as the wrong test before or after Mitchell.
In paras 88 to 90, Judge Mosedale rejected the contention that the importance of the case to HMRC was a relevant factor: if it was a test case, they could for instance, concede the appeal, and fight another case, and, even if it proceeded and HMRC lost, the authority of the decision would be weakened by the fact that it was unopposed.
In paras 91 to 93, she rejected as irrelevant the contention that the case should be allowed to proceed as the unfairness of a wrongly adverse decision would mean that it could be relied on as res judicata by BPP in relation to every claim, while expressly leaving open the premise for that contention.
In para 94, she rejected as irrelevant the fact that Judge Hellier had thought it right to make a rule 8(3) order rather than the rule 8(1) order sought by BPP.
Judge Mosedale then reached her Conclusions.
She started in para 95 by saying that she must simply weigh all the factors, and if in doubt should not make a debarring order, and added that the objective in exercising my discretion is the overriding objective of dealing with cases fairly and justly.
In the following paragraph, she said that she had to give significant weight when considering the overriding objective to the importance of compliance with directions of the tribunal and avoiding unnecessary delays and expense.
She then referred to the delay caused by HMRCs default, the absence of any reason for it, the existence of previous less serious breaches of the Tribunal rules in these proceedings, although this is not a case where HMRC have ignored the Tribunal entirely.
At para 100, she said that she had come to the conclusion that HMRC should be barred, and explained: There has been unnecessary delay and expense.
Tribunal directions have been breached.
There is clear prejudice to the appellant in having to wait eight months for a proper statement of HMRCs case and not barring HMRC would leave the appellant without a remedy for this prejudice.
There was no good reason for the delay in stating its case, the failure lasted for a significant period of time, and HMRC were clearly on notice from the first that the appellant did not consider their [statement of case] satisfactory, and clearly on notice from January that a failure to comply might lead to a barring order yet they did not correct the position for another five months.
Barring is the appropriate sanction.
Discussion
This was a full and very carefully considered judgment.
However, it would nonetheless be appropriate for an appellate court to interfere with it, if it could be shown that irrelevant material was taken into account, relevant material was ignored (unless the appellate court was quite satisfied that the error made no difference to the decision), there had been a failure to apply the right principles, or if the decision was one which no reasonable tribunal could have reached.
Ms Simor has argued that there were a number of errors in the judgment, and also that the ultimate decision was outside the bounds of what a reasonable tribunal could have decided.
First, it was said that the Judge approached the issue before her as if the order made by Judge Hellier was an order under rule 8(1) rather than under rule 8(3).
I do not agree.
As Ryder LJ said in para 29 of his judgment in the Court of Appeal, Judge Mosedale was careful to identify (at para 60) that she was making a decision about whether barring should be applied as a sanction rather than considering whether to grant relief from a sanction already applied.
Furthermore, she did not equate a rule 8(3) conditional order with a rule 8(1) unless order.
She was plainly aware of the rule which applied.
And she was right when she said in para 94 that the fact that Judge Hellier had refused to make a rule 8(1) order took matters no further so far as the issue before her was concerned.
Secondly, it is said that Judge Mosedales reliance on the Court of Appeals reasoning in Mitchell was unsound as the reasoning has subsequently been modified by the Court of Appeal in Denton v T H White Ltd [2014] 1 WLR 3926.
This inferentially raises an important point in relation to the interpretation and application of the rules of the Ft T and the UT.
The jurisdiction of many of these tribunals is not limited to England and Wales, but extends to the whole of the United Kingdom, and even where that is not so, the applicable rules may be the same in the different jurisdictions.
In any event, it is highly desirable, particularly in a field where the law is the same throughout the United Kingdom (as in tax), that tribunals, or at any rate tribunals in the same field, apply the same, or (at least in some cases) even similar, rules in the same way throughout the UK.
In these circumstances, all tribunals and appellate courts above the level of the UT should be wary of applying or relying on the procedural jurisprudence of the English and Welsh courts without also taking into account that of the Scottish and Northern Irish courts.
As Lord Rodger memorably said in Mucelli v Government of Albania [2009] 1 WLR 276, para 11, in relation to the interpretation of a statute with UK wide application, In Scotland, the people still walk in darkness and upon them hath the light of the CPR not shined.
So there can be no question of interpreting the terms of the statute in the light of the CPR or of the Scottish or Northern Irish rules, for that matter.
Further, while it would be both unrealistic and undesirable for the tribunals to develop their procedural jurisprudence on any topic without paying close regard to the approach of the courts to that topic, the tribunals have different rules from the courts and sometimes require a slightly different approach to a particular procedural issue.
In this case, when considering the proper approach to the making of a debarring order in the Ft T, the Ft T, and indeed the UT, the Court of Appeal, and counsel before us, concentrated on recent English cases, particularly Mitchell and Denton, but also Durrant v Chief Constable of Avon and Somerset Constabulary (Practice Note) [2014] 1 WLR 4313.
These cases provide a salutary reminder as to the importance that is now attached in all courts and tribunals throughout the UK to observing rules in contentious proceedings generally, but they are directed to, and only strictly applicable to, the courts of England and Wales, save to the extent that the approach in those cases is adopted by the UT, or, even more, by the Court of Appeal when giving guidance to the Ft T.
Such guidance to tribunals on tax cases was given by Judge Sinfield in the UT in McCarthy & Stone.
In para 43, after referring to differences and similarities between the CPR and the tribunal rules, in that case the Tribunals Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698), he accepted that the CPR do not apply to tribunals but added that he did not accept that the UT should adopt a different, ie more relaxed, approach to compliance with rules, directions and orders than the courts that are subject to the CPR.
The same view was expressed by Ryder LJ in paras 37 and 38 in the Court of Appeal in this case, including this: I can detect no justification for a more relaxed approach to compliance with rules and directions in the tribunals, and added that [i]t should not need to be said that a tribunals orders, rules and practice directions are to be complied with in like manner to a courts.
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 Ft T 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).
We have twice recently affirmed a similar proposition in relation to the Court of Appeals role in relation to the proper approach to be taken in such cases by first instance judges see Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] 1 WLR 4495 and Thevarajah v Riordan [2016] 1 WLR 76.
The guidance given by Judge Sinfield in McCarthy & Stone was appropriate: as Mr Grodzinski QC, who appeared for BPP pointed out, it is an important function of the UT to develop guidance so as to achieve consistency in the Ft T: see R (Jones) v First tier Tribunal (Social Entitlement Chamber) [2013] 2 AC 48, para 41, per Lord Carnwath.
And, by confirming that guidance in this case, the Senior President, with the support of Moore Bick V P and Richards LJ, has very substantially reinforced its authority.
In a nutshell, the cases on time limits and sanctions in the CPR do not apply directly, but the Tribunals should generally follow a similar approach.
Such an approach was adopted by Judge Mosedale, as demonstrated by the passages in her judgment cited in paras 15 and 20 above.
As Ryder LJ rightly said at para 32 of his judgment: Judge Mosedale did not directly apply the CPR or the subsequent authorities that give guidance on CPR 3.9.
She was careful to make it clear that her consideration of the same was limited to whether the guidance contained in them was relevant by analogy to the application of the overriding objective in the tax tribunal rules Most importantly, she distinguished the guidance before applying a nuanced version of it to the overriding objective in the tax tribunal rules.
Turning to the specific points raised by Ms Simor, I would reject the argument that Judge Mosedales decision was vitiated because it relied on the reasoning in Mitchell, on the ground that the approach laid down in that case was significantly cut down in the subsequent case of Denton.
In the first place, the approach adopted by Judge Mosedale did not rely on a detailed analysis of Mitchell.
She ultimately approached the issue she had to decide on the basis which she explained in the passages quoted in paras 15 and 20 above, and that approach involved carrying out the unexceptionable balancing exercise which she described.
Secondly, in Denton, para 24, the Court of Appeal described the guidance given in Mitchell as remain[ing] substantially sound and suggested an approach which involved three stages, which it then went on to expound.
The refinements which the Court of Appeal then made to what had been said in Mitchell were largely clarifications (see paras 26 and 32).
Unless it appears that Judge Mosedale misinterpreted the guidance given in Mitchell, the decision in Denton would not therefore represent a reason for upsetting her decision, and I can see no basis for saying that she did misunderstand the guidance given in Mitchell.
Thirdly, it was contended that in her Conclusions in paras 95ff of her judgment, the Judge only considered the delay caused by HMRC, the lack of explanation or excuse, and the prejudice caused to BPP.
There was no consideration, it is said, of the disadvantage to HMRC and the arguably disproportionate benefit to BPP.
If one confines oneself to the contents of Judge Mosedales Conclusions in paras 95 to 101 of her judgment, that point has force.
However, it seems to me that that involves an unrealistic approach to the judgment.
In the preceding 28 paragraphs, Judge Mosedale considered all the relevant factors, and it appears to me to be fanciful to suggest that she did not take them into account when reaching her conclusion.
The worst that can be said in this connection is that the Judge should have said in terms in her Conclusions that she had taken all the matters she had discussed in paras 67 to 94 into account, but in my view it is clear that she did so: otherwise, one may rhetorically ask, why did she bother to consider those other matters, and so carefully.
Fourthly, Ms Simor argued that the Judge should have accepted the relevance of, and taken into account, the fact that the debarring order in this case prevents HMRC from discharging its public duty and could lead to the public interest being harmed in that VAT which should be paid may not be recovered.
I consider that it would set a dangerous precedent if that point were accepted, as it would discourage public bodies from living up to the standards expected of individuals and private bodies in the conduct of litigation.
It seems to me that there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals.
In fairness, it should be said that this point was more attractively developed by Ms Simor when she said that it justified a more relaxed approach to all parties by tribunals than that adopted by the courts.
Nonetheless, I find that unconvincing: there is no good reason to have different rules for public law cases.
I consider that Moore Bick V P in R (Hysaj) v Secretary of State for the Home Department (Practice Note) [2015] 1 WLR 2472, paras 41 to 42 was right to reject a similar point in relation to public law cases in the courts.
Fifthly, Ms Simor argued that it was disproportionate of BPP to have sought a debarring order in the present case rather than proceeding to a hearing in accordance with Judge Helliers directions.
She pointed to the fact that, had BPP taken that course, the issue raised by its substantive appeal could well have been determined by the time the present appeal came on for hearing in the Supreme Court.
That is true, but it is a point which can only be made because HMRC chose to challenge the decision of Judge Mosedale to make a debarring order that these proceedings have lasted beyond 1 July 2014.
More importantly, the order made on 9 January 2014 specifically envisaged a debarring order being made unless HMRC complied with their disclosure obligation recited in the order by 31 January, and it is not suggested that it was somehow culpable or unfair for BPP to have allowed some six weeks to elapse after that date before applying for a debarring order.
Sixthly, it was pointed out that a debarring order represents an unjustified windfall for BPP.
It is true that the debarring order will either improve BPPs prospects of success in the substantive surviving appeal (if the appeal goes ahead unopposed) or result in BPP succeeding on the appeal when it might not otherwise have done so (if HMRC concede the appeal).
However, that point can always be made by a party facing a debarring order, and to give the point any weight, save perhaps in exceptional circumstances, would appear to me to undermine the utility of the sanction of a debarring order.
I can see no exceptional circumstances in the instant case.
Finally, it was said that, bearing in mind all the circumstances, a debarring order was outside the scope of what a reasonable judge in the position of Judge Mosedale could have ordered, even if she made no specific errors.
I accept that the decision to make a debarring order against HMRC was tough, and I also accept that some Ft T judges may not have made that decision.
However, the issue whether to make a debarring order on certain facts is very much one for the tribunal making that decision, and an appellate judge should only interfere where the decision is not merely different from that which the appellate judge would have made, but is a decision which the appellate judge considers cannot be justified.
In the words of Lawrence Collins LJ in Walbrook Trustee (Jersey) Ltd v Fattal [2008] EWCA Civ 427, para 33: [A]n appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge.
In other words, before they can interfere, appellate judges must not merely disagree with the decision: they must consider that is unjustifiable.
HMRC cannot in my view cross that high hurdle in this case.
That is not to say that an appellate tribunal cannot interfere in a case where a debarring order has been imposed or confirmed.
The decision to impose a debarring order (unlike case management decisions of a more routine nature) can often have the effect of determining the substantive case.
Further, as already mentioned in para 27 above, an important function of the UT and the Court of Appeal is to ensure a degree of consistency of approach among Ft T judges.
In the context of court decisions, this concern was plainly in the mind of the Court of Appeal in Mitchell and Denton.
There must be a limit to the permissible harshness (or indeed the permissible generosity) of a decision relating to the imposition or confirmation (or discharge) of a debarring order.
It may well be that this case is not far from that limit (a view which obviously draws support from Judge Bishopps careful judgment in the UT).
However, I do not consider that it was on the wrong side of the line, given the combination of the nature and extent of HMRCs failure to reply to BPPs request, the length of the delay in rectifying the failure and the length of the consequential delay to the proceedings, the absence of any remedy to compensate BPP for the delay, and the absence of any explanation or excuse for the failure, coupled with the existence of other failures by HMRC to comply with directions.
Conclusion
Ms Simors fourth and fifth points prompt the thought that it may be worth considering whether tribunals should be accorded additional sanction powers to those which they currently have.
As Judge Mosedale explained, she was faced with a binary question, involving two unpalatable choices.
Making the debarring order, which she described as draconian, or not making the order, which, to use the vernacular, would have meant that HMRC effectively would have got away with it.
There may be force in the notion that the tribunal rules should provide for the possibility of more nuanced sanctions, such as a fine or even the imposition of some procedural advantage.
Experience suggests that such ideas, while attractive in theory, can often be difficult to formulate or to apply satisfactorily in practice, so I mention the point with some diffidence.
However, for the reasons I have given, HMRCs appeal must be dismissed.
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This appeal concerns whether the First tier Tribunal (Ft T) was entitled to make an order debarring the Commissioners for HM Revenue and Customs (HMRC) from defending an appeal concerning liability for VAT brought by three companies in the BPP Group of companies (BPP).
Between 1999 and 2006, BPP Holdings Ltd supplied education and books to students.
Following a corporate rearrangement in 2006, one company, BPP Learning Media Ltd, supplied books and another, BPP University College of Professional Studies Ltd, supplied education.
BPP considered that this involved separate supplies by separate companies, one of education (which is standard rated for VAT purposes) and the other of books (which is zero rated).
Accordingly, BPP did not account for VAT on the supplies of books.
In November 2012, HMRC issued two VAT assessments, prepared on the basis that BPP should have accounted for VAT at the standard rate on the supplies of books from 2006.
HMRC also issued a decision to that effect in December 2012.
In May 2013, BPP appealed against the two assessments and the decision to the Tax Chamber of the Ft T. HMRC served its statement of case on 21st October 2013, 14 days late, and subsequently provided disclosure, which was also late.
On 11th November 2013, BPP requested that HMRC provide further information of their case, and subsequently applied to the Ft T for an order that HMRC supply the information within 14 days of making the order, failing which BPPs substantive appeals should be allowed.
On 9th January 2014, Judge Hellier made an order in terms that: if the respondents fail to provide replies to each of the questions identified in the appellants request for Further Information by 31st January 2014, the respondents may be barred from taking further part in the proceedings.
On 31st January 2014, HMRC served a response to BPPs request.
On 14th March, BPP issued an application for an order barring HMRC from taking further part in the proceedings (a debarring order) as the response did not reply to each of the questions identified in [BPPs] request for further information.
HMRC have since withdrawn the two assessments and conceded those appeals, but BPPs third appeal against HMRCs decision has proceeded.
Meanwhile, HMRC supplied a defective disclosure statement and list of documents some eight days late on 8th May, and did not apply for an extension of time until four weeks later.
BPP maintained its claim for a debarring order in the surviving appeal.
On 23rd June 2014, Judge Mosedale granted BPPs application and made a debarring order.
On 25 September 2014, Judge Herrington refused HMRCs application to lift the debarring order but gave HMRC permission to appeal against Judge Mosedales decision.
Judge Bishopp in the Tax and Chancery Chamber of the Upper Tribunal (UT) allowed HMRCs appeal on 3rd October 2014.
The Court of Appeal (Moore Bick V P, Richards and Ryder LJJ) allowed BPPs appeal and restored Judge Mosedales debarring order for reasons given by Ryder LJ.
The Supreme Court unanimously dismisses the appeal, but does not approve all the reasoning of the Court of Appeal.
It would be appropriate for an appellate court to interfere with Judge Mosedales full and carefully considered judgment if it could be shown that irrelevant material was taken in to account, relevant material was ignored (unless the appellate court was satisfied that this made no difference), or the decision was one which no reasonable tribunal court have reached [21].
The order made by Judge Hellier reflects the terms of rule 8(3)(a) of Rule 8 of the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), which provides that: the Tribunal may strike out the whole or a part of the proceedings if (a) the appellant has failed to comply with a direction which stated that a failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them [10 11].
Judge Mosedale had correctly approached the issue on the basis that the order reflected rule 8(3), rather than rule 8(1) as HMRC had contended [22].
Case law concerning time limits and sanctions relevant to the Civil Procedure Rules does not apply directly to the tribunals: the jurisdiction of many of the tribunals extends to the whole of the United Kingdom rather than being limited to England and Wales, and they have different rules from the courts and sometimes require a different approach to a particular procedural issue.
However, in general, a similar approach should be followed [23 26].
Judge Mosedale had made clear that her consideration of the Civil Procedure Rules and related authorities was limited to whether the guidance contained in them was relevant by analogy to the application of the overriding objective in the Tax Tribunal rules.
She had distinguished the guidance before applying a nuanced version of it [26 27].
Further, in considering the reasoning in Mitchell v Newsgroup Limited [2014] 1 WLR 795, Judge Mosedale had correctly considered that whilst the case was not strictly relevant, it contained some useful guidance when considering the overriding objective of dealing with cases fairly and justly [28], [15].
There is no basis for concluding that she had misunderstood the guidance given in Mitchell, nor that any developments in the subsequent case of Denton v TH White Ltd [2014] 1 WLR 3926 justified upsetting her decision [28].
In reaching her conclusion, Judge Mosedale had carefully considered all the relevant factors, including the disadvantage to HMRC and the arguably disproportionate benefit to BPP [29], [12 20].
The fact that HMRC was discharging a public duty in this case did not justify the application of a special rule or approach [30].
It was not disproportionate for BPP to have sought a debarring order rather than proceeding to a hearing [31].
The argument that the result of the debarring order would result in an unjustified windfall for BPP by improving its prospects of success in the substantive appeal could be made by any party facing a debarring order, and would, if accepted, save in exceptional circumstances, undermine the utility of the sanction of a debarring order [32].
The decision to make a debarring order against HMRC was tough and some Ft T judges may not have made it.
However, HMRC cannot cross the high hurdle of demonstrating that the decision was unjustifiable, given the combination of the nature and extent of HMRCs failure to reply to BPPs request, the length of the delay in rectifying the failure and the length of the consequential delay to the proceedings, the absence of any remedy to compensate BPP for the delay and the absence of any explanation or excuse for the failure, coupled with the existence of other failures by HMRC to comply with directions [33 34].
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Mr Durkin has fought this battle for many years.
He purchased a laptop computer from PC World in Aberdeen for 1,499 on 28 December 1998.
He entered a debtor creditor supplier agreement with HFC Bank plc under section 12(b) of the Consumer Credit Act 1974 to fund the purchase, apart from a 50 deposit which he paid.
On the next day he rejected the computer because it did not conform to his contract.
PC World did not accept that he had validly rescinded the contract until the sheriff at Aberdeen in a judgment dated 26 March 2008 determined that he had.
In the meantime, HFC treated him as being in default and intimated that default to credit reference agencies.
Mr Durkin claimed damages for financial loss caused by the damage to his credit.
The principal issue in this appeal is whether Mr Durkin was entitled to rescind the credit agreement on rescission of the sale agreement.
The factual background
In December 1998 Mr Durkin wanted to buy a laptop computer which had an internal modem by which he could connect to the internet.
On 28 December 1998 he went to PC World in Aberdeen to purchase a suitable product.
He specified his requirements to Mr Andrew Taylor, a member of the stores management, who introduced him to a sales assistant, Mr Robert Slorance.
The sales assistant identified a product but said he was unsure whether it had an inbuilt modem.
Because PC World did not allow customers to remove a laptop from its box before purchase, the sales assistant agreed that Mr Durkin could take the computer home and, if on inspection it was found not to contain an internal modem, he could return it.
Mr Durkin paid the deposit and completed and signed the credit agreement, which the sales assistant gave him, for the balance of 1,449.
The sales assistant signed the credit agreement on behalf of HFC.
When he took his purchase home and opened the sealed box, he discovered that the laptop did not have an internal modem.
At about 9 am on the following day he handed back the computer to the store and asked for his deposit of 50 to be returned and the credit agreement cancelled.
Mr Taylor refused to accept Mr Durkins rejection of the goods and took no step to cancel the credit agreement.
That remained PC Worlds position in the action which Mr Durkin initiated in the sheriff court in Aberdeen in 2004 until the sheriff in his judgment of 26 March 2008 granted a declarator that Mr Durkin had validly rescinded the contract of sale.
In the later proceedings before the Inner House PC World did not challenge the sheriffs finding that the contract of sale had been rescinded.
Mr Durkin did not pay any money to HFC under the credit agreement.
In late February or early March 1999, after he returned from working offshore, he responded to a request for payment by telephoning HFC to advise it that he had rejected the laptop and had rescinded his contract with PC World.
He intimated to HFC that he had rescinded the credit agreement also.
On 8 March 1999 Mr Durkin wrote to the managing director of PC World to explain that he had rejected the computer, that PC Worlds manager had refused to refund the deposit, and that HFC was demanding money from him because the manager would not tell it that the goods had been rejected.
On 22 July 1999 HFC wrote to Mr Durkin to warn him that he had arrears of 326.22 and that if he did not resume payments under the credit agreement it was possible that he might have difficulty in obtaining a mortgage or other credit because HFC reported monthly to credit reference agencies on the status of customer accounts.
HFC also informed him that if he did not respond to the letter it would serve a default notice on him in accordance with section 87(1) of the 1974 Act.
Mr Durkin telephoned HFC to re affirm his position that the sales contract had been rescinded and that he was not due to pay any sums under the credit agreement.
Without making any enquiries about Mr Durkins claim that he had rescinded both the contract of sale and the credit agreement, HFC issued a default notice and intimated to the UK credit reference agencies, Experian Ltd and Equifax Ltd, that he had been in default of his obligations under the credit agreement since 14 January 1999.
They recorded the alleged default on their registers.
Thereafter Mr Durkin attempted without success to persuade the credit reference agencies to correct their registers.
The entries remained on the registers until about 2005 or 2006.
The legal proceedings
Mr Durkin raised a small claims action against DSG Retail Limited, which trades under the name of, among others, PC World, and recovered his 50 deposit in an out of court settlement in which DSG did not admit any liability.
But that did not resolve his problem with HFC.
He found that the entries on the credit registers prevented him from opening new accounts with credit card companies and other lending institutions.
He had used credit cards in funding his lifestyle and wished to make use of offers of 0% credit on transferred balances to minimise the cost of his borrowing by transferring from one credit card company to another at the end of each period of interest free credit.
The entries on the registers of the credit reference agencies prevented him from doing so.
Mr Durkin therefore raised an action in Aberdeen sheriff court in early 2004 against both DSG and HFC.
He sought a declarator that he had validly rescinded both the contract of sale and the credit agreement and claimed damages of 250,000 from HFC for its negligence in representing to the credit reference agencies that he had defaulted on the credit agreement.
He claimed damages from HFC under three heads of loss: (i) damage to his financial credit, (ii) loss from interest charges caused by his inability to exploit seriatim the offers of 0% credit and (iii) loss caused by his inability to put down a 30% deposit on a house in Benalmedena, Spain in October 2003, measured essentially by the difference between the price available in 2003 and the enhanced value of that property three years later.
DSG contested Mr Durkins claim that he had rescinded the contract of sale and it was only after proof of the facts that he established that DSG had been in material breach of contract entitling him to rescind the sale contract.
HFC contested both his entitlement to rescind the credit agreement and his claim for damages.
Sheriff Tierney followed the opinion of Sheriff Principal Reid in United Dominions Trust Ltd v Taylor 1980 SLT (Sh Ct) 28 and held that section 75 of the 1974 Act (which I discuss in paras 18 26 below) had the effect that Mr Durkin had been entitled to rescind and had rescinded both the sale contract and the credit agreement.
The sheriff awarded Mr Durkin (i) 8,000 for injury to his credit, (ii) 6,880 for the extra interest which he had had to pay and (iii) 101,794 for the loss of a capital gain arising from his inability to purchase the Spanish property in 2003.
Mr Durkin appealed to the Inner House of the Court of Session against the sheriffs assessment of his damages.
HFC cross appealed against the sheriffs findings (i) that section 75 of the 1974 Act enabled Mr Durkin to rescind the credit agreement, (ii) that HFC was in breach of its duty of care, and (iii) that HFCs breach of duty had caused the second and third heads of loss.
HFC did not dispute the award of 8,000 if it had been in breach of its duty but submitted that there was no evidence to entitle the sheriff to make the awards which he did under the second and third heads of loss.
At a hearing before the First Division of the Inner House Mr Durkins appeal on the amount of damages failed.
Worse for him, HFCs counsel persuaded the court that section 75 did not allow him to rescind the credit agreement.
In addition, the court accepted HFCs submission that, absent averments and evidence of the sort of enquiries which a bank could reasonably have been expected to make, Mr Durkin had not shown that HFC had failed in its duty of care.
Further, counsel for HFC analysed the evidence in the transcripts of evidence and the documents and persuaded the court that the evidence did not permit the sheriff to hold that a breach of duty by HFC had caused Mr Durkin loss under the second and third heads of claim.
The court therefore amended the sheriffs findings of fact to exclude his claims for loss of interest and the loss arising from his inability to purchase the property in Spain.
On 15 June 2010 the First Division granted decree of absolvitor to HFC.
This appeal
Mr Andrew Smith QC sought permission to advance a new ground of appeal, namely that there was on a proper analysis no contract of sale and no credit agreement.
As this stance contradicted the basis on which the case had been pleaded from the outset and argued in the courts below, we refused his application.
The issues for this court therefore are (i) whether Mr Durkin had rescinded the credit agreement, (ii) whether HFC was in breach of a duty of care to him and (iii) whether on the findings of fact any breach of HFCs duty of care caused him loss exceeding the 8,000 which the sheriff had awarded for the loss of his credit.
Whether Mr Durkin rescinded the credit agreement
The credit agreement, which DSGs sales assistant presented to Mr Durkin for his signature in the PC World store, was a personal loan agreement which described in a schedule the purchase of the computer, the 50 deposit payable on supply and the amount of credit which was the balance of the purchase price.
The first clause of the terms and conditions was entitled Payment of the Supplier and stated (a) We [HFC] agree to lend to you and you agree to borrow the Amount of Credit.
Subject to clause 1(b) below, you authorise us to pay the Amount of Credit to the Supplier. (b) We may withhold payment to the Supplier until we are satisfied that the Goods and/or Services have been supplied and/or installed or completed to your satisfaction. (c) By signing this Agreement you declare that you have paid the Deposit (if any is shown in the Schedule) to the Supplier.
In order to understand the arguments about the interpretation of section 75 of the 1974 Act, it is necessary to set out certain statutory provisions.
The agreement was a consumer credit agreement under section 8(1) of the 1974 Act as it was an agreement between an individual (the debtor) and any other person (the creditor) by which the creditor provides the debtor with credit of any amount.
It was a regulated consumer credit agreement under section 8(3) of the 1974 Act as it was not an exempt agreement.
It was also a debtor creditor supplier agreement under section 12 of the 1974 Act.
To understand the definitions in section 12 one must first look at section 11.
That section lists three types of restricted use credit agreement and also an unrestricted use credit agreement.
It provides: (1) A restricted use credit agreement is a regulated consumer credit agreement (a) to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or (b) to finance a transaction between the debtor and a person (the supplier) other than the creditor, or (c) to refinance any existing indebtedness of the debtors, whether to the creditor or another person, and restricted use credit shall be construed accordingly. (2) An unrestricted use credit agreement is a regulated consumer credit agreement not falling within subsection (1), and unrestricted use credit shall be construed accordingly. (3) An agreement does not fall within subsection (1) if the credit is in fact provided in such a way as to leave the debtor free to use it as he chooses, even though certain uses would contravene that or any other agreement.
Section 12 provides: A debtor creditor supplier agreement is a regulated consumer credit agreement being (a) (b) a restricted use credit agreement which falls within section 11(1)(a), or a restricted use credit agreement which falls within section 11(1)(b) and is made by the creditor under (c) pre existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or an unrestricted use credit agreement which is made by the creditor under pre existing arrangements between himself and a person (the supplier) other than the debtor in the knowledge that the credit is to be used to finance a transaction between the debtor and the supplier.
We are not concerned in this case with the circumstance in which the creditor is also the supplier (sections 11(1)(a) and 12(a)).
Section 75, which I set out below, covers both restricted use credit agreements under section 12(b) and unrestricted use credit agreements under section 12(c).
The agreement in this case is an example of the former, where the creditor pays the money to the supplier.
An example of the latter would be where a supplier introduces the customer to a financial organisation to obtain a loan to finance the transaction with him but the customer, who receives the money, could use it for another purpose, even if by that use he broke a contract (section 11(3)).
Section 75 provides (so far as relevant): (1) If the debtor under a debtor creditor supplier agreement falling within section 12(b) or (c) has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor. (2) Subject to any agreement between them, the creditor shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor.
In my view the First Division was correct to hold that section 75(1) did not give the debtor any right to rescind the credit agreement if he did not have such a right under the general law.
I have reached this view for the following five reasons.
First, it is consistent with the ordinary meaning of the words of section 75(1): they give the debtor who has a claim against a supplier a like claim against the creditor.
Thus a debtor, who has a right of action against the supplier for misrepresentation or breach of the contract of supply, can sue the creditor for that misrepresentation or breach of the supply contract.
In other words, the creditor is concurrently liable for the suppliers breach.
Secondly, it is consistent with that concurrent primary liability that the creditor and the supplier should be jointly and severally liable to the debtor.
I do not suggest that the provision of joint and several liability of itself means that the claim against the supplier must be a monetary claim, because the closing words of the subsection can readily be interpreted as having effect where applicable and not as words of limitation.
Thirdly, the creditors entitlement to indemnity from the supplier under subsection (2) is consistent with his incurring of concurrent liability for matters which he cannot control.
Fourthly, my view matches the relevant recommendation of the Report of the Committee on Consumer Credit chaired by Lord Crowther in 1971 (Cmnd 4596), whose review led to the 1974 Act.
In its discussion of the liability of connected lenders (paras 6.6.24 6.6.31) the committee favoured an approach which made the lender answerable in damages for misrepresentations made by the seller in antecedent negotiations and for breaches of any term of the agreement relating to title, fitness or quality of the goods (paras 6.6.26 27).
I set out in full the committees recommendation (at para 6.6.28).
We therefore recommend that where the price payable under a consumer sale agreement is advanced wholly or in part by a connected lender that lender should be liable for misrepresentations relating to the goods made by the seller in the course of antecedent negotiations, and for defects in title, fitness and quality of the goods.
Further, we consider that where the sale and the loan are made by separate contracts, the borrower should nevertheless have the right to set off against any sum payable by him under the loan contract any damages he is entitled to recover from the lender for breaches of the sale agreement by the seller.
It is of note that in this recommendation the claim against the lender is derived from the sellers breach of contract or misrepresentation and is not a claim relating to the credit agreement or the actions of the creditor.
Fifthly, section 75 also applies to an unrestricted use credit agreement under section 12(c) in which the supplier introduces the debtor to a financial organisation in order to fund a supply transaction with him but the debtor, who receives the money, is not restricted in fact, even if he is by contract, to using the loan which he obtains to finance that particular transaction.
In such a case where there was no contractual restriction, if the supply contract were rescinded and the purchase price repaid, the debtor could use the borrowed money for other purposes.
There is no obvious need for a right to rescind the finance agreement where the debtor can use the borrowed funds to obtain substitute or other goods and services, if such use does not contravene the credit agreement.
Mr Smith relied on section 75 for Mr Durkins entitlement to rescind.
For the reasons set out above, I do not think that he can do so.
But that is not the end of the matter.
In the course of the debate counsel were asked how the debtor would obtain his remedy if the contract of sale were rescinded and the credit agreement were not.
Mr Clark submitted that, if the supplier contested the rescission of the contract of supply, the credit contract would remain in force until the debtor had established his right to rescind the supply agreement and had repaid the creditor or made a claim to offset against the creditors claim.
On establishing his right to rescind the debtor could raise an action against the supplier to recover his deposit on the basis of unjustified enrichment and also claim damages for breach of contract.
Those damages could include the loss he had incurred and would incur in meeting his obligations under the credit agreement.
Thus he could pay off his obligations to his creditor.
Section 75 would allow him to claim those damages against the creditor, who would probably counter claim for the sums outstanding on the credit agreement and make a third party claim against the supplier.
The debtor could wait until the creditor sued him and then plead a section 75 claim for damages to offset the creditors claim.
In Scots law the debtor would be able to plead a defence of compensation as the amount of his damages claim against the creditor could readily be measured by the creditors claim against him and any deposit (Henderson & Co Ltd v Turnbull & Co 1909 SC 510, 517 per Lord Low).
In English law he could plead an equitable set off (Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927, 974 975 per Lord Denning MR).
In neither jurisdiction would the debtors claim for damages extinguish his debt to the creditor until either it was upheld by a court or the creditor agreed to cancel the debt.
It is not consistent with the policy of the 1974 Act that the debtor in a case such as this should have to work out the consequences of the rescission of the supply contract in such a complex way.
In my view he does not have to.
Section 11(1)(b) of the 1974 Act states that the purpose of the restricted use credit agreement, such as the agreement in this case, is to finance a transaction between the consumer and the supplier.
Where, as here, the contract is tied to a particular transaction, it has no other purpose.
The rescission of the supply agreement excuses the innocent party from further performance of his obligations (if any) under the supply agreement (Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, 844 per Lord Wilberforce) and entitles him to repetition of sums paid and damages.
If the supplier were to pay in damages the sums needed to pay off the creditor under the credit agreement, the debtor could not retain those sums or spend them on anything else.
He would have to pay the creditor forthwith because he had borrowed money solely for a transaction which had ceased to have effect.
In most cases the consumers acceptance of the repudiation of a supply agreement does not frustrate the credit contract by analogy with the coronation case, Krell v Henry [1903] 2 KB 740, because the creditor will have paid the supplier and the purpose of the credit agreement will have been fulfilled by the purchase of the goods, before the consumer rescinds the supply contract.
But that does not mean that the debtor has no remedy.
It is inherent in a debtor creditor supplier agreement under section 12(b) of the 1974 Act, which is also tied into a specific supply transaction, that if the supply transaction which it financed is in effect brought to an end by the debtors acceptance of the suppliers repudiatory breach of contract, the debtor must repay the borrowed funds which he recovers from the supplier.
In my view, in order to reflect that reality, the law implies a term into such a credit agreement that it is conditional upon the survival of the supply agreement.
The debtor on rejecting the goods and thereby rescinding the supply agreement for breach of contract may also rescind the credit agreement by invoking this condition.
As the debtor has no right to retain or use for other purposes funds lent for the specific transaction, the creditor also may rescind the credit agreement.
It appears to me that similar reasoning would apply to a section 12(c) agreement where the credit agreement tied the loan to a particular transaction.
agreement.
Mr Clark submitted that it was not open to Mr Durkin to argue that the common law gave him a right to rescind because he had staked his case on section 75.
I disagree.
Mr Durkins assertion throughout has been that he had rescinded both the sale agreement and the credit agreement.
His legal advisers relied on a decision of the sheriff principal in United Dominions Trust which, although criticised in textbooks and legal articles, had been followed in other sheriffdoms.
If I am correct that a restricted use credit agreement which falls under section 12(b) of the 1974 Act and relates to a specified supply transaction is conditional upon the substantive survival of that supply transaction, so the purchaser can bring to an end the credit agreement without invoking section 75, the result is the same but the mechanism more simple.
In this case I do not think that the different legal analysis of the rescission amounts to a different case.
I am satisfied therefore that this reformulation of his claim does not come too late for Mr Durkin.
I am satisfied therefore that Mr Durkin was entitled to rescind the credit
Before considering the delictual case against HFC, it is necessary to take into account section 102(1) of the 1974 Act, which provides: Where the debtor or hirer under a regulated agreement claims to have a right to rescind the agreement, each of the following shall be deemed to be the agent of the creditor or owner for the purpose of receiving any notice rescinding the agreement which is served by the debtor or hirer (b) any person who, in the course of a business carried on by him, acted on behalf of the debtor or hirer in any negotiations for the agreement.
Notice means notice in writing (section 189 of the 1974 Act).
In this case the sales assistant in the PC World store, Mr Slorance, was the person who discussed with Mr Durkin the provision of credit for the purchase of the computer.
He did so on the instructions of the manager, Mr Taylor.
Mr Durkin intimated the cancellation of the credit agreement to Mr Taylor orally on 29 December 1998.
That was not sufficient for section 102 as it was not in writing.
But his letter of 8 March 1999 to the managing director of PC World was confirmation of the rejection of the computer and intimation of the rescission of the credit agreement.
By virtue of section 102(1) DSG was deemed to have received notice of that rescission as HFCs agent at that time.
But Mr Durkin does not have to rely on section 102.
HFC had notice of his asserted rescission of the credit agreement directly through the telephone calls in February and March 1999 which I described in para 4 above.
The delictual case against HFC
The First Division rejected Mr Durkins case in delict.
HFC accepted that it was under a duty to exercise reasonable care not to make untrue statements about Mr Durkin to the credit reference agencies.
But HFC submitted that Mr Durkin had failed to plead or prove the nature of the enquiries that it should have carried out and what the outcome of those enquiries would have been.
The First Division accepted that submission.
Accordingly they held that Mr Durkin had not established that any act or omission by HFC amounted to a breach of duty which had caused him loss.
I take a different view.
HFC, knowing of Mr Durkins assertion that the credit agreement had been rescinded, was under a duty to investigate that assertion in order reasonably to satisfy itself that the credit agreement remained enforceable before reporting to the credit reference agencies that he was in default.
HFC could readily foresee that registration of a default could damage Mr Durkins credit: it said so in its letter of 22 July 1999.
As it knew that Mr Durkins assertion of rescission of the sale agreement was unresolved, it had the options of (i) saying nothing to the credit reference agencies or (ii) if it chose to notify them, incurring the duty to him to take reasonable care to ensure that the notification was accurate (cf.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, 486 per Lord Reid).
HFC made no enquiries before intimating Mr Durkins alleged default to the credit reference agencies.
After Mr Durkin complained about the entries on the credit registers, HFC told him to sort matters out with DSG.
As the First Division recorded in amended finding of fact 21, HFC made no enquiries and, at all material times throughout the litigation, accepted without question DSGs position that Mr Durkin had not been entitled to rescind the contract of sale.
It is relevant to ask what would have happened if HFC had made enquiries (McWilliams v Sir William Arrol & Co 1962 SC (HL) 70).
The answer is clear.
If HFC had contacted DSG, it is likely that DSG would have said that it contested the rejection of the computer.
But HFC would not have known whether DSGs stance was correct.
If it had been faced with a contested rescission of the supply agreement and an asserted rescission of the credit agreement which it was not in a position to resolve, HFC should have refrained from intimating a default until the issues were resolved.
HFC could have sought to test the continued effectiveness of the credit agreement by suing Mr Durkin to enforce its terms.
Alternatively, it could have waited for Mr Durkin to sue to resolve the issue, as he later did.
It would have known that if it did so, it was entitled to be indemnified by DSG under section 75(2) of the 1974 Act.
But it should not have intimated the default without a reasonable basis for the belief that it had occurred.
In so doing it acted in breach of its duty of care to Mr Durkin.
There may be cases in which a creditor, having made enquiries, acts reasonably in reaching the view that the debtors assertions are unfounded.
This is not such a case.
The quantification of Mr Durkins loss
HFC did not contest the award of 8,000 for injury to Mr Durkins credit if it were established that it had breached its duty of care to him.
But Mr Smith sought also to restore the sheriffs award of damages for the extra interest which he had paid and for the loss of the capital gain on the Spanish property.
Mr Durkin faces an insuperable difficulty in pursuing this part of his appeal.
Section 32 of the Court of Session Act 1988 sets out how the Court of Session is to handle appeals from the judgment of a sheriff after proof and limits the role of the Supreme Court in relation to such appeals.
It provides in relation to the Court of Session: (4) Where such an appeal is taken to the Court from the judgment of the sheriff principal or sheriff proceeding on a proof, the Court shall in giving judgment distinctly specify in its interlocutor the several facts material to the cause which it finds to be established by the proof, and express how far its judgment proceeds on the matter of facts so found, or on matter of law, and the several points of law which it means to decide.
In relation to the Supreme Court it provides: (5) The judgment of the Court on any such appeal shall be appealable to the Supreme Court only on matters of law.
The First Division held that the evidence before the sheriff did not establish the extent to which Mr Durkin would have made use of 0% interest rate credit cards between 2001 and 2005 or the net benefit which he would have gained from such use (paras 78 80).
They altered the relevant finding of fact to exclude this claim.
This court is not empowered to go behind the amended finding of fact absent a demonstrated legal error.
Mr Durkins much larger claim for loss of the capital gain on the Spanish property was based on the proposition that his inability to borrow on his credit cards at 0% interest had caused him to borrow more from the Northern Rock Building Society, which had a security over his home.
That borrowing used up funds that would otherwise have been available to pay the deposit on the Spanish property which he wished to purchase.
The First Division (in paras 80 82) concluded that there was no evidence to support the sheriffs crucial finding that Mr Durkins additional borrowing from the Northern Rock was caused by the non availability of 0% credit rather than by the general level of his expenditure.
Again they altered the relevant finding of fact.
As a result, on the findings of fact there is no causal link between the adverse credit reference and Mr Durkins inability to fund the purchase of the Spanish property.
Again we cannot go behind those findings of fact, there being no demonstrated legal error.
Conclusion
I would allow the appeal and declare that Mr Durkin was entitled to rescind and validly rescinded the credit agreement by giving notice to HFC in about February 1999.
Damages resulting from HFCs breach of its duty of care are confined to injury to Mr Durkins credit in the sum of 8,000.
I would give the parties an opportunity to agree the date from which interest should run and the rate or rates of interest to be applied.
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Richard Durkin visited a PC World store in Aberdeen on 28 December 1998 to purchase a laptop computer, making clear that he wanted one with an internal modem.
A sales assistant identified a laptop but said he was unsure whether it had an internal modem.
He agreed that Mr Durkin could take the computer home and return it if it did not.
Mr Durkin paid a 50 deposit and signed a credit agreement given to him by the sales assistant for the balance of 1,449.
The assistant signed the credit agreement on behalf of a lender, HFC Bank plc [2].
On returning home, Mr Durkin found that the computer did not have an internal modem.
At about 9am the next day, he returned it and asked for his deposit back and for the credit agreement to be cancelled.
A store manager refused to accept his rejection of the goods and took no step to cancel the credit agreement [2].
Mr Durkin eventually raised an action and in March 2008 the sheriff declared he had validly rescinded the contract of sale.
This was not challenged on appeal [3].
Mr Durkin did not pay any money to HFC under the credit agreement.
In February 1999, he responded by telephone to a request for payment, explaining that he had rejected the laptop and rescinded both his contract with PC World and the credit agreement.
The following month, Mr Durkin wrote to the managing director of PC World to explain that he had rejected the computer, that PC Worlds manager had refused to refund the deposit and that HFC was demanding money from him because the manager would not tell HFC the goods had been rejected [4].
HFC wrote again in July 1999 warning Mr Durkin that if he did not resume payments he might have difficulty obtaining credit because HFC made monthly reports to credit reference agencies.
It added that if he did not respond to the letter, HFC would serve a default notice on him under the Consumer Credit Act 1974.
Mr Durkin telephoned HFC to re affirm his position [5].
Without making any enquiries about his claim to have rescinded both agreements, HFC issued a default notice and intimated to credit reference agencies that Mr Durkin had been in default of his obligations under the credit agreement since 14 January 1999.
Entries remained on their registers until 2005 or 2006 [6].
Mr Durkin recovered his deposit out of court, but found that the credit register entries prevented him from opening new accounts with other lenders, meaning he could not continue to take advantage of offers of 0% credit on transferred balances to minimise the costs of his borrowing by transferring from one credit card company to another [7].
He raised an action in the Sheriff Court in 2004 seeking a declarator that he had validly rescinded both the contract of sale and the credit agreement.
He claimed damages of 250,000 from HFC for its negligence in representing to the credit reference agencies that he had defaulted.
He did so under three heads: (i) damage to his financial credit, (ii) loss from interest
charges caused by his inability to exploit offers of 0% credit and (iii) loss of a capital gain caused by his inability to put down a 30% deposit on a Spanish property in 2003 [8].
In March 2008, the sheriff held that section 75 of the 1974 Act meant that Mr Durkin had been entitled to rescind and had rescinded the sale contract and the credit agreement.
He awarded 8,000 for injury to credit, 6,880 for additional interest Mr Durkin had to pay, and 101,794 for the loss in respect of the Spanish property [9].
In June 2010 Mr Durkins appeal against the sheriffs assessment of damages was refused by the First Division of the Inner House of the Court of Session and HFC successfully cross appealed the findings that section 75 allowed him to rescind the credit agreement and that it had breached its duty of care.
The First Division also held that the evidence did not entitle the sheriff to find that a breach of duty by HFC had caused the alleged interest charges and Spanish property losses [10 11].
Lord Hodge delivers the unanimous judgment of the Court, allowing Mr Durkins appeal.
Lord Hodge finds that Mr Durkin was entitled to rescind the credit agreement and validly did so by giving notice to HFC in about February 1999 [27].
He sets out the legal framework, explaining that the agreement was a regulated consumer credit agreement and a debtor creditor supplier agreement under the 1974 Act [13 17].
The key provision is section 75(1), which provides that if the debtor under a debtor creditor supplier agreement has, in relation to a transaction financed by the agreement, any claim against the supplier in respect of a misrepresentation or breach of contract, he shall have a like claim against the creditor, who, with the supplier, shall accordingly be jointly and severally liable to the debtor [18].
Lord Hodge explains that the purpose of the restricted use credit agreement is to finance a transaction between the consumer and the supplier.
Where, as here, the contract is tied to a particular transaction, it has no other purpose [22 23].
The rescission of the supply agreement excuses the innocent party from further performance of any obligations he has under it [24].
It is inherent in a debtor creditor supplier agreement under the 1974 Act, which is also tied into a specific supply transaction, that if the supply transaction it financed is brought to an end by the suppliers repudiatory breach of contract, the debtor must repay the borrowed funds recovered from the supplier.
In order to reflect that reality, the law implies a term into such a credit agreement that it is conditional upon the survival of the supply agreement.
The debtor on rejecting the goods and thereby rescinding the supply agreement for breach of contract may also rescind the credit agreement by invoking this condition [26].
Knowing of Mr Durkins assertion that the credit agreement had been rescinded, HFC was under a delictual duty to investigate that assertion in order reasonably to satisfy itself that the credit agreement remained enforceable before reporting to the credit reference agencies that he was in default.
HFC made no such enquiries, accepting without question DSGs position that Mr Durkin had not been entitled to rescind the contract of sale [29 33].
HFC did not contest the award of 8,000 for damage to credit if breach of duty were established.
However, the Supreme Court rejects Mr Durkins attempt to restore the sheriffs award of damages for the extra interest he paid and for the loss of the capital gain on the Spanish property.
Appeals like the present may only be made on matters of law, meaning the Supreme Court cannot go behind the First Divisions findings of fact on these alleged heads of loss [36 39].
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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.
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These appeals raise questions about the availability of cross border relief and the method of quantifying such relief.
For the purposes of corporation tax, Marks and Spencer plc (M&S) claim 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 & Spencer (Belgium) NV (MSB), which was resident in Belgium.
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 were 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 claims were originally made and refused by HMRC over ten years ago.
M&Ss basic contention underlying all these claims was that the provisions in UK legislation were contrary to Article 43 EC (now Article 49 TFEU) on the freedom of establishment and were therefore unlawful.
The ECJ gave a preliminary ruling holding 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.
This case was last before the Supreme Court on 22 May 2013 when Lord Hope gave judgment on the first of five issues.
The Court held that that the correct date to identify the circumstances in which it would be unlawful to preclude cross border relief for losses (the no possibilities test) was the date of the claim, not the end of the accounting period.
As a consequence, one of the issues (issue 3) did not need to be answered.
That left three issues: Issue 2: Can sequential/cumulative claims be made by M&S for the same losses in respect of the same accounting period? Issue 4: 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? Issue 5: What is the correct method of calculating the losses available to be transferred?
The courts below did not analyse the issues in quite that order, but they held, in essence, that the answer to issue two was yes: M&S were in principle entitled to make sequential/consequential claims in respect of the same accounting period.
As to issue 4, part of which was treated as part of issue 2, they held that both the principle of effectiveness and the principle of certainty did allow M&S to make fresh pay and file claims provided that they were not time barred.
However they held that such claims were time barred.
As to issue 5, they preferred the method of calculation advanced by M&S to that of the HMRC.
M&S appealed to this court on the time bar point, whereas the HMRC appealed on the issues on which they had lost.
The Supreme Court unanimously dismisses all the appeals.
Lord Clarke gives the lead judgment, with which Lord Neuberger, Lord Mance, Lord Reed and Lord Carnwath agree.
As a matter of domestic law, there is no support in the provisions in Part VIII of Schedule 18 to the Finance Act to support the conclusion that only one claim can be made.
On the contrary, the provisions contemplate that successive claims can be made [24].
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 [27].
The legislation must also be construed so as to ensure that European Community law rights are effective in the sense that they are not practically impossible or excessively difficult to exercise and so as to ensure that the statutory code provides an effective remedy [28].
The taxpayer is entitled to advance claims for cross border relief provided that it is in time to do so [36].
The principle of effectiveness is concerned with giving effect to European 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 [45].
The relevant jurisprudence establishes that a member state may impose a reasonable time limit in the interests of legal certainty [46].
The relevant pay and file claims are now time barred [48].
The correct method for calculating the losses available to be surrendered is the one contended for by M&S [49].
It 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 [50].
It does not give the parent company 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 [52].
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This appeal concerns the rights of so called Zambrano carers and their children to financial support from the state.
That expression is derived from the decision of the Court of Justice of the European Union dated 8 March 2011, in Ruiz Zambrano v Office national de lemploi (Case C 34/09) [2012] QB 265.
The case concerned a Colombian who had been living in Belgium with his wife, and working (and paying social security contributions), but without a right to reside.
Their three children, born between 2003 and 2005, acquired Belgian nationality at birth, and with it European citizenship and the right of free movement, under article 20 of the Treaty on the Functioning of the European Union (TFEU).
When in 2005 he lost his job, he was refused unemployment benefit, because under the relevant national law that depended on his having a right to reside.
The European court held that the refusal of such a right was unlawful because it would result in the children being deprived of effective enjoyment of their rights as European citizens.
The present appeal arises from a challenge to the legality of amendment regulations introduced in this country in November 2012 in response to the Zambrano decision.
They were designed to limit the rights of Zambrano carers to claim certain categories of non contributory social security assistance to which those habitually resident would otherwise be entitled: more specifically, income related benefits, child benefit and child tax credit, and housing and homelessness assistance.
The amendment regulations in question are: i) The Social Security (Habitual Residence) (Amendment) Regulations 2012 (SI 2012/2587), amending the Income Support (General) Regulations 1987 (SI 1987/1967). ii) The Child Benefit and Child Tax Credit (Miscellaneous Amendments) Regulations 2012 (SI 2012/2612), amending the Child Benefit (General) Regulations 2006 (SI 2006/223). iii) The Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) Regulations 2012 (SI 2012/2588), amending the Allocation of Housing and Homelessness (Eligibility) (England) Regulations 2006 (SI 2006/1294).
The effect of the amendment in each case is to add to the relevant list of exclusions from qualifying rights of residence, a right to reside existing by virtue of TFEU article 20, where that right arises because a British citizen would otherwise be deprived of the genuine enjoyment of the substance of their rights as a European Union citizen.
The Secretary of States evidence (in a statement by Gareth Cooper, Policy Adviser) refers to the Explanatory Memorandum to the amendment regulations.
This explained the purpose as being to maintain the existing policy that non European Economic Area (EEA) nationals are not entitled to claim income related benefits, following the ruling in the Zambrano case.
Mr Cooper (para 8) quotes it as follows: the Home Office are amending their regulations to provide a right to reside and a right to work to a non EEA national who is a primary carer of a dependent British citizen only if the British citizen would otherwise be forced to leave the UK and be deprived of exercising their rights as an EU citizen.
If the social security regulations are not amended such persons would become entitled to income related benefits.
The amendments had been subject to consultation with local authority associations and the Social Security Advisory Committee, and had attracted no objection or substantive comment.
According to Mr Cooper it had been estimated by the Home Office that there would initially be some 700 people a year qualifying for Zambrano rights, giving rise to a potential annual cost of between 3.8m and 9.4m in respect of income support, housing benefit and council tax benefit together.
Mr Cooper does not indicate what consideration, if any, had been given to how children of workless Zambrano carers were to be supported, if not entitled to such assistance.
The facts relevant to the present appellant, Mrs HC, can be shortly stated.
She is an Algerian national who has been living in this country since 2008, having arrived with leave but over stayed.
In 2010 she married a British national on whom she was financially dependent.
She has two children by him, born in August 2011 and March 2013.
Her relationship with him ended after domestic violence in late 2012, when she sought help from the Oldham City Council, in whose area she was then living.
After an initial refusal, the council agreed to provide temporary housing and financial support under section 17 of the Children Act 1989.
Separate judicial review proceedings against the council resulted in an interim order by His Honour Judge Pelling QC, under which she and her children were accommodated by the council in two bedroom accommodation and given 80.50 per week to cover subsistence and utility costs.
Those proceedings were later stayed by consent on the councils agreement to carry out a further assessment of their needs, and to continue the support in the meantime.
It is now common ground (following a decision of the First tier Tribunal in April 2014) that she is entitled to reside in the UK as a Zambrano carer.
It is also not in dispute that that entitlement, taken with the financial support provided by the council, provides not only the legal right, but also the practical support, necessary to protect the children against being obliged to leave the territory of the European Union while under her care.
Her case (para 36 of her second witness statement) is that this is not enough: As I cannot go back to Algeria and have no right to live in any other country my only option is to remain here, where at least I have the protection of a prohibited steps order and the British courts.
Also my children are British.
This is their home country and the only place they know.
They are entitled to grow up here and, I pray, to enjoy the same benefits and opportunities of growing up in Britain that other British children have.
At present when I see how they must live compared to their British cousins and step siblings I know that they do not in practice have the same rights.
We are expected to make do with far less, the bare minimum, only enough to survive.
In legal terms, Mr Drabble QC on her behalf submits that it was not legally possible for the amendment regulations to deny a Zambrano carer and her child mainstream welfare and housing provision, without contravening what he calls the fundamental principle of equal treatment that is part of EU law, as embodied in article 21 of the EU Charter of Fundamental Rights (the Charter).
As a fall back position he relies also on article 14 of the European Convention on Human Rights (the Convention).
Against this background, the following issues arise: i) The Zambrano principle.
Does the principle require from the state more for the children and their Zambrano carer than bare protection (legal and practical) against being obliged in practice to leave the territory of the Union? ii) Discrimination: a) In so far as the regulations placed limits on the benefits available to Zambrano carers was the UK implementing Union law (within the meaning of article 51 of the EU Charter), so as to bring the Charter into play? If so, did those limits involve unjustified discrimination on grounds prohibited by article 21 of the Charter? b) Alternatively, did involve unjustified those discrimination contrary to article 14 of the Convention, taken with article 8 (right to respect for private and family life) or article 1 of the First Protocol (right to property)?
limits
The Zambrano principle
I start from the formulation of the principle by the European court in Zambrano itself.
Having described citizenship of the European Union as the fundamental status of nationals of the member state, the court said: 42.
In those circumstances, article 20 TFEU precludes national measures which have the effect of depriving citizens of the European Union of the genuine enjoyment of the substance of the rights conferred by virtue of their status as citizens of the European Union 43.
A refusal to grant a right of residence to a third country national with dependent minor children in the member state where those children are nationals and reside, and also a refusal to grant such a person a work permit, has such an effect. 44.
It must be assumed that such a refusal would lead to a situation where those children, citizens of the European Union, would have to leave the territory of the European Union in order to accompany their parents.
Similarly, if a work permit were not granted to such a person, he would risk not having sufficient resources to provide for himself and his family, which would also result in the children, citizens of the Union, having to leave the territory of the European Union.
In those circumstances, those citizens of the European Union would, as a result, be unable to exercise the substance of the rights conferred on them by virtue of their status as citizens of the Union. 45.
Accordingly, the answer to the questions referred is that article 20 TFEU is to be interpreted as meaning that it precludes a member state from refusing a third country national 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 third country national, 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. (emphasis added)
It is clear (particularly from the passages highlighted in para 44) that the reasoning of the court turned specifically and solely on the risk of being obliged to leave the territory of the Union.
There was no issue as to the nature of financial support (if any) required, nor as to the extent of any right to benefits otherwise available to nationals.
Once the right of residence, and with it the right to work, were established, the entitlement to and the amount of unemployment benefit followed as a matter of Belgian law.
Indeed Advocate General Sharpston had dismissed arguments that there might be an unreasonable burden on public finances, pointing out that Mr Zambrano had worked full time for nearly five years, paid social security contributions, and thus contributed steadily and regularly to the public finances of the host member state (Opinion paras 118 120).
Mr Drabble rightly does not suggest that in itself the judgment throws any light on the right to non contributory benefits.
The same emphasis is found in the next significant case: Dereci v Bundesministerium fr Inneres (Case C 256/11) [2012] 1 CMLR 45.
Mr Dereci, a Turkish national, had entered Austria illegally.
He had married an Austrian woman and had three children who were EU citizens.
He applied for a residence permit, but this was refused by the national authorities because the EU citizens concerned had not exercised their right of freedom of movement.
The European court accepted that, in the light of its decision in Zambrano, the situation of Union citizens who have not made use of their freedom of movement could not for that reason alone, be assimilated to a purely internal situation (para 61).
Having summarised the decision in that case, the court said: 66.
It follows that the criterion relating to the denial of the genuine enjoyment of the substance of the rights conferred by virtue of EU citizen status 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. 67.
That criterion is specific in character inasmuch as it relates to situations in which, although subordinate legislation on the right of residence of third country nationals is not applicable, a right of residence may not, exceptionally, be refused to a third country national, who is a family member of a member state national, as the effectiveness of Union citizenship enjoyed by that national would otherwise be undermined. 68.
Consequently, the mere fact that it might appear desirable to a national of a member state, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a member state to be able to reside with him in the territory of the Union, is not sufficient in itself to support the view that the Union citizen will be forced to leave Union territory if such a right is not granted. 69.
That finding is, admittedly, without prejudice to the question whether, on the basis of other criteria, inter alia, by virtue of the right to the protection of family life, a right of residence cannot be refused.
However, that question must be tackled in the framework of the provisions on the protection of fundamental rights which are applicable in each case.
That passage indicates both the exceptional nature of the Zambrano right (para 67); and that it is triggered not by the mere desirability of keeping the family together, on economic or other grounds, but solely by the threat of being forced to leave Union territory if the right were not granted (para 68).
Subsequent authorities are to the same effect.
We have been referred to no European court authority which extends Zambrano rights to include non contributory benefits of the kind in issue in the present appeal.
A more recent example, on which Mr Drabble relies, is Rendn Marin v Administracin del Estado (Judgment: Citizenship of the Union) [2016] EUECJ C 165/14; [2017] QB 495, where the court described this line of cases as having the common feature that, although they are governed by legislation which falls, a priori, within the competence of the member states, namely legislation on the right of entry and residence of third country nationals outside the scope of provisions of secondary legislation which provide for the grant of such a right under certain conditions, they nonetheless have an intrinsic connection with the freedom of movement and residence of a Union citizen, which prevents the right of entry and residence being refused to those nationals in the member state of residence of that citizen, in order not to interfere with that freedom. (para 75)
Mr Drabble asks us to note that the national (Spanish) court, in making the reference, had referred to its possible relevance to social benefits under domestic law (para 30).
However, there is nothing in the European courts treatment of the case itself to suggest that the scope of EU law for these purposes extended beyond protection against being obliged to leave.
Thus it was left for the national court to determine whether the refusal to grant residence to the father would mean that he had to leave the territory of the European Union with the result that the children could be compelled to go with him, and therefore to leave the territory of the European Union as a whole (para 78).
In R (Agyarko) v Secretary of State for the Home Department [2017] UKSC 11; [2017] 1 WLR 823, paras 62 63, in a judgment agreed by the other members of the Supreme Court, Lord Reed referred to this line of cases and emphasised the specific and derivative nature of the rights so conferred.
He cited a passage from the judgment of the European court in S v Secretary of State for the Home Department (Case C 304/14) [2017] QB 558; [2017] 2 WLR 180, para 29, holding that there are very specific situations in which, despite the fact that the secondary law on the right of residence of third country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third country national who is a family member of his since the effectiveness of citizenship of the Union 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 European Union as a whole, thus denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status. (emphasis added)
The emphasised words in that citation are critical in defining the limited scope of the right.
On this issue I agree entirely with the analysis of Elias LJ (Harrison (Jamaica) v Secretary of State for the Home Department [2012] EWCA Civ 1736; [2013] 2 CMLR 23, paras 63 70).
As he said: The right of residence is a right to reside in the territory of the EU.
It is not a right to any particular quality of life or to any particular standard of living.
Accordingly, there is no impediment to exercising the right to reside if residence remains possible as a matter of substance, albeit that the quality of life is diminished (para 67)
Baumbast and related cases
It is convenient at this point to address Mr Drabbles argument based on a line of cases beginning with Baumbast v Secretary of State for the Home Department (Case C 413/99) [2002] ECR I 7091, followed in Ibrahim v Harrow London Borough Council and Teixeira v Lambeth Borough Council (Joined Cases C 310/08 and C 480/08) (both reported at [2010] ICR 1118).
These were concerned directly with a quite different issue: the interpretation of EU Regulation 1612/68, on freedom of movement for workers.
Article 12 provided that children of a national of a member state employed in the territory of another member state should be admitted to that states general educational courses under the same conditions as the nationals of that state, if such children are residing in its territory.
In Bambaust itself there was an issue whether the childrens rights of residence under the article continued after a change in the position of the parents in the state concerned.
It was held that the children retained their right under article 12 to reside for the purpose of attending educational courses, notwithstanding the facts that the parents had divorced, that the only Union citizen parent had ceased to be a migrant worker in the state concerned, and that the children were not themselves citizens of the Union (para 63).
It was held further that the parent who was the primary carer, irrespective of nationality, must be permitted to reside with them in order to facilitate the exercise of their right.
Mr Drabble relies in particular on the application of that principle in the second case, Ibrahim.
That concerned a Somali national who entered with leave to join her Danish husband, who was at the time working here; their children began to attend school shortly after her arrival.
They later separated, and the husband had ceased working here, and she was wholly dependent on social assistance.
The question arose whether she had a right of residence derived from her childrens rights under article 12, or whether that was subject to the conditions laid down in the Citizenship Directive (2004/38), including that of sufficient resources.
On a reference from the Court of Appeal, the CJEU held that the rights of both children and their primary carers were derived from article 12, and were not as such subject to any such conditions (under the Citizenship Directive or otherwise) (paras 50 59).
Mr Drabble relies on this as showing that once the right of residence is established it was not necessary to show a positive right to claim social assistance.
In the words of his case (para 4.34): The whole approach proceeds on the basis that if there is a right of residence which arises even if the individuals concerned are not self sufficient, the individuals who are exercising the rights derived from EU law will be able to claim the same benefits as nationals of the host state.
By the same token, he submits, in the absence of any self sufficiency condition or other limitation, the residence rights of Zambrano carers should be treated as giving rise to the same benefits as those of other categories of resident.
He adopts a passage from an article by Dr Charlotte OBrien Hand to mouth citizenship: decision time for the UK Supreme Court on the substance of Zambrano rights, EU citizenship and equal treatment: [2016] 38(2) JSWFL 228 at p 234: The CJEU [in Zambrano] created an EU citizenship based right to reside, which necessarily triggers a right to equal treatment under EU law.
Nowhere did the CJEU suggest that those exercising that right were not intended to really have that kind of right.
Given that the Zambrano case was a benefits case, it seems only fair to suppose that had the CJEU wished to invent a new equal treatment free right to reside, that is something they might have mentioned.
We have been here before, and should have learnt from past experience.
Following Baumbast UK authorities were adamant that Baumbast only applied to the self sufficient (ie the well off), even though the CJEU had not said so, and in spite of the incongruity with the case law.
According to the UK the right to reside did not entail equal treatment.
The Court of Appeal, while making the reference in Ibrahim [2008] EWCA Civ 386 was inclined to agree, expressing scepticism about the idea that they shouldnt read a self sufficiency condition into Baumbast (55).
However, the CJEU in Ibrahim . made clear that there was no basis for a condition of self sufficiency in the legislation in question (52), or in the case law (53) and specifically pointed out that the ruling in Baumbast had not
been based on a finding of self sufficiency
I have two difficulties with the comparison so made with this line of cases.
In the first place, the domestic law context was quite different.
As the court noted in Ibrahim (para 14), entitlement under the national legislation turned on whether she had a right of residence conferred by EU law, but was otherwise unlimited.
The issue was whether it was implicitly subject to a self sufficiency condition derived from EU law.
No such issue arises here.
The limitations are derived from the domestic legislation, and the only issue is their compatibility with EU law.
Secondly, the proposition that the right of residence created in Zambrano necessarily triggers a right to equal treatment under EU law begs one of the principal issues raised by the present appeal a question to which I now turn.
Discrimination under the Charter
Although Mr Drabble has referred to what he calls the fundamental principle of equal treatment that is part of EU law, his submissions (rightly in my view) are not based on any such general principle.
They are directed specifically to article 21 of the Charter, as applied by article 51, rather than any more general principle.
At an earlier oral permission hearing of this case permission was refused for a separate ground of appeal based on article 18 of the Treaty, which prohibits discrimination on the grounds of nationality.
That can have no application to a third country national, such as Mrs HC.
As Lady Hale has said (Patmalniece v Secretary of State for Work and Pensions [2011] 1 WLR 783, para 83): This [article 18] is not a general prohibition of discrimination on grounds of nationality.
Only the nationals of member states are protected.
Discrimination against third country nationals is not prohibited.
Indeed it is positively expected.
The underlying purpose is to promote the objects of the Union and in particular the free movement of workers between the member states and the free establishment of businesses within them.
Under the Charter, the starting point is article 51, by which the principles of the Charter apply to member states only when they are implementing Union Law.
Mr Drabble submits that for this purpose it is sufficient that the Zambrano principle brings the carer and child within the scope of the EU treaties ratione personae (adopting the language of the CJEU in Martnez Sala v Freistaat Bayern (Case C 85/96), [1998] ECR I 2691).
Alternatively, in setting the support to be provided to Zambrano carers, and in choosing between section 17 support and mainstream welfare benefits, the Secretary of State was choosing between different modes of implementing EU law, or (as Mr Banner puts it, for the AIRE Centre, as intervener) regulating the entitlement to financial assistance under EU law.
Mr Coppel, for the Secretary of State, rejects that approach.
It is not enough to say that Mrs HC is personally (ratione personae) within the scope of the Treaty by virtue of her derivative right of residence.
Sala was directed specifically to the rights of EU citizens (see judgment paras 62 63), and was not in any event concerned with the application of the Charter.
Nor is it enough that the national law is related in some way to EU law.
There must be a direct link between the act in question and the implementation of that law.
This is illustrated by reference to Ymeraga v Ministre du Travail, de lEmploi et de lImmigration (Case C 87/12) [2013] 3 CMLR 33.
That concerned the refusal by the Luxembourg government, under a national law on freedom of movement, to grant a right of residence to family members of the first applicant (Mr Y).
One issue concerned the application of the Charter to the law in question.
The court considered whether the refusal was a situation involving the implementation of European Union law within the meaning of article 51.
For that purpose it must be ascertained among other things whether the national legislation at issue is intended to implement a provision of EU law, what the character of that legislation is, and whether it pursues objectives other than those covered by EU law, even if it is capable of indirectly affecting that law, and also whether there are specific rules of EU law on the matter or capable of affecting it (para 41) The court accepted that the national law on freedom of movement was indeed intended to implement EU law, but that was not enough.
The situation of the applicants was not governed by either of the EU directives relied on, nor did the refusal of a right of residence to Mr Ys family members have the effect of denying him the genuine enjoyment of the substance of the rights conferred by virtue of his status as citizen of the Union.
Accordingly the refusal did not involve the implementation of European Union law, and accordingly the Charter had no application (paras 41 43).
Mr Coppel relies particularly on Dano v Jobcenter Leipzig (Case C 333/13) [2015] 1 WLR 2519 (Dano), as showing that decisions about the level of non contributory benefits, absent any specific requirement or condition of EU law, are not within the scope of the Charter.
In that case a Romanian mother had been living in Germany with her son, where she was looking for work.
Her application for benefits as a job seeker was refused because national law excluded such benefits for foreign nationals whose right of residence arose solely out of the search for employment.
This was challenged as breaching their right to equal treatment under Parliament and Council Regulation No 883/2004 (which categorised such benefits as special non contributory cash benefits), article 4 of which provided that Union citizens residing in another member state should enjoy the same benefits as nationals of the host member state.
It was held by the CJEU (in summary) that, although the benefits in question fell within the scope of article 4, they were linked to the right of residence under the Citizenship Directive and could be limited by reference to its conditions.
A fourth question related to the application of certain provisions of the Charter.
The court referred to article 51, and to article 6(1) of the EU Treaty, by which the provisions of the Charter are not to extend the competences of the EU as defined in the Treaties (paras 87 88).
It noted that the relevant regulation did not lay down conditions for the rights in question; it was therefore for the legislature of each state to lay down those conditions (para 89).
It concluded: 91.
Consequently, when the member states lay down the conditions for the grant of special non contributory cash benefits and the extent of such benefits, they are not implementing EU law.
In my view Mr Coppels approach is correct.
The test is not whether Mrs HC is personally within the scope of EU law in some way.
The issue must be judged by reference to the test set by article 51, which is directed to implementation of EU law.
Once it is determined that EU law does not require more for the children of a Zambrano carer than practical support sufficient to avoid their being obliged to leave the Union, that also sets the limits of what is involved in its implementation.
Although it is open to the state to provide more generous support (gold plating, as it is sometimes called), that is the exercise of a choice under national law, not EU law.
To describe this as regulating the financial assistance given to the EU carer does not alter that fact.
Just as Mr Ymeraga could not rely on the Charter to extend the derivative rights otherwise available to his family members, so Mrs HC cannot rely on it to give her any entitlement to financial assistance beyond the limited support required by the Zambrano principle itself.
The point does not bear of much elaboration, but the conclusion is sufficient to dispose of this issue in favour of the Secretary of State.
It is unnecessary therefore to consider the interesting questions which would have arisen under article 21, had the Charter been held to apply.
Discrimination under the Convention
I can deal relatively briefly with this issue, which was not developed in any great detail by Mr Drabble, other than by repetition of the arguments advanced in respect of article 21 of the Charter.
In short, he submits that the amendment regulations have an impact within the ambit of article 8, or article 1 of the First Protocol, and that accordingly there is right under article 14 not to be discriminated against without reasonable justification.
It is unnecessary for present purposes to enter into the continuing debate about the application to benefits of this kind of article 8, as opposed to article 1 of the First Protocol) (see per Collins J R (DA) v Secretary of State for Work and Pensions [2017] EWHC 1446 (Admin), paras 39 40).
I am prepared to proceed on the basis that the case falls within the ambit of convention rights so as potentially to engage article 14.
That article 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 status on which Mr Drabble relies, as I understand his submission, is either immigration status, or, more narrowly, the status of Zambrano carer and child.
I do not think that either can assist him under article 14.
Discrimination on the basis of immigration status is of course a fundamental and accepted part of both EU and national law, but cannot in itself give rise to an issue under article 14.
In so far as Mrs HCs differential treatment arises from her status as a third country national, she can have no complaint.
So far as concerns her Zambrano status, that is a creation of European law, and such differences of treatment as there are, as compared to other categories of resident, do no more than reflect the law by which the status is created.
In any event, the Strasbourg court has long accepted that the allocation of limited public funds in the social security and welfare context is pre eminently a matter for national authorities, subject only to the requirement that their decisions should not be manifestly without reasonable foundation (see R (MA) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2016] 1 WLR 4550, para 32 per Lord Toulson).
The governments reasons for not providing support to Zambrano carers, as explained in the evidence of Mr Gareth Cooper, included the objectives of reducing costs by allocating benefits to those with the greatest connection with this country, of encouraging immigrants here unlawfully to regularise their stay, of encouraging TCNs wishing to have children here to ensure that they had sufficient resources to support themselves and their children, and of reducing benefits tourism.
Like Arden LJ in the Court of Appeal (para 96) in spite of criticisms made by Mr Drabble, I find it impossible to say that these objectives fall outside the wide margin of discretion allowed to national governments in this field.
Section 17
As I have said, no issue arises in this appeal as to the scope of the local authoritys duties under section 17 of the Children Act 1989, and we have heard no argument upon them.
However, it has emerged as an important aspect of the governments response to Zambrano principle, which may not have been anticipated at the time that the amending regulations were being prepared.
There is no indication that it was the subject of discussion between central and local government at that time.
Mr Cooper does no more than refer to the actions taken by the Oldham Borough Council, as the responsible local authority under that Act.
He does not suggest that section 17 formed any part of the governments thinking when preparing the regulations, or of any impact assessment then carried out.
Nor have we heard any submissions from the Oldham Borough Council itself.
However some brief comment may be appropriate.
Section 17(1) imposes a general duty on local authorities: to safeguard and promote the welfare of children within so far as is consistent with that duty, to promote the (a) their area who are in need; and (b) upbringing of such children by their families, by providing a range and level of services appropriate to those childrens needs.
The services so provided may include providing accommodation and giving assistance in kind or in cash (section 17(6)).
A child is taken to be in need for this purpose if (inter alia) he is unlikely to achieve or maintain, or to have the opportunity of achieving or maintaining, a reasonable standard of health or development without the provision for him of services by a local authority under this Part. (section 17(10)) More detailed provision as to how that duty is to be carried out is contained in Schedule 2 to the Act.
Also relevant is section 11 of the Children Act 2004, which requires local authorities to make arrangements to ensure that their functions are discharged having regard to the need to safeguard and promote the welfare of children (section 11(2)(a)); and in so doing to have regard to any guidance given to them for the purpose by the Secretary of State (section 11(4)).
The scope of the section 17 duty was considered by the Court of Appeal in R (C) v London Borough of Southwark [2016] EWCA Civ 707; [2016] HLR 36.
That case concerned assistance provided to children of a Nigerian mother following the refusal of leave to remain, and pending their return to Nigeria.
The court rejected, on the evidence, a claim that the authority had applied an unlawful policy of setting financial support by reference to levels of child benefit, or to amounts paid by the Secretary of State to asylum seekers, rather than by way of assessing their actual needs.
In the leading judgment Ryder LJ described the duty in these terms: 12.
It is settled law that the section 17 scheme does not create a specific or mandatory duty owed to an individual child.
It is a target duty which creates a discretion in a local authority to make a decision to meet an individual child's assessed need.
The decision may be influenced by factors other than the individual childs welfare and may include the resources of the local authority, other provision that has been made for the child and the needs of other children Accordingly, although the adequacy of an assessment or the lawfulness of a decision may be the subject of a challenge to the exercise of a local authoritys functions under section 17, it is not for the court to substitute its judgment for that of the local authority on the questions whether a child is in need and, if so, what that child's needs are, nor can the court dictate how the assessment is to be undertaken 14.
A local authority that provides support for children in need under the 1989 Act is acting under its powers as a childrens services authority (a local social services authority with responsibility for children) not as a local social services authority performing functions relating to homelessness and its prevention, and not as a local housing authority.
The limited nature of the local authority's power is important.
The local authority appropriately remind this court of the statement of principle in this regard which is to be found in R (Blackburn Smith) v London Borough of Lambeth [2007] EWHC 767 (Admin) at para 36 per Dobbs J: the defendants powers [under section 17] were never intended to enable it to act as an alternative welfare agency in circumstances where Parliament had determined that the claimant should be excluded from mainstream benefits.
As that judgment makes clear, section 17 is designed to cover a wide range of circumstances in which a local authority may need to take action to protect the interests of children in their area, temporary (as in that case) or more long lasting.
The duty arising in the present context is perhaps unusual in that arises from a responsibility imposed by EU law on member states.
It is also likely to continue so long as no other sources of support are available to the child.
On the view I have taken the allocation of responsibility for that support, as between central and local government, is an issue of national rather than EU law.
However, that does nothing to diminish the importance of the duty.
It must always be remembered that the primary objective is to promote the welfare of the children concerned, including the upbringing of such children by their families.
The assessment of need must remain the responsibility of the local authority (as Ryder LJ made clear), but, given that this is a national responsibility, it is clearly desirable that there should be a degree of consistency as between authorities.
The legislation allows for the provision of national guidance.
Judicial review is available as a backstop, but it is likely to be unsatisfactory for the levels of appropriate support to be left for determination by the individual authorities on a case by case basis, subject only to control by the courts by reference to conventional Wednesbury principles.
On this aspect I agree also with the observations of Lady Hale at paras 43 46 of her judgment.
Conclusion
For the reasons given above, which are substantially the same as those of the Court of Appeal, I would dismiss the appeal.
LADY HALE:
I have found this a very troubling case.
It is not a case about adults rights.
It is a case about childrens rights specifically the right of these two very young British children to remain living in their own country and to have the support which they need in order to enable them to do so.
Self evidently they need the support of their mother in the shape of the care which she is able to give them.
But they also need support in the shape of a place to live and enough to live on.
Yet this is not the way in which the policy makers who framed the various Regulations which are under attack in these proceedings saw the matter.
They saw it solely in terms of the mother and other Zambrano carers like her, as third country nationals who should be put in the same position as any other third country national.
Third country nationals are not, in general, entitled to income related benefits; and so (as Mr Gareth Cooper explains) the Department for Work and Pensions extended this rule to Zambrano carers.
Third country nationals are only entitled to be allocated social housing or given homelessness assistance if this accords with the Governments immigration and asylum policy, broadly only if they have leave to enter or remain without a condition that they have no recourse to public funds; and so (as Ms Frances Walker explains) the Department for Communities and Local Government excluded Zambrano carers from eligibility.
Third country nationals are only entitled to child benefit and child tax credits in broadly the same circumstances; and so (as Mr Phillip Dearne explains) Her Majestys Revenue and Customs excluded them from eligibility.
Yet Zambrano carers are not like any other third country nationals.
They have British (or other EU citizen) children dependent upon them.
That is why, because of the Zambrano decision, the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) had to be amended to give them the right to live and work here.
There is not a hint in the evidence which we have seen that any consideration was given to how these children would be supported if the parent looking after them was unable to work, whether because of the demands of child care or for any other good reason.
We are told that the Department of Work and Pensions consulted the local government associations about the exclusion from benefits and the associations made no objection.
We do not know whether it had occurred either to central or to local government that (unless there was family or charitable support) the only way in which these children could escape destitution was through the powers of local childrens services authorities under section 17 of the Children Act 1989.
If that had been made clear, one imagines that the local government associations might well have expressed some concern about the transfer of this responsibility to them without some corresponding transfer of the considerable sums entailed in discharging this responsibility properly.
Section 17 empowers and obliges local authorities to provide a range of services to safeguard and promote the welfare of children in need and, so far as is consistent with that duty, to promote their upbringing by their families.
It is a development of a duty dating back to the Children and Young Persons Act 1963 to provide families with help in order to avoid the need for children to be taken into care or looked after by the local authority.
It was not intended to be a long term substitute for social housing or means tested benefits.
Fortunately, however, section 17(6) provides that The services provided by a local authority in the exercise of functions conferred on them by this section may include providing accommodation and giving assistance in kind or in cash.
As originally enacted, cash could only be provided in exceptional circumstances, but those words were repealed in 2011, under powers granted by the Children and Young Persons Act 2008.
Section 17 services have the great merit of flexibility.
They can be adjusted to the needs of the particular child or family.
They may well be in addition to the benefits and services to which the family are entitled under other legislation and thus may provide assistance at a higher level than that.
But they have several disadvantages when compared with the benefits and services from which these children and their carers are excluded.
First, they depend upon the local authority considering that the child is in need as defined in section 17(10) and (11) (see para 34).
This is a judgment to be made by the local authority subject only to judicial review on the usual principles.
Second, they are discretionary and not as of right to those who qualify.
Indeed, it has been held that (unlike the duty to accommodate a child in section 20 of the 1989 Act) the section 17 duty is a target duty rather than a duty owed to any individual child.
Third, there are no standard rates for assistance in cash, as there are with state benefits generally, with the consequent risk of inconsistency between authorities.
Fourth, providing assistance in cash does not automatically bring with it entitlement to other assistance, such as free school meals, to which receipt of certain benefits is a passport.
Fifth, the only way in which a family can seek to challenge the local authoritys decision is through judicial review, which is far more limited in scope and accessibility than an appeal to the social entitlement chamber of the First tier Tribunal.
Thus, according to the mothers evidence, when she approached the local authority for the area where she was living with her husband, she was given her train fare to travel north to the area where her sister and family were living.
This is a typical use of section 17 money.
When she approached the local authority for that area, because her sister could not house and feed her and her child and her expected second child indefinitely, she was at first refused.
But eventually she was offered one room in a local hotel and 45 per week in cash.
That is how things stood when these proceedings were launched in July 2013.
The local authority then reassessed the childrens needs and (through their Head of Safeguarding, Mr Saul Ainsworth) offered them two bedroomed accommodation of the sort which would be offered to a family who may be eligible for homeless accommodation and in effect to discharge her council tax liability; 55 a week for subsistence, based on the UK Border Agencys figures for the amount needed to meet the needs of one adult and two children under three (as they then were); and 25.50 a week for gas, electricity and water, based on local inquiries.
The annual cost of this package was estimated at 11,368.76, while the local authoritys annual budget for section 17 support was 12,000 (which is an indication that it is not expected to be used to provide long term income support).
It was on that basis that, on 1 August 2013, the proceedings against the local authority were stayed while the proceedings against the Department of Work and Pensions, the Department for Communities and Local Government and Her Majestys Revenue and Customs, challenging the various regulations, continued.
We are told that that is still the position today, although of course the local authority may carry out a further review of the childrens needs, especially as they are older now, and will no doubt have to do so if these proceedings are concluded in the Governments favour.
In carrying out that review, the local authority will no doubt bear in mind, not only their duties under section 17, but also their duty under section 11 of the Children Act 2004, to discharge all their functions having regard to the need to safeguard and promote the welfare of children, and their duty, under section 175 of the Education Act 2002, to exercise their education functions with a view to safeguarding and promoting the welfare of children.
Safeguarding is not enough: their welfare has to be actively promoted.
The authority will no doubt take into account that these are British children, born and brought up here, who have the right to remain here all their lives; they cannot therefore be compared with asylum seeking children or the children of asylum seeking parents, who may end up with no or only a limited right to remain.
They will no doubt also wish to take into account the impact upon the proper development of these children of being denied a level of support equivalent to that of their peers, that is, the other British children around them whose families are dependent on income related benefits.
That level of support is not fixed at a level designed to lift children out of poverty, as officially defined, but at a level much closer to subsistence.
The above is, of course, premised on the dismissal of this appeal.
Zambrano and the later cases say nothing about entitlement to benefits, but they do recognise that the children are dependent upon their parents, not just for care, but also for financial support, at least if it is derived from the parents ability to work.
The situation of Zambrano carers and their children does not fall within the European Union legislation on access to social security and other welfare benefits.
All that Zambrano requires is that the children are not effectively deprived of their rights as European citizens by the situation in which they find themselves.
Section 17 support, at least if it is determined giving due weight to the factors suggested above, should be sufficient to ensure that they are not effectively deprived of their rights as British and European citizens.
So the questions of EU law which arise are, first, does the Charter of Fundamental Rights apply, and second, what difference, if any, would it make if it did? By article 51 of the Charter, its provisions are addressed to the member states only when they are implementing Union law.
The change to the 2006 Immigration Regulations, allowing Zambrano carers to live and work here, was of course implementing Union law.
But were the changes to the Regulations at issue here doing so? They were in consequence of a development in Union law, but they were not implementing it in fact, quite the reverse.
Supposing that there had been no fall back in the shape of section 17, this could well have been a failure to implement Union law, leaving these children and their carers without support in this country and thus effectively obliging them to leave.
But there is section 17, and in my view it is the administration of section 17 which could be said to be implementing Union law, by enabling these children to remain living in this country.
Assuming for the moment, without deciding, that the Charter can apply, not only to domestic legislation which implements Union law but also to domestic administration which does so, what difference would the Charter make in this context? Article 24(1) requires that Children shall have the right to such protection and care as is necessary for their well being; section 17 of the 1989 Act is designed as a way of doing this.
Article 24(2) requires that In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration.
This obligation is obviously derived from article 3(1) of the United Nations Convention on the Rights of the Child, as was the obligation in section 11 of the 2004 Act.
Properly understood, they should amount to the same thing.
By article 21(1) of the Charter, Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited.
The discrimination complained of here is between two types of British citizen child the child who is being cared for by a third country national with only Zambrano carers rights to be here, and the child who is being cared for by a parent (or anyone else) who is entitled to claim income related benefits, child benefit and child tax credit, and to seek social housing and homelessness assistance.
In general, of course, member states are entitled to draw distinctions between different categories of their own citizens, as long as these are not based on the listed personal characteristics.
But, at a stretch, it might just be possible to regard this as a ground such as those listed.
If that were so, I am not impressed by the justifications given by the respondents witnesses.
These were justifications for exclusion from mainstream benefits.
They were addressed to the parents, viewed as third country nationals rather than Zambrano carers, and not to the children.
A child focussed approach would have been quite different.
Thus the first aim, allocating benefits to those with the greatest connection with this country, would obviously include allocating benefits to British children who were born here and have lived here all their lives.
The second aim, of strengthening immigration control, is irrelevant to children who are not subject to it.
Their Zambrano carers are only here to support them and for a long as they need that support.
A third aim, of saving money, is less than compelling, given that what has in fact happened is a transfer of responsibility from one arm of government to another.
As we have seen, the sums involved for a local authority such as this one are not negligible.
But if there is a need to avoid discrimination against the children of Zambrano carers, this merely reinforces my view of what local authorities should be taking into account when making their decisions about the level of support to be provided under section 17.
Section 17 is one way of providing these children with what they need and deserve.
That fact that there are other, and in some respects preferable, ways of doing so does not mean that the United Kingdom is in breach of its obligations under EU law.
But no doubt local authorities would welcome some guidance on how they should meet their responsibilities to children with Zambrano carers (and even some help in doing so).
For these reasons, I agree that there is no question to be referred to the Court of Justice of the European Union and this appeal should be dismissed.
|
Mrs HC is an Algerian national who has been living in the UK since 2009.
She arrived with leave but then over stayed.
In 2010 she married a British national on whom she depended financially.
She had two children by him, in 2011 and 2013.
Her children are British nationals.
The relationship ended after domestic violence in late 2012, when Mrs HC sought help from her local authority.
Oldham City Council, after initially refusing, agreed to provide Mrs HC and her children with temporary housing and 80.50 per week for subsistence and utilities, under section 17 of the Children Act 1989.
It is common ground that Mrs HC is entitled to reside in the UK as the carer of her children, due to decision of the Court of Justice of the European Union (CJEU) in Zambrano v Office nationale de lemploi (Case C 34/09) [2012] QB 265.
In Zambrano the CJEU held that an EU member state could not take measures in respect of a non EU citizen who was the primary carer (a Zambrano carer) of an EU citizen, where those measures effectively deprive that dependent EU citizen of the genuine enjoyment of his or her rights under EU law.
In response to the Zambrano decision, the UK government introduced regulations which amended legislation to preclude Zambrano carers from claiming various income related benefits: (i) The Social Security (Habitual Residence) (Amendment) Regulations 2012; (ii) The Child Benefit and Child Tax Credit (Miscellaneous Amendments) Regulations 2012; (iii) The Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) Regulations 2012 (collectively, the Regulations).
Mrs HC challenges the legality of the Regulations.
Mrs HC contends that the denial of mainstream welfare and housing provision to a Zambrano carer and her child is unlawful, because it amounts to unlawful discrimination under article 21 of the EU Charter of Fundamental Rights and Freedoms (the Charter) and/or under article 14 of the European Convention of Human Rights (ECHR).
The Supreme Court unanimously dismisses the appeal.
Lord Carnwath gives the lead judgment, with which Lord Clarke, Lord Wilson and Lord Sumption agree.
Lady Hale gives a concurring judgment.
In Zambrano and subsequent cases, the reasoning of the CJEU turned solely on the risk that the dependents of Zambrano carers might be forced to leave the EU, thereby being deprived of the enjoyment of their rights as EU citizens.
That Zambrano right of residence is exceptional and is not triggered merely by the desirability of keeping the family together.
It is not a right to any particular quality of life or standard of living [8 15].
It was argued on behalf of Mrs HC that in EU law, once a right of residence is established, the Zambrano carer is automatically entitled to the same social security assistance as nationals of the host state.
That argument relied
on the judgment of the CJEU in Baumbast v Secretary of State for the Home Department [2002] ECR I 7091, as followed in Ibrahim v Harrow London Borough Council and Teixeira v Lambeth Borough Council (Joined Cases C 310/08 and C 480/08) [16 20].
This Court rejects the analogy with those cases for two reasons.
First, those cases concerned whether rights of residence were subject to conditions derived from EU law.
The rights asserted in those cases were not limited by domestic law.
Conversely the issue in this case is whether the Regulations, which limit Mrs HCs entitlement to assistance, comply with EU law.
Second, the argument that a right of residence triggers a right to equal treatment under EU law relies on article 21 of the Charter.
This begs the question of whether the Charter applies to this case at all [21].
According to article 51 of the Charter, the Charter applies to EU member states only when they are implementing EU law.
As a result, the test for the applicability of the Charter is not whether Mrs HC was personally within the scope of EU law; it is whether the Regulations were implementing EU law [22 28].
EU law requires no more for the children of a Zambrano carer than the practical support necessary for them to remain in the EU.
It is common ground that the limited financial support provided to Mrs HC and her children is sufficient for them to remain.
It follows that Mrs HC cannot rely on the Charter to establish a right to further financial assistance [5, 28 29].
The measures adopted by the UK do not amount to unlawful discrimination under article 14 of the ECHR.
Discrimination on the basis of immigration status is an accepted part of EU and national law and cannot in itself give rise to an issue under article 14.
Insofar as Mrs HC relies on differences between her treatment as a Zambrano carer specifically and the treatment of others, such differences only reflect the rules of EU law which created her Zambrano carer status.
In any event, the European Court of Human Rights has accepted that the allocation of public funds in the social security context is primarily a matter for national authorities, provided that allocations are not manifestly without reasonable foundation.
The objectives underlying the Regulations cannot be said to fall outside that wide margin of discretion allowed to national governments [31 32].
No issue arises in the appeal as to the scope of the local authoritys duties under section 17 of the Children Act 1989, but that provision is now an important aspect of the governments response to the Zambrano principle.
Section 17 confers a duty on local authorities to promote the welfare of the children in their area and, insofar as consistent with that, to promote the upbringing of such children by their families [33 34].
In this case, the duty arises from a responsibility imposed by EU law, but the allocation of that responsibility as between central and local government is a matter of domestic law only.
That does nothing to diminish the importance of the duty under section 17.
It is appropriate to provide guidance at a national level for the various local authorities discharging that duty [36 37].
In her concurring judgment, Lady Hale adds that a local authority reviewing the needs of the children for the purposes of section 17 will no doubt consider: (i) the need to promote actively the welfare of the children, when exercising various statutory powers; (ii) the fact that these children are British, with the right to remain here for the rest of their lives; (iii) the impact on the proper development of the children which would follow if they were denied a level of support equivalent to their peers [43 46].
The other members of the Court agree with those observations [37].
In Lady Hales view the administration of section 17, unlike the Regulations, could be said to implement EU law by enabling the children to remain in the UK.
If the Charter were applicable to the administration of section 17, it might be possible to regard discrimination against the children of Zambrano carers in that context as falling within article 21 of the Charter.
In that case, the justifications presently offered on behalf of the Secretary of State would be unimpressive.
But section 17 is one way of providing these children with what they need and deserve.
The availability of alternatives, which are in some ways preferable, does not mean that the UK is in breach of EU law [48 52].
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This has proved an unusually difficult case to resolve.
Not only are the substantive issues, relating to the compatibility of abortion law in Northern Ireland with articles 3 and 8 of the European Convention on Human Rights (the ECHR or the Convention), of considerable depth and sensitivity; but there is also the procedural issue raised by the Attorney General for Northern Ireland, who challenges the standing of the Northern Ireland Human Rights Commission (NIHRC) to bring these proceedings.
The court is divided on both questions, but in different ways.
On the substantive compatibility issues, a majority Lord Mance, Lord Kerr, Lord Wilson and I hold that the current law is incompatible with the right to respect for private and family life, guaranteed by article 8 of the Convention, insofar as it prohibits abortion in cases of rape, incest and fatal foetal abnormality.
Lady Black agrees with that holding in the case of fatal foetal abnormality.
Lord Kerr and Lord Wilson also hold that it is incompatible with the right not to be subjected to inhuman or degrading treatment, guaranteed by article 3 of the Convention.
Lord Reed and
Lord Lloyd Jones hold that the law is not incompatible with either article 8 or article
On the procedural issue, a majority Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones hold that the NIHRC does not have standing to bring these proceedings and accordingly that this court has no jurisdiction to make a declaration of incompatibility to reflect the majority view on the compatibility issues.
A minority Lord Kerr, Lord Wilson and I hold that the NIHRC does have standing and would have made a declaration of incompatibility.
In these unusual circumstances, it is not possible to follow our usual practice and identify a single lead judgment which represents the majority view on all issues.
We have therefore decided to revert to the previous practice of the appellate committee of the House of Lords and print the judgments in order of seniority.
It is for that reason only that my judgment comes first.
Far more substantial judgments on all issues follow from Lord Mance and Lord Kerr.
Introduction
The substantive questions in this case are legal issues specifically related to the implementation in UK law, by the Human Rights Act 1998 (HRA), of the ECHR, which in turn has to be interpreted in the light of other international treaties to which the UK is a party, in this case the United Nations Convention on the Elimination of All Forms of Discrimination against Women 1979 (CEDAW) and the United Nations Convention on the Rights of Persons with Disabilities 2006 (CRPD).
Moral and political issues, important though they undoubtedly are, are relevant only to the extent that they are relevant to the legal issues which have to be resolved.
The starting point for any discussion of the legal issues has to be the right of all human beings, male and female, to decide what shall be done with their own bodies.
This right has long been recognised by the common law: it is the reason why consent is needed for invasive medical treatment however well intentioned: see Montgomery v Lanarkshire Health Board (General Medical Council intervening) [2015] AC 1430.
It is also recognised by the ECHR: see Pretty v United Kingdom (2002) 35 EHRR 1, where it was said that the notion of personal autonomy is an important principle underlying the interpretation of its guarantees (para 61).
For many women, becoming pregnant is an expression of that autonomy, the fulfilment of a deep felt desire.
But for those women who become pregnant, or who are obliged to carry a pregnancy to term, against their will there can be few greater invasions of their autonomy and bodily integrity.
The point is vividly made in Professor Thomsons famous article (A Defence of Abortion, reprinted in R M Dworkin (ed), The Philosophy of Law): You wake up in the morning and find yourself back to back in bed with an unconscious violinist.
A famous unconscious violinist.
He has been found to have a fatal kidney ailment, and the Society of Music Lovers has canvassed all the available medical records and found that you alone have the right blood type to help.
They have therefore kidnapped you, and last night the violinists circulatory system was plugged into yours, so that your kidneys can be used to extract poisons from his blood as well as your own.
The director of the hospital now tells you, Look, were sorry the Society of Music Lovers did this to you we would never have permitted it had we known.
But still, they did it, and the violinist is now plugged into you.
To unplug you would be to kill him.
But never mind, its only for nine months.
By then he will have recovered from his ailment, and can be safely unplugged from you.
There can be no doubt that the grossest invasion of your legal rights has taken place: the question is whether you are now under a legal duty to endure that invasion for the next nine months.
By definition we are here considering the cases of women and girls who either did not want to become pregnant at all, or having experienced the joy of a wanted pregnancy, have reached the agonising conclusion that because of the foetal abnormalities, they do not wish to carry the pregnancy to term.
There will of course be women who decide that they do wish to continue the pregnancy despite the circumstances.
Any woman or girl who finds herself in such a situation and wants an abortion will have made her own moral choice, often a very difficult moral choice.
The question is whether others, many of whom will never be placed in that situation, are entitled to make a different moral choice for her, and impose upon her a legal obligation to carry the pregnancy to term.
The present law, contained in sections 58 and 59 of the Offences Against the Person Act 1861, an Act of the UK Parliament, and section 25(1) of the Criminal Justice Act (NI) 1945, an Act of the Northern Ireland legislature, does impose that obligation upon her, unless there is a risk to her life or of serious long term or permanent injury to her physical or mental health.
Indeed, it does more than that.
It has, as the United Nations Committee on the Elimination of Discrimination against Women has recently pointed out, a chilling effect upon clinicians, who are reluctant to discuss the options for fear of being thought to aid, abet, counsel or procure an abortion which might be unlawful.
It also discourages women who have had abortions, lawful or unlawful, from seeking proper after care, because of section 5 of the Criminal Law Act (NI) 1967: anyone who knows or believes that an offence has been committed and has information which might be of material assistance in securing the apprehension, prosecution, or conviction of the person who committed it, commits an offence if they fail without reasonable excuse to give that information to the police within a reasonable time.
The Departmental Guidance for Health and Social Care Professionals on Termination of Pregnancy in Northern Ireland (March 2016) draws professionals attention to both these risks.
The Royal Colleges of Obstetricians and Gynaecologists, of Midwives and of Nursing described the 2013 draft as intimidating for women and for professionals and the CEDAW Committee found that the finalised Guidance perpetuates such intimidation (Report of the inquiry concerning the United Kingdom of Great Britain and Northern Ireland under article 8 of the Optional Protocol to the Convention on the Elimination of All Forms of Discrimination against Women, CEDAW/C/OP.8/GBR/1, published 23 February 2018, para 18).
This being the state of the law in Northern Ireland, it is not suggested that this Court can strike it down or interpret it out of existence.
The only question is whether it is incompatible with either article 3 or article 8 of the ECHR and whether the Court both can and should declare it so.
The first question, therefore, is whether the NIHRC has standing to bring these proceedings.
Standing
This is an arid question, because there is no doubt that the NIHRC could readily have found women who either are or would be victims of an unlawful act under the Human Rights Act 1998 and either supported or intervened in proceedings brought by those women.
The relevant sections of the Northern Ireland Act 1998, which established the Commission, are set out in full in paras 48, 49 and 50 of Lord Mances judgment.
Under section 69(5) of the Northern Ireland Act 1998, the NIHRC may do two things: the first is to give assistance to individuals in accordance with section 70 (section 69(5)(a)).
Section 70 applies to proceedings involving law or practice relating to the protection of human rights which a person in Northern Ireland has brought or wishes to bring (section 70(1)(a)) or proceedings in which such a person relies or wishes to rely on such law or practice (section 70(1)(b)).
This will clearly encompass, not only actions brought under section 7(1)(a) of the HRA, but also other proceedings in which a person wishes to rely on the HRA; the latter must include cases such as Ghaidan v Godin Mendoza [2004] 2 AC 557, in which there was no suggestion of an unlawful act by a public authority but the court was being asked to construe certain provisions of the Rent Act 1977 compatibly with the Convention rights.
The second thing that the NIHRC may do is to bring proceedings involving law or practice relating to the protection of human rights (section 69(5)(b)).
Unlike section 69(5)(a), there is no cross reference to another section of the Act which might limit the breadth of that power.
Nevertheless, it is argued that the power is limited by section 71, which is headed Restrictions on application of rights.
The first thing to notice about section 71 is that it is directed to sections 6(2)(c) or 24(1)(a) of the Northern Ireland Act (set out in para 51 of Lord Mances judgment).
Section 71(1) provides that nothing in those sections shall enable a person to bring any proceedings on the ground that any legislation or act is incompatible with the Convention rights or to rely on any of the Convention rights in any such proceedings unless he would be regarded as a victim of the legislation or act in the European Court of Human Rights in Strasbourg.
Section 6(2)(c) provides that an Act of the Northern Ireland Assembly is outside its competence (and thus not law under section 6(2)) if it is incompatible with any of the Convention rights.
Section 71(3) limits the scope of that prohibition.
Section 24(1)(a) provides that a Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights.
Section 71(4) similarly limits the scope of that prohibition.
The aim of section 71(1) was thus to prevent private persons bringing proceedings to challenge Acts of the Assembly, subordinate Northern Irish legislation or executive acts unless they could claim to be victims.
But, under section 71(2), the principal Law Officers of England, Northern Ireland and Scotland could bring such proceedings.
It is not clear why the original version of section 71(1) (set out in para 175 of Lord Kerrs judgment) referred to section 69(5)(b), but it had the effect of preventing the NIHRC bringing proceedings to challenge any legislation or act, because the NIHRC could never (or hardly ever) claim to be a victim of such legislation or act.
That defect was recognised by the House of Lords in In re Northern Ireland Human Rights Commission [2002] NI 236 and the problem dealt with by deleting the reference to section 69(5)(b) in section 71(1) and expressly providing in section 71(2A) that the prohibition did not apply to the NIHRC.
It is clear, therefore, that the NIHRC has power to challenge any legislation or act without being its victim.
Sections 71(2B) and (2C) go on to deal with the Commissions instituting or intervening in human rights proceedings.
Section 71(2B)(a) makes it clear that the Commission itself need not be a victim of the unlawful act to which the proceedings relate.
But section 71(2B)(c) provides that the Commission may act only if there is or would be one or more victims of the unlawful act.
By section 71(2C) human rights proceedings means proceedings under section 7(1)(b) of the HRA or under section 69(5)(b) of the Northern Ireland Act.
Section 7(1)(b) refers to claims that a public authority has acted or proposes to act incompatibly with a Convention right, which claims may be relied on in any legal proceedings, but only if the person making the claim is or would be a victim of the unlawful act.
Construing the subsection as a whole, the reference to proceedings under section 69(5)(b) must mean proceedings brought by the NIHRC claiming that a public authority has acted or proposes to act incompatibly with a Convention right.
It then makes perfect sense for section 71(2B)(c) to provide that the NIHRC can only bring proceedings in respect of an unlawful act if there is or would be a real victim of such an act.
But we know that the Human Rights Act provides two different methods of seeking to ensure compliance with the Convention rights.
One is for victims to bring proceedings in respect of an unlawful act of a public authority, or to rely on such an unlawful act in other proceedings, pursuant to section 7(1) of the HRA.
The other is to challenge the compatibility of legislation under sections 3 and 4 of the HRA, irrespective of whether there has been any unlawful act by a public authority.
This may be done in proceedings between private persons, as in Wilson v First County Trust (No 2) [2004] 1 AC 816 and Ghaidan v Godin Mendoza.
But it may also be done in judicial review proceedings brought by person with sufficient standing to do so.
A current example is Steinfeld v Secretary of State for Education [2017] 3 WLR 1237, where the provisions in the Civil Partnership Act 2004 limiting civil partnerships to same sex couples are under challenge.
The NIHRC clearly has standing to bring such proceedings by virtue of section 69(5)(b).
In my view, therefore, section 71(2B) and (2C) are dealing only with proceedings brought by the NIHRC, or interventions by the NIHRC in proceedings brought by others, in respect of claims that a public authority has acted or proposes to act unlawfully.
Not surprisingly it requires that there be an identifiable victim of such an unlawful act.
But it does not apply to or limit the general power of the NIHRC to challenge the compatibility of legislation of any sort under sections 3 and 4 of the HRA.
This would be clearer still if the words if any were inserted after unlawful act in section 71(2B)(c), but it is in my view clear that the unlawful act means the unlawful act alleged in the proceedings, so it does not apply where no such unlawful act is alleged.
For the reasons given by Lord Kerr, it would be very surprising if it did limit the NIHRCs power to bring such a challenge.
It is to my mind clear that the Equality and Human Rights Commission in Great Britain, albeit operating under different legislation (set out in para 63 of Lord Mances judgment), does have that power, so there can be no objection in principle.
Article 8
I propose first to address the compatibility of Northern Ireland abortion law with article 8 of the ECHR, because it is common ground that the current law is indeed an interference with the right of pregnant women and girls to respect for their private lives which is guaranteed by article 8(1).
The question is whether in terms of article 8(2) it is justified because it is in accordance with the law and is necessary in a democratic society for the protection of health or morals, or for the protection of the rights and freedoms of others.
In answering the second part of that question, it is now customary to ask whether the measure in question has a legitimate aim, is rationally connected to that aim, and is a proportionate means of achieving it.
For the reasons given by Lord Kerr and Lord Mance, I agree that such interference is not justified, but would like to make a few points of my own.
Although the current state of the law has been criticised for its lack of clarity and is certainly not as clear as is the law in the rest of the UK it is no more uncertain than many other areas of the law which rely upon the application of particular concepts in this case a risk to life or of serious and prolonged or permanent injury to physical or mental health to the facts of a particular case.
It is also sufficiently accessible to those affected by it for the interference to be in accordance with the law for this purpose.
It is more difficult to articulate the legitimate aim.
It cannot be protecting the rights and freedoms of others, because the unborn are not the holders of rights under the Convention (Vo v France (2004) 40 EHRR 12) or under domestic law (In re MB (Medical Treatment) [1997] 2 FLR 426).
But the community undoubtedly does have a moral interest in protecting the life, health and welfare of the unborn it is that interest which underlies many areas of the law, including the regulation of assisted reproduction, and of the practice of midwifery, as well as of the termination of pregnancy.
But the community also has an interest in protecting the life, health and welfare of the pregnant woman that interest also underlies the regulation of assisted reproduction, of midwifery and of the termination of pregnancy.
And pregnant women are undoubtedly rights holders under the both the Convention and domestic law with autonomy as well as health and welfare rights.
The question, therefore, is how the balance is to be struck between the two.
Where there is no consensus of opinion among the member states of the European Union, the Strasbourg court will usually allow individual member states a wide (though not unlimited) margin of appreciation when undertaking such balancing exercises.
In A, B and C v Ireland (2010) 53 EHRR 13, the majority of the Grand Chamber of the Strasbourg court took the unusual step of holding that the margin of appreciation allowed to Ireland had not been decisively narrowed, despite the existence of a consensus amongst a substantial majority of the contracting States allowing abortion on wider grounds than those allowed under Irish law (which was and, for the time being at least, remains even narrower than the law in Northern Ireland).
The majority felt able to do this because the prohibition was based on the profound moral views of the Irish people as to the nature of life and women had the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland (para 241).
The minority (of six) pointed out that this was the first time that the court had disregarded a European consensus on the basis of profound moral views and considered it a real and dangerous new departure, even assuming those views were still well embedded in the conscience of the Irish people (para O III11).
Two of the women in the A, B and C case were seeking abortions on what were described as health and well being grounds: the majority found no violation.
The third was concerned that continuing her pregnancy might endanger her life because she had cancer: the Court found a violation of the States positive obligation to secure effective respect for her private life because there was no accessible and effective procedure by which she could have established whether she qualified for a lawful abortion in Ireland.
The position in this case is quite different.
In the first place, there is no evidence that the profound moral views of the people of Northern Ireland are against allowing abortion in the three situations under discussion here.
Quite the reverse.
There is a remarkably consistent series of public opinion polls showing majority support for abortion in these circumstances.
The most recent survey was a serious academic study, more rigorous than a conventional opinion poll (the results of the Northern Ireland Life and Times Survey are set out in para 110 of Lord Mances judgment).
This evidence cannot be lightly dismissed when the argument is that profound moral views of the public are sufficient to outweigh the grave interference with the rights of the pregnant women entailed in making them continue their pregnancies to term even though they, by definition, have reached a different moral conclusion no doubt, for many, an agonising one.
In the second place, we are dealing with three very different situations from those with which the A, B and C case was concerned, situations in which it cannot seriously be contended that a pregnant woman has a duty to carry the pregnancy to term.
In the case of rape, not only did she not consent to becoming pregnant, she did not consent to the act of intercourse which made her pregnant, a double invasion of her autonomy and the right to respect for her private life.
In this connection, it is worth noting that the Sexual Offences (Northern Ireland) Order 2008 labels two offences rape: article 5 makes it the offence of rape intentionally to penetrate, inter alia, a vagina with a penis where the woman does not consent and the man does not reasonably believe that she consents; article 12 makes it the offence of rape of a child intentionally to penetrate a person under 13 with a penis, irrespective of consent or a belief in consent; both offences carry a maximum of life imprisonment.
Article 16 is labelled Sexual activity with a child and makes it an offence for a person of 18 or older intentionally to touch another person where the touching is sexual and that other person is either under 16 and the toucher does not reasonably believe that she is 16 or over or she is under 13.
If the touching involves penetration of a vagina with a penis, the offence carries a maximum sentence of 14 years imprisonment.
Thus the only difference between the article 16 offence and the article 12 offence is that, if the child is 13 or over but under 16, no offence is committed if the penetrator reasonably believed that she was 16 or over.
Consent or reasonable belief in consent does not feature in either offence.
Thus it is conclusively presumed in the law of Northern Ireland that children under 16 are incapable of giving consent to sexual touching, including penetration of the vagina by a penis.
It is difficult, therefore, to see any reason to distinguish between the offences under article 12 and article 16 for the purpose of this discussion, nor indeed to exclude pregnancies which would be the result of an offence under article 16 were it not for the penetrators reasonable belief that the child was 16 or over: she is still deemed incapable of giving a real consent to it.
The claim refers only to rape and incest (as well as foetal abnormality) but there is no longer any offence labelled incest in Northern Ireland law.
There is, however, an offence under article 32 of the 2008 Order labelled Sexual activity with a child family member which follows the same pattern as article 16: it covers sexual touching of a child whom the toucher knows or can reasonably be expected to know is related in the defined ways; if the child is 13 but under 18 the toucher must not believe that she is 18 or over; no such exception applies if the child is under 13; the offence carries a maximum penalty of 14 years imprisonment if the touching involves penetration, inter alia, of the vagina.
Article 68 creates an offence labelled Sex with an adult relative: penetration and article 69 creates an offence of consenting to such penetration.
Thus the criminal law covers (in substance) the same ground as was previously covered by the law of incest.
I see no reason to exclude pregnancies which are the result of the offences created by articles 16, 32 and 68 from this discussion.
Nor do I see any reason to treat child pregnancies resulting from penetration by a relative any differently from child pregnancies arising in other circumstances.
Adult pregnancies are different, because there may have been genuine consent to the penetration.
But the giving of that consent is itself an offence, and so the law should not treat it on the same footing as a real consent.
Furthermore, as Lord Mance has convincingly demonstrated, there is good evidence that most intra familial sexual relationships are abusive.
And once again, by definition we are discussing a woman who does not consent to the pregnancy: she has made a conscious choice that she does not wish to continue with it.
These are all, therefore, situations in which the autonomy rights of the pregnant woman should prevail over the communitys interest in the continuation of the pregnancy.
I agree, for the reasons given by Lord Kerr and Lord Mance, that in denying a lawful termination of her pregnancy in Northern Ireland to those women and girls in these situations who wish for it, the law is incompatible with their Convention rights.
I agree with Lord Mance, in particular, that relying on the possibility that she may be able to summon up the resources, mental and financial, to travel to Great Britain for an abortion if anything makes matters worse rather than better.
This conclusion is reinforced by the recent Report of the CEDAW Committee.
This contains a helpful discussion of the difficulties of travelling out of Northern Ireland for abortion, which it concludes is not a viable solution (paras 25 to 32).
The third type of case with which we are concerned, that of foetal abnormality, does have to be separated into cases where the foetus suffers from a fatal abnormality, one which will cause death either in the womb or very shortly after delivery, and other serious abnormalities.
Both share the feature that the pregnancy may have been very much wanted by the woman, and her partner, and the news of the abnormality will have been doubly devastating.
But in the case of fatal foetal abnormality, there can be no community interest in obliging the woman to carry the pregnancy to term if she does not wish to do so.
There is no viable life to protect.
It is, of course, essential that the diagnosis be as accurate as possible, but we have the evidence of Professor Dornan that, before the law was clarified in Family Planning Association of Northern Ireland v Minister for Health, Social Security and Public Safety [2004] NICA 39; [2005] NI 188, abortions were offered in such cases and there was a high level of accuracy in the diagnosis.
Travelling to Great Britain is even more difficult in such cases, as the problem is often detected comparatively late in the pregnancy, at 18 to 20 weeks, which leaves very little time to make the arrangements and there may be no counselling offered on what the options are.
If the woman does manage to travel, not only will she have all the trauma and expense associated with that, but also serious problems in arranging the repatriation of the foetal remains.
Serious foetal abnormality is a different matter.
The CEDAW committee has obviously had some difficulty in reconciling its views on the legalisation of abortion, which it systematically recommends in all cases (Report, para 58), with the views of the United Nations Committee on the Rights of Persons with Disabilities.
Thus the CEDAW Committee states (Report, para 60): The Committee interprets articles 12 and 16, clarified by GR Nos 24 and 28, read with articles 2 and 5, to require States parties to legalise abortion, at least in cases of rape, incest, threats to the life and/or health (physical or mental) of the woman, or severe foetal impairment.
The Committee has not taken the view it does of the legalisation of abortion because there is an express provision to that effect in the Convention: it has taken the view that it is the inescapable conclusion from the rights which the Convention does recognise.
Article 12 requires State parties to eliminate discrimination against women in the field of health care, in order to ensure equality between men and women in access to health care services.
Article 16 requires the same in relation to family relations, including the right to decide freely and responsibly on the number and spacing of children.
Article 2 is a general prohibition of discrimination against women and requires positive steps to achieve equality between men and women.
Article 5 requires, inter alia, the elimination of practices based on the inferiority or superiority of either of the sexes or on stereotypical roles for men and women.
However (Report, para 62): In cases of severe foetal impairment, the Committee aligns itself with the Committee on the Rights of Persons with Disabilities in the condemnation of sex selective and disability selective abortions, both stemming from the need to combat negative stereotypes and prejudices towards women and persons with disabilities.
While the Committee consistently recommends that abortion on the ground of severe foetal impairment be available to facilitate reproductive choice and autonomy, States parties are obligated to ensure that womens decisions to terminate pregnancies on this ground do not perpetuate stereotypes towards persons with disabilities.
Such measures should include the provision of appropriate social and financial support for women who choose to carry such pregnancies to term.
Accordingly, the CEDAW Committee recommended to the UK that it adopt legislation legalising abortion at least where there is a threat to the pregnant womans physical or mental health; rape or incest; and severe foetal impairment, including fatal foetal abnormality without perpetuating stereotypes towards persons with disabilities and ensuring appropriate and ongoing support, social and financial, for women who decide to carry such pregnancies to term (para 85).
As already stated, the guarantees contained in the ECHR should be interpreted in the light of other relevant international human rights instruments.
Some may think that the CEDAW Committees recommendations strike the right balance, but I recognise and understand that others may think that they do not give sufficient weight to the valuable and rewarding lives led by many people with serious disabilities.
Article 3
Article 3 differs from article 8 in several ways.
First, the right not to be subjected to torture or inhuman or degrading treatment or punishment is absolute it is not to be balanced against any other rights, including the right to life of people whose lives might be saved if, for example, a prisoner were tortured in order to discover their whereabouts.
Second, therefore, the treatment complained of has to reach what is referred to as a minimum level of severity but which actually means a high level of severity in order to attract the prohibition.
Third, although the motive with which the treatment is inflicted may be relevant, the principal focus is upon the effect upon the victim.
I have no doubt that the risk of prosecution of the woman, and of those who help her, thus forcing her to take that risk if she procures an illegal abortion in Northern Ireland, or to travel to Great Britain if she is able to arrange that, constitutes treatment by the State for this purpose.
It is the State which is subjecting her to the agonising dilemma.
I also have little doubt that there will be some women whose suffering on being denied a lawful abortion in Northern Ireland, in the three situations under discussion here, will reach the threshold of severity required to label the treatment inhuman or degrading.
This is another respect in which article 3 is unlike article 8.
In every case where a woman is denied a lawful abortion in Northern Ireland which she seeks in the three situations under discussion, her article 8 rights have been violated.
But it cannot be said that every woman who is denied an abortion in such circumstances will suffer so severely that her rights under article 3 have been violated.
It depends upon an intense focus on the facts of the individual case which the article 8 question, at least in the three cases under discussion, does not.
This is not a situation, as it is under article 8, where the operation of the law is bound to produce incompatible results in every case.
But neither is it a situation where the law can always be operated compatibly with the Convention rights if the public authority takes care to act in a way which respects those rights.
Rather, it is a situation in which the law is bound to operate incompatibly in some cases.
I have sympathy for the view expressed by Lord Kerr that the risk of acting incompatibly with article 3 rights is such as to engage the positive obligation of the state to prevent that risk materialising; but it is unnecessary to decide the point, in the light of my conclusion that the present law is incompatible with article 8 in the three respects discussed above.
Remedy
I have reached the following conclusions (i) that the NIHRC does have standing to challenge the legislation in question here; (ii) that, in denying a lawful abortion in Northern Ireland to a woman who wishes it in cases of rape, incest and fatal foetal abnormality, the law is incompatible with article 8 of the Convention; and (iii) that it will also operate incompatibly with article 3 of the Convention in some cases.
I agree, for the reasons given by Lord Kerr, that the incompatibility with article 8 cannot be cured by further reading down of section 58 of the Offences against the Person Act 1861 under section 3 of the HRA.
Should we therefore make a declaration of incompatibility under section 4 of the HRA? I understand, of course, the view that this is a matter which should be left entirely to the democratic judgment of the Northern Ireland Assembly (or the United Kingdom Government should direct rule have to be resumed).
But I respectfully disagree for several reasons.
First, although the Strasbourg court was prepared to accord Ireland a wide measure of appreciation in the A, B and C case, that was, as the minority pointed out, most unusual.
It cannot be guaranteed that the Strasbourg court would afford the United Kingdom the same margin of appreciation in this case, given that public opinion in Northern Ireland is very different from assumed public opinion in Ireland at the time of the events in A, B and C.
In any event, even if it did, that does not answer the question.
It means only that the United Kingdom authorities have to decide what is, or is not, compatible with the Convention rights.
Second, this is not a matter on which the democratic legislature enjoys a unique competence.
It is a matter of fundamental human rights on which, difficult though it is, the courts are as well qualified to judge as is the legislature.
In fact, in some ways, the courts may be thought better qualified, because they are able to weigh the evidence, the legal materials, and the arguments in a dispassionate manner, without the external pressures to which legislators may be subject.
It falls within the principle accepted by the House of Lords in In re G (Adoption: Unmarried Couple) [2009] AC 173 and indeed by the majority of this Court in R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2015] AC 657.
Third, Parliament has expressly given the higher courts the power to rule upon the compatibility or incompatibility of legislation with the Convention rights.
Parliament did not say, when enacting section 4 of the HRA, but there are some cases where, even though you are satisfied that the law is incompatible with the Convention rights, you must leave the decision to us.
Parliamentary sovereignty is respected, not by our declining to make a declaration, but by what happens if and when we do.
Parliament has three options.
First, it may share the courts view and approve a fast track remedial order under section 10 of the HRA, which is appropriate if the matter is quite simple and easy to solve.
Second, it may share our view and pass an Act of Parliament to put things right, which is appropriate if the matter is not simple and easy to solve, and complex arrangements have to be put in place.
Third, it may do nothing.
This could be because it disagrees with courts view, and prefers to wait and see what view is eventually taken by the European Court of Human Rights.
Or it could be because it is inclined to leave matters as they are for the time being.
The do nothing option is no doubt more attractive if the matter is one which Strasbourg would regard as within the UKs margin of appreciation.
It is at this point that the democratic will, as expressed through the elected representatives of the people, rules the day.
All that a declaration on incompatibility does, therefore, is place the ball in Parliaments court.
This is not a case like Nicklinson in which the matter was already before Parliament and the issues were not as clear cut: the case had changed from one of active euthanasia to one of assisted suicide in the course of its progress through the courts.
In this case, if the court has reached a firm conclusion that the law is incompatible there is little reason not to say so, particularly where, as here, the UK has already been advised that the law is in breach of its international human rights obligations under another treaty.
I would therefore have allowed this appeal and made a declaration accordingly, but in the light of the majoritys view of the standing of the NIHRC to bring these proceedings it must follow that we have no jurisdiction formally to declare the majoritys view.
But, as Lord Mance explains in para 135 that does not mean that it can safely be ignored.
LORD MANCE:
Summary
(a) By these proceedings against the Department of Justice and the Attorney General for Northern Ireland (the respondents), the Northern Ireland Human Rights Commission (the Commission) challenges the compatibility of the law in Northern Ireland with articles 3 and 8 of the European Convention on Human Rights (the Convention rights), insofar as that law prohibits abortion in cases of fatal and other foetal abnormality, rape and incest. (b) The respondents raise an initial objection to the challenge, that it is outside the Commissions competence (in the sense of power) to institute abstract proceedings of this nature (an actio popularis).
I deal with this issue in paras 47 to 72.
The courts below considered that the Commission had competence.
The Supreme Court concludes by a majority, consisting of Lord Reed, Lady Black, Lord Lloyd Jones and myself, that the objection is well founded and that the courts below were wrong on this issue. (c) It follows that the Supreme Court has no jurisdiction to give any relief in respect of the challenge to Northern Ireland abortion law.
But that challenge has been fully argued, and evidence has been put before the Court about a number of specific cases.
It would, in the circumstances, be unrealistic and unhelpful to refuse to express the conclusions at which I would have arrived, had I concluded that the Commission had competence to pursue the challenge. (d) I would have concluded, without real hesitation at the end of the day, that the current state of Northern Ireland law is incompatible with article 8 of the Convention, insofar as it prohibits abortion in cases of fatal foetal abnormality, rape and incest, but not insofar as it prohibits abortion in cases of serious foetal abnormality: see paras 73 to 134.
That conclusion, obiter in my case, is of the essence of the judgments of the three members of the Court (Lady Hale, Lord Kerr and Lord Wilson) who (dissenting) would have held that the Commission had competence.
Lady Black would (obiter) reach the same conclusion as I do with regard to fatal foetal abnormality, but not rape or incest.
Lord Kerr and Lord Wilson would go further than I would have done and hold that the current law in Northern Ireland law is also incompatible with article 3 of the Convention rights as regards fatal foetal abnormality, rape and incest.
Lady Hales view on this point appears in paras 28 to 30 of her judgment. (e) With that summary, I will turn to introduce the proceedings more fully.
However, those who may at the outset wish to have an idea of the distressing cases to which the Commission has drawn attention in the context of its challenge can look at once at paras 84 to 90 below.
Introduction
This is an appeal in proceedings for judicial review commenced by the Northern Ireland Human Rights Commission (the Commission) on 11 December 2014.
By their Order 53 statement, the Commission sought general relief, unrelated to any particular set of facts, consisting of: a. A declaration pursuant to section 6 and section 4 of the Human Rights Act 1998 (the HRA) that sections 58 and 59 of the Offences against the Person Act 1861 (the 1861 Act) and section 25 of the Criminal Justice Act (NI) 1945 (the 1945 Act) are incompatible with articles 3, 8 and 14 of the European Convention on Human Rights so far as they relate to access to termination of pregnancy services for women with pregnancies involving a serious malformation of the foetus or pregnancy as a result of rape or incest; b. A declaration that, notwithstanding the provisions of the above sections, women in Northern Ireland may lawfully access termination of pregnancy services within Northern Ireland in cases of serious malformation of the foetus or rape or incest; c. A declaration that the rights of women in Northern Ireland with a diagnosis of serious malformation of the foetus or who are pregnant as a result of such rape or incest are breached by the above sections; and/or d. such further or other relief as the Court might think appropriate.
The declarations sought to focus on three broad situations: serious malformation of the foetus; rape; and incest.
In this judgment, I shall divide the first into fatal foetal abnormality and serious (but not fatal) foetal abnormality.
The expert evidence before the judge indicated that doctors are well capable of identifying cases of fatal foetal abnormality, that is cases where the foetus will die in the womb or during or very shortly after birth.
As to rape, it was made clear during the course of submissions before the Supreme Court, that the Commission, when commencing these proceedings, had in mind situations in which, because a child was under the age of 13, consent cannot in law be given, but had not focused on, for example, sexual offences (not described in law as rape) committed against children aged 13 or more, but under the age of 16.
I return to this aspect in paras 73 and 131 below.
As to incest, there was again no detailed examination of the offence(s) in question.
There is no longer any offence called, in law rather than colloquially, incest.
Since 2008, the relevant law is found in articles 32 to 36 and 68 to 69 of the Sexual Offences (Northern Ireland) Order 2008, mirroring sections 25 to 29 and 64 to 65 of the Sexual Offences Act 2003 in England and Wales.
These articles introduce a very wide range of penetrative offences involving related persons, but it is only those which can lead to pregnancy which are presently relevant.
In this context, article 32 contains offences under the head Sexual activity with a child family member.
This is capable of commission where the child family member (B) is either under 18, and is someone who the person committing the offence (A) does not reasonably believe to be 18 or over, or is under 13.
The relevant family relationships are defined in section 34, and the maximum punishment on conviction on indictment of an offence involving penetration of the vagina is up to 14 years.
Article 68 contains the offence of Sex with an adult relative: penetration, which may, inter alia, be committed when a person aged 16 or over (A) penetrates the vagina of (B) aged 18 or over.
Article 69 contains the offence of Sex with an adult relative: consenting to penetration, which may be committed where A (aged 18 or over) penetrates the vagina of B (aged 16 or over) with Bs consent.
Articles 68 and 69 have their own definition of the prohibited relationships, and the maximum sentence on conviction of indictment is in each case up to two years.
For convenience, I shall in this judgment continue to use the colloquial term incest to refer to all three offences, although it is clear that the legislator has identified a significant general difference between offences under article 32 involving a child family member on the one hand and offences under articles 68 and 69 involving adults.
I shall consider the position in respect of incest in greater detail in paras 127 to 131 below.
In support of its Order 53 statement, the Commissions Chief Commissioner, Mr Les Allamby, swore an affidavit, confirming that the Commissions case was made pursuant to section 4 of the HRA and based on alleged incompatibility with Convention Rights of the sections identified above of both the 1861 and the 1945 Acts.
In other words, it treated both Acts as primary legislation.
On that basis, it is not clear on what basis it could have been thought that any relief could be granted beyond that identified in sub para (1).
Just conceivably, sub paras (2) and (4) may have been framed to cover the possibility of a more expansive interpretation of the Bourne exception (deriving from R v Bourne [1939] 1 KB 687), along the lines which the Lord Chief Justice accepted in the Court of Appeal: para 79.
Be that as it may be, while the 1861 Act is clearly primary legislation, the same cannot in my opinion be said of the 1945 Act.
The 1945 Act was an Act of the Parliament of Northern Ireland, established by the Government of Ireland Act 1920.
In terms of the HRA, it constitutes subordinate, rather than primary, legislation: see the definitions in section 21 of the HRA, and in particular paragraph (c) in relation to subordinate legislation.
For present purposes, this point may not prove significant, since it is unclear what section 25 of the 1945 Act adds, at least in law, to sections 58 and 59 of the 1861 Act.
Brice Dicksons Law in Northern Ireland, para 7.17, instances the 1945 Act as one of a number introduced in the face of jury reluctance to convict of existing offences with greater overtones of evilness in the same areas.
Before the Supreme Court, the first issue is whether it was within the Commissions competence to seek the relief identified in sub paragraph 43 above, that is a general declaration of incompatibility in relation to primary legislation of the United Kingdom Parliament.
This issue is raised both in direct response to the Commissions claim and pursuant to devolution questions referred to the Supreme Court under section 33 of the Northern Ireland Act 1998 (the NI Act 1998) by the Attorney General for Northern Ireland by notice dated 18 January 2017.
The devolution questions which have been referred ask, in summary, whether the Commission was empowered to institute human rights proceedings or seek a declaration of incompatibility other than as respects an identified unlawful act or acts.
Only if it was within the Commissions competence to issue proceedings for the relief claimed, could the court make any declaration of incompatibility, even if incompatibility was otherwise established.
The second issue, arising strictly only if the Commission had such competence, is whether any incompatibility is established.
Both Horner J and the Court of Appeal held that the Commission had such competence.
Having so held, Horner J went on to conclude that there was incompatibility, but only in so far as it is an offence to procure a miscarriage (a) at any stage during a pregnancy where the foetus has been diagnosed with a fatal foetal abnormality, or (b) up to the date when the foetus is capable of being born alive where a pregnancy arises as a result of rape or incest.
The Court of Appeal, in three differently reasoned judgments, concluded that there was no incompatibility.
The respondents, the Department of Justice and the Attorney General for Northern Ireland, appeal on the first issue, while the Commission appeals on the second issue.
The Commissions competence to seek the relief claimed
Logically, the issue of the Commissions competence should be taken first, and I propose to do so, although in the event it will also be appropriate to express views on the issue of incompatibility, which has been fully argued.
The Commission is a body corporate created by section 68 of the NI Act 1998.
It was accepted by the House of Lords in In re Northern Ireland Human Rights Commission [2002] NI 236 that it only has such powers as are conferred on it by statute, though these can clearly include such powers as may fairly be regarded as incidental to or consequential upon those things which the legislature has authorised: ibid, p 243C.
The relevant statutory provisions in the current legislation define the Commissions functions as follows: 69.
The Commissions functions. (1) The Commission shall keep under review the adequacy and effectiveness in Northern Ireland of law and practice relating to the protection of human rights. (2) The Commission shall, before the end of the period of two years beginning with the commencement of this section, make to the Secretary of State such recommendations as it thinks fit for improving its effectiveness; the adequacy and effectiveness of the functions (a) (b) conferred on it by this Part; and (c) of this Part relating to it. the adequacy and effectiveness of the provisions (3) The Commission shall advise the Secretary of State and the Executive Committee of the Assembly of legislative and other measures which ought to be taken to protect human rights as soon as reasonably practicable after receipt of (a) a general or specific request for advice; and (b) on such other occasions as the Commission thinks appropriate. (4) The Commission shall advise the Assembly whether a Bill is compatible with human rights as soon as reasonably practicable after receipt of (a) a request for advice; and (b) on such other occasions as the Commission thinks appropriate. (5) The Commission may (a) give assistance to individuals in accordance with section 70; and (b) bring proceedings involving law or practice relating to the protection of human rights. (6) The Commission shall promote understanding and awareness of the importance of human rights in Northern Ireland; and for this purpose it may undertake, commission or provide financial or other assistance for (a) (b) research; and educational activities. (7) The Secretary of State shall request the Commission to provide advice of the kind referred to in para 4 of the Human Rights section of the Belfast Agreement (8A) The Commission shall publish a report of its findings on an investigation. (8) For the purpose of exercising its functions under this section the Commission may conduct such investigations as it considers necessary or expedient (9) The Commission may decide to publish its advice and the outcome of its research (10) The Commission shall do all that it can to ensure the establishment of the committee referred to in paragraph 10 of that section of that Agreement. (11) In this section a reference to the Assembly includes a reference (a) to a committee of the Assembly; (b) human rights includes the Convention rights.
Section 70 of the NI Act reads: 70.
Assistance by Commission. (1) This section applies to (a) proceedings involving law or practice relating to the protection of human rights which a person in Northern Ireland has commenced, or wishes to commence; or (b) proceedings in the course of which such a person relies, or wishes to rely, on such law or practice. (2) Where the person applies to the Northern Ireland Human Rights Commission for assistance in relation to proceedings to which this section applies, the Commission may grant the application on any of the following grounds (a) that the case raises a question of principle; (b) that it would be unreasonable to expect the person to deal with the case without assistance because of its complexity, or because of the persons position in relation to another person involved, or for some other reason; that there are other special circumstances which (c) make it appropriate for the Commission to provide assistance. (3) Where the Commission grants an application under subsection (2) it may (a) provide, or arrange for the provision of, legal advice; (b) arrange for the provision of legal representation; (c) provide any other assistance which it thinks appropriate. (4) Arrangements made by the Commission for the provision of assistance to a person may include provision for recovery of expenses from in certain circumstances.
Section 71 reads as follows: the person 71.
Restrictions on application of rights. (1) Nothing in section 6(2)(c) or 24(1)(a) shall enable a person to bring any proceedings in a court or tribunal on (a) the ground that any legislation or act is incompatible with the Convention rights; or (b) to rely on any of the Convention rights in any such proceedings unless he would be a victim for the purposes of article 34 of the Convention if proceedings in respect of the legislation or act were brought in the European Court of Human Rights. (2) Subsection (1) does not apply to the Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland, the Advocate General for Scotland or the Lord Advocate. (2A) Subsection (1) does not apply to the Commission. (2B) In relation to the Commissions instituting, or intervening in, human rights proceedings (a) the Commission need not be a victim or potential victim of the unlawful act to which the proceedings relate, (b) section 7(3) and (4) of the Human Rights Act 1998 (c 42) (breach of Convention rights: sufficient interest, &c) shall not apply, (c) be one or more victims of the unlawful act, and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies). the Commission may act only if there is or would (2C) For the purposes of subsection (2B) human rights proceedings means proceedings (a) which rely (wholly or partly) on section 7(1)(b) of the Human Rights Act (i) 1998, or (ii) (b) an expression used in subsection (2B) and in section 7 of the Human Rights Act 1998 has the same meaning in subsection (2B) as in section 7. section 69(5)(b) of this Act, and (3) Section 6(2)(c) (a) does not apply to a provision of an Act of the Assembly if the passing of the Act is, by virtue of subsection (2) of section 6 of the Human Rights Act 1998, not unlawful under subsection (1) of that section; and (b) does not enable a court or tribunal to award in respect of the passing of an Act of the Assembly any damages which it could not award on finding the passing of the Act unlawful under that subsection. (4) Section 24(1)(a) (a) does not apply to an act which, by virtue of subsection (2) of section 6 of the Human Rights Act 1998, is not unlawful under subsection (1) of that section; and (b) does not enable a court or tribunal to award in respect of an act any damages which it could not award on finding the act unlawful under that subsection.
In this section the Convention has the same meaning (5) as in the Human Rights Act 1998. 6.
Legislative competence. (1) A provision of an Act is not law if it is outside the legislative competence of the Assembly. (2) A provision is outside that competence if any of the following paragraphs apply
Sections 6(2)(c) and 24(1)(a), to which reference is made at the start of section 71 address the legislative competence of, respectively, the Northern Ireland Assembly and of Northern Irish Ministers and departments, as follows: (a) it would form part of the law of a country or territory other than Northern Ireland, or confer or remove functions exercisable otherwise than in or as regards Northern Ireland; (b) it deals with an excepted matter and is not ancillary to other provisions (whether in the Act or previously enacted) dealing with reserved or transferred matters; (c) rights; it is incompatible with EU law; (d) (e) it discriminates against any person or class of person on the ground of religious belief or political opinion; (f) it is incompatible with any of the Convention it modifies an enactment in breach of section 7. (3) For the purposes of this Act, a provision is ancillary to other provisions if it is a provision (a) which provides for the enforcement of those other provisions or is otherwise necessary or expedient for making those other provisions effective; or (b) which is otherwise incidental to, or consequential on, those provisions; 24.
EU law, Convention rights, etc. (1) A Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with EU law; is incompatible with any of the Convention (a) rights; (b) (c) discriminates against a person or class of person on the ground of religious belief or political opinion; (d) in the case of an act, aids or incites another person to discriminate against a person or class of person on that ground; or (e) in breach of section 7. in the case of legislation, modifies an enactment (2) Subsection (1)(c) and (d) does not apply in relation to any act which is unlawful by virtue of the Fair Employment and Treatment (Northern Ireland) Order 1998, or would be unlawful but for some exception made by virtue of Part VIII of that Order.
Sections 6, 7 and 8 of the HRA provide as follows: It is unlawful for a public authority to act in a way which 6.
Acts of public authorities. (1) 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 (3) rights, the authority was acting so as to give effect to or enforce those provisions.
In this section public authority includes (a) (b) functions of a public nature; a court or tribunal, and any person certain of whose functions are but does not include either House of Parliament or a person exercising functions in connection with proceedings in Parliament. (4) (5) In relation to a particular act, a person is not a public authority by virtue only of subsection (3)(b) if the nature of the act is private. (6) failure to (a) for legislation; or (b) make any primary legislation or remedial order.
An act includes a failure to act but does not include a introduce in, or lay before, Parliament a proposal 7. Proceedings. (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 rely on the Convention right or rights concerned (b) in any legal proceedings, but only if he is (or would be) a victim of the unlawful act. (2) In subsection (1)(a) appropriate court or tribunal means such court or tribunal as may be determined in accordance with rules; and proceedings against an authority include a counterclaim or similar proceeding. (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) (5) Proceedings under subsection (1)(a) must be brought before the end of the period of one year beginning with the date on (a) which the act complained of took place; or (b) considers equitable having regard circumstances, such longer period as the court or tribunal to all the but that is subject to any rule imposing a stricter time limit in relation to the procedure in question. (6) In subsection (1)(b) legal proceedings includes (a) proceedings brought by or at the instigation of a public authority; and (b) tribunal. an appeal against the decision of a court or (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. 8.
Judicial remedies. (1) 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. (2) But damages may be awarded only by a court which has power to award damages, or to order the payment of compensation, in civil proceedings. (3) 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, or order (a) made, in relation to the act in question (by that or any other court), and (b) other court) in respect of that act, the consequences of any decision (of that or any the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made. (4) In determining (a) whether to award damages, or (b) the amount of an award, the court must take into account the principles applied by the European Court of Human Rights in relation to the award of compensation under article 41 of the Convention.
The Commission relies on section 69(5)(b) of the NI Act 1998 for its power to bring these proceedings.
But proceedings relying wholly or partly on section 69(5)(b) constitute, under section 71(2C)(a)(ii), human rights proceedings and are subject therefore to the restrictions (taking this word from the heading of section 71) in section 71(2B).
Under section 71(2B)(a), the Commission need not itself be a victim or potential victim of the unlawful act to which the proceedings relates and, consistently with this, section 71(2B)(b) provides that sections 7(3) and (4) of the HRA do not apply.
But section 71(2B) contains a number of pointers to the fact that the legislature contemplated that human rights proceedings, for the purposes of section 71(2B), are proceedings which relate to an unlawful act.
That contemplation can be seen in the reference in section 71(2B)(a) to the unlawful act to which the proceedings relate.
The provision in section 71(2B)(c) that the Commission may act only if there is or would be one or more victims of the unlawful act reflects the same contemplation.
It is also consistent with the provision in section 71(2B)(d) that no award of damages may be made to the Commission, whatever the position would be under section 8(3) of the HRA, since section 8 addresses the possibility of an award of damages as a remedy available in relation to an act (or proposed act) which the court finds is (or would be) unlawful.
The other type of proceedings which, under section 71(2C)(a)(i) constitute human rights proceedings for the purposes of section 71(2B) and (2C), consists of proceedings in which a person who is (or would be) a victim of the unlawful act pursuant to section 7(1)(b) of the HRA relies on a Convention right.
Section 71(2C)(a)(i) does not refer to section 7(1)(a), which provides that a person who claims that a public authority has acted or proposes to act in a way made unlawful by section 6(1) of the HRA may bring proceedings against the authority.
It does not follow that its reference to section 7(1)(b) covers only situations where a Convention right is relied on by way of defence, rather than as the basis of a claim.
Section 7(1)(b) is wide enough to cover both.
This type of proceedings will by definition involve the Commission intervening in, rather than instituting, the proceedings within the opening words of section 71(2B).
In this context, section 71(2B) reflects and regulates the existence of the incidental or consequential power which the House of Lords held the Commission to possess in In re Northern Ireland Human Rights Commission: see para 66 below.
The Commission will, in contrast, be acting pursuant to its power under section 69(5)(b) to bring proceedings involving law or practice relating to the protection of human rights, when it institutes human rights proceedings within the opening words of section 71(2B).
The upshot under section 71(2B) and (2C) is that, where the Commission is intervening in human rights proceedings, the person instituting the proceedings must be an actual or potential victim of an unlawful act, and, where the Commission is itself instituting human rights proceedings, it need not be, but there must be an actual or potential victim of an unlawful act to which the proceedings relate.
By section 71(2C)(b), an expression used in subsection (2B) and in section 7 of the HRA has the same meaning in the former as in the latter.
Section 7(1) of the HRA refers to section 6(1) of the HRA for the concept of an unlawful act, and that subsection provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right.
But the subsection is expressly stated, by section 6(2), not to apply to (in summary) an authoritys act which was (a) compelled by a provision of primary legislation or which was (b) to give effect to or enforce one or more provisions of or made under primary legislation which cannot be read or given effect in a way which is compatible with Convention rights.
Further, by section 6(6), an act does not include a failure to introduce, or lay before Parliament a proposal for legislation or make any primary legislation.
It follows that the Commissions powers under sections 69 and 71 of the NI Act 1998 do not include either instituting or intervening in proceedings where the only complaint is that primary legislation, such as the 1861 Act, is incompatible with the Convention Rights.
Neither the Westminster Parliaments enactment of, nor its or the Northern Irish legislatures failure to repeal or amend, the 1861 Act can constitute an unlawful act under sections 6 and 7 of the HRA: see the preceding paragraphs of this judgment.
Such proceedings would not therefore involve any suggestion of an unlawful act within the meaning of section 7 of the HRA or, therefore, of section 71 of the NI Act.
The Lord Chief Justice of Northern Ireland thought that this conclusion could be avoided by reading into section 71(2C)(a)(ii) the additional words in respect of unlawful acts after Act: para 42.
This would leave section 69(5)(b) completely unconstrained and unregulated by section 71 as regards proceedings not relying on any unlawful act.
That is by itself implausible.
But, more fundamentally, there is neither a need nor any basis for any such words to be read into section 71.
A reading of section 71 as a whole makes clear that it was envisaged as establishing a limited jurisdiction.
Section 71(1) identifies the requirement of victimhood to be satisfied by any person challenging legislation of the devolved Assembly or subordinate legislation or other acts of the devolved administration which are unlawful in terms of sections 6 and 7 of the HRA.
Further, sections 71(3) and (4) make express that section 71(1) is not intended to embrace proceedings challenging legislation of the devolved Assembly or subordinate legislation or an act of the devolved administration which is, by virtue of section 6(2) of the HRA, not unlawful for the purposes of sections 6(1) and 7 of the HRA.
It is in other words clear that no one can claim to be an actual or potential victim in relation to any such devolved or subordinate legislation or devolved act if it was compelled by or done to give effect to or to enforce provisions of primary legislation.
The exclusion of the Commission from section 71(1) is simply the prelude to the Commissions powers to institute or intervene in proceedings, but this is carefully limited to situations where there is or would be an unlawful act, of the kind identified in section 7 of the HRA.
It is likewise clear that the Commission cannot either institute or intervene in proceedings where neither it nor anyone else can claim to be an actual or potential victim of an unlawful act, because the situation falls within section 6(2) of the HRA.
In these circumstances, it is, as I have said, implausible to suppose that Parliament by the NI Act 1998 at the same time intended the Commission to be able to institute or intervene in proceedings where the complaint was that primary legislation of the United Kingdom Parliament was itself incompatible with the Convention rights, without either referring to this or imposing any restriction on the circumstances.
It would amount to carte blanche to the Commission, without having to establish any standing or interest other than its general interest in promoting and protecting human rights, to bring any proceedings it thought fit to establish the interpretation and/or incompatibility of primary legislation under section 3 and/or 4 of the HRA.
This would contrast incongruously with the express and careful delimitation by Parliament of its capacity to institute or intervene in proceedings where and only where a specific unlawful act is in question under sections 6 and 7.
It is wrong to approach the present issue on the basis of an assumption that it would be anomalous if the Commission did not have the (apparently unlimited) capacity suggested to bring proceedings to establish the interpretation, or incompatibility with Convention rights, of any primary Westminster legislation it saw as requiring this for the better protection of human rights.
The issue is one of statutory construction, not a priori preconception.
It is in fact no surprise, in my view, that Parliament did not provide for the Commission to have capacity to pursue what would amount to an unconstrained actio popularis, or right to bring abstract proceedings, in relation to the interpretation of United Kingdom primary legislation in some way affecting Northern Ireland or its supposed incompatibility with any Convention right.
On the contrary, it is natural that Parliament should have left it to claimants with a direct interest in establishing the interpretation or incompatibility of primary legislation to initiate proceedings to do so; and should have limited the Commissions role to giving assistance under sections 69(5)(a) and 70 and to instituting or intervening in proceedings involving an actual or potential victim of an unlawful act as defined in section 7 of the Human Rights Act 1998.
True it is that sections 3 and 4 of the HRA are not made expressly subject to the victimhood requirement which affects sections 6 and 7: R (Rusbridger) v Attorney General [2004] 1 AC 357, para 21, per Lord Steyn; though they must undoubtedly be subject to the usual rules regarding standing in public law proceedings.
However, a capacity to commence general proceedings to establish the interpretation or incompatibility of primary legislation is a much more far reaching power than one to take steps as or in aid of an actual or potential victim of an identifiable unlawful act.
Further, Parliaments natural understanding would have reflected what has been and is the general or normal position in practice, namely that sections 3 and 4 would be and are resorted to in aid of or as a last resort by a person pursuing a claim or defence under sections 7 and 8: see Lancashire County Council v Taylor [2005] EWCA Civ 284; [2005] 1 WLR 2668, para 28, reciting counsels submission, and paras 37 44, concluding that, to exercise the courts discretion to grant a declaration to someone who had not been and could not be personally adversely affected would be to ignore section 7.
This being the normal position, it is easy to understand why there is nothing in section 71 to confer (the apparently unlimited) capacity which the Commission now suggests that it has to pursue general proceedings to establish the interpretation or incompatibility of primary legislation under sections 3 and/or 4 of the HRA, in circumstances when its capacity in the less fundamental context of an unlawful act under sections 6 and 7 is expressly and carefully restricted.
In instructive written submissions by the Equality and Human Rights Commission (EHRC) for England and Wales and Scotland as intervener, the EHRC invites comparison with the legislation which governs it, and suggests that it would be incongruous if there were a distinction between the position in England, Wales and Scotland on the one hand and Northern Ireland on the other.
Sections 9 and 30 of the Equality Act 2006 provide as follows in relation to the EHRC: 9(1) Human rights The Commission shall, by exercising the powers conferred by this Part encourage good practice in relation to human (a) promote understanding of the importance of human rights, (b) rights, (c) promote awareness, understanding and protection of human rights, and (d) encourage public authorities to comply with section 6 of the Human Rights Act 1998 (c 42) (compliance with Convention rights).
Judicial review and other legal proceedings 30. (1) The Commission shall have capacity to institute or intervene in legal proceedings, whether for judicial review or otherwise, if it appears to the Commission that the proceedings are relevant to a matter in connection with which the Commission has a function. (2) The Commission shall be taken to have title and interest in relation to the subject matter of any legal proceedings in Scotland which it has capacity to institute, or in which it has capacity to intervene, by virtue of subsection (1). (3) The Commission may, in the course of legal proceedings for judicial review which it institutes (or in which it intervenes), rely on section 7(1)(b) of the Human Rights Act 1998 (c 42) (breach of Convention rights); and for that purpose the Commission may act only if there is or would the Commission need not be a victim or potential (a) victim of the unlawful act to which the proceedings relate, (b) be one or more victims of the unlawful act, (c) and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies); section 7(3) and (4) of that Act shall not apply, and an expression used in this subsection and in section 7 of the Human Rights Act 1998 has the same meaning in this subsection as in that section. (4) Subsections (1) and (2) (a) do not create a cause of action, and (b) are, except as provided by subsection (3), subject to any limitation or restriction imposed by virtue of an enactment (including an enactment in or under an Act of the Scottish Parliament) or in accordance with the practice of a court.
These provisions are different from those in the NI Act 1998, in both its original form and the form in which it was amended in 2007.
It is open to argument under section 30(1) of the 2006 Act that the EHRC is given general capacity to initiate proceedings relevant to any matter in connection with which the Commission has a function, and that section 30(3) is merely regulating one particular kind of such proceedings.
I need express no view on the correctness of this argument.
Even if it were correct, the mere perception that it might be welcome and entirely sensible, as the EHRC put it, if both the Northern Ireland Commission and the EHRC had the same powers cannot help construe different statutory schemes enacted at different times in different terms and without reference to each other.
For these reasons, I conclude that sections 69 and 71 are incapable of conferring on the Commission power to institute or intervene in proceedings in so far as the complaint relates to the suggested incompatibility of primary legislation of the United Kingdom Parliament, namely the 1861 Act, with one or more of the Convention rights scheduled to the HRA.
This conclusion is in my opinion reinforced by consideration of the legislative history of the NI Act 1998.
As originally enacted, section 71 contained only subsections (1), (2), (3), (4) and (5).
Subsections (2A), (2B) and (2C) were only added in 2007 by the Justice and Security (Northern Ireland) Act 2007, and so in the light of In re Northern Ireland Human Rights Commission, decided in 2002.
Importantly also, subsection (1) as originally enacted commenced with the words: Nothing in section 6(2)(c), 24(1)(a) or 69(5)(b) shall enable a person Subject to the omission in 2007 of the reference in subsection (1) to section 69(5)(b) and the addition in 2007 of the reference to the Advocate General for Northern Ireland in 2007, subsections (1) and (2) remain otherwise as originally enacted.
In In re Northern Ireland Human Rights Commission, the Commission had been refused permission by a coroner to intervene in an inquest into the Omagh bomb explosion in 1998, where in its view questions of human rights had arisen on which it would be appropriate for it to make submissions.
By a majority, the House held that a power to intervene could be regarded as incidental to other powers expressly conferred by section 69, while noting that neither section 69(5)(a) nor section 69(5)(b) applied in terms, and that both could, under the then wording, only be invoked if the Commission could show that it was a victim for the purposes of the Convention.
The Commission would, in reality, have been unable to do this.
Firstly, it is a statutory public authority, listed as such in paragraph 1A of Schedule 2 to the Parliamentary Commissioner Act 1967, to which reference is made in section 75(3)(a) of the NI Act 1998.
It is a core public authority within the scope of that concept as identified in Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546, para 8, per Lord Nicholls, and paras 43 47, per Lord Hope.
As the House there acknowledged, core public authorities owe Convention duties, but cannot themselves be victims.
Even if the Commission had been a hybrid public authority, this would only mean that it was not a public authority in respect of acts of a private nature: see Aston Cantlow, para 11 per Lord Nicholls.
The present proceedings are indisputably of a public nature.
Secondly and in any event, the Convention test of victimhood requires an individual applicant to have been actually affected by the alleged violation, and does not contemplate a kind of actio popularis relating to the interpretation or application of Convention rights: Klass v Germany (1978) 2 EHRR 214.
The European Court of Human Rights reiterated this point with clarity in Stbing v Germany (2012) 55 EHRR 24, para 62: [I]n cases arising from individual applications it is not the Courts task to examine domestic legislation in the abstract.
Rather, it must examine the manner in which the relevant legislation was applied to the applicant in the particular
circumstances of the individual case
In section 71(1) as originally enacted, it is clear that the reference to sections 6(2)(c), 24(1)(a) and 69(5)(b) covered all circumstances in which it was contemplated that these sections could be invoked.
The legislature, for understandable reasons (see para 60 above), did not contemplate or provide that the Commission should have competence under section 69(5)(b) to bring abstract proceedings under sections 3 and 4 of the HRA.
In this respect, it was following the general approach of the European Court of Human Rights itself: see Klass v Germany and Stbing v Germany (para 68 above).
The need to focus on individual facts was also powerfully emphasised (in the context of article 8) by Judge Lpez Guerra, joined by Judge Casadevall, in their concurring judgment in A, B and C v Ireland (2010) 53 EHRR 13.
The 2007 amendments to the NI Act 1998 confirm the legislatures approach in this regard.
They removed the reference to section 69(5)(b) from section 71(1), and moved it to section 71(2C).
The clear effect of section 71(2B) and (2C) is they also deal with all circumstances contemplated as falling within section 69(5)(c) and that such circumstances are to be limited to only one situation, viz where there is or would be one or more victims of an unlawful act within sections 6 and 7 of the HRA, in aid of whom the Commission initiates or intervenes in proceedings.
It is, as I have said, implausible to suppose that Parliament intended at the same time to give the Commission tacit and unrestricted capacity to pursue the much more serious course of initiating proceedings to establish the interpretation or incompatibility of primary legislation, whenever it decided that this would promote or protect human rights.
The combination of section 69(5)(b) and section 71 in my view therefore clearly excludes any power on the part of the Commission to institute proceedings to assert the alleged incompatibility of primary legislation of the United Kingdom Parliament with Convention rights.
Any such challenge by the Commission is in my opinion outside the scope of section 71, both before and after its 2007 amendment.
But, even if it were not so, it would not involve any identifiable unlawful act or any act of which any identifiable person could be said to be the actual or potential victim.
The result may be seen, in some eyes, as inconvenient.
However, I think it entirely comprehensible that Parliament should have left any such challenge made by reference to Convention rights to be raised in a specific context, by a victim.
The Commission would be able under sections 69(5)(a) and 70 of the NI Act to give assistance to an individual commencing or wishing to commence proceedings raising a human rights issues or relying or wishing to rely on such an issue in current proceedings.
That is however quite a different matter from the Commission initiating such proceedings in the abstract itself.
Nothing in the Houses reasoning in In re Northern Ireland Human Rights Commission supports a suggestion that there has ever existed such a power on the part of the Commission to initiate legal proceedings.
Any such suggestion would have been inconsistent with section 71 as originally enacted and would now be inconsistent with section 71 as amended with its careful definition and restriction of the circumstances in which the Commission may institute or intervene in proceedings.
Those restrictions clearly exclude the claim to institute abstract proceedings for a declaration of incompatibility with primary United Kingdom legislation, which the Commission now advances.
It is at this point appropriate to say something further about the 1945 Act, which the Commission appears to have treated as primary legislation for the purposes of the HRA: see para 45 above.
As I have already indicated, that does not seem to me correct.
It follows that it might have been open to the Commission to claim that the failure of the Northern Ireland Assembly to repeal or amend section 25 of the 1945 Act constituted itself an unlawful act within the meaning of sections 6 and 7 of the HRA.
I do not see how such a claim could be directed to the first respondent, The Department of Justice, which is not a law making body (and, for good measure, would appear also to have been precluded from taking any initiative to amend the 1945 Act by virtue of section 28A of the Northern Ireland Act and paragraph 2.4 of the Ministerial Code, which assigns such matters to the Executive Committee of the Northern Ireland Assembly).
The second respondent, the Attorney General, was not sued as representing the Northern Ireland Government and it may be could not have been (see section 17(3) of the Crown Proceedings Act 1947).
But even assuming that a claim could have been made against him on that basis, the Commission would still be subject to the restriction under section 71(2B) that it could only institute the present proceedings if there is or would be one or more victims of the unlawful act.
That restriction is not satisfied by a general assertion that the failure to abrogate or amend section 25 is likely to give rise to victims.
Section 71(2B) contemplates the specific existence and identification of a victim who can say that he or she is or would be the victim of an unlawful act, in a way which satisfies section 7(1) of the HRA.
Finally, however, I repeat the point made in para 45 above, that, even if the Commission could satisfy the restrictions of section 71(2B) and establish that the maintenance in force of section 25 constituted an unlawful act, the practical effect would appear to be either nothing or very little, having regard to the continuing effect of sections 58 and 59 of the 1861 Act.
In summary, the present proceedings were not instituted by identifying any unlawful act or any actual or potential victim of it.
First and fundamentally, as regards sections 58 and 59 of the 1861 Act, this is because they were brought to challenge the compatibility with the Convention rights of United Kingdom primary legislation, which by statutory definition is not a complaint about any act which is unlawful under the HRA or indeed otherwise.
Secondly, although this would not have resolved the first objection if they had been, the proceedings were not, in fact, brought by reference to any particular alleged victim of any such incompatibility, and this remains the case although evidence has subsequently been adduced about a number of specific cases.
In these circumstances, I would uphold the respondents objection to the Commissions pursuit of these proceedings, and answer the questions raised by the Attorney General of Northern Irelands reference in the negative.
The alleged incompatibility
The case advanced by the Commission, with the support of a number of the interveners (other interveners joining the respondents in opposition to it), involves different categories which can be identified as follows: (a) Cases of fatal foetal abnormality, (b) Cases of serious foetal abnormality, (c) Cases of pregnancy due to rape, (d) Cases of pregnancy due to incest.
Clearly, there is room for argument at the margin about the precise definition and scope of these categories.
There is however medical evidence to the effect that circumstances falling within category (a) can be reasonably clearly identified, whether they involve the inevitable or likely death of the foetus in the womb or within a fairly short period after birth.
Cases within category (b) are on that basis cases where the foetus will live for a reasonable period after birth, but suffer from permanent abnormalities.
As to category (c), the Commission initiated these proceedings with the narrow focus indicated in para 42 above.
The circumstances of the JR76 interveners (see para 89 below), relating to a child of 13 or over but under 16, were not in the Commissions mind.
Sexual activity with such a child is capable of constituting one of a number of sexual offences, not described as rape, set out in sections 16 to 22 of the Sexual Offences (Northern Ireland) Order 2008, (2008) No 1769 (NI 2), depending inter alia on the age of the person committing the offence.
As the evidence regarding the JR76 interveners illustrates (para 89 below), a pregnancy in a case involving such an offence can well involve most distressing circumstances.
However, since the question is whether current Northern legislation is bound to operate incompatibly with the Convention rights in a legally significant number of cases, it is unnecessary for us on this appeal to attempt to address every conceivable case.
Bearing in mind the narrow focus of both the Commissions case as initiated and of the submissions which we heard in this area, I will focus on rape in the legal sense, and leave other cases to be considered separately, though in the light of course of any relevant assistance which this judgment may afford.
Sections 58 and 59 of the 1861 Act provide as follows: 58.
Administering drugs or using instruments to procure abortion.
Every woman, being with child, who, with intent to procure her own miscarriage, shall unlawfully administer to herself any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, and whosoever, with intent to procure the miscarriage of any woman, whether she be or be not with child, shall unlawfully administer to her or cause to be taken by her any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, shall be guilty of felony, and being convicted thereof shall be liable to be kept in penal servitude for life . 59.
Procuring drugs, &c to cause abortion.
Whosoever shall unlawfully supply or procure any poison or other noxious thing, or any instrument or thing whatsoever, knowing that the same is intended to be unlawfully used or employed with intent to procure the miscarriage of any woman, whether she be or be not with child, shall be guilty of a misdemeanor, and being convicted thereof shall be liable to be kept in penal servitude.
Section 25 of the 1945 Act provides: 25.
Punishment for child destruction. (1) Subject as hereafter in this sub section provided, any person who, with intent to destroy the life of a child then capable of being born alive, by any wilful act causes a child to die before it has an existence independent of its mother, shall be guilty of felony, to wit, of child destruction, and shall be liable on conviction thereof on indictment to penal servitude for life: Provided that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother. (2) For the purposes of this and the next succeeding section, evidence that a woman had at any material time been pregnant for a period of 28 weeks or more shall be prima facie proof that she was at that time pregnant of a child then capable of being born alive.
The word unlawfulness used in sections 58 and 59 of the 1861 Act was explained by Macnaghten J in directions given to the jury in the seminal case of R v Bourne [1939] 1 KB 687; [1938] 3 All ER 615.
In order to understand its scope, he pointed to different wording used to define an associated offence in both the Infant Life (Preservation) Act 1929 in England and section 25 of the 1945 Act.
Under both provisions, it is necessary to prove that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother.
Macnaghten J held that the same requirement was implied by the word unlawful in section 58 (and, it follows, section 59).
He also considered that impairment of health might reach a stage where it was a danger to life, and that the words ought to be construed in a reasonable sense, and, if the doctor is of opinion, on reasonable grounds and with adequate knowledge, that the probable consequence of the continuance of the pregnancy will be to make the woman a physical or mental wreck, the jury are quite entitled to take the view that the doctor, who, in these circumstances, and in that honest belief, operates, is operating for the purpose of preserving the life of the mother: pp 693 694.
further relaxed, in particular by the Abortion Act 1967, providing: In other parts of the United Kingdom, the prohibition of abortion has been 1.
Medical termination of pregnancy. (1) Subject to the provisions of this section, a person shall not be guilty of an offence under the law relating to abortion when a pregnancy is terminated by a registered medical practitioner if two registered medical practitioners are of the opinion, formed in good faith that the pregnancy has not exceeded its twenty (a) fourth week and that the continuance of the pregnancy would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the pregnant woman or any existing children of her family; or that the termination is necessary to prevent grave (b) permanent injury to the physical or mental health of the pregnant woman; or (c) that the continuance of the pregnancy would involve risk to the life of the pregnant woman, greater than if the pregnancy were terminated; or (d) that there is a substantial risk that if the child were born it would suffer from such physical or mental abnormalities as to be seriously handicapped. (2) In determining whether the continuance of a pregnancy would involve such risk of injury to health as is mentioned in paragraph (a) of subsection (1) of this section, account may be taken of the pregnant womans actual or reasonably foreseeable
environment
In Northern Ireland, the law remains as stated in the 1861 and 1945 Acts and explained in R v Bourne.
In Family Planning Association of Northern Ireland v Minister for Health, Social Services and Public Safety [2004] NICA 37, [2005] NI 188 (the FPANI case), the Association did not challenge that proposition, but by judicial review proceedings, claimed, successfully in the Court of Appeal, that it was incumbent on the defendant Minister to investigate how many women in Northern Ireland who had pregnancies terminated in other parts of the United Kingdom could have had their abortions terminated lawfully in Northern Ireland, to provide guidance to women in that position to reduce the number travelling abroad for abortions and to provide guidance to clinicians to enable them to ensure that those having abortions gave informed consent.
The Court of Appeal also expressed views about the effect of the principles established in R v Bourne.
The Court concluded that it was incumbent on the Minister or his department to investigate the need for and if necessary issue guidelines to clarify for the medical profession and the public the legal principles governing abortion, including the provision of aftercare for those having abortions in Northern Ireland as well as those returning from having an abortion in England.
Its conclusions were to be expressed more precisely in declarations, which were not examined before the Supreme Court on the present appeal.
Articles 2, 3, 8 and 14 of the Convention rights scheduled to the HRA provide as follows: 2.
Right to life. 1.
Everyones right to life shall be protected by law. 2.
Deprivation of life shall not be regarded as inflicted in contravention of this article when it results from the use of force which is not more than absolutely necessary: in defence of any person from unlawful violence; in order to effect a lawful arrest or to prevent the (a) (b) escape of a person lawfully detained; in action lawfully taken for the purpose of quelling a riot or insurrection. 3.
Prohibition of torture.
No one shall be subjected to torture or to inhuman or degrading treatment or punishment. 8.
Right to respect for private and family life. 1.
Everyone has the right to respect for his private and family life, his home and his correspondence. 2.
There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.
Prohibition of discrimination. 14.
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 issue on this appeal is whether the existing law in Northern Ireland is compatible with these articles of the Convention in the categories of case identified in paras 42 and 67 above.
During the submissions made by Ms Caoilfhionn Gallagher QC for Humanists UK as interveners, a submission was made that the existing law, interpreted in accordance with R v Bourne, was generally too imprecise to be in accordance with the law within article 8.
That is a submission which lies outside the scope of the present appeal.
It would require revisiting the territory covered in the FPANI case and, quite probably, considering what has occurred in the light of whatever declarations were made in that case.
That is not what the present appeal has been or is about.
Even if there proved to be force in the point made by Ms Gallagher, it could at best only lead to a conclusion that the legal principles should be further clarified, whether by the court or the department or by legislative amendment.
The Abortion Act 1967 applicable in the rest of the United Kingdom demonstrates the feasibility of further legislative clarification.
When considering the compatibility in the abstract of the current Northern Ireland legislation with any particular Convention right, it is not enough to show that, as a matter of practice or when applied in the light of administrative guidance, legislation has proved prone to give rise to unjustified infringement of a Convention right.
The relevant question is whether the legislation itself is capable of being operated in a manner which is compatible with that right, or, putting the same point the other way around, whether it is bound in a legally significant number of cases to lead to unjustified infringement of the right.
That is how Lady Hale DPSC expressed the test in The Christian Institute v The Lord Advocate [2016] SLT 805, para 88.
She cited her own previous words in R (Ali) and R (Bibi) v Secretary of State for the Home Department [2015] 1 WLR 5055, para 2, where she rightly emphasised that the test sets a complainant a difficult task and at para 6 she also cited words of Lord Hodge at para 69, on which I wish to make this observation.
Lord Hodge stated in para 69 that The court would not be entitled to strike down the Immigration Rule under consideration in that case unless satisfied that it was incapable of being operated in a proportionate way and so was inherently unjustified in all or nearly all cases.
In support, Lord Hodge cited a dictum of Aikens LJ, giving the only reasoned judgment in R (MM (Lebanon)) v Secretary of State for the Home Department [2014] EWCA Civ 985; [2015] 1 WLR 1073, para 134, to the effect that If the particular immigration rule is one which, being an interference with the relevant Convention right, is also incapable of being applied in a manner which is proportionate or justifiable or is disproportionate in all (or nearly all) cases, then it is unlawful.
However, I myself see no basis for so high a numerical test.
It cannot be necessary to establish incompatibility to show that a law or rule will operate incompatibly in all or most cases.
It must be sufficient that it will inevitably operate incompatibility in a legally significant number of cases.
That itself is, as Lady Hale observed, is a difficult hurdle to overcome.
Very often the problem lies not in the law or rule itself, but in the way it has been understood or applied in practice, and, even in borderline cases, very often the solution can be found in a conforming interpretation, however bold, under section 3 of the Human Rights Act 1998.
The latter course is not however possible in relation to the 1861 or 1945 Acts, in view of their unequivocal tenor and terms.
Expert evidence
Professor (or as he was then Dr) James Dornan, director of foetal medicine at the Royal Jubilee Maternity Service at the Royal Maternity Hospital, Belfast gave evidence to the court in the FPANI case and has given further evidence in the present proceedings.
In the FPANI case (see paras 122 to 123), he explained how, after his appointment as a consultant with responsibility for foetal medicine in 1986, he had clarified with the Department of Health the implications of diagnosis of congenital deformities, and was, as he recorded in a letter dated 31 August 2001, informed that we should not change our clinical practice and that termination of pregnancy should be carried out for lethal abnormalities or abnormalities where there would be a major physical or mental problem for the foetus prior to the stage of viability. (At that time 28 weeks, now considered to be 24 weeks.) We were also informed that termination could be offered and performed on a pregnancy that could have a serious mental or physical effect on the mother.
Therefore for the past decade, terminations of pregnancy for the above abnormalities have been offered to mothers and are carried out on mothers from throughout Northern Ireland in our unit.
In the FPANI case (para 83), Nicholson LJ inferred that the Department of Health had not considered the legal position in relation to abnormal foetuses, and that It would appear that it has never been indicated to Dr Dornan or his colleagues that it might be necessary to obtain a psychiatric viewpoint on the mothers mental health, if that was the ground on which the abortion of a viable foetus was carried out or that the effect on the mothers health would have to be serious and long term.
In the present proceedings, Professor Dornan has updated the position in a statement dated 17 October 2017, in which he records that the FPANI case made it clear that we could no longer offer a pregnant woman the option of an abortion on the grounds of fatal foetal abnormality alone, the focus had to be on the pregnant woman and a pregnancy could be lawfully terminated if its continuation threatened her life or would have a serious and long term effect on her physical or mental health (para 12).
His statement endorses the Department of Healths and the Royal College of Midwiferys conclusions that foetal or serious foetal abnormalities can now be diagnosed with a high degree (Professor Dornan says extremely high degree) of accuracy.
As to fatal or lethal abnormality, he summarises clinicians typical understanding of that term as applying where a foetus is diagnosed as liable to die during pregnancy, labour or within a short period of birth (para 17), and adds that clinicians are well able to accurately diagnose antenatally whether a foetus has a condition which is incompatible with life, whether in the sense that it is unlikely to be able to continue to term, to survive the birth process or to be able to maintain its vital functions independently for anything more than a few days (para 20).
Professor Dornan also explains the risks of, in particular, sepsis to the physical health of a mother of an abnormal foetus, which may die and remain undetected in utero for a significant period (up to two weeks), as well as the significant risks to the mental health of a mother required to continue with a pregnancy knowing that her baby has a fatal abnormality and may die at any moment.
Horner J accepted that The doctors know when the foetus has an FFA (a fatal foetal) abnormality.
This is primarily a medical diagnosis not a legal judgment (para 160).
Before the Supreme Court Christian Action and Research in Education (CARE), ADF International (UK) and Professor Patricia Casey as joint interveners suggested that other professional opinion differed but the evidence before the judge and his finding were clear.
Factual cases put in evidence
The Commissions case on the issue before the Court is supported by evidence relating to a selection of pregnant women.
Their experiences are harrowing.
Three cases concern foetal abnormality.
In the first, Ashleigh Topley recounts her joy as a prospective mother in 2013, up to the point when a 20 week scan revealed her babys severe bone abnormality, with a fatal prognosis.
A doctor explained that an abortion would be a possibility, only for that relatively hopeful outcome to be shattered by a consultants distressingly blunt statement the next day: Well, thats not going to happen, followed by another to the effect that, if Mrs Topley were to continue with the pregnancy, things would just proceed as normal.
A later consultants appointment confirmed that the babys condition meant that it could survive through Mrs Topley in the womb, unless and until its heart ran out of room, but would not survive birth.
At 35 weeks pregnant, her waters broke and she gave birth to a girl, whose appearance indicated that her heart had probably stopped beating two or so days earlier.
During and after the pregnancy, Mrs Topley faced the ordeal of others congratulating her on her pregnancy or asking about the baby.
A second sad case is that of Sarah Ewart, on whose behalf as an intervener the Supreme Court has received both written and oral submissions.
In summer 2013, just prior to 20 weeks into her pregnancy, a scan revealed that her baby had anencephaly, the lack of a developed brain and skull.
She was told that there was no risk to her health, and that the baby would be monitored fortnightly and labour induced if it was then discovered that it had died.
She did not feel that she could say that her mental health was at risk (and a consultant psychiatrist later confirmed that he could not predict this either).
She was horrified to discover that, without a skull, the baby could not travel down the birth canal, and decided that she could not face the prospect of a long and painful labour.
Her mother contacted Assembly and Westminster representatives, with scant results.
Her doctor explained the guidelines for abortion (presumably those developed after the FPANI case), and that nothing could be done for Ms Ewart in Northern Ireland, adding that she wasnt going to prison for anyone.
The concerns of Ms Ewart, her husband and parents were increased by a departmental briefing to the effect that the courts in Northern Ireland have not ruled on whether it is lawful to encourage or arrange for someone to have a termination and that in the absence of current law on the subject, it remains a grey area and practitioners should be mindful of that fact.
There were protesters outside the Family Planning Association in Belfast, who crowded round and abused them as they left.
The Association had however by then arranged an appointment for an abortion in Streatham, where no one knew about anencephaly.
Her Northern Ireland medical notes could not be transferred to the English clinic, where she felt criticised for having left an abortion so late and the process lacked dignity and was like a conveyor belt.
There was, apparently because of a lack of clarity whether this would be permitted in Northern Ireland, no autopsy on the remains to provide an indication of the likelihood of recurrence of fatal foetal conditions.
The whole experience was devastating and at times almost overwhelming.
The third case is that of Denise Phelan, a qualified lawyer and teacher, who found herself having to carry until one month before her due date in summer 2016 a baby who she knew from an early stage could not live.
Her evidence is that none of her professional training was of any assistance at all in dealing with the reality that in my most desperate time of need the law of Northern Ireland not only could not assist me but actually made things worse.
She continued: The sadness I felt in learning that the foetus I was carrying had a fatal abnormality was completely overtaken by the horror of realising that I had to continue on with the pregnancy in the knowledge that the foetus could die at any moment and then there would be the awful experience of having to deliver it.
After learning that her baby had Edwards Syndrome, Mrs Phelan and her husband were told that they would have to go to England if they decided to terminate the pregnancy, but that doctors in Northern Ireland could not because of the law give any information about that.
She understood that there was a limit of 24 weeks for such a process, and was not informed to the contrary.
When she and her husband asked further about English clinics, they were shocked not just at the cost which was over 1,400, but more so by how the abortion clinics acted like businesses and by the apparent absence of any NHS aftercare.
She had a prior history of mental illness and chronic migraine, which reasserted itself with a vengeance, leaving her incredibly ill with grief, depression, and chronic migraine and vomiting.
She records one psychiatrist saying on the telephone that if a mothers mental health was at risk, the symptoms would simply be treated with medication, while the psychiatrist who she saw assessed her as ineligible for an abortion under Northern Ireland law, saying the bar was set so high that an abortion on those grounds was impossible to obtain.
With her husband she eventually made arrangements to attend an English abortion clinic in her 24th week, but she had chronic migraine and could not travel.
She became even more depressed and ill as a result, and thought of committing suicide.
She knew when her baby died, but it was five days before she was induced to give birth.
During that period the dead baby released meconium which fills the womb and suffers decay, an experience for which no one had prepared her and her husband and which remains seared in her mind.
As one example of a case involving rape, Dawn Purvis of Marie Stopes International Northern Ireland (MSNI) cites client B, who presented at MSNI pregnant after being raped by her partner, with whom she was enduring a domestically violent relationship and who had refused to allow her to use any contraception.
Her GP had refused to refer her to any health care provider on the basis that abortion was illegal in Northern Ireland, and MSNI assessed her as ineligible for an abortion under Northern Ireland law.
Client B was upset and distressed at being informed that she would have to travel to England for an abortion, this being compounded by her fear of her partner and of his reaction if he found out that she was pregnant and planning a termination.
She underwent a termination outside Northern Ireland.
Other examples of the distressing consequences of pregnancy following rape are given by Mara Clarke of Abortion Support Network (ASN).
One is of a woman beaten and raped by a group of men including a close relative.
Northern Ireland organisations and agencies knew of her circumstances, but none offered any assistance.
She managed to raise 100 towards the costs of obtaining an abortion in England, including travel and accommodation, with ASN funding the remaining 1,200.
She later told ASN that, without their help, she would be dead either by her own hand or by that of those who abused her.
The case of two other interveners before the Supreme Court calls for mention.
They are mother and daughter, identified as the JR76 interveners, referring to judicial review proceedings to which they are party in Northern Ireland.
The daughter aged 15, and therefore legally unable to consent to sexual intercourse, became pregnant as a result of a relationship with a boy one year older.
The boy was abusive, and threatened to kick the baby out of her and to stab it if born.
The daughter wanted to continue her schooling and go to university.
Discussing the situation with her supportive mother, the daughter decided that she could not go through with the pregnancy or a termination in England.
She would have had to obtain travel documents and go with her mother.
Instead, she asked her mother to obtain pills to put an end to the pregnancy, neither apparently realising this was unlawful.
Taking the pills led to heavy bleeding, as a result of which the daughter saw her GP, but not to termination of the pregnancy.
The GP referred her to Children and Adolescent Mental Health Services (CAMHS), who advised a referral to a local maternity/gynaecologist clinic and also contacted Social Services, who a month later contacted the Police Service of Northern Ireland (PSNI).
The PSNI then, without notice, obtained her medical records from her GP and CAMHS, which led to her being questioned on child protection grounds in her mothers absence, and then to her mother being interviewed under caution and charged by the Public Prosecution Service for Northern Ireland.
The pending judicial review proceedings relate to that decision to prosecute.
As an example of pregnancy due to incest, Dawn Purvis identified client C, aged under 13, who presented at MSNI with a relative after becoming pregnant as a result of familial sexual abuse elsewhere within the family.
Client C had, as is common in such cases, concealed the abuse and pregnancy beyond nine weeks and four days.
MSNI only provide medical abortions within that period, and then not to girls under 16.
MSNI initiated its safeguarding procedures and social services and the PSNI became involved.
Client C became frightened and distressed when told that she would have to travel to England, but did so.
Subsequently, the PSNI have asked to retain the products of conception, and have travelled to England to collect them.
These are distressing cases.
But they are not before the Court for resolution, in the way that they could have been if those directly involved in them had brought proceedings as victims.
Had these cases been before the Court, the circumstances of each would have been the subject of individualised investigation and adjudication.
Instead, they are deployed in support of a general challenge to Northern Ireland law as incompatible with the Convention rights.
Further, the Court is invited to address this challenge in terms of risk.
An analogy is suggested with cases such as Chahal v United Kingdom [1996] 23 EHRR 413 and Saadi v Italy [2008] 49 EHRR 30, where the European Court of Human Rights identified as the relevant test of the legitimacy of a deportation, whether there would be a real risk of torture or inhuman or degrading treatment in the country to which deportation was proposed.
In my view, these points demonstrate the problem about treating the Commission as having a generalised competence to challenge legislation, and illustrate a likely reason why the NI Act 1998 was framed so as not to confer such a competence.
When a challenge is made by a victim, the court focuses on the treatment which the victim has actually received or is actually receiving, and its cause may well prove not to have been the applicable legislation, but rather the way this was (mis)understood or (mal)administered.
In contrast, where, as here, the claim is that the legislation itself presents a risk of treatment incompatible with the Convention, the focus is in one sense narrowed, in so far as it is now solely on the legislation and its effect, but in another sense broadened, in so far as it is submitted that compatibility must be judged not by reference to actual facts, but by reference to risk.
That said, others among my colleagues consider that the Commission is competent to bring the present proceedings.
In the circumstances I shall go on to express my own views on the generalised challenges which are made.
The starting point is that an unborn foetus is not treated in domestic law as being already a person.
In the context of abortion, a conclusion that a foetus is not a person appears to follow naturally from the interpretation of the 1861 and 1945 Acts, according to which the preservation both of the mothers life and of her long term mental health from serious damage prevail, without more, over any interests of the unborn foetus.
The English law position was considered more generally in In re MB (Medical Treatment) [1997] EWCA Civ 3093; [1997] 2 FLR 426, 444.
The issue there was whether the court had power to compel a woman of competent decision making power to have a caesarean in order to save her unborn child.
The Court of Appeal rejected the existence of such a power, saying forcibly: The law is, in our judgment, clear that a competent woman who has the capacity to decide may, for religious reasons, other reasons, or for no reasons at all, choose not to have medical intervention, even though, as we have already stated, the consequence may be the death or serious handicap of the child she bears or her own death.
She may refuse to consent to the anaesthesia injection in the full knowledge that her decision may significantly reduce the chance of her unborn child being born alive.
The foetus up to the moment of birth does not have any separate interests capable of being taken into account when a court has to consider an application for a declaration in respect of a caesarian section operation.
The court does not have the jurisdiction to declare that such medical intervention is lawful to protect the interests of the unborn child even at the point of birth. (italics added)
In Attorney Generals Reference (No 3 of 1994) [1998] AC 245, the House concluded, as the headnote puts it, that a foetus is neither a distinct person separate from its mother, nor merely an adjunct of the mother, but was a unique organism to which existing principles could not necessarily be applied.
This introduces a note of caution about any absolutist attempt of definition, and the italicised sentence in the quotation from In re MB (Medical Treatment) above may in that respect be too dogmatic.
The European Court of Human Rights has also taken a somewhat more nuanced approach.
Vo v France (2004) 40 EHRR 12 was concerned with a case where a doctor by negligence had caused the termination of a pregnancy at the 20 to 24 weeks stage.
The doctor had been acquitted of causing unintentional harm on the ground that the foetus was not at that stage a person.
Complaint was made that this involved a breach of article 2.
The European Court of Human Rights after considering the previous case law said that, in the circumstances examined to date, under various national laws on abortion, the unborn child is not regarded as a person, directly protected by article 2.
However, it went on to leave open the possibility that in certain circumstances certain safeguards might be extended to the unborn child (para 80).
In the context of the new situation before it, no single answer could be given to the question when life begins and who is a person.
The question was within each states margin of appreciation (para 82).
But, so far as there was a consensus, it was only that the foetus/embryo belonged to the human race and had the potential to develop into a full person (para 84).
In A, B and C v Ireland (2010) 53 EHRR 13, the issue was whether the Irish prohibition on abortion was compatible with the Convention.
The prohibition applied save where necessary to save the mothers life, so obliging pregnant mothers fearing for their health or well being if their pregnancy continued to travel to England for an abortion.
The Court at para 213 referred to Vo v France in support of a dictum that the womans right to respect for her private life must be weighed against other competing rights and freedoms involved including those of the unborn child.
That is a more open ended proposition, but at para 222 the Court repeated that it had been confirmed by the Courts finding in .
Vo v France that it was neither desirable nor possible to answer the question of whether the unborn was a person for the purposes of article 2 of the Convention.
In the light of this and of the Courts case law generally, the Court cannot in para 213 be read as equating the interests of an unborn child with those of the mother in the context of abortion.
Article 3
The Commissions primary case is that the 1861 and 1925 Acts infringe article 3.
Article 3 contains an unqualified or absolute prohibition of torture and of inhuman or degrading treatment or punishment.
The European Court of Human Rights explained the concept in Gfgen v Germany (2010) 52 EHRR 1, para 88 in these terms: In order for ill treatment to fall within the scope of article 3, it must attain a minimum level of severity.
The assessment of this minimum depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age, and state of health of the victim.
Further factors include the purpose for which the treatment was inflicted together with the intention or motivation behind it, as well as its context, such as an atmosphere of heightened tension and emotions.
Again, it is apparent that the exercise which the Commission invites of judging the general incompatibility of legislation with article 3 sits uneasily with the case by case and contextual approach with which both the European Court of Human Rights and domestic courts are more familiar under article 3.
The European Court of Human Rights has considered article 3 in the context of abortion in a number of cases.
A, B and C v Ireland is a useful starting point, although it did not concern foetal abnormality, rape or incest.
The three applicants, all resident in Ireland, each travelled to England for an abortion, believing that they had no right to one in Ireland.
Each had become pregnant unintentionally.
The Court found that the first applicant had had an abortion for reasons of health and well being, namely her history of alcoholism, post natal depression and difficult family circumstances, the second applicant had had an abortion because she did not feel ready to be a mother, and the third applicant had had an abortion because of a fear (whether or not well founded) that her pregnancy constituted a risk to her life, because it might cause her cancer to recur and mean that she did not then receive cancer treatment in Ireland.
The Court accepted that, although the psychological impact was not susceptible to clear proof, travelling abroad for an abortion constituted a significant psychological burden on each applicant (para 126), and said that an abortion in Ireland would have been a less arduous process, as well as less expensive.
The third applicant made the additional complaint (which the Court upheld under article 8) that there had been no proper regulatory framework and system for considering and establishing whether she was entitled to an abortion in Ireland.
The judgment is of interest for the Courts treatment of the complaints made in the above circumstances by all three applicants under article 3.
The Court recited the effect of the first two sentences quoted above from Gfgen and went on simply to say that the facts alleged do not disclose a level of severity falling within the scope of article 3, with the result that it rejected the complaints under that article as manifestly ill founded (paras 164 165).
I note in passing that, contrary to the Commissions submissions before the Supreme Court, I see no reason to exclude as a relevant factor in the connection that the foetuses in question would have been viable.
The first and second applicants complaints under article 8 were rejected on the ground that the prohibition in Ireland of abortion for health and well being reasons, based as it is on the profound moral views of the Irish people as to the nature of life left open the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland, and represented a choice which fell within the margin of appreciation accorded to the Irish state (para 241).
The third applicant succeeded under article 8 on special grounds, as already mentioned.
In two cases the European Court of Human Rights has held that article 3 was infringed by failures to give effect to rights to an abortion which domestic law in the circumstances conferred.
It is well established in Strasbourg case law that a Convention breach may consist in failing to give effect to domestic law rights, even though there is no Convention obligation on domestic law to provide such rights: see eg RR v Poland (2011) 53 EHRR 31, para 200, Marckx v Belgium (1979) 2 EHRR 330, para 31, and Stec v United Kingdom (2005) 41 EHRR SE18, para 53.
In RR v Poland the applicant learned of possible malformation of the foetus from an ultrasound at the 18 week stage.
Her repeated requests for genetic tests were met with procrastination, confusion and a lack of proper counselling and information, and it was not until the 23rd week that, with the help of a sympathetic doctor, she was able to gain access to a hospital by subterfuge and have appropriate tests, the results of which were only available two weeks later.
She was then told that the foetus had Edwards syndrome, but was refused an abortion on the basis that it was now too late, after the 24 week stage.
As a result, she had to carry the baby to term, and deliver it.
The legislation providing for abortion expressly, and unequivocally entitled a pregnant woman to unimpeded access to prenatal information and testing (para 156).
The applicant was in a situation of great vulnerability and deeply distressed by the information that the foetus could be malformed (para 159).
The services not provided to her had been available, and she had been shabbily treated and, as the Polish Supreme Court had also found, humiliated (para 160).
In P and S v Poland [2012] 129 BMLR 120, P aged 14 became pregnant due to rape, evidenced by bruises.
Polish law permitted an abortion in such circumstances, but the reality of its practical implementation was in striking discordance with the theoretical right.
P was given contradictory information and was subject to religious pressure, medical procrastination, combined with the release by a hospital of information to the national press, exposing P to public comments, unwanted and intrusive text messages from unknown persons and harassment by anti abortion activists.
The Lublin Family Court even removed P from the custody of her mother (S), on the (unfounded) basis that her mother was pressurising her to have an abortion contrary to her wishes, and put her in a juvenile shelter.
Eventually, after S complained to the Ministry of Justice, she was informed that P could have an abortion in Gdansk, 500 kilometres away.
S and P drove there clandestinely and the abortion was carried out on 17 June 2008.
Nonetheless, in July 2008 criminal proceedings were begun against P on suspicion of unlawful sexual intercourse with a minor under 15.
These proceedings were only dismissed in November 2008 on the basis that P was the victim, not the perpetrator.
In these circumstances, the Court focused on Ps great vulnerability, her young age, the extent to which she had been pressurised and exposed to unwanted public attention, the misguided criminal proceedings commenced against her, and (echoing a phrase from RR v Poland) procrastination, confusion and lack of proper and objective counselling and information throughout; and on that basis found a breach of article 3.
In contrast, in Tysiac v Poland (2007) 45 EHRR 42, the Court rejected the applicants complaint under article 3, while accepting it under article 8.
She had complained about the failure to afford her an abortion in circumstances where she had an understandable fear that giving birth would lead to her losing her already poor sight, leading to a further six months of pregnancy and a caesarean birth, after which her sight did in fact deteriorate significantly (although the causation of this was in issue), causing her immense personal hardship and psychological distress.
The Court held that there was no adequate system in Poland for deciding whether an abortion was lawful and appropriate, for resolving issues arising in this connection and for enabling the applicant to know her position, thereby exposing her to prolonged uncertainty, severe distress and anguish.
Nonetheless, the Court only held there to have been a breach of article 8.
The case made under article 3 was rejected, evidently on the ground that the ill treatment did not reach the requisite level of severity, since the Court referred in this connection to Ilhan v Turkey (2000) 34 EHRR 36, para 87, which proceeded on that basis.
These three cases are all instances of careful consideration of particular facts, to decide whether the relevant threshold of severity has been crossed.
They were decided on an assessment of the actual circumstances of the conduct relied on as contrary to article 3.
They were not decided by reference to an assessment of the risk that the State might commit an actual breach of article 3.
They lend no support to a general conclusion that the current Northern Irish legislative position necessarily involves a breach of article 3 in respect of any pregnant woman faced with a choice between carrying her foetus to term or travelling abroad for an abortion.
Even when one takes into account that the present case concerns pregnancies where the foetus is diagnosed as fatally or seriously abnormal or is the result of rape or incest, it remains the case that the pregnant woman may, and it seems likely in most cases can if she chooses, travel elsewhere from Northern Ireland for an abortion.
It is clear that this can be a distressing and expensive experience, even taking into account that it has now been accepted that the NHS should bear the costs of such an abortion in England.
Nevertheless, this is the result of current Northern Irish legislative policy, which itself no doubt originates in moral beliefs about the need to value and protect an unborn foetus.
In these circumstances, I do not see that current Northern Ireland law can be regarded as giving rise either generally or necessarily in any case to distress of such severity as to infringe article 3, any more than the European Court of Human Rights considered it to be in A, B and C v Ireland.
Instead, the focus should be on individual cases, in a way which the Commissions actio popularis does not permit.
The appellant submits that it is wrong to look solely in this connection to article 3 of the Human Rights Convention.
International legal material under other instruments, to which the European Court of Human Rights would itself have regard, can and in their submission should inform the view taken of article 3: see eg Opuz v Turkey (2009) 50 EHRR 28, para 185.
In the present context, the Commission invites attention to decisions of the United Nations Human Rights Committee (UNHRC) in relation to article 7 of the International Covenant on Civil and Political Rights, the first sentence of which is, with the addition of the further alternative cruel before inhuman or degrading, in identical terms to the first sentence of article 3 of the Human Rights Convention.
In Mellet v Ireland (9 June 2016) and Whelan v Ireland (17 March 2017), substantially overlapping groups of distinguished international lawyers have recently considered specific complaints by two Irish women about the circumstances in which they were denied abortions in respect of fatally abnormal foetuses in Ireland, and were compelled to travel abroad to obtain them.
In each case, the UNHRC concluded that the prohibition on abortion in Ireland, the shame and stigma associated with the criminalisation of abortion of a fatally ill foetus, the compulsion in such a case to travel abroad from the familiar home environment to have an abortion, the lack of information and assistance in Ireland, before and after such abortion, the fact of having to leave the babys remains behind and then in Whelan having them unexpectedly delivered by courier, were all factors combining to lead to a conclusion that article 7 was breached.
In each case, the UNHRC also concluded that there was arbitrary or unlawful interference with the complainants privacy contrary to article 17 of the Covenant.
Mellet and Whelan represent the conclusions of distinguished lawyers under a different international treaty to the Human Rights Convention.
In both cases, the UNHRC received and recorded submissions from the Irish government on A, B and C v Ireland.
The UNHRC did not, however, specifically address the requirement under the case law of the European Court of Human Rights for treatment to have a significant severity before it falls to be treated under article 3, compared for example with article 8 of the Convention, or consider the (perhaps more restrictively worded) equivalent of article 8 to be found in article 7 of the Covenant.
Further, in both decisions, the UNHRC was at pains to note that, according to General Comment No 20 on the Covenant, its text was not limited, and no justification or extenuating circumstances may be invoked to excuse a violation for any reason: Whelan at para 7.7.
While it also true that article 3 of the Human Rights Convention is in terms unqualified, the contextual application which the European Court of Human Rights adopts (para 94 above) militates against too absolutist an approach.
It is not clear that the UNHRC takes the same approach.
Even so, both UNHRC decisions adopt the same approach as the European Court of Human Rights, in that they focus intensely on the particular facts.
Although the UNHRC decisions do so in the context of fatal foetal abnormality, which is now in issue before the Supreme Court, they are not authorities as to the position under the Human Rights Convention and, even if they were, they could not stand for a general proposition that the Northern Ireland legislation with which the present appeal is concerned must itself be condemned as generally incompatible with article 3.
For these reasons, therefore, I would reject the Commissions general case that the 1861 and 1945 Acts are of themselves incompatible with article 3 of the Human Rights Convention.
That does not mean that the Northern Ireland authorities treatment of a pregnant woman, with a foetus with a fatal abnormality or the result of rape or incest (or, indeed, in other cases) may not on particular facts achieve that level of severity that justifies a conclusion of breach of article 3.
It means only that the legislation by itself cannot axiomatically be regarded as involving such a breach.
Article 8
It is common ground that the prohibition of abortion in the circumstances in issue on this appeal constitutes an interference coming within the scope of, or engaging, article 8 in the case of persons affected by that prohibition: see also A, B and C v Ireland, para 214.
But article 8 is, in contrast to article 3, qualified by reference to the interests identified in its para 2 and set out in para 80 above.
In A, B and C v Ireland the questions arising were addressed under three heads: (i) Was the interference in accordance with the law? (ii) Did it pursue a legitimate aim? (iii) Was it necessary in a democratic society? In domestic authority a more detailed, overlapping schema is commonly identified: (i) Was the aim or objective of the interference sufficiently important to justify the limitation of a fundamental right? (ii) Was the interference rationally connected to such aim or objective? (iii) Could a less intrusive measure have been used? (iv) Having regard to these matters and to the severity of the interference, was a fair balance struck between the rights of the individual and of the community? See Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, per Lord Sumption at para 20 and, in slightly greater detail, Lord Reed at para 74.
Taking head (i), in the present context, the interference was prescribed by law the 1861 and 1945 Acts.
I have already noted that this appeal is not about whether those Acts define sufficiently clearly the circumstances in which abortion is permitted.
It is clear at least since the FPANI case that they exclude, as such and without more, abortion in the circumstances of foetal abnormality and of pregnancy due to rape or incest, with which this appeal is concerned.
The next step, taking head (ii), is to identify and consider the legitimacy of the aim or objective of the legislative prohibition.
In terms of article 8(2), the potentially relevant interests are the protection of health or morals, and, perhaps, if a foetus is treated as or equated with an other, the protection of the rights and freedoms of others.
It is clear that there exists in Northern Ireland a considerable body of religious or moral opinion that places great weight on the interests of the unborn child and believes that, even in the situations in issue on this appeal, those interests deserve such protection as the present legislative prohibition affords.
How much protection is actually achieved, when the possibility exists and is clearly taken up by many pregnant women of travelling abroad for an abortion, is however very doubtful.
The likelihood is that it is only a few women who are not sufficiently informed or sufficiently funded and organised who miss out on this possibility.
With regard to the moral or religious case made against abortion, in A, B and C v Ireland (para 222) the European Court of Human Rights recalled that it had in Open Door Counselling and Dublin Well Woman v Ireland (1992) 15 EHRR 244: found that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life which were reflected in the stance of the majority of the Irish people against abortion during the 1983 referendum.
The impugned restriction in that case was found to pursue the legitimate aim of the protection of morals of which the protection in Ireland of the right to life of the unborn was one aspect.
The position in Ireland was that, pursuant to the 1983 referendum, the Eighth Amendment to the Irish Constitution was passed to the effect that Ireland acknowledges the right to life of the unborn and with due respect to the equal right to life of the mother, guarantees in its laws to regard and, as far as practicable, by its laws to defend and vindicate that right.
A, B and C v Ireland shows that a constitutional choice in such terms is well capable of constituting the pursuit of a legitimate aim, even though it is not one which is shared by, or reflects any sort of consensus in, other Council of Europe States.
In A, B and C v Ireland, the Court was not persuaded that limited opinion polls put before it by the applicants were sufficiently indicative of a change in the views of the Irish people, concerning the grounds for lawful abortion in Ireland, as to displace the states opinion to the Court on the exact content of the requirements of morals in Ireland (para 226).
The position in Northern Ireland is very different.
The retention in Northern Ireland of the 1861 and 1925 Acts, without qualification, is not the result of, and has not been endorsed by, any referendum.
It reflects without much doubt a deliberate moral choice or choices in the past on an issue which is still controversial.
But the extent of the protection given to the foetus is less extensive than in Ireland.
There is no express recognition of a right, still less an equal right, to life on the part of the unborn, and the Northern Ireland legislation permits abortion to protect not only the life of the pregnant woman, but also her mental health from serious long term injury.
Further, Mr McGleenan for the Department of Justice does not argue that a foetus has a free standing right to life, but for an analysis along the lines adopted by the European Court of Human Rights in Vo v France, whereby the foetus has a potential and intrinsic value.
The issue is currently controversial for at least two reasons.
First, the Commission has been pressing the Northern Ireland Department of Justice since 2013 to present proposals for amending the law in all the areas before the Supreme Court.
The Department eventually concluded that the law should be reconsidered as a matter of policy, not, Mr McGleenan stressed, because it considered that the Convention required such reconsideration.
But it confined its October 2014 consultation paper, as well as its June 2015 paper seeking approval to draft a bill, to fatal foetal abnormality.
In February 2016 the Northern Ireland Assembly voted by 59 votes to 40 against amendments to the Justice (No 2) Bill which would have legalised abortion in cases of fatal foetal abnormality and by 64 votes to 32 against amendments legalising abortion in cases of rape, incest or indecent assault.
The opposition to these amendments was presented on the basis that the Justice Bill was the wrong vehicle for consideration of an issue which was best dealt with in a more measured way, and was accompanied by a proposal for a working group.
Such a group was set up, and it is anticipated that it will recommend reform.
But, in the absence of any Northern Ireland government since early 2017, no progress has been possible.
Nonetheless, Mr McGleenan submits, the ordinary legislative process should be followed, even though it is, at least for the time being, at an impasse.
On the other hand, the Commission now submits that there is strong public support for changes in the law.
A poll commissioned by Amnesty International in 2014 found that respectively 69%, 68% and 60% of those polled people considered that abortion should be permitted in cases of respectively rape, incest and fatal foetal abnormality.
In 2017 the Northern Ireland Life and Times Survey, a joint project of Queens University, Belfast and the Ulster University, reported on the results of a survey undertaken in 2016, which showed the following percentages definitely or probably in favour of permitting abortion in the following situations: Probably Foetus 23 has fatal abnormality and will not survive birth Foetus has serious abnormality and may not survive birth Pregnancy due to rape or incest A woman has a serious health condition and a doctor says she will die if she continues with the pregnancy A doctor says there is a serious threat to the womans physical or mental health if she continues with the pregnancy Definitely 58 24 27 54 56 30 28 46 45 17 44 31 17 A doctor says there is more risk to the life of a pregnant woman if she continues with the pregnancy than if she were to have an abortion A woman wants an abortion because she does not want to have
children
Neither Horner J nor Weatherup LJ in the Court of Appeal was prepared to put much weight on opinion polls in the present context.
Weatherup LJ noted that a referendum had not been held and could not be expected in Northern Ireland where the use of a referendum is usually reserved for constitutional issues (para 145).
Accordingly, he said, support for a measure must be gauged by the votes of members of Parliament and in respect of devolved matters that means the votes of the members of the Northern Ireland Assembly.
Weatherup LJs observations address an important point.
The paradigm, at both the Westminster and devolved levels, is one of representative democracy.
It is integral to representative democracy that a Parliament or other legislative Assembly may reach and maintain decisions which would not be shared by a majority if put to a popular vote.
A classic instance is the abolition in most cases of the death penalty in the UK in 1965, in circumstances where public opinion overwhelmingly supported its retention at that date, and appears to have remained on balance in favour of such a penalty until 50 years later.
Where deployed as an exception to this paradigm, a referendum can certainly have a potent effect.
But there are no rules as to when referenda take place, and none is likely on the subject of abortion in Northern Ireland.
And opinion polls can never equate to a referendum.
Views elicited by opinion polls cannot by themselves prevail over the decision to date by the Northern Ireland Assembly to maintain, at least for the present, the existing policy and law.
As a matter of general principle, the paradigm must apply, when it comes to deciding whether the present prohibition pursues a legitimate aim or objective.
The one qualification that may be made relates to the nature of the Assemblys most recent vote on 10 February 2016 to reject amendments to the Justice (No 2) Bill: para 109 above.
Out of a total of 108 potential votes, I understand that most of the Ulster Unionist members (with 16 votes between them) and Alliance members (with 8 votes between them) were in favour of the amendments, while the Democratic Union Party (the DUP), the largest party (38 votes) does not appear to have rejected the amendments for reasons of inflexible moral principle, but rather because the issues demanded careful consideration from the medical professionals, practitioners, families and ethics and legal experts to ensure that sufficient and proper clarity and guidance are the hallmarks of the way forward.
It was the DUP which in these circumstances proposed the establishing of a working party as the key to a sensible, informed and appropriate way forward, with a view to its reporting in six months.
Since January 2017, any such solution has been precluded by the cessation of the Assemblys activity, and over two years have now elapsed since the vote on 10 February 2016 without any step towards a real resolution of this pressing issue.
Taking the approach of the European Court of Human Rights in A, B and C v Ireland, the focus moves to question (iii): was the interference necessary in a democratic society? Taking the more detailed approach indicated in Bank Mellat, the interference can be seen to be rationally connected with the fulfilment of the relevant aim or objective, in so far as the aim or objective is a moral one.
On the other hand, if the connection is viewed by reference to the success of the current legislation in preserving births and lives of babies who would otherwise be aborted, the connection is less readily sustained, bearing in mind the lack of up to date evidence on this point.
In August 2017 the Advertising Standards Authority rejected a complaint that a poster issued by the pro life campaign group BothLivesMatter was misleading, when it estimated at 100,000 the total number of people alive in Northern Ireland today, who would not be had the Abortion Act 1967 been extended to Northern Ireland.
That figure does not however bear or help in any way in relation to the situations of abnormality, rape and incest in issue on this appeal.
The real issue on this appeal is, on that basis, whether the interference was necessary in a democratic society, in the sense that, having regard to all the relevant matters, it struck a fair balance.
In the present context, that means a fair balance between the rights of the pregnant woman and the interests of the foetus which the community has by maintaining the 1861 and 1925 Acts determined to merit protection.
In relation to this central issue, the Supreme Court faces a fundamental question about its role in relation to that of the Northern Ireland Assembly, which has until now determined to maintain the 1861 and 1925 Acts unamended in an area where devolution has conferred on it legislative competence to amend the law.
Looked at from the perspective of the European Court of Human Rights, there is no doubt that this is a situation where that Court would afford the United Kingdom, represented in this context by the Northern Ireland Assembly, a large margin of appreciation.
That is evidenced by A, B and C v Ireland, although as pointed out in the concurring judgment of Judge Lpez Guerra, joined by Judge Casadevall in that case, the margin is not unlimited at the Strasbourg level.
Here, however, the Convention rights have been domesticated, and the position in that context is on any view different.
As Lord Hoffmann put it in In re G [2009] 1 AC 173, para 37: In such a case, it is for the court in the United Kingdom to interpret articles 8 and 14 and to apply the division between the decision making powers of courts and Parliament in the way which appears appropriate for the United Kingdom.
The margin of appreciation is there for division between the three branches of government according to our principles of the separation of powers.
There is no principle by which it is automatically appropriated by the legislative branch.
See also my judgment, at paras 128 130, where I pointed out that Sections 3, 4 and 6 of the Human Rights Act 1998 define the courts role in relation to the new domestic Convention rights.
Courts must act compatibly with them (unless primary legislation precludes this, when all that courts can do is make a declaration of incompatibility).
But I added this important note of caution: In performing their duties under sections 3 and 6, courts must of course give appropriate weight to considerations of relative institutional competence, that is to the decisions of a representative legislature and a democratic government within the discretionary area of judgment accorded to those bodies: see Brown v Stott [2003] 1 AC 681, 703, though the precise weight will depend on inter alia the nature of the right and whether it falls within an area in which the legislature, executive or judiciary can claim particular expertise: see R v Department of Public Prosecution, Ex p Kebilene [2000] 2 AC 326, 381 per Lord Hope of Craighead.
The Supreme Court has quite recently had again to consider its role in relation to the United Kingdom Parliament in a context which can be seen as having both similarities to and differences from the present.
R (Nicklinson) v Ministry of Justice [2015] AC 657 involved the question whether primary legislation which prevented assistance being given to persons with locked in syndrome who wished to commit suicide was compatible with Convention rights.
The Supreme Court by a majority reiterated the applicability in this context of the approach taken in In re G.
But, by a different majority, it also held that it would be inappropriate to make a declaration of incompatibility.
One reason given by some of the members of the majority in this connection was that proportionality is sensitive to considerations of institutional competence and legitimacy and that a further opportunity should be given for both ministerial and Parliamentary reconsideration (see paras 115 116 per Lord Neuberger, paras 166 170 per Lord Mance and para 197(d) per Lord Wilson) without prejudging the position if Parliament chose to maintain the blanket prohibition on assisting suicide.
On the present appeal, the Department of Justice and the Attorney General for Northern Ireland are able to rely on Nicklinson, when submitting that the Northern Ireland Assembly should be given the opportunity of completing its unfinished work of examination of the present law.
The obvious difficulty about this has already been identified.
There is no assurance as to when or even that the Northern Ireland Assembly will resume its activity or address an issue on which it had wished to receive the working party report some 20 months ago.
Nicklinson was also a different case from the present in significant respects.
First, it centred on a difficult balancing exercise between the interests of different adult persons: on the one hand, the sufferer with locked in syndrome, unable to act autonomously, but unable to receive assistance to commit suicide; on the other hand, the others, elderly or infirm, who might feel pressured by others or by themselves to commit suicide, if assistance were permissible.
The balancing of autonomy and suffering against the risks to others was and is a particularly sensitive matter.
The legislature had chosen an absolute protection against the latter risks, with which the courts should not, at least at that juncture, interfere.
On the present appeal, there is in law no question of a balance being struck between the interests of two different living persons.
The unborn foetus is not in law a person, although its potential must be respected.
In addition, the current legislation already recognises important limitations on the interests and protection of the unborn foetus.
It permits abortion of a healthy foetus in circumstances where the mothers life would be at risk or where she would suffer serious long term damage to her physical or psychological health.
There is therefore no question of any absolute protection of even a healthy foetus.
The Northern Ireland position is in that respect also more nuanced than the Irish position considered in A, B and C v Ireland, where the profound moral views identified by the European Court of Human Rights subordinated the interests of the unborn foetus in only one situation, namely where the pregnant womans life would otherwise be compromised.
A further difference is that Nicklinson was decided against a background where the attitude maintained by the United Kingdom Parliament reflected a similar attitude across almost the whole of the rest of Europe.
Northern Ireland is, in contrast, almost alone in the strictness of its current law, with Irelands even stricter regime having been reconsidered in the referendum held on 25 May 2018, in which the people of that country voted by a large majority (66.4%) to replace the Eighth Amendment of the Irish Constitution, effected in 1983 (which had, as already stated, affirmed the right to life of the unborn, and guaranteed, with due regard to the equal right to life of the mother, to respect and, as far as practicable, but its laws to defend and vindicate that right, by the simple words: Provision may be made by law for the regulation of termination of pregnancy.
Under the Eighth Amendment, prior to such replacement, and in the light of Irish Supreme Court decision in Attorney General v X [1992] IESC 1 (a case of pregnancy following rape) and the Protection of Life during Pregnancy Act 2013, abortions were only permissible where there was a real and substantial risk to the womans life (including by suicide).
None of this of course means axiomatically that the Northern Irish position may not be justifiable.
The margin of appreciation has its domestic homologue in the respect due to the decisions of a representative legislature and a democratic government within the discretionary area of judgment accorded to those bodies, which I mentioned in In re G (para 130).
But the close ties between the different parts and peoples of the United Kingdom make it appropriate to examine the justification for the differences in this area with care.
One might think that this would also apply as between peoples living and able freely to interchange with each other on the same island.
In the light of the above, it is, I think, appropriate to examine the substantive position in relation to the present prohibition before returning to the question whether the Supreme Court should express its own view on the proportionality of the prohibition, rather than leaving it to the Northern Ireland Assembly to complete its consideration of the matter, when and if it resumes operations.
I start with cases of fatal foetal abnormality, and identify in this context a number of considerations.
Fatal foetal abnormality
First, the present position in Northern Ireland is, as I have pointed out, not an absolutist, but a qualified, one.
The interests of even the entirely viable foetus are already subordinated not simply to the life, but also to the maintenance, in substance, of the long term physical and psychological health, of the pregnant woman.
Second, and in contrast, a pregnant woman is in Northern Ireland refused an abortion of a foetus which can be and has been diagnosed definitively as suffering a fatal abnormality which will cause it either to die in the womb or shortly after birth.
In the case of a foetus with a fatal abnormality, Horner J said there was nothing to weigh in the balance (para 160).
That may perhaps put the point too high, but, even if it does, I agree with his view that the present law cannot be regarded as proportionate.
It is difficult to see what can be said to justify inflicting on the woman the appalling prospect of having to carry a fatally doomed foetus to term, irrespective of such associated physical risk as that may on the evidence involve.
Third, the moral beliefs or policy views at the origin of the present law, or relied on now to justify it, cannot in my opinion explain the contrast in the treatment of these two situations.
Even viewing the latter situation by itself, they cannot justify the infliction of such suffering on women who, by definition, do not share such beliefs or views.
Fourth, the present law treats the pregnant woman as a vehicle who must (as far as Northern Ireland is concerned) be expected to carry a foetus to birth, whatever the other circumstances, and whatever her wishes, as long as this experience does not end her life or ruin her health.
As Ms Dinah Rose QC for the Family Planning Association and other interveners submitted, and as I would accept, that approach fails to attach any weight whatsoever to personal autonomy and the freedom to control ones own life: values which underpin article 8 of the Convention.
Fifth, whatever view may be taken on the first four points, the actual effect of the present law in achieving its aims appears negligible as well as haphazard, in so far it appears probable that all it does is put the large majority of women affected to the stress, indignity and expense of arranging for a mechanical process of abortion away from their familiar home surroundings and sources of local support, while meaning that a minority of women, less well informed, funded or organised, miss out on an abortion altogether (witness the experiences of Mrs Topley and Mrs Phelan).
Even for the majority who do travel abroad, the potential stress and trauma is clearly substantial and potentially long term, even though not sufficiently serious to justify an abortion under current Northern Ireland law.
The European Court of Human Rights in A, B and C v Ireland relied on the possibility of travelling abroad to have an abortion as a reason for not condemning Irish law.
To my mind, however, the fact that the present Northern Ireland law does not achieve its identifiable aims, in most cases, but merely outsources the issue, by imposing on the great majority of women within the categories in issue on this appeal the considerable stress and the cost of travelling abroad, away from their familiar home environment and local care, to undergo the humiliating conveyor belt experience described in evidence, is a potent indication that the present law is disproportionate.
In so far as it does achieve such aims, it in effect victimises unfortunates who miss this humiliating opportunity, because of stress, confusion or lack of funding or organisation in the situation in which they find themselves.
I cannot therefore regard the present law as striking a proportionate balance between the interests of women and girls in the cases of fatal foetal abnormality, when it fails to achieve its objective in the case of those who are well informed and well supported, merely imposing on them harrowing stress and inconvenience as well as expense, while it imposes severe and sometimes life time suffering on the most vulnerable, who, commonly because of lack of information or support, are forced to carry their pregnancy to term.
A number of the considerations identified in relation to fatal foetal abnormality apply with equal force in relation to rape.
This is so in particular in relation to the considerations identified in paras 122, 125 and 126.
As to the considerations identified in paras 123 and 124, pregnancy following rape must be considered on the assumption that the foetus is perfectly viable.
The moral beliefs or policy relied on to justify the current law focus on that point.
But pregnancy following rape presents anguish of a different nature, certainly comparable in severity with that imposed on a woman who is expected to carry a foetus with a fatal abnormality to term.
In the case of a pregnancy resulting from rape, a woman is not just expected to carry the foetus to birth, as long as the experience does not end her life or ruin her health (the consideration identified in para 125).
She is also potentially responsible for the child once born, under a relationship which may continue as long as both live.
Causing a woman to become pregnant and bear a child against her will (as by a negligently performed vasectomy of a partner in McFarlane v Tayside Health Board [2000] 2 AC 59) was described in Parkinson v St James and Seacroft University Hospital NHS Trust [2001] EWCA Civ 530; [2002] QB 266, para 58 as an invasion of that fundamental right to bodily integrity.
Hale LJ went on there to describe the profound physical and psychological changes involved in pregnancy, as well as the continuing responsibilities, legal and practical, of a mother after giving birth, of which, short of adoption, she cannot rid herself.
The additional burden and torment of being expected to carry to birth and thereafter to live with a baby who is the product of a rape can only be imagined.
Sexual crime is, as Horner J said at para 161 the grossest intrusion on a womans autonomy in the vilest of circumstances.
This is a situation where the law should protect the abused woman, not perpetuate her suffering.
That this trauma will not by definition amount to serious and long term psychological injury seems to me quite insufficient to outweigh this consideration.
Again, there is the possibility, very probably taken up by most in these categories, of travelling abroad for an abortion (the consideration identified in para 126).
Again, I am unable to regard this as any justification of the law.
On the contrary and for reasons already given in para 126, I regard it rather as a factor confirming its disproportionality.
The current law in Northern Ireland does not significantly achieve its object.
It stresses and humiliates the majority and victimises the minority.
I therefore conclude that the current law is disproportionate in relation to cases of pregnancy due to rape.
Incest
It is clear from the legislation itself, briefly outlined in para 44 above, that there are differences between cases which fall, colloquially though no longer in law, under the head of incest.
Cases of pregnancy resulting from sexual activity with a child, falling within article 32 of the 2008 Order, are clearly at one end of a scale.
But Professor Jennifer Temkin LLD of Sussex University, an expert in the field, also records (citing in support D E H Russells Sexual Exploitation (1984), p 114) that: The general view is, however, that incest rarely commences above the age of 20 but having started at a younger age may continue into adulthood. (Do we need the Crime of Incest? (1991) Current Legal Problems 185, 187.) Further, the Home Office White Paper Protecting the Public Strengthening Protection Against Sex Offenders and Reforming the Law on Sexual Offences, (2002), Cm 5668, which preceded the Sexual Offences Act 2003 in England and Wales stated (para 59) that there is evidence that some adult familial relationships are the result of long term grooming by an older family member and the criminal law needs to protect adults from abuse in such circumstances.
Professor Temkins answer to the question in her title was affirmative.
She refers to innumerable studies showing that incest in all its forms is frequently harmful or extremely harmful to victims (p 186).
She cites D Glaser and S Froshs Child Sexual Abuse (1988), p 17, as recording that sexually abused children commonly show depression, guilt or lowered self esteem, and D Finkelhors study Sexually Victimised Children (1979), p 101, as indicating that father/daughter incest is particularly traumatic and as finding that the girls suffering most trauma were those abused between the ages of 16 and 18 (p 100).
Professor Temkin also points out that rape is hard to prove and that Many coercive and exploitative incestuous acts will not fall within the narrow legal definition of rape (p 193).
Incest is also destructive both to those who participate in it and to those who are indirectly involved (p 187).
It crosses a boundary, which is necessary to protect the family and the individual from the family (p 188).
It is, in short, potentially destructive of wider family relationships, even though it also witnesses a prior breakdown of ordinary behaviour.
These factors exist quite apart from a slight, though noticeable, risk of foetal and post natal abnormalities: surveys referred to in a Max Planck Institut report put before the German Constitutional Court in the case of Herrn S (2 BvR 392/07 of 26 February 2008) identify a 1.7 to 2.8% increased risk of genetic abnormalities in a child of an incestuous relationship and a 7 to 30% increased risk of disease in the first year of life.
In the present context, that risk, which is a further factor relied on by Professor Temkin in favour of the current criminalisation of incest, can be put on one side.
Most of the points made above with regard to incest are underlined in the German Federal Constitutional Courts judgment of 26 February 2008 in the case of Herrn S (2 BvR 392/07 of 26 February 2008).
This judgment, when examined by the European Court of Human Rights in Stbing v Germany (2012) 55 EHRR 24 was held not to involve any violation of article 8 of the Convention.
Stbing was in fact one of the cases, to which Professor Temkin refers as having so much exercised the romantic imagination of some writers (and, she might have added, at least one composer), but which are statistically irrelevant (p 188).
It was a case of a brother brought up from the age of three separate from his birth family, to which he only returned aged about 24, to discover that he had a seven years younger sister, with whom he very soon commenced consensual sexual relations, and over the next five years had four children.
Perhaps with such rare cases in mind, it has been suggested that the prohibition on consensual sexual relations between adults falling within the presently prohibited degrees of affinity should be reconsidered (see eg Incest Should Incest between Consenting Adults be a Crime? by H H Peter Bowsher QC [2015] Crim LR 208, and other material there cited).
But it is clear that, when pregnancy due to incest is under consideration, the focus cannot and should not be on the rare situation exemplified in Stbing.
Rather, it must be on the sort of picture found by the Scottish Law Commission in its 1980 Memorandum No: 44, The Law of Incest in Scotland.
Examining some 16 cases where pregnancies were alleged to have occurred, the Scottish Law Commission found that two involved step fathers and step daughters, and that, of the remaining 14, 11 concerned father daughter incest, two concerned brother sister incest, and one uncle niece incest.
The present issue is whether a blanket prohibition of abortion in cases of incest is proportionate.
In the light of the factors I have identified, I have no doubt that the only answer is that it is not.
The most typical cases of abortion involve exploitative relationships with young or younger female relatives.
The agony of having to carry a child to birth, and to have a potential responsibility for, and lifelong relationship with, the child thereafter, against the mothers will, cannot be justified.
The same considerations that I have identified in paras 122, 125 and 126 above apply.
Similar considerations to those which I have identified in relation to rape in para 127 above also apply.
There can be exceptional cases, such as perhaps Stbing, where such considerations do not apply with the same force, but they cannot justify a law which is clearly disproportionate in many, indeed typical, instances of incest.
Serious foetal abnormality
I have up to this point left on one side cases of serious foetal abnormality, in respect of which the Commission also seeks relief, by way of a declaration of incompatibility.
Like Horner J (para 166), I see the position here as different.
The foetus has the potential to develop into a child though it will have to cope with a mental and/or physical disability.
There can also be additional stresses and strains which may have serious effects upon the whole family, as Hale LJ said in Parkinson (para 90).
The law is, as she also said at para 91, able to distinguish between the needs of ordinary children and the special needs of a disabled child, and to cater for the latter in terms of care and facilities or, in an appropriate case, by way of damages.
But in principle a disabled child should be treated as having exactly the same worth in human terms as a non disabled child, save to the extent that additional costs due to the disability may be identified and recovered in damages from someone negligently responsible for causing the disability: Parkinson, para 90.
This is also the consistent theme of the United Nations Committee on the Rights of Persons with Disabilities, expressing concerns about the stigmatising of persons with disabilities as living a life of less value than that of others, and about the termination of pregnancy at any stage on the basis of foetal abnormality, and recommending States to amend their abortion laws accordingly (CRPD/C/GBR/CO/1).
If this embraces fatal foetal abnormality, I cannot go so far.
But, in relation to disability, I consider that the Committee has a powerful point.
Further, although the Abortion Act 1967 itself distinguishes children who would be seriously handicapped from others, this is in the context of a law which entrusts that judgment to the opinion of two registered medical practitioners formed in good faith: section 1.
In the result, I share Horner Js view that it is not possible to impugn, as disproportionate and so incompatible with article 8, legislation which prohibits abortion of a foetus diagnosed as likely to be seriously disabled.
Article 14
We were addressed separately on the question whether the present Northern Irish law involves discrimination against women.
The case made was that the prohibition of abortion necessarily or at least primarily affects women, not men, that it is not necessary to find any comparator and that gender based discrimination is a suspect ground, carrying a heavy burden to justify.
In view of the conclusions which I have come to on article 8, I do not find it necessary or propose to address this topic.
Conclusion
I return to the question whether a positive conclusion of incompatibility is appropriate in relation to cases where there is a diagnosis of fatal foetal abnormality or where the pregnancy is due to rape or incest.
Should this Court leave the position in relation to these categories to be considered further whenever the Northern Ireland Assembly resumes operation and receives whatever report or recommendations the working group presents? First, there is the consideration that it is unclear what will happen in Northern Ireland, in particular whether and when the Assembly will resume its operations.
But this is not itself decisive.
What is clear is that the issue has been under discussion for some five years, since it was first raised by the Commission, without any definite upshot.
Further, if we were to refrain now from any conclusion on it, or were to defer to the Assembly for the time being, in order for it to reach and express its own definitive position, we would have in my opinion to do so on the basis that it would then still be open to a person affected to return to court to have the matter finally resolved, if the legislature did not amend the existing law in the three areas identified.
In my opinion, that is not an appropriate course, as the need for such amendment is evident and the outcome of any further litigation would in that respect be inevitable.
I am in short satisfied that the present legislative position in Northern Ireland is untenable and intrinsically disproportionate in excluding from any possibility of abortion pregnancies involving fatal foetal abnormality or due to rape or incest.
My conclusions about the Commissions lack of competence to bring these proceedings means that there is however no question of making any declaration of incompatibility.
But the present law clearly needs radical reconsideration.
Those responsible for ensuring the compatibility of Northern Ireland law with the Convention rights will no doubt recognise and take account of these conclusions, at as early a time as possible, by considering whether and how to amend the law, in the light of the ongoing suffering being caused by it as well as the likelihood that a victim of the existing law would have standing to pursue similar proceedings to reach similar conclusions and to obtain a declaration of incompatibility in relation to the 1861 Act.
LORD KERR: (with whom Lord Wilson agrees)
Introduction
(a) Fatal foetal abnormality
Ashleigh Topley married in September 2012.
She and her husband had been together for seven years before they married.
They wanted to have children and they stopped using contraception shortly after their wedding.
In October 2013, to her great joy, Mrs Topley discovered that she was pregnant.
Her baby was due to be born in July 2014.
On 14 February, she attended hospital for a 20 week scan.
It was diagnosed that the foetus was suffering from a fatal form of skeletal dysplasia.
Mr and Mrs Topley were told that their baby would die either in the womb or within a short time of birth.
As it happens, their daughter, Katy, died before her birth on 26 May 2014, when Mrs Topley was 35 weeks pregnant.
A post mortem examination revealed that she had suffered from osteogenesis imperfecta, type 2, a form of skeletal dysplasia.
Mrs Topley has provided a moving account of the harrowing ordeal that she and her husband faced after they learned that their baby would not survive.
They received conflicting advice as to whether a termination of her pregnancy would be possible.
She had to endure the experience of receiving congratulations from well intentioned individuals about the impending birth, while she was trying to come to terms with the awful reality that her baby would not survive.
The three months between February and May 2014 were deeply traumatic for her.
She summarised her plight in this passage of her witness statement: It was clear to me that the current 1egal framework takes no account of the circumstances that we found ourselves in.
In the normal course of events, an abortion is not something that would have occurred to me.
However, the serious condition that my daughter suffered from thrust us into a situation that no one could predict.
My daughter was bound to die before, or close to, her birth.
If she had survived, even for a short period, she may have suffered.
This tragic situation was compounded for me by the apparent inability of the medical profession to offer me a termination even in these circumstances.
If this had been available, I believe it would have diminished our suffering.
Being forced to continue with this pregnancy added to the tragedy.
We were not able to grieve for our daughter even at the time of her actual death or to start to deal with our emotions.
This was further compounded by the fact that the medical professionals could not even agree amongst themselves whether a termination was permitted.
Sarah Jane Ewart found out that she was pregnant on 15 July 2013.
On 26 September 2013, it was discovered that her baby had anencephaly.
This meant that the foetus did not have a skull; there was no bone above the eye sockets and jaw line.
There was no possibility of survival beyond birth.
Mrs Ewart asked if she could have a caesarean section.
She was told that this would not happen.
Like Mrs Topley she had to endure the ordeal of being congratulated by well wishers.
She felt unable to tell them of what she described as the awfulness of the truth.
Mrs Ewarts gynaecologist was so concerned about the possibility that, if she gave Mrs Ewart advice as to where she might go to seek help in relation to the termination of her pregnancy, she (the gynaecologist) would be exposed to the risk of prosecution, it was impossible for her to offer that advice.
Mrs Ewarts general medical practitioner was similarly reluctant to advise.
Mrs Ewarts experience of the worry associated with her condition; the indignity she felt in having to travel to England to have her pregnancy terminated; the traumatic experience of the termination; and her dependence on her mother and husband throughout this ordeal are all movingly and graphically described in her witness statement.
The prolonged torment that she had to suffer is pitifully recounted by her.
Her fear of becoming pregnant with another anencephalic baby, and having to undergo a similar tribulation to that which she suffered in 2013, is entirely understandable and incontestably obvious.
Denise Phelan and her husband discovered in November 2015 that they were expecting their first child.
The pregnancy was planned and the baby was, in Mrs Phelans words, very much wanted.
In her affidavit she has described the horror of her experience during her pregnancy; the nightmare of discovering that her baby suffered from the most grievous condition; the suffering that she had to endure while waiting for the birth of the child, doomed to die (in fact her baby girl died five days before birth); the frustration and dismay at her and her husbands inability to access medical assistance for their plight; and the dreadful torment that they both had to bear after the baby was delivered stillborn.
The courage of these women in giving unsparing accounts of their experiences is wholly admirable.
It is impossible not to feel profound sympathy for their plight and for the ordeal that each of them has had to endure.
Admiration and sympathy do not provide an answer to the complex questions which arise on this appeal, however.
A dispassionate analysis of those questions is required.
But the nature of their suffering and the trauma of their experiences are by no means irrelevant to the unravelling and resolution of the issues to which this appeal gives rise.
(b) Pregnancy because of rape or incest
Dawn Purvis is the programme director of Marie Stopes International in Northern Ireland (MSNI).
This is a non profit making organisation which works in about forty countries providing sexual and reproductive health services.
MSNI opened a clinic in Belfast in October 2012.
It offers a range of services including advice on methods of contraception, information and support for women dealing with an unplanned pregnancy, as well as access to safe and legal abortion services and post abortion care.
In an affidavit made for the purposes of these proceedings, Ms Purvis described the case of a woman who had consulted MSNI after having been raped by her partner.
He refused to allow her to use any form of contraception.
She was fearful that he would react violently if he discovered that she was pregnant and was seeking an abortion.
Her general medical practitioner refused to refer her to any health care provider, observing simply that abortion was illegal in Northern Ireland.
When this woman sought help from MSNI, it was decided that she could not qualify for an abortion under the current law.
She was therefore obliged to leave Northern Ireland in order to obtain an abortion elsewhere.
Ms Purvis described another case: that of a child less than 13 years old, who came to MSNI, having become pregnant as a result of sexual abuse by a member of her family.
The girl and the relative who accompanied her to MSNI believed that she could be treated in Northern Ireland.
She had never been outside that country before and, unsurprisingly, was frightened and distressed when told that she would have to travel to England.
MSNI provided support and the child had a termination of her pregnancy carried out away from Northern Ireland.
Fortunately, she was accompanied by an adult to the place where that procedure occurred but it is not difficult to imagine how traumatic the experience must have been for her.
Mara Clarke is the director of the Abortion Support Network (ASN) in Coventry.
Her organisation has helped a number of women and girls from Northern Ireland who have sought their assistance after becoming pregnant as a result of rape.
In an affidavit of 2 February 2015, she described the distressing circumstances of four women who had been sexually assaulted and had been made pregnant.
The accounts of the suffering of these women and, in some cases, the privations which their families had to endure are distressing in the extreme.
I will refer only to one.
The victim had been beaten and raped by a group of men.
She discovered that she was pregnant.
Despite the fact that a number of organisations in Northern Ireland became aware of her predicament, she was offered no support or help.
She was able to raise only 100 towards the cost of travelling to England to obtain an abortion.
ASN made her a grant of 1,200 to meet the additional costs of travelling, having the procedure performed and hotel accommodation.
Some considerable time later, having seen a television programme about their work, she wrote to ASN to thank them for their help, adding, poignantly, that, without it, she would be dead, either by her own hand, or by the hands of those who had raped and beaten her.
The Northern Ireland Human Rights Commission (described hereafter as NIHRC or the Commission), the appellant in these proceedings, has claimed that the experiences of these individuals are typical of those that many women and girls in Northern Ireland have been forced to undergo.
NIHRC also claims that the reaction of medical practitioners and their reluctance to offer any assistance for fear of prosecution under the current law are also entirely typical.
Those claims have not been disputed by the respondents or any of the interveners in the appeal.
Again, this is not surprising in light of the current state of the law in relation to abortion in Northern Ireland.
The current law
Section 58 of the Offences Against the Person Act 1861, as amended, provides that: Every woman, being with child, who, with intent to procure her own miscarriage, shall unlawfully administer to herself any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, and whosoever, with intent to procure the miscarriage of any woman, whether she be or be not with child, shall unlawfully administer to her or cause to be taken by her any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, shall be guilty of felony, and being convicted thereof shall be liable to be kept in penal servitude for life.
Section 59 of the 1861 Act, again as amended, provides that: Whosoever shall unlawfully supply or procure any poison or other noxious thing, or any instrument or thing whatsoever, knowing that the same is intended to be unlawfully used or employed with intent to procure the miscarriage of any woman, whether she be or be not with child, shall be guilty of a misdemeanour, and being convicted thereof shall be liable to be kept in penal servitude.
The Criminal Justice Act (Northern Ireland) 1945 was an Act of the Northern Ireland Parliament made by virtue of powers vested in that body by section 20 of the Government of Ireland Act 1920.
Section 25 of the 1945 Act extended to Northern Ireland the effect of the materially identical section 1 of the Infant Life (Preservation) Act 1929.
Section 25 of the 1945 Act provides that: (1) Subject as hereafter in this sub section provided, any person who, with intent to destroy the life of a child capable of being born alive, by any wilful act causes a child to die before it has an existence independent of its mother, shall be guilty of felony, to wit, of child destruction, and shall be liable on conviction thereof on indictment to penal servitude for life: Provided that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother. (2) For the purposes of this and the next succeeding section, evidence that a woman had at any material time been pregnant for a period of 28 weeks or more shall be prima facie proof that she was at that time pregnant of a child then capable of being born alive.
Sections 58 and 59 of the 1861 Act have been considered with section 1 of the 1929 Act in England and Wales in R v Bourne [1939] KB 687 and with section 25 of the 1945 Act in Northern Ireland in Family Planning Association of Northern Ireland v Minister for Health, Social Services and Public Safety [2004] NICA 39; [2005] NI 188 (the FPANI case).
The latter case also dealt with section 25 of the 1945 Act.
In Bourne a surgeon performed an abortion on a young girl of 14 years who had become pregnant as a result of rape.
He was charged under section 58 of the 1861 Act with unlawfully procuring an abortion.
The jury was directed that it was for the prosecution to prove that the operation was not performed in good faith for the purpose of preserving the life of the girl.
The surgeon was not obliged to wait until the patient was in peril of immediate death.
As to the words of the 1929 Act, that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother, Macnaghten J (the trial judge) said to the jury that, although those words did not appear in section 58 of the 1861 Act, they were implied by the word unlawful in that section.
Those words ought to be construed in a reasonable sense said Macnaghten J, and it was, therefore, the surgeons duty to perform the operation if he was of the reasonable opinion that the probable consequence of the pregnancy continuing would be to make the patient a physical and mental wreck.
In the Court of Appeal in the present case ([2017] NICA 42, Morgan LCJ, Gillen and Weatherup LJJ), the Lord Chief Justice, Sir Declan Morgan, suggested that it was possible to construe the words, for the purpose only of preserving the life of the mother so as to include circumstances where the mothers life was significantly adversely affected para 49.
Developing this theme, he said at para 79: I accept that the grain of the 1861 Act and the 1945 Act was intended to provide substantial protection for the foetus but in my view the phrase for the purpose of preserving the life of the mother cannot in present circumstances be interpreted reasonably as confining protection for the mother by way of abortion to those circumstances where it is likely that she will be a physical or mental wreck.
I have had the benefit of affidavits sworn in these proceedings by Sarah Ewart and AT [Ashleigh Topley].
Some aspects of the effect on these women of the prohibition of abortion in this jurisdiction in their circumstances have been described in [earlier paras of the judgment].
The present law prioritises the need to protect to a reasonable extent the life that women in these emotionally devastating situations can enjoy.
In my opinion that requires the court to determine what is reasonably tolerable in todays society.
That is not to be defined by the values of the 1930s.
I conclude that circumstances such as those described in those affidavits fall within the scope of the Bourne exception interpreted in accordance with that test.
I consider that in each case the effects on these women were such that the option of abortion in this jurisdiction after appropriate advice should have been open.
That conclusion is not dependent upon the state of health of the foetus.
Gillen LJ expressed disagreement with these statements in para 91 of his judgment.
He considered that it was institutionally inappropriate for the court to change the effect of the legislation and its interpretation in R v Bourne.
Weatherup LJ also disagreed with the Lord Chief Justices view that contemporary standards could serve to enlarge the scope of the Bourne exception.
He pointed out that the law as expressed by Macnaghten J had been applied by the Court of Appeal in Northern Ireland in the FPANI case where Nicholson LJ said at para 75: Procurement of a miscarriage (or abortion) is a criminal offence [in Northern Ireland] punishable by a maximum sentence of life imprisonment if the prosecution proves beyond any reasonable doubt to the satisfaction of a jury: (1) that the person who procured the miscarriage did not believe that there was a risk that the mother might die if the pregnancy was continued; or (2) did not believe that the mother would probably suffer serious long term harm to her physical or mental health; or (3) did not believe that the mother would probably suffer serious long term harm to her physical or mental health if she gave birth to an abnormal child ; (4) a person who is a secondary party to the commission of the criminal offence referred to above is liable on conviction to the same penalty as the principal; (5) it follows that an abortion will be lawful if a jury considers that the continuance of the pregnancy would have created a risk to the life of the mother or would have caused serious and long term harm to her physical or mental health.
Campbell LJ in the FPANI case said in para 140 that the law in Northern Ireland permits a termination where there is a serious and long term risk to the mothers mental or physical health or well being.
Sheil LJ, in accepting the principles which were said by counsel for the Minister for Health to encapsulate the law in Northern Ireland, reached essentially the same conclusion.
Among those principles were that a termination of pregnancy was unlawful unless performed to preserve the life of the mother; that life included mental and physical life; that a termination would be lawful where there was a real and serious adverse effect on health but that this had to be permanent or long term.
This, therefore, was the law of Northern Ireland, as pronounced by a unanimous Court of Appeal in that jurisdiction in October 2004.
The Lord Chief Justices judgment in the present case would have brought about a significant change in that law in two respects.
In the first place, it would shift the emphasis towards the need to protect to a reasonable extent the life that women [in cases such as those of Mrs Topley and Mrs Ewart] would enjoy (emphasis supplied).
Secondly it would eliminate the requirement that there be a real, serious, long term or permanent effect on the womans physical or mental health.
This would be a radical departure from not only the law as Macnaghten J declared it to be in Bourne but also as the Court of Appeal in Northern Ireland held it to be in 2004.
The fundamental nature of the alteration of the law that this would bring about is perhaps best illustrated by the Lord Chief Justices statement that the court was required to determine what was reasonably tolerable in todays society.
I do not consider that such a change in statutory law can be achieved by judicial decision.
The 1861 and 1945 Acts are the foundation of the law on abortion in Northern Ireland.
They forbid the termination of pregnancy unless it is required to preserve the mothers life.
That has been interpreted to mean that abortion is permitted in order to save the mother from a condition of physical or mental devastation.
That condition has been held to equiparate to long term or permanent effect on the mothers health which is both real and serious.
I do not consider that it is possible to stretch the concept of preservation of life beyond these notions.
The proceedings
On 2 February 2015, NIHRC was given permission to apply for judicial review.
Three declarations were sought: (i) A declaration pursuant to section 6 and section 4 of HRA, that sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act were incompatible with articles 3, 8 and 14 of the European Convention on Human Rights and Fundamental Freedoms [hereafter ECHR or the Convention] as they relate to access to termination of pregnancy services for women with pregnancies involving a serious malformation of the foetus or pregnancy as a result of rape or incest. (ii) A declaration that, notwithstanding the provisions of sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act, women in Northern Ireland may lawfully access termination of pregnancy services within Northern Ireland in cases of serious malformation of the foetus or rape or incest. (iii) Further and in the alternative, a declaration that the rights of women in Northern Ireland, with a diagnosis of serious malformation of the foetus or who are pregnant as a result of rape or incest, under articles 3, 8 and 14 of ECHR are breached by sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act.
Following the grant of leave to apply for judicial review, a number of organisations sought to intervene in the proceedings.
They were given permission to intervene and have been represented in the proceedings before this court, although the number of interveners has increased from those who participated in the hearing before the High Court and the Court of Appeal.
On 17 February 2015, the High Court issued a Notice of Incompatibility under section 4 of HRA and Order 121 of the Rules of the Court of Judicature (the rules), notifying the Attorney General and the Department of Justice that they might enter an appearance to the proceedings.
The court also issued a devolution notice under paragraph 5 of Schedule 10 to the Northern Ireland Act 1998 (NIA) and Order 120 of the Rules.
The case was heard at first instance by Horner J on 15 17 June 2015.
NIHRC argued that where there was a serious malformation of the foetus or where the pregnancy was the result of rape or incest, the prohibition on abortion in Northern Ireland breached the rights of women and girls under article 3, article 8 and article 14 (read together with article 8) of ECHR.
The Attorney General and the Department of Justice disputed these claims, arguing that there was no violation of ECHR and that, in any event, the Commission did not have standing to bring proceedings for judicial review.
Horner J held that the application for judicial review should succeed in part.
He held that the Commission had standing to apply for the relief that it sought.
He also found that sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act were incompatible with article 8 in cases of fatal foetal abnormality, rape and incest, but not in cases of serious malformation of the foetus para 184 of his judgment.
He dismissed that part of the application that depended on article 3.
The Attorney General and the Department of Justice appealed Horner Js judgment.
They argued that a declaration of incompatibility could not be granted in the absence of an identified unlawful act and that the Commissions failure to identify someone who was or would be a victim of the asserted breaches of the Convention was fatal to the success of the application for judicial review because it did not allow for an examination of the particular facts said to constitute the breach.
NIHRC did not have standing, therefore, it was submitted.
They challenged the judges findings in relation to article 8 and they claimed that he had erred in holding that the life of an unborn foetus was not protected by the common law of Northern Ireland.
NIHRC cross appealed, arguing that the relevant statutory provisions were incompatible with article 3 of ECHR and article 14 (read with article 8).
It also argued that appropriate declarations should have been made in the case of serious as well as fatal foetal abnormality.
All three members of the Court of Appeal agreed that the Commission had standing to bring the judicial review challenge para 46 of Morgan LCJs judgment.
The Lord Chief Justice held that it was within the margin of appreciation of the contracting states of the Council of Europe to determine the nature of the protection to be afforded a foetus paras 50 52 of his judgment.
Gillen LJ agreed with this conclusion.
Weatherup LJ held that, although the foetus was not entitled to protection under article 2 of ECHR, it was possible that some recognition of a foetuss rights might arise under article 8 paras 126 131.
Gillen and Weatherup LJJ agreed with the Lord Chief Justices conclusions that article 3 was not engaged paras 52 60 of his judgment.
In relation to article 8, Morgan LCJ, after reviewing European authorities, particularly A, B and C v Ireland [2010] 53 EHRR 13, concluded that the article 8 claim did not succeed, although, as observed above, he considered that the principles in Bourne could be applied to the cases of Mrs Topley and Mrs Ewart.
The Lord Chief Justice conducted a close examination of the A, B and C case and concluded that it did not lend decisive weight to the arguments advanced by the Attorney General and the Department of Justice para 74.
Gillen LJ disagreed.
He considered that the A, B and C case established that a broad margin of appreciation should be accorded to the contracting states of the Council of Europe on the question of the legal requirements for lawful abortion paras 103 105.
Weatherup LJ expressed what he described as a provisional view that the restriction on the termination of pregnancy in cases of fatal foetal abnormality and as a result of rape and incest would amount to a breach of the right to respect for private life under article 8.
He considered, however, that it would not be institutionally appropriate for the court to intervene see para 178 of his judgment.
Standing
The discussion about the standing of the Commission to bring these proceedings begins with the Belfast Agreement and the influence which it had on the NIA.
That Act was introduced to implement the agreement made in Belfast between various political parties in Northern Ireland on 10 April of that year (1998).
Paragraph 5 of Strand One of the agreement stated that safeguards would be put in place to ensure that all sections of the community were protected.
Those safeguards were to include the rights guaranteed by ECHR.
By para 5 of Strand Three, dealing with new institutions, it was provided that NIHRC would be established.
Its task would be to keep under review the adequacy and effectiveness of laws and practices, making recommendations to Government as necessary; providing information and promoting awareness of human rights; considering draft legislation referred to them by the new Assembly; and, in appropriate cases, bringing court proceedings or providing assistance to individuals doing so.
This aspiration found expression in section 69 of NIA.
It deals with the Commissions functions.
Subsection (1) reflects para 5 of Strand Three and provides that NIHRC should keep under review the adequacy and effectiveness in Northern Ireland of laws and practice relating to the protection of human rights.
Subsection (3) enjoins the Commission to advise the Secretary of State and the Executive Committee of the Northern Ireland Assembly of legislative and other measures which ought to be taken into account to protect human rights and subsection (4) requires NIHRC to advise the Assembly whether a Bill which it proposes to pass is compatible with human rights.
Subsection (6) emphasises the broad scope of the Commissions remit in relation to the protection of human rights.
It is required to promote understanding and awareness of the importance of human rights in Northern Ireland and for this purpose it may undertake or commission research and educational activities.
The provision in section 69 which is most directly relevant to the issue of NIHRCs standing to bring the present proceedings is subsection (5).
It provides: The Commission may (a) give assistance to individuals in accordance with section 70; and (b) bring proceedings involving law or practice relating to the protection of human rights.
The approach to the interpretation of these provisions should start with the general proposition that it would be anomalous if NIHRC did not have the power to challenge the compatibility of legislation with the provisions of ECHR, given its principal stated function (in section 69(1)) see para 169 above.
An obvious way in which that function can be fulfilled is that the Commission should have the opportunity to present a legal challenge to potentially incompatible legislation.
It is in the nature of things that not every item of legislation which is inconsistent with ECHR rights will be subject to challenge by individuals affected by it.
To cater for that circumstance, it is appropriate that NIHRC should perform a supervisory function, monitoring legislation, both proposed and historic, for its conformity with contemporary human rights standards.
To deny it the legal capacity to challenge legislation would deprive the Commission of an important means of carrying out its fundamental role.
Moreover, the power to challenge incompatible legislation is a natural complement to the duty to advise the Secretary of State and the Executive Committee of the Northern Ireland Assembly about legislative and other measures necessary to protect human rights.
The respondents argue that neither NIA nor the Human Rights Act 1998 (HRA) confers on NIHRC a freestanding right to challenge legislation on the basis of its avowed incompatibility with ECHR.
It is claimed that the Commission may only contest the legislations consistency with the Convention in proceedings brought to challenge an act of a public authority which is said to be incompatible with an ECHR right and where there is an identified victim of the alleged unlawful act.
The requirement that there be a victim is derived from section 7 of HRA and section 71(1) of NIA.
Section 7 of HRA provides in subsection (1):
Section 71(1) of NIA originally provided that: (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) in any legal proceedings, rely on the Convention right or rights concerned but only if he is (or would be) a victim of the unlawful act. (1) Nothing in section 6(2)(c), 24(1)(a) or 69(5)(b) shall enable a person (a) to bring any proceedings in a court or tribunal on the ground that any legislation or act is incompatible with the Convention rights; or (b) such proceedings, to rely on any of the Convention rights in any unless he would be a victim for the purposes of article 34 of the Convention if proceedings in respect of the legislation or act were brought in the European Court of Human Rights. (the reference to section 69(5)(b) was deleted in the amended version)
In In re Northern Ireland Human Rights Commission [2002] NI 236, the House of Lords held that the Commission had the power to apply to intervene in court proceedings where a human rights issue arose.
In para 11 of his speech, however, Lord Slynn of Hadley observed that section 69(5)(b) did not enable the Commission to bring proceedings on the ground that legislation was incompatible with a Convention right unless it was a victim for the purpose of proceedings brought in the European Court of Human Rights (referred to hereafter as ECtHR or the Strasbourg court).
And at para 23 he said that: in respect of proceedings in which it is sought to contend that legislation is incompatible with the European Human Rights Convention they can only be brought, it seems, if the Commission can show that it is a victim for the purposes of the Convention.
These observations prompted the amendment of section 71.
As originally enacted section 71(2) had provided that subsection (1) did not apply to the Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland, the Advocate General for Scotland or the Lord Advocate.
Section 14 of the Justice and Security (Northern Ireland) Act 2007 inserted the following provisions, among others, to section 71: (2A) Subsection (1) does not apply to the Commission. (2B) In relation to the Commissions instituting, or intervening in, human rights proceedings (a) the Commission need not be a victim or potential victim of the unlawful act to which the proceedings relate, section 7(3) and (4) of the Human Rights Act (b) 1998 (c 42) (breach of Convention rights: sufficient interest, &c) shall not apply, (c) be one or more victims of the unlawful act, and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies).
the Commission may act only if there is or would
In circumstances in which the requirement that NIHRC be a victim was removed by this new provision, it would be surprising that the Commission should continue to be obliged to identify a particular victim before it could bring proceedings concerning the incompatibility of an item of legislation with ECHR.
I shall deal with this argument in more detail below but, first, it should be noted that the Attorney General for Northern Ireland also argues that, even if section 4 of HRA were to be regarded as creating a new cause of action, NIHRC is explicitly prevented by section 71(2B) and (2C) (as to which see para 179 below) from challenging primary legislation in the absence of a specific unlawful act.
Thus, not only must there be a specific victim, an identified unlawful act must have been perpetrated.
I am of the clear view that section 71(2B) does not confine the Commissions opportunity to act to circumstances where a specific act directed to a particular individual is identified.
Although that is, arguably, a possible theoretical interpretation of the provision, its adoption would run directly counter to the spirit of the amendment.
Its purpose must surely have been to ensure that the Commission could challenge legislation which it perceived to be incompatible with the Convention.
That conclusion is reinforced by a consideration of section 71(2B)(c).
Section 71(2B)(c) provides that the Commission may only act if there is or would be one or more victims.
The Commissions power to act on behalf of potential victims and, importantly, to act pre emptively would be robbed of its essence if unlawful act was interpreted in the narrow, literal sense.
The amendment to the NIA was made in order to make it easier for NIHRC to institute HRA proceedings.
In light of the clear intention to widen NIHRCs powers, it would be illogical that these would be restricted by the imposition of a requirement that there be a particular, identified unlawful act.
Section 71(2C) provides: (2C) For the purposes of subsection (2B) human rights proceedings means proceedings (a) which rely (wholly or partly) on section 7(1)(b) of the Human Rights Act (i) 1998, or (ii) an expression used in subsection (2B) and in (b) section 7 of the Human Rights Act 1998 has the same meaning in subsection (2B) as in section 7.
section 69(5)(b) of this Act, and
Paragraph 8 of the Explanatory Notes to the 2007 Act (although the Notes do not form part of the Act and were not endorsed by Parliament) is illuminating on the question of whether a victim needs to be identified.
In material part, it reads: This Act makes provision to extend the powers of the Northern Ireland Human Rights Commission It amends the Northern Ireland Act 1998 by granting powers to the Commission to institute judicial proceedings in the Commissions own right, and when doing so to rely upon the European Convention on Human Rights.
This will mean that the Commission can bring test cases without the need for a victim to do so personally.
I reject the arguments that the Commission is obliged to identify a victim and that it must demonstrate that an unlawful act has actually taken place before it may bring proceedings to challenge the compatibility of legislation with ECHR.
HRA contemplates two distinct and complementary mechanisms for the protection of Convention rights challenges to legislation under sections 3 5 of the Act and challenges to the acts of public authorities under sections 6 9 per Lord Rodger in Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, para 206.
The title to sections 3 5 of the Act is legislation, and to sections 6 9 public authorities.
There is every reason to conclude that the availability of two different species of challenge was in the contemplation of the legislature.
True, of course, it is that a challenge to a decision of a public authority may prompt a declaration of incompatibility in relation to the legislation under which the act of the authority has taken place.
But that circumstance does not preclude the making of a declaration of incompatibility where a freestanding challenge to the legislation is made and its intrinsic nature (as opposed to its impact on a particular individuals rights under ECHR), is deemed to be inconsistent with the Convention.
This, I consider, is clear from the terms of section 4(1) (4) of HRA.
They state: (1) Subsection (2) applies in any proceedings in which a court determines whether a provision of primary legislation is compatible with a Convention right. (2) If the court is satisfied that the provision is incompatible with a Convention right, it may make a declaration of that incompatibility. (3) Subsection (4) applies in any proceedings in which a court determines whether a provision of subordinate legislation, made in the exercise of a power conferred by primary legislation, is compatible with a Convention right. (4) If the court is satisfied that the provision is incompatible with a Convention right, and that (disregarding any possibility of revocation) the primary legislation concerned prevents removal of the incompatibility, it may make a declaration of that incompatibility.
Section 69(5)(b) empowers NIHRC to bring proceedings.
The only restriction on that right is that the proceedings must involve law or practice relating to human rights claims.
A claim under section 4 of the HRA meets that requirement.
The respondents objection resolves to the claim that an application for a declaration of incompatibility must be parasitic on or ancillary to a claim that an individuals right has been violated.
But there is nothing in the text of section 4 which warrants that view.
There is no reason why the court should not entertain proceedings in which NIHRC claims that the 1861 and 1945 Acts contain provisions which are generally incompatible with ECHR.
Proceedings for a declaration of incompatibility are still proceedings.
Nothing in section 4 of HRA suggests that an application for such a declaration must be an adjunct to some other claim.
Cases which challenge primary legislation without claiming that a public authority has acted unlawfully do not engage section 6.
They are actions under sections 3 or 4, and the victim requirement in section 7 need not be satisfied.
In R (Rusbridger) v Attorney General [2004] 1 AC 357, journalists sought to challenge section 3 of the Treason Felony Act 1848 which, at least arguably, criminalised the publication of articles advocating abolition of the monarchy.
An article to that effect was published in the Guardian newspaper and both before and after its publication, the claimant journalists sought an assurance that its publication would not lead to their being prosecuted.
The Attorney General refused to give that assurance.
The claimants original complaint was that the Attorney General had acted contrary to section 6(1) HRA by refusing to confirm that no prosecution would be brought if articles advocating republicanism were published in the Guardian.
They launched judicial review proceedings under section 7(1)(a) of HRA, complaining of a breach of section 6(1) of HRA (which makes it unlawful for a public authority to act in a way which is incompatible with a Convention right), and in the alternative seeking a declaration pursuant to section 3 of HRA as to the scope of application of section 3 of the 1848 Act, or a declaration of incompatibility pursuant to section 4 HRA.
The section 6(1) HRA complaint failed at first instance but the Court of Appeal permitted the case to proceed as an amended claim for a declaration that section 3 of the 1848 Act should be read down by the insertion of words expressly limiting its application to situations where there were acts of force or constraint or other unlawful means: [2002] EWCA Civ 397, paras 16 17, 25 and 28.
When, therefore, the case came before the House of Lords it was for a declaration under section 3 of HRA (which requires courts to read and give effect to legislation in a way that is compatible with Convention rights, in so far as that is possible) and, alternatively for a declaration of incompatibility under section 4.
There was no challenge to any act of a public authority as being contrary to section 6 of HRA.
The case did not proceed under section 7 of HRA, therefore.
Lord Steyn made it clear that, in those circumstances, the requirement in section 7, that there be a victim, did not have to be satisfied para 21.
Lord Scott and Lord Walker agreed with this analysis.
In the event, the House of Lords in Rusbridger refused to grant the relief sought but that was because the litigation served no practical purpose and had been unnecessary para 28.
The important point to take from that case, however, in so far as the present appeal is concerned, is that it recognised a distinct form of proceeding under sections 3 and 4 of HRA which did not require victim status to be established.
It was a principal feature of the respondents case in the present appeal that section 4 of HRA created no new or freestanding cause of action and that it was merely a remedies provision.
That submission is clearly wrong.
It fails to recognise the two distinct mechanisms for enforcing Convention rights and is inconsistent with Rusbridger.
In Ghaidan v Godin Mendoza [2004] 2 AC 557 a claim for possession of a flat owned by Mr Ghaidan was made.
It was resisted on the basis that the defendant had succeeded to a secure tenancy as the surviving spouse of the original tenant.
The House of Lords applied section 3(1) HRA to interpret the relevant provisions of the Rent Act 1977 so that they benefited same sex as well as opposite sex couples.
Lord Millett, dissenting on the application of section 3(1), would nevertheless have considered making a declaration of incompatibility pursuant to section 4 HRA (para 55).
In this case, again, there was no section 6(1) challenge to an act of a public authority.
The relevant obligation was either section 3 (in the case of the majority) or section 4 (according to Lord Millett).
It was not deemed necessary that there be a victim.
Likewise, in Wilson v First County Trust (No 2) Lord Hope noted that no claim had been made by a victim that a public authority had acted in a way that was unlawful under section 6(1) of HRA para 91.
None of these three cases was brought in reliance on section 7(1) of HRA.
In none of them was the lack of a victim considered to render the claims unfeasible.
The cases exemplify the first of the two mechanisms adumbrated by Lord Rodger in Wilson v First County Trust (No 2), namely a challenge to the compatibility of legislation which is not associated with a challenge to an act of a public authority said to be in violation of a Convention right.
In extremely helpful submissions prepared by Mr Coppel QC on behalf of the equivalent body in Great Britain, the Equality and Human Rights Commission (EHRC), it has been argued that the Equality Act 2006 (EA) invests EHRC with the power to institute proceedings which challenge the compatibility of legislation with ECHR.
By virtue of section 30(1) of EA, EHRC has the capacity to institute or intervene in legal proceedings, whether for judicial review or otherwise, if it appears to the Commission that the proceedings are relevant to a matter in connection with which the Commission has a function.
As with section 71A of NIA, EHRC is exempted from the victim requirement in relation to proceedings under section 7(1)(b) of HRA section 30(3) of EA.
Mr Coppel QC argues that, given the enforcement mechanisms contained in the HRA, such proceedings may be constituted as section 7 HRA proceedings which challenge the act of a public authority as being contrary to section 6(1) HRA, or they may be founded on sections 3 and 4 HRA so as to seek a compatible interpretation of primary legislation, or challenge that legislation as incompatible, without there being any allegation of breach of section 6(1) HRA.
Proceedings brought by the EHRC in the latter category would, he says, unquestionably be relevant to the EHRCs functions (for example) to promote protection of human rights and, in certain cases, to encourage compliance with section 6 HRA.
This can be achieved by establishing a Convention compliant interpretation of legislation or by the remedying of incompatible legislation following a declaration of incompatibility.
Either outcome will constrain public authorities to act compatibly with Convention rights.
I accept Mr Coppels submissions.
They have not been challenged by the respondents to this appeal.
It would be wholly anomalous that NIHRC should not be competent to institute proceedings challenging the compatibility of legislation with ECHR unless it identified a victim and a specific unlawful act, when EHRC had been relieved of those requirements.
This is especially so given that the insertions into the NIA by the Justice and Security (Northern Ireland) Act were made in the year following the EA.
The Attorney General has argued that the reason for requiring an actual unlawful act and a specifically identified victim is to avoid challenges to the law in the abstract it is not sufficient, he contends, to claim that the mere existence of a law violates Convention rights.
This argument is misconceived for two reasons.
First, such a restriction would only be appropriate to prevent individuals from bringing challenges which serve no practical purpose.
It should not operate to inhibit the bringing of proceedings by statutory bodies which have been specifically empowered to do so in order to address violations of Convention rights.
Secondly, this is not in any sense an actio popularis.
It is not an academic challenge brought against obsolete legislation.
The 1861 and the 1945 Acts have a direct impact on individuals, as the cases discussed in the first part of this judgment amply demonstrate.
It is notable that section 71(2B)(c) provides that the Commission may act only if there is or would be one or more victims of the unlawful act.
If, as I consider to be the case, the implementation of the provisions of the 1861 and 1945 Acts involves the violation of Convention rights, it is clear that there have been and will be victims of such violations.
The Attorney Generals suggestion that, in order to satisfy the requirement that there would be victims of the unlawful act, NIHRC must bring its case by reference to a specific potential victim and a concrete set of facts, is plainly incorrect.
The natural meaning of a power to act where there would be victims clearly indicates an intention that the Commission should be able pre emptively to prevent human rights violations rather than merely bring post hoc proceedings relating to actual violations.
Quite apart from this, the Attorney Generals submission (in para 53 of his reference) that the Commission has not identified any individual who is or would be a victim of any unlawful act (nor has any intervener) cannot be accepted.
If these legislative provisions are found to be incompatible with ECHR, clearly there are actual and potential victims.
The cases described above amply demonstrate this.
And, as NIHRC notes at para 64 of its reply to the reference, neither of the respondents has ever disputed that there are women and girls in the three categories instanced, fatal foetal abnormality, serious foetal abnormality and pregnancy as the result of rape or incest.
The practical effects of a finding that NIHRC does not have standing should not be shied away from.
These can be considered at a general and at a particular level.
The first is to deny the body instituted for the precise purpose of defending and promoting human rights protection in Northern Ireland of one of the most obvious means of securing that protection.
It introduces a perplexing and unaccountable discrepancy between the powers available to EHRC and NIHRC.
Most importantly, as this case vividly illustrates, it makes a significant inroad into the practicality and effectiveness of the article 3 and 8 rights of pregnant girls and women in Northern Ireland.
Women suffering from the ill effects of a pregnancy where there is a fatal foetal abnormality or who are pregnant because of rape or incest do not have the luxury of time within which to seek vindication of their rights.
This is pre eminently a situation where an independent body such as NIHRC should be invested with the power to mount a challenge to legislation which violates, and will violate if it continues in force, the rights of some members of the female population of Northern Ireland.
Article 13 of ECHR provides for the right to an effective remedy.
It is in these terms: Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.
This article was not included in the schedule to the HRA 1998 because it was thought that the HRA 1998 itself provided an effective remedy.
A requirement that there must be a specific unlawful act affecting a particular individual before breach of article 3 or article 8 can be canvassed throws into substantial question whether an effective remedy is possible for that section of the female population of Northern Ireland whose foetus has a fatal abnormality or who are pregnant as a result of rape or incest.
Fatal foetal abnormality is frequently not detected until the 20 week scan.
If, for instance, the end point at which a woman may seek an abortion is 24 weeks (as under the Abortion Act 1967), this provides an impossibly short time within which vindication of the womans rights could be achieved.
Moreover, the number of women who have had to endure the trauma of a fatal foetal abnormality pregnancy or a pregnancy which is the consequence of rape or incest and who would be prepared, after the event, to assert a violation of their rights cannot be presumed to be significant.
If NIHRC is unable, by reason of a lack of standing, to bring proceedings to protect such womens rights, I consider that they will be deprived of the practical and effective remedy which article 13 guarantees.
I consider, therefore, that NIHRC has standing to bring the present proceedings.
The decision of the majority that the appellant does not have standing appears to me, with respect, to depart from a well established line of authority that an interpretation of a statute which gives effect to the ascertainable will of Parliament should be preferred to a literal construction which will frustrate the legislations true purpose.
In R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687, Lord Bingham said at para 8: The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed.
But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty.
Such an approach not only encourages immense prolixity in drafting It may also (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute.
Every statute other than a pure consolidating statute is, after all, enacted to make some change, or address some problem, or remove some blemish, or effect some improvement in the national life.
The courts task, within the permissible bounds of interpretation, is to give effect to Parliaments purpose.
So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment.
A similar approach was taken by Lord Carswell in R v Z (Attorney General for Irelands reference) [2005] 2 AC 645, where, having cited Lord Binghams statements in Quintavalle, he said at para 49: My Lords, this appeal serves as a very good example of the principle of statutory construction that in seeking to ascertain the mischief towards which a statute is directed it can be of prime importance to have regard to the historical context.
If the words of a statutory provision, when construed in a literalist fashion, produce a meaning which is manifestly contrary to the intention which one may readily impute to Parliament, when having regard to the historical context and the mischief, then it is not merely legitimate but desirable that they should be construed in the light of the purpose of the legislature in enacting the provision: cf Karpavicius v The Queen [2003] 1 WLR 169, 175 176, paras 15 16, per Lord Steyn.
In Attorney Generals Reference (No 5 of 2002) [2005] 1 AC 167, Lord Steyn said at para 31: No explanation for resorting to a purposive construction is necessary.
One can confidently assume that Parliament intends its legislation to be interpreted not in the way of a black letter lawyer, but in a meaningful and purposive way giving effect to the basic objectives of the legislation.
A more recent example of the same approach is found in Littlewoods Ltd v Revenue and Customs Comrs [2017] 3 WLR 1401, where Lord Reed and Lord Hodge said: the literal reading fatally compromises the statutory scheme created by Parliament.
It cannot therefore be the construction of the critical words which Parliament intended. (para 37) and that and that: It is not a literal construction, but a departure from a literal construction is justified where it is necessary to enable the provision to have the effect which Parliament must have intended. (para 39)
Bennion on Statutory Interpretation, 7th ed (2017), states at section 11.1 that: General judicial adoption of the term purposive construction is relatively recent, but the concept is not new the idea that the courts should pay regard to the purpose of a provision led to the resolution in Heydons case [which was reported in 1584]. when judges speak of purposive construction, they are often referring to a strained construction However, a purposive construction in the true sense (that is, construing an enactment with the aim of giving effect to the legislative purpose) does not necessarily require the statutory language to be strained.
Most often, a purposive construction in this sense will also be a grammatical construction, as the purpose and wording of an enactment will usually align with one another.
The conclusion that the Commission has standing to institute proceedings does not require a strained construction of the legislation.
The statement in section 71(2B)(c) that the Commission may bring proceedings only where there is or would be victims of an unlawful act can reasonably be interpreted to mean that the Commission may act where it is clear that there have been and will be victims of the implementations of the provisions of the 1861 and 1945 Acts (as noted in para 58 above).
Indeed, to interpret these words as meaning that a case must be brought in relation to a specific potential victim and a specific unlawful act constitutes a much more obviously strained construction.
Section 11.1 of Bennion also cites the American case of Cabell v Markham (1945) 148 F 2d 737, in which Justice Learned Hand explained the merits of purposive interpretation: Of course, it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else.
But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.
Whether the interpretation of the relevant provisions is considered in terms of giving effect to the overall purpose of the legislation or curing a mischief or in its historical context, the permissible and plainly proper construction to be given to those provisions is that the Commission has standing to bring the present proceedings.
The decision in this case sweeps away a vital protection for the people of Northern Ireland which, I am convinced, Parliament intended that they should have.
It is my hope that Parliament will swiftly restore that protection in legislation which permits no debate as to its purpose.
There is another consideration.
It relates to the constitutional character of the NIA.
In Robinson v Secretary of State for Northern Ireland [2002] NI 390, Lord Bingham made the following statement at para 11 in relation to that Act: The 1998 Act does not set out all the constitutional provisions applicable to Northern Ireland, but it is in effect a constitution. the provisions should, consistently with the language used, be interpreted generously and purposively, bearing in mind the values which the constitutional provisions are intended to embody.
To like effect, in R v Director of Public Prosecutions, Ex p Kebeline [2000] 2 AC 326, 375, Lord Hope said: In Attorney General of Hong Kong v Lee Kwong kut [1993] AC 951, 966 Lord Woolf referred to the general approach to the interpretations of constitutions and bills of rights indicated in previous decisions of the Board, which he said were equally applicable to the Hong Kong Bill of Rights Ordinance 1991.
He mentioned Lord Wilberforces observation in Minister of Home Affairs v Fisher [1980] AC 319, 328 that instruments of this nature call for a generous interpretation suitable to give to individuals the full measure of the fundamental rights and freedoms referred to, and Lord Diplocks comment in Attorney General of The Gambia v Momodou Jobe [1984] AC 689, 700 that a generous and purposive construction is to be given to that part of a constitution which protects and entrenches fundamental rights and freedoms to which all persons in the state are to be entitled.
The same approach will now have to be applied in this country when issues are raised under the 1998 Act about the compatibility of domestic legislation and of acts of public authorities with the fundamental rights and freedoms which are enshrined in the Convention.
I consider that these strong statements as to the approach to be taken to constitutional provisions provide a powerful indication that the standing of NIHRC to take these proceedings should be recognised.
Article 3 of ECHR
Article 3 provides: No one shall be subjected to torture or to inhuman or degrading treatment or punishment.
The first thing to notice about this provision is its absolute nature.
It unequivocally forbids torture or treatment which can properly be regarded as inhuman or degrading.
If that threshold is passed, there is no question of mitigation or justification of the action which constitutes the offending behaviour.
The focus is directly on the behaviour said to constitute torture or inhuman or degrading treatment rather than on the circumstances in which it occurred or the avowed reasons for it.
If the treatment to which an individual is subjected can properly be regarded as torture or inhuman or degrading, it does not matter a whit what the person or agency which is responsible for the perpetration of that treatment considers to be the justification for it.
Nor does it matter that it is believed to be necessary to inflict the treatment to protect the interests of others.
Torture and inhuman or degrading treatment are forbidden.
That is an end of it.
But the anterior question, whether the threshold has been passed; whether the complained of behaviour is torture or inhuman or degrading treatment, does not, in every instance, leave out of account the purpose of the conduct.
In Gfgen v Germany (2010) 52 EHRR 1, para 88 the Strasbourg court said: In order for ill treatment to fall within the scope of article 3 it must attain a minimum level of severity.
The assessment of this minimum depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age and state of health of the victim.
Further factors include the purpose for which the treatment was inflicted together with the intention or motivation behind it, as well as its context, such as an atmosphere of heightened tension and emotions.
It is necessary to treat this statement with some care, however.
The three cases referred to in footnote 38 to the paragraph and which are said to support the proposition that the purpose or motivation of the persons inflicting the treatment was relevant and whether it had occurred at a time of heightened tension was material were Aksoy v Turkey (1996) 23 EHRR 553 (at para 64); Egmez v Cyprus (2000) 34 EHRR 29 (at para 78); and Krastanov v Bulgaria (2004) 41 EHRR 50 (at para 53).
These cases were concerned with, inter alia, the question whether the deliberate assault of the victim constituted torture or what might be regarded as the lesser wrongdoing of meting out inhuman or degrading ill treatment.
The decisions of the Strasbourg court in those cases linked the issue of torture (or the absence of it) to the question whether police officers were seeking to extract a confession.
This confines the issue of motivation or purpose to a relatively narrow compass.
It is understandable that ill treatment designed to extract information might be regarded as torture because it has that purpose, while the same treatment with no particular motivation would not qualify.
It is important to note, however, that the treatment complained of in all three cases was considered to be in breach of article 3.
It was inhuman or degrading.
So, the decisions in those cases are a far cry from saying that the motivation of the inflictor of the ill treatment will always be relevant to, much less determinative of, the question of whether that ill treatment crosses the threshold which article 3 prescribes.
It appears to me, therefore, that examination of the purpose of the offending behaviour or of the motivation of the person or the state which perpetrates it is principally, if not exclusively, concerned with an assessment of whether treatment which might otherwise not meet the standard set by article 3 crosses the threshold by reason of that motivation or purpose.
One can readily understand why this should be so.
Conduct which is offensive but, examined out of context lacking in the necessary level of severity to amount to a breach of article 3, can be converted to that condition where there are base motives for its infliction because this can contribute to its degrading or inhuman qualities.
It is more difficult to see how the motivation of the inflictor of the treatment or the purpose of its being inflicted, can convert behaviour which would otherwise meet article 3 standards to a condition where it does not.
In this connection, what ECtHR had to say in para 151 of RR v Poland (2011) 53 EHRR 31 is relevant: Although the purpose of [alleged ill treatment] is a factor to be taken into account, in particular whether it was intended to humiliate or debase the victim, the absence of any such purpose does not inevitably lead to a finding that there has been no violation of article 3.
To bring these considerations home to the present case, I do not accept that the purpose of preserving the impugned provisions of the 1861 and 1945 Acts is relevant to the question whether their effect constitutes torture or inhuman or degrading treatment.
That effect must be independently examined for its potential to qualify as treatment forbidden by article 3.
If it is found to reach that standard, it cannot be diminished or rescued from the status of article 3 ill treatment by what might be said to be laudable motives or objectives.
If I am wrong in that conclusion and it is relevant to take into account the purpose of preserving the impugned legislative provisions and the motivation of those responsible for their preservation, I consider that no great weight should be accorded to those factors in the present case.
One begins with the premise that the primary focus of article 3 is on its effect on the victim.
Where that effect is, by any objective standard, plainly degrading or inhumane, very considerable and provable benefits would surely be required to displace the primary position.
It has been claimed that some 100,000 people in Northern Ireland are alive today because of the law in relation to abortion in that province.
That claim featured in a poster issued by the pro life campaign group, Both Lives Matter, in January 2017.
The poster was the subject of a complaint to the Advertising Standards Agency (ASA).
It was suggested that the poster was misleading and that the claim, that 100,000 people were alive because of the law on abortion in Northern Ireland, could not be substantiated.
ASA did not uphold the complaint.
It considered that, contrary to the complaint that the advertisement had made an absolute, objective claim, it was a large, round figure that readers would typically associate with estimates and that, furthermore, readers would appreciate that it was not possible to calculate the precise number of abortions that would have theoretically occurred in Northern Ireland if abortion had been legal over the past 50 years.
The joint written submissions of the interveners, CARE, ADF International and Professor Patricia Casey, cited this figure and it was relied on in the oral submissions by Mr Mark Hill QC on their behalf, to support their claim that the abortion law in Northern Ireland had a positive, beneficial effect.
I do not consider that that claim is sustained by the material on which it purports to rely.
I say that for two reasons.
Firstly, although ASA dismissed the complaint, it is clear from its report that while it endorsed the methodologies employed by the campaign group, it did not vouch for the accuracy of the figure.
It is in the nature of such an exercise that, at best, only a broad estimate could be made.
Secondly, even if the accuracy of the figure could be established, it cannot be taken as a given that this outweighs the interests of women required to carry foetuses to term against their will.
In this context, it is to be remembered that the clear jurisprudence of Strasbourg (which will be discussed later in this judgment) is that a foetus does not enjoy rights, whereas the expectant mother does.
It is therefore misconceived to assert that, because a number of children have been born who would not otherwise have been, this trumps the essential case of the appellant on article 3.
This case is that a law requiring mothers to carry babies with fatal abnormalities to term or where their pregnancy is the result of rape or incest, carries an inevitable risk that a number of them will have suffered inhuman or degrading treatment, contrary to the article.
It is, in my opinion, beyond question that many women in Northern Ireland who have had to continue with a pregnancy against their will, or who have had to travel to England to obtain an abortion, have had to undergo treatment forbidden by article 3.
I will give my reasons for that conclusion later in this judgment.
In as much as the motivation of those responsible for the preservation of the laws bears on the question of whether an article 3 breach has been established, it can be said that it is difficult to ascertain what that motivation is, much less that it is soundly based.
The respondents point to the fact that on 10 February 2016, members of the Northern Ireland Assembly voted, by 59 votes to 40, against legalising abortion in cases of fatal foetal abnormality, after an amendment was tabled by a Member of the Legislative Assembly (MLA) to the Justice (No 2) Bill.
A further amendment legalising it in cases of sexual crimes tabled by another MLA was also unsuccessful.
Since that date, the issue of the law on termination of pregnancy has not been further debated by the Assembly, nor has the Northern Ireland Executive considered outstanding proposals from the Department of Justice to change the law to cover cases of fatal foetal abnormality.
It would be quite wrong, in my view, to conclude from this that those MLAs who voted against the amendments shared the same stance on why the law should not be amended, much less that this vote is indicative of the will of the majority of the population in Northern Ireland that the law on abortion should be maintained.
As NIHRC has submitted, there is no necessary correlation between the votes cast in the Assembly on such issues and the moral views of the people of Northern Ireland.
This aspect will be discussed in detail in the sections of this judgment dealing with article 8 and institutional competence and I say nothing more about it here.
On the question of the reasons that MLAs voted as they did, the Hansard report of the debate in the Assembly is illuminating.
Mrs Pengelly spoke on behalf of the Democratic Unionist party (DUP).
She urged MLAs to vote against the amendment in relation to fatal foetal abnormality.
She did so, however, on the basis that further investigation and consultation were required.
She did not suggest that the DUP (then the largest party in the Assembly) was unalterably opposed to amendment of the abortion law.
To the contrary, although she said that the DUP was opposed to the extension of the 1967 Abortion Act to Northern Ireland, in the following passages she made clear that the DUP had not shut its mind to possible reform: The issue before us requires it demands careful consideration from the medical professionals, practitioners, families and ethics and legal experts to ensure that sufficient and proper clarity and guidance are the hallmarks of the way forward.
That is absolutely essential to ensure that the arrangements are fully grounded in compassion, good law, support and the protection of our integrity and to ensure that our societal values and rights are properly and carefully balanced and maintained Tread carefully.
That is why the DUP is rejecting the amendment but outlining a road map to a sensible, informed and appropriate way forward.
The Minister of Health has been asked to establish, by the end of February, a working group that will include clinicians in this field and legally qualified persons to make recommendations on how this issue can be addressed, including, if necessary, bringing forward draft legislation.
We have asked that all interested parties should be consulted and that the group will be tasked to report within six months.
We all need to hear more fully the views of the Royal College and others.
We all need the opportunity to ask those vital questions to get the appropriate advice.
That is why the working group is the best and most appropriate way forward I urge members to vote against the amendment and for the proposed way forward that we are outlining a sensible way that is based on expertise, evidence and careful, thoughtful consideration.
Support a way forward that is based on love, compassion and hope.
Mrs Dolores Kelly, speaking on behalf of the Social Democratic and Labour Party declared that her party was a pro life party.
But the opposition of her party to the amendment was not based solely on that position.
She considered that greater clarity was required about the guidelines issued by the Department of Health as to when termination could legally take place.
She welcomed the decision of the First Minister to set up a working group to consider the question of abortion law in Northern Ireland.
Again, it is clear that this party did not have an implacable opposition to amendment of the law.
At the time of the vote on the amendment, the make up of the Assembly was DUP 38; Sinn Fin 29; Ulster Unionist Party 16; Social Democratic and Labour Party 14; Alliance Party of Northern Ireland 8; Traditional Unionist Voice 1; Green Party 1; Independent 1.
It is clear from the voting record that the bulk of the opposition came from DUP but members of other parties, notably, the Social Democratic and Labour party, also joined the no lobby while members of the Ulster Unionist party and the Alliance party supported the amendment.
It is inescapably clear, therefore, that there was no single, cohesive view among those who voted against the amendment as to the reasons for doing so.
The motivation for preserving the law in its current state cannot begin to qualify as a basis for treating what would otherwise be inhuman or degrading treatment as something less than that.
The applicability of article 3 to cases of fatal foetal abnormality and rape or incest
I have already referred (in para 215 above) to the absolute nature of article 3.
That characteristic was recognised by ECtHR in Pretty v United Kingdom [2002] 35 EHRR 1.
At paras 50 52, the court said: 50.
An examination of the Courts case law indicates that article 3 has been most commonly applied in contexts in which the risk to the individual of being subjected to any of the proscribed forms of treatment emanated from intentionally inflicted acts of State agents or public authorities.
It may be described in general terms as imposing a primarily negative obligation on States to refrain from inflicting serious harm on persons within their jurisdiction.
However, in light of the fundamental importance of article 3, the Court has reserved to itself sufficient flexibility to address the application of that article in other situations that might arise. 51. In. particular, the Court has held that the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within the 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 and degrading treatment or punishment, including such treatment administered by private individuals.
A positive obligation on the State to provide protection against inhuman or degrading treatment has been found to arise in a number of cases: see, for example the above cited A v United Kingdom where the child had been caned by his stepfather and Z v United Kingdom where four child applicants were severely abused and neglected by their parents.
It also imposes requirements on State authorities to protect the health of persons deprived of liberty. 52.
As regards the types of treatment which fall within the scope of article 3 of the Convention, the Courts case law refers to ill treatment that attains a minimum level of severity and involves actual bodily injury or intense physical or mental suffering Where treatment humiliates or debases an individual showing a lack of respect for, or diminishing, his or her human dignity or arouses feelings of fear, or inferiority capable of breaking an individuals moral and physical resistance, it may be characterised as degrading and also fall within the prohibition of article 3.
The suffering which flows from naturally occurring illness, physical or mental, may be covered by article 3, where it is, or risks being, exacerbated by treatment, whether flowing from conditions of detention, expulsion or other measures, for which the authorities can be held responsible.
The Attorney General argued that those who wished to have an abortion in Northern Ireland but were forbidden by the law from obtaining one had not been ill treated within the meaning of article 3 in that they had not been treated at all by the state.
I do not accept that argument.
At present, a girl or woman who obtains an abortion in circumstances other than those narrowly prescribed by the 1861 and 1945 Acts commits a criminal offence and is liable to prosecution.
That constitutes ill treatment in so far as imposing that sanction on women amounts to a breach of article 3.
Likewise, requiring a woman to carry to term a foetus who is doomed to die, or a foetus who is the consequence of rape or incest, when the impact on the mother is inhuman or degrading is, in every sense, treatment to which the woman is subjected by the state.
It is, moreover, treatment which because of its inhumanity or degrading effect, is in violation of article 3.
Moreover, the threat of prosecution of a doctor whose assistance in the termination of a pregnancy is sought has a direct impact on a girls or womans experience of pregnancy where, for instance, she has been told that the foetus she is carrying has a fatal abnormality.
In this connection, the evidence of Professor Dornan is highly pertinent.
He is a distinguished obstetrician and gynaecologist whose appointments include Emeritus Professor in Maternal and Foetal Medicine at the Queens University of Belfast and the Professor of Health and Life Sciences at Ulster University.
He is also a member of the external advisory group to Centre for Maternal and Newborn Health (CMNH).
CMNH is a World Health Organisation collaborating Centre for Research and Training on Maternal and Newborn Health whose work includes emergency obstetric care in Africa and Asia.
Professor Dornan has explained that before the decision in the FPANI case, it was the clinical practice in the unit in which he was a consultant to carry out terminations of pregnancy where lethal abnormalities of the foetus were detected on screening and where abnormalities were discovered prior to the stage of viability (at that time 28 weeks, now considered to be 24 weeks) which indicated that there would be a major physical or mental problem for the foetus.
After the judgments of the Court of Appeal were handed down in FPANI, that practice changed radically, as Professor Dornan explained in para 12 of his affidavit: The FPANI case, which was finally decided in 2004, made it clear that we could no longer offer a pregnant woman the option of an abortion on the grounds of fatal foetal abnormality alone.
Rather the focus was to be solely on the pregnant woman.
Therefore, a pregnancy could be lawfully terminated if its continuation threatened her life or would have a serious and long term effect on her physical or mental health.
Hence a diagnosis of fatal foetal abnormality would only be relevant to offering a termination if the continuation with that pregnancy would have such an impact.
Unless, therefore, a doctor could advise with confidence that there would be a serious and long term effect on a mothers physical or mental health, it was legally forbidden to carry out a termination of pregnancy in the case of a fatal abnormality of the foetus.
And this, as Professor Dornans affidavit convincingly shows, despite the high level of accuracy in such diagnoses.
In sum, a doctor treating a pregnant mother is able to tell her with confidence that her baby has a fatal condition but is not be able to offer her a termination of her pregnancy unless a prognosis of serious and long term mental or physical ill health for the mother (an inherently difficult prognosis to make) is possible.
It is small wonder that the doctors in the examples given at the beginning of this judgment felt unable to assist their patients.
Not all mothers who are told that the baby they are carrying has a fatal abnormality will suffer the trauma that was endured by the women whose experiences have been described earlier.
Likewise, not all girls or women who become pregnant as a result of rape or incest will suffer to the same extent.
Some may have uncommon reserves of stoicism and fortitude.
But it is undeniable that some will suffer profound psychological trauma.
That circumstance is sufficient to give rise to a violation of article 3 where proper safeguards to mitigate the risk of such trauma are not put in place.
Obligations owed by the state under article 3 extend to protecting individuals from the risk of a breach of its provisions as well as a positive duty to provide appropriate healthcare treatment where the denial of that treatment would expose victims to ill treatment contrary to article 3.
The positive obligation to protect citizens from ill treatment is stated in A v United Kingdom (1998) 27 EHRR 611: Article 1 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 (para 22).
In RR v Poland (2011) 53 EHRR 31, the court stated that it cannot be excluded that the acts and omissions of the authorities in the field of health care policy may in certain circumstances engage their responsibility under article 3 by reason of their failure to provide appropriate medical treatment (para 152).
In Chahal v United Kingdom (1996) 23 EHRR 413 the ECtHR held that the risk of the applicant being subjected to torture, inhuman or degrading treatment if he was returned to India was sufficient to give rise to a breach of article 3 where the British authorities had evinced an intention to deport him there.
So also in Saadi v Italy [2008] 49 EHRR 30, the Strasbourg court held that since there were substantial grounds for believing that, in the event of his deportation to Tunisia, the applicant would face a real risk of ill treatment, contrary to article 3, to return him there, as the Italian authorities proposed to do, would violate his article 3 rights.
In Sufi and Elmi v United Kingdom [2011] 54 EHRR 9 it was held that the risk of the applicants being subjected to treatment which would violate article 3 if returned to Somalia meant that the British authorities would be in breach of the article if they carried through their intention to deport them to that country.
The risk of women and girls being subject to ill treatment contrary to article 3 is therefore sufficient to trigger the states positive obligations to take measures to prevent that happening.
That such a risk exists while the impugned legislative provisions remain in force is beyond dispute, in my opinion.
Article 3 prohibits torture and inhuman or degrading treatment.
Degrading treatment means subjecting someone to humiliation or debasement see RR v Poland at para 150.
In my view, it is plainly humiliating to require a girl or woman to continue a pregnancy when she knows that the foetus she carries will die or where she finds that pregnancy abhorrent because it is the consequence of rape or incest.
It has been suggested that since a woman from Northern Ireland who wishes to have an abortion can obtain one by travelling to England or Scotland, she can avoid inhuman or degrading treatment.
I do not accept this.
Termination of pregnancy is one of lifes most traumatic and fraught experiences.
To be required to travel away from home and to undergo an abortion in unfamiliar surroundings without the normal support network that a woman would expect and hope to have is in itself deeply upsetting.
A girl or woman who has become pregnant as a result of rape or incest is already in a vulnerable position and liable to suffer extreme distress.
So too a mother who has been told that the child she carries will not survive.
That distress can only be increased and compounded by forcing the woman to seek termination of her pregnancy in a different country, away from her family and friends and without the support of her own doctor.
The fact of being required to do so is in itself sufficient to expose her to the risk of inhuman and degrading treatment.
The Court of Appeals treatment of the article 3 issue
Sir Declan Morgan LCJ rejected the Commissions article 3 case on the ground that the standard of severity of impact required for its engagement in this field was so high see para 60 of his judgment.
In reaching that conclusion, the Lord Chief Justice examined four decisions of the Strasbourg court Tysiac v Poland (2007) 45 EHRR 42; A, B and C v Ireland (2010) 53 EHRR 13; RR v Poland; and P and S v Poland (2013) 129 BMLR 120.
Before examining those decisions, it is to be noted that, as Sir Declan observed in para 53 of his judgment, the threshold level for the engagement of article 3 is relative.
In other words, whether the treatment complained of is to be regarded as torture or inhuman or degrading depends on a close examination of the individual circumstances of any case in which breach of article 3 is claimed.
Those individual circumstances must comprehend not only the nature of the behaviour but also its effect on those affected by it and a number of other factors.
As the ECtHR said in Ireland v United Kingdom (1978) 2 EHRR 25: 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 cases, the sex, age and state of health of the victim.
It is not appropriate, therefore, to categorise those wishing to have a termination of pregnancy as inhabiting a single class of persons and to theorise that a high level of severity is required before article 3 is engaged for any member of that group.
The same law may affect different women in different ways.
The fact that some feel able to face an ordeal with stoicism or even equanimity, does not mean that others, who do not react in the same way, and who suffer severe trauma when confronted with the same prospect as those who can contemplate it equably, cannot be the victims of an article 3 breach.
That is not to say, however, that those women and girls who become pregnant as a result of rape or incest, or who have been found to be bearing foetuses with serious or fatal abnormality do not share certain characteristics.
Rape or incest victims are in a highly vulnerable group para 162 of P and S v Poland.
Being required to give birth to a child which is the result of sexual abuse or assault carries at least the risk of having to endure treatment which is forbidden by article 3.
Likewise, a woman who is obliged to carry to term a foetus who is fatally malformed is placed in a position of similar peril see RR v Poland at para 159.
A law which forbids a woman, impregnated as a result of sexual assault, from avoiding its consequence, when the continuation of the pregnancy is utterly abhorrent to her and when it will prolong and intensify her suffering, faces a formidable hurdle in its defence to a claim that it violates her article 3 rights.
So does a law which demands that a woman, who has been told that the foetus she carries cannot survive, but must nevertheless be sustained by her until his or her inevitable demise, with all the horrible effects that will be visited on the mother during the period, must live with that knowledge.
The cases which NIHRC have cited exemplify the agony of such women.
In Tysiac v Poland a pregnant woman was denied an abortion, notwithstanding her general medical practitioners opinion that her already significant myopia would deteriorate if she was to give birth.
Ophthalmic specialists disagreed.
ECtHR found that she had been the victim of a breach of article 8 of ECHR.
The court dealt perfunctorily with her claim under article 3, stating in para 68 that the facts did not disclose a breach of the article.
The judgment did not elaborate on the reasons for this conclusion.
I do not consider that this case assists in the present appeal, at least not on the issue of article 3.
A, B and C v Ireland was a case in which three women had been required to travel from Ireland to the United Kingdom to obtain an abortion.
It will be necessary to consider the case in some detail in relation to article 8 and the margin of appreciation but, for present purposes, I focus on what the ECtHR had to say about article 3.
In paras 124 127, the court set out its findings as to the circumstances in which each of the applicants travelled to England to obtain an abortion.
Although the Irish government had not accepted the versions of events given by the applicants and asserted that these were not substantiated, the court considered that the essential facts as related by the women should be regarded as proved.
In particular, at para 126 the court said: The Court considers it reasonable to find that each applicant felt the weight of a considerable stigma prior to, during and after their abortions: they travelled abroad to do something which, on the Governments own submissions, went against the profound moral values of the majority of the Irish people and which was, or (in the case of the third applicant) could have been, a serious criminal offence in their own country punishable by penal servitude for life.
Moreover, obtaining an abortion abroad, rather than in the security of their own country and medical system, undoubtedly constituted a significant source of added anxiety.
The Court considers it evident that travelling abroad for an abortion constituted a significant psychological burden on each applicant.
As regards the physical effects of having to travel abroad to obtain an abortion, the court, at para 127, said: As to the physical impact of travelling for an abortion abroad, it is evident that an abortion would have been physically a less arduous process without the need to travel, notably after the procedure.
However, the Court does not find it established that the present applicants lacked access to necessary medical treatment in Ireland before or after their abortions.
The Court notes the professional requirements on doctors to provide medical treatment to women post abortion.
Finally, the court accepted that in the case of the first applicant, having to travel to England cast a significant financial burden on her and that the second and third applicants were put to considerable expense.
These effects, physical, psychological and financial, did not, in the courts estimation, constitute a breach of article 3.
The reason for that conclusion is pithily expressed in para 164: the Court reiterates its case law 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 depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age and state of health of the victim.
In the above described factual circumstances and whether or not such treatment would be entirely attributable to the state, the Court considers that the facts alleged do not disclose a level of severity falling within the scope of article 3 of the Convention.
Two important points should be made about this passage.
The first is that the court was careful to reiterate the well established formula that the assessment of whether the minimum standard of severity has been met depends on all relevant circumstances.
The second, and related, point is that the courts rejection of the applicants claims under article 3 rested squarely on its evaluation of the particular facts of those cases.
Apart from its restatement of the requirement to examine all material circumstances, the court expressed no general principle that might be considered applicable to cases where the facts were significantly different.
Plainly, cases of serious or fatal abnormality of the foetus or cases where pregnancy is the consequence of sexual assault or incest are markedly different from the A, B and C case.
In my opinion, the judgment in that case does not assist in the decision as to whether there is an article 3 breach in the three categories involved in these proceedings.
In RR v Poland it was discovered at the 18 week scan of the applicant in February 2002 that the foetus she was carrying might have a malformation.
Two subsequent scans confirmed the possibility that the foetus was malformed.
Throughout March 2002 the applicant sought, without success, to obtain genetic tests or an abortion.
Eventually, on 21 March 2002 a scan confirmed that the foetus was malformed.
The applicant had an amniocentesis on 26 March 2002.
She was then 23 weeks pregnant.
She did not receive the results until 9 April.
It was revealed that the foetus had Turner syndrome.
The applicant thereafter requested an abortion, but that request was refused because under the applicable domestic law, the last point at which an abortion could be undertaken on the basis of foetal abnormality was 24 weeks, and that time limit had expired.
ECtHR held that there had been a violation of article 3.
In para 150, the court gave a useful definition of degrading treatment: Treatment has been considered degrading when it was such as to arouse in victims feelings of fear, anguish and inferiority capable of humiliating and debasing them [Iwanczuk v Poland (2004) 38 EHRR 8 at para 51; and Wikiorko v Poland (14612/02) March 31, 2009 at para 45].
It is, of course, the case that RR was entitled to seek an abortion under the law of Poland on the basis that the child she was carrying had a serious malformation.
And it is plainly relevant that the failure of the medical authorities to act promptly denied her the opportunity to vindicate that legal entitlement.
But what ECtHR had to say about the nature of the effect on her in being required to carry the baby to term is clearly relevant to an evaluation of the impact that the imposition of such a requirement has on a woman who does not enjoy equivalent rights in the domestic laws of the country of which she is a citizen.
At para 159 the court said: The Court notes that the applicant was in a situation of great vulnerability.
Like any other pregnant woman in her situation, she was deeply distressed by information that the foetus could be affected with some malformation.
It was therefore natural that she wanted to obtain as much information as possible so as to find out whether the initial diagnosis was correct, and if so, what was the exact nature of the ailment.
She also wanted to find out about the options available to her.
As a result of the procrastination of the health professionals as described above, she had to endure weeks of painful uncertainty concerning the health of the foetus, her own and her familys future and the prospect of raising a child suffering from an incurable ailment She suffered acute anguish through having to think about how she and her family would be able to ensure the childs welfare, happiness and appropriate long term medical care. (Emphasis supplied)
In RR the applicants distress was rooted in her uncertainty about the prospects for her unborn child and the impact that her condition would have on her family.
It was also due to the lack of information provided by the medical authorities.
But, where a woman is presented with a definite diagnosis as to the future for the foetus she carries and the certainty that nothing can be done in Northern Ireland to alleviate her plight, can it be said that her anguish is less acute than that suffered by RR? If a lack of certainty about prognosis and the options available is sufficient to constitute a violation of article 3, is not a definite prognosis and the complete shutting down of all options an a fortiori case of breach of that article?
It cannot be correct, as the Attorney General and Mr McGleenan QC for the Department of Justice argued, that the breach of article 3 in RRs case depended on the existence of her right to an abortion.
The focus of article 3 is on the impact on the person affected by the ill treatment alleged, not on the reasons which underlie it.
In Gfgen v Germany (quoted at para 216 above) the ECtHR stated that the Convention prohibits in absolute terms torture and inhuman or degrading treatment or punishment, irrespective of the conduct of the person concerned (para 87) and the prohibition on ill treatment of a person applies irrespective of the conduct of the victim or the motivation of the authorities.
Torture, inhuman or degrading treatment cannot be inflicted even in circumstances where the life of an individual is at risk.
No derogation is allowed even in the event of a public emergency threatening the life of a nation. (para 107)
In the case of Mubilanzila Mayeka and Kaniki Mitunga v Belgium (2006) 46 EHRR 23, which concerned a five year old child detained by the Belgian authorities in an immigration centre, the court assessed the impact of the treatment on the applicant, stating that her position was: characterised by her very young age, the fact that she was an illegal immigrant in a foreign land and the fact that she was unaccompanied by her family from whom she had become separated so that she was effectively left to her own devices.
She was thus in an extremely vulnerable situation.
In view of the absolute nature of the protection afforded by article 3 of the Convention, it is important to bear in mind that this is the decisive factor and it takes precedence over considerations relating to the second applicants status as an illegal immigrant.
She therefore indisputably came within the class of highly vulnerable members of society to whom the Belgian state owed a duty to take adequate measures to provide care and protection as part of its positive obligations under article 3 of the Convention. (para 55)
Those who come within a highly vulnerable class (such, I suggest, as girls or women who have become pregnant as the result of rape or incest, or those who are at risk of significant suffering because they are carrying babies with a fatal foetal abnormality) are owed duties by the state under article 3 of the Convention.
The nature of that duty to those within the vulnerable class is, as this case illustrates, to take adequate measures for their care and protection.
In other words, it is incumbent on the state to recognise the vulnerability of girls and women in those categories and to take steps to ensure that they are appropriately protected.
The states duty does not depend on or require the onset of actual suffering by an individual within the class.
It is triggered by recognition of the likelihood that such suffering will occur to at least some members of the vulnerable group.
P and S v Poland was a case in which the applicants were daughter and mother.
In 2008, at the age of 14, P became pregnant as a result of rape.
In order to have an abortion, in accordance with the 1993 Polish Law on Family Planning, she obtained a certificate from the public prosecutor on 20 May 2008 to the effect that her pregnancy had resulted from unlawful sexual intercourse.
Thereafter, the applicants encountered substantial difficulties in obtaining an abortion for P. She came under pressure to have the baby from the head gynaecologist of one of the hospitals to which she had been brought; similar pressure was exerted by a Catholic priest who had been brought to see her, although she did not ask for him; she was induced to sign a statement that she wished to carry the baby to term; her mother was required to sign a statement that the carrying out of the abortion would put Ps life at risk; details of the case were released to the media and P was subject to intrusive and distressing messages and a press campaign renewing the pressure on her to keep the baby; she was unlawfully separated from her mother; when she sought police protection from harassment by anti abortion protesters, she was arrested on suspicion of having had unlawful sexual intercourse; she and her mother received contradictory information from two public hospitals as to whether they needed a referral from the regional consultant for gynaecology and obstetrics in addition to the certificate from the prosecutor, as to who could perform the abortion, who could make a decision, whether there was any waiting time prescribed by law, and what other conditions, if any, had to be complied with; finally, mother and daughter were compelled to travel a considerable distance in clandestine conditions in order for the abortion to be carried out.
The Strasbourg court, in considering whether a breach of article 3 had been made out, placed considerable emphasis on the first applicants vulnerability.
At paras 161 and 162 of its judgment, the court said this: 161.
For the courts assessment of this complaint it is of a cardinal importance that the first applicant was at the material time only 14 years old.
The certificate issued by the prosecutor confirmed that her pregnancy had resulted from unlawful intercourse.
The court cannot overlook the fact that the medical certificate issued immediately afterwards confirmed bruises on her body and concluded that physical force had been used to overcome her resistance. 162.
In the light of the above, the court has no choice but to conclude that the first applicant was in a situation of great vulnerability.
The court concluded that Ps treatment at the hands of the authorities was deplorable and so it undoubtedly was.
The Lord Chief Justice in the present case said that the P and S judgment demonstrates the high level of severity required in this context para 59.
If by that, Sir Declan meant that, in every instance, an ordeal akin to that suffered by P was required to establish a breach of article 3, I do not agree.
The Strasbourg court in its judgment in P and S was careful to repeat the definition of degrading treatment offered in RR v Poland; Iwanczuk v Poland (2004) 38 EHRR 148; and Wikiorko v Poland (Application No 14612/02 unreported 31 March 2009) see para 159.
Feelings of fear, anguish and inferiority capable of humiliating and debasing those affected by ill treatment can be aroused by conduct of a different stripe from that endured by P and her mother in the P and S case.
Could it be said, for instance, that the child whose case was described by Ms Purvis and which is detailed in para 10 above, did not suffer such feelings and did not feel humiliated and debased as a consequence?
We need to be clear about what the current law requires of women in this context.
It is not less than that they cede control of their bodies to the edict of legislation passed (in the case of the 1861 Act) more than 150 years ago and (in the case of the 1945 Act) almost 75 years ago.
Binding the girls and women of Northern Ireland to that edict means that they may not assert their autonomy in their own country.
They are forbidden to do to their own bodies that which they wish to do; they are prevented from arranging their lives in the way that they want; they are denied the chance to shape their future as they desire.
If, as well as the curtailment on their autonomy which this involves, they are carrying a foetus with a fatal abnormality or have been the victims of rape or incest, they are condemned, because legislation enacted in another era has decreed it, to endure untold suffering and desolation.
What is that, if it is not humiliation and debasement?
Conclusions on article 3
I consider that the law on abortion in Northern Ireland is incompatible with the article 3 rights of the girls and women of that country who are pregnant with foetuses which have a fatal abnormality or who are pregnant as a result of rape or incest.
I would make a declaration of incompatibility under section 4 HRA to that effect.
Article 8
Article 8 of ECHR provides: 1.
Everyone has the right to respect for his private and family life, his home and his correspondence. 2.
There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.
It is accepted that the Acts of 1861 and 1945 interfere with womens rights under article 8.
The single issue on this aspect of the case is whether that interference is justified.
It is also accepted that it is for the state to establish that justification.
The first question to be asked is whether the interference is in accordance with the law.
If it is, as is now well established, examination of whether the interference with a qualified Convention right is justified requires a court to follow a four stage process.
Those four stages were set out by Lord Wilson in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, para 45.
They are (a) is the legislative objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; (d) do they strike a fair balance between the rights of the individual and the interests of the community? (See also Lord Reed at para 75 of Bank Mellat v HM Treasury (No 2) [2014] AC 700 and Lord Sumption in the same case at para 20)
In accordance with the law
Following the hearing of this case before the Court of Appeal, it appears that the Lord Chief Justice sought further submissions on the meaning to be given to the word unlawfully in section 58 of the 1861 Act.
In NIHRCs printed case, at para 116, it is said that the Department, in its reply to that request, stated at para 20 that the Bourne test does not afford sufficient clarity or certainty of interpretation.
NIHRC states that, if this is correct, it must follow that the lack of clarity and certainty means that the criminalisation of abortion in these circumstances is not in accordance with the law as required by article 8(2): Sunday Times v United Kingdom (1979) 2 EHRR 245, para 49.
Ms Gallagher QC, on behalf of the intervener, Humanists UK, has suggested that the limited qualification to the prohibitions in sections 58 and 59 of the 1861 Act provided under section 25 of the 1945 Act, as interpreted in Bourne and affirmed in the FPANI case, is insufficiently precise and accessible for Northern Irish women with fatal foetal abnormality pregnancies.
Nor was it, she suggested, sufficiently clear to allow medical professionals to decide whether they might be able provide a lawful abortion in their own jurisdiction.
She claimed that the lack of clarity was underscored by the Lord Chief Justices proposed extension of the Bourne defence.
It is to be remembered, of course, that both Gillen and Weatherup LJJ disagreed with the Lord Chief Justices analysis on this point and none of the parties to the appeal has sought to advance it.
Nor did they apparently make submissions to that effect before the Court of Appeal.
For the reasons that I have given, I do not consider that the proposed extension to Bourne is feasible and I would therefore not be prepared to hold that a lack of certainty has been introduced by the Lord Chief Justices proposal.
One might observe, however, that the formula used by Macnaghten J does not lend itself to ready, confident definition.
What is meant by a physical and mental wreck? Would contemporary thinking on that term accord with what it was understood to mean in 1938? There must be some question, at least, therefore, as to whether the law is sufficiently clear and accessible to women seeking abortion in Northern Ireland and to those medical practitioners from whom abortions are sought. Since this issue was not widely canvassed on the hearing of the appeal and since it is unnecessary for me to reach a final view on it in order to decide the appellants claim that the 1861 and 1945 Acts are in breach of article 8, I say nothing more on the subject.
Legitimate aim
Both the Department of Justice and the Attorney General have expressed in terms of some generality what the legitimate aim is that the relevant sections of the 1861 and 1945 Acts are designed to achieve.
They have said that that aim is the protection of the unborn child.
This was refined somewhat in the printed case of the Attorney General which, when challenging Weatherup LJs judgment on the point, suggested that the legitimate aim was the protection of the unborn childs life to the extent possible without significant and enduring damage to the life or health of the mother para 79.
Horner J accepted that the protection of the unborn child was a legitimate aim so long as the foetus was viable.
Even if there was a prospect that the child would suffer disability after birth, it was still a legitimate aim to afford him or her protection.
The judge considered, however, that prohibition on the termination of a pregnancy where the foetus [was] doomed to die because a fatal abnormality [rendered him or her] incapable of an existence independent of the mothers womb was not a legitimate aim para 148 of his judgment.
Morgan LCJ did not expressly articulate the legitimate aim at stake in this case but referred to that identified by the ECtHR in A, B and C v Ireland which he stated was the protection of morals of which the protection in Ireland of the right to life of the unborn was one aspect para 67 of the Lord Chief Justices judgment.
Gillen LJ considered that this statement encapsulated the legitimate aim in the present case.
The legitimate aim was, he said, the protection of morals in this jurisdiction of which the protection of the right to life of the unborn child is one aspect para 102.
Weatherup LJ stated that the avowed legitimate aim was the protection of the unborn child, based on the moral view that the unborn child requires protection para 144.
The Lord Chief Justice and Gillen LJ considered that the protection of the unborn child as an aspect of the protection of morals was a legitimate aim.
As I discuss in the next paras, Weatherup LJ was, at least, doubtful about that proposition.
Weatherup LJ pointed out that, where the existing law permits the termination of a pregnancy where the foetus is healthy, provided there is sufficient threat to the long term health of the mother, the rationale for forbidding the abortion of a foetus which has no prospect of survival is not easy to find para 167 where he said: The evidence submitted on behalf of the respondent does not address the particular character of the legitimate aim of the restrictions by reference to the precise nature of the moral view that the unborn child should be protected in such circumstances.
The evidence submitted concerns the materials circulated in the consultation process about the scope of proposals for amendment of the present law.
The focus is on the practicalities of amendments and the nature of conditions that might apply, all entirely legitimate matters for discussion.
What is absent is the underlying rationale for the exclusion of fatal foetal abnormality by reference to the moral view on the protection of the unborn child when that protection is not afforded in those cases where termination of pregnancy is permitted under present arrangements in the case of a healthy unborn child by recognising a preference for the quality of life of the mother. (original emphasis)
In other words, where a firm medical diagnosis has been made that the foetus will not survive, what is the moral value in insisting that the mother carry the unborn child to term? In this context, it is important to recognise that all three members of the Court of Appeal identified the legitimate aim as being the protection of the unborn child as an element of the moral values or views of society rather than having any intrinsic worth.
The case made by the Attorney General appears to depart from the Court of Appeals understanding of the legitimate aim and to assign an inherent and fundamental value to the life of the unborn child.
At para 81 of his printed case, the Attorney makes this claim: the balance struck by the current law of Northern Ireland does not purport to afford absolute protection to the unborn child.
The balance is struck, instead, in favour of the mothers life and health, with the public interest in the protection of life before birth giving way when (and only when) the impact on the mother reaches the level where a threat to the life of the mother or serious and long term threat to her health can be established.
Where that impact is not serious or not long term, the unborn child is absolutely protected, whether or not he/she came into being as a result of rape or incest and whether or not his/her life is likely to be short lived.
On this argument, the legitimate aim of the legislation must be taken to be that, absent serious and long term threat to the mothers health, the foetus must be afforded complete and unconditional protection.
Much of the argument surrounding this issue is also (and more directly) relevant to the third and fourth stages identified by Lord Wilson in Quila.
As Lord Sumption said in Bank Mellat, the four requirements are logically separate, but in practice they inevitably overlap because the same facts are likely to be relevant to more than one of them (para 20).
But I do not accept that the aim identified by the Attorney General in such absolute terms can be regarded as legitimate.
How can it be said to be legitimate to force a woman to carry a baby to term, when there is conclusive evidence that it will not survive?
Although he does not say so explicitly, Weatherup LJ appeared at least to doubt that restrictions on abortion in cases of fatal foetal abnormality could be a legitimate aim see the passage from para 167 of his judgment quoted at para 273 above.
It should be noted, however, that at para 145 he stated that he was satisfied that the restriction on termination of pregnancies pursues the legitimate aim of the protection of morals reflecting the views of the majority of the members of the last Assembly on the protection of the unborn child.
If expressed in general terms such as the protection of the unborn child, I have no quarrel with the proposition that restriction on the termination of pregnancy pursues a legitimate aim.
It is when one begins to examine the nature of the restriction that difficulties with the legitimacy of the aim emerge.
But this debate finds a more natural home in consideration of the third and fourth stages of Quila and I will return to it when dealing with those aspects.
Rational connection
If one posits that the legitimate aim is the protection of the unborn child, there is an obvious and rational connection between the aim and the restriction on termination of pregnancy.
If, however, the legitimate aim is the protection of foetuses with a reasonable prospect of survival and is attended by a blanket ban on abortion in all cases where there is not a serious and long term threat to the health of the mother, a rational connection between the aim and the means employed is less easily forged.
This subject is better dealt with under the third and fourth requirements of the proportionality analysis, however.
The least intrusive means
The third stage in Quila, are the measures no more than is necessary to achieve the aim? is sometimes expressed as, are they the least intrusive means of accomplishing the objective?.
The starting point of the discussion on this question must be the recognition of the fundamental nature of the right in question.
A womans right to respect for her private life, her right to exercise autonomy over her own body, her entitlement to make decisions as to her own welfare and happiness lie at the very centre of her existence.
Interference with that right, to be proportionate, must be no more than is necessary to achieve the aim that it is designed to fulfil.
In Mouvement Raelien Suisse v Switzerland (2012) 56 EHRR 14, para 75, in the course of considering the proportionality of the measure under challenge, ECtHR said, the authorities are required, when they decide to restrict fundamental rights, to choose the means that cause the least possible prejudice to the rights in question.
And in Nada v Switzerland (2012) 56 EHRR 18, para 183, the Strasbourg court employed a similar formula: The court has previously found that, for a measure to be regarded as proportionate and as necessary in a democratic society, the possibility of recourse to an alternative measure that would cause less damage to the fundamental right at issue whilst fulfilling the same aim must be ruled out.
The exercise involved in deciding whether the measure is the least intrusive throws the focus back on the question of the legitimacy of the aim.
In relation to cases involving fatal foetal abnormality, is it the protection of every foetus whose continued existence does not present a threat of serious, long term harm to the health of the mother, irrespective of the chances of his or her survival, as the Attorney General argues, or is it, as Horner J suggests, the protection of unborn children who enjoy a prospect of viable life? Viewed through the prism of the fundamental nature of the mothers right under article 8, I have no hesitation in concluding that it is the latter.
The question of the protection of morals or moral values adds nothing to this debate, in my opinion.
As Weatherup LJ implicitly suggested, how can it be moral to allow the abortion of a healthy foetus where there is a serious threat to the long term health of the mother but to forbid it when the foetus will not survive?
If, therefore, the legitimate aim in restricting abortion in these cases is the protection of unborn children who have a reasonable chance of survival after birth, the reasonableness of imposing a blanket ban on the termination of pregnancy in every case where its continuation does not present a serious, long term threat to the health of the mother is obviously difficult.
Put in stark terms, if the foetus has little hope of survival, can it be said that requiring the mother to carry it to term is the least intrusive means of achieving the aim of protecting the unborn child who does have a hope of survival? Clearly not.
Different considerations arise in the case of victims of rape and incest.
As I have said, all three members of the Court of Appeal considered that the protection of the unborn child was an aspect of the moral values of the people of Northern Ireland, whereas the Attorney General in the appeal before this court appears to have espoused a legitimate aim which asserts the protection of the unborn child as an intrinsic value.
If the legitimate aim is as the Court of Appeal expressed it to be, like Weatherup LJ, I have difficulty in understanding how the moral values of the population of Northern Ireland permit abortion to take place when there is a threat of serious, long term ill health to the mother but forbid it where that cannot be said to be present but the mother finds the pregnancy repugnant and a constant reminder of the sexual abuse to which she has been subjected.
As Weatherup LJ said (at para 172), the underlying rationale for the exclusion of pregnancy arising from rape or incest by reference to the moral view on the protection of the unborn child is absent from the case presented on behalf of the respondents.
If the Attorney General is right and the protection of the unborn child has an intrinsic value, freestanding of considerations of morality, it may well be that there is no less intrusive means of securing that value than by forbidding abortion in all cases save where there is a serious long term risk to the health of the mother.
The Attorney General has not explained why the protection of the unborn child should be segregated from the moral values of the people of Northern Ireland, however.
Moreover, the majority in A, B and C v Ireland, on which both respondents so crucially rely, identified the moral values of the population of Ireland as a critical feature in the justification for the restriction on abortion in that country.
Since, however, the respondents avowed justification for interference with the rights of girls and women made pregnant as the result of rape or incest fails at the fourth stage of the proportionality exercise, I do not propose to discuss this issue further.
A fair balance?
As with the least intrusive means stage, so the discussion as to whether a fair balance is struck between the rights of the mother (whose foetus has a fatal abnormality or is the result of rape or incest) and the interests of the community, must begin with a clear sighted appreciation of the fundamental nature of the right involved.
A woman who knows that the foetus will not survive or one who has been impregnated as a result of rape or incest and who wishes to have her pregnancy terminated is, under the current law of Northern Ireland, coerced to carry her baby to term, or to leave her country and travel abroad to have that wish fulfilled.
For the reasons that I have given, I consider that requiring such a woman to do so amounts to exposing her to a breach of her article 3 rights.
It follows that placing her under such duress cannot be said to strike a fair balance between her fundamental right under article 8 and the interests of the community.
Even if I had decided that no breach of article 3 was involved, however, I would have concluded that a fair balance is not struck between the competing interests and I now give my reasons for that conclusion.
Much has been made by the respondents about the margin of appreciation that Strasbourg has accorded to the contracting states of the Council of Europe in the field of social policy.
It has been suggested in particular that, in relation to abortion in Ireland, a wide margin of freedom in decision making must be afforded to the state because of the sensitivity which attends this difficult and delicate subject.
Before examining the ECtHR jurisprudence in this area, it is necessary to remember that the margin of appreciation principle is one which is not relevant in the domestic setting, at least not in the sense that the expression has been used by the Strasbourg court.
The margin of appreciation principle applied on the pan European plane by the supra national court in Strasbourg recognises that in the field of social policy, there may be different views among the individual contracting states, reflecting, among other things, differing moral standards and cultural values of the various societies of the states which comprise the Council of Europe.
Where those differences are marked, ECtHR evinces a reticence in imposing a universal prescription applicable to all contracting states and leaves it to the institutions of those states to make the choice which best suits the concerns and values of its citizens.
When it comes to the domestic superintendence by one institution (the judiciary) of another institutions (the executives or the legislatures) decision in the field of human rights, there is no place for reticence on the basis of a margin of appreciation.
There may be a case for the courts to defer to the decision of one of the other organs of the state either because of what is sometimes described as institutional competence or, relatedly, because it is considered that the decision maker is more fully equipped to take a decision than is the court.
But that is not, in the strict sense, a question of the domestic courts according a margin of appreciation to those institutions.
Horner J dealt with this subject admirably in the section of his judgment entitled Margin of Appreciation between paras 35 and 56.
I agree with all that he had to say there and need not repeat it, beyond recalling his apt quotation of the celebrated passage from the speech of Lord Bingham of Cornhill in A v Secretary of State for the Home Department [2005] 2 AC 68, para 42: I do not accept the distinction which [the Attorney General] 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.
It is also of course true that Parliament, the executive and the courts have different functions.
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.
It is particularly inappropriate in a case such as the present in which Parliament has expressly legislated in section 6 of the 1998 Act to render unlawful any act of a public authority, including a court, incompatible with a Convention right, has required courts (in section 2) to take account of relevant Strasbourg jurisprudence, has (in section 3) required the courts, as far as possible, to give effect to Convention rights and has conferred a right of appeal on derogation issues.
The effect is not, of course, to override the sovereign legislative authority of the Queen in Parliament, since if primary legislation is declared to be incompatible the validity of the legislation is unaffected (section 4(6)) and the remedy lies with the appropriate minister (section 10), who is answerable to Parliament.
The 1998 Act gives the courts a very specific, wholly democratic, mandate.
As Professor Jowell has put it, The courts are charged by Parliament with delineating the boundaries of a rights based democracy. (Judicial deference: servility, civility or institutional capacity? [2003] PL 592, 597).
The institutional competence factor has sometimes been expressed as the discretionary area of judgment see R v Director of Public Prosecutions, Ex p Kebeline [2000] 2 AC 326, 381, per Lord Hope, where he said: In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society.
In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention.
The notion of deference to the elected institutions has not been without criticism.
In R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2015] AC 945 Lord Sumption at para 22 said: As a tool for assessing the practice by which the courts accord greater weight to the executives judgment in some cases than in others, the whole concept of deference has been subjected to powerful academic criticism: see, notably, TSR Allan, Human Rights and Judicial Review: a Critique of Due Deference [2006] CLJ 671; J Jowell, Judicial Deference: Servility, Civility or Institutional Capacity? [2003] PL 592.
At least part of the difficulty arises from the word, with its overtones of cringing abstention in the face of superior status.
In some circumstances, deference is no more than a recognition that a Court of review does not usurp the function of the decision maker, even when Convention rights are engaged.
Beyond that elementary principle, the assignment of weight to the decision makers judgment has nothing to do with deference in the ordinary sense of the term.
It has two distinct sources.
The first is the constitutional principle of the separation of powers.
The second is no more than a pragmatic view about the evidential value of certain judgments of the executive, whose force will vary according to the subject matter.
On the question of the usurpation of the function of the decision maker, in the circumstances of the present case, this simply does not arise.
The Northern Ireland Assembly has not made a decision.
Its largest party, at the time of the debate in February 2016, declared that further consultation and consideration were required.
Other parties, such as the SDLP, who voted against the measure, were not irreversibly opposed to reform.
Likewise, the evidential value of judgments of the executive holds no sway here because none has been made.
The courts should feel no sense of inhibition in relation to the question of whether the current law offends article 8 of the Convention, in the light of the absence of any firmly expressed view of the democratic institutions of Northern Ireland.
Substantial reliance was placed by the respondents on the decision of this court in R (Nicklinson) v Secretary of State for Justice [2015] AC 657.
In that case the claimants, although suffering from irreversible physical disabilities rendering them immobile, were of sound mind and aware of their predicament.
They wished to die at a time of their choosing but were not physically capable of ending their own lives unaided.
They had a settled and considered wish that their death should be hastened by the requisite assistance.
They sought judicial review on the basis that, under both common law and ECHR, those who provided them with assistance to bring about their death ought not to be subject to any criminal consequences.
In particular, they applied for declarations that the law of murder, or of assisted suicide forbidden by section 2(1) of the Suicide Act 1961, was incompatible with the right to respect for private life under article 8 of ECHR.
At para 116, Lord Neuberger said: There is a number of reasons which, when taken together, persuade me that it would be institutionally inappropriate at this juncture for a court to declare that section 2 is incompatible with article 8, as opposed to giving Parliament the opportunity to consider the position without a declaration.
First, the question whether the provisions of section 2 should be modified raises a difficult, controversial and sensitive issue, with moral and religious dimensions, which undoubtedly justifies a relatively cautious approach from the courts.
Secondly, this is not a case like In re G (Adoption: Unmarried Couple) where the incompatibility is simple to identify and simple to cure: whether, and if so how, to amend section 2 would require much anxious consideration from the legislature; this also suggests that the courts should, as it were, take matters relatively slowly.
Thirdly, section 2 has, as mentioned above, been considered on a number of occasions in Parliament, and it is currently due to be debated in the House of Lords in the near future; so this is a case where the legislature is and has been actively considering the issue.
Fourthly, less than 13 years ago, the House of Lords in R (Pretty) v Director of Public Prosecutions [2002] 1 AC 800 gave Parliament to understand that a declaration of incompatibility in relation to section 2 would be inappropriate, a view reinforced by the conclusions reached by the Divisional Court and the Court of Appeal in this case: a declaration of incompatibility on this appeal would represent an unheralded volte face.
Several obvious points of distinction between the situation encountered in the Nicklinson case and this appeal are immediately apparent.
True it may be that this case, like Nicklinson, gives rise to a difficult, controversial and sensitive issue, with moral and religious dimensions, but I would not accept that, in this instance, the incompatibility is difficult to identify or that it is difficult to cure.
To the contrary, denial of a womans right to autonomy, which must surely be an indispensable aspect of her right to respect for a private life, gives rise to a readily identifiable incompatibility in cases of fatal foetal abnormality, rape or incest.
And, the remedy for that incompatibility is easy to find.
A simple amendment to the 1861 and 1945 Acts, permitting termination of pregnancy in those cases would achieve that aim.
The other obvious point of distinction is that, unlike the position of Parliament in the Nicklinson case, the Northern Ireland Assembly is not about to actively [consider] the issue.
The fourth factor identified by Lord Neuberger in Nicklinson (that a declaration of incompatibility would be a volte face) does not arise in this instance.
It is to be remembered that a declaration of incompatibility does no more than indicate to the appropriate legislative body that a particular statutory provision has been deemed to be inconsistent with citizens Convention rights.
As was said in paras 343 and 344 of Nicklinson: 343.
An essential element of the structure of the Human Rights Act 1998 is the call which Parliament has made on the courts to review the legislation which it passes in order to tell it whether the provisions contained in that legislation comply with the Convention.
By responding to that call and sending the message to Parliament that a particular provision is incompatible with the Convention, the courts do not usurp the role of Parliament, much less offend the separation of powers.
A declaration of incompatibility is merely an expression of the courts conclusion as to whether, as enacted, a particular item of legislation cannot be considered compatible with a Convention right.
In other words, the courts say to Parliament, This particular piece of legislation is incompatible, now it is for you to decide what to do about it.
And under the scheme of the Human Rights Act 1998 it is open to Parliament to decide to do nothing. 344.
What the courts do in making a declaration of incompatibility is to remit the issue to Parliament for a political decision, informed by the courts view of the law.
The remission of the issue to Parliament does not involve the courts making a moral choice which is properly within the province of the democratically elected legislature.
In advancing the case that the interests of the unborn child should be balanced against the article 8 rights of the mother, the respondents relied heavily on the decision of ECtHR in the case of Vo v France (2004) 40 EHRR 12.
In that case, because of negligence on the part of her doctor, the applicant suffered injury to her amniotic sac, which necessitated the termination of her pregnancy.
The foetus was between 20 and 24 weeks at termination.
The doctor was charged with causing unintentional injury but was acquitted on the basis that the foetus was not, at that stage, a human person.
The Strasbourg court observed that article 2 (which guarantees the right to life) was silent as to when life began and on the issue of who came within its protection.
The court had not previously considered whether an unborn child had article 2 rights.
Such case law as there was indicated that, at least in the context of abortion, an unborn child did not have a right to life and was not a person within the meaning of article 2.
It had not been ruled out, however, that, in certain circumstances, the Convention might be applicable paras 76 80.
It was legally difficult, indeed inappropriate, to impose one exclusive answer to the question of when life began on all the contracting states of the Council of Europe.
This came within the margin of appreciation enjoyed by the various states para 82.
It is, of course, important to note that Vo was a case where there was no conflict between the rights of the mother and the interests of the foetus.
The mothers complaint was that her doctor had wrongly made it necessary to terminate her pregnancy.
There was no occasion for the court to consider what weight should be given to the position of the foetus in circumstances where the womans article 8 rights were being interfered with.
The Department of Justice has drawn attention to the observations of the Grand Chamber in Vo to the effect that there was no consensus among European states as to when life begins and suggests that, in effect, this is what NIHRC invites this court to recognise.
Mr McGleenan also argues that since the Strasbourg court has not moved to exclude prenatal life, this court should find that article 2 extends to protect the human rights of the most vulnerable.
He claims that a finding that article 2 did not extend protections to prenatal life would go against the very grain of the Convention.
I do not accept these arguments.
In the first place, the Grand Chamber in Vo had the opportunity to say that article 2 protected the life of the unborn child and explicitly refrained from so holding.
More fundamentally, however, if article 2 were held to apply to unborn life, no abortion could ever be legal.
In the context of abortion the right enshrined in article 2 would be absolute.
In my view, the proper construction to be placed on Vo is that contracting states enjoy a margin of appreciation in deciding when human life begins but that this does not afford protection to the foetus under article 2.
As NIHRC has submitted, no case in Strasbourg has recognised an article 2 entitlement for a foetus.
Indeed, such a finding would run directly counter to the consensus across the vast majority of contracting states as to the right to abortion in cases of rape, incest and fatal foetal abnormality.
While the laws of those states vary in terms of gestational limits, all apart from Ireland, Liechtenstein, Malta, San Marino and Andorra are unanimous in permitting abortion in those circumstances.
Domestic law does not recognise rights vested in the unborn child.
The courts of this country have consistently stated that the foetus has no separate rights in UK law, see In re MB [1997] 2 FLR 426; and Attorney Generals Reference (No 3 of 1994) [1998] AC 245.
This line of jurisprudence mirrors that in the Canadian Supreme court in Winnipeg Child and Family Services (Northwest Area) v G (1997) 3 BHRC 611.
In A, B and C v Ireland, ECtHR portrayed the balancing exercise between the first and second applicants article 8 rights and the interests of society in para 230 of its judgment thus: the Court must examine whether the prohibition of abortion in Ireland for health and/or well being reasons struck a fair balance between, on the one hand, the first and second applicants right to respect for their private lives under article 8 and, on the other, profound moral values of the Irish people as to the nature of life and consequently as to the need to protect the life of the unborn.
The first applicant had become pregnant unintentionally.
She was unmarried, unemployed and already had had four young children.
They had been taken into care because of As inability to cope with them.
She had a history of depression during all of her pregnancies.
She travelled to England for an abortion, believing that she would not be able to obtain one in Ireland.
Her case on article 8 was, therefore, firmly rooted in the claim that her rights under the article had been unjustifiably interfered with.
The second applicant also became pregnant unintentionally.
She had been advised by two different doctors that there was a substantial risk of an ectopic pregnancy but was aware by the time that she decided to travel to England for an abortion that the pregnancy was not ectopic.
She did not feel able to care for a child at this time in her life and the case was principally concerned with whether an abortion should be available on well being grounds.
In the case of the third applicant, C, she had been treated for three years with chemotherapy for a rare form of cancer.
She had been advised that it was not possible to predict the effect of pregnancy on her cancer and that if she did become pregnant it would be dangerous for the foetus if she were to have chemotherapy during the first trimester.
Her cancer went into remission and she became pregnant unintentionally.
She had been unaware of this when she underwent a series of tests for cancer which were contraindicated during pregnancy.
She consulted her general medical practitioner and several medical consultants.
She claimed that she did not receive sufficient information as to the impact of the pregnancy on her health and life and the consequences of her prior tests for cancer on the well being of the foetus.
At para 233, the court dealt with the margin of appreciation available to the Irish state in defence of its position that abortion should not be available to the states citizens: There can be no doubt as to the acute sensitivity of the moral and ethical issues raised by the question of abortion or as to the importance of the public interest at stake.
A broad margin of appreciation is, therefore, in principle to be accorded to the Irish state in determining the question whether a fair balance was struck between the protection of that public interest, notably the protection accorded under Irish law to the right to life of the unborn, and the conflicting rights of the first and second applicants to respect for their private lives under article 8 of the Convention.
At para 234, the court made the conventional point that a margin of appreciation would be narrowed where there was a relevant consensus among contracting states as to the circumstances in which abortion should be available.
Rejecting the governments submission to the contrary, at para 235, the court said that there was indeed a consensus among a substantial majority of the contracting states of the Council of Europe towards allowing abortion on broader grounds than that accorded under Irish law.
The first and second applicants could have obtained an abortion on request (according to certain criteria including gestational limits) in some 30 such states.
The first applicant could have obtained an abortion justified on health and well being grounds in approximately 40 contracting states and the second applicant could have obtained an abortion justified on well being grounds in some 35 contracting states.
Despite this significant consensus, the court concluded that the margin of appreciation had not been decisively narrowed.
It is of critical importance that one should focus precisely on why the court arrived at that (which would at first sight appear to be an) anomalous result.
The essential reasoning of the court on this issue is given at para 237: Of central importance is the finding in the above cited Vo case that the question of when the right to life begins came within the states margin of appreciation because there was no European consensus on the scientific and legal definition of the beginning of life, so that it was impossible to answer the question whether the unborn was a person to be protected for the purposes of article 2.
Since the rights claimed on behalf of the foetus and those of the mother are inextricably interconnected, the margin of appreciation accorded to a states protection of the unborn necessarily translates into a margin of appreciation for that state as to how it balances the conflicting rights of the mother.
It follows that, even if it appears from the national laws referred to that most contracting parties may in their legislation have resolved those conflicting rights and interests in favour of greater legal access to abortion, this consensus cannot be a decisive factor in the Courts examination of whether the impugned prohibition on abortion in Ireland for health and well being reasons struck a fair balance between the conflicting rights and interests, notwithstanding an evolutive Convention. interpretation of
Two themes emerge from this passage.
The first is that there is no consensus as to when life begins.
The second is that the rights claimed on behalf of the foetus and those of the mother are interconnected.
As to the first of these, as I have pointed out, full article 2 protection cannot be afforded the foetus otherwise no termination of pregnancy would be lawful. (Indeed, as will become clear, the ECtHR acknowledged this in para 238).
The courts reference to article 2 is only explicable on the basis that some lesser form of protection for the interests of the unborn child can be recognised by an individual contracting state.
The majority in A, B and C did not explain how that might work in practice.
As to the interconnectedness of the interests of the mother and her unborn child, it is not made clear what, if any impact, this should have on the balancing exercise.
The majority certainly found that there was an interference with the applicants rights, and with it came the obligation on the part of the state to justify that interference.
What is not clear from the judgment is whether an adjustment to the way in which the interests of the mother and those of the community generally is required because the interests of the foetus and the mother are interconnected.
The matter becomes even less clear, in my opinion, when one considers para 238 of the majoritys judgment: It is indeed the case that this margin of appreciation is not unlimited.
The prohibition impugned by the first and second applicants must be compatible with a states Convention obligations and, given the Courts responsibility under article 19 of the Convention, the Court must supervise whether the interference constitutes a proportionate balancing of the competing interests involved.
A prohibition of abortion to protect unborn life is not therefore automatically justified under the Convention on the basis of unqualified deference to the protection of pre natal life or on the basis that the expectant mothers right to respect for her private life is of a lesser stature.
Nor is the regulation of abortion rights solely a matter for the contracting states, as the Government maintained relying on certain international declarations.
However, and as explained above, the Court must decide on the compatibility with article 8 of the Convention of the Irish states prohibition of abortion on health and well being grounds on the basis of the above described fair balance test to which a broad margin of appreciation is applicable.
This constitutes a reassertion of the need for a balancing of the competing interests.
The passage does not explain how this is to be carried out, however, other than by referring again to the broad margin of appreciation, which, apparently, derives from the lack of consensus as to when life begins.
Quite why a lack of consensus on that matter should prompt a broad margin of appreciation on the circumstances in which abortion should be permitted, and how it affects the balancing exercise in practice, remain unexplained.
Some insight into the courts reasoning is to be gleaned from the first passage of para 239: From the lengthy, complex and sensitive debate in Ireland as regards the content of its abortion laws, a choice has emerged.
Irish law prohibits abortion in Ireland for health and well being reasons but allows women, in the first and second applicants position who wish to have an abortion for those reasons, the option of lawfully travelling to another state to do so (Emphasis supplied)
The background to the restriction of abortion in Ireland was that a referendum had been held in 1983, resulting in the adoption of a provision which became article 40.3.3 of the Irish Constitution which was in the following terms: The State acknowledges the right to life of the unborn and, with due regard to the equal right to life of the mother, guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate that right.
In the referendum 53.67% of the electorate had voted, with 841,233 votes in favour of this amendment and 416,136 against.
Although proposals in subsequent referenda which sought to restrict further the circumstances in which abortion might be available in Ireland were defeated, ECtHR in the A, B and C case plainly laid great store by the result of the 1983 poll.
At para 126 of its judgment, for instance, it said that the applicants, in travelling abroad to obtain abortions, were conscious that they were going against the profound moral values of the majority of the Irish people.
The government had submitted to the Strasbourg court that the protection accorded under Irish law to the right to life of the unborn was based on profound moral values deeply embedded in the fabric of society in Ireland and the legal position was defined through equally intense debate.
At para 222 the court said of this argument: The Court recalls that, in the Open Door case [(1992) 15 EHRR 244], it found that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life which were reflected in the stance of the majority of the Irish people against abortion
during the 1983 referendum
Clearly, therefore, the Strasbourg court in A, B and C considered that it should continue to deal with the question of justification of the restrictions on abortion in Ireland on the basis that they reflected the profound moral values of a majority of the Irish population.
Whether that was justified on the basis of a referendum held 28 years before in which only 53.67% of the population voted is at least questionable but, in any event, no such assumption may be made in respect of the population of Northern Ireland.
For the reasons that I have given, the vote in 2016 in the Assembly cannot be taken as an indication that the majority of the elected representatives opposed reform.
To the contrary, it is evident that a majority was prepared to contemplate an amendment of the current law.
For that reason alone, A, B and C v Ireland cannot be regarded as a significant decision in the present case.
Quite apart from that consideration, however, such evidence as is available about the current views of the Northern Ireland population points clearly away from the conclusion that a majority of that countrys population wishes to maintain the law on abortion in its present form.
In 2016 the Northern Ireland Life and Times Survey (NILT Survey) asked the Northern Ireland public for their views on a range of issues relating to abortion and abortion law. 1,208 respondents took part in the survey.
These were chosen as representative of the various social groups in Northern Ireland. 58% of those surveyed considered that where the foetus had a fatal abnormality and would not survive beyond birth, abortion should definitely be legal. 23% felt that abortion in those circumstances should probably be legal, while 6% thought that it should probably be illegal and 10% believed that it should definitely be illegal. 4% were undecided.
The respondents to the survey were also asked for their views on whether abortion should be legal in cases where a woman had become pregnant as a result of rape or incest. 54% said that abortion in those circumstances should definitely be legal. 24% believed that it should probably be legal. 8% considered that it should probably be illegal and 11% were of the view that it should definitely be illegal. 4% were undecided.
At para 141 of his judgment, Horner J said that little weight can be attached to opinion polls as they are dependent on the nature of the questions asked, the circumstances in which they were asked and the nature of the persons sampled.
Weatherup LJ agreed with that view see para 145 of his judgment.
Both Horner J and Weatherup LJ considered that the only reliable indicator of the true nature of public opinion would be a referendum and, as Weatherup LJ observed, this was unlikely to take place in Northern Ireland since referenda were generally reserved for constitutional issues para 145.
It is unquestionably correct that one should be wary of treating opinion polls, however well conducted, as an infallible guide to the views of the people on any particular issue.
That is not to say, however, that they have no usefulness in counteracting a claim as to what the public mood or opinion might be.
I, like Horner J and Weatherup LJ, am not disposed to accept the results of the NILT survey as providing positive evidence of the preponderant view of the people of Northern Ireland on the question of when abortion should be available.
But I am not prepared wholly to discount the NILT survey.
At the least, it serves to cast substantial doubt on the claim made by the respondents that opposition to the change in the law is firmly embedded in the minds and attitudes of the people of Northern Ireland.
I have concluded, therefore, that when the balancing exercise is conducted in this case, the scales fall firmly in favour of a breach of article 8.
Under the current law, no account is taken of a womans right to autonomy.
Severe criminal sanctions are applied to those who obtain an abortion in Northern Ireland save in the narrowly circumscribed circumstances permitted by the 1861 and 1945 Acts.
These undoubtedly have a significant chilling effect both on women who wish to obtain an abortion and doctors who might assist them.
Abortion in cases where there is a fatal foetal abnormality or the pregnancy is the result of rape or incest is available throughout the vast majority of countries in Europe.
The counterweight which the ECtHR found to exist in the A, B and C case (the profound moral values embedded in the fabric of Irish society) is not present in this much more limited instance.
I am satisfied, therefore that the maintenance of sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act in their present form constitutes a breach of article 8 of ECHR and would make a declaration of incompatibility in respect of those provisions in cases involving fatal foetal abnormality or where pregnancy has resulted from rape or incest.
International law and standards
In the High Court and the Court of Appeal NIHRC relied on a number of international treaties and judgments, decisions and general statements of treaty bodies.
Horner J dealt with these in a section of his judgment entitled International Law and Obligations between paras 59 and 71.
Again, I find myself in agreement with the judge in his observations and I do not repeat them.
The Court of Appeal did not deal with these arguments.
Although the traditional and orthodox view is that courts do not apply unincorporated international treaties (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, per Lord Oliver at 499 and R (Miller) v Secretary of State for Exiting the European Union [2018] AC 61), as Lord Hughes stated in R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, para 137, such treaties may be relevant in a number of ways.
NIHRC relies on the third of these, namely, where the court is applying ECHR via the HRA.
As Lord Hughes observed, the ECtHR has accepted that, in appropriate cases, the Convention should be interpreted in the light of generally accepted international law in the same field.
Similar propositions are to be found in Convention jurisprudence, most notably, Demir v Turkey (2008) 48 EHRR 1272, para 69; Neulinger v Switzerland (2010) 54 EHRR 31, para 131.
The international conventions on which the Commission principally relied were the 1979 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the International Covenant on Civil and Political Rights (ICCPR), the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment and Punishment (UNCAT), the Council of Europe (CoE) European Social Charter (ESC) and Resolution 1607 (2008) and the United Nations Convention on the Rights of the Child (UNCRC).
The Commission has cited a number of authorities in which ECtHR has relied on conclusions of the CEDAW committee, the ICCPR committee, UNCAT, ESC and UNCRC.
It is unnecessary for me to discuss those decisions, in light of the view that I have formed on the compatibility of the impugned legislative provisions.
It is sufficient to record that the conclusion that the current law in Northern Ireland on abortion, as it affects fatal foetal abnormality and pregnancy as a result of rape and incest is incompatible with the Convention, is in harmony with many of those decisions.
I express no view (because it is not necessary to do so) on the recent decisions of the United Nations Human Rights Committee in Mellet v Ireland (9 June 2016) and Whelan v Ireland (17 March 2017).
The status of those decisions and their relevance in domestic proceedings such as these are far from straightforward subjects.
I consider it prudent to defer consideration of those matters to a case where they are more directly in issue.
Serious malformation of the foetus
In para 64 et seq of his judgment, Horner J gave a number of reasons for refusing to hold that the unavailability in Northern Ireland of abortion in cases of serious malformation of a foetus was not incompatible with the Convention rights of women in that country.
I agree with his reasoning and conclusions.
The United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) is one of the treaties specified as an EU treaty under the EC (Definition of Treaties) (UNCRPD) Order 2009.
Section 6(2)(d) of the NIA forbids the Northern Ireland Assembly from making laws contrary to UNCRPD.
That circumstance alone would not, of course, preclude a finding of incompatibility but, as Horner J pointed out, UNCRPD is based on the premise that if abortion is permissible, there should be no discrimination on the basis that the foetus, because of a defect, will result in a child being born with a physical or mental disability.
That is a weighty factor to place in the balance, and one which is not present in cases of fatal foetal abnormality or rape and incest.
This is particularly so in the light of UNCRPD Committees consistent criticism of any measure which provides for abortion in a way which distinguishes between the unborn on the basis of a physical or mental disability, relying on general principles and obligations (articles 1 4) and equality and non discrimination (article 5) see Horner J at para 65.
As Horner J pointed out, many children born with disabilities, even grave disabilities, lead happy, fulfilled lives.
In many instances they enrich and bring joy to their families and those who come into contact with them.
Finally, the difficulty in devising a confident and reliable definition of serious malformation is a potent factor against the finding of incompatibility.
For these and the other reasons given by the judge, I would refuse to make a declaration of incompatibility in the case of serious malformation of the foetus.
LORD REED: (with whom Lord Lloyd Jones agrees)
I respectfully agree with Lord Mance, for the reasons which he gives, that the Commission has no power to bring the present proceedings.
The questions referred by the Attorney General for Northern Ireland should be answered in the negative and the appeal of the Commission should be dismissed.
Given that conclusion, it would ordinarily follow that the court should express no view on whether the laws challenged by the Commission are or are not compatible with Convention rights.
Since Parliament has not conferred on the Commission the power to bring proceedings challenging in the abstract the compatibility of legislation with Convention rights, it follows that it cannot have intended that the courts should determine that issue in proceedings of that nature.
That conclusion is supported by the practical difficulties involved in attempting to carry out an abstract assessment of compatibility, unanchored to the facts of any particular case.
Those members of the court who take a different view of the Commissions standing to bring these proceedings are however expressing their opinion on the question which it has placed before the court; and Lord Mance also considers it appropriate to do so for the reasons which he has explained.
In those circumstances, it is as well that I should explain my own view.
General observations
It is difficult to envisage a more controversial issue than the proper limits of the law governing abortion.
Diametrically opposed views, and every shade of opinion in between, are held with equal sincerity and conviction.
Each side of the debate appeals to moral or religious values which are held with passionate intensity.
In a democracy on the British model, the natural place for that debate to be resolved is in the legislature.
The laws involvement in the question is strictly limited.
Parliament has enacted the Human Rights Act 1998, which requires the courts to give effect to the Convention rights of individuals so far as that can be done compatibly with primary legislation, and, where primary legislation is incompatible with Convention rights, enables the courts to make a declaration to that effect.
It has also enacted provisions in the devolution statutes under which legislation is outside the legislative competence of the devolved legislatures if it is incompatible with Convention rights, and the devolved administrations have no power to do any act which is incompatible with Convention rights: see, in relation to Northern Ireland, sections 6(2)(c) and 24(1)(a) of the Northern Ireland Act 1998.
The Convention rights include the right not to be subjected to torture or to inhuman or degrading treatment, under article 3 of the European Convention on Human Rights and Fundamental Freedoms, and the right to respect for private and family life, under article 8.
The article 3 right, like the right to life under article 2, and the prohibition on slavery under article 4, is expressed in absolute terms.
The article 8 right, like the right to freedom of thought, conscience and religion, the right to freedom of expression, the right to freedom of assembly and association, and the right to freedom to marry, under articles 9 to 12 respectively, is expressed in terms which allow for restrictions: it is subject to such interferences as are in accordance with the law and are necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.
Like a number of other Convention rights, it thus allows scope for contention as to how it is to be balanced with other competing interests.
The distinction between absolute and qualified rights is fundamental to the operation of the Convention.
The absolute rights reflect unconditional moral imperatives which are owed to individuals simply as human beings: not to kill them other than in certain specific situations, not to torture them, not to subject them to inhuman or degrading treatment, and not to hold them in slavery.
Although the content of these rights is nuanced, and they might even be said to be subject, in substance, to certain qualifications, they are not in principle amenable to balancing against other interests.
There is no scope for their being restricted by democratic policy choices.
They are not issues on which the Convention accepts that there is scope for democratic debate.
The courts task is not to assess the proportionality of murder, torture or enslavement, but to secure that the right to be protected against such treatment is respected.
There is therefore, in principle, no room for the European Court of Human Rights to defer to the judgement of national authorities on the question whether conduct is in breach of the substantive, negative, obligations imposed by an absolute provision such as article 3: the question falls outside the scope of the principle of subsidiarity.
The threshold for finding a breach of article 3 is correspondingly high: the court has repeatedly emphasised that ill treatment has to attain a minimum level of severity before it can be regarded as falling within the ambit of the article.
The same high threshold applies when article 3 is applied by national courts.
Thus, under article 3, there is in principle no scope for constitutional deference to the judgement of democratic institutions, but it is only where the stringent requirements of the article are satisfied that the courts will adopt such an uncompromising approach.
The qualified rights are essentially different.
They belong to individuals as social beings, and are subject to such limitations as are justifiable in the society in which they live.
The Conventions acceptance that they are subject to restrictions that are necessary in a democratic society not just in any democratic society, but specifically in the particular society in question opens the door to democratic policy choices.
The Convention accepts that there is room for reasonable minds to differ as to the policy which should be adopted.
The role of the court is to determine whether the restrictions imposed in a particular case are justifiable on one of the permissible grounds, generally by applying a test of proportionality.
The European Court of Human Rights can thus recognise the legitimacy of decision making at the national level, when applying a qualified provision such as article 8, and acknowledge that a judgement as to the restrictions which can appropriately be imposed in a given society is in principle best made by the authorities of that country.
National courts can equally respect the judgements made by the democratic institutions of their society, applying the principle of proportionality in a manner which reflects the constitutional principle of the separation of powers.
It follows that the extent, in practice, to which elements of social and ethical policy are taken out of the hands of national democratic processes and determined by judges depends on how stringently absolute provisions of the Convention, such as article 3, are applied by both the European and national courts, and on how much respect they pay to the judgement of national democratic institutions when applying a proportionality analysis to restrictions of qualified rights such as that recognised in article 8.
At the European level, increasing emphasis has been placed on the critical role of national legislatures in defining human rights protection within the scope of the qualified rights.
Increasing attention has therefore been paid to the question whether a legislative measure has been based on considered debate, including consideration of the impact of the measure on the Convention right in question, and of the necessity of the interference: see, for example, Donald and Leach, Parliaments and the European Court of Human Rights (2016), and Spano, The European Court of Human Rights: Subsidiarity, Process Based Review and Rule of Law (2018) HRLR 1.
Parliamentary processes are regarded as especially important where the question involves the assessment of moral or ethical issues falling squarely within the scope of democratic debate, or where the legislative policy adopted reflects a historical tradition of giving legal effect to a particular conception of social or moral life.
At national level, it is equally important that the courts should respect the importance of political accountability for decisions on controversial questions of social and ethical policy.
The Human Rights Act and the devolution statutes have altered the powers of the courts, but they have not altered the inherent limitations of court proceedings as a means of determining issues of social and ethical policy.
Nor have they diminished the inappropriateness, and the dangers for the courts themselves, of highly contentious issues in social and ethical policy being determined by judges, who have neither any special insight into such questions nor any political accountability for their decisions.
Abortion law and Convention rights
In interpreting the Convention in cases concerned with abortion, the European Court of Human Rights has demonstrated its awareness of the sensitivity of this topic and the extent to which it is better suited to determination by national authorities.
It has never interpreted the Convention as requiring contracting states to introduce laws permitting abortion, either generally or in relation to particular categories of pregnancy.
In its most recent consideration of the issue, in the case of A, B and C v Ireland (2010) 53 EHRR 13, the Grand Chamber rejected complaints by two Irish women that the prohibition on abortion in Ireland (a more restrictive prohibition than in Northern Ireland), by effectively compelling them to travel elsewhere if they wished to terminate their pregnancy, with similar consequences to those described in the present case, had violated their rights under articles 3 and 8 (the third applicant raised somewhat different issues relating to her specific situation).
The court accepted that travelling abroad for an abortion was both psychologically and physically arduous for each of the applicants, and that it was also financially burdensome.
Nevertheless, it pointed out that ill treatment must attain a minimum level of severity if it was to fall within the scope of article 3, and concluded that the facts alleged did not disclose a level of severity falling within the scope of the article.
The complaint under article 3 was found to be manifestly ill founded.
In relation to article 8, it was argued on behalf of the first and second applicants, as in the present case, that it had not been shown that the restrictions were effective in achieving the aim pursued: the abortion rate for women in Ireland was similar to states where abortion was legal since Irish women chose to travel abroad for abortions in any event.
Even if the restrictions were effective, the first and second applicants questioned how the Irish state could maintain the legitimacy of their aim given the opposite moral viewpoint espoused by human rights bodies worldwide.
They also suggested that the current prohibition on abortion in Ireland no longer reflected the views of the Irish people, arguing that there was evidence of greater support for broader access to legal abortion.
It was pointed out that the financial burden of travel impacted particularly on poor women and their families.
It was also emphasised that women experienced the stigma and psychological burden of doing something abroad which was a serious criminal offence in their own country.
The extent of the prohibition on abortion in Ireland also stood in stark contrast to the more flexible regimes for which there was a clear European and international consensus.
Reliance was placed, in that regard, on a range of international materials, including material produced by CEDAW.
There was in addition said to be a lack of assistance by doctors, due to the chilling effect of a lack of clear legal procedures combined with the risk of serious criminal and professional sanctions.
In response, the European Court of Human Rights referred to its previous case law finding that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life.
It referred to its finding in Vo v France (2004) 40 EHRR 12 that it was neither desirable nor possible to answer the question of whether the unborn was a person for the purposes of article 2 of the Convention, so that it would be equally legitimate for a state to choose to consider the unborn to be such a person and to aim to protect that life.
In relation to the balancing exercise required by article 8, the court observed that the state authorities are, in principle, in a better position than the international judge to give an opinion, not only on the exact content of the requirements of morals in their country, but also on the necessity of a restriction intended to meet them (para 232).
It continued: There can be no doubt as to the acute sensitivity of the moral and ethical issues raised by the question of abortion or as to the importance of the public interest at stake.
A broad margin of appreciation is, therefore, in principle to be accorded to the Irish state in determining the question whether a fair balance was struck between the protection of that public interest, notably the protection accorded under Irish law to the right to life of the unborn, and the conflicting rights of the first and second applicants to respect for their private lives under article 8 of the Convention. (para 233)
This broad margin of appreciation was not decisively narrowed by the consensus among other contracting states towards allowing abortion on broader grounds than under Irish law (a consensus which, the court said, made it unnecessary to look further to international trends and views): Of central importance is the finding in the above cited Vo case, referred to above, that the question of when the right to life begins came within the states margin of appreciation because there was no European consensus on the scientific and legal definition of the beginning of life, so that it was impossible to answer the question whether the unborn was a person to be protected for the purposes of article 2.
Since the rights claimed on behalf of the foetus and those of the mother are inextricably interconnected, the margin of appreciation accorded to a states protection of the unborn necessarily translates into a margin of appreciation for that state as to how it balances the conflicting rights of the mother.
It follows that, even if it appears from the national laws referred to that most contracting parties may in their legislation have resolved those conflicting rights and interests in favour of greater legal access to abortion, this consensus cannot be a decisive factor. (para 237)
The court noted that the states margin of appreciation was not unlimited.
It emphasised, however, that the law in Ireland was the product of considered democratic debate: From the lengthy, complex and sensitive debate in Ireland as regards the content of its abortion laws, a choice has emerged.
Irish law prohibits abortion in Ireland for health and well being reasons but allows women, in the first and second applicants position who wish to have an abortion for those reasons, the option of lawfully travelling to another state to do so. (para 239) The court also placed some emphasis on the fact that the prohibition of abortion in Ireland was accompanied by measures designed to assist certain categories of women in obtaining access to abortion facilities elsewhere: On the one hand, the Thirteenth and Fourteenth Amendments to the Constitution removed any legal impediment to adult women travelling abroad for an abortion and to obtaining information in Ireland in that respect.
Legislative measures were then adopted to ensure the provision of information and counselling about, inter alia, the options available including abortions services abroad, and to ensure any necessary medical treatment before, and more particularly after, an abortion.
The importance of the role of doctors in providing information on all options available, including abortion abroad, and their obligation to provide all appropriate medical care, notably post abortion, is emphasised in CPA [Crisis Pregnancy Agency] work and documents and in professional medical guidelines. (ibid)
In those circumstances, although the court accepted that the process of travelling abroad for an abortion was psychologically and physically arduous, especially for women in impoverished circumstances, and also accepted that it might be the case that the prohibition on abortion was to a large extent ineffective in protecting the unborn, in the sense that a substantial number of women took the option of travelling abroad for an abortion, nevertheless the first and second applicants complaints under article 8 were rejected.
Having regard to the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland, the court did not consider that the prohibition in Ireland of abortion for health and well being reasons, based as it was on the profound moral views of the Irish people as to the nature of life and as to the consequent protection to be accorded to the right to life of the unborn, exceeded the margin of appreciation accorded to the Irish state.
The prohibition consequently struck a fair balance between the womens right to respect for their private lives and the rights invoked on behalf of the unborn.
The third applicants complaint under article 8, which succeeded, concerned a different issue (the absence of a procedure by which she could have established whether she qualified for a lawful abortion in Ireland on grounds of the risk to her life of her pregnancy), and is of no relevance to the present case.
The present case
In the light of the European courts relatively recent judgment in A, B and C, it appears to me to be impossible to hold that the legislation in force in Northern Ireland is incompatible with article 3.
In that regard, I again agree with the reasoning of Lord Mance.
As he states, even when one takes into account that the present case focuses on pregnancies where the foetus is abnormal or has been conceived as the result of a sexual offence, it is apparent that the great majority of Northern Irish women wishing to terminate their pregnancy in such circumstances are able to do so by travelling elsewhere.
The consequences are similar to those with which A, B and C was concerned, and do not meet the threshold for a violation of article 3.
Some individual cases have been put forward in which it is said that the women in question were unable to travel abroad as a result of the failure of health professionals to provide them with appropriate assistance and advice, and endured harrowing experiences as a consequence.
It may be that such cases, if established in individual applications, would be found to involve a violation of article 3.
But, disturbing though those cases are, the possibility that there might be a violation of article 3 in an individual case cannot warrant a declaration that the legislation, as such, is incompatible with article 3.
If a breach of article 3 were established in an individual case, the court might grant declaratory relief, but the terms of the relief would reflect the circumstances which had led to the violation.
Whether it was appropriate to grant a declaration that the legislation itself was incompatible, because it could not be given effect in a manner which was compliant with article 3, would depend on a close examination of the facts of the case, and of the role which the legislation had played in bringing about the violation.
In relation to article 8, I agree with Lord Mance that no declaration of incompatibility should be made, but I have reached that conclusion for somewhat different reasons.
I would emphasise at the outset a point which this court has made on several occasions, namely that an ab ante challenge to the validity of legislation on the basis of a lack of proportionality faces a high hurdle: if a legislative provision is capable of being operated in a manner which is compatible with Convention rights in that it will not give rise to an unjustified interference with article 8 rights in all or almost all cases, the legislation itself will not be incompatible with Convention rights: Christian Institute v Lord Advocate [2017] HRLR 19, para 88.
As in relation to article 3, the judgment in A, B and C appears to me to provide valuable guidance.
The practical effect of the law in Northern Ireland, as in Ireland, is to require women to travel elsewhere if they wish to terminate their pregnancy.
The general prohibition on termination for reasons other than a danger to life, or a danger of serious injury to health, is accompanied by guidance to doctors and other professionals on the information and advice which should be provided to women who wish to obtain a termination (Department of Health, Social Services and Public Safety, Guidance for Health and Social Care Professionals on Termination of Pregnancy in Northern Ireland, March 2016).
That guidance advises health professionals that they can provide women who cannot lawfully obtain an abortion in Northern Ireland with information about abortion services lawfully available in other jurisdictions, and about their freedom to travel there.
It also advises health professionals about their responsibility to provide aftercare, counselling and other support services to women who have had a termination of pregnancy carried out outside Northern Ireland.
In those circumstances, I am not persuaded that the issues arising under article 8 in relation to the law in Northern Ireland are in general materially different from those considered in A, B and C, even if one confines ones attention to women undergoing a pregnancy where the foetus is abnormal or has been conceived as the result of a sexual offence.
They are free to travel to England or Scotland, where they can have their pregnancy terminated free of charge in an NHS hospital, provided that the termination is lawful under the law in force there.
They should be able to obtain advice about termination from health professionals in Northern Ireland, and they should receive whatever care they may require in Northern Ireland after the termination has been carried out.
Most of the arguments relied on by those who would hold the law in Northern Ireland to be incompatible with article 8 are the same as those rejected by the European court in A, B and C.
Of course, to the extent that the law places restrictions on the availability of abortion, it treats the moral value of protecting the life of the unborn as outweighing the womans personal autonomy and freedom to control her own life.
That is true of any restriction on abortion.
Of course, the law applies even to those who do not share the ethical perspective which underpins it.
That is the nature of law: it applies to everyone, whether they agree with it or not.
It may be that the law is largely ineffective to protect the unborn, because the great majority of women who wish to have abortions do so anyway, travelling to England for that purpose.
Nevertheless, a society cannot be bound under the Convention to permit behaviour which it considers morally repugnant, merely because a prohibition can be obviated.
On the contrary, the fact that a prohibition imposed for moral reasons can be obviated may tend to support its proportionality, since it imposes less of a restriction in reality on those who do not share the moral values which underpin it.
As in relation to article 3, the court has been provided with accounts of individual cases which, if they were established in individual applications, would almost certainly demonstrate violations of article 8, due principally, it would appear, to shortcomings in the provision of advice and support by health care professionals.
But the possibility that there might be violations of article 8 in some individual cases does not warrant a bald declaration that the legislation, as such, is incompatible with article 8.
The principal difference between this case and A, B and C is that it raises the question whether it is proportionate to treat the moral value of protecting the life of the unborn as outweighing the womans personal autonomy in situations where the foetus is abnormal or was conceived as the result of a sexual offence: an issue which arises in a particularly acute form in cases where the foetus suffers from a fatal abnormality.
There is no doubt that such situations can result in emotional anguish for the women involved, and that there can be circumstances in which, if the woman is unable to obtain a termination of the pregnancy, its continuation may pose a serious risk to her health and well being.
Nevertheless, the difficulty in the form of the present appeal is that it does not invite the court to investigate the facts of individual cases where Northern Irish women undergoing particular categories of pregnancy have been unable to obtain an abortion, and to decide whether they justify the conclusion that the legislation itself is incompatible with article 8.
Instead, the court is invited, as an abstract exercise, to define categories of pregnancy in respect of which a termination must be legally available if the legislation is to be compatible with article 8.
That approach requires the court to address a number of difficult issues: for example, whether to treat some categories of pregnancy differently from other pregnancies at all; whether, if so, to draw the line at foetuses with fatal abnormalities which will prevent their surviving until birth or for more than a short time after birth, or to include foetuses with serious but non fatal abnormalities; whether to differentiate between healthy foetuses conceived as the result of sexual offences and other healthy foetuses; and whether, if so, to draw the line at foetuses conceived as the result of offences which were non consensual, or to include those conceived as the result of consensual offences.
These are highly sensitive and contentious questions of moral judgement, on which views will vary from person to person, and from judge to judge, as is illustrated by the different views expressed in the present case.
They are pre eminently matters to be settled by democratically elected and accountable institutions, albeit, in the case of the devolved institutions, within limits which are set by the Convention rights as given effect in our domestic law.
A process of democratic consideration of these issues has begun in Northern Ireland and has not yet been completed, as a result of the breakdown of devolved government in January 2017.
It is important that a review of these issues should be completed.
It appears from the accounts of individual cases put forward in these proceedings that there is every reason to fear that violations of the Convention rights will occur, if the arrangements in place in Northern Ireland remain as they are.
In those circumstances, these issues need to be discussed and determined in a democratic forum, which is where they pre eminently belong.
In the meantime, the courts will have to deal with any individual cases which may come before them.
But, in the present proceedings, there is no need for this court to pre empt democratic debate on changes to the law or to the arrangements for the provision of health services, or, by determining the requirements of the Convention in advance of that debate, to take the matter out of the hands of democratically accountable institutions.
LADY BLACK:
The Commissions competence to seek the relief claimed
I agree with Lord Mance that, for the reasons he gives, the Commission has no power to bring the present proceedings.
From that it would follow that the questions referred by the Attorney General for Northern Ireland should be answered in the negative and the Commissions appeal dismissed.
Despite this conclusion, I feel I should express my view as to the substance of the Commissions appeal, as other members of the court have done.
Article 3
I agree with Lord Mances view that, for the reasons that he sets out in paras 94 to 103 of his judgment, the Commissions argument that the legislation in Northern Ireland is incompatible with article 3 of the ECHR must be rejected.
Article 8:
Generally
I also agree with what Lord Mance says about article 8 in the passage of his judgment commencing at para 104 and concluding at para 121, but I do not entirely share his view in relation to the compatibility of the legislation with article 8.
He considers the law incompatible in cases where the pregnancy has resulted from rape or certain other sexual crimes, and in cases of fatal foetal abnormality, that is to say where the foetus cannot survive at all after birth or will die very shortly after delivery.
I would only wish to express the view that the law is incompatible in cases of fatal foetal abnormality.
Article 8: Cases other than fatal foetal abnormality
As to cases which do not concern fatal foetal abnormality, I find myself in agreement with Lord Reeds reasoning in relation to article 8.
He has pointed out the similarity between the arguments advanced unsuccessfully in A, B and C v Ireland, and those relied upon in the present case.
Although it is important to note that A, B and C did not concern the particular categories of pregnancy with which we are concerned, it persuades me that, in relation to pregnancies where the foetus has a non fatal abnormality or has been conceived as the result of a sexual offence, I must bring myself to accept two related propositions.
First, notwithstanding the widespread consensus (in Europe and internationally) in favour of more flexible abortion regimes, it must be accepted that there may be room for different moral viewpoints.
Secondly, it must be accepted that the balance between the protection of the life of the unborn child, the interests of society, and the rights of the pregnant woman may be struck in different ways.
In these circumstances, and given the difficulty identified by Lord Reed as to where to draw the line in accommodating the categories of case with which we have been concerned, as well as the current lack of certainty about what moral views are presently held by the population of Northern Ireland, I do not feel that it would be appropriate at this stage to express a positive conclusion that the legislation itself is incompatible with article 8.
In so saying, I also have in mind that, as Lord Mance says at para 92 of his judgment, other factors can play a part, in addition to the legislation itself, in producing adverse treatment of which complaint may be made.
He points out that where one is able to examine the specific circumstances that have arisen, the cause of the impugned treatment may, in some cases, prove to have been not the applicable legislation itself, but rather the way that it was (mis)understood or (mal)administered.
That is one of the reasons why an abstract challenge to legislation presents such a difficulty.
In such circumstances, alleviating the hardship of women in the categories of case that we have been asked to consider, may involve a combination of amending the law and taking practical steps to ensure that proper information and support is available to the women concerned, countering what Lord Kerr has described (para 176) as the significant chilling effect on women who wish to obtain an abortion and doctors who might assist them.
Given the diverse circumstances covered by the categories upon which we have been asked to focus (as to which, see for example Lord Mances discussion of the position in relation to sexual crimes, commencing at para 127 of his judgment), the solutions require democratic debate.
However, Lord Reed has made observations about the worrying situation disclosed in the accounts placed before us, and about the need for the review that had been begun in Northern Ireland to be resumed and completed.
I share his view about the importance of this and about the fact that there is every reason to fear that violations of the Convention rights of women in Northern Ireland will occur if arrangements there remain as they are.
Article 8: Fatal foetal abnormality
In relation to foetuses with fatal abnormalities, I would go further than Lord Reed does.
I do not consider the present law in Northern Ireland to be compatible with article 8 of the ECHR in relation to this category of case.
Where the unborn child cannot survive, in contrast to the other categories of pregnancy with which we are concerned, there is no life outside the womb to protect.
In those circumstances, even if allowance is made for the intrinsic value of the life of the foetus, the moral and ethical views of society cannot, it seems to me, be sufficient to outweigh the intrusion upon the autonomy of the pregnant woman, and her suffering, if she is obliged to carry to term a pregnancy which she does not wish to continue.
Furthermore, as Lady Hale points out, and as can be seen from the experiences of some of those whose circumstances were placed before the court, a problem such as this is often diagnosed comparatively late in the pregnancy.
This is likely to make the process of termination more demanding for the woman than it would be at an earlier stage in the pregnancy, and to compound the problems that exist for any woman who has to travel abroad for the procedure, including by significantly restricting the time available for making arrangements to have the termination carried out in Great Britain so as to avoid it having to be carried out at an advanced stage of the pregnancy.
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Ss. 58 and 59 of the Offences Against the Person Act 1861 (an Act of the UK Parliament) (the 1861 Act) and s.25(1) of the Criminal Justice Act (NI) 1945 (an Act of the Northern Ireland legislature) (the 1945 Act) criminalise abortion in Northern Ireland.
It is not however a crime to receive or supply an abortion where it is done in good faith for the purpose of preserving the life of the mother.
Further it is not a crime to receive or supply an abortion where the continuance of the pregnancy will make the woman a physical or mental wreck the Bourne exception following R v Bourne [1939] 1 KB 687.
The Northern Ireland Human Rights Commission (NIHRC) challenges the compatibility of the law of Northern Ireland with Art 3 (the prohibition of torture and of inhuman or degrading treatment), Art 8 (the right of everyone to respect for their private and family life) and Art 14 (the prohibition of discrimination) of the European Convention on Human Rights (ECHR) insofar as that law prohibits abortion in cases of (a) serious malformation of the foetus, (b) pregnancy as a result of rape, and/or (c) pregnancy as a result of incest.
NIHRC seeks declarations to that effect under s.6 and s.4 of the Human Rights Act 1998 (HRA 1998).
These proceedings are brought in the name of NIHRC, rather than the name of particular victims.
Examples of particular individuals however were relied on by NIHRC during the proceedings.
In the High Court Horner J held that NIHRC had standing to bring these proceedings in its own name.
Further Horner J held that sections 58 and 59 of the 1861 Act were incompatible with Art 8 insofar as they criminalise abortion in cases of (a) fatal foetal abnormality, (b) rape up to the date when the foetus is capable of being born alive and (c) incest up to the date when the foetus is capable of being born alive.
He made a declaration of incompatibility to that effect under s.4 HRA 1998.
He did not consider that the law was incompatible with Art 3.
The Northern Ireland Court of Appeal (NICA) held that NIHRC had standing to bring these proceedings.
However, in three differently reasoned judgments it concluded that there was no incompatibility with any of the articles of the ECHR.
NIHRC appeals the decision of NICA.
NICA has also referred a reference from the Attorney General for Northern Ireland on devolution issues under para 33 of sch 10 to the Northern Ireland Act 1998 (NIA 1998).
The reference relates to whether NIHRC has standing to bring these proceedings, specifically, whether NIHRC has the power to institute human rights proceedings or to seek a declaration of incompatibility other than in relation to an identified unlawful act.
A majority of the court dismisses the appeal.
A majority (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) concludes that NIHRC does not have standing to bring these proceedings.
As such, the court does not have jurisdiction to make a declaration of incompatibility in this case.
A minority of the court (Lady Hale, Lord Kerr and Lord Wilson) considers that NIHRC does have standing to bring these proceedings.
A majority of the court (Lady Hale, Lord Mance, Lord Kerr and Lord Wilson) does however consider that the current law in Northern Ireland is disproportionate and incompatible with Art 8 ECHR insofar as that law prohibits abortion in cases of (a) fatal foetal abnormality, (b) pregnancy as a result of rape and (c) pregnancy as a result of incest.
Lady Black joins that majority on (a) but not on (b) or (c).
A minority of the court (Lord Reed, Lady Black on (b) and (c) and Lord Lloyd Jones) considers that it is not possible to conclude in the abstract, in proceedings of the present nature (as distinct from individual applications), that the current law is disproportionate or incompatible with Art 8.
A majority of the court (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) concludes that the current law, in the abstract, is not incompatible with Art 3 ECHR.
A minority of the court (Lord Kerr and Lord Wilson) disagrees and considers that it is.
Lady Hale expresses sympathy with the view expressed by Lord Kerr but does not consider it necessary to decide on incompatibility in relation to Art 3 in light of her decision on Art 8.
Standing Lord Mance (with whom Lord Reed, Lady Black and Lord Lloyd Jones agree) considers that NIHRC does not have standing to bring these proceedings.
They were not instituted by identifying any unlawful act or any potential victim of it [73].
NIHRC relies on s.69(5)(b) of the NIA 1998 for its power to institute these proceedings.
These proceedings constitute human rights proceedings under s.71(2C)(a)(ii) and are therefore subject to the restrictions in s.71(2B) [54].
Under s.71(2B) and (2C), where NIHRC is instituting human rights proceedings, it need not be a victim, but there must be an actual or potential victim of an unlawful act to which the proceedings relate [54 and 56].
S.71(2C)(b) states that an expression used in s.71(2B) has the same meaning as the same expression used in s.7 HRA 1998.
S.7 HRA 1998 refers to s.6(1) for the concept of unlawful act.
It does not apply to an authoritys act which was (a) compelled by a provision of primary legislation or was (b) to give effect to or enforce one or more provisions of or made under primary legislation which cannot be read or given effect in a way which is compatible with ECHR rights.
Further, under s.6(6) HRA 1998, an act does not include a failure to introduce or lay before Parliament a proposal for legislation or make any primary legislation [57].
It follows that NIHRCs powers under ss.69 and 71 NIA 1998 do not include either instituting or intervening in proceedings where the only complaint is that primary legislation, such as the 1861 Act, is incompatible with the ECHR because such proceedings would not involve any unlawful act within the meaning of ss.6 and 7 HRA 1998 and consequently s.71 NIA 1998 [58].
It is no surprise that Parliament did not provide for NIHRC to have capacity to pursue what would amount to unconstrained actio popularis regarding the interpretation or compatibility of primary legislation with Convention rights [61].
The 1945 Act, as an act of a devolved legislature, is not primary legislation.
It might have been open to NIHRC to claim that the failure of the Northern Ireland Assembly to repeal or amend s.25 constituted an unlawful act within the meaning of ss.6 and 7 HRA 1998.
However, NIHRC, pursuant to s.71(2B), would still have to demonstrate that there is or would be one or more victims of the unlawful act.
That restriction is not satisfied by a general assertion that the failure to abrogate or amend s.25 is likely to give rise to victims.
There must be a specific and identifiable victim who is or would be the victim of
an unlawful act [72].
Even if NIHRC could establish standing regarding the 1945 Act it would have little practical effect given the ongoing effect of the 1861 Act [72].
A minority of the court (Lady Hale, Lord Kerr and Lord Wilson) concludes that NIHRC does have standing to bring these proceedings.
Lady Hale and Lord Kerr (with whom Lord Wilson agrees) hold that there are two separate species of challenge under the HRA 1998.
One is for victims to bring proceedings in respect of an unlawful act of a public authority, or to rely on such an unlawful act in other proceedings, pursuant to s.7(1).
The other is to challenge the compatibility of legislation under sections 3 and 4 irrespective of whether there has been any unlawful act by a public authority.
NIHRC has standing to bring such proceedings by virtue of s.69(5)(b) [17 and 183 184].
In Lady Hales view section 71(2B) and (2C) deal only with proceedings brought by NIHRC or interventions by NIHRC in proceedings brought by others in respect of claims that a public authority has acted or proposes to act unlawfully.
But it does not apply to or limit the general power of the NIHRC to challenge the compatibility of legislation under sections 3 and 4 of HRA 1998.
The unlawful act means the unlawful act alleged in the proceedings so does not apply where no such unlawful act is alleged [18].
In Lord Kerrs view the only restriction on NIHRCs power to bring proceedings under s.69(5)(b) NIA 1998 is that the proceedings must involve law or practice relating to human rights [184].
Under s.71(2B)(c) the NIHRC may act only if there is or would be one or more victims of the unlawful act.
Would be victims indicates an intention that NIHRC should be able to act pre emptively [195].
The majority decision departs in his view from well established authority that an interpretation of a statute which gives effect to the ascertainable will of Parliament should be preferred to a literal construction which will frustrate the legislations true purpose [202 213].
S.71(2B)(c) can reasonably be interpreted to mean that NIHRC may act where it is clear that there have been and will be victims of the implementation of the provisions of the 1861 and 1945 Acts, which is satisfied in this case [195 and 208].
If NIHRC is unable to bring proceedings to protect the rights of women in the three situations in this case, they will be deprived of an effective remedy under Art 13 ECHR [199].
Article 8 The courts decision on standing means that there is no possibility of making a declaration of incompatibility under s.4 HRA 1998.
However, a majority of the court (Lady Hale, Lord Mance, Lord Kerr and Lord Wilson) considers that the current law in Northern Ireland on abortion is disproportionate and incompatible with Art 8 insofar as it prohibits abortion in cases of (a) fatal (as distinct from serious) foetal abnormality (b) pregnancy as a result of rape and (c) pregnancy as a result of incest.
If an individual victim did return to court in relation to the present law, a formal declaration of incompatibility would in all likelihood be made.
Lady Hale agrees with the reasons provided by Lord Mance and Lord Kerr and writes separately only on a few points.
Lady Black joins the majority in relation to (a) but not in relation to (b) and (c).
The majority on this issue starts from the position that the current law is an interference with the right of pregnant women and girls to respect for their private lives, guaranteed by Art 8(1).
The question is whether the Northern Ireland abortion law is justified under Art 8(2) [9, 104, 263 and 265].
The majority concludes that it is not.
Lord Mance and Lord Kerr (with whom Lord Wilson agrees) hold that the general clarity of the existing law on abortion was not the focus of the present appeal.
Lord Mance holds that it is clear that all the categories in issue are prohibited under the 1861 and 1945 Acts [81, 105 and 269].
Lady Hale considers that it is no more uncertain than other areas of law which rely upon the application of particular concepts to particular facts [20].
All of the majority accept that the current law pursues a legitimate aim: the moral interest in protecting the life, health and welfare of the unborn child [21, 105 and 278].
Lady Hale highlights that the community also has an interest in protecting the life, health and welfare of the pregnant woman [21].
It is accepted that the unborn are not right holders under Art 2 ECHR and do not have a right to life
in domestic law or in Northern Ireland [21, 24, 94 and 305 306].
The law as it currently stands already permits abortion to protect not only the life of the pregnant woman but also her mental health from serious long term injury [24 and 106 108].
The majority refer to the opinion polls produced by NIHRC demonstrating strong public support for changes in the law [24, 110 and 322].
Lord Mance accepts that views elicited by opinion polls cannot prevail over the decision to date by the Northern Ireland Assembly which is to maintain the existing policy and law [111].
However, Lady Hale and Lord Kerr (with whom Lord Wilson agrees) state that this evidence cannot be lightly dismissed when the argument is that profound moral views of the public are sufficient to outweigh the grave interference on the rights of pregnant women and a change in the law [24 and 325].
All of the majority however agree that the Working Group established by the Northern Irish Assembly demonstrates that the Assembly is not necessarily opposed to amending the law in the future but that any such solution has been precluded by the cessation of the Assemblys activities since January 2017 [112 and 228 229].
The majority holds that the banning of abortion in all the categories at issue is rationally connected to the legitimate aim [113 and 279].
The real issue on this appeal is whether the interference with womens Art 8 rights is necessary in a democratic society in that it strikes a fair balance between the rights of the pregnant woman and the interests of the foetus by maintaining the 1861 and 1925 Acts [21, 117 and 287].
The majority all refer to the institutional role of the UKSC in relation to the legislature.
A distinction is drawn between the margin of appreciation applied by Strasbourg and considerations of institutional competence required in a domestic context [37 28, 115 and 289 295].
Lady Hale remarks that this is not a matter on which the domestic legislature enjoys a unique competence.
Lady Hale, Lord Mance and Lord Kerr all highlight that Parliament, through s.4 HRA 1998, has expressly given the high courts power to rule on compatibility of legislation with the ECHR [39 and 292].
The majority on this issue also distinguishes the present case from R (Nicklinson) [2014] UKSC 38 in reaching a decision that it is institutionally appropriate for the Supreme Court to consider the compatibility of the existing law on abortion with the Convention rights.
The Northern Irish Assembly is not about to actively consider the issue of abortion there is no assurance as to when it will resume its activity [40, 117 and 299].
There is no question of a balance being struck between the interests of two different living persons as in Nicklinson.
The unborn foetus is not in law a person, although its potential must be respected [119].
Nicklinson was also decided against a background where the attitude maintained by the UK Parliament reflected a similar attitude across almost the whole of Europe.
Northern Ireland, in contrast, is almost alone in the strictness of its current law.
The close ties between the different parts and peoples of the UK make it appropriate to examine the justification for differences in this area with care [120].
Lord Kerr also distinguishes the present case from Nicklinson on the basis that the present incompatibility is not difficult to identify or cure.
A simple amendment to the 1861 and 1945 Acts permitting termination of pregnancy in the three situations would achieve that aim [298].
Fatal foetal abnormality: the majority and Lady Black conclude that there is no community interest in obliging the woman to carry a pregnancy to term where the foetus suffers from a fatal abnormality [28, 133, 326, 368 and 371].
Lord Mance remarks that the present law treats the pregnant woman as a vehicle and fails to attach any weight to her personal autonomy [125].
The present law also fails to achieve its objective in the case of those who may choose to travel for an abortion, merely imposing on them harrowing stress and inconvenience as well as expense, while it imposes severe and sometimes life time suffering on the most vulnerable who, because of lack of information, or support are forced to carry their pregnancy to term [27, 28 and 126].
Serious foetal abnormality: By contrast, it is not possible to impugn as disproportionate and incompatible with Art 8 legislation that prohibits abortion of a foetus diagnosed as likely to be seriously disabled.
A disabled child should be treated as having equal worth in human terms as a non disabled child [31, 133 and 331].
Rape: the majority considers that the current law is disproportionate in cases of rape and that the rights of the pregnant woman should prevail over the community interest in the continuance of the pregnancy [27, 127 and 326].
Lord Mance mentions that NIHRC made it clear that its submissions on rape included offences against children under the age of 13 who could not give consent in law but that it had not focused on sexual offences (not described as rape) committed against girls aged 13 or more but under the age of 16 [44].
Lady Hale, however, considers that for the purposes of this case, it is unnecessary to distinguish between offences where the child is under 13 and offences where the child is under 16 where no offence is committed if the perpetrator reasonably believed she was over 16.
It is presumed under the law of Northern Ireland that children under 16 are incapable of giving consent to sexual touching, including penetration of the vagina by a penis, irrespective of the perpetrators belief and there is no reason to exclude such pregnancies from this case [25].
Lord Mance considers that causing a woman to become pregnant and bear a child against her will is an invasion of the fundamental right to bodily integrity.
Neither Lord Mance nor Lady Hale consider the possibility of travel for an abortion as a justification for the law but rather a factor demonstrating its disproportionality [27 and 127].
Incest: A blanket prohibition of abortion in cases of incest is not proportionate [27, 132 and 326].
Lord Mance (with whom Lady Hale agrees) points to the fact that the most typical cases of incest involve abusive relationships with young or younger female relatives.
The agony of having to carry a child to birth and have a potential responsibility and lifelong relationship with the child thereafter against the mothers will cannot be justified [27 and 132].
Lord Reed (with whom Lord Lloyd Jones and Lady Black (on pregnancy resulting from rape and incest) agree) would not make a declaration of incompatibility under Art 8.
They are not convinced that the three situations are, as abstract categories, materially different from those explored in the case of A, B and C v Ireland (2011) 53 EHRR 13.
Women are free to travel to obtain abortions on the NHS in England and Scotland.
They should be provided with advice about termination, by medical professionals in Northern Ireland, and should receive whatever care they may require there after the termination has been carried out [357 and 369].
The court has been provided with information about individual cases which, if established in individual applications, would almost certainly demonstrate violations of Art 8, due principally to shortcomings in the provision of medical advice and support.
However, this does not warrant a bald declaration that the legislation as such is inherently incompatible with Art 8 [359].
The difficulty with the form of the present appeal is that it does not enable the court to examine the facts of individual cases [361 and 369].
Defining categories of pregnancy in which abortions should be permitted involves highly sensitive and contentious questions of moral judgment [362].
They are pre eminently matters to be settled by democratically elected and accountable institutions [362 and 369].
That democratic consideration has not been completed in Northern Ireland as a result in the breakdown of devolved government in January 2017.
However, there is every reason to fear that violations of the ECHR will occur if the arrangements in place in Northern Ireland remain as they are [363 and 370].
Article 3 A majority of the court (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) would not have made a declaration that the law of Northern Ireland is incompatible with Art 3 ECHR [34 and 100].
Art 3 is an absolute right.
The treatment complained of has to reach a minimum level of severity in order to contravene it [95].
The majority all agree that there will be some women in the three situations in this case, whose suffering on being denied an abortion in Northern Ireland will reach the threshold of severity required to label the treatment inhuman or degrading.
But Lord Mance notes that it cannot be said that legally significant number of women denied an abortion in such circumstances will suffer so severely that her Art 3 rights have been violated [82].
Whether there has been any violation also depends on the facts of the individual case [34, 95, 103, 354 and 367].
Lord Mance (with whom Lord Reed, Lady Black and Lord Lloyd Jones agree) considers that the cases relied on by NIHRC to demonstrate breach of Art 3: RR v Poland (2011) 53 EHRR 31, P & S v Poland [2012]
129 BMLR 120 and Tysiac v Poland (2007) 45 EHRR 412 were decided on an assessment of the actual circumstances of the conduct relied on.
They were not decided on the basis of a risk that the State might commit a breach of Art 3 [100, 353 and 367].
Lord Mance (with whom Lord Reed, Lord Lloyd Jones and Lady Black agree) notes that women are able to travel elsewhere to obtain an abortion.
Although this can be a distressing and expensive experience, it does not generally or necessarily give rise to distress of such severity so as to infringe Art 3: see A, B and C [100, 353 and 367].
A minority (Lord Kerr with whom Lord Wilson agrees) would have made a declaration that the law of Northern Ireland is incompatible with Art 3 ECHR insofar as it prohibits abortion in the three categories of case presented [262].
Even though some mothers may not, there is a risk that some mothers who are denied an abortion in cases (a), (b) and (c) above will suffer profound psychological trauma which is sufficient to give rise to a violation of Art 3 [235].
The state owes individuals an obligation to protect them from the risk of a breach of Art 3 as well as a positive duty to provide appropriate healthcare treatment where the denial of that treatment would expose victims to ill treatment contrary to Art 3 [235].
The risk of women and girls being subject to ill treatment contrary to Art 3 is sufficient to trigger the states positive obligations.
Travelling to England or Scotland to obtain an abortion does not avoid this.
The fact of being required to do so is in itself sufficient to expose women and girls to the risk of inhuman and degrading treatment [238].
Lady Hale expresses sympathy with the view expressed by Lord Kerr (with whom Lord Wilson agrees) but does not consider it necessary to decide on incompatibility in relation to Art 3 in light of her decision on Art 8 [34].
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This is a judgment in two appeals that this Court heard together.
They raise issues as to the scope of the powers conferred by the Proceeds of Crime Act 2002 (POCA).
They arise out of attempts by the respondent (SOCA), acting apparently on its own initiative, to deprive the first appellant (Mr Perry), together with members of his family or entities associated with them, of the fruits of serious criminal fraud for which Mr Perry has been convicted in Israel, wherever in the world those fruits may be found.
SOCA intends to achieve this aim by invoking the powers of civil recovery conferred on the High Court by Part 5 of POCA.
So far, however, it has not got beyond preliminary steps aimed at ensuring that the substantive relief which it seeks is effective.
One of those steps has been obtaining a worldwide property freezing order in respect of property held by the appellants in appeal 0143.
I shall call this the PFO appeal.
The other step has been to obtain a disclosure order, under which notices have been given to the appellants in appeal 0182.
I shall call this the DO appeal.
It is logical to consider the PFO appeal first, for the result of this appeal will have some bearing on the DO appeal.
THE PFO APPEAL
Introduction and factual background
Some of this introduction will be relevant to both appeals.
The substantive relief that SOCA seeks consists of civil recovery orders in relation to property obtained through Mr Perrys unlawful conduct.
In order to prevent the dissipation of that property SOCA has obtained a worldwide property freezing order pursuant to section 245A of POCA (in future all statutory references will be to POCA unless I state otherwise).
Section 245A gives SOCA the power to seek a property freezing order where it is empowered to take proceedings for a civil recovery order.
It is common ground that a property freezing order can only relate to property that can properly be made the subject of a civil recovery order.
The appellants contend that, subject to a limited exception, a civil recovery order can only be made in respect of property that is within the territorial jurisdiction of the court making it.
On this ground the appellants attack the validity of the property freezing order in so far as this extends to property outside that jurisdiction.
Thus the important issue raised by the PFO appeal is the extent to which a recovery order can be made in respect of property outside the United Kingdom.
Lea Perry is Mr Perrys wife and Tamar Greenspoon and Yael Perry are his daughters.
Leadenhall Property Ltd is an Isle of Man company alleged to hold assets on behalf of Mr Perry.
On 24 October 2007 Mr Perry was convicted in Israel of a number of offences in relation to a pension scheme that he had operated in Israel.
On 19 February 2008 he was sentenced to 12 years imprisonment and fined the equivalent of approximately 3m.
He has paid that fine.
Two subsequent appeals had limited success inasmuch as they resulted in a reduction of his sentence to 10 years imprisonment and a reduction in the finding of the amount that he had stolen.
In or about May 2008 Hoares Bank in London disclosed to SOCA that Mr Perry, Tamar and Yael had accounts there.
Subsequently SOCA discovered that Mr Perry had accounts in London in the Bank J Safra (Gibraltar) Ltd. The total in these various accounts amounted to approximately 14m.
On 8 August 2008 SOCA obtained a disclosure order from HH Judge Kay QC, sitting as a Deputy High Court Judge, on a paper application without notice.
Notices under that order addressed to the DO appellants, all of whom were at all material times outside the jurisdiction, were communicated to them by letter addressed to a residence that Mr Perry maintains in Mayfair.
On 28 October 2009 SOCA obtained a worldwide property freezing order from Cranston J on an application without notice against eight respondents, including the appellants in the PFO appeal.
So far as Mrs Perry was concerned, the order froze certain identified assets, but it froze worldwide all the assets of the other defendants.
The order also required all the defendants to disclose all their worldwide assets.
The hearings below
The PFO appellants sought an order from Mitting J varying the property freezing order so as, inter alia, to exclude from its ambit property that was located outside England and Wales and to limit the disclosure obligations under the order to assets located within England and Wales.
In a judgment dated 28 June 2010 [2010] EWHC 1711 (Admin); [2010] 1 WLR 2761 Mitting J varied some of the disclosure obligations but otherwise rejected the application.
Mitting Js judgment was admirably clear and concise.
He started with a presumption against giving the relevant provisions of POCA extraterritorial effect, but concluded that, with the exception of section 286, which applied only to an order made in Scotland, the language of the relevant provisions so clearly applied to property outside the jurisdiction that it displaced this presumption.
The appellants appeal to the Court of Appeal was heard on 8 and 9 December 2010 and judgment was delivered on 18 May 2011 [2011] EWCA Civ 578; [2011] 1 WLR 2817.
The lengthy lead judgment of Hooper LJ was a reflection not only of the complexities of POCA but of the very detailed submissions advanced by Mr Philip Jones QC for the appellants, which were summarised at some length by the Lord Justice.
Among many other arguments Mr Jones relied on the presumption against extraterritoriality.
A civil recovery order vests property in a trustee for civil recovery.
Mr Jones submitted that such an order took effect in rem.
He submitted that it would be a breach of international law for the English Court to make an order in rem in respect of property in a foreign jurisdiction, the more so if that property was real property.
Hooper LJ rejected this argument.
He held that a civil recovery order operated in personam against the holder of the property.
The effect, if any, of a civil recovery order in relation to property in a foreign jurisdiction would depend upon the law applied in that jurisdiction and, in those circumstances, there was nothing untoward in making such an order.
Like Mitting J, Hooper LJ concluded that the clear meaning of the relevant provisions was that a civil recovery order could be made in respect of property wherever in the world the property was located, and there was no reason not to give effect to the natural meaning of the language.
Like Mitting J, Hooper LJ concluded that section 286 made an exception in the case of an order made in Scotland.
Hooper LJ derived support for his conclusions from analogies with the law of bankruptcy and from the practice of issuing worldwide freezing orders.
In a shorter judgment Tomlinson LJ concurred both with the result reached by Hooper LJ and with his reasoning.
Maurice Kay LJ agreed with both judgments.
It is common ground that, on its face, section 286 makes provision in respect of the scope of a recovery order that distinguishes the position in Scotland from that in the rest of the United Kingdom.
There is a dispute as to the nature of that distinction and, whatever its nature, no one has yet been able to suggest an explanation for it.
A summary of my conclusions
Because of the complexity of the subject matter of this appeal I propose to follow the example of Hooper LJ by summarising my conclusions at the outset. (i) The courts below placed undue weight on the definition of property in POCA. (ii) The appellants have placed undue weight on the presumption that a statute does not have extraterritorial effect. (iii) States have, by agreement, departed from the customary principles of international law in the case of confiscating the proceeds of crime.
Of particular relevance is the 1990 Strasbourg Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (the Strasbourg Convention).
POCA must be read in the light of that Convention. (iv) The Convention recognises that the courts of state A may make an order purporting to vest in the authorities of state A property that is situated in state B in circumstances where the property is the proceeds of the criminal conduct of a defendant subject to the criminal jurisdiction of state A. (v) The Convention provides that effect should be given to such an order by confiscation proceedings in state B at the request of state A. (vi) The answer to the issue raised by the PFO appeal depends upon an analysis of both the scheme and the language of POCA considered in the light of the Convention. (vii) Parts 2, 3 and 4 of POCA provide for (a) the imposition in personam of obligations in respect of property worldwide; (b) measures in rem to secure and realise property within the United Kingdom; and (c) requests to be made to other states to take such measures in respect of property within their territories. (viii) Part 5 of POCA makes provision for in rem proceedings in respect of property within the United Kingdom but not outside it. (ix) The scheme of POCA, as described above, accords with arrangements made by the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) (the Order) for giving effect to requests from other states in relation to the confiscation of the proceeds of crime. (x) The scheme of POCA as described above also accords with the requirements of a coherent international scheme for confiscation of the proceeds of crime and with principles of public international law.
The converse is the case if SOCAs submissions as to the extraterritorial effect of Part 5 are correct. (xi) Section 286 is an anomalous enigma and cannot justify giving the provisions of POCA that relate to the rest of the United Kingdom a meaning different from that which they would bear in the absence of section 286. (xii) For all these reasons the PFO appeal should be allowed.
The definition
Part 5 of POCA places on the High Court in England and Wales and Northern Ireland and the Court of Session in Scotland the obligation, in prescribed circumstances, to make a civil recovery order in respect of property which is, or represents, property obtained through unlawful conduct.
Section 316(4) has a definition of property (the definition) that applies in Part 5: Property is all property wherever situated and includes (i) money, (ii) all forms of property, real or personal, heritable or moveable, (c) incorporeal property. things in action and other intangible or Mitting J and the Court of Appeal were impressed by the natural meaning of the words wherever situated and concluded that these words should be applied, without restriction, to property in respect of which a recovery order could be made.
Thus a recovery order could be made in respect of any form of property, whether real, personal or a chose in action, and wherever in the world that property was situated.
The words wherever situated do not describe the type of property to which Part 5 applies.
Rather they indicate the location of the property to which the provisions of Part 5 can apply.
The definition is repeated no less than eight times in POCA sections 84(1), 150(1), 232(1), 316(4), 326(9), 340(9), 414(1) and 447(4).
POCA is peppered with references to property.
All fall within the definition.
But the definition cannot be applied so as to add to the words property, wherever it appears, the words wherever situated.
As I shall demonstrate, most of the provisions of POCA apply only to property within England and Wales, Scotland or Northern Ireland.
By way simply of example, I can refer to section 45(1) which confers on a constable the power to seize property to prevent its removal from England and Wales.
Some provisions refer, however, to property worldwide.
Whether or not the location of property to which a provision of POCA refers is subject to a territorial restriction depends upon the context.
I so held, when giving the only reasoned speech, in King v Director of the Serious Fraud Office [2008] UKHL 17; [2009] 1 WLR 718, para 37.
For these reasons I do not attach to the words in the definition wherever situated the weight that they have carried with the courts below.
In order to decide on the scope of the application of Part 5 of POCA it is necessary to consider both the structure and the language of the Act having regard to relevant principles of international law.
The presumption against extraterritoriality and the Strasbourg Convention
Mr Jones QC for the appellants submitted that it was a breach of international law for a United Kingdom statute even to purport to vest in a United Kingdom authority property situated in the territory of another state.
Mitting J began his judgment by reference to the presumption of statutory interpretation that a statute will not have extraterritorial effect and to the statement of Lord Hoffmann in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para 54: it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries.
Hooper LJ himself cited the statement of Lord Diplock in R v Cuthbertson [1981] AC 470, 485: Under English rules of conflict of laws it is in my view well established that an English court has no jurisdiction either in a criminal or a civil matter to make orders purporting ipso jure to transfer moveable property situate abroad.
Confiscation of the proceeds of crime is, however, an activity in respect of which States have departed from these principles.
Of particular relevance is the Strasbourg Convention, to which the United Kingdom is a party.
The question of whether the exorbitant effect of Part 5 of POCA for which SOCA contends would involve a breach of international law must be considered in the light of the Strasbourg Convention.
Hooper LJ set out relevant provisions of the Strasbourg Convention in some detail and I must do the same.
The Strasbourg Convention
Chapter I contains definitions which include: (b) property includes property of any description, whether corporeal or incorporeal, movable or immovable, and legal documents or instruments evidencing title to, or interest in such property; (c) instrumentalities means any property used or intended to be used, in any manner, wholly or in part, to commit a criminal offence or criminal offences; (d) confiscation means a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property;
Chapter II deals with measures to be taken at national level to identify and trace properties subject to confiscation.
Chapter III deals with international co operation.
Section 1 sets out the relevant principles.
Article 7 lays down general principles and measures for international co operation.
It provides: 1.
The Parties shall co operate with each other to the widest extent possible for the purposes of investigations and proceedings aiming at the confiscation of instrumentalities and proceeds. 2.
Each Party shall adopt such legislative or other measures as may be necessary to enable it to comply, under the conditions provided for in this chapter, with requests: a. for confiscation of specific items of property representing proceeds or instrumentalities, as well as for confiscation of proceeds consisting in a requirement to pay a sum of money corresponding to the value of proceeds; b. for investigative assistance and provisional measures with a view to either form of confiscation referred to under a. above.
The Explanatory Report submitted to the Committee of Ministers of the Council of Europe by the committee of experts who drew up the Convention, illuminates article 7: 10.
Where the law enforcement agencies and judicial authorities have gathered information through investigations, there should also be efficient means available to ensure that the offender does not remove the instruments and proceeds of his criminal activities.
Freezing of bank accounts, seizure of property or other measures of conservancy need to be taken to ensure this.
Section 3 of Chapter III provides for international co operation in respect of provisional measures.
In order to secure the confiscation of the instruments and proceeds from crime, the Convention provides in section 4 of Chapter III principally two forms of international co operation, namely the execution by the requested State of a confiscation order made abroad and, secondly, the institution, under its own law, of national proceedings leading to a confiscation by the requested State at the request of another State.
In respect of the first alternative, the Convention follows the pattern of the European Convention on the International Validity of Criminal Judgments.
The second method of international co operation could be compared to the one which is provided for in the European Convention on the Transfer of Proceedings in Criminal Matters.
Section 2 deals with mutual assistance in identifying and tracing property liable to confiscation and requires a party to comply with a request for assistance from another party to the extent compatible with the law of the former.
Section 3 deals with provisional measures.
Where a party has instituted criminal proceedings or proceedings for the purpose of confiscation and so requests, another party must take provisional measures such as freezing or seizing to secure property which may become subject to confiscation, in so far as permitted by its domestic legislation.
The same applies where a party receives a request for confiscation.
Section 4 deals with confiscation.
It provides: Article 13 Obligation to confiscate 1.
A Party, which has received a request made by another Party for confiscation concerning instrumentalities or proceeds, situated in its territory, shall: a. enforce a confiscation order made by a court of a requesting Party in relation to such instrumentalities or proceeds; or b. submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such order is granted, enforce it. 2.
For the purposes of applying paragraph 1.b of this article, any Party shall whenever necessary have competence to institute confiscation proceedings under its own law. 3.
The provisions of paragraph 1 of this article shall also apply to confiscation consisting in a requirement to pay a sum of money corresponding to the value of proceeds, if property on which the confiscation can be enforced is located in the requested Party.
In such cases, when enforcing confiscation pursuant to paragraph 1, the requested Party shall, if payment is not obtained, realise the claim on any property available for that purpose. 4.
If a request for confiscation concerns a specific item of property, the Parties may agree that the requested Party may enforce the confiscation in the form of a requirement to pay a sum of money corresponding to the value of the property.
Article 14 Execution of confiscation 1.
The procedures for obtaining and enforcing the confiscation under article 13 shall be governed by the law of the requested Party. 2.
The requested Party shall be bound by the findings as to the facts in so far as they are stated in a conviction or judicial decision of the requesting Party or in so far as such conviction or judicial decision is implicitly based on them. 3.
Each Party may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, by a declaration addressed to the Secretary General of the Council of Europe, declare that paragraph 2 of this article applies only subject to its constitutional principles and the basic concepts of its legal system.
There was an issue in the Court of Appeal as to whether the Strasbourg Convention applied to Part 5 proceedings.
Hooper LJ held at para 72 that it did.
I agree with him.
The Explanatory Report makes the following comment at para 15: The experts were also able to identify considerable differences in respect of the procedural organisation of the taking of decisions to confiscate (decisions taken by criminal courts, administrative courts, separate judicial authorities, in civil or criminal proceedings totally separate from those in which the guilt of the offender is determined (these proceedings are referred to in the text of the Convention as proceedings for the purpose of confiscation and in the explanatory report sometimes as in rem proceedings), etc).
It was also possible to distinguish differences in respect of the procedural framework of such decisions (presumptions of licitly/illicitly acquired property, time limits, etc).
The experts agreed that it would be impossible to devise an efficient instrument of international co operation without taking into account these basic differences in national legislation.
On the other hand, effective co operation must recognise that the systems may not be alike but that they aim to achieve the same goals.
This is why the committee agreed to put the two systems (value and property confiscation) of confiscation on an equal footing and to make the text unambiguous on this point.
The Explanatory Report adds at para 43 in relation to article 13: Any type of proceedings, independently of their relationship with criminal proceedings and of applicable procedural rules, might qualify in so far as they may result in a confiscation order, provided that they are carried out by judicial authorities and that they are criminal in nature, that is, that they concern instrumentalities or proceeds.
Such types of proceedings (which include, for instance, the so called in rem proceedings) are, as indicated under General considerations above, referred to in the text of the Convention as proceedings for the purpose of confiscation.
The Explanatory Report adds this further comment at para 48: [According to para 3 of article 13], parties must, for purposes of international co operation in the confiscation of proceeds, be able to apply both the system of property confiscation and the system of value confiscation.
This is made clear by article 7, paragraph 2.a.
It may imply that Parties which have only a system of property confiscation in domestic cases have to introduce legislation providing for a system of value confiscation of proceeds, including the taking of provisional measures on any realisable property, in order to be able to comply with requests to that effect from value confiscation countries.
On the other hand, Parties which have only a system of value confiscation of proceeds in domestic cases must introduce legislation providing for a system of property confiscation of proceeds in order to be able to comply with requests to that effect from property confiscation countries.
Confiscation under the Strasbourg Convention has to be ordered by a court following proceedings in relation to a criminal offence or criminal offences see article 1(d).
Thus it would seem that the Convention applies to (i) a confiscation order in rem made by party A after conviction of a defendant within its territory in respect of property owned by the defendant situated within the territory of party B; (ii) a confiscation order in rem made by party A in respect of property situated within its territory after conviction of the owner of that property in the territory of party B. One thing is plain beyond doubt.
The Strasbourg Convention envisages the courts in one state making an order confiscating property situated in another state.
There would thus appear to be established, in respect of the proceeds of crime, an exception to the principle stated by Lord Diplock in Cuthbertson to which I have referred at para 17 above.
I believe, however, that the exorbitant in rem confiscation order that the Strasbourg Convention envisages is one where the jurisdiction to make the order is an in personam jurisdiction founded on the conviction of the owner of the property by the court of the state making the order.
The much wider exorbitant jurisdiction that SOCA contends is conferred by Part 5 is, so far as I am aware, without precedent anywhere in the world.
I can summarise the position as follows.
The Strasbourg Convention envisages two types of confiscation proceedings: (i) value confiscation and (ii) confiscation of specific property.
It requires parties to give effect, by proceedings within their own jurisdictions and in accordance with their own laws, to requests for assistance in respect of both types of confiscation proceedings that are taking place or have taken place in the jurisdictions of other parties.
The scheme of confiscation under POCA
Confiscation
Parts 2, 3 and 4 of POCA make provision for value confiscation by the criminal court, by means of what is described as a confiscation order.
Confiscation is a misnomer.
The scheme of these Parts involves the imposition of the obligation to make a money payment, which is enforced in the same way as a fine, on a person who has been convicted in the relevant jurisdiction.
Thus the order is in personam and it is made as part of the criminal process.
The amount of the confiscation order is the amount of benefit that the defendant has obtained from his criminal conduct, calculated in accordance with complex provisions of POCA and subject to an upper limit, which is the amount of the defendants available assets.
The provisions in Part 2 relate to England and Wales.
Similar provision in relation to Scotland are set out in Part 3 and in relation to Northern Ireland in Part 4.
I shall describe the effect of the provisions in Part 2.
The confiscation order is made by the Crown Court after a defendant has been convicted by the court or committed to the court for sentencing or for the imposition of a confiscation order.
Thus the order is in personam on a defendant who is within the jurisdiction of the Crown Court.
To calculate the amount of the confiscation order, the court must (i) identify the property that the defendant initially obtained as a result of or in connection with his criminal conduct and value this; (ii) decide whether the defendant still holds that property, or property that represents it and value this; and (iii) identify all the realisable property that the defendant owns and value this.
The confiscation order is made in the higher of the values arrived at under process (i) and process (ii) subject to an upper limit in the amount of the value arrived at under process (iii).
Where POCA speaks of property in the context of these processes, the property is worldwide.
It matters not where in the world the defendant obtained property through his criminal conduct or where in the world he owns property when his realisable assets fall to be assessed.
Thus where property is referred to in sections 76 to 83, which deal with these matters, the property referred to is property wherever situated in the world.
Many of the provisions in Parts 2, 3 and 4 are concerned with identifying and securing property in each of the three jurisdictions, either in anticipation of the possibility of the making of a confiscation order or by way of enforcing a confiscation order.
The relevant powers are conferred on the Crown Court in England and Wales and in Northern Ireland and on the Court of Session or the sheriff in Scotland.
The provisions of the three Parts begin to apply as soon as a criminal investigation has been started in circumstances where there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct.
Although the terminology and the precise nature of the measures that can be ordered by the court differ in the case of Scotland from those in the other two jurisdictions, their effect is in substance the same.
I shall refer to some of the more material provisions that relate to England and Wales.
Section 41 permits the Crown Court to make a restraint order prohibiting any specified person from dealing with any realisable property held by him.
The property need not be described in the order.
Section 45 permits a constable, inter alios, to seize realisable property to which a restraint order relates to prevent it being taken out of England and Wales.
Section 48 permits the Crown Court to appoint a receiver, described as a management receiver in respect of realisable property to which the restraint order applies.
Section 50 permits the Crown Court to appoint a receiver, described as an enforcement receiver in relation to realisable property for the purpose of the enforcement of a confiscation order that has been made.
While the restraint order takes effect in personam and is of worldwide effect, the provisions that relate to securing and realising property apply to such activities within England and Wales, for each of Parts 2, 3 and 4 deals with activities in the jurisdiction to which it relates.
This is made plain by section 443 which provides, inter alia, for the making of Orders in Council (i) for an order made under Part 2 to be enforced in Scotland or Northern Ireland, for an order made under Part 3 to be enforced in England and Wales or Northern Ireland and for an order made under Part 4 to be enforced in England and Wales or Scotland; (ii) for a function of a receiver appointed pursuant to Part 2 to be exercisable in Scotland or Northern Ireland, for a function of an administrator appointed pursuant to Part 3 to be exercisable in England and Wales or Northern Ireland and for a function of a receiver appointed pursuant to Part 4 to be exercisable in England and Wales or Scotland.
These provisions would seem to indicate, a fortiori, that the powers or functions conferred by Parts 2, 3 or 4 cannot be exercised outside the United Kingdom.
Orders in Council pursuant to the above provisions have been made.
The effect of these provisions is as I have summarised them at para 12(vii) above.
Value confiscation is ordered in personam having regard to property worldwide, but no power is granted to authorities within the United Kingdom to secure or realise property that is situated outside the jurisdiction.
This situation is dealt with by section 74.
Section 74 relates to confiscation under Part 2 (sections 141 and 222 are analogous provisions in Parts 3 and 4).
Section 74 deals with securing property abroad in anticipation of making a confiscation order and realising property in satisfaction of a confiscation order that has been made.
It provides: Enforcement abroad (1) This section applies if (a) any of the conditions in section 40 is satisfied, (b) the prosecutor believes that realisable property is situated in a country or territory outside the United Kingdom (the receiving country), and (c) the prosecutor sends a request for assistance to the Secretary of State with a view to it being forwarded under this section. (2) In a case where no confiscation order has been made, a request for assistance is a request to the government of the receiving country to secure that any person is prohibited from dealing with realisable property. (3) In a case where a confiscation order has been made and has not been satisfied, discharged or quashed, a request for assistance is a request to the government of the receiving country to secure that (a) any person is prohibited from dealing with realisable property; (b) realisable property is realised and the proceeds are applied in accordance with the law of the receiving country. (4) No request for assistance may be made for the purposes of this section in a case where a confiscation order has been made and has been satisfied, discharged or quashed. (5) If the Secretary of State believes it is appropriate to do so he may forward the request for assistance to the government of the receiving country. (6) If property is realised in pursuance of a request under subsection (3) the amount ordered to be paid under the confiscation order must be taken to be reduced by an amount equal to the proceeds of realisation.
These provisions are in accord with the scheme of the Strasbourg Convention.
Civil Recovery
As section 240, which introduces Part 5, explains, the purpose of that Part is to enable recovery in civil proceedings before the High Court or Court of Session of property which is, or represents, property obtained through unlawful conduct.
Parts 2, 3 and 4 impose personal liability on defendants convicted of criminal conduct in each of the three jurisdictions.
Part 5 is of very different effect.
The focus is not on a particular defendant but upon property that is the product of criminal conduct, wherever in the world this is committed, as section 241 makes plain.
It is not necessary that the person who holds or owns the property should be the person guilty of the criminal conduct.
The claim form in the relevant proceedings has to be served on the holder of the property, wherever that person is domiciled, resident or present: see sections 243 and 244.
Sections 245A to 255 provide for the measures that a court in England and Wales or Northern Ireland can take to preserve property in respect of which a recovery order may be sought.
Sections 255A to 265 make similar provisions in respect of Scotland.
Section 245A provides for a property freezing order.
As this is the order under attack in this appeal I shall set out the material part of its provisions in full: (1) Where the enforcement authority may take proceedings for a recovery order in the High Court, the authority may apply to the court for a property freezing order (whether before or after starting the proceedings). (2) A property freezing order is an order that (a) specifies or describes the property to which it applies, and (b) subject to any exclusions (see section 245C(1)(b) and (2)), prohibits any person to whose property the order applies from in any way dealing with the property. (3) An application for a property freezing order may be made without notice if the circumstances are such that notice of the application would prejudice any right of the enforcement authority to obtain a recovery order in respect of any property. (4) The court may make a property freezing order on an application if it is satisfied that the condition in subsection (5) is met and, where applicable, that the condition in subsection (6) is met. (5) The first condition is that there is a good arguable case (a) that the property to which the application for the order relates is or includes recoverable property .
Sections 245E to 245G make provision for the appointment by the High Court of a receiver in respect of property to which a property freezing order relates.
Sections 246 to 247 make similar provision in relation to property that is not subject to such an order.
In each case the order may require any person to whose property the order applies to bring the property to a place (in England and Wales or, as the case may be, Northern Ireland) specified by the receiver or to place it in the custody of the receiver (if, in either case, he is able to do so).
Section 255A provides (1) Where the enforcement authority may take proceedings for a recovery order in the Court of Session, the authority may apply to
the court for a prohibitory property order
Section 266 sets out the circumstances in which the court must make a recovery order: (1) If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order. (2) The recovery order must vest the recoverable property in the trustee for civil recovery. (3) But the court may not make in a recovery order (a) any provision in respect of any recoverable property if each of the conditions in subsection (4) or (as the case may be) (5) is met and it would not be just and equitable to do so, or (b) any provision which is incompatible with any of the Convention rights (within the meaning of the Human Rights Act 1998 (c 42)). (4) In relation to a court in England and Wales or Northern Ireland, the conditions referred to in subsection (3)(a) are that (a) the respondent obtained the recoverable property in good faith, (b) he took steps after obtaining the property which he would not have taken if he had not obtained it or he took steps before obtaining the property which he would not have taken if he had not believed he was going to obtain it, (c) when he took the steps, he had no notice that the property was recoverable, (d) if a recovery order were made in respect of the property, it would, by reason of the steps, be detrimental to him.
The provisions in (4) are repeated virtually verbatim in (5) in relation to a court in Scotland.
The very fact that separate provision is made for making property recovery orders in England and Wales, Scotland and Northern Ireland indicates that these, and the ancillary steps in relation to securing and realising property, were, at least primarily, designed to apply to property within one of the three jurisdictions of the United Kingdom.
Some of the provisions plainly relate exclusively to property within the United Kingdom, such as those in section 248, which deal with registration of property freezing orders and interim receiving orders in relation to land.
The question raised by the PFO appeal is whether the totality of Part 5 relates exclusively to property within the United Kingdom.
Provisions of Part 5 that relate to the recovery order itself
Mr Jones drew attention to a number of provisions in relation to the recovery order itself, which he submitted could only apply in respect of property within the three jurisdictions of the United Kingdom.
He relied upon the absence of any similar provisions that would apply in relation to property situated outside the United Kingdom as indicating that Part 5 did not apply to property outside the United Kingdom.
Mr Eadie QC on behalf of SOCA did not accept that the provisions in question carried that significance.
I shall refer to two exceptions.
Section 269(1) provides that a recovery order is to have effect in relation to any property despite any provision (of whatever nature) which would otherwise prevent, penalise or restrict the vesting of the property.
Section 269(2) then specifies a number of rights that are to be overridden by a recovery order.
These include a right of return or other similar right, a right of return being defined as any right under a provision for the return or reversion of property in specified circumstances.
Mr Eadie submitted that these provisions applied implicitly only to property within the jurisdiction.
Mr Jones agreed with this submission, and argued that this was a further indication that recovery orders could only be made in respect of property within the jurisdiction.
Hooper LJ dealt with section 269 in a different way.
He held at para 155 that section 269(1) should be interpreted as applying only to provisions of English law as it could never have been intended to apply to provisions of the law of a foreign country in relation to property situated in that country.
Mr Jones accepted the last part of this proposition, but on the basis that Part 5 as a whole did not apply to property situated in a foreign country.
He did not, however, accept that section 269(1) only applied to provisions of English law.
He pointed out that under the English rules of conflict of laws foreign law is sometimes determinative of title to property situated in this country.
On the premise that Part 5 applies only to property within this jurisdiction there is no basis for restricting the ambit of section 269(1) to rules of English law.
I found Mr Jones submissions compelling.
Section 269 makes sense if Part 5 is concerned only with property within the United Kingdom.
It does not make sense if the property is worldwide.
Section 269 deals with provisions that are overridden by a recovery order.
Sections 281 and 282 deal with exemptions from the effect of a recovery order.
The first of these, under section 281, arises where the victim of the offence to which the recovery order relates demonstrates to the court that the property belongs to him.
The implications of this I shall consider when I come, at paras 65 and 66, to deal with the coherence of the scheme laid down by POCA.
Section 282 sets out a number of other exemptions, including property held by the Financial Services Authority, property held by a person in his capacity as an insolvency practitioner and property subject to any of a number of charges under United Kingdom statutes.
Mr Jones submitted that if property subject to a recovery order were worldwide property, there would have to be equivalent provisions, even if only in general terms, to acknowledge exceptions that would be required in order to accommodate the laws of the countries in which the property was situated.
Mr Eadies answer to this was that this was unnecessary as those laws would apply to defeat any claim based on the recovery order in any event.
This is a fair response to Mr Jones point.
None the less, these domestic provisions in relation to the reach of a recovery order add force to the submission that Part 5 is concerned only with property within the United Kingdom.
In summary, apart from the definition of property in section 316(4), and the enigmatic section 286, there is nothing in Part 5, from first to last, that suggests that its application extends to property outside England and Wales, Scotland and Northern Ireland.
Many of its provisions clearly relate to property within those jurisdictions.
What then of the definition? If a recovery order can only be made in respect of property within England and Wales, Scotland and Northern Ireland, can the words in the definition wherever situated, which appear in the definition of property in Part 5, have any application in Part 5 at all?
The answer to that question is that there are places in Part 5 where property means property wherever situated, even if a recovery order can only be made in respect of property within the United Kingdom.
Section 240 provides in relation to Part 5: (1) This Part has effect for the purposes of (a) enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property obtained through unlawful conduct, Even if property when first used means property within the United Kingdom Courts, the second time that the word is used it unquestionably means property wherever situated.
Property within the United Kingdom that represents property obtained by criminal conduct, wherever the property was when obtained, is on any view, covered by Part 5.
The same point can be made in relation to property in section 242, which deals with the initial obtaining of property through unlawful conduct, and to the original property in section 305, which deals with tracing property that represents the original property.
Thus it is not right to postulate that the words wherever situated in the definition of property in section 316 make no sense if Part 5 does not permit the making of a recovery order in respect of property abroad.
For these reasons, giving the words of Part 5 their natural meaning, and ignoring section 286, I would conclude that the provisions that they make in relation to an order for civil recovery apply only within the United Kingdom.
Thus far I have been considering the provisions that appear in Part 5.
Of perhaps greater significance are the provisions that do not appear in that Part.
There are no provisions in relation to enforcement abroad to mirror those that appear at sections 74, 141 and 222 in relation to Parts 2, 3 and 4.
Mr Jones submitted to the Court of Appeal that this indicated that Parliament did not intend that civil recovery orders could be made in respect of property situated abroad.
Hooper LJ dismissed this submission out of hand at para 113 of his judgment.
He held that, having taken the view that the Strasbourg Convention applied to enforcement orders made in civil proceedings, SOCA was entitled to seek to enforce both interim and final Part 5 orders abroad in those countries in which the Convention was in force or in which provisions similar to the Convention had been implemented.
I find Hooper LJs conclusions surprising.
They are at odds with the scheme of the Strasbourg Convention: see para 30 above.
I do not understand how SOCA could seek to enforce abroad interim or final orders under Part 5.
Part 5 makes no provisions for SOCA to take steps to secure property or enforce confiscation abroad.
The relevant provisions in Part 5 in relation to securing property apply within the United Kingdom: see para 44 above.
Realisation of confiscated property is exclusively a matter for the trustee for civil recovery in whom property vests under a recovery order.
The suggestion that he would be able to recover property situated abroad is unrealistic: see para 71 below.
Had Parliament, or those responsible for drafting POCA, intended Part 5 confiscation to extend to property outside the United Kingdom they would surely have included provisions parallel to section 74.
The fact that they did not do so strongly suggests that there was no intention that Part 5 should have extraterritorial effect.
Reciprocity
I now turn to demonstrate that provisions for giving effect to requests for assistance from other states accord with an interpretation of Part 5 that restricts its application to property within the United Kingdom.
One obvious explanation for the provisions of Part 5 is that they were intended to comply with the obligations of the United Kingdom in respect of incoming requests under the Strasbourg Convention, and to afford similar assistance to states not party to that convention.
Section 444(1) provides for the making of an Order in Council to make provision for a prohibition on dealing with property which is the subject of an external request and for the realisation of property for the purpose of giving effect to an external order.
Section 444(2) provides that such an Order may include provision which (subject to any specified modification) corresponds to any provision of Part 2, 3, 4 or 5, excluding Chapter 3, which deals with cash seizure.
Section 447 defines an external request and an external order as follows: (1) An external request is a request by an overseas authority to prohibit dealing with relevant property which is identified in the request. (2) An external order is an order which (a) is made by an overseas court where property is found or believed to have been obtained as a result of or in connection with criminal conduct, and (b) is for the recovery of specified property or a specified sum of money.
Thus, where a foreign court makes a finding that property has been, or is believed to have been, obtained as a result of or in connection with criminal conduct and orders the recovery of specified property or a specified sum of money, section 444 provides for an Order in Council that permits realisation of property to give effect to the order of the foreign court.
Section 444 addresses both forms of confiscation order referred to in the Explanatory Report to the Strasbourg Convention: see para 28 above.
Section 444 does not provide in terms that the property to be realised should be within the United Kingdom.
The power conferred by section 444 was exercised by the making of the Order.
The Order enables the powers conferred by Parts 2, 3, 4 and 5 of POCA to be exercised for the purpose of giving effect to external requests and external orders, so that the provisions of the Order mirror the provisions of POCA.
Part 2 of the Order provides for the Secretary of State to refer an external request in connection with criminal investigation or proceedings, or an external order arising from a criminal conviction, to, among others in England and Wales, the Director of Public Prosecutions.
He will then apply to the Crown Court for the exercise of the powers conferred by Part 2.
Parts 3 and 4 of the Order make equivalent provisions in respect of Scotland and Northern Ireland.
Parts 2, 3 and 4 provide for measures to secure and realise relevant property.
Section 447(7) of POCA states that property is relevant property if there are reasonable grounds to believe that it may be needed to satisfy an external order which has been or may be made.
Part 2 of the Order is headed Giving Effect in England and Wales to External Requests in Connection with Criminal Investigations or Proceedings and to External Orders Arising from Such Proceedings.
Parts 3 and 4 have equivalent headings.
Parts 2, 3 and 4 of the Order expressly provide that the external request or order must relate to property in, respectively, England and Wales, Scotland and Northern Ireland.
In King v Director of the Serious Fraud Office [2009] UKHL 17; [2009] 1 WLR 718 the House of Lords held that the provisions of Part 2 of the Order only permitted a restraint order to be made in respect of property within England and Wales and that the same territorial restriction applied in respect of seizure and enforcement provisions.
Why do Parts 2, 3 and 4 of the Order expressly limit the assistance that can be sought by the foreign state to assistance in respect of property within England and Wales, Scotland and Northern Ireland? The answer must be that which I gave in King v Director of the Serious Fraud Office at para 31: If a country wishes assistance from other countries in preserving or recovering property that is related to criminal activity, it makes sense for its request to each of those other countries to be restricted to the provision of assistance in relation to property located within its own jurisdiction.
If each country were requested to take steps to procure the preservation or recovery of property on a worldwide basis, this would lead to a confusing, and possibly conflicting, overlap of international requests for assistance.
Not only would such multiplication of activity be confusing, it would involve significant and unnecessary multiplication of effort and expense.
This reasoning underlies the scheme for assistance laid down in the Strasbourg Convention.
Part 5 of the Order provides for the Secretary of State to forward an external order to the enforcement authority in the United Kingdom for the purpose of enabling the enforcement authority to realise recoverable property in civil proceedings for the purpose of giving effect to the external order.
The procedure for a civil recovery order in response to the external order is thus put in train.
Part 5 of the Order is headed: Giving Effect in the United Kingdom to External Orders by Means of Civil Recovery (my emphasis).
In contrast to Parts 2, 3 and 4, however, the body of Part 5 contains no express territorial limitation in relation to the property to which the Order relates.
There would seem to be two possible explanations for this.
One is that SOCA is correct in contending that Part 5 of POCA has extraterritorial effect and Part 5 of the Order is similarly intended to apply without territorial limitation.
The other is that Part 5 of POCA applies only to property within the United Kingdom, so that there was no need to insert a territorial restriction in Part 5 of the Order.
I believe that the latter is the correct explanation.
In the first place that accords with the heading of Part 5 of the Order.
In the second place, if Part 5 of POCA had extraterritorial effect, there would seem no reason to restrict Parts 2, 3 and 4 of the Order to property within the United Kingdom but to impose no such restriction in relation to Part 5.
In summary, the terms of the Order accord with an interpretation of POCA that restricts the making of recovery orders under Part 5 to property that is situated within the United Kingdom.
A coherent scheme that accords with international law
The provisions of Part 5 of POCA comply with the requirements of reciprocity contained in the Strasbourg Convention.
If a foreign court makes an order by way of value confiscation, the property of the defendant in England and Wales, Scotland or Northern Ireland can be seized and realised in satisfaction, or part satisfaction, of the order.
If, after conviction, a foreign court makes an order for the confiscation of specific proceeds of crime which are in one of the three United Kingdom jurisdictions, they can be seized and realised.
However Part 5 of POCA goes further than is necessary to meet the requirements of the Strasbourg Convention.
Section 241 requires the court or sheriff to decide on a balance of probabilities whether the property is or represents property obtained through unlawful conduct, irrespective of whether such conduct occurred in the United Kingdom or abroad.
If it is, or does, the Court must, subject to the provisions of Part 5, make a recovery order in respect of the property, whether or not any proceedings have been brought for an offence in connection with the property: see section 240(2).
The claim form has to be served on the person holding the property and on any person holding associated property which the authority wishes to be subject to a recovery order, wherever domiciled, resident or present (section 243(2)).
Part 5 makes complex provision for the protection of the rights of holders of associated property and of third parties who claim ownership of property that is subject to Part 5 proceedings.
Those provisions require those persons to make their claims before the court in England and Wales, Scotland or Northern Ireland seised of the Part 5 proceedings.
If the jurisdiction described above is founded on the presence of the property in question within the jurisdiction of the Court making the order, the action permitted by Part 5 is neither unreasonable nor contrary to international law.
It is perfectly understandable that Parliament should wish to make provision for the confiscation of proceeds of crime held in the United Kingdom by someone outside the jurisdiction and proper that anyone holding that property, or associated property, should be served with the claim to confiscate it and that anyone claiming ownership of it or an interest in it should be expected to assert that claim before the court conducting the confiscation proceedings.
Part 5 proceedings brought in respect of property held within the jurisdiction are also likely to be effective, thanks to the provisions in Part 5 for securing and realising the property in question.
Thus the scheme of Part 5 is simple and rational.
If property is identified in England and Wales, Scotland or Northern Ireland that is believed to be or to represent the proceeds of a crime committed outside the United Kingdom, recovery proceedings can be begun in the jurisdiction concerned.
Steps can be taken to secure the property in question and subsequently to realise it within the jurisdiction in question.
The proceeds of realisation of the property will be available to defray the cost of the proceedings.
The holder of the property, and any holder of associated property or person claiming to own the property can reasonably be expected to take part in the proceedings to assert his right or otherwise to challenge the making of the recovery order.
The picture is very different if SOCAs submissions as to the scope of Part 5 proceedings are correct.
Part 5 proceedings in respect of property outside the jurisdiction would involve the assertion of an exorbitant jurisdiction in personam without any basis in international law.
They would also be likely to prove ineffective.
At para 14 of his judgment Hooper LJ cited the following description by the appellants of the effect of SOCAs submissions: Parliament has conferred authority on the enforcement authorities to bring proceedings to vest in a trustee for civil recovery property situated abroad which derives entirely from unlawful conduct abroad where neither the holder of the property, nor any intermediate holders of the property, or property from which the holder's property is derived, have ever been domiciled, resident or present within the jurisdiction; in other words, where there is no connection with the jurisdiction whatsoever.
Hooper LJ accepted that this result was startling.
He was right to do so.
Asserting in personam jurisdiction over the holder of such property, or of associated property, has, as I have said, no precedent in international law.
It would not be reasonable to expect the holder of the property, or any person holding associated property or claiming to own the property, to submit to the jurisdiction of a United Kingdom court when neither they nor the property had any connection with that jurisdiction.
Any order made would be likely to be made unopposed.
In these circumstances the exorbitant confiscation proceedings that had resulted in an unopposed recovery order would be unlikely to bear fruit.
Hooper LJ stated on a number of occasions that the recovery order would operate in personam so as to give the trustee for civil recovery a right against the holder of the property.
Such a right would, however, be likely to be nugatory, for there would be no basis upon which the trustee for civil recovery could found jurisdiction in the United Kingdom over the holder of the property or any associated property so long as they remained outside the jurisdiction.
The fact that they had been served in the Part 5 proceedings would not confer jurisdiction in relation to a claim by the trustee.
It was common ground that if in such circumstances the trustee sought to bring a civil claim in respect of the property in the state where it was located, his title would not be likely to be recognised.
Hooper LJ advanced the following practical justification for according Part 5 extraterritorial effect.
He held, at para 15, that if the appellants were correct: a court in this jurisdiction would be unable to make a civil recovery order in respect of land or other property in Spain bought with the proceeds of crimes committed here by a person resident here.
Unable to obtain a civil recovery order, the enforcement authority could not take any steps here to require the person to hand over the property in Spain.
Nor (so it appears) could the United Kingdom take enforcement action in Spain pursuant to [the Strasbourg Convention] (to which I return below) because there would be no order of the court to enforce: see paragraph 81 below.
This reasoning is not compelling.
The appropriate course in the circumstances envisaged by Hooper LJ would be to obtain a confiscation order under Part 2, 3 or 4 and to make a request for assistance via the Secretary of State in accordance with section 74.
I can see no compelling reason why Parliament should have wished to confer on SOCA a right to seek a civil recovery order in respect of the proceeds of a crime that was not committed within the United Kingdom where those proceeds are not within the United Kingdom.
There will, of course, be the possibility that SOCA will become aware of the existence of property in another jurisdiction that it has reason to believe is, or may be, the proceeds of crime.
The natural course in those circumstances will be to pass on such information as it has about the property to the appropriate authorities in the country where the property is situated.
For all these reasons, but for the effect of section 286, I would have reached the firm conclusion that the jurisdiction to make a civil recovery order conferred by Part 5 of POCA applied only in respect of property that is situated in England and Wales, Scotland or Northern Ireland.
What is the effect of section 286?
The enigma
Section 286 provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a persons moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland.
It is implicit in this provision that, if POCA did not include it, the jurisdiction that it confers would not exist.
Thus section 286(2) purports to confer on the Court of Session the jurisdiction to make an order in respect of moveable property outside Scotland provided either that the holder is domiciled, resident or present in Scotland or the unlawful conduct through which the property was obtained took place in Scotland.
The only thing that is agreed about this provision is that it purports to create for Scotland a position that differs from that which the Act provides in relation to the rest of the United Kingdom.
This is puzzling as, when moving the amendment that introduced it in the House of Lords, Lord Goldsmith stated on 25 June 2002 that the intention was to achieve the same effect in all the jurisdictions of the United Kingdom: see Hansard (HL Debates), 25 June 2002, vol 636, col 1291.
Equally puzzling is section 399 in the Explanatory Notes to the Act, the second sentence of which echoes a comment that Lord Goldsmith made on the same occasion: 399.
The section provides that the Court of Session may make an order in respect of a person whether or not he is domiciled, present or resident in the United Kingdom.
No similar provision is required in respect of England, Wales and Northern Ireland, due to the jurisdiction of the civil courts and the general provisions on property in section 316.
In relation to this note Hooper LJ understandably remarked at para 128 that he could not understand the reference to section 316 of the Act as this applied to all three jurisdictions.
No one has been able to proffer a satisfactory explanation for section 286(2).
Part 3 of POCA would be the normal and appropriate route for confiscation in relation to property outside Scotland that was or represented proceeds of unlawful conduct that had taken place in Scotland.
Why, in the case of Scotland, should special provision be made to bring such property within the scope of Part 5? Section 286(2) remains an enigma.
It does not lead me to alter the conclusion that I have expressed in para 74 above, at least in so far as it relates to the position in England and Wales and Northern Ireland.
Conclusion
The High Court of England and Wales has no jurisdiction under Part 5 to make a recovery order in relation to property outside England and Wales.
It follows that the court had no jurisdiction to make the worldwide property freezing order that was made in this case.
The PFO appeal should be allowed and the property freezing order redrawn so that it applies only to property within the jurisdiction of the Court.
It may be necessary for the Court to hear further argument as to how this should be done, for a question remains, that has not yet been addressed, as to whether the form of the order made in this case is appropriate even if its ambit is restricted to property within the jurisdiction.
The foundation of the jurisdiction conferred under Part 5 of POCA is the existence of property believed to be the proceeds of crime.
The existence of such property enables SOCA, as the enforcement authority, to serve a claim form on the holder of the property and on any other person who SOCA thinks holds associated property, even if that person is outside the jurisdiction, if SOCA wishes the property to be the subject of a civil recovery order see section 243.
Section 243(3) requires the property either to be specified or described in the form in general terms.
Section 245A, which I have set out at para 40 above, sets out the requirements of a property freezing order.
Subsection (2)(a) states that a property freezing order is one that specifies or describes the property to which it applies.
The property freezing order obtained in this case set out schedules of property to which the order applied.
But the order was not restricted to specific property.
It provided that the prohibition on disposal of assets applies, but is not limited to, the following categories of assets: (1) all real property, including, but not limited to the properties listed at Schedule 1 to this Order; (2) the balances standing to the credit of any bank and/or building society accounts, including, but not limited to the accounts listed at Schedule 2 to this Order; (3) any Personal Equity Plan (PEP); (4) any endowment policy; (5) any securities, including any debentures or shares in any company (wheresoever incorporated); and (6) any chattels, motor vehicles, or other personal property valued in excess of 2000, including, but not limited to the property listed at Schedule 3 to this Order. wheresoever located (whether within England and Wales or otherwise).
It is questionable whether these general descriptions specify or describe property as required by section 245A.
The property freezing order also required all the PFO appellants, together with the other respondents to the property freezing order, to disclose all their worldwide assets.
It is not clear to me how the court had jurisdiction to make such an order.
Part 8 of POCA expressly deals with disclosure, which is the subject of the DO appeal.
If this Court is invited to make a revised property freezing order in which property is described in terms as general and speculative as have been adopted in this case it will require to be satisfied that they fall within the scope of section 245A.
If the Court is invited to include in the revised freezing order an order for disclosure of assets it will require to be satisfied that it has jurisdiction to do so.
The DO appeal
This appeal challenges the validity of information notices addressed to Mr Perry and his daughters by SOCA pursuant to the disclosure order issued by Judge Kay QC on 8 August 2008: see para 6 above.
The disclosure order was issued under Part 8 of POCA, which deals with Investigations.
Part 8 applies to both confiscation proceedings under Parts 2, 3 and 4 of POCA and civil recovery proceedings under Part 5.
In relation to Part 5 a disclosure order can be made only if property specified in the application for the order is subject to a civil recovery investigation and the order is sought for the purposes of the investigation: see section 357(3)(b).
A civil recovery investigation is defined by section 341(2): For the purposes of this Part a civil recovery investigation is an investigation into (a) whether property is recoverable property or associated property, (b) who holds the property, or (c) its extent or whereabouts.
Section 357 defines a disclosure order as follows: (4) A disclosure order is an order authorising an appropriate officer to give to any person the appropriate officer considers has relevant information notice in writing requiring him to do, with respect to any matter relevant to the investigation for the purposes of which the order is sought, any or all of the following (a) answer questions, either at a time specified in the notice or at once, at a place so specified; (b) provide information specified in the notice, by a time and in a manner so specified; (c) produce documents, or documents of a description, specified in the notice, either at or by a time so specified or at once, and in a manner so specified. (5) Relevant information is information (whether or not contained in a document) which the appropriate officer concerned considers to be relevant to the investigation.
Section 358 sets out the requirements for making a "disclosure order": (1) These are the requirements for the making of a disclosure order. (2) There must be reasonable grounds for suspecting that (b) in the case of a civil recovery investigation, the property specified in the application for the order is recoverable property or associated property. (3) There must be reasonable grounds for believing that information which may be provided in compliance with a requirement imposed under the order is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the order is sought. (4) There must be reasonable grounds for believing that it is in the public interest for the information to be provided, having regard to the benefit likely to accrue to the investigation if the information is obtained.
Section 359(1) provides that a person commits an offence if without reasonable excuse he fails to comply with a requirement imposed on him under a disclosure order.
The offence carries a maximum sentence on summary conviction of imprisonment for six months.
Section 359(3) provides for the more serious offence of knowingly or recklessly making a false statement in purported compliance with a requirement imposed under a disclosure order.
This carries a maximum sentence of two years imprisonment in respect of a conviction after a trial on indictment.
SOCAs application for a disclosure order was supported by a witness statement of Vanessa Ewing, a Financial Investigator on SOCAs staff.
The application notice named as respondents Mr Perry, Mrs Lea Perry, Mrs Greenspoon, Miss Yael Perry and any other individual or entity specifically associated to the named respondents and property identified as relevant to the civil recovery investigation conducted by the Director General.
In para 5.7 Miss Ewing described the property that was subject to the civil recovery investigation as any property held by or on behalf of Perry including, but not limited to, the following: (i) monies which have been credited to or have passed through the following: (a) accounts held by or on behalf of Israel Perry, including accounts held by his wife, Mrs Lea Lili Perry, and/or his two adult daughters, Mrs Tamar Greenspoon and Miss Yael Perry.
In explaining why the order was sought in relation to Mr Perrys wife and
daughters, Miss Ewing explained: I believe that it is common practice for criminals to use the proceeds of crime to acquire property held in the names of other family members or trusted associates.
Persons involved in criminal activity often seek to reduce the amount of money and other property held in their own names in an attempt to minimise their exposure to the risk of confiscation or to avoid paying tax.
It is therefore reasonable for the investigation to include property owned by Mrs Lea Lili Perry, Miss Yael Perry and Mrs Tamar Greenspoon in order to ascertain whether such property has a legitimate origin or whether it represents the proceeds of criminal conduct.
The Order made by Judge Kay was addressed to all those named in the application notice, included, inappropriately, a penal notice, and conferred authority on SOCA in the general terms of section 357(4).
The property referred to by Miss Ewing in her application was described in the most general terms.
The purpose of the application, as explained by her, appears to have been to enable SOCA to carry out a roving commission aimed at identifying any property that might be the proceeds of Mr Perrys criminal conduct.
A number of notices were issued by Miss Ewing pursuant to the disclosure order.
Some sought information of funds in specific accounts.
Some sought information in the following terms: (1) Provide the following information under section 357(4)(b) of the Act: (i) A statement of assets held by, or on behalf of, Israel PERRY in the United Kingdom including Crown Dependencies and British Overseas Territories; (ii) A statement of assets held by, or on behalf of, Israel PERRY in any other country other than the United Kingdom.
The information sought includes, but is not limited to, the following: (a) Any assets held by a legal entity of which Mr PERRY is the beneficiary including worldwide companies, trusts and corporations; (b) Any precious metals and gems held by, or on behalf of, Israel PERRY; (c) Any valuable art, antiques and the like held by, or on behalf of, Israel PERRY; (d) Any loans made by, or on behalf of, Israel PERRY; (e) Any real estate held by, or on behalf of, Israel PERRY; (f) Any vehicles, pleasure craft etc held by, or on behalf of, Israel PERRY; (g) Any stocks, bonds, shares, bearer bonds, negotiable instruments, investment funds etc held by, or on behalf of, Israel PERRY; (h) Any bank accounts, in any currency, held by, or on behalf of, Israel PERRY; The exercise carried out by Miss Ewing seems to go beyond the purpose of a civil recovery investigation as defined in section 341(2).
That investigation, as I understand the relevant provisions, relates to property whose existence has already been identified.
Similar questions arise in relation to the scope of the disclosure order and some of the notices served under it as to those that I have raised in paras 79 to 83 above in relation to the scope of the property freezing order.
Under section 357(4) the authority conferred by a disclosure order is restricted to enquiries with respect to any matter relevant to the investigation for the purposes of which the order is sought.
It is questionable whether this authority extends beyond seeking information about property whose existence has already been identified.
Mr Jones has not, however, sought to challenge the scope of the order or of the notices issued under it.
He has made a more fundamental attack on SOCAs authority to issue the notices.
Those notices were given to persons who were, and were known by SOCA to be, outside the jurisdiction of the United Kingdom.
It was Mr Jones submission, advanced before the Court of Appeal, that the authority given by a disclosure order to give disclosure notices only applies to notices given to persons within the jurisdiction.
In making this submission Mr Jones relied particularly on the presumption that, unless it clearly provides to the contrary, a statute will not have extraterritorial effect.
The majority of the Court of Appeal, Ward and Carnwath LJJ, rejected the appellants attack on the validity of the notices; Richards LJ dissented [2010] EWCA Civ 907; [2011] 1 WLR 542.
The gist of the reasoning of Carnwath LJ appears in the following short passage of his judgment: 50. is there any reason why persons who are reasonably considered to have an interest in property validly subject to a disclosure order, and who have a sufficient presence within the jurisdiction for a notice to be effectively given to them, should be treated as outside the legislative grasp of the statutory scheme? 51.
As a matter of common sense, it is difficult to see why mere presence in or absence from the country at the time of sending or delivery of the notice is the critical factor.
For example, a person normally resident at an address in this country could not sensibly seek to deny that the notice had been given to him at that address, merely because he happened to be out of the country at the time (for example, on a business or holiday trip).
Ward LJ proceeded on the premise that a recovery order could be made in respect of property outside the jurisdiction.
He commented at para 77 that the extraterritorial effect of Part 5 could not be denied and that he could not see why Part 8 should not act in the same way.
For the reasons that I have given I consider that he proceeded on a false premise.
The point is a very short one.
No authority is required under English law for a person to request information from another person anywhere in the world.
But section 357 authorises orders for requests for information with which the recipient is obliged to comply, subject to penal sanction.
Subject to limited exceptions, it is contrary to international law for country A to purport to make criminal conduct in country B committed by persons who are not citizens of country A. Section 357, read with section 359, does not simply make proscribed conduct a criminal offence.
It confers on a United Kingdom public authority the power to impose on persons positive obligations to provide information subject to criminal sanction in the event of non compliance.
To confer such authority in respect of persons outside the jurisdiction would be a particularly startling breach of international law.
For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction.
Mr Jones referred to a number of other provisions of POCA which, so he submitted, indicated that notices under a disclosure order could only be given to persons within the jurisdiction.
He pointed out that Part 8 applies to confiscation as well as to civil recovery.
Section 376 as originally drafted included provision for the issue by the judge of a letter of request for the purpose of obtaining information relevant to a confiscation order.
He submitted that this provision would have been superfluous if the authority conferred by section 357 extended to persons beyond the United Kingdom.
Part 8 gives other investigatory powers, including the power to make a production order in relation to specified material, the power to issue search and seizure warrants and the power to make a customer information order.
Mr Jones submitted that the provisions conferring these powers, either as a matter of language or because of the presumption against extraterritoriality, could only be exercised within the United Kingdom.
These submissions have some merit and reinforce my view of the limited ambit of section 357.
For these reasons I would also allow the DO appeal.
I agree with Mr Jones suggestion that the appropriate relief is a declaration that the Disclosure Order made by Judge Kay does not authorise sending information notices to persons who are outside the United Kingdom.
LORD REED
I agree with Lord Phillips, for all the reasons that he gives, that these appeals must be allowed.
In relation to the appeal concerning the property freezing order, however, I wish to consider further section 286 of POCA, in view of the extent to which the submissions of the parties, and the division of opinion in the court, have focused upon that provision.
In expressing views about it, I am conscious that the provision is concerned with the jurisdiction of the Court of Session, that these are not Scottish appeals, and that this court has not had the benefit of consideration of the provision by the Scottish courts.
In those circumstances, it would be undesirable to express any definite view about the effect of section 286 unless it is necessary to do so in order to determine the present appeal; and, in my view, it is not.
Nevertheless, since the provision appears in a United Kingdom statute which must be read and understood as a whole, it is potentially relevant to the construction of the provisions with which the appeal is directly concerned.
It was also the subject of much of the argument in the present appeal.
Some consideration of its effect is therefore unavoidable.
In recognition of that, both parties adduced expert evidence from Scottish counsel before the Court of Appeal.
This court, on the other hand, as the final court of appeal in civil matters from all parts of the United Kingdom, has judicial knowledge of Scots, English and Northern Irish law, and may take cognisance of the law of one jurisdiction in an appeal originating in another (Elliot v Joicey [1935] AC 209; 1935 SC (HL) 57; Bank of East Asia Ltd v Scottish Enterprise 1997 SLT 1213).
Both the appellants and the respondent were therefore represented by Scottish as well as English counsel.
The international background
In order to understand the relevant provisions of POCA, including section 286, it is necessary to begin by considering an important aspect of the background to the legislation.
As Lord Phillips has explained, POCA is intended to fulfil certain international obligations of the United Kingdom.
These include, in particular, the obligations arising under the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna, 20 December 1988), the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime (Strasbourg, 8 November 1990), and the Council Framework Decision of 26 June 2001 on Money Laundering, the Identification, Tracing, Freezing, Seizing and Confiscation of Instrumentalities and the Proceeds of Crime (OJ 5.7.2001, L182/1).
The legislation must therefore be considered in the light of those instruments.
For present purposes, the most significant of them are the Vienna Convention and the Strasbourg Convention.
The Vienna Convention
The Vienna Convention is concerned with drugs offences.
Article 5 relates to confiscation, defined by article 1 as meaning the permanent deprivation of property by order of a court or other competent authority.
Article 5(1) requires each party to adopt such measures as may be necessary to enable confiscation of proceeds derived from relevant offences.
Proceeds are defined in article 1 as meaning any property derived from or obtained, directly or indirectly, through the commission of a relevant offence.
Article 5(2) requires each party also to adopt such measures as may be necessary to enable its authorities to identify, trace, and freeze or seize proceeds for the purpose of eventual confiscation.
Article 5(4) relates to international co operation.
Put shortly, article 5(4)(a) envisages that a request may be made by a party having jurisdiction over an offence to another party in whose territory proceeds referred to in article 5(1) that is to say, proceeds derived from offences are situated.
On receipt of such a request, the party requested must either submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such order is granted, give effect to it, or it must submit to its competent authorities an order of confiscation issued by the requesting party, with a view to giving effect to it in so far as it relates to proceeds situated in its territory.
Article 5(4)(b) in addition provides for effect to be given to requests for the taking of provisional measures for the purpose of eventual confiscation.
In terms of article 5(5)(a), proceeds confiscated by a party pursuant to article 5(4) are to be disposed of by that party according to its domestic law.
The Strasbourg Convention
The Strasbourg Convention is wider in its subject matter than the Vienna Convention, in that it applies to criminal offences generally, but narrower in its geographical scope, in so far as it was made under the auspices of the Council of Europe rather than the United Nations, and fewer states are party to it.
Chapter III is concerned with international co operation in relation to confiscation of the proceeds of crime.
The relevant provisions have been set out by Lord Phillips.
Confiscation is defined by article 1(d) as meaning a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property.
It is to be noted that, as in the Vienna Convention, the term confiscation has a wider scope than a confiscation order within the meaning of Parts 2, 3 and 4 of POCA, and is apt to include recovery orders of the kind for which Part 5 makes provision.
Section 1 of Chapter III of the Convention, comprising article 7, sets out the general principles in relation to international co operation.
In particular, article 7(2) imposes an obligation upon each party to the Convention to adopt such legislative and other measures as may be necessary to enable it to comply, under the conditions provided for in that chapter, with requests for confiscation, and with requests for investigative assistance and provisional measures with a view to confiscation.
Section 2, comprising articles 8 to 10, is concerned with investigative assistance.
In terms of article 8, in particular, parties undertake to afford each other, upon request, the widest possible measure of assistance in the identification and tracing of proceeds and other property liable to confiscation.
Such assistance is to include any measure providing and securing evidence as to, amongst other matters, the existence and location of such property.
Section 3, comprising articles 11 and 12, is concerned with provisional measures.
In terms of article 11(1), in particular, parties are obliged, at the request of another party which has instituted criminal proceedings or proceedings for the purpose of confiscation, to take the necessary provisional measures, such as freezing or seizing, to prevent any dealing in, transfer or disposal of property which, at a later stage, may be the subject of a request for confiscation or which might be such as to satisfy the request.
Section 4, comprising articles 13 to 17, is concerned with confiscation.
Article 13, in particular, is concerned with the obligation to confiscate.
Following the dual scheme created by article 5(4) of the Vienna Convention, article 13(1) of the Strasbourg Convention envisages alternative means by which a party may respond to a request made by another party for the confiscation of proceeds of crime which are situated in its territory.
The first alternative, set out in article 13(1)(a), is that the requested party may enforce a confiscation order made by a court of the requesting party.
The second alternative, set out in article 13(1)(b), is that the requesting party may submit a request to the competent authorities of the requested party so that the latter may obtain and enforce a confiscation order.
Finally, in relation to the Strasbourg Convention, article 15 follows article 5(5)(a) of the Vienna Convention in providing that any property confiscated by the requested party shall be disposed of by that party in accordance with its domestic law, unless otherwise agreed by the parties concerned.
As I shall explain, that provision is not reflected in the effect of a recovery order made under Part 5 of POCA.
The contrast is relevant to the question whether such orders can be of the kind contemplated by article 13(1)(a) of the Convention, and therefore to the question whether such orders may fall within the scope of that exception to the ordinary principles of international law.
The Framework Decision
The Framework Decision seeks to ensure the effective implementation of the Strasbourg Convention within the EU.
It does not however add anything of significance in relation to the issues with which the appeal is concerned.
Parts 2, 3 and 4 of POCA
Parts 2, 3 and 4 of POCA are concerned primarily with confiscation orders: orders, that is to say, made against a person convicted in criminal proceedings, for the payment of a sum of money equivalent to the value of any property or pecuniary advantage obtained as a result of or in connection with his criminal conduct (or such lesser amount as may be available).
Such orders can be made in criminal proceedings in England and Wales, Scotland or Northern Ireland: see section 6 in relation to England and Wales, section 92 in relation to Scotland, and section 156 in relation to Northern Ireland.
The order operates in personam, and the person against whom it is made is necessarily subject to the criminal jurisdiction of the court which makes the order.
The courts are also empowered to order provisional measures.
In particular, a restraint order can be made if, put shortly, a criminal investigation or criminal proceedings have been started in England and Wales, Scotland or Northern Ireland, and there is reasonable cause to believe that the alleged offender or defendant has benefited from his criminal conduct: see sections 41, 120 and 190.
Such orders again operate in personam.
The courts can also order enforcement measures, including measures authorising the securing and realisation of property.
Such orders operate in rem.
Parts 2, 3 and 4 each contain a provision concerned with overseas jurisdictions.
If the conditions for the making of a restraint order are met, and the prosecutor believes that realisable property that is to say, property held by the defendant or by the recipient of a tainted gift is situated in a country outside the United Kingdom, then the prosecutor can send a request to the Secretary of State, with a view to its being forwarded to the government of the country where the property is situated: see sections 74, 141 and 222.
In a case where no confiscation order has been made, the request is to secure that any person is prohibited from dealing with the property.
If a confiscation order has been made and has not been satisfied, the request is also to secure that the property is realised and the proceeds are applied in accordance with the law of the requested country.
These provisions fall within the ambit of articles 5(4) and (5) of the Vienna Convention and 11 and 13(3) of the Strasbourg Convention.
It appears, therefore, that although property is defined by section 84(1), and by the corresponding provisions for Scotland and Northern Ireland, as all property wherever situated, and the powers to make restraint orders under sections 41, 120 and 190 can therefore be exercised in relation to property situated overseas, it is envisaged that the securing and realisation of such property will be dealt with by means of requests to foreign governments for assistance.
That is as one would expect, since it is only the authorities of the jurisdiction where the property is situated which have the power to make effective orders of that nature in respect of such property.
The wide definition of property is nevertheless essential in the context of Parts 2, 3 and 4, not only for the purposes of sections 74, 141 and 222 but more generally.
In particular, as I have explained, a confiscation order is an order for the payment of a sum of money equal to the value of any property or pecuniary advantage obtained by the defendant from his criminal conduct.
Although the court must have jurisdiction over the defendant in the criminal proceedings, there is no reason why the property obtained as a result of or in connection with the offence need also be situated within the United Kingdom, or within the part of the United Kingdom where the court is located.
Part 5 of POCA
As section 240(1) of POCA states, Part 5 has two purposes.
The first, with which the present case is concerned, is to enable the enforcement authority to recover, in civil proceedings before the High Court or the Court of Session, property which is or represents property obtained through unlawful conduct.
The Act thus creates an entirely new form of remedy.
Section 240(2) makes it clear that such proceedings may be brought whether or not any criminal proceedings have been brought for an offence in connection with the property.
Section 241 explains what is meant by unlawful conduct, and in particular that such conduct may occur in the United Kingdom or elsewhere.
Accordingly, in distinction to Parts 2, 3 and 4, proceedings can be brought under Part 5 in circumstances where the court has no jurisdiction in respect of the offence in question.
Chapter 2 of Part 5 is concerned with civil recovery.
In particular, sections 243 and 244 are concerned with proceedings for recovery orders in England and Wales or Northern Ireland, and in Scotland, respectively.
Each provision permits proceedings for a recovery order to be taken against any person who the enforcement authority thinks holds recoverable property, and requires the enforcement authority to serve the claim form or application upon the respondent wherever domiciled, resident or present.
Accordingly, proceedings for a recovery order can be brought in circumstances where not only the court has no jurisdiction in respect of the offence in question, but the defendant is not domiciled, resident or present within the jurisdiction of the court.
Having read only this far into the legislation, if one were to ask what connecting factor is required in order for the Court of Session to have jurisdiction in proceedings under Part 5, if the respondent is not domiciled, resident or present in Scotland, and if the Scottish courts do not have criminal jurisdiction over him, the answer which one would naturally expect is that the necessary connecting factor is the situation within Scotland of the property which is sought to be recovered.
It is difficult to see what else it might be.
It is however necessary to read further to find out whether that expectation is well founded.
This is perhaps an appropriate point at which to note SOCAs submission that there need not be any connecting factor: POCA, it is argued, enables the enforcement authorities to bring proceedings in the High Court or the Court of Session to vest property situated abroad in a trustee for civil recovery, even where there is no connection with the United Kingdom whatsoever.
As it is put in SOCAs written case, Parliament has decided that a Chinese thief, living in China, who has stolen property in China from a Chinese citizen may be the subject of civil recovery action.
It is however inherently unlikely that such a result could have been intended by Parliament: in such circumstances, there would be no reason for the holder of the property to submit to the jurisdiction of the courts of this country, and no likelihood that any order granted by those courts without appearance would be given effect overseas.
Again, however, it is necessary to examine the legislation further in order to determine what Parliament has done.
A recovery order must vest the recoverable property in the trustee for civil recovery: section 266(2).
The order may sever any property: section 266(7).
Furthermore, the order may impose conditions as to the manner in which the trustee for civil recovery may deal with any property vested by the order for the purpose of realising it: section 266(8).
The trustee for civil recovery is a person appointed by the court to give effect to a recovery order: section 267(1).
His functions include securing the detention, custody or preservation of any property vested in him by the recovery order and realising the value of the property, other than money: section 267(3).
By virtue of section 267(6), he has the powers mentioned in Schedule 7.
The first of these is power to sell the property: paragraph 1.
There is no equivalent of these provisions in Parts 2, 3 or 4.
These provisions suggest strongly, if not conclusively, that a recovery order operates in rem to transfer title to the property to the trustee.
That is the usual, although not invariable, sense in which the concept of vesting is employed, and that sense is consistent with the power to sever the property, and with the power of the trustee to sell the property and his function of realising its value.
This interpretation of section 266 derives further support from section 269, which is concerned with rights, such as rights of pre emption or irritancy, which might otherwise be triggered by the vesting of the property in the trustee.
Section 269 provides, so far as material: (1) A recovery order is to have effect in relation to any property despite any provision (of whatever nature) which would otherwise prevent, penalise or restrict the vesting of the property. (2) A right of pre emption, right of irritancy, right of return or other similar right does not operate or become exercisable as a result of the vesting of any property under a recovery order.
A right of return means any right under a provision for the return or reversion of property in specified circumstances. (3) Where property is vested under a recovery order, any such right is to have effect as if the person in whom the property is vested were the same person in law as the person who held the property and as if no transfer of the property had taken place.
The most significant of these provisions for present purposes is section 269(3), since that provision implies that the vesting of property under a recovery order involves the transfer of the property, so that it is held by the trustee rather than by the person who formerly held it.
It was also accepted on behalf of SOCA that section 269(2) is one of a number of provisions in Part 5 which can only apply to property if POCA forms part of the lex situs: in other words, if the property is situated in one of the parts of the United Kingdom.
One would ordinarily expect an order having the effect of transferring a real right of ownership to apply only in relation to property situated in the territory of the state where the order is made.
As Lord Mance, delivering the judgment of the Board, said in Pattni v Ali [2006] UKPC 51; [2007] 2 AC 85 (para 24): Their Lordships also note the existence of a more general principle.
The actual transfer or disposition of property is, in principle, a matter for the legislature and courts of the jurisdiction where the property is situate (state A), and will be recognised accordingly by courts in any other state (state B) It follows from it, conversely, that in the unlikely event that the courts of state A were to purport actually to transfer or dispose of property in state B, the purported transfer or disposal should not be recognised as effective in courts outside state A.
That principle would apply with particular force if the order were made for the purpose of seizure or confiscation: Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para 54 per Lord Hoffmann; Government of the Republic of Spain v National Bank of Scotland 1939 SC 413.
Lord Justice Clerk Aitchison said in the latter case (at pp 433 434): such decrees of a foreign country as purport to have extra territorial effect, and to attach property in a subject situated, and at a time when it is situated, within this country or its territorial waters, will not be recognised by our laws and courts.
As I have previously explained, however, article 5(4) of the Vienna Convention and article 13(1)(a) of the Strasbourg Convention allow for the possibility that a party may make an order confiscating property situated in the territory of another party, to which the latter party may choose to give effect, but is not obliged to do so.
It therefore cannot be taken for granted that POCA does not allow for that possibility.
It is necessary to examine the legislation further in order to decide whether POCA does so or not.
Other provisions in Chapter 2 concern provisional measures.
The available measures in England and Wales, and in Northern Ireland, are property freezing orders and interim receiving orders.
The corresponding measures in Scotland are prohibitory property orders and interim administration orders.
A property freezing order and a prohibitory property order are orders that prohibit any person to whose property the order applies from dealing with the property: sections 245A(2)(b) and 255A(2)(b).
The court can make such an order only if it is satisfied that there is a good arguable case that the property to which the application for the order relates is or includes recoverable property, and that, if any of it is not recoverable property, it is associated property: sections 245A(4) and (5), and 255A(4) and (5).
One consequence of that requirement is that such orders can be made only in respect of property which is, in principle, capable of being made the subject of a recovery order, or is mixed with such property in such a way as to be associated property as defined in section 245.
If a recovery order operates in rem, as one might infer for the reasons I have explained at paragraphs 123 to 125, it follows that the scope of property freezing orders and prohibitory property orders is more limited than the nature of the orders themselves might otherwise have led one to expect.
Part 5 contains no provision concerned with overseas jurisdictions.
There is, in particular, no equivalent of sections 74, 141 and 222.
This contrast with Parts 2, 3 and 4 (and also with Part 8, as originally enacted: see section 376) provides further support for the view that recovery orders are concerned solely with property situated within the part of the United Kingdom where the order was made.
If such orders had extraterritorial scope, the absence of any provision corresponding to sections 74, 141 and 222 would be difficult to understand.
In that connection, it is also relevant to note that Part 5 requires that the realised proceeds of property vested in the trustee must be applied in accordance with section 280.
That section requires that the net proceeds, after payment of the remuneration and expenses of the trustee, must be paid to the enforcement authority.
No provision is made for the possibility that the proceeds of realization of property situated in another jurisdiction might be applied in accordance with the law of that jurisdiction, as envisaged by article 5(5)(a) of the Vienna Convention and article 15 of the Strasbourg Convention.
In that respect, recovery orders again differ from confiscation orders made under Parts 2, 3 and 4: in the case of those orders, sections 74(3), 141(3) and 222(3) provide, in relation to enforcement abroad, that the request is to be that realisable property is realised and the proceeds are applied in accordance with the law of the receiving country.
I shall return to section 286, which is concerned with the power of the Court of Session to make orders under Chapter 2 of Part 5, and to section 316(4), which defines property for the purposes of Part 5.
Part 11 of POCA
It is also relevant to note one of the provisions in Part 11 of POCA, which is concerned with co operation.
Section 444 deals with external requests and orders.
It allows provision to be made by Order in Council for a prohibition on dealing with property which is the subject of an external request, or for the realisation of property for the purpose of giving effect to an external order.
An external request is a request by an overseas authority to prohibit dealing with property which may be needed to satisfy an external order which has been or may be made: section 447(1) and (7).
An external order is an order made by an overseas court where property is found or believed to have been obtained as a result of or in connection with criminal conduct, and is for the recovery of specified property or a specified sum of money.
Such an Order in Council may include provision which (subject to any specified modifications) corresponds to any provision of Part 2, 3 or 4 or Part 5, except Chapter 3, which concerns the recovery of cash in summary proceedings.
Section 444 thus enables articles 11 and 13(1) of the Strasbourg Convention, and the corresponding provisions of the Vienna Convention, to be implemented by the United Kingdom.
The Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) was made under sections 444 and 459(2) of POCA.
Part 5 of the Order concerns recovery orders, and contains articles corresponding to sections 286 and 316(4) of POCA: see articles 197 and 213(4) respectively.
The Order was construed by the House of Lords in King v Director of the Serious Fraud Office [2009] UKHL 17; [2009] 1 WLR 718 as conferring jurisdiction upon the Crown Court to make a restraint order in response to an external request only where the request concerned property in England and Wales.
The same territorial requirement was also held to apply to the seizure and enforcement provisions of Part 2 of the Order.
Although the terms of the Order differ in some significant respects from the terms of POCA, the speech of Lord Phillips, with which the other members of the committee agreed, contains observations which are equally germane to the present case.
In particular, Lord Phillips rejected the contention that an Order made under section 444 might have been intended to enable foreign countries to obtain worldwide orders from the British courts (para 37).
His Lordship also observed that, although property was defined by section 447(4) of POCA as meaning property wherever situated, whether the word bore that meaning depended on the context in which the word was used.
Thus, where the Order expressly or by implication referred to property in England and Wales, it necessarily referred only to property there situated (para 37).
Section 316(4)
It is necessary next to consider section 316(4), which defines property for the purposes of Part 5 as all property wherever situated.
At first sight, that might be thought to entail that the power to make a recovery order extended to property anywhere in the world, provided that it had been obtained through unlawful conduct occurring anywhere in the world and was therefore recoverable property as defined in section 304(1).
As I have explained, however, there are a number of factors which point away from that conclusion.
To recap: (1) Part 5, unlike Parts 2, 3 and 4, makes no provision in respect of overseas jurisdictions; (2) Part 5, unlike Parts 2, 3 and 4, makes no provision for the proceeds of realisation of recoverable property to be applied in accordance with foreign law, as contemplated by article 5(5)(a) of the Vienna Convention and article 15 of the Strasbourg Convention; (3) recovery orders under Part 5, unlike confiscation and restraint orders under Parts 2, 3 and 4, appear on the face of the provisions (notably sections 266, 267, 269 and Schedule 7) to operate in rem; (4) orders taking effect in rem ordinarily apply only to property situated within the territorial jurisdiction of the court; (5) there is a presumption that Parliament does not intend to legislate in respect of property outside the United Kingdom, and in particular that legislation is not intended to authorise the seizure or confiscation of property situated outside the United Kingdom; (6) courts in the United Kingdom have no power to make effective orders purporting to transfer real rights of ownership of property situated outside the jurisdiction of the court; and (7) it is accepted that references to property in a number of other provisions of POCA, including provisions of Part 5, can refer only to property situated in the United Kingdom.
Some of these points have greater force than others.
Cumulatively, however, they provide compelling support for the conclusion that the ambit of recovery orders is intended to be confined to property located within the part of the United Kingdom where the court in question exercises jurisdiction.
Subject to section 286, it appears therefore that, although property is defined so widely by section 316(4) that the power to make recovery orders under section 266 might be understood as extending to property located overseas, such an interpretation of section 266 would be mistaken: in the context of the section, the word property has to be understood as referring only to property situated within the territorial jurisdiction of the High Court or the Court of Session, as the case may be.
The wide definition of property is nevertheless essential in the context of other provisions of Part 5.
In particular, the tracing provisions in Part 5 have the consequence that a recovery order may be appropriate in respect of property located within the jurisdiction of the court which represents property unlawfully obtained elsewhere: see, for example, section 305.
Civil jurisdiction in the Scottish courts
Before coming finally to section 286, it is necessary to explain in outline the relevant aspects of Scots law in relation to jurisdiction, apart from POCA.
I should emphasise that my purpose here is merely to explain matters in the most general terms, so as to provide some background against which to attempt to understand the effect of section 286.
In most ordinary civil proceedings before the Scottish courts, jurisdiction is regulated by the rules contained in Schedule 8 to the Civil Jurisdiction and Judgments Act 1982, as amended.
In the present context, it is convenient to begin with rule 5(1)(a), which confers upon the courts for the place where immovable property is situated exclusive jurisdiction in proceedings which have as their object rights in rem in immovable property (sic: the terms movable and immovable are derived from the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters rather than the Scots law of property, which distinguishes between heritable and moveable property.
It is the latter terminology which is employed in section 316(4) of POCA).
The exclusive jurisdiction of the forum rei is reinforced by rule 5(2), which precludes a Scottish court from exercising jurisdiction in a case where immovable property is situated outside Scotland and the court would have exclusive jurisdiction if the property were situated in Scotland.
A similar rule applies to the allocation of jurisdiction within the United Kingdom: Schedule 4, rule 11(a)(i).
Even before the enactment of the 1982 Act, that approach had long been established under the common law.
For example, in Cathcart v Cathcart (1902) 12 SLT 182 Lord Low declined to grant a declarator that the pursuer was entitled to a liferent of land situated in England.
He observed, at p 185: Real estate in England is beyond the jurisdiction of the Scotch courts Further, if decree of declarator in terms of the second conclusion was pronounced, this court would have no power to give practical effect to the right thereby declared.
The pursuer would require to go to England to obtain his remedy.
Would the English courts, according to the principles of international law, be bound to recognise and act upon the declarator of this court? I am of opinion that they would not I think that the answer would be that it was for the court of the country where the real estate was situated to say what was the result, as regards the rights of the parties [of the relevant events].
I am therefore of opinion that the question is one with which this court is not competent to deal.
In relation to proceedings concerned with moveable property, Schedule 8 contains a number of relevant rules.
Under rule 1, the general rule is that persons can be sued in Scotland if they are domiciled there.
The concept of domicile is defined for this purpose on the basis of residence: section 41.
Under rule 2, there are also a number of special grounds on which the Scottish courts may have jurisdiction.
In particular, under rule 2(i) a person may be sued in Scotland in proceedings which are brought to assert, declare or determine proprietary or possessory interests, or rights of security, in or over movable property, or to obtain authority to dispose of movable property, if the property is situated in Scotland.
There are in addition other rules which may be relevant to confer jurisdiction in particular circumstances.
Broadly similar rules apply to the allocation of jurisdiction within the United Kingdom, under Schedule 4, rules 1 and 3(h)(ii).
The Scottish courts may therefore have jurisdiction in proceedings concerned with the ownership of moveable property situated outside Scotland.
In practice, however, as I have explained, the courts in Scotland, as in the other parts of the United Kingdom, would be unlikely to make an order in rem purporting to transfer or dispose of property in another state.
Accordingly, summarising the matter broadly, proceedings concerned with rights in rem can ordinarily be brought in the Scottish courts in relation to heritable property only if the property is situated in Scotland.
They can ordinarily be brought in relation to moveable property if the property is situated in Scotland or if the defender is domiciled in Scotland.
They cannot otherwise ordinarily be brought, in the absence of particular circumstances in which other grounds of jurisdiction may arise (for example, under rule 2(h) of Schedule 8).
There are a number of circumstances where jurisdiction is not governed by Schedules 4 or 8.
In particular, those schedules do not affect the operation of any enactment which confers jurisdiction on a Scottish court in respect of a specific subject matter on specific grounds: sections 17(1) and 21(1)(a) of the 1982 Act.
Section 286 of POCA is an example of such an enactment.
Section 286
I can now turn at last to section 286 itself.
It is headed Scope of powers (Scotland), and provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a person's moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland.
The words this Chapter refer to Chapter 2 of Part 5 of POCA, which as I have explained is concerned with civil recovery.
The orders which may be made by the Court of Session under Chapter 2 are recovery orders, prohibitory property orders, interim administration orders and consent orders (made under section 276).
Since these orders can only be made in respect of property which is at least arguably recoverable (or associated property), it is the extent of the courts jurisdiction in relation to the power to make recovery orders which is of critical importance.
Section 286 provides further support for the conclusion that the definition of property in section 316(4) does not have the effect of enabling a recovery order to be made under section 266 in respect of property anywhere in the world.
If section 266, read with section 316(4), had that effect, the provision made by section 286(2) in respect of moveable property would be redundant, and the distinction implicitly drawn between heritable and moveable property would be inexplicable.
Section 286(3) is also difficult to reconcile with such an interpretation, since it qualifies the jurisdiction conferred by section 286(2) in relation to moveable property.
This supports the view that section 266 does not itself define the courts jurisdiction to make a recovery order, but confers a power which can be exercised in circumstances in which the court possesses jurisdiction, based upon some independent foundation.
A distinction has to be drawn, that is to say, between the nature of the power conferred by section 266, on the one hand, and the jurisdiction of the court: a jurisdiction arising, in relation to the Court of Session, from section 286 and from the background rules of civil jurisdiction, so far as they are not implicitly displaced.
If recovery orders operate in rem, and the jurisdiction of the Scottish courts to make orders of that character is not ordinarily conditional upon the holder of the property being domiciled, resident or present in Scotland, section 286(1) is as one would expect.
It also enables the jurisdiction of the court to meet the requirements of article 5(4) of the Vienna Convention and article 13 of the Strasbourg Convention.
The absence from section 286 of any provision in respect of heritable property is also as one would expect.
As I have explained, one would not expect the court to have jurisdiction to make orders in rem in respect of heritable property outside Scotland.
Since the court would not possess such a jurisdiction under the 1982 Act or under the common law, there is no necessity for POCA to alter that position.
In relation to moveable property, on the other hand, the position is different.
As I have explained, the ordinary rules of civil jurisdiction in Scotland enable the courts to exercise jurisdiction in relation to moveable property outside Scotland (including questions concerning proprietary rights in respect of such property), provided the defender is domiciled in Scotland or other requirements specified in the 1982 Act are met.
At the same time, one would not expect the court to exercise a power to transfer or dispose of moveable property situated outside Scotland, in accordance with the principle explained in Pattni v Ali [2006] UKPC 51; [2007] 2 AC 85, or to purport to confiscate moveable property situated in another sovereign state, in accordance with the principles discussed in Socit Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260 and in Government of the Republic of Spain v National Bank of Scotland 1939 SC 413.
The width of the courts formal jurisdiction does not therefore entail that the court will exercise its powers to the limits of its jurisdiction, where for example such an exercise would be ineffective or would contravene recognized principles of international law.
The jurisdiction conferred by section 286(2) and (3) in relation to moveable property differs in a number of respects from the courts ordinary jurisdiction: instead of the possible grounds of jurisdiction set out, in particular, in rules 1 and 2 of Schedule 8 to the 1982 Act, the apparent effect of section 286(2) and (3) is to confer jurisdiction upon the court, for the purposes of chapter 2 of Part 5 of POCA, where moveable property is situated in Scotland, and also where it is situated elsewhere and either (a) the holder of the property is domiciled, resident or present in Scotland, or (b) the unlawful conduct took place in Scotland.
The rationale of such a wide jurisdiction is not obvious, given that the power conferred by section 266 to make a recovery order (and therefore the powers to make other orders in respect of property which is at least arguably recoverable) is more limited in scope, as I have explained.
In the circumstances, counsel referred the court to the legislative history of the provision, and in particular to statements made in Parliament during the passage of the Bill.
These statements, even if admissible as an aid to interpretation, do not however provide any clear explanation of the intention of section 286(2) and (3).
They confirm that section 286 was intended to regulate the question of jurisdiction, and indicate that its effect was intended to be the same as was achieved for England and Wales and Northern Ireland by a combination of the provisions on property in section 316 and the general rules on the jurisdiction of the civil courts.
One matter on which all parties to these proceedings are agreed, however, is that that is not the case: on any view, the position in England and Wales and Northern Ireland is not the same as that set out in section 286(2) and (3).
It appears therefore to be possible that the drafting of section 286(2) and (3) may have reflected a misunderstanding.
Since POCA deals with matters falling partly within the competence of the Scottish Parliament, proceedings also took place in that Parliament in accordance with the arrangements known colloquially as the Sewel convention: see Hansard (HL Debates), 21 July 1998, col 791.
Section 286 was not however specifically considered, and neither the discussion in the Parliament nor the Sewel memorandum prepared by the Scottish Executive appears to shed any light on its intended effect.
As Sir Winston Churchill once said in another context, it is a riddle, wrapped in a mystery, inside an enigma.
The effect of section 286 is however not of critical importance in the present context.
If section 266 is to be understood as referring to property within the territorial jurisdiction of the relevant court, for the reasons I have explained, then it follows that the power conferred by section 266 is consequently restricted to such property.
The fact that the jurisdiction of the Court of Session, as regulated by section 286 for the purposes of chapter 2 of Part 5, may be wider than that of the High Court does not alter the meaning and effect of section 266 in relation to the High Court, which is the issue at the heart of the present appeal.
If section 266 confers the same power upon courts in all parts of the United Kingdom, as it appears to do, then it may be that section 286 has equally little practical effect upon the ambit of recovery orders made by the Court of Session.
That is not however an issue which need be, or ought to be, decided in the present case.
SIR ANTHONY HUGHES
I respectfully agree with Lord Phillips that both appeals must be allowed, and for the reasons which he gives.
I add only some very brief words about the PFO appeal.
For my part, if it were possible to construe the complex provisions of POCA in such a way as to admit of limited extraterritorial effect for Part 5, but only where there is a sufficient jurisdictional connection between a part of the UK and the criminal proceeds, I should have wished to do so.
I am, however, reluctantly persuaded that this cannot be achieved by construction and would involve illegitimately re writing the statute.
For the reasons explained by Hooper LJ, cited by Lord Phillips at para 72 above, it would make excellent sense for the English court to have jurisdiction to make a civil recovery order in relation to real or personal property in Spain bought with the profits of crime by an English criminal, or by someone who committed his offence in England and Wales.
It will not always be possible to achieve removal of such proceeds by means of a post conviction confiscation order under Part 2; there may, for a number of reasons, be no conviction for example the criminal may be dead, or untriable because resident in a country from which no extradition is possible.
It seems to me that the kind of jurisdictional links contemplated by section 286 for the limited case of moveable property in the case of Scottish courts could sensibly serve as a model for all property and for all UK courts: that is to say links (1) because the crime was committed here, (2) because the offender or holder of the property is domiciled, resident or present here, or (3) because the relevant property is here.
Such jurisdiction would not, as it seems to me at least, be exorbitant, nor would it offend the sovereignty of other States.
That, however, is not what the statute can be made to say.
What cannot, as it seems to me, be the correct construction is that, as SOCA was obliged to submit, it has jurisdiction to seek a (mandatory) civil recovery order over property in China which is the product of a crime committed in China by an offender who has never left that country.
LORD JUDGE AND LORD CLARKE
We will explain briefly why we are unable to agree with the conclusions of the majority of the Court that the appeal in relation to the worldwide property freezing order (PFO) should be allowed.
We agree that the Proceeds of Crime Act 2002 (the Act) is poorly drafted.
Nevertheless its objective is clear and can be explained in uncomplicated terms.
Those who engage in criminal or unlawful conduct, whether here or abroad, should be deprived of the property which is or which represents the proceeds of their crimes or unlawful conduct.
Part 2 of the Act addresses confiscation orders which may be made following convictions recorded in England and Wales.
For these purposes section 84(1) provides: Property is all property wherever situated and includes (a) money; (b) all forms of real or personal property; (c) things in action and other intangible or incorporeal property.
For present purposes, there are two crucial features.
First, the property extends to all property including all forms of real or personal property and it applies to all such property wherever in the world it is situated.
It was not suggested in the course of argument that, where these words appear in Part 2, they should be given a limited meaning.
They mean what they say, that is, wherever in the world the property (whatever form it may take) is situated.
Given the ease with which professional criminals in particular can move their assets around the world, by section 74 the Act unsurprisingly makes provision for the enforcement of confiscation orders abroad.
It is an elementary principle of statutory construction that legislation in this country which purports to have effect abroad requires to be expressed in unequivocal language.
Sovereign states are sovereign.
We do not interfere in the affairs of a sovereign country in order to enforce orders made here which impact on people living and property located abroad.
Accordingly, the provisions relating to the enforcement abroad of a confiscation order made here are structured so as to give full recognition to these principles, and the structures created for these purposes have not been called into question.
Part 5 of the Act is concerned with the recovery of the proceeds of unlawful conduct when there is no criminal conviction in this jurisdiction.
It applies to conduct which is unlawful within the United Kingdom or conduct which would be criminal abroad and which would be recognised as criminal here.
Among its other wide ranging effects, it provides the statutory process by which those convicted of crimes abroad (including citizens of the relevant country) may be deprived of the proceeds or profits which have found their way into this country.
Where the statutory conditions are satisfied the court is required to make a civil recovery order: by contrast, the effect of the order is that the enforcement authority is enabled to take the appropriate steps to enforce it.
For the purposes of a civil recovery order under Part 5, property is identified in identical terms to the property which may be made the subject of the confiscation processes in Part 2 of the Act.
An almost identical definition of property to that in section 84(1) is contained in Parts 3, 4, 5, 6, 7, 8 and 11 of the Act.
Section 316 is the general interpretation section for the purposes of Part 5.
Section 316(2) provides that the following provisions apply for the purposes of Part 5.
Those provisions include section 316(4), which provides: Property is all property wherever situated and includes (a) money, (b) all forms of property, real or personal, heritable or moveable, (c) things in action and other intangible or incorporeal property.
It can be seen that the language is the same as that in section 84, save that it expressly includes language referable to Scottish property.
In our judgment the expression all property wherever situated must have the same meaning in each of the sections in which it appears, including section 316(4).
With respect to those who take a contrary view, it seems to us that the language unequivocally describes not only the whereabouts of the property encompassed within Part 5, but also the nature and type of property covered by it.
This does not mean that absolutely every provision in the Act which refers to property must be taken as a reference to property wherever situated because it might be clear from the particular provision that it must be more limited.
A good example is section 45(1) which is referred to in paras 14 and 35 above.
It confers on a constable the power to seize property to prevent its removal from England and Wales.
Since the power only arises in the case of property in England and Wales, it cannot refer to property wherever situated.
Subject to such cases, the definition sections are of general effect.
Until Mr James Eadie QC addressed the problems to which this appeal has given rise, we suspect that the extent of the control mechanisms built into the statutory processes had not been fully appreciated.
However, as it seems to us, a civil recovery order in relation to property situated outside the jurisdiction of the United Kingdom is not designed to have extra territorial effect in the sense that it should operate so as to oblige a court or authority in a foreign country, or for that matter anyone living in that country, to obey the order.
That would contravene the sovereignty principle.
Indeed, if the enforcement authorities or the trustee for civil recovery were to barge into a foreign country demanding the return of property situated there on the basis of a civil recovery order made here, the response would almost certainly be decidedly cold, and ultimately ineffective.
On the other hand, when properly informed that a court in this jurisdiction has made such an order, the authorities abroad would be likely to appreciate that there is or may be property within its jurisdiction which represents the proceeds of unlawful conduct and that, in accordance with their own procedures, this might, with advantage, be removed from the criminal, and dealt with in accordance with domestic principles within its own jurisdiction.
In this way the criminal would be deprived of the proceeds and profits of crime or unlawful conduct.
Notwithstanding the requirement on the court here to make a recovery order if satisfied that the necessary conditions are satisfied, we believe that control mechanisms have been created within Part 5 to ensure that the order may be made subject to appropriate conditions which would avoid any improper extra territorial effect or infringement of the principle of sovereignty.
In the language of section 266(8) the order may address the manner in which the trustee for civil recovery may deal with any property vested by the order for the purpose of realising it.
Section 267(5) acknowledges that the obligation on the trustee to maximise the amount payable to the enforcement authority must be realised only so far as practicable.
The powers of the trustee under Schedule 7 extend to starting or continuing legal proceedings in relation to property, that is, property wherever situated.
In our judgment this provides the trustee with the power to do so where the property is situated abroad.
If so, any such proceedings would be governed by the legal structures which obtain in the relevant foreign country.
Mr Eadie accepted in argument that the exercise of the functions of the trustee for civil recovery specified in section 267 of and Schedule 7 to the Act are subject to the powers of our court to impose conditions in relation to the recovery process which acknowledge the sovereignty principle and give effect to it.
We agree.
Some reliance was placed on section 269.
However, in our opinion section 269 is directed only to the courts of England and Wales, Scotland or Northern Ireland as the case might be.
It tells those courts which legal rights must take priority over a recovery order.
These may include rights under provisions of foreign law, where those provisions of foreign law are applicable under English conflicts rules.
However section 269 does not purport to tell foreign courts what rules they may or may not apply.
It therefore respects the principle of sovereignty.
Section 243 provides that the enforcement authority must serve the claim form on the respondent wherever domiciled, resident or present.
The parties agreed that it was not necessary to obtain permission to serve the claim form out of the jurisdiction on the basis that this is a claim which the court has power to determine within CPR 6.33(3).
We assume for present purposes (without deciding) that that is correct.
The claim form must then be served in accordance with CPR 6.40, which includes safeguards and, at any rate in many cases, requires service in accordance with the local law.
In short, in relation to property situated abroad, to which Part 5 applies, we believe that it is open to the court making a civil recovery order to direct that any attempt to enforce the order abroad should not be made, save and except through the legal processes which obtain in the country where the property is situated, or in accordance with the procedures which apply to the enforcement of a confiscation order abroad, or subject to any other appropriate conditions.
Viewed in this way, Part 5 of the Act is not inconsistent with and does not contravene the sovereignty principle.
We recognise that the Strasbourg Convention does not expressly authorise proceedings of this kind but there is nothing in it which prohibits them.
There is in our opinion nothing in the scheme or language of the Act which supports the conclusion that Part 5 is limited to property within the jurisdiction.
Indeed section 286 shows that it was not so restricted.
Section 286 is part of a series of sections entitled Miscellaneous and is itself entitled Scope of powers (Scotland).
It provides: (1) Orders under this Chapter may be made by the Court of Session in respect of a person wherever domiciled, resident or present. (2) Such an order may be made by the Court of Session in respect of moveable property wherever situated. (3) But such an order in respect of a persons moveable property may not be made by the Court of Session where (a) the person is not domiciled, resident or present in Scotland, and (b) the property is not situated in Scotland, unless the unlawful conduct took place in Scotland.
The section thus provides for the making of a recovery order where the relevant person is not domiciled, resident or present in Scotland and where the property is not situated in Scotland.
The view expressed by the majority is inconsistent with that section, which (whether or not it is an enigma) is part of the Act.
It is true that the section does require that in such circumstances a recovery order can only be made where the unlawful conduct took place in Scotland but that is not relevant to the question which divides the court, which is whether Part 5 applies to property outside the jurisdiction.
Section 286 also provides assistance on the true construction of section 316(4).
The expression wherever domiciled, resident or present in section 286(1) plainly means wherever situated in the world and the expression in respect of moveable property wherever situated in section 286(2) equally plainly means wherever the moveable property is situated in the world.
The contrary is not suggested.
In our judgment, there is no escape from the conclusion that wherever situated in section 316(4) means the same.
It follows that, if, as the majority say at para 44, the question raised by the PFO appeal is whether the totality of Part 5 relates exclusively to property within the United Kingdom, the question must be answered in the negative.
That conclusion seems to us to be supported by the scheme of Part 5.
The general purpose of Part 5 is set out in section 240, which is defined in section 240(1) as for the purposes of enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property obtained through unlawful conduct.
The majority recognise that the second reference to property in that subsection must be to property wherever situated because section 241(2) makes it clear that unlawful conduct includes conduct which takes place outside the United Kingdom provided that it is unlawful in the place where it occurs and would be unlawful if it took place in the United Kingdom.
There is nothing in section 240(1) which supports the conclusion that property where it is first used is to have a different meaning from property in the same section.
Indeed, read naturally, it has the same meaning.
The section provides for a recovery order to recover property which is property obtained through unlawful conduct.
Given that it is agreed that property obtained through unlawful conduct can be property outside the jurisdiction, it must follow that property which is such property can be property outside the jurisdiction.
The plain effect of section 240(1) read together with the definition section in section 316(4), which by section 316(2) applies for the purposes of Part 5, is that both references to property are references to property wherever situated.
So too, as is accepted, are the references to obtaining property by unlawful conduct in section 242.
This conclusion does not depend upon section 286 but is supported by it because it provides a particular example of a case where a recovery order may be made in respect of property outside the jurisdiction.
So far as moveable property is concerned, the position in Scotland is clear.
Section 286 shows that it includes moveable property anywhere in the world.
It does not however apply in England.
The provisions which apply in England are not limited in any relevant respect.
As already stated, the definitions of property as being wherever situated in sections 84(1) in Part 2 and section 316(4) in Part 5 are part of the central provisions of those Parts.
Moreover, section 240(2) provides that the powers conferred by Part 5 are exercisable in relation to any property regardless of whether any proceedings have been brought for an offence in connection with the property.
Section 266(1) provides that If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order.
By section 304(1) property obtained through unlawful conduct is recoverable property.
It follows that (subject to the exceptions in section 308), recoverable property is a very wide term.
It thus appears to us that property in section 266(1) is the property defined in section 316(4), which is all property wherever situated in the world.
It was submitted that, by reason of the principles of international sovereignty, property situated abroad must be excluded because of section 266(2), which provides that the recovery order must vest the recoverable property in the trustee for civil recovery.
We have already expressed our view that those principles are not infringed merely by including foreign property in the order because the order would be subject to the local law or lex situs.
The problem is said to arise from the use of the word vest in section 266(2).
There are two reasons why in our view there is no such problem.
The first is that the majority accept that the expression moveable property wherever situated in section 286(2) means wherever situated in the world.
In cases falling outside the restriction imposed by section 286(3), the majority therefore accept that moveable property situated anywhere in the world may be made the subject of a recovery order.
Indeed, it must be made the subject of a recovery order under section 266(1) if the other criteria are satisfied.
It follows that the majority see no problem with the making of an order in Scottish proceedings which vests moveable property which is outside the jurisdiction in the trustee for civil recovery.
This is no doubt because, as explained above, any such order must be subject to the provisions of the local law and may be subject to appropriate conditions under section 266(8).
Moreover, under section 267(5) the trustees obligation to sell the property is expressly limited by what is practicable.
If there are no problems with applying section 266(1) and (2) to moveable property in the case of orders made by the Scottish courts, it follows that there are no problems in applying them to moveable property in the case of orders made by the English courts.
The only difference between the jurisdiction of the two courts, so far as moveable property is concerned, is that the Scottish courts cannot make an order if the restriction imposed by section 286(3) is satisfied, whereas the jurisdiction of the English courts is not limited in the same way.
The second reason why the use of the word vest does not gives rise to a difficulty is that it is capable of operating in personam.
Mr Eadie relies upon the similar use of the verb vests in section 306(1) of the Insolvency Act 1986, which provides that a bankrupts estate shall vest in the trustee immediately upon his appointment taking effect.
He relies upon the decision of the Court of Appeal in Ashurst v Pollard [2001] Ch 595, which related to real property in Portugal which was owned by the bankrupt and his wife.
Jonathan Parker LJ (with whom Kennedy and Potter LJJ agreed) said at para 11 that the vesting provisions of section 306 cannot effect a change in the Portuguese register of title, which continues to record Mr and Mrs Pollard as the joint owners of the property.
Thus in those circumstances, as here, the mere making of a vesting order does not have the inevitable consequence of transferring the legal interest in (or legal title to) real property to the trustee in bankruptcy or (here) the trustee for civil recovery.
We would accept Mr Eadies submission that the consequences of a vesting order in relation to property situate abroad depend upon the local law or lex situs.
We recognise that there are differences between the Insolvency Act and the Act but in our opinion the Insolvency Act provides a valuable pointer to the correct conclusion under Part 5 of the Act, namely that, as Tomlinson LJ concisely put it in the Court of Appeal at para 168, vest is simply an ordinary English word which takes its meaning from its context and is not here used as a term of art which carries with it inevitable consequences as to the effective transfer of title.
In these circumstances, given the fact that section 266 must be construed so that it does not offend against the principles of sovereignty in international law, we see no difficulty in applying it to orders relating to moveable property made by the English courts.
What then of immoveable property? Again, we see no reason in either the language of the Act or the principles of international law to prohibit a recovery order in such a case.
The effectiveness of such an order would simply be subject to the rules of the lex situs.
The definition of property in sections 84(1) and 316(4) expressly applies to all forms of property including real property wherever situated.
It thus applies on its face to real property outside the United Kingdom and, whatever the position in Scotland in the light of section 286(2), the Act gives the English courts jurisdiction to make a recovery order in respect of such real property.
The provisions of Part 5 of the Act, at any rate in relation to proceedings in England and Wales, are in our view unequivocal.
They plainly apply to all property, whether real or personal and wherever situated in the world.
Moreover they reflect the purpose behind the Act, namely to deprive criminals of their ill gotten gains.
We recognise that how effective the approach we favour will be depends upon the co operation of courts elsewhere.
However, for the reasons we have given, we are firmly of the view that nothing we have said infringes or would infringe the sovereignty of other states or the principles of international law.
We prefer the views of Mitting J at first instance and of Maurice Kay, Hooper and Tomlinson LJJ in the Court of Appeal to those of the majority.
For these reasons we would dismiss the PFO appeal.
As to the disclosure order (DO) appeal, we agree that the appeal should be allowed for the reasons given by Lord Phillips in para 94 above.
There is nothing in section 357 or 358 to indicate that it was intended that a notice under a disclosure order could be given to a person outside the jurisdiction.
The position under section 357 is not inconsistent with our analysis of Part 5.
A core feature of our analysis of Part 5 is that recovery orders take effect in personam subject to the local law, or lex situs.
In other words, they have no legal consequences outside the United Kingdom except those positively prescribed by local law.
For this reason, recovery orders do not impinge upon the sovereignty of foreign states.
By contrast, an information notice given to someone outside the United Kingdom has the potential to criminalise acts and omissions committed abroad by foreign citizens who are outside the jurisdiction of the United Kingdom courts.
There is no scope for reading the relevant provisions of Part 8 as taking effect subject to the local law or lex situs.
The statutory language is clear and unequivocal unless the recipient of an information notice has a reasonable excuse he is guilty of an offence if he fails to comply with an information notice.
Further, Part 5 clearly contemplates service on persons anywhere in the world.
Section 243(2) states that the claim form must be served on the respondent wherever domiciled, resident or present.
If Parliament intended SOCA to have authority to give information notices anywhere in the world, one would expect to see an equivalent provision in Part 8.
However Part 8 contains no such provision.
Section 357(4) defines a disclosure order as an order authorising SOCA to give information notices to any person the appropriate officer considers has relevant information.
There is nothing in this language to suggest that SOCAs power may be exercised extra territorially.
In addition, paragraph 15 of Practice Direction Civil Recovery Proceedings states: Disclosure order 15.1 The application notice should normally name as respondents the persons on whom the appropriate officer intends to serve notices under the disclosure order sought. 15.2 A disclosure order must (1) give an indication of the nature of the investigation for the purposes of which the order is made; (2) set out the action which the order authorises the appropriate officer to take in accordance with section 357(4) of the Act; (3) contain a statement of (a) the offences relating to disclosure orders under section 359 of the Act; and (b) the right of any person affected by the order to apply to discharge or vary the order. 15.3 Where, pursuant to a disclosure order, the appropriate officer gives to any person a notice under section 357(4) of the Act, he must also at the same time serve on that person a copy of the disclosure order.
Paragraph 15.3 suggests that the recipient of an information notice is not obliged to comply with the notice unless and until SOCA serves a copy of the disclosure order on him.
Presumably, that service must take place in accordance with the CPR.
However it is not at all clear by what mechanism under the CPR SOCA could serve a copy of a disclosure order on a person outside the United Kingdom.
This reinforces the view that information notices can only be served on persons who are physically present within the United Kingdom.
We agree that the appropriate relief is a declaration that the DO does not authorise sending information notices to persons who are outside the United Kingdom.
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On 24 October 2007 Mr Perry, was convicted in Israel of a number of fraud offences in relation to a pension scheme that he had operated in Israel.
He was given a substantial prison sentence and paid a fine of approximately 3m.
The Serious Organised Crime Agency (SOCA) is now seeking to deprive Mr Perry, together with members of his family and entities associated with them, of assets obtained in connection with his criminal conduct, wherever in the world those assets may be situated.
None of these persons resides in the United Kingdom.
As a preliminary step, aimed at ensuring that its action to recover assets is effective, SOCA obtained a worldwide property freezing order (PFO) against Mr Perry, his wife and Leadenhall Property Limited (the PFO appellants).
Before that, it had obtained a disclosure order (DO) under which notices requesting information were given to Mr Perry and his daughters (the DO appellants) by letter addressed to Mr Perrys house in London.
The PFO appellants challenged the PFO on the basis that a civil recovery order could only be made in respect of property that was within the territorial jurisdiction of the court making it.
The DO appellants contended that notices under the DO could not be addressed to persons who were not within the UK.
In the PFO matter, the High Court ruled that the provisions of the Proceeds of Crime Act 2002 (POCA) relied on by SOCA did apply, save as to orders made in Scotland, to property outside the jurisdiction and upheld the scope of the PFO.
An appeal from this decision was dismissed by the Court of Appeal on 18 May 2011.
Earlier, the Court of Appeal had also upheld the validity of the notices requesting information given to the DO appellants under the DO.
Appeals against the PFO and the DO notices were brought to the Supreme Court and were heard together.
The Supreme Court allows both appeals: the PFO appeal by a majority (Lord Judge and Lord Clarke dissenting) and the DO appeal unanimously.
Lord Phillips (with whom Lady Hale, Lord Brown, Lord Kerr and Lord Wilson agree) gives the main judgment.
Lord Reed and Sir Anthony Hughes give shorter concurring judgments.
Lord Judge and Lord Clarke give a joint dissenting judgment on the PFO appeal.
SOCAs application was pursuant to the powers in Part 5 of POCA for the court to make a civil recovery order in respect of property which is, or represents, property obtained through criminal conduct.
The applicable definition of the term property is in section 316(4) which provides that property is all property wherever situated.
However, many of the provisions referring to property in POCA plainly apply only to property within the UK and the scope of the term depends on its context.
Thus the definition should not have been given the weight it had carried in the courts below [14].
Although there was a presumption under principles of international law that a statute does not have extraterritorial effect, states have departed from this by agreement in the case of confiscating the proceeds of crime.
POCA must be read in the light of the Strasbourg Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, which recognises that the courts of state A may seek to seize property in state B which is the proceeds of the criminal conduct of a defendant subject to the criminal jurisdiction of state A [18 29].
Parts 2, 3 and 4 of POCA provide for (a) the imposition of personal obligations in respect of property worldwide; (b) proprietary measures to secure and realise property within the UK and (c) requests to be made to other states to take such measures in respect of property within their territories.
This represents a coherent international scheme which accords with the Strasbourg Convention and with principles of international law [31 38].
The purpose of Part 5 of POCA is to enable recovery in civil proceedings in each part of the UK of property which is or represents property obtained through unlawful conduct.
The focus is on the property rather than a particular defendant.
In their natural meaning, and in the absence of provisions corresponding to those for enforcement abroad in Parts 2, 3 and 4, the provisions of Part 5 apply only to property within the UK [53 56, 136].
The only anomaly with this analysis was the presence of section 286(2) POCA which purported to create a different position in Scotland from that in the rest of the UK.
There was no satisfactory explanation for this and it remained an enigma [75 77] (Lord Reed thought it may have reflected a misunderstanding [152]), but it did not alter the overall conclusion that the High Court of England and Wales had no jurisdiction under Part 5 to make a recovery order in relation to property outside England and Wales.
Thus the property covered by the PFO must be limited to such property, and the appellants could not be required under it to disclose all their worldwide assets [78 82].
The notices under the DO were given to persons who were, and were known by SOCA to be, outside the jurisdiction of the UK.
Compliance with such orders was subject to penal sanction.
It was generally contrary to international law for country A to purport to make criminal conduct in country B committed by persons who are not citizens of country A.
It was therefore implicit that the power to impose positive obligations to provide information could only be exercised in respect of persons who were within the UK and the DO did not authorise the sending of notices to persons outside the UK [94, 98].
Lord Judge and Lord Clarke, dissenting on the PFO appeal, agreed that POCA was poorly drafted but held that the objective was clearly to deprive criminals of the proceeds of their crimes, whether here or abroad [160].
The expression all property wherever situated should have the same meaning in all sections in which it appeared [164].
Control mechanisms had been created in Part 5 to ensure that orders made could avoid any improper extra territorial effect or infringement of the principle of sovereignty.
Recovery orders took personal effect and, in respect of foreign property, were subject to the local law [167].
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The appellant, O, is a woman of Nigerian nationality, aged 38.
In November 2003, with her son, then aged three, she illegally entered the UK.
In July 2008 she pleaded guilty to offences of cruelty towards her son, who had returned to live in Nigeria, and the court sentenced her to 12 months imprisonment and recommended that she be deported.
On 8 August 2008 her sentence came to an end, whereupon the respondent, the Home Secretary, detained her at first pending the making of a deportation order and then, following the making of such an order, pending her deportation pursuant to it.
Os detention, which was at the Immigration Removal Centre (IRC) at Yarls Wood in Bedfordshire, continued until 6 July 2011 when, pursuant to a grant of bail on 1 July 2011, she was released.
It follows that O was detained at Yarls Wood for almost three years.
The court knows nothing about her circumstances after 6 July 2011 but infers that she has not, or not yet, been deported.
In her first claim for judicial review, O, acting (as now) by the Official Solicitor, her litigation friend, challenged the lawfulness of the earlier period of her detention, namely from 8 August 2008 to 22 July 2010.
In the Administrative Court her claim failed entirely but on appeal it succeeded to a limited extent.
By its decision, entitled R (OM) v Secretary of State for the Home Department [2011] EWCA Civ 909 and dated 28 July 2011, the Court of Appeal held that for most of that earlier period, namely until 28 April 2010, O had been the subject of unlawful detention but was entitled only to nominal damages in respect of it and that for the remainder of that earlier period she had not been the subject of unlawful detention at all.
In the present proceedings, which chronologically encompass her fourth claim for judicial review, O challenges the lawfulness of the later period of her detention, namely from 22 July 2010, and in particular from say 4 March 2011, until 6 July 2011.
The object of the present proceedings has never been to secure her release, which had already occurred at the time of their issue.
The object has been to secure a declaration that the detention was unlawful and, perhaps in particular, an award of substantial damages for false imprisonment.
But on 3 April 2012 Lang J refused to grant permission for this claim to proceed and on 17 July 2014 the Court of Appeal (by a panel which comprised Arden LJ, who gave the substantive judgment, and Underhill and Floyd LJJ, who agreed with it) dismissed her appeal: [2014] EWCA Civ 990, [2015] 1 WLR 641.
O now asks this court to grant permission for the claim to proceed and therefore to remit it to the Administrative Court, so that, following the filing by the Home Secretary of detailed grounds for contesting it and of any written evidence on which she wished to rely, it might proceed to substantive determination.
O has the misfortune to have suffered for many years from serious mental ill health.
So the appeal requires this court to consider the Home Secretarys policy relating to the detention of the mentally ill pending deportation; and perhaps also to identify the criterion by which the court should determine a complaint that she has failed to implement some aspect of her policy relating to it.
Furthermore the Home Secretary is obliged to conduct monthly reviews of whether a persons detention pending deportation should continue.
There were, as the Court of Appeal held, defects in the Home Secretarys conduct of the monthly reviews of Os detention between March and July 2011.
The appeal requires this court to identify the effect of the deficiencies on the lawfulness of her detention during those four months, particularly in the light of the Court of Appeals decision in R (Francis) v Secretary of State for the Home Department (Bail for Immigration Detainees intervening) [2014] EWCA Civ 718, [2015] 1 WLR 567.
Supported by Bail for Immigration Detainees which, jointly with Medical Justice, also intervenes in the present appeal, O contends that the Francis case was wrongly decided.
BACKGROUND
It was within days of their arrival in the UK in November 2003 that O (a) committed the offence of cruelty to her son, contrary to section 1 of the Children and Young Persons Act 1933. (b) In 2004, upon being charged with that offence, O was granted bail but she absconded and did not attend court on the date in February 2005 for which the trial had been fixed. (c) Meanwhile, earlier in 2004, Os claim for asylum or for discretionary leave to remain in the UK under the European Convention on Human Rights (the ECHR) was refused and her appeal against the refusal dismissed.
In July 2005, while she remained unlawfully at large, O gave birth to (d) a daughter, whom, to Os great distress, a court later authorised to be placed for adoption. (e) In September 2007 O was arrested and charged with making a false instrument, namely a false identity document which she had used in an attempt to open a bank account, for which she was later convicted and sentenced to imprisonment for nine months. (f) In due course it was realised that O was the subject of the outstanding charge of child cruelty, to which in due course she pleaded guilty and for which, in July 2008, she became subject to the sentence of 12 months imprisonment and to the recommendation for deportation.
In that the length of the sentence was such as, subject to exceptions, to oblige the Home Secretary to order O to be deported under section 32(5) of the UK Borders Act 2007 (the 2007 Act), no such recommendation would nowadays be given: R v Kluxen [2010] EWCA Crim 1081, [2011] 1 WLR 218. (g) On 5 August 2008, three days prior to Os release from prison and the beginning of her detention at Yarls Wood, the Home Secretary served notice of her intention to make a deportation order in respect of O. (h) On 25 November 2010, following conclusion of the family proceedings relating to Os daughter, the Home Secretary made the deportation order in respect of O. (i) On 7 December 2010 O applied to the Home Secretary to revoke the deportation order on human rights grounds but on 13 January 2011, confirmed on 8 April 2011, the Home Secretary rejected the claim and certified it as clearly unfounded. (j) On 18 January 2011 the Home Secretary made directions for Os removal to Nigeria on a flight booked for 7 February 2011. (k) On 24 January 2011 O issued her second claim for judicial review, which was by way of challenge to the Home Secretarys certificate. (l) On 4 February 2011 the court enjoined the Home Secretary from effecting Os removal to Nigeria on 7 February. (m) On 7 March 2011 a tribunal judge refused to grant bail to O, whereupon she issued her third claim for judicial review by way of challenge to the refusal. (n) On 20 May 2011 a court refused to permit O to proceed with her third claim but permitted her to proceed with her second claim, which ultimately, in November 2012, was upheld, with the result that the Home Secretarys certificate was quashed. (o) Meanwhile, on 17 June 2011, a tribunal judge again refused to grant O bail but on 1 July 2011 she granted it, whereupon, on 6 July 2011, she was released from detention. (p) On 5 October 2011 O issued her fourth claim for judicial review, in which she brings the present appeal.
Os MENTAL ILL HEALTH
During the period of her imprisonment and of her detention at Yarls Wood O displayed signs of serious mental ill health, including by a number of attempts at suicide and other acts of self harm; by suffering hallucinations; and by unpredictable mood swings and impulsive outbursts.
There she was mainly treated with high doses of anti psychotic and anti depressant medication.
In May 2008, for the purposes of the court in sentencing her for the offence of child cruelty, Dr Olajubu, a specialist registrar in forensic psychiatry, diagnosed O as suffering a recurrent depressive disorder and an emotionally unstable personality disorder.
He considered that in prison she would have access to all appropriate psychological interventions.
On 30 April 2009 Professor Katona, a consultant psychiatrist, made the first of a series of reports on O at her request.
At that time he agreed with the diagnosis of Dr Olajubu but on 21 September 2009 he reported a considerable deterioration in Os condition and recommended that the Home Secretary should direct her transfer from Yarls Wood to hospital under section 48 of the Mental Health Act 1983.
On 12 March 2010, following an attempt to suffocate herself, O was admitted to the psychiatric wing of Bedford Hospital for assessment.
On 15 March 2010 Dr Ratnayake, a consultant psychiatrist there, led the assessment and, by letter of discharge to Yarls Wood of that date, he expressed agreement with Dr Olajubus diagnosis of O as having an emotionally unstable personality disorder, which Dr Ratnayake said was of a borderline type.
He added that his team found no true psychosis in her and that her needs, in particular for constant observation and continued medication, would be adequately met at Yarls Wood, to where accordingly she was returned.
On 16 July 2010 Professor Katona reported that, although Os acts of self harm had become somewhat less frequent and her depression less profound, he maintained his recommendation for her transfer to hospital.
On 10 February 2011 Dr Agnew Davies, a clinical psychologist with special expertise on the impact of trauma on the mental health of women, reported on O. Her report forms the foundation of this appeal.
It runs to 69 pages.
Instructions to her to make the report came from Os solicitors, who asked her to comment in particular upon whether Os detention was detrimental to her mental health and upon the effect on it of her forcible return to Nigeria.
Dr Agnew Davies reported: (a) that O gave a plausible history of having suffered frequent physical and sexual abuse at the hands of an uncle when she was aged between 11 and 14 and in his care in Nigeria; (b) that staff at Yarls Wood had told her that since the summer 2010 Os behaviour had been more stable and that she had undertaken a short course of cognitive behavioural therapy; (c) that her study of Os records, her lengthy interview with O and the results of application to her of mainstream psychological tests led her to diagnose in O not only a major depressive disorder but, in particular, a severe, complex and chronic form of post traumatic stress disorder (PTSD) arising out of her uncles protracted abuse of her; (d) necessary mental health services at Yarls Wood; (e) (f) services; (g) (h) that she was not fit to live independently without professional support; that recovery of her mental health could occur only over the long term; that release from detention would greatly benefit her mental health; that she needed a long term structured package of mental health that, unlike Dr Ratnayake, she considered that O could not access the that neither medication nor general counselling services would alone (i) be enough to secure her recovery; (j) that she needed to be referred to a specialist trauma focussed psychiatric clinic, such as those in London provided by St Bartholomews Hospital, by the Maudsley Hospital and by three others, for treatment which would take place in phases over years; (k) that such a referral was in accordance with guidance issued by the National Institute for Health and Care Excellence (NICE) to the effect that neither general counselling services nor treatment with medication could alone provide sufficient interventions in a severe, complex case of this sort; and (l) that her deportation to Nigeria would have grave effects upon her mental health and be likely to precipitate unsuccessful attempts at suicide followed perhaps by a successful one.
On 30 June 2011, for the purposes of the application for bail which proved successful on the following day, Dr Agnew Davies wrote an addendum report.
She noted the apparent absence of any acts of self harm on Os part during the previous six months and, from her psychological perspective, she urged Os immediate release.
She recommended that O should receive medical support in the community from a home treatment team and later from a community mental health team and, as before, that in the long term O should engage in treatment at a specialist clinic.
Also on 30 June 2011 Professor Katona wrote a further report in which, without having again interviewed O, he reviewed the reports of Dr Agnew Davies and the up to date medical records from Yarls Wood.
In the light of the marked improvement in Os self harming behaviour, he withdrew his recommendation for her transfer to hospital.
He now agreed with Dr Agnew Davies that O was suffering PTSD in addition to her depressive disorder.
He also agreed with her recommendation for O to access medical care in the community and in the long term for her to undertake treatment at a specialist clinic, which, he added, would probably continue for two or three years.
AUTHORITY TO DETAIN
Paragraph 2 of Schedule 3 to the Immigration Act 1971 (the 1971 Act), entitled Detention or control pending deportation, provides: (1) Where a recommendation for deportation made by a court is in force in respect of any person, and that person is not detained in pursuance of the sentence or order of any court, he shall be detained pending the making of a deportation order in pursuance of the recommendation, unless the Secretary of State directs him to be released pending further consideration of his case or he is released on bail. (1A) (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 of a decision to make a deportation order against him he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise).
I have set four words above in italics in order that the reader may more easily understand my discussion in paras 42 to 49 below of the Francis case cited at para 4 above.
In that she had been the subject of a recommendation for deportation, it follows that from 8 August 2008 to 25 November 2010 O was detained under para 2(1) of Schedule 3 to the 1971 Act and that, from 25 November 2010, when the deportation order was made in respect of her, until 6 July 2011 she was detained under the words in parenthesis in para 2(3) of the schedule.
In that the Home Secretary made the deportation order in accordance with section 32(5) of the 2007 Act, it is worthwhile to note section 36(2) of that Act, which provides: Where a deportation order is made in accordance with section 32(5) the Secretary of State shall exercise the power of detention under paragraph 2(3) of Schedule 3 to the [1971 Act] unless in the circumstances the Secretary of State thinks it inappropriate.
I have set the word power in italics for the same reason.
POLICY
[I]mmigration detention powers need to be transparently identified through formulated policy statements, observed Lord Dyson in R (Lumba) v Secretary of State for the Home Department (JUSTICE and another intervening) [2011] UKSC 12, [2012] 1 AC 245 at para 34.
The Home Secretarys published policy in this regard is set out in Chapter 55, entitled Detention and Temporary Release, of a manual addressed to caseworkers and entitled Enforcement Instructions and Guidance (the manual).
It states: (a) at para 55.1.1 that the power to detain had to be retained in the interests of maintaining effective immigration control but that there was a presumption in favour of release; (b) at para 55.1.2 that the presumption applied even to foreign national offenders (such as O) but that, in relation to detention pending their intended deportation, the risks of their re offending and absconding might well outweigh it; and (c) at para 55.8 that, following the start of any detention, reviews of it were necessary in order to ensure that it remained lawful and in line with policy; that in a criminal case (such as that of O) they should take place at least every 28 days; and that the law required detainees to be provided every 28 days with written reasons for their continued detention, based on the outcome of the reviews.
Paragraph 55.10 of the manual is entitled Persons considered unsuitable for detention.
It states: Certain persons are normally considered suitable for detention in only very exceptional circumstances In criminal cases, the risk of further offending or harm to the public must be carefully weighed against the reason why the individual may be unsuitable for detention.
There may be cases where the risk of harm to the public is such that it outweighs factors that would otherwise normally indicate that a person was unsuitable for detention.
The following are normally considered suitable for detention in only very exceptional circumstances : Those suffering from serious mental illness which cannot be satisfactorily managed within detention The words at the bullet point quoted above were introduced into the paragraph on 25 August 2010.
Prior to that date the category was described as those suffering from serious medical conditions or the mentally ill.
It is clear that, in considering whether there are very exceptional circumstances which make a person suitable for detention even though her (or his) serious mental illness cannot satisfactorily be managed there, the caseworker has to weigh the severity of any risks of offending or further offending and of absconding.
On 14 January 2016 Mr Stephen Shaw CBE made a report to the Home Secretary entitled Review into the Welfare in Detention of Vulnerable Persons, Cm 9186.
His eleventh recommendation was that the phrase satisfactorily managed should be removed from para 55.10 of the manual.
Mr Shaw noted suggestions that the meaning of the phrase was inexact and obscure and he stated that, irrespective of whether it was satisfactorily managed, serious mental illness among detainees was clearly not being treated in accordance with good psychiatric practice.
REVIEWS OF Os DETENTION
A central inquiry mandated by this appeal is into the treatment of the report of Dr Agnew Davies in the Home Secretarys reviews of Os detention.
The report was submitted to the Home Secretary under cover of a letter from Os solicitors dated 16 February 2011.
It is of some relevance that it was expressly submitted in support of Os application, then recently issued, for judicial review of the Home Secretarys certificate that the application to revoke the deportation order had been clearly unfounded.
In the letter Os solicitors quoted at some length from the report and stressed passages relevant to the claim for judicial review, including doubts about Os ability to conduct an out of country appeal and the risk of her suicide in the event of deportation.
Although in the letter they did refer to the diagnosis of PTSD, the solicitors did not refer to the recommendation of treatment at a specialist clinic in London; did not allege that Os illness could not be satisfactorily managed at Yarls Wood; and, generally, did not question the legality of Os continued detention in the short term.
By letter dated 8 April 2011 the Home Secretary, by her caseworker, replied to the letter dated 16 February 2011.
Again the context of the letter was Os claim for judicial review rather than the legality of her continued detention in the short term; and the gist of it was that the Home Secretary found nothing in the report of Dr Agnew Davies to lead her to abandon her defence of the claim.
Presumably in an attempt to show that she had carefully read it, the writer quoted at length from the report, including that the doctor had diagnosed PTSD.
Oddly, however, she then twice asserted that the report contained no new diagnosis.
She said that, in response to Dr Agnew Davies report, the medical officers at Yarls Wood had explained that Os condition had become more stable; that her last attempt at self harm had occurred more than a year previously; and that she was compliant with her medication.
In the six reviews of Os detention which were written between 4 March 2011 and 4 July 2011, each prepared by the caseworker who wrote the letter dated 8 April 2011 and each duly countersigned by senior officers, only the briefest reference was made to the report of Dr Agnew Davies.
Inserted into the lengthy recital in each review of Os protracted immigration history was reference to yet another psychiatric report, which had been treated as a further request to revoke the deportation order.
Again oddly, the reviews identified Os most recent diagnosis as being that of Dr Ratnayake on 15 March 2010.
In each case the senior officers in effect indorsed the caseworkers conclusion that the risk of Os reoffending and absconding outweighed the presumption in favour of release.
One has some sympathy for the caseworker because the report of Dr Agnew Davies had been submitted to the Home Secretary as relevant to an issue different from that of the legality of Os continued detention in the short term.
Nevertheless on any view the report bore some relevance to the Home Secretarys policy relating to the detention of the mentally ill and should have been properly addressed in the reviews.
The reviews (a) failed to refer to Dr Agnew Davies diagnosis of O as suffering PTSD; (b) indeed wrongly stated that the most recent diagnosis of Os mental condition was that of Dr Ratnayake; (c) failed to refer to Dr Agnew Davies assessment of Os need for treatment at a specialist trauma focussed psychiatric clinic; and (d) failed therefore to consider whether O could be satisfactorily managed at Yarls Wood and, even if not, whether there were very exceptional circumstances which nevertheless justified her continued detention.
In the above circumstances the Court of Appeal concluded that the Home Secretary had unlawfully failed to apply the policy set out in para 55.10 of the manual when deciding to continue to detain O between March and July 2011.
This conclusion the Home Secretary now accepts.
She does not suggest that the evidence which she would be entitled to file in the event that the claim was permitted to proceed would be likely to throw a different light on it.
The defects in the reviews already filed speak for themselves.
Appendix 4 to Mr Shaws recent report, referred to in para 20 above, is an assessment by Mr Jeremy Johnson QC of six High Court cases in which since 2010 the Home Secretarys treatment of immigration detainees has been held to be inhuman or degrading and therefore in violation of their rights under article 3 of the ECHR.
He also assessed at least six other cases in which, without identifying a violation of article 3, the High Court or the Court of Appeal held the detention to have been unlawful.
For the purposes of these assessments Mr Johnson made a detailed study of the Home Secretarys detention reviews and concluded: There are two themes that run through the cases.
The first is that the person reviewing detention does not always appear to have been aware of all of the relevant evidence (particularly medical evidence) that is relevant to the assessment of whether it is appropriate to detain (so sequential reviews are written in almost identical terms without any reference being made to important developments in the medical picture).
The second is that decisions to detain are made without properly engaging with the test that has to be satisfied before a decision is made.
The reviews of Os detention between March and July 2011 are perfect illustrations of both of Mr Johnsons themes.
The next question is: were she to have applied her policy correctly, how would the Home Secretary have reacted to the report of Dr Agnew Davies? The first part of the answer is to consider the meaning of the phrase satisfactory management.
There is lively dispute between the parties as to the nature of the courts review of the legality of the Home Secretarys application of policy (which presupposes that she has purported to apply it: see para 37 below).
But in this appeal there is no dispute that the courts approach to the meaning of the policy is to determine it for itself and not to ask whether the meaning which the Home Secretary has attributed to it is reasonable: R (Raissi) v Secretary of State for the Home Department [2008] EWCA Civ 72, [2008] QB 836, paras 107 to 123.
SATISFACTORY MANAGEMENT
NHS England is responsible for commissioning the provision of all health services in IRCs as well as in prisons in England pursuant to regulations made under section 3B(1)(c) of the National Health Service Act 2006.
What level of health services should NHS England arrange to be provided there? The answer is to be found in the following two principles identified in the Partnership Agreement, first published in 2013 and republished in April 2015, between Home Office Immigration Enforcement, NHS England and Public Health England, at p 12: Detainees should receive health care equivalent to that available to the general population in the community with access to services based on clinical need and in line with the Detention Centre Rules; and Health and wellbeing services in IRCs should seek to improve health and wellbeing (including parity of esteem between services which address mental and physical health) In relation to the detention of those suffering from mental health problems, the Home Secretarys Policy Equality Statement dated 26 November 2014 recorded her agreement with NHS England that the provision of healthcare at a standard equal to that provided in the community was a core principle.
She noted, however, that respondents to her consultation had suggested that in IRCs there was an insufficiency of specialist mental health interventions, with the result that adherence to the principle was not achieved.
Although both the Partnership Agreement and the Equality Statement post date 2011, the Home Secretary does not suggest that they are irrelevant to the interpretation of the policy then applicable to O.
In formulating policy that, save very exceptionally, management of serious mental illness in an IRC, if not satisfactory, should precipitate release, the Home Secretary has adopted a word of extreme and appropriate elasticity.
It catches a host of different factors to which the circumstances of the individual case may require her to have regard.
In R (Das) v Secretary of State for the Home Department (Mind and another intervening) [2014] EWCA Civ 45, [2014] 1 WLR 3538, in a judgment with which Moses and Underhill LJJ agreed, Beatson LJ, at paras 45 to 47 and 65 to 70, offered a valuable discussion of the phrase satisfactory management.
I respectfully disagree with him only in relation to an aside in para 71 of his judgment.
Beatson LJ there expressed an inclination to accept the Home Secretarys contention that, if the management of the illness in an IRC was likely to prevent its deterioration, it would be satisfactory even if treatment was available in the community which was likely to secure its improvement.
I would not exclude the relevance of treatment, available to the detainee only if released, which would be likely to effect a positive improvement in her (or his) condition.
If it was likely that such treatment would actually be made available to the detainee (rather than be no more than on offer in principle to all members of the community in NHS publications), its availability should go into the melting pot; and the burden would be upon the Home Secretary to inquire into its availability.
If, contrary to the Partnership Agreement quoted in para 29 above, the standard of care (expressly aimed at improving health as well, of course, as preventing it from deteriorating) provided to a detainee in an IRC were for some reason not equal to that which would be made available to her if released, it would in my view be questionable, subject to the strength of other relevant factors, whether the management of her illness in the IRC was satisfactory.
While satisfactory management does not mean optimal management, a narrow construction of the word management as meaning no more than control of the illness would lack principled foundation, particularly when in very exceptional circumstances the detainee may continue to be detained in the IRC pursuant to the policy notwithstanding the unsatisfactory management of her illness there.
Above all the policy in para 55.10 of the manual mandates a practical inquiry.
As Beatson LJ stressed in the Das case, the phrase satisfactory management should be interpreted with regard to its context and purpose (para 45); should not be subjected to the fine analysis appropriate to a statute (para 47); nor invested with a spurious degree of precision (para 65).
An important part of its context is that the management of the illness takes place in detention pending likely deportation.
Treatment of a patient who finds herself in the doubly stressful circumstances both of detention and of likely deportation has its own considerable, extra challenges; treatment in those circumstances might be satisfactory even if it would not otherwise be satisfactory.
The reliance by Dr Agnew Davies on highly generalised words of guidance issued by NICE, set out in para 11(k) above, leads O to refer the court to the paragraph in The NHS Constitution for England, updated to 14 October 2015, which tells the patient: You have the right to drugs and treatments that have been recommended by NICE for use in the NHS, if your doctor says they are clinically appropriate for you.
But Os argument is underdeveloped and carries her appeal no further.
Precisely what treatment has been recommended for use in the NHS and for use in what circumstances? As I explore more fully below, would the doctor responsible for O have agreed that treatment at the trauma clinic was clinically appropriate for her and, if so, would it have been among the treatments which the doctors local clinical commissioning group had decided to commission? And to what extent is the right referred to in the NHS Constitution circumscribed by the limited availability of recommended treatments?
Had she sought to ask herself whether, in the light of the report of Dr Agnew Davies, Os illness would satisfactorily be managed at Yarls Wood, the Home Secretary would have sought to obtain answers to questions along the following broad lines: (a) Was Dr Agnew Davies likely to be correct in diagnosing PTSD in O? No one had previously diagnosed it.
In particular it had been diagnosed neither by Dr Ratnayake nor (until 30 June 2011) by Professor Katona. (b) In particular did the clinicians treating O at Yarls Wood agree with the diagnosis and, if not, what diagnosis did they favour? Their intimate and protracted exposure to O might, subject to the quality of their response, invest their views with considerable authority. (c) What was the nature of the treatment currently provided to O at Yarls Wood? (d) How satisfactory did the clinicians regard the current treatment and would they confirm the improved stability of Os behaviour reported by Dr Agnew Davies? (e) Was it necessary to instruct an independent psychologist to comment on the diagnosis of Dr Agnew Davies? (f) What was the likely length of time before the Home Secretary could achieve Os deportation? In February 2011 she had come close to achieving it but Os second claim for judicial review in relation to revocation of the deportation order was pending. (g) Insofar as Dr Agnew Davies was recommending that O needed at once to embark on lengthy treatment at a specialist trauma focussed clinic, would the doctor responsible for O approve it and was the recommendation in any way practical? Was there evidence that any such clinic could and would accept O, as a foreign citizen awaiting deportation, even for immediate assessment let alone for early treatment? (h) If O were released into the community, what accommodation should be provided for her and would its location be compatible with her need to undergo the treatments appropriate for her? (i) What medical services (in particular, what mental health services) and what local authority community care services would be available to O in her locality immediately following any release?
Realistically O accepts that the proper application of the Home Secretarys policy to her case in the light of the report of Dr Agnew Davies would not have led to her immediate release in March 2011.
She correctly contends that the report should have led the Home Secretary to make inquiries.
We cannot predict the result of the inquiries, most of which, judged by the contents of the reviews, seem never to have been made.
Indeed, even if, which is doubtful and which indeed the Court of Appeal expressly rejected, the appropriate conclusion would or might have been that Os illness could not be satisfactorily managed in detention, the Home Secretary, in considering whether there were very exceptional circumstances which nevertheless justified her continued detention, would have had to consider the risks of her absconsion and (possibly also) re offending.
On 1 July 2011 the tribunal judge rated them as acceptably low.
But, in his judgment given later that month on Os appeal in her first claim for judicial review, and therefore by reference to the circumstances which existed only up to 22 July 2010, Richards LJ at para 36 assessed the risk of her absconsion as very high.
At least, however, the limited period between March and her release on bail on 6 July 2011 makes one thing clear: even on the dubious assumption that proper application of her policy should in due course have led the Home Secretary to direct Os release, it is unrealistic to consider that the conditions necessary for her release would have been in place prior to 6 July 2011.
For the above reasons, in agreement with the Court of Appeal, I regard it as already clear that, although the Home Secretary unlawfully failed to apply her policy under para 55.10 of the manual to Os continued detention between March and July 2011, a lawful application of her policy would not have secured Os release from detention any earlier than the date of her actual release on bail.
I have referred at para 28 above to the dispute as to the nature of the courts review of the legality of the Home Secretarys application of policy.
It is now settled at the level of the Court of Appeal at first sight unsurprisingly that the nature of the review is the traditional public law inquiry into whether the application of it was rational: R (ZS) (Afghanistan) v Secretary of State for the Home Department [2015] EWCA Civ 1137.
In para 30 above I have explained the open texture of the concept of satisfactory management, which reflects the wide range of factors relevant to it and explains the broad nature of the Home Secretarys decision making process.
If indeed the inquiry is into the decisions rationality, a process of that breadth may very well yield more than one rational, and thus more than one lawful, decision.
But, supported by the interveners, O vigorously commends a more muscular approach.
She insists that the subject is liberty; that indeed it is liberty denied by executive diktat; and that nothing less than an intense judicial inquiry into whether the application of policy was correct can be warranted in circumstances so controversial and of such fundamental importance.
I do not descend more fully into the rival contentions noted above because I consider that this appeal does not afford to the court the opportunity to choose between them.
For the Home Secretary failed to address the satisfactory management or otherwise of Os illness at Yarls Wood in the light of Dr Agnew Davies report and so there is no decision for a court to be able on either basis to appraise.
Instead the overall refusal to release O betrays a different type of public law error: it was procedurally flawed.
What however is clear is that, even in the absence of any flaw, no decision to release O would in any event have been made prior to 6 July 2011.
THE LUMBA PRINCIPLE
In the Lumba case, cited at para 17 above, two foreign nationals, Mr Lumba and Mr Mighty, were sentenced to terms of imprisonment, apparently without being recommended for deportation by the sentencing judge.
Once their sentences came to an end, and following notice of her decision to make deportation orders against them, the Home Secretary detained them; and, following the making of those orders, her detention of them continued.
So initially, unlike O, they were detained pursuant to para 2(2) of Schedule 3 to the 1971 Act, set out in para 14 above; and subsequently, like O, they were detained pursuant to the words in parenthesis in para 2(3) of the schedule, also there set out.
In proceedings for judicial review they challenged the lawfulness of their detention and claimed damages for false imprisonment.
At the time of the detention of the two men the Home Secretarys published policy was that, even in relation to foreign national prisoners such as them, there was a presumption that they should be at liberty pending their intended deportation.
In fact, however, the Home Secretary detained them pursuant to an unpublished policy which, inconsistently with her published policy, amounted almost to a blanket resolution on her part to detain foreign national prisoners pending intended deportation.
It had been patently unlawful for the Home Secretary to apply to them an unpublished policy which was inconsistent with the published one.
It was also clear, however, that, had the Home Secretary applied her published policy to them, her decision would, similarly, have been to detain them.
This had led the Court of Appeal to hold that her unlawful application of policy had not made their detention unlawful.
By a majority, this court disagreed.
Giving the leading judgment, Lord Dyson said: 71.
I can see that at first sight it might seem counter intuitive to hold that the tort of false imprisonment is committed by the unlawful exercise of the power to detain in circumstances where it is certain that the claimant could and would have been detained if the power had been exercised lawfully.
But the ingredients of the tort are clear.
There must be a detention and the absence of lawful authority to justify it.
Where the detainer is a public authority, it must have the power to detain and the power must be lawfully exercised.
Where the power has not been lawfully exercised, it is nothing to the point that it could have been lawfully exercised.
If the power could and would have been lawfully exercised, that is a powerful reason for concluding that the detainee has suffered no loss and is entitled to no more than nominal damages.
But that is not a reason for holding that the tort has not been committed.
I provisionally conclude that, were Os claim for judicial review permitted to Although an unrelated aspect of one claim was remitted for further consideration, the claims relating to the Home Secretarys policy thus resulted in awards to each of the two men of damages in the sum of 1.
proceed, it should therefore lead to the same result.
The Home Secretary, however, contends that the Lumba case is distinguishable from the present case; and that, where the detainee is initially detained, as here, under para 2(1) of Schedule 3 to the 1971 Act, rather than under para 2(2) of the schedule, an unlawful application of policy does not make the detention itself unlawful; and that therefore it does not generate a right even to nominal damages for false imprisonment.
In this respect the Home Secretary relies on the Francis case, cited at para 4 above.
THE FRANCIS CASE
Although the initial detention of the two men in the Lumba case had been effected pursuant to paragraph 2(2) of Schedule 3 to the 1971 Act, the Court of Appeal in that case, [2010] EWCA Civ 111, [2010] 1 WLR 2168, in the course of explaining its decision (later reversed), had in passing addressed the effect of para 2(1) of the schedule.
It had clearly had in mind the difference between the words shall in para 2(1) and may in para 2(2), both of which I have set in italics in my quotation of the sub paragraphs in para 14 above; and at paras 88 to 89 it had proceeded to observe that, unlike detention under para 2(2), a persons detention under para 2(1) was authorised by that sub paragraph itself and that, even were the Home Secretary to have made an unlawful decision not to direct that persons release, the lawfulness of the detention would therefore remain unaffected.
In para 55 of his judgment in this court in the Lumba case Lord Dyson had specifically put those observations to one side.
In the Francis case the Court of Appeal, by a majority (Moore Bick and Christopher Clarke LJJ), reached its decision by reference to the observations which that court had made in passing in the Lumba case.
Mr Francis, who for the purposes of the proceedings was assumed to have Jamaican rather than British nationality, had been sentenced to a term of imprisonment and recommended for deportation.
On 4 December 2007 his sentence came to an end and he was detained pending the making of a deportation order.
Following the making of that order on 21 May 2008, he continued to be detained until 29 September 2011.
So, like that of O, his initial detention was effected pursuant to para 2(1) of Schedule 3 (being a shall provision) and his subsequent detention was effected pursuant to the words in parenthesis in para 2(3) (also being a shall provision).
The Court of Appeal divided the detention of Mr Francis into three periods: (a) The first period was from 4 December 2007 to 9 September 2008.
In respect of this period the court adopted the conclusion of the trial judge that the Home Secretary had, as in the Lumba case, unlawfully applied to Mr Francis an unpublished policy in favour of detention which was inconsistent with her published policy. (b) The second period was from 9 September 2008 to 1 June 2010.
In respect of this period the court adopted the conclusion of the trial judge that the Home Secretary had unlawfully failed to apply her policy by failing to cause the reviews of the continued detention of Mr Francis to be conducted by persons with authority to direct his release. (c) The third period was from 1 June 2010 to 29 September 2011.
The court adopted the finding of the trial judge that during this period there was no longer any prospect that the deportation of Mr Francis would take place within a reasonable time.
Although the focus required by the present case is upon the courts treatment in the Francis case of the first and second periods, its treatment of the third period remains important.
This requires reference to principles which are no longer in play in the present case, namely the Hardial Singh principles, named after the decision of Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704.
In due course Lord Dyson distilled the decision of Woolf J into four principles of public law and he repeated them in para 22 of his judgment in the Lumba case.
The second Hardial Singh principle is that the Home Secretary should detain a person pending intended deportation only for a reasonable period and the third is that if, before the expiry of the reasonable period, it becomes apparent that the Home Secretary will not be able to effect deportation within a reasonable period, she should direct release.
In the Francis case the Court of Appeal concluded, in the light of the judges finding, that in respect of the third period the Home Secretary had been in breach of the third Hardial Singh principle.
What, however, is of importance is that it then proceeded to hold that the detention of Mr Francis during the third period had been rendered unlawful by the Home Secretarys breach of the third principle and that accordingly he was entitled to damages for false imprisonment during that period.
By contrast, however, the Court of Appeal proceeded to hold that neither of the different deficiencies in the Home Secretarys application of policy during the first and second periods rendered the detention of Mr Francis during those periods unlawful.
The court felt obliged to give a different value to the word shall in para 2(1) of Schedule 3 from that to be given to the word may in para 2(2) of it.
Moore Bick LJ said: 21.
In the present case there was no discretionary decision to detain the claimant which was capable of being vitiated by the application of an unlawful policy . 22.
The fact remains that the decision to detain has been made by Parliament and the statute provides the authority for detention, unless and until the [Home Secretary] exercises the power to release him.
It is that which distinguishes detention under sub paragraph (1) from detention under sub paragraph (2).
And see the judgment of Christopher Clarke LJ at paras 53 and 54.
Notwithstanding the proper predisposition of any court to discern a difference of effect in any difference of language between statutory provisions, I have, with great respect to Moore Bick and Christopher Clarke LJJ, come to the conclusion that their decision in relation to the first and second periods was wrong.
It was wrong for the following reasons, taken cumulatively: (a) Any claim by the Home Secretary to be entitled to detain a person pending deportation must be clearly justified by the statutory language: Khawaja v Secretary of State for the Home Department [1984] AC 74, 122 (Lord Bridge of Harwich). (b) The Home Secretarys duty to review the continuation of detention applies as much to those detained under para 2(1) as to those detained under para 2(2).
Why would Parliament intend that the same unlawful deficiencies in her conduct of those reviews should have such different legal consequences? (c) Why should the effect of a recommendation for deportation, with the result that detention falls into para 2(1) rather than para 2(2), be that it remains lawful notwithstanding the Home Secretarys unlawful application of policy? A Crown Court judges recommendation, perhaps made several years previously, has no other legal consequence, let alone one of such significance, and it is not even a recommendation for detention pending deportation. (d) Both men in the Lumba case were detained initially under para 2(2) (being a may provision) and subsequently under the words in parenthesis in para 2(3) (being a shall provision).
This court decided that they had been unlawfully detained throughout both periods as a result of the Home Secretarys unlawful application of policy; and it clearly considered that their later detention under the shall provision was no impediment to its decision.
It was no doubt respect for this courts decision which led Moore Bick LJ in the Francis case to suggest at para 17 that [t]he natural meaning of the words in paragraph 2(3) (and the meaning which best gives effect to the purpose of paragraph 2 as a whole) is that if the person in question has been detained, whether under sub paragraph (1) or (2), his detention is to continue on the same basis.
His suggestion therefore was that, where detention began under the authority of para 2(2), with the result that it would be rendered unlawful by any misapplication of policy, the same result would continue even after a deportation order was made and after authority for the detention instead became conferred by the words in parenthesis in para 2(3).
But, if in that situation no different effect is to be attributed to the word shall when found in the parenthesis in para 2(3), it is hard to attribute a different effect to it when found in para 2(1). (e) Section 36(2) of the 2007 Act, set out in para 16 above, refers to the Home Secretarys exercise of the power of detention under para 2(3).
But, according to the decision in the Francis case, Parliaments reference to a power under para 2(3) was incorrect in circumstances in which detention under para 2(3) has been preceded by detention under para 2(1). (f) The courts treatment in the Francis case of the Home Secretarys breach of the third Hardial Singh principle seems to me to have been at odds with its treatment of her unlawful application of policy.
The former was held to have rendered detention during the third period unlawful.
The latter was held not to have rendered detention during the first and second periods unlawful.
But why the difference? Moore Bick LJ suggested at para 47 that the Hardial Singh principles can be understood as implied limitations on the scope of an otherwise unqualified direction.
But why should the requirement in public law for the Home Secretary properly to apply her policy have any lesser effect than the requirement in public law for her to comply with the Hardial Singh principles? (g) In my view, therefore, the preferable analysis is along the lines sketched by Sir Stephen Sedley in his concurring judgment in the Francis case at paras 56 and 57, namely that the mandate to detain conferred by para 2(1) and by the words in parenthesis in para 2(3) is subject to two conditions.
At the risk of oversimplifying the Hardial Singh principles, I would summarise the first condition as being that there is a prospect of deportation within a reasonable time.
I would summarise the second as being that the Home Secretary will consider in accordance with her policy whether to exercise the power expressly given to her to direct release.
Were either condition not to be satisfied, the mandate would cease and the detention would become unlawful. (h) The second condition was not satisfied in respect of the first and second periods of Mr Francis detention, with the result that, as in respect of the third period, the mandate to detain him ceased and therefore his detention during those periods should also have been held to have been unlawful.
Accordingly there is no difference in effect between, on the one hand, the conditional mandate to detain conferred on the Home Secretary by para 2(1) and by the words in parenthesis in para 2(3) and, on the other, the power to detain conferred on her by para 2(2) and by the words not in parenthesis in para 2(3).
DISPOSAL
The conclusion postulated in para 40 above need no longer be provisional: were Os claim for judicial review permitted to proceed, the result in all likelihood would be a declaration that her detention from 4 March 2011 to 6 July 2011 was unlawful and an award to her of damages in the sum of 1.
The Court of Appeal decided that, since such was at most, so it added the likely result of the claim, it was appropriate to uphold the refusal of Lang J to grant permission for it to proceed.
I agree.
By the time of its issue O had been released and it could bring her no practical benefit.
To the extent that her contentions in these proceedings have deserved to be vindicated, she has secured their vindication in this judgment.
I would dismiss the appeal.
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The appellant (O) is a Nigerian woman aged 38.
After arriving in the UK illegally in 2003, her claim for asylum or discretionary leave to remain in the UK was refused and her appeal was dismissed.
She was charged with an offence of child cruelty, but absconded on bail.
In 2007 she was arrested and charged with another offence, for which she was later convicted and imprisoned.
She later pleaded guilty to the outstanding child cruelty charge, and was sentenced to 12 months imprisonment and made the subject of a recommendation for deportation.
Upon her release from prison in August 2008, the respondent (the SSHD) detained O, first under para 2(1) of Schedule 3 to the Immigration Act 1971 (the 1971 Act) pending the making of a deportation order and then, once the deportation order was made, under para 2(3) of Schedule 3 to the 1971 Act pending deportation.
O was detained at Yarls Wood Immigration Removal Centre until 6 July 2011, when she was released on bail.
O has suffered from serious mental ill health, including episodes of self harm, and has been the subject of several medical reports.
In 2008 she was diagnosed with a recurrent depressive disorder and an emotionally unstable personality disorder.
In 2009 a consultant psychiatrist instructed by O recommended that she be transferred from Yarls Wood to hospital.
Following a suicide attempt in March 2010, O was admitted to hospital but was subsequently discharged, the hospitals consultant psychiatrist concluding that her needs would be met adequately at Yarls Wood.
In February 2011 a report on O was prepared by another clinical psychologist instructed by O (the Report).
The Report concluded in particular that: O suffered from not only a depressive disorder but a severe form of post traumatic stress disorder; O could not access the necessary mental health services at Yarls Wood and that release from detention would greatly benefit her mental health; O needed a long term structured package of mental health services; O needed to be referred to a specialist trauma focussed clinic for phased treatment; and that such a referral was in accordance with the National Institute for Health and Care Excellence (NICE) guidelines.
In the present proceedings, O challenges the lawfulness of the period of her detention from 22 July 2010 (and in particular from 4 March 2011, the date of the first review of Os detention following the SSHDs receipt of the Report) until 6 July 2011 (the date of her release on bail).
The object of these proceedings is to secure a declaration that Os detention during this period was unlawful and an award of damages.
In April 2012 Lang J refused permission for the claim to proceed and in July 2014 the Court of Appeal dismissed Os appeal.
O now appeals to the Supreme Court.
The Supreme Court unanimously dismisses Os appeal.
Lord Wilson gives the leading judgment, with which the other Justices agree.
This appeal requires the Court to consider the SSHDs policy relating to the detention of mentally ill persons pending deportation (the Policy) and the effect of any failure by the SSHD to apply that Policy, in the light of the Court of Appeals decision in R (Francis) [4].
The Policy obliges the SSHD to conduct monthly reviews of detention pending deportation [18].
Para 55.10 provides that those suffering from serious mental illness which cannot be satisfactorily managed within detention will normally be considered suitable for detention only in very exceptional circumstances, including for example where there is a risk of further offending or harm to the public [19].
In Os detention reviews between 4 March and 4 July 2011, only the briefest reference was made to the Report, and Os most recent diagnosis was incorrectly identified as being in March 2010 [24].
Although the Report was submitted to the SSHD expressly in support of Os application to challenge her deportation [22 23], on any view it bore some relevance to the Policy and should have been addressed properly in the detention reviews [25].
Therefore, as the Court of Appeal concluded (and the SSHD now accepts), the SSHD unlawfully failed to apply her Policy when deciding to continue to detain O between March and July 2011 [26 27].
The refusal to release O during this period was procedurally flawed [37].
Given that conclusion, this case does not afford the opportunity to consider the nature of the courts review of the legality of the SSHDs application of her Policy [28, 37].
The question is then how the SSHD would have reacted to the Report, had she applied her Policy correctly.
It is for the Court to determine the meaning of the Policy for itself [28].
Satisfactory is a word which catches the various different factors to which the SSHD may be required to have regard.
The discussion of satisfactory management in R (Das) is approved, save that treatment (available to a detainee only if released) which would be likely to effect a positive improvement in his or her condition might be relevant; the burden would be on the SSHD to inquire as to its availability.
While satisfactory does not mean optimal management, a narrow construction of management, meaning no more than control of the illness would lack principled foundation [30].
The Policy mandates a practical inquiry by the SSHD, in the light of the context of immigration detention [31].
The SSHD should have made inquiries and obtained answers to a number of questions as to whether, in the light of the Report, Os illness could satisfactorily be managed at Yarls Wood [32 33].
The Court cannot predict the result of those inquiries, most of which seem never to have been made.
The SSHD would also have had to consider whether there were very exceptional circumstances which nonetheless justified Os detention.
Even on the assumption that the proper application of the Policy should in due course have led the SSHD to direct Os release, it is unrealistic to consider that the conditions necessary for her release would have been in place prior to 6 July 2011, when she was released on bail [34 35].
Were Os claim for judicial review permitted to proceed, it would result in no more than a declaration that her detention was unlawful and an award of only nominal damages [38 40].
The lower courts were entitled to refuse Os application for permission [50].
R (Francis) R (Francis) was wrongly decided.
The power to detain conferred by para 2(1) of Schedule 3 to the 1971 Act (pending the making of a deportation order) and by the words in parenthesis in para 2(3) (pending deportation) is a mandate subject to two conditions: first, there must be a prospect of deportation within a reasonable time; and second, the SSHD must consider in accordance with the Policy whether to exercise the power to detain.
If either condition is not satisfied, the mandate to detain ceases and detention becomes unlawful [42 49].
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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.
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By a lease dated 28 April 2006, the freeholder of a block of flats in Runcorn (the Building) let Flat 10 in the building for a term of 199 years from 1 January 2006 to Mr Kumarasamy (the Headlease).
The Building is accessed by a paved pathway (the paved area) which leads to the main entrance door which opens onto a front hallway (the front hallway).
On 2 April 2009, Mr Kumarasamy granted Mr Edwards a subtenancy of the Flat for a term expiring on 5 October 2009 (the Subtenancy).
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.
Under the Subtenancy, Mr Edwards was under an obligation to repair the Flat, excepting items which Mr Kumarasamy was responsible to maintain.
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.
He suffered injuries as a result and 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 covenants implied into the Subtenancy by section 11(1)(a) and 11(1A)(a) of the Landlord and Tenant Act 1985 (the 1985 Act).
At first instance Deputy District Judge Gilman accepted Mr Edwards case and awarded him 3,750 in damages.
Her Honour Judge May QC allowed Mr Kumarasamys appeal on two grounds: (i) the paved area was not within the ambit of the section 11 covenant; and (ii) even if it had been, Mr Kumarasamy could not have been liable as he had no notice of the disrepair.
The Court of Appeal allowed Mr Edwards appeal, disagreeing with Judge May on both grounds.
Mr Kumarasamy now appeals to the Supreme Court.
The Supreme Court unanimously allows Mr Kumarasamys appeal.
Lord Neuberger gives the leading judgment, with which the other Justices agree.
Lord Carnwath also gives a short judgment.
This appeal raises three questions, all of which must be answered in the affirmative for Mr Edwards to succeed on the appeal [14 16]: (1) Whether, in the light of the wording of sections 11(1)(a) and 11(1A)(a) of the 1985 Act, the paved area can be described as part of the exterior of the front hall; (2) Whether Mr Kumarasamy had an estate or interest in the front hall for the purposes of section 11(1A)(a);
(3) 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 Edwards accident.
Section 11(1) of the 1985 Act, which implies into certain leases of dwelling houses a covenant by the landlord to keep in repair the structure and exterior of the dwelling house, applies to the Subtenancy.
Where the dwelling house only forms part of a building, section 11(1A) provides that the covenant has effect in relation to any part of the building in which the lessor has an estate or interest [6].
It is not possible, as a matter of ordinary language, to describe a path leading from a car park to the entrance door of a building as part of the exterior of the front hall of that building [17].
Such a wide reading would be difficult to reconcile with the wording of section 11(1A)(a), particularly the limitation to the building, and the specific extension to cover drains, gutters and external pipes, which supports a natural reading of the term exterior [18].
As to the second question, 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 [23].
The argument that Mr Kumarasamy cannot be said to have interest in the front hall since the Subtenancy had effectively deprived Mr Kumarasamy of any practical benefit in the easement so long as it continued is rejected [24 25].
As to the third question, there is an established rule that a landlord is not liable 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) [30].
Where a landlord agrees to repair the structure and exterior of a flat, the rule would apply but only to the extent that the structure is included in the demise and the tenant is accordingly in possession of that part of the structure [39 40].
The subsequent question is whether the rule can be invoked when a landlord has covenanted with a tenant to repair the structure but is not in possession of the structure, for example because he has let it to another tenant [41].
In such a case, the landlord is not normally entitled to notice in such circumstances [42 42].
The rule only applies to property in the possession of the tenant [43].
In view of this analysis, Mr Kumarasamys submission that, in every case where a tenant relies on a covenant implied by section 11, a landlord could not be liable until they had notice of the disrepair, even where the landlord is undoubtedly in possession of the property, is rejected [44 46].
The present case 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.
The application of the reasoning upon which the rule is based justifies the conclusion that the landlords 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 [49].
While it is true that Mr Kumarasamy has the right to use the common parts as against the freeholder, he has effectively lost that right for the duration of the Subtenancy to the tenant, Mr Edwards [50].
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 [50] and has the best means of knowing of any want of repair in them [52].
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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
|
The issue in this appeal is whether, in terms of the Scotland Act 1998 (the Scotland Act), section 72 of the Agricultural Holdings (Scotland) Act 2003 (the 2003 Act) is outside the legislative competence of the Scottish Parliament.
The argument for Mr Salvesen is that it is incompatible with his rights under article 1 of the First Protocol to the European Convention on Human Rights (A1P1) relating to the protection of his property [1, 26].
For much of the post war period, agricultural tenants enjoyed effectively indefinite security of tenure under statute.
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.
When such a limited partnership is dissolved, the remaining partners cannot carry on the business of the firm, and there ceases to be anyone who can claim to be the tenant.
Therefore by dissolving the limited partnership, the limited partner effectively had a way of terminating the tenancy.
Landlords were reluctant to let agricultural land on any other basis and the practice of letting to limited partnerships became widespread.
But it came to be recognised that a new system was needed [8, 9].
Section 72(6) of the 2003 Act provides that if the limited partner serves a dissolution notice after 16 September 2002, the tenancy continues to have effect and the general partner becomes the tenant under the tenancy in his own right if he gives notice to the landlord as required under the subsection.
Section 72 also provides that if the dissolution notice is served between 16 September 2002 and 30 June 2003, the landlord can apply to the Land Court for an order that section 72(6) does not apply.
The Land Court can make such an order only if it is satisfied that (a) the dissolution notice had been served otherwise than for the purposes of depriving any general partner of any right derived from the section and (b) that it is reasonable to make the order.
Section 72(10) provides that where a tenancy continues to have effect by virtue of section 72(6) and the dissolution notice was served on or after 1 July 2003, section 73 applies.
Section 73 allows the landlord to terminate the tenancy at the end of its term 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), that gives rise to the devolution issue in this case [13 16, 21].
The Agricultural Holdings (Scotland) Bill had been introduced into the Scottish Parliament on 16 September 2002.
Amendments were published on 3 February 2003, which included the precursor to section 72.
At that stage, the start date of the period on or after which a notice of dissolution would trigger the application of the provision was 4 February 2003.
On or about 10 March 2003, an amendment to that provision was published which moved the start date back to 16 September 2002.
The aim was apparently to address urgently the mass service of dissolution notices and to prevent any further steps by way of avoidance by landlords.
The March 2003 amendment was retrospective.
It caught dissolution notices that had been served in the period since the Bill was introduced.
They included the notice served by Mr Salvesen [18 21].
Peaston Farm, near Ormiston, East Lothian was subject to a tenancy held by a limited partnership in which the general partners were the Riddells.
When Mr Salvesen purchased the farm in 1998 and became the landlord, the limited partners rights were assigned to his nominee.
The lease was to run until 28 November 2008 and would continue from year to year thereafter unless the limited partnership was dissolved.
On 3 February 2003 the
limited partner gave notice to the general partners that the limited partnership which was to run until 28 November 2008 and from year to year thereafter unless dissolved would be dissolved on 28 November 2008.
On 12 December 2008 the general partners gave notice to the landlord that they intended to become the joint tenants of the farm in their own right.
Mr Salvesen then applied to the Land Court for an order that section 72(6) did not apply.
He said that his intention when he bought the farm was, when the tenancy came to an end, to amalgamate it with other farms he had in hand, and farm everything as one unit.
The Land Court was not satisfied that the test for such an order had been made out.
Mr Salvesen then appealed to the Court of Session and obtained leave to raise the devolution issue which is now before the Supreme Court.
Although the underlying dispute between the parties to the lease was settled during the summer of 2012, the question whether section 72 is incompatible with the landlords A1P1 rights is a matter of general public importance [4 7].
The Supreme Court unanimously allows the appeal.
It finds that Mr Salvesens A1P1 rights were violated by section 72(10) of the 2003 Act and that this provision is outside the legislative competence of the Scottish Parliament.
It makes an order under the Scotland Act suspending the effect of this finding effectively until the defect is corrected [58].
The judgment is given by Lord Hope with whom all the other justices agree.
A1P1 is, as was conceded by the Lord Advocate, engaged in this case [33].
A measure designed to deal with the large number of dissolution notices served on 3 February 2003 in an attempt to avoid the effects of the Bill can be said to have had a legitimate aim [40].
The effect of section 72(10) 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).
The landlords who served dissolution notices during that period are in a worse position than those who served notices from 1 July 2003.
The provision is discriminatory in a respect that affects the landlords right to the enjoyment of their property.
It is hard not to see it as having been designed to penalise landlords in this group retrospectively [42].
The Court is not persuaded that there was a justified difference in treatment between this group and landlords of continuing tenancies who served notices from 1 July 2003.
The benefit of section 73 was regarded in their case as an appropriate counterweight to the benefit that was conferred on the general partner by section 72(6).
The difference in treatment of those whose notices were served before that date 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.
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 still been applied to him [44].
The relevant provisions are expressed in clear and unequivocal language.
Section 72 can be read only in a way that is incompatible with the A1P1 right.
It is plain that the whole section needs to be looked at again, as does its relationship with section 73.
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.
The incompatibility arises from the fact that section 72(10) excludes landlords of continuing tenancies from the benefit of section 73 if their notices were served between 16 September 2002 and 30 June 2003.
So the Court limits the decision about the lack of legislative competence to that subsection only [47 51].
The Court declines to make an order removing or limiting the retrospective effect of its decision on incompatibility.
A long period has elapsed since the legislation came into operation, and there are competing rights and interests which will need to be considered, as well as a number of different possible scenarios.
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 following research, consultation with both sides of the industry, and the formulation of proposals for dealing with the situation that respects the parties Convention rights [54 57].
An order will be made under the Scotland Act suspending the effect of this finding for a period that will enable this process to be carried out [58].
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What happens if land is registered as a town or village green when it should not have been? There is power to rectify the register, but what is the effect of the lapse of time (a less pejorative term than delay) between the registration and the application to rectify? There are many private and public interests in play those of the landowners who have wrongly been severely restricted in the use to which they can put their land, those of the local inhabitants who have rightly been enjoying the amenity of the green since its registration, and those of the wider public which are many and varied such as protecting the accuracy of public registers, preserving public open spaces, or securing that land earmarked or suitable for development can be used for that purpose.
The statutory background
The principal purpose of the Commons Registration Act 1965 was, as its long title says, to provide for the registration of common land and of town and village greens.
Section 1(1)(a) requires that land which is a town or village green be registered in accordance with the Act.
Section 1(2)(a) provides that no land capable of being registered under this Act shall be deemed to be . a town or village green unless it is so registered by the deadline prescribed by the Minister, which was 31 July 1970.
This meant that the rights of local inhabitants over such ancient but unregistered greens were extinguished.
However, the Act contemplated the possibility of land becoming a town or village green in the future.
Regulations under section 13(b) could and did provide for registers to be amended where any land becomes . a town or village green (emphasis supplied) (see the Commons Registration (New Land) Regulations, SI 1969 No 1843).
Three separate categories of town or village green are defined in section 22 of the Act (since amended by section 98 of the Countryside and Rights of Way Act 2000, but not so as to affect these cases): Town or village green means land which has been allotted by or under any Act for the exercise or recreation of the inhabitants of any locality or on which the inhabitants of any locality have a customary right to indulge in lawful sports and pastimes or on which the inhabitants of any locality have indulged in such sports and pastimes as of right for not less than twenty years.
The first and the third might arise after the statutory deadline, whereas the second could not.
In reality, however, provided that the local inhabitants continued to exercise their customary rights as of right for 20 years, they would be able to register the land as a new or modern green.
But it was also possible for many other pieces of land on which the inhabitants of any locality had indulged in lawful sports and pastimes as of right for at least twenty years to be registered.
This gave rise to several important cases deciding upon the requirements for registration as a new or modern green and on the consequences of such registration, many of them relevant to the issues in the two cases with which we are concerned: see, for example, R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335, R (Beresford) v Sunderland City Council [2003] UKHL 60, [2004] 1 AC 889, Oxfordshire County Council v Oxford City Council [2006] UKHL 25, [2006] 2 AC 674, and R (Lewis) v Redcar and Cleveland Borough Council (No 2) [2010] UKSC 11, [2010] 2 AC 70.
No procedure was laid down, either in the Act or in the Regulations, for the registration authority, normally a County Council, to decide such matters.
Practice varies, with some holding elaborate public inquiries and others deciding matters more informally, as illustrated in the two cases before us.
By section 10 of the Act, registration of any land as a town or village green is conclusive evidence of the matters registered, as at the date of registration.
the register in two circumstances, only one of which is relevant here: Section 14 of the Act gives the High Court power to order the amendment of . if (b) the register has been amended in pursuance of section 13 of this Act and it appears to the court that no amendment or a different amendment ought to have been made and that the error cannot be corrected in pursuance of Regulations made under this Act; and . the court deems it just to rectify the register.
Anyone may apply for rectification, although the owners of the land registered as a green are most likely to want to do so.
There is no statutory deadline for making such an application.
The question, therefore, once it has been decided that the entry on the register ought not to have been made, is the relevance of the lapse of time since the registration in deciding whether it is just to order rectification.
Betterment: the facts
In 1994, a Mrs Horne applied to Dorset County Council, on behalf of the Society for the Protection of Markham and Little Francis, for the registration of some 46 acres of open land in Weymouth.
These were part of a larger area of land owned by the Curtis family which had been let for grazing but had ceased to be so used in around 1980.
Two public footpaths crossed the land but local residents and their dogs had wandered more freely over the area.
Mrs Horne relied upon 20 years use by local inhabitants for lawful sports and pastimes after 31 July 1970.
The Curtis family objected.
Her first application was declined but she made a second one in 1997 which the County Councils Rights of Way Sub committee decided should be referred to a non statutory public inquiry before a panel of three county councillors.
They held an oral hearing in December 2000 and received a great deal of written material, oral evidence and both oral and written submissions.
In June 2001, the Council notified the parties, in a detailed reasoned decision letter, that it had decided to register the land as a new town or village green.
In December 2001, a Mr and Mrs Thompson bought a house at the south west corner of the registered land, having been told of the registration by the vendors and having researched the matter on the website of the Open Spaces Society (which is supporting this appeal).
They also discovered that none of the Curtis familys land was designated for development in the draft local plan although the Curtis family were objecting to aspects of this.
In August 2001, Mr Barry Curtis applied on behalf of the landowners for judicial review of the Councils decision.
The Council objected that this was inappropriate as Parliament had provided the remedy of rectification in section 14 of the 1965 Act.
Acting on legal advice, therefore, Mr Curtis discontinued the judicial review proceedings in December 2001, without prejudice to his right to apply under section 14.
The Curtis family subsequently sold the land to Betterment Properties (Weymouth) Ltd for a price which was much less than the land would have been worth had it not been registered as a green but rather more than it was worth as a registered green.
Agreement was reached with the various members of the Curtis family in stages over 2003 and 2004 and Betterment finally acquired title to the whole of the Curtis familys land in May 2005.
In December 2005, Betterment began the present proceedings under section 14 for rectification of the register.
Two preliminary issues were raised, one being the scope of the jurisdiction: was it a full rehearing or a review to be conducted on either appellate or judicial review principles? Lightman J determined that it was a full rehearing and this was confirmed by the Court of Appeal: [2008] EWCA Civ 22.
The case therefore returned to the Chancery Division for a hearing, which was conducted by Morgan J over nine days in June 2010, partly in Weymouth and partly in London.
By that time, Betterment accepted that most of the land had been used for lawful sports and pastimes for twenty years before the application made in 1997.
The principal issues were whether the whole of the land had been used for that purpose for that period and whether the use had been as of right.
Morgan J gave judgment allowing the application to rectify in November 2010: [2010] EWHC 3045 (Ch).
The greater part of his judgment is devoted to the two substantive issues bearing on the first requirement of section 14(b): whether the entry on the register ought to have been made.
He decided that it ought not: he found that the use of the land had been contentious and thus not as of right until some time in the 1980s, which he put at 1984.
He went on to consider whether it would be just to rectify the register.
In relation to Mr and Mrs Thompson he found that they bought the house on the basis that development to the north was unlikely, but without distinguishing between the registered green and the rest of the open land.
If they had investigated the position further, they would have discovered that the landowners had reserved the right to apply to rectify the register.
In any event, the landowners were not responsible for their state of mind.
Among the other objections raised was the delay of 9 and a half years during which the land had been registered and the inhabitants had been enjoying its use.
He did not see the mere passage of time as material, one way or the other, to the issue of the justice of rectifying the register (para 189).
Balancing all proper points which could be made on behalf of the landowners and the inhabitants, he concluded that If rectification is ordered the result will be that the landowners will be free from burdens which should not have been placed upon them and the inhabitants of Wyke Regis will be denied, in the future, rights which they have enjoyed in the past, but which they should never have had (para 191).
Mrs Taylor, who had replaced Mrs Horne as the representative of the Society for the Protection of Markham and Little Francis, appealed to the Court of Appeal, which dismissed her appeal: [2012] EWCA Civ 250.
Once again the major part of the judgment is devoted to the as of right issue.
However, Patten LJ, who gave the leading judgment, did comment that the justice issue had become the most significant aspect of both this and the Paddico appeals.
In his view, although delay was a relevant factor, it will not be a barrier to rectification unless there is material before the court to show that other public or private decisions are likely to have been taken on the basis of the existing register which have operated to the significant prejudice of the respondents or other relevant interests (para 87).
Sullivan LJ, with whom Carnwath LJ agreed (para 103), would have gone further.
In his view, there is a strong public interest in upholding the register in the absence of a prompt challenge to its contents, so that there would be exceptional cases where the delay is so long that prejudice to good administration can properly be inferred in the absence of evidence of prejudice.
He suggested that a decade would be capable of raising such an inference (para 95).
Paddico: the facts
In December 1996, application was made, on behalf of the Clayton Fields Action Group, for the registration of an area of some six and a half acres of grassland lying between Edgerton and Birkby in north west Huddersfield which had long been known as Clayton Fields.
Most of the land was owned by Geo.
H. Haigh and Co Ltd (the company).
There were two extant planning permissions, dating back to the 1960s, for housing development on the land.
The land had also been designated for housing in the Huddersfield Town map in 1972, again in the Huddersfield local plan in 1986, and in the draft Kirklees Unitary Development Plan in 1993.
In 1997 an inspector reported that the land should remain allocated for housing, noting that a development brief including requirements for access, footpaths, open space and the protection of trees is to be prepared.
This plan was eventually adopted by the Council in 1999.
Meanwhile, the company had objected to the application to register the land as a green and on 14 April 1997 the Policy (General Purposes) (Executive) Sub Committee of Kirklees Metropolitan Council held an oral hearing.
After a short adjournment the Chairman announced, without more, that the application was granted.
The company began proceedings to rectify the register in May 1997 but these were delayed pending the decision of the House of Lords in the Sunningwell case.
Following that decision, the company were advised that they were very likely to lose their action and so took no further steps.
The action was automatically stayed under CPR Part 51, PD 19(1) in April 2000.
In 2005, the company sold their land to Paddico (267) Ltd.
As in the Betterment case, the price was much less than it would have been worth without it.
Unlike the Betterment case, the contract included overage provisions, entitling the company to 30% of the uplift in market value in the event of planning permission being obtained for development of all or part of the land within 10 years of the transfer.
In 2008 Paddico applied to lift the stay on the companys section 14 application and to be substituted as claimant.
This was refused by the Deputy Master in 2009, permission to appeal was refused on paper in January 2010, and on renewal in March 2010.
Meanwhile, Paddico had begun its own section 14 claim in January 2010.
This was heard before Vos J over five days in May and June 2011.
Vos J gave judgment allowing the application to rectify in June 2011: [2011] EWHC 1606, [2011] LGR 727.
As with the Betterment case, the major part of the judgment is devoted to the substantive issue of whether the land ought to have been registered.
This turned on the meaning of any locality in the definition in section 22(1).
Vos J held that the inhabitants using the land for lawful sports and pastimes had to be predominantly from a single locality and that neither Edgerton nor Birkby qualified as a locality recognised by law, nor were the users predominantly from either of the suggested alternatives.
As to the justice of rectifying the register after 14 years, he considered that the delay did weigh against rectification but was unlikely to be conclusive (para 118).
The fact that registration was not justified in 1997 and if refused then would be very unlikely ever to be granted was a very strong, though not conclusive, factor.
The delay was a significant factor, but little other prejudice had been demonstrated by the residents.
The planning permission obtained required part of the land to be made available for recreation (para 119).
Hence the balance came down fairly clearly in favour of rectification (para 120).
Interestingly, he concluded with the hope that local residents would be allowed a reasonable area for recreation and in that way, perhaps, justice will ultimately be done (para 122).
The appeal on behalf of the Action Group was heard by the same constitution of the Court of Appeal that heard the Betterment appeal and at the same time.
But in this case, by a majority, the appeal was allowed: [2012] EWCA Civ 262, [2012] LGR 617.
Once again, the greater part of the leading judgment, this time given by Sullivan LJ, was devoted to the locality issue.
On this, the court was unanimous in upholding the judges decision that the amendment to the register ought not to have been made.
But they differed on the justice issue.
Sullivan LJ held that there was an analogy with judicial review of inaccurate entries in other registers, in particular the planning register, where section 31(6) of the Senior Courts Act 1981 gives the court power to refuse relief if delay is prejudicial to good administration.
There was a strong public interest in resolving alleged errors in the register at the earliest opportunity.
Although Parliament had not prescribed a time limit for making applications under section 14, it must have envisaged that persons adversely affected by an erroneous amendment of the register would take reasonably prompt action to secure rectification, and would not sleep on their rights.
All other things being equal, the longer the delay in seeking rectification the less likely it is that it will be just to order rectification (para 37).
In this case, he considered that all other things were equal, because neither side could claim prejudice: Paddico had taken a calculated risk (para 38).
Over 12 years delay was so excessive as to make it not just to rectify (para 39).
Carnwath LJ agreed.
The owners rights were an important consideration.
The rectification procedure fills the gap in a process of controlling the owners rights which would otherwise not comply with article 6 of the European Convention on Human Rights.
Thus a precise analogy with judicial review was not appropriate (para 67).
However, the balance had to include considerations of public administration.
Justice in this context need not turn on proof of individual prejudice, but is wide enough to cover general prejudice to the public (including planning authorities) who are entitled to rely on the register to order their affairs, public and private.
While it would not be appropriate for the court to lay down a specific time limit, he would regard a delay beyond the normal limitation period of six years as requiring very clear justification (para 68).
Patten LJ disagreed.
In his view, it was necessary to identify some significant or material prejudice attributable to the delay which makes it just to refuse to restore to Paddico its full legal rights as owner of this land (para 43).
There would be an injustice to Paddico if rectification were refused (para 46), while there was no demonstrable prejudice in depriving the appellant of rights to which he was never entitled (para 44).
Furthermore, the public interest in planning policies in relation to the land no longer being frustrated militated strongly in favour of rectification (para 45).
The scope of this appeal
The local inhabitants, in the person of Mrs Taylor on behalf of the Society for the Protection of Markham and Little Francis, appeal against the decision to allow rectification in the Betterment case.
Paddico, supported by the company, which has been given permission to intervene in this Court, appeals against the refusal of rectification in their case.
These appeals are not concerned with whether the courts below were correct in their judgments on the as of right and locality issues.
They are solely concerned with the relevance of the lapse of time (as I prefer to call it) to whether or not it is just to rectify the register.
The proper approach?
What then is the proper approach in principle to the lapse of time? There are at least three possible analogies, none of which is precise: (1) with the principles applicable to public law claims; (2) with the principles applicable to private law claims where Parliament has provided a limitation period; and (3) with the principles applicable to private property law claims where Parliament has not provided a limitation period, as embodied in the equitable doctrine of laches.
(1) Public law
There is a public law aspect to such claims.
This is a register kept by a public authority which is open to public inspection and upon which both public authorities and private persons may rely in making their decisions.
The decision to make an entry may be challenged by way of judicial review as well as by an application to rectify.
While no one is suggesting that the short time limit applicable to applications for judicial review should apply, all members of the Court of Appeal appear to have thought it appropriate to take into account the interests of good public administration.
Section 31(6) of the Senior Courts Act 1981 provides that where the High Court considers that there has been undue delay in making an application for judicial review, it may refuse either to grant permission to make the application or the relief sought in it, if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration.
This means that there is an interest in good administration which is independent of the interests of individuals.
But it does, of course, beg the question of what is meant by a detriment to good administration.
This criterion was recommended by the Law Commission in their Report on Remedies in Administrative Law (Law Com No 73, 1976) (Cmnd 6407).
They pointed out that when an individual applies for judicial review, what will be in issue will be not only the vindication of his personal right but also the assertion of the rule of law in the public sphere.
Hence they thought that the formula should recognise not only the interests of individuals but also the public interest in good administration (para 50).
They did not, however, explain what they meant by this.
On the one hand, there is the view taken by Lord Goff of Chieveley in Caswell v Dairy Produce Quota Tribunal for England and Wales [1990] 2 AC 738.
He did not consider it wise to attempt to formulate a precise definition, because the contexts were so various, but in the context of the allocation of a finite quantity of milk quota between dairy farmers, the interest in good administration lies essentially in a regular flow of consistent decisions, made and published with reasonable dispatch; in citizens knowing where they stand, and how they can order their affairs in the light of the relevant decision.
Allowing a late claim for judicial review of an erroneous decision could lead to attempts to reopen many other decisions, to the obvious prejudice to good administration (pp 749 750).
A similar approach was taken, in the rather more analogous context of the grant of outline planning permission, in R v Newbury District Council, Ex p Chieveley Parish Council [1999] PLCR 51.
Pill LJ observed that a planning permission is contained in a public document which potentially confers benefit on the land to which it relates.
Important decisions may be taken by public bodies and private bodies and individuals upon the strength of it, both in relation to the land itself and in the neighbourhood.
A chain of events may be set in motion.
It is important to good administration that, once granted, a permission should not readily be invalidated.
Hence, relief against an invalid grant of permission was refused on account of a three year delay in bringing the proceedings, notwithstanding the absence of convincing evidence that the applicants for planning permission have been prejudiced by the delay (pp 66 67).
On the other hand, in R v Bassetlaw District Council, Ex p Oxby [1998] PCLR 283, 302, Hobhouse LJ stated that if it has been clearly established . that a planning consent was improperly and invalidly granted, then it should, in principle, be declared to be void.
This was cited by Schiemann LJ in Corbett v Restormel Borough Council [2001] EWCA Civ 330, at para 24, who had earlier said this: However, as is well known, there clashes with this principle of legal certainty another principle which is also of great value the principle of legality which requires that administrators act in accordance with the law and within their powers.
When they do things they are not empowered to do this principle points towards the striking down of their illegal actions. (para 16)
Sedley LJ added this: Schiemann LJs reasoning shows once again how distracting and unhelpful [section 31(6) of the Senior Courts Act 1981] is.
It selects one element time of the many which may affect the grant of relief and builds upon it some of the many other possible factors which can as the present case shows be relevant.
It also includes, delphically, detriment to good administration.
How, one wonders, is good administration ever assisted by upholding an unlawful decision? If there are reasons for not interfering with an unlawful decision, as there are here, they operate not in the interests of good administration but in defiance of it. (para 32)
Nevertheless, Mr Charles George QC, on behalf of the inhabitants, has drawn our attention to other examples where the principle of certainty in upholding the contents of public registers of various sorts has prevailed over the principle of legality in ensuring the correctness of the decisions upon which the entries are based and hence the accuracy of those entries.
Thus in Bahamas Hotel Maintenance & Allied Workers Union v Bahamas Hotel Catering & Allied Workers Union [2011] UKPC 4, the Privy Council upheld the trial judges refusal to grant judicial review of the unlawful registration of a trade union in part because of the delay by the rival union in challenging it.
Lord Walker of Gestingthorpe observed that conclusive evidence provisions (there was one akin to section 10 of the 1965 Act here) are often included in legislation relating to official registers, because such registers cannot serve their purpose unless members of the public can safely rely on them (para 33).
In Smith Kline & French Laboratories Ltd v Evans Medical Ltd [1989] 1 FSR 561, Aldous J refused an application to amend a patent (made in order to save the validity of the patent for the purpose of infringement proceedings) because of a delay of eight years in making the application.
He held that where a patentee delays for an unreasonable period before seeking an amendment it will not be allowed unless he shows reasonable grounds for the delay (p 569).
It was not enough to show that no one had been hurt by the delay (p 577).
He had earlier cited the opinions in the House of Lords in Raleigh Cycle Co Ltd v Miller (H) & Co Ltd (1950) 67 RPC 226, where Lord Morton had placed particular emphasis on the fact that the wide claims had remained on the register of patents for a considerable period, so although bicycles were not being manufactured for a large part of it because of the second world war, it is impossible to say how many inventors and workers in this art may have been deterred from research and experiment by reason of the fact that the plaintiffs had marked out so wide a territory as their own (p 236).
However, although the element of public confidence and possible reliance will be there irrespective of whether or not the applicant for relief knew of the illegality, Mr George accepts that it is only delay after the applicant knew or ought to have known of the illegality which should be taken into account.
The above cases tend to support that proposition.
Ironically, however, Mr George derives that proposition from the opinion of the Judicial Committee of the Privy Council in Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, which was a laches case.
(2) Statutory limitation periods
Although applications to rectify may be brought by anyone, the people most likely to apply are the owners of the registered land, whose own right to use that land is severely curtailed by the rights of the local inhabitants to use it for lawful sports and pastimes and by the Victorian legislation which prevents it being used for other purposes (see the Oxford City Council case).
The view that this is principally a matter of vindicating private rights, rather than controlling the legality of the acts of public authorities, is reinforced by the European Convention on Human Rights.
The rights conferred by registration, while they may not deprive the landowner of his property for the purposes of article 1 of the First Protocol to the Convention, undoubtedly control his use of it.
This amounts to the determination of his civil rights and obligations within the meaning of article 6.
The administrative process of registration does not fulfil the requirement in article 6 for a fair hearing by an impartial tribunal established by law.
The section 14 process of rectification fills that gap.
That is one reason why it has to be a full rehearing rather than a review of the registration authoritys decision.
Most actions to vindicate private rights are subject to statutory limitation periods, typically, but not invariably, three, six or twelve years.
Where an equitable claim is not expressly covered by any statutory [limitation] period but is closely analogous to a claim which is expressly covered, equity will act by analogy and apply the same period (Snells Equity, 32nd Edn (2010), para 5 018).
Both Sullivan LJ and Carnwath LJ thought it appropriate to apply a similar approach, being prepared to infer prejudice to other interests after the lapse of time.
Sullivan LJ talked of a delay of a decade or more, whereas Carnwath LJ talked of six years or more.
There are, of course, many other periods which could have been chosen if this analogy were the appropriate one.
Some might think that the most appropriate would be 12 years, the time limit for actions to recover land, after which title is extinguished (Limitation Act 1980, ss 15 and 17).
There are many arbitrary features of the statutory limitation regime apart from the variety of periods prescribed.
Except in cases of fraud or concealment, for example, the starting point is that knowledge of the facts giving rise to the cause of action is irrelevant; but that principle has been replaced in personal injury and some other cases with a date of knowledge principle (1980 Act, ss 11, 11A (as inserted by Schedule 1 to the Consumer Protection Act 1987), 12, and 14A (as inserted by section 1 of the Latent Damage Act 1986)).
Another starting point is that there is no general discretion to disapply or extend these limitation periods; but again that principle has been departed from in defamation and personal injury cases (1980 Act, ss 32A (as substituted by section 5 of the Defamation Act 1996) and 33).
Ms Crail, for Paddico, argues that Mr Georges concession that the duty to act promptly, for which he contends, does not arise unless the claimant has or ought to have knowledge is inconsistent with the approach of the majority in the Court of Appeal; they would be prepared to assume prejudice after a certain period of time; but if one allows for knowledge, such assumed prejudice loses the paramount importance which the majority attributed to it.
(3) Laches
Finally, therefore, there is the analogy of actions to vindicate private property rights, for which no limitation period has been prescribed by Parliament.
Here the equitable doctrine of laches may provide the answer: inaccurately summed up in the Latin tag, vigilantibus, non dormientibus, jura subvenient (the law supports the watchful not the sleeping).
Sullivan LJs reference to sleeping on his rights comes from the words of Lord Camden LC in Smith v Clay (1767) 3 Bro CC 639n, at 640n: A Court of Equity has always refused its aid to stale demands, where a party has slept upon his right and acquiesced for a great length of time.
Nothing can call forth this Court into activity, but conscience, good faith, and reasonable diligence; where these are wanting, the Court is passive, and does nothing.
According to Snells Equity (32nd Edn, para 5.016) mere delay, however lengthy, is not sufficient to bar a remedy (referencing Burroughs v Abbott [1922] 1 Ch 86 and Weld v Petrie [1929] 1 Ch 33).
Mr George disputes this (but referencing Wright v Vanderplank (1856) 2 K & J 1, 8 De GM & G 133, where there was an express finding of acquiescence, and RB Policies at Lloyds v Butler [1950] 1 KB 76, which was a limitation case turning on the date when the cause of action accrued, so scarcely giving strong support for his position).
This is not the place definitively to resolve that debate, as we are concerned with analogies rather than the direct application of the doctrine.
Nevertheless, the general principle is that there must be something which makes it inequitable to enforce the claim.
This might be reasonable and detrimental reliance by others on, or some sort of prejudice arising from, the fact that no remedy has been sought for a period of time; or it might be evidence of acquiescence by the landowner in the current state of affairs.
In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, the judgment of the Board, given by Lord Selbourne LC (but wrongly attributed to Sir Barnes Peacock in the actual report), contains the following oft quoted passage: Now the doctrine of laches in Courts of Equity is not an arbitrary or technical doctrine.
Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material.
But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. (pp 239 240)
Lord Neuberger cited this passage in Fisher v Brooker [2009] UKHL 41, [2009] 1 WLR 1764, in support of his observation that Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion (para 64).
Later in Lindsay Petroleum (p 241) Lord Selbourne said this: In order that the remedy should be lost by laches or delay, it is, if not universally at all events ordinarily . necessary that there should be sufficient knowledge of the facts constituting the title to relief. (p 241) It is for this reason that Mr George accepts that there must be knowledge of the facts before delay can constitute a bar to relief.
Discussion
Obviously, there is no precise analogy here, because there are elements of both public and private law involved.
But it is necessary to have a starting point and it is always useful to start with the statute itself.
First, it lays down no limitation period for section 14 applications.
Second, in the rectification power contained in section 14, which is the one relevant to these proceedings, there is no bias either for or against rectification.
The section merely requires that it be just.
Third, it makes no reference to good administration, not surprisingly, as that concept was articulated later, in the Law Commissions Report.
Furthermore, the principles of good administration seem to me to cut both ways.
While there is a public interest in respecting the register, which is conclusive until rectified, there is also a public interest in the register being accurate and lawfully compiled.
I share the view of Sedley LJ in Restormel that If there are reasons for not interfering with an unlawful decision, . they operate not in the interests of good administration but in defiance of it.
Nor do I find the analogy with the other registers referred to compelling.
Each register is compiled for different reasons and in a different context.
To my mind, therefore, although the interests of the wider public are not irrelevant, the section is principally focussing on justice as between the applicant for rectification of a registration and the local inhabitants who are the beneficiaries of that registration.
Where the applicant is the owner of the land, the starting point, as it seems to me, is that the landowners rights have been severely curtailed when they should not have been, and the inhabitants have acquired rights which they should not have had.
It does not follow that the lapse of time is immaterial.
None of the appellate judges thought that it was.
Parliament has seen fit to deprive people of their right to bring proceedings to vindicate their rights after a certain period of time no matter how unjust this might seem to be (an illustration might be found in the facts of A v Hoare [2008] UKHL 6, [2008] AC 844, where the law as laid down in Stubbings v Webb [1993] AC 498 denied a remedy to the victim of a convicted rapist who had later won the lottery, until the House of Lords in Hoare departed from its previous decision in Stubbings).
But Parliament has not seen fit to set a deadline for these applications, nor is there an obvious close analogy within the Limitation Acts.
The better analogy would therefore appear to be with the equitable doctrine of laches, which generally requires (a) knowledge of the facts, and (b) acquiescence, or (c) detriment or prejudice.
As to (a), this is unlikely to be a problem in most of these cases: the original landowner will have been notified of and had an opportunity of objecting to the proposed registration and a subsequent purchaser such as Betterment or Paddico will have had the opportunity of consulting the register before deciding to buy.
But the point might arise in relation to other successors in title, such as donees or legatees, who have acquired the land in ignorance of the registration.
However, if the landowner does know about the registration, it does not appear to me that the fact that a purchaser bought with knowledge of the registration and at a discounted price is likely to make much difference.
His rights as landowner have still been severely curtailed and he sustains harm as a result.
So too does the original landowner in the position of the company in the Paddico case.
As Mr Carter pointed out on their behalf, the overage provisions in the contract of sale to Paddico meant that the company retained an interest in rectifying the register and from their point of view things were very definitely not equal, as Sullivan LJ suggested.
As to (b), acquiescence may be especially relevant where an application for rectification is made by someone other than the landowner.
Then the applicant probably has no private interest to vindicate and the fact that the landowner has chosen to take no action may be highly relevant to the justice of the case.
Even here, however, the considerations might be different if the applicant were a public authority perhaps another local authority seeking to vindicate some public interest.
It is a curiosity of the Paddico case that the land was registered as a green even though it had long been allocated for housing by the local planning authorities.
The fact that the landowner was content for local inhabitants to enjoy rights of recreation which they should never have had might not be decisive if there were other such public interests in play.
Whoever is the applicant, it would not in my view be appropriate to treat the landowners failure to object to the inhabitants use of the land after it had been registered as a green by putting up fences, notices, etc as acquiescence on his part.
Once the land is registered, it is conclusive evidence of the inhabitants rights unless and until the register is rectified and he would not be entitled to prevent them.
As to (c), detriment or prejudice, this, it seems to me, will usually be the crux of the matter.
Because this is a public register and there are public as well as private interests involved I would not limit the potential prejudice caused by rectification to the prejudice to the local inhabitants who will no longer be entitled to use the land for lawful sports and pastimes.
There are at least four categories of prejudice which might be relevant and no doubt more might be imagined:
(i) Prejudice to the local inhabitants
Given that this is a right which they should never have had, this element of prejudice may not be very weighty.
Nevertheless, practices may have developed over the years which it would be detrimental to the inhabitants to lose, such as holding an annual fair or feast or celebrating the foiling of the gunpowder plot.
Decisions may have been taken on the basis that the green would stay a green: for example, if the local cricket club had declined the opportunity of securing a cricket ground elsewhere in the village because they were entitled to play on the village green.
(ii) Prejudice to other individuals
There may be people who have made decisions which they would not otherwise have made on the basis that the land is a registered town or village green.
People may have bought houses because of it or they may have refrained from selling houses because of it.
It is worth bearing in mind, as Lord Sumption pointed out in the course of the hearing, that the right which is protected by registration is not the right to a view, but the right to use the land for lawful sports and pastimes.
But many people are attracted to properties near a village green because of the recreational opportunities it offers and the community spirit which these engender anyone who grew up with a traditional village green can understand the focus it brings to village life which would not be there if the green were not there.
(iii) Prejudice to public authorities and the public they serve
The authorities too may have made decisions in reliance on the registration which they would not have made without it.
For example, the local planning authority may have granted planning permission for residential development on other land because the green is not available for development.
On the other hand, maintaining the registration of a village green which ought not to have been registered may be damaging to such interests, as where the land is allocated for much needed local housing.
(iv) Prejudice to the fair hearing of the case
The longer the lapse of time since the original registration, the more difficult it may be to have a fair trial of the issues relating to registration, perhaps in particular as to the length and nature of the use to which the land was put in the twenty years previously and to whether it was contentious or as of right.
As this is a full hearing, evidence of those matters will be necessary, but the people who could give such evidence may have died or moved away or otherwise be unavailable.
This is perhaps a species of prejudice to the local inhabitants, who may find it much more difficult many years later to adduce evidence of their use of the land than they would have done had the challenge been made earlier.
There is a further point about prejudice.
Mr Laurence on behalf of Betterment and Paddico objected in particular to the view of the majority in the Court of Appeal that after a certain lapse of time prejudice could be inferred without evidence.
The correct view, as it seems to me, is that there must be some solid material from which such inferences can be drawn.
Speculation or assumptions are not enough.
But the longer the delay, the easier it will be to draw such inferences.
In general I would agree with the approach of Patten LJ in the Betterment case, that there should be material before the court to show that other public or private decisions are likely to have been taken on the basis of the existing register which have operated to the significant prejudice of the respondents or other relevant interests.
Application in the Betterment case
I would not agree with the trial judge that the lapse of time is immaterial to the justice of the case.
The Court of Appeal were correct to consider it a material factor.
But the general approach of Patten LJ is closer to the principles discussed above than that of Sullivan and Carnwath LJJ.
Even adopting their rather different approach, the majority did not consider that the lapse of time was such as to cause them to allow the appeal.
Applying the principles set out above, I would agree with the Court of Appeal in the result.
Specifically, the lapse of time between the registration and the Betterment application was from June 2001 to December 2005.
During all of that time, the possibility of an application under section 14 was known to the registration authority and could presumably have been discovered by others had they asked.
There is no evidence of prejudice and no material from which the likelihood of prejudice can be inferred, other than the position of Mr and Mrs Thompson.
They contracted to buy their house in December 2001, only six months after the registration and long before there could be any suggestion that delay in applying for rectification would make it unjust to grant it.
Application in the Paddico case
The trial judge took the lapse of time into account in his consideration of the justice of the case but decided to order rectification nonetheless.
The majority of the Court of Appeal disagreed.
The approach of the trial judge and of Patten LJ is closer than theirs to the principles discussed above.
The lapse of time between the registration and the Paddico application to rectify was from April 1997 to January 2010, much longer than in the Betterment case.
But there had been an early application to rectify which was not pursued because of legal advice.
During much of this time, the law was in a considerable state of flux, as the series of cases mentioned earlier made their way through the courts, sometimes reaching as far as the House of Lords.
The same small group of lawyers were involved in most of these cases and were thoroughly aware of what was going on and how the arguments were shifting.
There is no evidence at all of any specific prejudice to the local inhabitants, other than the loss of the right to use the land for recreation.
On the other side of the coin, Sullivan LJ was in my view wrong to suggest that all other things were equal.
Paddico would suffer injustice as a result of being wrongly deprived of the right to seek to develop the land.
The company would suffer injustice in being deprived of the likelihood that they would benefit from the overage provisions in the sale contract.
The public would suffer prejudice in the land not being available for the use to which the democratic planning procedures had decided that it should eventually be put.
In my view the judge was entitled to reach the conclusion that he did and his decision should be restored.
Conclusion
I would therefore dismiss Mrs Taylors appeal on behalf of the Society in the Betterment case and allow the landowners appeal in the Paddico case.
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Land that has been used by the inhabitants of a locality for sports and pastimes as of right for at least 20 years may be registered as a town or village green, pursuant to the Commons Registration Act 1965 (the Act).
If the registration is wrongly made, an application can be made under section 14(b) for the register to be rectified.
The issue in these appeals is the effect of a lapse of time on an application for rectification.
The first appeal concerns land known as Clayton Fields in Huddersfield.
Planning permissions dating back to the 1960s had been granted for housing development on the land, and it remained designated for such development in local plans.
No building had however occurred by 1996, when an application by the Clayton Fields Action Group (the Action Group) was successfully made to register the land as a village green.
The then landowners sold the land to the respondent (Paddico) in 2005, and in 2010 Paddico applied for rectification of the register.
The application was granted by Vos J in the High Court, who held that the land had been wrongly registered as it had not been used by inhabitants from a single locality, and it was just to rectify the register, notwithstanding the long delay, as little prejudice (harm or detriment) had been demonstrated by the residents.
The Court of Appeal agreed with the judge that the land had been wrongly registered but, by a majority, allowed the Action Groups appeal on the ground that the delay in seeking rectification made it unjust to rectify.
In the second appeal, the Society for the Protection of Markham and Little Francis (the Society) successfully applied to register an area of 46 acres of open land in Weymouth as a village green in June 2001.
The land was sold to the respondent (Betterment) in May 2005, who applied to rectify the register in December 2005.
The application was granted in the High Court.
Morgan J found that the registration should not have been made, as the use of the land had not been as of right, and that it was just to rectify the register as the inhabitants had been enjoying rights which they should never have had.
His order was upheld by the Court of Appeal.
Paddico and the Society appealed to the Supreme Court on the sole issue of the relevance of the lapse of time before making an application to the question of whether it was just to rectify the register.
The Supreme Court unanimously allows Paddicos appeal, and dismisses that of the Society.
It holds that a lapse of time is not immaterial to the justice of applications for rectification but that in these
cases there was no evidence before the court to show that significant detriment to others had occurred as a result.
Lady Hale gives the only judgment.
Where an application for rectification in respect of land wrongly registered as a village green is made there are many private and public interests in play: those of the landowners who have been severely restricted in the use to which the land can be put; those of the local inhabitants who have been enjoying the amenity of the green; and those of the wider public, which include the protection of the accuracy of public registers, the preservation of public open spaces and the securing of the use of land earmarked for development for that purpose [1].
If there has been a lapse of time before making the application the court must adopt a principled approach to its relevance in circumstances where there is no precise analogy with public law claims (which are subject to short time limits), private law claims subject to limitation periods, or private property claims subject to the equitable doctrine of laches (unconscionable delay) [20].
The starting point is the Act itself, which lays down no limitation period for s 14 applications.
S 14 has no bias either for or against rectification.
The principles of good administration require not only a conclusive register but that the register is accurate and has been lawfully compiled.
The focus is primarily on justice as between the applicant and the local inhabitants [33].
Where the applicant is the owner of the land, his rights have been severely curtailed when they should not have been and the inhabitants have acquired rights which they should not have.
The lapse of time is not however immaterial.
The best analogy is with the doctrine of laches which generally requires (a) knowledge of the facts, and (b) acquiescence, or (c) detriment or prejudice, if it is to bar the remedy [34].
Knowledge of the facts is unlikely to be a problem as landowners have an opportunity to object to the registration before it is made and subsequent purchasers are able to consult the register before deciding to buy.
The fact that a purchaser bought the land with notice of the registration is unlikely to make much difference as he still suffers harm from the curtailment of his rights [35].
The crux of the matter is usually the question of detriment or prejudice, of which there are at least four relevant kinds: (i) detriment to the local inhabitants, although this may not be weighty given that this is a right they should never have had [38]; (ii) detriment to other individuals who may have made decisions to purchase property near the land based on the register [39]; (iii) detriment to public authorities and those they serve in, for example, the allocation of land for residential development [40]; and (iv) detriment to the fair hearing of the case after the lapse of time.
Even after a long delay there must be some material from which to infer that public or private decisions have been taken on the basis of the existing register which have operated to the respondents significant detriment [42].
Applying these principles, the courts below had reached the right decision in the Betterment application, where there was no evidence of detriment [43].
In the Paddico application, the trial judge had correctly found that, although the lapse of time was over 12 years, there was no evidence of specific detriment to the local inhabitants, but injustice to the landowner by being deprived of the right to seek to develop the land, and to the public in the unavailability of the land for such development.
The judges order for rectification would be restored [44].
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This appeal raises a question as to the effect of a commencement provision in a statute which provides that provisions shall come into force on a specified date, and a consequential question as to the effect of a provision conferring upon Ministers the power to make regulations, where the provisions which are subject to the commencement provision cannot come into effective operation unless such regulations have been made.
The legislation
These questions arise in relation to the Mental Health (Care and Treatment) (Scotland) Act 2003 (the 2003 Act).
The relevant substantive provisions are contained in Chapter 3 of Part 17, comprising sections 264 to 273.
That Chapter is concerned with the detention of patients in conditions of excessive security.
Section 264 is headed Detention in conditions of excessive security: state hospitals.
It applies where a patient's detention in a state hospital is authorised by one of the measures listed in subsection (1)(a) to (d): that is to say, a compulsory treatment order, a compulsion order, a hospital direction or a transfer for treatment direction.
By virtue of subsection (2), an application can be made to the Mental Health Tribunal for Scotland (the Tribunal) by any of the persons mentioned in subsection (6), including any patient falling within the scope of the section.
By virtue of subsection (9), however, the Tribunal cannot determine any application without having first afforded the persons identified in subsection (10) the opportunity of making representations and of leading or producing evidence.
Those persons include the relevant Health Board.
If, on hearing the application, the Tribunal is satisfied that the patient does not require to be detained under conditions of special security that can be provided only in a state hospital, it can then make an order declaring that the patient is being detained in conditions of excessive security, and specifying a period not exceeding three months during which the duties under subsections (3) to (5) are to be performed.
The effect of such an order depends on whether the patient is a relevant patient, in which case subsection (3) applies, or is not such a patient, in which case subsection (4) is applicable.
In either case, an obligation is imposed upon the relevant Health Board to identify a hospital which it considers, in agreement with the managers of the hospital (if the Board is not itself the manager) and, in the case of a relevant patient, the Ministers, is a hospital in which the patient could be detained in appropriate conditions and in which accommodation is available for the patient.
The expression relevant patient is defined by section 273.
Section 265 makes provision for further orders in the event that a patient is not transferred to a hospital following an order made under section 264(2); and section 266 makes provision for further orders in the event that a patient is not transferred following an order made under section 265.
In each case, an order can be made only after affording the persons identified in section 264(10), including the relevant Health Board, the opportunity of making representations and of leading or producing evidence; and the effect of the order is to impose a duty upon the relevant Health Board, the nature of that duty being dependent upon whether the patient in question is or is not a relevant patient.
Section 267 makes provision for the recall of orders made under sections 264 to 266.
Recall can be sought by the relevant Health Board, amongst others.
An application for recall can be determined only after affording the persons identified in section 264(10), including the relevant Health Board, the opportunity of making representations and of leading or producing evidence.
Section 268 is headed Detention in conditions of excessive security: hospitals other than state hospitals.
It applies where a qualifying patients detention in a qualifying hospital is authorised by one of the measures listed in subsection (1)(a) to (d): that is to say, a compulsory treatment order, a compulsion order, a hospital direction or a transfer for treatment direction.
Apart from its applying to qualifying patients in qualifying hospitals rather than to patients in state hospitals, section 268 otherwise follows closely the scheme of section 264, mutatis mutandis.
In particular, subsection (2) permits an application to the Tribunal to be made by a qualifying patient, and for the Tribunal to make an order declaring that the patient is being detained in conditions of excessive security and specifying a period not exceeding three months during which the duties under subsections (3) to (5) are to be performed.
Those subsections impose an obligation upon the relevant Health Board to identify a hospital in which the patient could be detained in conditions not involving excessive security and in which accommodation is available.
Provision is made for the expressions qualifying patient and qualifying hospital to be defined by regulations made under subsections (11) and (12), which are in the following terms: (11) A patient is a qualifying patient for the purposes of this section and sections 269 to 271 of this Act if the patient is of a description specified in regulations. (12) A hospital is a qualifying hospital for the purposes of this section and sections 269 to 271 of this Act if (a) it is not a state hospital; and (b) it is specified, or of a description specified, in regulations.
Subsection (13) provides that regulations under subsection (11) or (12) may have the effect that qualifying patient means a patient, and that qualifying hospital means a hospital other than a state hospital, or a part of a hospital.
Sections 270 and 271 make provision for further orders following upon an order under section 268, analogous to the provision made by sections 265 and 266.
Section 271 makes provision for the recall of orders made under sections 268 to 271, analogous to the provision made by section 267.
Section 272 makes provision for the enforcement of orders made under sections 264 to 266, and 268 to 270, and is not material to the issues in the appeal.
Section 273 defines the expression relevant patient, and also makes provision for the expression relevant Health Board to be defined by regulations.
In relation to the latter aspect, it provides: In this Chapter relevant Health Board means, in relation to a patient of such description as may be specified in regulations, the Health Board, or Special Health Board (a) of such description as may be so specified; or (b) determined under such regulations.
In terms of section 326, regulations under the Act are to be made by statutory instrument.
Regulations under section 268(11) and (12) are subject to affirmative resolution: that is to say, a draft of the instrument must be laid before the Scottish Parliament for approval, in accordance with section 326(4).
Regulations under section 273 are subject to negative resolution: in other words, the instrument is subject to annulment in pursuance of a resolution of the Scottish Parliament.
In terms of section 329(1), regulations means regulations made by the Ministers.
The commencement provisions of the 2003 Act are contained in section 333.
So far as material, it provides: (2) Chapter 3 of Part 17 of this Act shall come into force on 1st May 2006 or such earlier day as the Scottish Ministers may by order appoint. (3) The remaining provisions of this Act, other than this section and section 326 shall come into force on such day as the Scottish Ministers may by order appoint. (4) Different days may be appointed under subsection (2) or (3) above for different purposes.
The 2003 Act was passed by the Scottish Parliament on 20 March 2003 and received Royal Assent on 25 April 2003.
Section 333 came into force on that date.
All the remaining provisions of the Act, so far as not already in force, were brought into force on 5 October 2005, with the exception of Chapter 3 of Part 17.
Sections 268 and 273 were brought into force on 6 January 2006, but only for the purpose of enabling regulations to be made: the Mental Health (Care and Treatment) (Scotland) Act 2003 (Commencement No 4) Order 2005 (SSI 2005/161).
As I shall explain, Ministers possessed the power to make such regulations in any event, by virtue of paragraph 10 of Schedule 1 to the Scotland Act 1998 (Transitory and Transitional Provisions) (Publication and Interpretation etc of Acts of the Scottish Parliament) Order 1999 (SSI 1999/1379) (the 1999 Order), which applied to Acts of the Scottish Parliament between 1999 and 2010, and applies in particular to the 2003 Act.
Regulations defining the expression relevant Health Board were made by the Ministers and came into force on 1 May 2006: the Mental Health (Relevant Health Board for Patients Detained in Conditions of Excessive Security) (Scotland) Regulations 2006 (SSI 2006/172).
No regulations have been made under section 268(11) and (12) defining the expressions qualifying patient and qualifying hospital.
In consequence, sections 264 to 267 are in effective operation, but sections 268 to 271 are not.
In a guidance note issued to health boards, local authorities, the Tribunal and others in April 2006 (NHS HDL (2006) 25), the Ministers candidly acknowledged the practical consequence of their failure to make regulations under section 268: 1.
The main provisions of the Mental Health (Care and Treatment) (Scotland) Act 2003 came into effect on 5 October 2005.
The provisions in Part 17 of the Act in relation to excessive security were not commenced at that time but are required by the Act to come into effect by 1 May 2006. 2.
The provisions in Part 17 will therefore come into effect on l May 2006.
These provisions relate to appeals by patients in the State Hospital.
No regulations have been made under section 268 to specify qualifying patients or hospitals to which the provisions in sections 268 to 270 apply.
In effect these sections will not come into force on 1 May 2006.
The background circumstances
The appellant is a patient in Leverndale Hospital, which is not a state hospital.
He has been detained there since 1995, latterly under a compulsion order.
He is detained under conditions of low security.
He believes that he is being detained under conditions of excessive security and wishes to be transferred to an open ward, which he believes would improve the quality of his life, increase his level of liberty, and advance the prospects of his eventual release from detention.
He wishes to apply to the Tribunal under section 268(2) of the 2003 Act for an order declaring that he is being detained in conditions of excessive security.
He cannot however make such an application in the absence of regulations specifying which patients are qualifying patients and which hospitals are qualifying hospitals.
The appellant applied for judicial review of the Ministers failure to draft and lay regulations under section 268(11) and (12) before the Scottish Parliament.
He sought declarator that their failure to draft and lay such regulations before the Scottish Parliament prior to 1 May 2006 was unlawful, and an order that they draft such regulations and lay them before the Scottish Parliament within 28 days of the date of the order of the court or within such other period as the court saw fit.
The appellant argued that, since the Scottish Parliament had enacted that section 268 shall come into force on 1 May 2006 at the latest, the Ministers were under a duty to make regulations under section 268(11) and (12) to give legal effect to section 268 by that date.
The Lord Ordinary, Lord Carloway, refused the petition for judicial review (M v Scottish Ministers [2008] CSOH 123; 2008 SLT 928).
He accepted that a duty to make regulations, and to do so within a particular period, could be imposed by implication.
If legislation vested a person or class of persons with a right which could only be exercised if regulations governing that exercise were in force, it would be assumed that Parliament intended that the person delegated with the relevant power should make regulations so as to activate the right in practice: Singh v Secretary of State for the Home Department 1993 SC (HL) 1; [1992] 1 WLR 1052.
That was not however the position in the present case, since section 268 did not confer any rights on any person or class of persons but permitted the identification of such persons by regulation.
It was only once such regulations were made that any right could arise (para 24).
Section 268 was to be contrasted with section 264, under which, it was said, no further legislative action was required for the provisions to have effect once the chapter came into force (para 25).
A reclaiming motion was refused by an Extra Division of the Inner House on broadly similar grounds (M v Scottish Ministers [2011] CSIH 19; 2011 SLT 787).
After referring to Julius v Bishop of Oxford (1880) 5 App Cas 214, the court contrasted section 268 with section 264, which identified the class of persons for whose benefit the provisions were intended.
Although it was necessary for regulations to be made before the expression relevant Health Board was defined for the purposes of section 264 as well as section 268, the absence of such regulations would not have precluded a patient in the state hospital from making an application to the Tribunal under section 264.
The Tribunal could, it was said, have made an order under section 264(2).
If the Ministers failure to define the expression relevant Health Board had the effect of preventing the implementation of the Tribunals order, then, it was said, the court could undoubtedly have intervened to construe the legislation as imposing a duty upon the Ministers to make such regulations as regards patients in state hospitals.
It was the clear intention of the Scottish Parliament that patients in state hospitals who satisfied any of the criteria in section 264(1)(a) to (d) should have effective rights of appeal against being detained in conditions of excessive security.
In that situation the court would infer that there was a duty on Ministers to make any necessary regulations to give effect to that intention (para 9).
In contrast to the provisions relating to patients in state hospitals, upon whom a right to apply to the Tribunal had been conferred by the Scottish Parliament, the provisions of sections 268 to 271 failed to identify any persons with actual rights to be effectuated by regulations (para 10).
The appellant has appealed to this court against the decision of the Extra Division.
In their printed case, the Ministers assert that sections 268 to 271 came into force and operation, along with the remaining provisions of Chapter 3 of Part 17, on 1 May 2006.
With effect from that date, it is said, the Tribunal had jurisdiction to hear and determine applications from qualifying patients at qualifying hospitals, as well as to hear applications from patients in state hospitals.
At the same time, the Ministers acknowledge that no applications can be made to the Tribunal under sections 268 to 271 unless and until the necessary regulations are made under section 268(11) and (12).
The internal contradictions of the Ministers argument are evident.
In their submissions at the hearing of the appeal, counsel for the Ministers drew a distinction between a provisions being in force and its being in operation, maintaining that the provisions of sections 268 to 271 were in force, but did not operate.
They had become law on 1 May 2006, but they could not operate in practice unless and until the Ministers decided to make the necessary regulations.
The Ministers failure to make such regulations did not defeat the intention of the Scottish Parliament and was not unlawful.
The contrary argument presented on behalf of the appellant was said to elide the distinction between the concept of coming into force, on the one hand, and the concept of taking effect or operating, on the other hand.
Counsel for the appellant submitted that it could be inferred from section 333(2) that the intention of the Scottish Parliament was that all the provisions of Chapter 3 of Part 17 should be in effective operation by 1 May 2006.
The idea that it had been the intention of the Parliament that the provisions should technically have the force of law, but in practice be a dead letter, was inherently implausible.
Why, counsel asked rhetorically, would the Parliament have bothered to enact section 333(2) if that was its intention? Why not leave matters entirely in the hands of the Ministers, as it had when it enacted section 333(3) in relation to most of the remaining provisions of the 2003 Act? Acknowledging that the court could not appropriately make an order requiring the Ministers to lay regulations before the Scottish Parliament, since the Ministers could alternatively invite the Parliament to repeal or amend the relevant provisions of the 2003 Act, counsel requested the court to make an order declaring that their failure to draft and lay such regulations prior to 1 May 2006, or since that date, was unlawful.
The commencement provision
An Act which has been enacted by both Houses of Parliament and has received the Royal Assent is on the statute book.
But it does not follow that a provision of the Act is necessarily part of the law of the United Kingdom.
As Hobhouse LJ stated in R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, 529, whether or not a provision becomes part of the law of the United Kingdom depends upon whether and when it comes into force: that is what coming into force means.
When a statutory provision becomes part of the law of the United Kingdom depends upon what commencement provision Parliament has enacted.
The same is true, mutatis mutandis, of statutes passed by the Scottish Parliament and the other devolved legislatures.
The Interpretation Act 1978 (the 1978 Act) provides in Schedule 1, to which effect is given by section 5, that commencement, in relation to an Act or enactment, means the time when it comes into force.
That provision applies to statutes enacted by the United Kingdom Parliament.
In relation to Acts of the Scottish Parliament, a similar definition is contained in Schedule 2 to the 1999 Order, and in Schedule 1 to the Interpretation and Legislative Reform (Scotland) Act 2010 (the 2010 Act), which has now replaced the 1999 Order.
Where no provision is made for an Act or provision of an Act coming into force, it comes into force at the beginning of the day on which the Act receives the Royal Assent (1978 Act, section 4(b); 1999 Order, Schedule 1, paragraph 2(b)); or, since 2010, in the case of an Act of the Scottish Parliament, at the beginning of the following day (2010 Act, section 3(2)).
In practice, however, it is common for an Act to provide that it is to come into force at a time after it has received the Royal Assent, either on a date specified in the Act itself, or on a date or dates to be fixed by a separate order.
Usually, although not invariably, this is done in order to allow time for persons affected by the Act to familiarise themselves with its provisions and to make any necessary adjustments to their affairs.
Officials may also require time to prepare for the work involved in administering the Act.
It may, for example, be necessary to draft regulations or other instruments to be made under the Act, after consultation with those concerned, or to prepare explanatory material for the guidance of officials and the public.
The delay in commencement thus allows persons affected by the Act sufficient time to prepare for its practical operation.
Where commencement is postponed, Parliament may leave the decision when the Act (or a part of the Act) is to come into force to the discretion of Ministers, by enacting a provision such as section 333(3) of the 2003 Act ( shall come into force on such day as the Scottish Ministers may by order appoint).
Parliament may on the other hand determine the date itself, as it did, for example, in section 9(1) of the Equal Pay Act 1970 ( the foregoing provisions of this Act shall come into force on the 29th December 1975), or it may provide for the Act to come into force upon the expiration of a specified period of time following Royal Assent.
Parliament may also enable Ministers to make a commencement order, but specify the date, or the latest date, to be appointed by such an order.
Section 9(2) of the Equal Pay Act provides an example: the Secretary of State was given a power to bring certain provisions of the Act into force by order made to come into operation on the 31st December 1973.
Another example is section 5(2) of the Domestic Violence and Matrimonial Proceedings Act 1976, which provided that: This Act shall come into force on such day as the Lord Chancellor may appoint by order Provided that if any provisions of this Act are not in force on 1st April 1977, the Lord Chancellor shall then make an order by statutory instrument bringing such provisions into force.
Although most modern statutes favour the expression come into force, the expression come into operation has also been used in the same sense, and was in more common use in earlier times.
These expressions, and others such as speaks from and comes into effect, have been used interchangeably by the courts, and are also used interchangeably in textbooks on statutory interpretation, such as Bennion on Statutory Interpretation, 5th ed (2008), and Craies on Legislation, 10th ed (2012).
The latter states at para 10.1.1 that the terms commencement, coming into force, taking effect, coming into effect and coming into operation are interchangeable and mean no more than the time when the legislation starts to have legal effect.
There is however another sense in which a provision may be said to be in operation (or an equivalent expression).
As well as a provisions being said to be in operation in the sense that it forms part of the law of the land, it may also be said to be in operation in the sense that it is in effective operation as a matter of objective fact.
It has rarely been necessary for the courts to advert to the distinction between these two senses, since a provision which has the force of law is normally also in operation as a matter of practical reality.
There are however two decisions of the Court of Appeal in which the distinction has been material, and which contain an illuminating discussion of the point.
The first case is R v Minister of Town and Country Planning, Ex p Montague Burton Ltd [1951] 1 KB 1, which concerned section 37 of the Interpretation Act 1889 (the 1889 Act).
Put shortly, that section provided that where an Act was not to come into operation immediately, and it conferred power to make regulations or other instruments for the purposes of the Act, that power could be exercised at any time after the passing of the Act, so far as may be necessary or expedient for the purpose of bringing the Act into operation at the date of the commencement thereof.
The term commencement was defined by section 36 as meaning the time at which the Act comes into operation.
The Court of Appeal held that the power conferred by section 37 was not confined to bringing the Act into operation in the sense of bringing it into legal force, but extended to taking measures which would enable the Act to operate in practice.
Tucker LJ, with whose judgment Asquith and Jenkins LJJ agreed, said (p 6) that section 37 gave power to take the necessary steps to set up the machinery for bringing the Act into operation as well as for doing such an act as appointing a day for the Act to come into operation.
The second case, Usher v Barlow [1952] Ch 255, also concerned section 37 of the 1889 Act.
Lord Evershed MR stated (p 259) that the section extended to something more than that which was requisite to enable the Act to come into operation at all: it covered such steps as would be required to enable the Act to operate effectively.
Jenkins LJ, with whose judgment Morris LJ agreed, observed (p 263) that operation was used in section 37 in two different senses, namely the sense in which it appeared in the definition of commencement and the sense of effective operation.
The section should be construed as extending to whatever was necessary or expedient for the purpose of bringing the Act into effective operation, in the second sense, at the time when it came into operation, in the first sense.
Section 37 of the 1889 Act was replaced by section 13 of the 1978 Act, which provides as follows: Where an Act which (or any provision of which) does not come into force immediately on its passing confers power to make subordinate legislation, or to make appointments, give notices, prescribe forms or do any other thing for the purposes of the Act, then, unless the contrary intention appears, the power may be exercised, and any instrument made thereunder may be made so as to come into force, at any time after the passing of the Act so far as may be necessary or expedient for the purpose (a) of bringing the Act or any provision of the Act into force; or (b) of giving full effect to the Act or any such provision at or after the time when it comes into force.
Similar provision was made in relation to Acts of the Scottish Parliament by paragraph 10 of Schedule 1 to the 1999 Order, and a more elaborate provision, to similar effect, is now made by section 4 of the 2010 Act.
Section 13 of the 1978 Act, like the equivalent legislation in respect of Acts of the Scottish Parliament, makes explicit, in setting out as alternatives the purposes described in paragraphs (a) and (b), the distinction which the Court of Appeal inferred in Ex p Montague Burton Ltd and Usher v Barlow from the terms of section 37 of the 1889 Act: the distinction, that is to say, between bringing [an] Act into force, on the one hand, and giving full effect to the Act when it comes into force, on the other hand.
It follows that the distinction which the Ministers have sought to draw between a provision being in force, in the sense that it has become law, on the one hand, and its being in effective operation, on the other hand, is in principle a valid distinction.
In a commencement provision such as section 333(2) of the 2003 Act, in particular, the words in force can only bear the former of those senses.
That is because the effect of a provision which fixes a date when provisions shall come into force is that those provisions will automatically come into force on the specified date.
Nothing requires to be done in order for the provisions to come into force beyond passively awaiting the date fixed by the Act itself.
If however the provisions being brought into force cannot be brought into effective operation without further action being taken as is true, on any view of the matter, of the provisions to which section 333(2) applies then the commencement provision must be referring only to the bringing of the provisions into force as law, and not to their being brought into effective operation.
That conclusion does not however permit one to infer, from a commencement provision in the form of section 333(2), that Parliament did not intend that the provisions to which it applies should be brought into effective operation on the date when they come into force.
On the contrary: the inference which one would naturally draw, unless the contrary intention appears, is that that was indeed the intention of Parliament.
That inference reflects a number of overlapping considerations.
First, it is ordinarily reasonable as a matter of common sense to infer that Parliament, when it fixes a date when a provision is to come into force, is not envisaging that the provision will technically have the force of law from that date but be in practice a dead letter.
Parliament is not given to idly passing legislation.
As Viscount Simon LC observed in Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014, 1022, Parliament would legislate only for the purpose of bringing about an effective result.
Its intention can ordinarily be taken to be that an enactment, when brought into force, will not be futile but will have practical consequences for the life of the community.
And it is for Parliament, not the Executive unless Parliament confers the necessary power upon it to determine when an enactment comes into force.
This is an aspect of the wider principle, fundamental to our constitution since the seventeenth century, that Parliament makes the law and the Executive carries the law into effect.
Secondly, as I have explained, Parliaments delaying the commencement of a provision, rather than allowing section 4(b) of the 1978 Act (or the equivalent provisions of the 1999 Order or the 2010 Act) to take effect, will usually be referable to the need to allow time for the necessary preparations to be made, by those affected by the provision and by officials, before the provision can be brought into effective operation.
In such circumstances, Parliament may enact a commencement provision which specifies a particular date when (or by which date) a provision is to come into force, such as section 333(2) of the 2003 Act; or, on the other hand, it may enact the more common form of commencement provision which confers on ministers a discretion to fix the commencement date by order: a form of provision of which section 333(3) provides an example.
As Lord Nicholls of Birkenhead observed in Ex p Fire Brigades Union [1995] 2 AC 513, 574, a provision of the latter kind is often the most convenient way of coping with the practical difficulty that, when the legislation is passing through Parliament, it is not always possible to know for certain what will be a suitable date for the legislation to take effect.
Regulations may need drafting, staff and accommodation may have to be arranged, literature may have to be prepared and printed.
There may be a host of other practical considerations.
In the nature of things, these practical considerations will normally relate to the effective operation of the statute, rather than to its becoming law, insofar as those two matters can be distinguished.
If, therefore, Parliament has not been willing to leave it to ministers to decide when provisions are to come into force, it is ordinarily reasonable to infer that it has itself determined how much time should be allowed in order for any practical considerations to be addressed.
It is natural to infer that Parliaments intention is that, once the allotted time has expired, the provision should be brought into effective operation as well as being given legal effect.
Thirdly, as Hobhouse LJ observed in Ex p Fire Brigades Union at pp 526 527, Parliament will be aware that when it has used words which leave it to a minister to appoint the day upon which a statutory provision shall come into force, this has meant that, on occasions, the minister has never made any appointment and the provision has never come into force.
It is no doubt because Parliament is aware that some parts of statutes may not be brought into force by the minister that it has on occasions used wording requiring the minister to make his appointment by a certain date, as in the Domestic Violence and Matrimonial Proceedings Act 1976.
The effect of such a provision is to impose a duty on the minister to bring the legislation into force by the specified date: Ex p Fire Brigades Union at p 550 per Lord Browne Wilkinson.
Another way of ensuring that provisions come into force within a given time is for Parliament itself to fix the date, as in section 333(2) of the 2003 Act.
Whichever method is selected, Parliaments decision to fix the time by which the provisions are to come into force will ordinarily reflect the importance which Parliament attaches to the practical effect of the provision in question, and its consequent intention to ensure not merely that it comes into force on the specified date as a matter of law, but that it comes into effective operation as a matter of practical reality.
The commencement provision in the present case
It is common ground that it is unnecessary to resort to Parliamentary materials in the present case in order to resolve any ambiguity or obscurity in the legislation.
Although counsel referred the court to various background materials, they are of limited relevance.
In general, the 2003 Act had its roots in a review of Scottish mental health legislation which had been carried out by a committee chaired by the Rt Hon Bruce Millan at the invitation of the Minister for Health.
The committees recommendations were published in a report entitled New Directions: Report on the Review of the Mental Health (Scotland) Act 1984 (SE/2001/56), which was laid before the Scottish Parliament in 2001.
One of the recommendations was that patients should have a right of appeal to be transferred from the State Hospital, or a medium secure facility, to conditions of lower security (recommendation 27.19).
As introduced, the Bill which became the 2003 Act did not contain any provision to implement that recommendation.
In response to Parliamentary promptings, however, the provisions which became Chapter 3 of Part 17 of the 2003 Act were introduced by amendment at Stage 3 of the Bill.
Section 333(2) was also the result of an amendment at Stage 3 of the Bill.
Accepting the amendment, the Deputy Minister for Health and Community Care said that it would provide a guarantee that the new rights will be brought into force no later than May 2006 (Proceedings of the Scottish Parliament, 20 March 2003, col 16740).
The member who had proposed the amendment responded that a cheer was appropriate (ibid).
The language of the debate is consistent with an intention that the rights of application provided by Chapter 3 of Part 17 should be in effective operation by 1 May 2006: it is difficult to reconcile with an intention that the provisions might be in force, but of no effect: vox et praeterea nihil.
As I have explained, section 333(2) states that Chapter 3 of Part 17 of the 2003 Act shall come into force on 1st May 2006 or such earlier day as the Scottish Ministers may by order appoint.
It is apparent from the provisions of Chapter 3 of Part 17 that all the rights of application for which provision is made require regulations to be made before they can come into practical effect.
That is as true of the provisions relating to state hospitals as of the provisions relating to other hospitals, since regulations have to be made under section 273, defining relevant Health Board, before the Tribunal can determine an application under section 264, as well as regulations under section 268 being necessary before an application can be made under that section.
It is therefore impossible to accept the contention of counsel for the Ministers that the Scottish Parliaments intention in relation to sections 264 to 267 was fundamentally different from its intention in relation to sections 268 to 271: in particular, that the former provisions, but not the latter, were intended to come into practical operation by 1 May 2006.
There is nothing in the legislation which supports that contention.
Notwithstanding the need for regulations to be made in order for any of the provisions of Chapter 3 of Part 17 to be given practical effect, the Scottish Parliament stipulated that all those provisions were to come into force on 1 May 2006, if not earlier.
Just as there is nothing in the 2003 Act which enables one to discern different intentions in relation to different provisions of Chapter 3 of Part 17, there is nothing to indicate that the Scottish Parliament intended that the provisions should become law on 1 May 2006 but might nevertheless remain a dead letter for an indefinite period thereafter.
In the absence of any such indication, it is reasonable to infer, for the reasons I have explained, that the Scottish Parliament intended that the provisions in question should be in effective operation, as well as being in force, on 1 May 2006.
The discretion to make regulations
It has long been a basic principle of administrative law that a discretionary power must not be used to frustrate the object of the Act which conferred it: see for example Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997.
If, as I have concluded, it was the intention of the Scottish Parliament that Chapter 3 of Part 17 of the 2003 Act should be in effective operation by 1 May 2006 at the latest, it follows that, although the Ministers had a discretion as to the manner in which they exercised their power to make the necessary regulations, they were under a duty to exercise that power no later than 1 May 2006.
In the event, the Ministers failure to exercise their power to make the necessary regulations under section 268(11) and (12) of the 2003 Act by 1 May 2006, or since that date, has had the result that, although sections 268 to 271 are technically in force, they have no more practical effect today than they had on the date, more than nine years ago, when the 2003 Act received Royal Assent.
The Ministers failure to make the necessary regulations has thus thwarted the intention of the Scottish Parliament.
It therefore was, and is, unlawful.
In their discussion of this aspect of the case, the Lord Ordinary and the Extra Division attached considerable importance to the fact that sections 268 to 271, unlike sections 264 to 267, did not confer rights of application upon an identified class of patients.
It was only in the event that regulations were made, defining the expressions qualifying patient and qualifying hospital, that any individual patient would have such a right.
They accepted the Ministers argument that authorities such as Julius v Bishop of Oxford 5 App Cas 214 and Singh v Secretary of State for the Home Department [1992] 1 WLR 1052; 1993 SC (HL) 1, which demonstrated that a duty to exercise a power would arise where its exercise was necessary to give effect to rights created by Parliament, were therefore distinguishable.
Since no rights were conferred by section 268 in the absence of regulations, it followed that there was no duty to make such regulations.
I observe in the first place that the argument is circular: there is no duty to make regulations because no rights have been conferred; no rights have been conferred because no regulations have been made; and no regulations have been made because there is no duty to make regulations.
The argument does not, in other words, provide any support for its conclusion, since it is premised upon that conclusion.
The fundamental flaw in the Ministers argument is to assume that a failure to exercise a discretionary power can only be unlawful or, to put the matter differently, to assume that an obligation to exercise a discretionary power can only arise where the exercise of the power is necessary to make effective a legal right.
That is too narrow an approach, as was made clear in Padfield, where the same argument was advanced (see pp 1020 1021) and rejected.
As Lord Reid explained in that case at p 1033, the case of Julius v Bishop of Oxford is itself authority for going behind the words which confer a statutory power to the general scope and objects of the Act in order to find what was intended.
In the words of Lord Cairns LC in Julius at pp 222 223, there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty.
The importance of Padfield was its reassertion that, even where a statute confers a discretionary power, a failure to exercise the power will be unlawful if it is contrary to Parliaments intention.
That intention may be to create legal rights which can only be made effective if the power is exercised, as in Singh v Secretary of State for the Home Department.
It may however be to bring about some other result which is similarly dependent upon the exercise of the power.
Authorities illustrating that principle in the context of a statutory power to make regulations, where such regulations were necessary for the proper functioning of a statutory scheme, include Greater London Council v Secretary of State for the Environment [1984] JPL 424 and Sharma v Registrar to the Integrity Commission [2007] 1 WLR 2849, para 26, per Lord Hope of Craighead.
In the present case, the exercise of the power to make regulations by 1 May 2006 was necessary in order to bring Chapter 3 of Part 17 of the 2003 Act into effective operation by that date, as the Scottish Parliament intended.
The Ministers were therefore under an obligation to exercise the power by that date.
Furthermore, although at the time when this case was before the Court of Session it might have been thought that the appellant lacked standing to challenge the Ministers conduct unless he could complain of a violation of his rights, it is now clear from AXA General Insurance Ltd and others v HM Advocate and others [2011] UKSC 46; [2012] 1 AC 868; 2012 SC (UKSC) 122 that it is necessary for an applicant for judicial review to demonstrate only a sufficient interest in the subject matter of the application.
As a patient whose detention is authorised by a compulsion order, and who might benefit from regulations made under section 268(11) and (12), the appellant possesses such an interest.
Conclusion
For these reasons, I would allow the appeal, recall the interlocutor of the Extra Division and grant declarator that the failure by the Ministers to draft and lay regulations under section 268(11) and (12) of the Mental Health (Care and Treatment) (Scotland) Act 2003 before the Scottish Parliament prior to 1 May 2006, and their continued failure to do so since that date, was and is unlawful.
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The Appellant is a patient who has been compulsorily detained in Leverndale Hospital, which is not a state hospital, since 1995.
He believes he is detained in conditions of excessive security.
He believes that his quality of life, his liberty and his prospects for release would be improved were he to be transferred to an open ward.
Section 264 of the Mental Health (Care and Treatment) (Scotland) Act 2003 (the Act) gives patients who are detained in state hospitals under certain types of order the right to apply to the Mental Health Tribunal for Scotland (the Tribunal) for a declaration that they are being held in conditions of excessive security.
Section 268 of the Act purports to give the same right to such patients who are detained in non state hospitals.
However, it also specifies that, within that class of individuals, only qualifying patients in qualifying hospitals may make an application.
Under each section, if the Tribunal makes a declaration, the relevant health board must identify within three months another hospital where the patient can be detained in appropriate conditions of security.
The Act was passed and received Royal Assent in 2003.
Section 333(2) of the Act states that the part of the Act containing sections 264 and 268 was to come into force by no later than 1 May 2006.
Section 268 of the Act specifies that the terms qualifying patient and qualifying hospital were to be defined in regulations made by the Respondents.
Section 273 of the Act specifies the same in relation to the term relevant health board.
However, although sections 268 and 273 were brought into force on 6 January 2006 specifically and only for the purpose of allowing regulations to be made under those sections, the Respondents made regulations under section 273 only, which defined relevant health board.
Those regulations came into force on 1 May 2006.
No regulations defining qualifying patient or qualifying hospital have been made by the Respondents under section 268 to date.
Because the term relevant health board was defined prior to 1 May 2006, the right to apply to the Tribunal for patients detained in state hospitals under section 264 was in effective operation by that date.
However, because the terms qualifying patient and qualifying hospital remain undefined, section 268 is not in effective operation.
Therefore, the Appellant cannot apply for a declaration from the Tribunal that he is detained in conditions of excessive security.
The Appellant applied for judicial review on the basis that the Respondents failure to draft and lay regulations under section 268 defining the terms qualifying patient and qualifying hospital was unlawful.
The Outer House of the Court of Session refused the Appellants petition on the basis that there was no duty to lay regulations to give effect to a statute where that statute had not conferred a right on any specific class of persons.
The Inner House refused the Appellants subsequent appeal on broadly similar grounds.
The Supreme Court unanimously allows the appeal.
The Court finds that the failure by the Scottish Ministers to draft and lay the regulations under section 268 of the 2003 Act before the Scottish Parliament prior to 1 May 2006, and their continued failure to do so, was and is unlawful.
Lord Reed gives the judgment of the court.
The Respondents argue that section 268 was in force by 1 May 2006, as required by section 333(2) of the Act, but did not operate.
The latter would not occur unless and until they decided to make the necessary regulations, and their failure to do so did not defeat the intention of the Scottish Parliament.
There is a valid distinction, they say, between coming into force and operating [20].
By contrast, the Appellant argues that the inference to be drawn from section 333(2) is that the part of the Act containing section 268 should be in effective operation by 1 May 2006.
This is supported by the fact that there are other sections within the Act in respect of which Parliament had not set any deadline for their coming into force [21].
The Court notes that the question of when a statutory provision comes into force depends not on when it appears on the statute book following Royal Assent, but on what commencement provision Parliament enacts [22].
It is common for a section to come into force on a later date, usually in order to allow for preparation by the officials who are to administer the Act and/or those who will be affected by its practical operation.
Parliament may allow Ministers to decide when a section should come into force, or alternatively may specify a particular deadline [24 25].
Having regard to previous decisions of the Court of Appeal, the distinction between a section coming into force, first, in the sense that it forms part of the law of the land and, second, in the sense that it is in effective operation as a matter of objective fact, is in principle a valid one.
As such, in a commencement provision such as section 333(2) of the Act, the words in force refer to the former of these two senses[27 32].
However, the natural inference that should nonetheless be drawn, unless the contrary intention appears, is that Parliament intended the sections to which such a commencement provision applies also to be in effective operation [33 37].
In relation to the present case, Parliamentary debate led to the inclusion in the Act of a right of application on the part of detained patients to be transferred to conditions of lower security.
Such debate also led, as a result of an amendment, to a commitment being made that such rights would be in force by no later than May 2006 [38 39].
The intention of the Scottish Parliament was that the rights of application for which the part of the Act containing section 268 provided should be in effective operation by that date.
There was nothing in the Act to support the contention that the Scottish Parliament intended that section 264 should be in effective operation by 1 May 2006 but that section 268 should not; both required the enactment of regulations to give them practical effect [40].
It is a basic principle of administrative law that a discretionary power must not be used to frustrate the object of the Act of Parliament which conferred that discretion.
The Respondents failure to exercise their power to make the regulations necessary to define qualifying patient and qualifying hospital, and therefore to give section 268 of the Act practical effect, thwarted the intention of the Scottish Parliament.
That failure therefore was, and is, unlawful [42 43].
Before the Scottish courts, the Respondents pointed out that the Scottish Parliament did not confer a right of application on an identified class of patients in section 268 in the way that it had in section 264.
They argued that this meant they had no duty to make regulations, as there was no right contained in section 268 to which they were duty bound to give effect [44].
However, the Court notes that that proposition is circular; there is no duty to make regulations because no rights have been conferred, but no rights have been conferred because no regulations have been made [45].
The fundamental flaw in the argument is that it is too narrow an approach to suggest that an obligation to exercise a discretionary power to make regulations only arises where it is necessary to do so to give effect to a legal right.
It may be necessary to exercise such a power to bring about some other result that was intended by Parliament, and in this case that intended result was that the part of the Act containing section 268 should be in effective operation by 1 May 2006 [46 47].
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The Secretary of State for the Home Department cannot make an order which deprives a person of his British citizenship on the ground that it is conducive to the public good if she is satisfied that the order would make him stateless.
This appeal seeks to raise the question: if at the date of the Secretary of States order it were open to the person to apply for citizenship of another state and if that application would necessarily be granted, is it her order which would make him stateless or is it his failure to make the application which would do so?
The Secretary of State appeals against an order of the Court of Appeal (Richards, Stanley Burnton and Gross LJJ) dated 29 March 2012, by which it quashed her order dated 14 December 2007 which purported to deprive Mr Al Jedda (the respondent) of his British citizenship.
The Secretary of State made her order pursuant to section 40(2) of the British Nationality Act 1981 (the Act).
In its current form, which reflects substitutions made by section 4 of the Nationality, Immigration and Asylum Act 2002 and by section 56(1) of the Immigration, Asylum and Nationality Act 2006, section 40 of the Act provides as follows: 40.
Deprivation of citizenship (1) . (2) The Secretary of State may by order deprive a person of a citizenship status if the Secretary of State is satisfied that deprivation is conducive to the public good. (3) The Secretary of State may by order deprive a person of a citizenship status which results from his registration or naturalisation if the Secretary of State is satisfied that the registration or naturalisation was obtained by means of fraud, false representation, or (a) (b) (c) concealment of a material fact. (4) The Secretary of State may not make an order under subsection (2) if he is satisfied that the order would make a person stateless. (5) Before making an order under this section in respect of a person the Secretary of State must give the person written notice specifying (a) (b) (c) that the Secretary of State has decided to make an order, the reasons for the order, and the persons right of appeal under section 40A(1) or under section 2B of the Special Appeals Immigration Commission Act 1997 (c 68). (6) .
So the issue is whether the Secretary of States order in respect of the respondent was invalidated by subsection (4) above.
B: HISTORY
The respondent was born in Iraq in 1957 and inherited Iraqi nationality.
In 1992 he and his first wife came to the UK and sought asylum.
In 1998 they and their four children were granted indefinite leave to remain in the UK and on 15 June 2000 they were granted British nationality.
The effect of his acquisition of British nationality was that the respondent automatically lost his Iraqi nationality pursuant to article 11 of the Iraqi Nationality Law No 43 of 1963.
In 2002, following divorce from his first wife and while he was temporarily abroad, the respondent married a second wife, by whom he had a child; and there he also entered into a polygamous marriage with a third wife, by whom he had three children.
In 2008 he was divorced from his second wife.
He is currently living in Turkey with his third wife and all eight of his children.
In September 2004 the respondent travelled from the UK to Iraq.
In October 2004 US forces in Iraq arrested him and transferred him into the custody of British forces.
For more than three years, namely until 30 December 2007, British forces detained him in Iraq, without charge, on grounds of his suspected membership of a terrorist group.
Following his release he remained in Iraq until 3 February 2008, when he travelled to Turkey.
In proceedings for judicial review which he had issued in 2005 the respondent contended that his internment violated his rights under article 5(1) of the European Convention on Human Rights.
His contention was rejected both by the Divisional Court of the Queens Bench Division and on his appeal to the Court of Appeal and also, by order dated 12 December 2007, on his further appeal to the House of Lords (R (Al Jedda) v Secretary of State for Defence (JUSTICE intervening) [2007] UKHL 58, [2008] AC 332).
Much later, however, namely on 7 July 2011, the Grand Chamber of the European Court of Human Rights held that his internment had violated his rights under article 5(1): Al Jedda v United Kingdom (2011) 53 EHRR 789.
In 2006 the respondent had brought a separate claim for habeas corpus in which he asserted that his internment had become unconstitutional under Iraqi law.
Following his release from detention he re pleaded his claim as one for damages.
In due course the claim was dismissed and the Court of Appeal upheld the dismissal (Al Jedda v Secretary of State for Defence [2010] EWCA Civ 758, [2011] QB 773).
The order by which the Secretary of State deprived the respondent of British citizenship was therefore made shortly prior to his release from internment.
As required by section 40(5) of the Act, her order was preceded by a letter, dated 12 December 2007, by which she notified him that she had decided to make the order on the ground that, for four reasons which she specified, she was satisfied that it would be conducive to the public good.
Pursuant to section 40A(2) of the Act, she certified in the letter that the decision was taken wholly or partly in reliance on information which in her opinion should not be made public, with the result that, under section 2B of the Special Immigration Appeals Commission Act 1997, his right of appeal lay to that Commission (the Commission) rather than to the First Tier Tribunal (the Tribunal).
In the domestic proceedings which, as described above, ended in the House
of Lords on 12 December 2007, it was recorded as a fact that the respondent had dual British and Iraqi nationality (Lord Bingham of Cornhill, para 1).
Apparently it was not then understood that, upon acquiring British nationality, the respondent had lost his Iraqi nationality.
When, however, on 11 January 2008 he issued his notice of appeal to the Commission against the Secretary of States order dated 14 December 2007, one of his grounds of appeal was that the order had made him stateless and was therefore void.
The Commission resolved to treat this ground as a preliminary issue and, having refused the respondents application for an adjournment, it determined it on 23 May 2008.
The Commission found that, upon acquiring British nationality, the respondent had indeed lost his Iraqi nationality; and that fact then became no longer in issue.
The Commission, however, proceeded to conclude (or, more strictly, to hold that the respondent had not established otherwise on the balance of probabilities) that he had regained Iraqi nationality under article 11(c) of the Law of Administration for the State of Iraq for the Transitional Period (the TAL) which had been in force between June 2004 and May 2006.
The Commission therefore rejected the respondents contention that the Secretary of States order had made him stateless.
By further judgments, open and closed, dated 7 April 2009, the Commission rejected the respondents remaining grounds of appeal against the order; and the dismissal of the appeal enabled the respondent to appeal to the Court of Appeal against the rejection of his contention that the order had made him stateless.
On 12 March 2010 the Court of Appeal upheld his submission that the Commission had been wrong to refuse his application for an adjournment of the hearing in May 2008 and the court directed it to rehear the issue ([2010] EWCA Civ 212).
On 26 November 2010 the Commission, differently constituted, again concluded that the respondent had regained Iraqi nationality prior to the date of the Secretary of States order, which had therefore not made him stateless.
It found that he had regained it automatically either under article 11(c) of the TAL or under article 10(1) of the Iraqi Law of Nationality 2006 which had in effect replaced the TAL.
In the light of its conclusion the Commission observed that it had no need to address the Secretary of States alternative contention, raised before it for the first time, that, if on 14 December 2007 the respondent had not been an Iraqi national, it had been open to him to regain it by application and that it had been his failure to make the application, rather than her order, which had made him stateless.
By its order under current appeal, the Court of Appeal set aside, as erroneous in law, the Commissions conclusion that prior to 14 December 2007 the respondent had automatically regained Iraqi nationality, whether under article 11(c) or under article 10(1).
This court has not permitted the Secretary of State to challenge the Court of Appeals disposal of that issue.
But the effect of its disposal was to require that court to address the Secretary of States alternative contention, which she had preserved by a respondents notice.
In a judgment with which Stanley Burnton and Gross LJJ agreed, Richards LJ rejected the alternative contention in the following terms: 120.
I am prepared to assume that if an application were made for the restoration of the appellants Iraqi nationality it would be bound to succeed, though the point is by no means free from doubt.
I also put to one side the objections raised by Mr Hermer as to the practicality of the appellant making an application at all: he submitted that an application would have to be made by the appellant in person, and for that purpose the appellant would have to enter Iraq legally and would therefore require a visa, which would lie in the discretion of the State and could be refused on national security grounds. 121.
I would reject the Secretary of States argument for the straightforward reason that section 40(4) requires the Secretary of State (and, on appeal, the court) to consider the effect of the order made under section 40(2): would the order make the person stateless? If Iraqi nationality was not restored to the appellant automatically under the Iraqi legislation considered above, he was not an Iraqi national at the time of the order: his only nationality at that time was British nationality.
The effect of the order would therefore be to make him stateless.
That would be the effect of the order irrespective of whether he could previously have acquired another nationality had he chosen to do so, or whether he could do so in the future.
It is against this determination that the appeal is brought.
C: STATELESSNESS
The evil of statelessness became better understood following the re drawing of national boundaries at the end of the two world wars of the twentieth century and following, for example, the Reich Citizenship Law dated 15 September 1935 which provided that all Jewish people should be stripped of their citizenship of the German Reich.
The Universal Declaration of Human Rights, adopted by the United Nations on 10 December 1948, provides in article 15: (1) Everyone has the right to a nationality. (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
The European Convention on Human Rights 1950 does not identify a right to a nationality but the European Court of Human Rights recognises that the arbitrary denial of citizenship may violate the right to respect for private life under Article 8 of the Convention (Karassev v Finland, Application No 31414/96, 12 January 1999).
In his dissenting judgment in Perez v Brownell, 356 US 44, 64 (1958), Warren CJ described a right to nationality as mans basic right for it is nothing less than the right to have rights.
Although the international growth of human rights during the past fifty years has to some extent succeeded in establishing that a persons right to have rights stems, instead, from his existence as a human being, worldwide legal disabilities with terrible practical consequences still flow from lack of nationality: see the illuminating article by Weissbrodt and Collins entitled The Human Rights of Stateless Persons, Human Rights Quarterly, 28 (2006) 245.
On 1 May 2013 the Home Office issued guidance on Applications for leave to remain as a stateless person referable to changes in Immigration Rules which had recently come into effect.
It states, at para 2(1): Statelessness occurs for a variety of reasons, including discrimination against minority groups in nationality legislation, failure to include all residents in the body of citizens when a state becomes independent (state succession) and conflicts of laws between states.
The dissolution of the Soviet Union and the Yugoslav Federation in the early 1990s, for example, caused internal and external migration that is reported to have left hundreds of thousands stateless throughout Eastern Europe and Central Asia.
In some countries, citizenship is lost automatically after prolonged residence in another country.
The absence of proof of birth, origins or legal identity can also increase the risk of statelessness.
Statelessness has been estimated to affect up to 12 million people worldwide.
Possession of nationality is essential for full participation in society and a prerequisite for the enjoyment of the full range of human rights.
Those who are stateless may, for example, be denied the right to own land or exercise the right to vote.
They are often unable to obtain identity documents; they may be detained because they are stateless; and they can be denied access to education and health services or blocked from obtaining employment.
Until 1964 the ability of the Secretary of State in limited circumstances to deprive a person of British citizenship acquired by naturalisation or registration was not qualified by any obligation not thereby to make that person stateless.
A power to deprive had been introduced by section 7(1) of the British Nationality and Status of Aliens Act 1914, which had enabled the Secretary of State to revoke a certificate of naturalisation on the ground that it had been obtained by misrepresentation or fraud.
Section 1 of the British Nationality and Status of Aliens Act 1918 had converted the power into a duty and had extended it to grounds of public interest: it was to apply to acts of disloyalty to the Crown and, provided that the Secretary of State was satisfied that the continuance of the certificate was not conducive to the public good, to any of five further facts.
In turn these provisions were replaced by section 20 of the British Nationality Act 1948, which converted the Secretary of States duty back into a power and which specified grounds for its exercise which loosely reflected those which had been identified in 1914 and 1918.
Shortly after 1948, however, came two important United Nations conventions in relation to statelessness.
The first was the Convention relating to the Status of Stateless Persons adopted on 28 September 1954 (the 1954 Convention).
The UK signed it on that day and ratified it on 16 April 1959; and it came into force on 6 June 1960.
It recited the profound concern of the United Nations for stateless persons and the desirability of regulating and improving their status.
By article 1(1), it defined a stateless person in terms which have become internationally authoritative, namely, as a person who is not considered as a national by any State under the operation of its law.
By the articles which followed, it identified a minimum level of treatment in specified respects which contracting states were required to afford to stateless persons within their territories.
But it did not address the deprivation of citizenship when such was to cause statelessness.
The second was the Convention on the Reduction of Statelessness adopted on 30 August 1961 (the 1961 Convention).
The UK signed it on that day and ratified it on 29 March 1966; and it came into force on 13 December 1975.
Concerned, as its title suggests, with the reduction of statelessness rather than with the rights of stateless persons, the 1961 Convention obliged states to grant nationality to certain persons who would otherwise be stateless.
But it also addressed the deprivation of citizenship when such was to cause statelessness.
Article 8(1) prohibited a state from depriving a person of his nationality if such was to cause him to be stateless.
Para 2 of the article specified two exceptions to the prohibition, of which the second was the situation in which the nationality had been obtained by misrepresentation or fraud.
Para (3)(a) of the article provided the opportunity for a state to escape more widely from the prohibition if (i) at the time of its ratification of the Convention, its law were to provide for deprivation on, in effect, the ground of conduct seriously prejudicial to the vital interests of the state and (ii) at the time of ratification the state declared its retention of the right to deprive a person of citizenship on that ground.
By 1964 the UK had resolved to ratify the 1961 Convention.
Parliament passed the British Nationality (No 2) Act 1964 in order (as was noted in Halsburys Statutes, Second Edition, Vol 44, p 80) to enable the government to ratify it.
The Act implemented the obligation cast by the 1961 Convention to grant nationality to certain persons who would otherwise be stateless.
In relation to the deprivation of citizenship the government proposed that, when ratifying the Convention, it should make the declaration permitted by article 8(3)(a).
It realised however that, notwithstanding the proposed declaration, three of the grounds for deprivation set by the 1948 Act would fall outside the exemptions permitted by the 1961 Convention and could therefore not form the basis of an order if its effect would be to make the person stateless.
By section 4(2) of the 1964 Act two such grounds for deprivation were abolished altogether.
Parliament resolved to maintain the third ground (namely that, within five years of naturalisation, the person had been sentenced to imprisonment for not less than a year: section 20(3)(c) of the 1948 Act); so, by section 4(1) of the 1964 Act, it provided that the Secretary of State could not make an order for deprivation on that ground if it appears to him that that person would thereupon become stateless.
Thus was the link between deprivation and statelessness first forged in domestic law.
Upon ratification of the 1961 Convention on 29 March 1966, the UK Government duly made the declaration permitted by article 8(3)(a) of it.
The provisions for deprivation of citizenship in section 20 of the 1948 Act and section 4 of the 1964 Act were in effect consolidated in the original version of section 40 of the Act.
On 6 November 1997 the Council of Europe promulgated the European Convention on Nationality.
Article 7(1) provided that a contracting state could not deprive a person of its nationality save on seven specified grounds, of which the second was that the person had obtained nationality by misrepresentation or fraud and the fourth was that his conduct had been seriously prejudicial to the vital interests of the state.
But, save in relation to the second ground, para 3 of article 7 prohibited deprivation if such was to cause statelessness.
Thus no escape from the prohibition was permitted in relation, for example, to the fourth ground, which reflected the public interest ground on which, in accordance with the 1961 Convention, the UK had retained its right to deprive even when such was to cause statelessness.
The UK has not ratified nor even signed the European Convention on Nationality.
But, as Lord Falconer of Thoroton informed a Committee of the House of Lords on 8 July 2002 (Hansard, HL Debs, vol 637, col 537), the government then hoped to ratify it.
He was promoting the bill which became the Nationality, Immigration and Asylum Act 2002.
The aspiration to ratify the European Convention explains the Acts dramatic expansion of the prohibition against orders for deprivation when such were to cause statelessness.
By section 4(1), fresh sections 40 and 40A were substituted for the original version of section 40 of the Act.
The grounds for making an order for deprivation were reduced to two.
The first remained misrepresentation or fraud in obtaining citizenship and, as before, the prohibition against orders which caused statelessness did not extend to orders on this ground: section 40(3) and (4), set out at para 3 above.
The second, namely the public interest ground, echoed the terms of the European Convention in referring to acts seriously prejudicial to the vital interests of the UK (section 40(2)(a)).
By section 56 of the Immigration, Asylum and Nationality Act 2006, however, this second ground was recast into its current form, namely that deprivation is conducive to the public good: section 40(2), set out at para 3 above.
For present purposes, however, the crucial change wrought by the 2002 Act was the fresh subsection (4), set out at para 3 above, which prohibited an order on the second ground if the Secretary of State was satisfied that it would make a person stateless.
It is clear therefore, that, in enacting the subsection, Parliament went further than was necessary in order to honour the UKs existing international obligations.
D: PREMISE
The Secretary of State invites the court to determine the appeal on a premise.
It is that on 14 December 2007 the respondent could have applied to the Iraqi authorities for restoration of his Iraqi nationality; that under Iraqi law he then had a right to have it restored to him; and that its restoration would have been effected immediately.
Pressed by the court to explain whether her argument extended to a persons right to obtain a nationality never previously held such as, perhaps, a Jewish persons right to obtain Israeli nationality or a wifes right to obtain the nationality of her husband Mr Swift QC, on behalf of the Secretary of State, explained that the argument did not extend beyond the restoration of a former nationality.
Pressed further to explain whether the argument extended to a person who, prior to her order, had had a right to secure the restoration of his former nationality but who, by the date of the order, had lost that right, Mr Swift explained that the focus was upon what the person could achieve in response to the order and thus that the argument did not extend that far.
It was Mr Swifts submission at the hearing (which the Secretary of State has subsequently withdrawn: see para 27 below) that if, on the suggested premise, it were to allow the appeal, this court should remit the respondents appeal against the order for deprivation back to the Commission for it to consider whether the premise is valid as a matter of Iraqi law.
Mr Swift stressed that the Commissions two previous lengthy hearings were concerned with whether on 14 December 2007 the respondent had Iraqi nationality, not with whether he then had a right to secure its restoration.
An appellate court has no need to address argument founded on a premise which it considers unrealistic and, in the absence of any other ground for the appeal, can dismiss it without doing more than to explain why it considers the premise to be unrealistic.
In my view, at least on the findings made below, the present appeal comes close to deserving that unusual treatment.
In rejecting the Secretary of States contention that the respondent had regained Iraqi nationality automatically under article 10(1) of the Iraqi Law of Nationality 2006, which was in force on 14 December 2007, Richards LJ said: 117.
In my judgment, the relevant factors come down strongly in favour of the view that the Iraqi courts would find the appellants situation to be covered by Article 10(3), not by Article 10(1), and that the restoration of his Iraqi nationality depends on his meeting the conditions of Article 10(3), including the making of an application for its restoration.
Article 10(3) provides: An Iraqi who renounces his Iraqi nationality may regain it, if he legally returns to Iraq and stays there for at least one year.
The Minister may, on expiry thereof, consider him to have acquired Iraqi nationality from the date of his return if he submits an application to regain Iraqi nationality before the end of the aforementioned period.
It is clear, therefore, that paragraph (3) of the article would have required the respondent (a) to return to Iraq legally, (b) to stay there for at least one year, as well as (c) to apply in the course of the year for restoration of his Iraqi nationality.
In the event that the respondent fulfilled these requirements, the Minister may restore Iraqi nationality to him, with retrospective effect to the date of his return; and, although the Court of Appeal made no finding in this regard, Mr Swift has not taken issue with the contention of Mr Hermer QC, on behalf of the respondent, that in the end all the experts who gave evidence at the second hearing before the Commission were agreed that, as one would expect, the word may connotes that the Minister nevertheless retains a discretion to refuse the application.
It seems to me, therefore, that there was an element of indulgence on the part of the Court of Appeal towards the Secretary of State in its accession to her invitation to proceed on the suggested premise; and that, were it to proceed likewise, this court would be extending an analogous indulgence.
On balance, however, and in the light of the time, effort and expense which has now been devoted to the substantive argument, I consider that this court should adopt the suggested premise and proceed to determine the clean point, namely whether an order for deprivation made against a person who, at its date, can immediately, by means only of formal application, regain his other, former, nationality is invalid under section 40(4) of the Act.
I add, as a postscript to this section of the judgment, that following the hearing in this court the Secretary of State has drawn to its attention what she contends to be important further information recently provided to her by the Iraqi authorities.
It is that on 20 January 2008, namely three weeks after his release, the respondent applied in Baghdad for an Iraqi passport; that his application form, a photocopy of which the Secretary of State has produced to the court, shows that it was accompanied by a certificate of his Iraqi nationality purportedly issued on the same date in Kirkuk; that on 28 January 2008 the Iraqi authorities issued a passport, number G1739575, to the respondent; and that the passport is genuine and betokens a valid grant of nationality to the respondent.
The information has emboldened the Secretary of State to withdraw Mr Swifts submission that if, on the suggested premise, it were to allow the appeal, the court should remit the respondents appeal to the Commission.
For she suggests that the new information incontrovertibly demonstrates the validity of the premise.
When asked by the court to comment on these allegations, the respondent, by his solicitors, has said: (a) (b) (c) from an early stage of the protracted proceedings referable to his appeal against the Secretary of States order, he had averred that, in order to travel from Iraq to Turkey on 3 February 2008, he had used a fake Iraqi passport: see, for example, his witness statement dated 10 October 2008 which was placed before the Commission; in 2008 he had also filed a report by a Turkish lawyer who stated that she had reviewed a scanned copy of what purported to be an Iraqi passport referable to him issued in Baghdad on 28 January 2008 and stamped with a Turkish entry visa dated 3 February 2008; in the course of cross examination of him at a hearing before the Commission in January 2009 Mr Swift had never sought to challenge (d) his assertion that the Iraqi passport by which he had travelled to Turkey was fake; in January 2008, in Kirkuk, he had in fact acquired two fake passports, one in his name and one in another name, on the black market by payment of about US$750 which he borrowed from his family; (e) he had provided his payee with details about himself and photographs of himself but not with a certificate of Iraqi nationality because he did not have one; the fake passport in his own name, which the payee provided to him, was indeed numbered G1739575 and it stated that it had been issued on 28 January 2008; this was the passport which he had elected to use for his travel to Turkey on 3 February 2008; (f) (g) he is unaware of the documents which his payee may have completed or caused to be completed in the course of procuring the passports; (i) (h) he, the respondent, never completed the application form a copy of which the Secretary of State has produced to the court and he has never previously seen it; the passport G1739575 is therefore fake, by which he appears to mean that it was forged, or, more probably, that it was fraudulently obtained; and since 2000 he has never held Iraqi nationality and in the above circumstances the passport is no evidence to the contrary. (j)
It is not the function of this court to resolve an issue whether an Iraqi
passport was regularly obtained and therefore betokens a valid grant of nationality under Iraqi law.
In my view it should set the issue to one side and, not that it matters, should therefore resist concluding that the Secretary of States new allegations add significantly to the validity of the suggested premise upon which the argument is founded.
Were this appeal to be dismissed, the Secretary of State might perhaps make a further deprivation order on the basis that, in the light of the passport, no such order would now make the respondent stateless.
He would evidently dispute that conclusion and it appears that he might also contend that the Secretary of State is estopped from alleging the validity of the passport at so late a stage.
This court should make no comment on any of these possibilities.
E: ARGUMENT
The Secretary of State places great weight on the word satisfied within the terms of the prohibition in section 40(4) of the Act against making an order for deprivation if [she] is satisfied that the order would make a person stateless.
In providing for her satisfaction in this regard, the subsection replicates the requirement in subsections (2) and (3) that she be satisfied of the existence of one or other of the two grounds for making the order.
The word satisfied in the subsections should, if possible, be given some value.
I confess, however, that I do not find it easy to identify what that value should be.
Parliament has provided a right of appeal against her conclusion that one or other of the grounds exist and/or against her refusal to conclude that the order would make the person stateless; and it has been held and is common ground that such is an appeal in which it is for the appellate body to determine for itself whether the ground exists and/or whether the order would make the person stateless (albeit that in those respects it may choose to give some weight to the views of the Secretary of State) and not simply to determine whether she had reason to be satisfied of those matters (B2 v Secretary of State for the Home Department [2013] EWCA Civ 616, Jackson LJ, para 96).
Mr Hermer suggests that the word satisfied means only that the Secretary of State must bring her judgement to bear on the matters raised by the subsections.
His suggestion may afford some slight significance to the word in subsections (2) and (3).
But does it work in relation to subsection (4)? If an order would make a person stateless but the Secretary of State has failed even to bring her judgement to bear on the possibility of that consequence, the order can hardly escape invalidity on the basis that the Secretary of State was never satisfied that the order would have that effect.
Irrespective, however, of whether the word satisfied in subsection (4) can sensibly be afforded any significance at all, I am clear that it cannot bear the weight which Mr Swift seeks to ascribe to it.
He contends that it confers latitude upon the Secretary of State and, in the event of an appeal, upon the Tribunal or the Commission to look beyond the ostensible effect of the order to the active cause of any statelessness and, in particular, to the facility of the person to secure restoration of his previous nationality.
But a requirement that I should be satisfied of a fact does not enlarge or otherwise alter the nature of the fact of which I should be satisfied.
Whether the requirement is that the fact should exist or that I should be satisfied of it, the nature of the fact remains the same; it is only the treatment of the fact in my mind which, subject to the context, is governed by the word satisfied.
Although the word satisfied therefore adds nothing to it, the Secretary of States argument still remains that section 40(4) requires the active or real cause of any statelessness to be identified.
The word in the subsection is make and the argument is that, although no doubt a number of factors contributed to making the respondent stateless on 14 December 2007 (including, presumably, even his initial loss of Iraqi nationality by acquisition of British nationality in 2000), the subsection requires identification of the factor which actively or really made him stateless, namely (if such it was) his failure to secure immediate restoration of his Iraqi nationality.
The argument is said to reflect a properly purposive construction of the subsection: where a ground for making a deprivation order exists, why disable the Secretary of State from making it in circumstances in which it remains open to the person so easily and so immediately to avoid becoming stateless? Does the law (asks Mr Swift) allow him to complain of a state of affairs of his own making?
I reject this argument.
Section 40(4) does not permit, still less require, analysis of the relative potency of causative factors.
In principle, at any rate, the inquiry is a straightforward exercise both for the Secretary of State and on appeal: it is whether the person holds another nationality at the date of the order.
Even that inquiry may prove complex, as the history of these proceedings demonstrates.
But a facility for the Secretary of State to make an alternative assertion that, albeit not holding another nationality at the date of the order, the person could, with whatever degree of ease and speed, re acquire another nationality would mire the application of the subsection in deeper complexity.
In order to make his argument less unpalatable to its audience, Mr Swift, as already noted, limited it to the re acquisition of a former nationality, as opposed to the acquisition of a fresh nationality.
But, with respect, the limitation is illogical; if valid, his argument would need to extend to the acquisition of a fresh nationality.
Yet a person might have good reason for not wishing to acquire a nationality available to him (or possibly even to re acquire a nationality previously held by him).
In section 12 of the Act Parliament provided for the renunciation of British citizenship by declaration and for the declaration to be registered.
Article 7 of the 1961 Convention had required a renunciation to be ineffective unless the person possesses or acquires another nationality and, by section 12(3), Parliament implemented that requirement in the following terms: A declaration made by a person in pursuance of this section shall not be registered unless the Secretary of State is satisfied that the person who made it will after the registration have or acquire some citizenship or nationality other than British citizenship; and if that person does not have any such citizenship or nationality on the date of registration and does not acquire some such citizenship or nationality within six months from that date, he shall be, and be deemed to have remained, a British citizen notwithstanding the registration.
For present purposes the significance of the subsection is that, as an addition to the person who will have another nationality on the date of registration, Parliament, reflecting the terms of the 1961 Convention, there refers to the person who will acquire another nationality.
Parliament would have been capable of making an analogous addition to section 40(4).
After the words would make a person stateless, it could have added the words in circumstances in which he has no right immediately to acquire the nationality of another state.
But it did not do so; and the Secretary of State therefore invites the court to place a gloss, as substantial as it is unwarranted, upon the words of the subsection.
An individuals nationality is to be assessed as at the time 3.4 of determination of eligibility under the 1954 Convention.
It is neither a historic nor a predictive exercise.
The question to be answered is whether, at the point of making an Article 1(1) determination, an individual is a national of the country or countries in question.
Therefore, if an individual is partway through a process for acquiring nationality but those procedures have not been completed, he or she cannot be considered as a national for the purposes of Article 1(1) of the 1954 Convention.
Similarly, where requirements or procedures for loss, deprivation or renunciation of nationality have not been completed, the individual is still a national for the purposes of the stateless person definition.
The Secretary of States own guidance eloquently exposes the fallacy behind her appeal.
On 20 February 2012 the United Nations High Commissioner for Refugees issued Guidelines on Statelessness No 1, HCR/GS/12/01, in which he addressed some of the effects of the authoritative definition of a stateless person in article 1(1) of the 1954 Convention.
Para 43 of his guidelines, entitled Temporal Issues, has been incorporated, word for word, into the Home Office guidance on Applications for leave to remain as a stateless person dated 1 May 2013, referred to at para 13 above.
The guidance provides:
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This appeal relates to immigration law and the British Nationality Act 1981 (the Act).
Pursuant to section 40 (4) of the Act, the Secretary of State for the Home Department (the Secretary of State) cannot deprive a person of his British citizenship on the ground that it is conducive to public good if she is satisfied that it would make that person stateless.
Mr Al Jedda came to the UK from Iraq in 1992 and was granted British nationality on 15 June 2000.
As a result, because of Iraqi law, he automatically lost his Iraqi nationality.
In September 2004 Mr Al Jedda travelled from the UK to Iraq.
He was arrested in Iraq the following month by US forces who transferred him into the custody of British forces.
Mr Al Jedda was held, without charge, for more than three years.
Soon after his release he travelled to Turkey where he currently lives.
In judicial review proceedings Mr Al Jedda contended that his internment violated his rights under article 5(1) of the European Convention on Human Rights (right to liberty and security).
This was rejected by the UK courts, including the House of Lords.
However, the Grand Chamber of the European Court of Human Rights held that his internment had violated his rights under article 5(1).
In separate proceedings, initiated in 2006, Mr Al Jedda brought a claim for habeas corpus in which he asserted that his internment had become unconstitutional under Iraqi law.
After his release, he re pleaded the claim as one for damages.
The claim was dismissed and the Court of Appeal upheld the dismissal.
By order dated 14 December 2007, shortly prior to his release from internment, the Secretary of State deprived Mr Al Jedda of British citizenship pursuant to her powers under the Act.
This order was preceded by a letter to Mr Al Jedda, dated 12 December 2007, by which the Secretary of State informed him of why she was satisfied that depriving him of British Citizenship would be conducive to the public good.
On 11 January 2008 Mr Al Jedda appealed to the Special Immigration Appeals Commission (the Commission), one of his grounds of appeal being that the Secretary of States order would render him stateless and was therefore void.
The Commission concluded that Mr Al Jedda had, through an Iraqi law in force between 2004 and 2006, regained Iraqi nationality and would therefore not be rendered stateless by the Secretary of States order.
Mr Al Jedda appealed and on 12 March 2010 the Court of Appeal, allowing the appeal, directed the Commission to rehear the issue.
On 26 November 2012, the Commission again concluded that Mr Al Jedda had regained Iraqi nationality prior to the date of the Secretary of States order and was therefore not stateless.
In the decision under current appeal the Court of Appeal found this second decision to be erroneous in law.
The effect of this was that the Court of Appeal had to consider the Secretary of States alternative contention, namely that if, on 14 December 2007, Mr Al Jedda had not been an Iraqi national, it had been open to him to regain it by application and that it had been his failure to make the application, rather than her order, which had made him stateless.
The Court of Appeal, rejecting the Secretary of States alternative contention, held that the effect of her order would be to make Mr Al Jedda stateless.
The Secretary of State appeals against this decision.
The Supreme Court unanimously dismisses the appeal by the Secretary of State.
The Court rejects the Secretary of States alternative argument.
From a plain reading of the statute and surrounding guidance, it is clear that the question is simply whether the person holds another nationality at the date of the order depriving him of his British citizenship.
On the evidence before the Court of Appeal, the validity of the premise upon which the Secretary of State bases her argument, namely that Mr Al Jedda could have applied to the Iraqi authorities for restoration of his nationality, that he had a right to its restoration and that restoration would have been effective immediately, is not clearly established [25].
Even adopting the suggested premise, the Section 40(4) restriction on the Secretary of States power to deprive a person of his British citizenship does not permit her to conduct an analysis of the relative strength of contributing factors.
The question is simply whether the person holds another nationality at the date of the order depriving him of his British citizenship [32].
The ability of the Secretary of State to assert that the person in question could quickly and easily re acquire another nationality would create confusion in the application of what should be a straightforward exercise [32].
In section 12 of the Act, a person can renounce British citizenship as long as they have another nationality or, notably, will acquire another nationality.
Parliament could have made an analogous provision in section 40(4), preventing a person from being made stateless, for example, in circumstances in which he has no right immediately to acquire the nationality of another state but it did not do so [33].
The Home Office has incorporated, verbatim, parts of 2012 United Nations guidelines on statelessness into its own guidance, dated 1 May 2013, entitled Applications for leave to remain as a stateless person.
This stipulates that .
An individuals nationality is to be assessed as at the time of determination of eligibility It is neither a historic nor a predictive exercise.
The question to be answered is whether, at the point of making [a] determination, an individual is a national of the country or countries in question.
Therefore, if an individual is partway through a process for acquiring nationality but those procedures have not been completed, he or she cannot be considered as a nationalSimilarly, where requirements or procedures for loss, deprivation or renunciation of nationality have not been completed, the individual is still a national for the purposes of the stateless person definition.
The Secretary of States own guidance helpfully addresses the very issue in question, but unhelpfully to her appeal [34].
An outstanding issue, which is not for this court to resolve [29], relates to the Secretary of States assertion, following the Supreme Court hearing, that she now understands that Mr Al Jedda has a genuine Iraqi passport and a valid grant of Iraqi nationality [27].
Mr Al Jedda responds that the passport to which the Secretary of State refers is a fake one, used by him at the time to travel from Iraq to Turkey in 2008 [28 (a)].
It may be that the Secretary of State will make a further deprivation order on the basis that, given the Iraqi passport, Mr Al Jedda would not be rendered stateless by it.
Mr Al Jedda would no doubt dispute this conclusion and may also contend that the Secretary of State is prevented from alleging the validity of the passport at this late stage.
The Court does not comment on these possibilities [29].
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These two appeals raise questions of some significance arising out of the interrelationship of the statutory schemes relating to the protection of employees pensions and to corporate insolvency.
The background to the two appeals is, in very summary terms, as follows: i. Many UK registered members of the Lehman group of companies, and all the UK registered members of the Nortel group of companies, have gone into insolvent administration; (a) One of those Lehman group companies entered into service ii. contracts with, and ran a pension scheme for the benefit of, employees who worked for other group members; (b) The Nortel group included a company which had a pension scheme, and which was insufficiently resourced to fund that scheme; iii.
The pension scheme (the Scheme) in each case was a final salary scheme, which appears to be, and to have been for some time, in substantial deficit; iv.
The Pensions Regulator subsequently initiated machinery under the Pensions Act 2004 to require certain other group members (the Target companies) to provide financial support for the Scheme; vs That machinery has been held up so it can be decided whether the liability under such a requirement would rank (a) as an expense of the Target companies administrations, (b) pari passu with the Target companies other unsecured creditors, or (c) as neither; vi.
Under option (a) the liability would rank ahead of the unsecured creditors, and may well be paid in full; under option (b) it would rank equally with those creditors; under option (c) it would rank behind them, and would probably be worthless; vii.
Briggs J and the Court of Appeal (in a judgment given by Lloyd LJ) concluded that option (b) was not open to them, and preferred option (a) to option (c); viii.
The issue now comes before the Supreme Court.
This judgment starts by explaining the relevant statutory provisions relating to pensions, which are mostly in the Pensions Act 2004 (the 2004 Act), in a description largely based on the exposition in the judgment of Briggs J, [2010] EWHC 3010 (Ch), [2011] Bus LR 766, paras 7 41.
It then deals with the statutory provisions and rules relating to insolvency, in the Insolvency Act 1986 (the 1986 Act) and the Insolvency Rules 1986 (SI 1986/1925) (the Insolvency Rules), largely drawing on what Lloyd LJ said in the Court of Appeal, [2011] EWCA Civ 1124, [2012] Bus LR 818, paras 20 23 and 39.
Next, it will explain the facts, in a summary reflecting what Briggs J said at paras 47 54 of his judgment.
After a short discussion, the judgment will then turn to consider whether the liabilities in the present cases would rank pari passu with the unsecured creditors of the Target companies.
It will then consider whether those liabilities rank as expenses of the administration.
Finally, it will address the power of the court under the 1986 Act and the Insolvency Rules to vary the priority of the liabilities.
The relevant statutory provisions relating to pensions In order to protect employees from the adverse consequences of an under
funded occupational pension scheme, (i) the Social Security Act 1990 introduced a statutory debt regime by amending the Social Security and Pensions Act 1975, and (ii) the Pensions Act 1995 (the 1995 Act) introduced a minimum funding requirement regime.
These were perceived to be inadequate in some respects, and the 2004 Act introduced a financial support direction (FSD) regime.
The regimes under these Acts were introduced against the backdrop of European Directives, which require member states to take measures to protect the interests of employees or ex employees in relation to pension rights in the event of their employers insolvency.
Section 75 of the 1995 Act
Although it is the FSD regime under the 2004 Act which is of central importance on these appeals, section 75 of the 1995 Act is highly relevant.
It provides that upon the happening of various events, which include an insolvency event, an amount equivalent to any shortfall in the assets of an occupational pension scheme (a scheme) as against its liabilities, which exists immediately prior to the relevant event, is to be a debt, known as a section 75 debt, due from the employer to the trustees of the scheme (the trustees).
Under the section as originally drafted, an insolvency event was limited to the employer going into insolvent liquidation, but the 2004 Act extended the expression to include going into administration.
In this judgment I shall similarly use the expression to cover going into administration or going into insolvent liquidation.
Section 75(8) provides that a section 75 debt is not to be regarded as a preferential debt for the purposes of the 1986 Act.
Section 75(4A) states that a section 75 debt is to be taken, for the purposes of an employers insolvency, to arise immediately before the occurrence of the insolvency event.
The 2004 Act: the Regulator and the PPF
The 2004 Act introduced both the Pensions Regulator (the Regulator) and the Pension Protection Fund (the PPF).
The Regulator is a body corporate established by section 1, and, by section 4, it is given wide regulatory functions.
When exercising any of those functions, the Regulator is required by section 100 to have regard to: 2(a) the interests of the generality of the members of the scheme to which the exercise of the function relates, and (b) the interests of such persons as appear to the Regulator to be directly affected by the exercise.
Section 5(1) defines the Regulators main objectives, which include protecting the benefits of members of schemes, and reducing the risk of compensation having to be paid by the PPF.
The PPF is financed from levies upon schemes.
It operates by assuming the assets and liabilities of a deficient scheme, and then paying its members compensation at a prescribed rate (generally less than the full rate promised under the relevant scheme), using the industry wide levies for the purposes of meeting the shortfall between the deficient schemes assets and the prescribed level of compensation.
The 2004 Act: the FSD regime and FSDs
It was perceived that the creation of the PPF might encourage some employers to arrange their affairs so as to throw the burden of pension scheme deficiencies upon the PPF, which would unfairly burden other schemes by increasing the amount of the levies.
An example of such an arrangement is where a group of companies uses a single company (a service company) to employ people who then work for other group companies.
In such a case, the employees pension rights could be regarded as unfairly prejudiced if, by comparison with the resources of other group companies, the service company had very limited resources to meet a section 75 debt.
The FSD regime was designed to mitigate such problems.
In a nutshell, it enables the Regulator in specified circumstances (i) to impose, by the issue of a FSD to some or all of the other group companies (known as targets), an obligation to provide reasonable financial support to the under funded scheme of the service company or insufficiently resourced employer, and (ii) to deal with non compliance with that obligation by imposing, through a Contribution Notice (a CN), a specific monetary liability payable by a target to the trustees.
The detailed provisions of the FSD regime are contained in sections 43 to 51 of the 2004 Act, and in the Pensions Regulator (Financial Support Directions etc) Regulations 2005 (SI 2005/2188) (the FSD Regulations).
Section 43 is of central importance.
Subsection (1) explains that the FSD regime extends to all occupational pension schemes other than money purchase schemes and certain other prescribed schemes.
Section 43(2) contains the so called employer condition, and provides as follows: The Regulator may issue a [FSD] in relation to such a scheme if the Regulator is of the opinion that the employer in relation to the scheme (a) is a service company, or (b) is insufficiently resourced, at a time determined by the Regulator which falls within subsection (9) (the relevant time).
Section 43(9) and the FSD Regulations define the relevant time as any time within a period of two years before the date of the determination of the Regulator to issue the FSD in question.
It is known as the look back date.
Service company is defined in section 44(2) as being a company within a group of companies which, by reference to its turnover, can be seen to be principally engaged in providing the services of its employees to other member companies in the group.
Section 44(3) to (5) and the FSD Regulations explain that an employer is insufficiently resourced if two tests are satisfied.
The first is that the value of its resources is less than 50% of the estimated section 75 debt in relation to a scheme, the amount of the shortfall being the relevant deficit.
Secondly (limiting the situation to those involving companies), there must be a company which has (or two or more companies which between them have) resources not less than the relevant deficit, and which is (or are), inter alia, a company which is (or companies which are) connected with, or an associate of the employer (section 43(6)(c)).
The 2004 Act and the FSD Regulations contain detailed provisions as to the manner in which a persons resources are to be assessed.
Whereas the resources of an employer are incapable of being defined as having a negative value, the resources of persons associated or connected with the employer may be so defined.
The formula for determining whether the insufficiently resourced condition is satisfied is known as the rich man/poor man test.
The employer condition operates entirely by reference to the look back date chosen by the Regulator, rather than at the time when the FSD is issued (the issue date).
Accordingly, the fact that, as at the date the FSD is issued, an employer may have ceased to be a service company, or the rich man/poor man test is not met, would not preclude a FSD.
As to the target, section 43(4) provides that a FSD in relation to a scheme may be issued to one or more persons, but subsection (5)(a) limits the issue of a FSD to persons falling within subsection (6) at the relevant time (i.e. the look back date).
Section 43(6)(a) and (c) respectively limit that class to the employer itself and, for present purposes, to a person who is connected with or an associate of the employer at the look back date.
It is therefore irrelevant that, by the issue date, one or more targets which had the requisite net worth to satisfy the rich man part of the rich man/poor man test as at the look back date may no longer be solvent.
Further, section 43(5)(a) does not limit the range of potential targets to those which satisfy the rich man part of the rich man / poor man test at the look back date.
Section 43(5)(b) states that a FSD can only be issued to a particular target if the Regulator is of the opinion that it is reasonable to impose the requirements of the direction on that person; this is often called the reasonableness condition.
Section 43(3) states that a FSD should: [require] the person or persons to whom it is issued to secure (a) that financial support for the scheme is put in place within the period specified in the direction, (b) that thereafter that financial support or other financial support remains in place while the scheme is in existence, and (c) that the Regulator is notified in writing of prescribed events in respect of the financial support as soon as reasonably practicable after the event occurs.
Prescribed events include an insolvency event affecting the employer and any target, and any failure to comply with the requirements of the FSD.
Section 45(1) and (2) define financial support as one or more of the following arrangements: (a) an arrangement whereby all the members of the group are jointly and severally liable for the whole or part of the employers pension liabilities in relation to the scheme; (b) [a legally binding] arrangement whereby a company which meets [certain] requirements and is the holding company of the group is liable for the whole or part of the employers pension liabilities in relation to the scheme; (c) an arrangement which meets [certain] requirements and whereby additional financial resources are provided to the scheme ; (d) such other arrangements as may be prescribed.
Subsection 45(3) states that the Regulator may only approve any arrangement if satisfied that it is reasonable in the circumstances.
Subsection 45(4) explains that the employers pension liabilities include, but are not limited to, the employers section 75 debt.
A FSD will not itself either contain or be accompanied by a specification of what would constitute reasonable arrangements.
It will simply require that the target secures that financial support for the scheme is put in place.
It is for the target (alone or in conjunction with other targets) to propose reasonable arrangements for written approval by the Regulator.
What the FSD must specify, pursuant to subsection 43(3)(a), is the period within which financial support for the scheme is to be put in place.
By contrast, the period during which that support is to remain in place is, by reference to subsections 43(3)(b) and (10), the whole of the period until the scheme is wound up.
Section 43(7) provides that, when deciding whether it is reasonable to impose the requirements of a FSD, the Regulator is to have regard to such matters as the Regulator considers relevant including, where relevant, the following matters: (a) the relationship which the person has or has had with the employer (including whether the person has or has had control of the employer ), (b) in the case of a person falling within [section 43(6)(c)], the value of any benefits received by that person from the employer, (c) any connection or involvement which the person has or has had with the scheme, (d) the financial circumstances of the person, .
The FSD regime is capable of applying to almost any company within a group which has a service company, or a potentially insufficiently resourced employing company, with a potentially under funded scheme.
Accordingly, the consequential contingent liabilities it creates could undermine the financial stability of potential targets.
Section 46(2) attempts to mitigate this problem by providing for applications to the Regulator to determine that: (a) the employer in relation to the scheme would not be a service company for the purposes of section 43, (b) the employer in relation to the scheme would not be insufficiently resourced for the purposes of that section, or (c) it would not be reasonable to impose the requirements of a financial support direction, in relation to the scheme, on the applicant.
Once issued, such a clearance statement binds the Regulator in relation to the power to issue a FSD unless there has been a relevant change of circumstances from those described in the application.
The 2004 Act: the FSD regime and CNs
The Regulator can issue a CN where there has been non compliance with a FSD.
Whereas a single FSD can be issued in relation to a scheme (albeit to one or more targets), CNs are only to be issued on a target by target basis.
Thus, section 47(4)(d) expressly contemplates that a CN may be issued to one target, where others have proposed arrangements in response to a FSD which have received the Regulator's approval.
Section 47(3) imposes a reasonableness condition upon the issue of a CN to a particular target.
Potentially relevant considerations are listed in subsection (4).
In addition to those listed in section 43(7) in relation to FSDs, there are two further considerations, namely: (a) whether the person has taken reasonable steps to secure compliance with the financial support direction [and] (d) the relationship which the person has or has had with the parties to any arrangements put in place in accordance with the direction (including, where any of those parties is a company within the meaning of subsection (11) of section 435 of the Insolvency Act 1986, whether the person has or has had control of that company within the meaning of subsection (10) of that section).
By contrast with a FSD, a CN is required to be specific as to the amount payable by the target.
By section 47(2) the notice must state that the target is under a liability to pay the scheme trustees or managers a specified sum.
By section 48, that sum is to be either the whole or a specified part of the amount which the Regulator estimates to be the amount of the section 75 debt at the time of non compliance with the FSD section 75 debt (if by then crystallised) or (if not crystallised) the Regulators estimate of what such debt would be if it had crystallised at that date.
Section 49(3) provides that [t]he sum specified in the notice is to be treated as a debt due from the person to the trustees or managers of the scheme.
Provision is also made for the Regulator (or, in specified circumstances, the Board of the PPF) to exercise any powers of the trustees or managers to recover the debt.
CNs can be issued to two or more targets, and to create joint and several liability for a specified amount.
Section 50 enables the Regulator to restrain the trustees or managers of the scheme from pursuing recovery of the section 75 debt while, at the same time, a CN is being enforced.
Section 50(6) ensures that any payments under a CN are treated as reducing the amount of the section 75 debt.
Finally, section 50(9) enables the Regulator to reduce the amount specified in a CN where, for example, there have in the meantime been payments of part of the section 75 debt.
The 2004 Act: Procedure
The 2004 Act and the FSD Regulations lay down a fairly elaborate procedural code for the implementation of functions of the Regulator, including the FSD regime.
The functions of the Regulator are divided between regulatory functions, which are exercisable by its executive arm, and reserved regulatory functions, which must be exercised by its Determinations Panel (the DP).
Decisions to issue a FSD and a CN are reserved functions, whereas the decision whether to give written approval to proposed arrangements under section 45 is not.
Although the Regulator has a degree of discretion as to its procedure, in relation to the FSD regime it must comply with what is called in section 96 the standard procedure, which involves, as a minimum: 2(a) the giving of notice to such persons as it appears to the Regulator would be directly affected by the regulatory action under consideration (a warning notice), (b) those persons to have an opportunity to make representations, (c) the consideration of any such representations and the determination whether to take the regulatory action under consideration, (d) the giving of notice of the determination to such persons as appear to the Regulator to be directly affected by it (a determination notice), (e) the determination notice to contain details of the right of referral to the Tribunal .
The issue of a FSD and a CN must each be subject to this procedure.
The Tribunal is now the Upper Tribunal (Tax and Chancery Chamber), from which an appeal lies to the Court of Appeal.
By section 103(4) the Tribunal must, on a reference, determine what (if any) is the appropriate action for the Regulator to take in relation to the matter referred to it.
The Tribunal must therefore approach the issue before it afresh rather than by way of reviewing the decision of the Regulator or the DP.
It is worth briefly summarising the timescale involved in these procedures.
Before implementing the standard procedure, the Regulator must identify a pension fund which appears to be at risk, and investigate whether the conditions for the implementation of the FSD regime are satisfied; it must then address all matters relevant to the exercise, including the reasonableness condition for the issue of a FSD to each potential target.
The ensuing standard procedure potentially involves six stages at which the target and others can make representations, namely (i) after a warning notice, (ii) following a determination (before the Tribunal), (iii) following a FSD, (iv) after a warning notice that a CN may be issued, (v) upon a determination that it should be issued (before the Tribunal), (vi) even after the issue of a CN, an adjustment may be asked for in the light of payments by others.
At every stage, the Regulator or the Tribunal is required to have regard to the interests of the target as a person directly affected.
The Insolvency legislation
Administration and liquidation
For present purposes, there are two relevant types of corporate insolvency procedure, administration and liquidation.
Liquidation, or winding up, has always been a feature of company law, and it can be invoked whether or not a company is insolvent, although insolvent liquidations are more common.
Administration was first introduced by the 1986 Act.
At that time, it did not allow for distributions to creditors of the company within the administration.
If the administration did not succeed in rescuing the company, it was expected that a winding up would follow, and the available assets would be distributed to creditors within the liquidation.
The Enterprise Act 2002 (the 2002 Act) rendered it possible for assets to be distributed to creditors by administrators, so that a winding up can be avoided. (Conversely, a company which is in liquidation may now come out of it and go into administration.) There may be companies which go into liquidation without having been in administration, but most of those companies with which the present cases are concerned (apart from one which is not insolvent) are in administration, and may or may not eventually go into liquidation (and two of the Lehman group companies are neither in administration nor in liquidation).
In general, the unsecured debts of a company after an insolvency event are payable pari passu to the relevant creditors, who claim payment by proving for their debts.
There has to be a cut off date to determine the class of creditors who are to participate in the distribution of the company's available net assets.
As the law stood as regards the companies with which these appeals are concerned, the cut off date for claims in a liquidation is the date on which the company goes into liquidation, whether or not the liquidation was immediately preceded by an administration.
The cut off date for claims in an administration is the date on which the company entered administration.
Under this regime, if an administration is followed immediately by a liquidation, the debts provable in the liquidation would include any which arise during the administration, although debts provable in the administration would be limited to those arising before the administration.
Before turning to the relevant statutory provisions, two points may be worth noting in passing.
First, the position described in para 35 above has now changed.
The cut off date for claims in a liquidation, which follows an administration started after 5 April 2010, is the date when the administration began.
The same issue as arises in these appeals can still arise.
However, there will no longer be an artificial distinction between the positions where the company proceeds from administration to winding up and where it does not.
The change will tend to increase the importance of the dispute as to the correct treatment for insolvency purposes of the liabilities arising under a FSD or a CN.
Secondly, in relation to the companies in the present cases, it is common ground that if a liability of such a company arises during the administration, and a winding up were to follow later, that liability can be the subject of proof in the liquidation.
The relevant provisions of the 1986 Act and the Insolvency Rules
In a liquidation of a company and in an administration (where there is no question of trying to save the company or its business), the effect of insolvency legislation (currently the 1986 Act and the Insolvency Rules, and, in particular, sections 107, 115, 143, 175, 176ZA, and 189 of, and paras 65 and 99 of Schedule B1 to, the 1986 Act, and rules 2.67, 2.88, 4.181 and 4.218 of the Insolvency Rules), as interpreted and extended by the courts, is that the order of priority for payment out of the companys assets is, in summary terms, as follows: (1) Fixed charge creditors; (2) Expenses of the insolvency proceedings; (3) Preferential creditors; (4) Floating charge creditors; (5) Unsecured provable debts; (6) Statutory interest; (7) Non provable liabilities; and (8) Shareholders.
So far as expenses of an insolvency are concerned, rule 12.2 of the Insolvency Rules (rule 12.2) states that: (1) All fees, costs, charges and other expenses incurred in the course of winding up, administration or bankruptcy proceedings are to be regarded as expenses of the winding up or the administration or, as the case may be, of the bankruptcy.
As to expenses in a liquidation, rule 4.218 (rule 4.218) provides: (1) All fees, costs, charges and other expenses incurred in the course of the liquidation are to be regarded as expenses of the liquidation. (3) [T]he expenses are payable in the following order of priority (a) expenses properly chargeable or incurred by the official receiver or the liquidator in preserving, realising or getting in any of the assets of the company or otherwise in the preparation or conduct of any legal proceedings . or in the preparation or conduct of any negotiations; (e) the cost of any security provided by a liquidator; (m) any necessary disbursements by the liquidator in the course of his administration ; (n) the remuneration or emoluments of any person who has been employed by the liquidator to perform any services for the company ; (o) the remuneration of the liquidator ; (p) the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the company; (r) any other expenses properly chargeable by the liquidator in carrying out his functions in the liquidation.
The equivalent provision in relation to the expenses of an administration is rule 2.67(1) (rule 2.67(1)), which states that The expenses of the administration are payable in the following order of priority, namely, (a) expenses properly incurred by the administrator in performing his functions in the administration of the company; (b) the cost of any security provided by the administrator in accordance with the Act or the Rules; (d) any amount payable to a person employed to assist in the preparation of a statement of affairs .; (f) any necessary disbursements by the administrator in the course of the administration ; (g) the remuneration or emoluments of any person who has been employed by the administrator to perform any services for the company .; (h) the remuneration of the administrator ; (j) the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the company .
Where the assets of the company are insufficient to meet the totality of the expenses, rule 2.67(2) and (3) gives the court power to make an order as to the payment out of the assets of the expenses incurred in the administration in such order of priority as the court thinks just.
Turning to unsecured debts and liabilities which are not expenses or preferential debts, rules 4.181 and rule 2.69 of the Insolvency Rules apply to liquidations and administrations respectively, and make it clear that, in so far as they are provable, they rank equally and, if there is insufficient money to meet them all, that they are to be abate[d] in equal proportions among themselves.
In relation to what constitutes a provable debt, rule 12.3 of the Insolvency
Rules in its form which applies to the instant administrations (rule 12.3) is headed Provable debts, and it provides as follows: (1) Subject as follows, in administration, winding up and bankruptcy, all claims by creditors are provable as debts against the company , whether they are present or future, certain or contingent, ascertained or sounding only in damages. (3) Nothing in this Rule prejudices any enactment or rule of law under which a particular kind of debt is not provable, whether on grounds of public policy or otherwise.
Rule 13.12 of the Insolvency Rules (rule 13.12) is of critical importance on these appeals and it states: (1) Debt in relation to the winding up of a company, means. any of the following (a) any debt or liability to which the company is subject at the date on which the company went into liquidation; (b) any debt or liability to which the company may become subject after that date by reason of any obligation incurred before that date; (2) For the purposes of any provision of the Act or the Rules about winding up, any liability in tort is a debt provable in the winding up, if either (a) the cause of action has accrued at the date on which the company went into liquidation; or (b) all the elements necessary to establish the cause of action exist at that date except for actionable damage. (3) For the purposes of references in any provision of the Act or the Rules about winding up to a debt or liability, it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion . (4) except in so far as the context otherwise requires, liability means (subject to paragraph (3) above) a liability to pay money or money's worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment, and any liability arising out of an obligation to make restitution. (5) This Rule shall apply where a company is in administration and shall be read as if references to winding up were references to administration.
The relevant facts
The Lehman group
The Lehman group was a very substantial international financial concern which notoriously collapsed on 15 September 2008.
The main London based group companies in the group were placed into administration that day, and I will refer to the administrators as the Lehman Administrators.
The ultimate parent company of the Lehman group is Lehman Brothers Holdings Inc. (LBHI), a company incorporated in Delaware USA, which commenced Chapter 11 bankruptcy proceedings in September 2008, and emerged from them in March 2013.
The main UK operating company is Lehman Brothers International (Europe) (LBIE), an unlimited company.
The principal Lehman employer company within the UK, providing employees on secondment for most of the group's European activities, based in London, is Lehman Brothers Limited (LBL).
When LBL went into administration on 15 September 2008, it crystallised a section 75 debt in relation to the Lehman Brothers Pension Scheme of approximately 120m.
LBL is a shareholder in LBIE, and therefore liable without limit for LBIEs liabilities.
Both LBIE and Lehman Brothers Europe Limited (LBEL), the other main London operating company, are subsidiaries of Lehman Brothers Holdings plc (LBH), which is itself wholly owned by Lehman Brothers UK Holdings Limited (LBUKH), which is in turn an indirect subsidiary of LBHI.
Shortly after the Lehman group crash, the Regulator began investigations, with the consent of the Lehman Administrators, into the Lehman companies pursuant to notices under section 72 of the 2004 Act.
Warning notices were issued to a number of Lehman group companies on or after 24 May 2010 on the ground that LBL was a service company, and the other requirements of section 43 of the 2004 Act were satisfied.
There was then an oral hearing in September 2010 before the DP (at which the Lehman Administrators solicitors attended to observe, but made no submissions).
A determination was then made by the DP on 13 September 2010 that a FSD should be issued against six Target companies, namely LBHI, LBIE, LBEL, LBH, LBUKH and Lehman Brothers Asset Management (Europe) Limited, which is no longer part of the Lehman group and is now called Neuberger Newman Europe Limited.
The FSD process in relation to the Lehman companies is now stayed until after the outcome of these applications.
The Nortel Group
Prior to its collapse in January 2009, the Nortel group carried on a very substantial international telecommunications, computer network and software business.
Its ultimate parent company is Nortel Networks Corporation (NNC) based in Canada.
Its main Canadian operating company was Nortel Networks Limited (NNL) and its substantial USA business was headed by Nortel Networks Inc. (NNI), a direct subsidiary of NNL.
The group's principal operating company in the UK was Nortel Networks UK Limited (NNUK) which is also a direct subsidiary of NNL.
Since June 2000 it is principal Nortel employer in relation to the Nortel Networks UK Pension Plan (the Nortel Scheme).
NNUK had a number of subsidiaries incorporated in various European countries.
In addition, the European business was also carried on by certain European subsidiaries of NNL, including the applicants Nortel Networks SA, Nortel Networks France SAS and Nortel Networks (Ireland) Limited.
At the time of the group's collapse in January 2009, NNUKs section 75 debt crystallised in an amount of about 2.1bn.
Upon the group's collapse, NNC and NNL sought protection under Canadian bankruptcy law to facilitate the reorganisation of the group for the benefit of its creditors.
On the same day NNI was placed into Chapter 11 bankruptcy in the United States, whilst NNUK, fifteen of its subsidiaries and the three European subsidiaries of NNL referred to above were placed into administration in England.
The English administrators of the nineteen Nortel companies (the Nortel Administrators) have cooperated with other Nortel group office holders worldwide, in the process of selling the Nortel groups businesses along business rather than corporate demarcation lines and total global realisations of approximately US$7.5bn have been made.
The Regulator's investigations into the Nortel Scheme began in early 2009, with the benefit of information provided by the Nortel Administrators.
A warning notice was issued on 11 January 2010 to twenty nine Target companies in the Nortel group, on the basis that NNUK was insufficiently resourced and the other requirements of section 43 of the 2004 Act were satisfied.
Representatives of the Nortel Administrators were present as observers, but did not make any representations at the oral hearing before the DP on 2 June 2010.
After that hearing, the DP issued a determination notice on 25 June 2010 deciding that a FSD should be issued to the applicant Nortel companies, together with certain other Target companies.
Following a reference to the Tribunal by the applicant Nortel companies and certain other of the Target companies, the automatic stay of the FSD process means that no FSD has yet been issued to those referring Target companies.
The Tribunal proceedings have been informally stayed pending the outcome of these applications.
Overview
The issue in both appeals is how the administrators of a target should treat the targets potential liability under the FSD regime (and in due course the liability under a CN) in a case where the FSD is not issued until after the target has gone into administration.
The courts below both held that the potential liability constituted an expense of the administration, falling within category (2) as described in para 39 above, so that it took priority over the normal run of unsecured creditors and even over the preferential creditors.
Four possibilities have been canvassed before us.
The first is that the courts below were right.
The second is that the potential liability is an ordinary provable unsecured debt, ranking pari passu with other unsecured debts falling within category (5).
The third possibility is that it is not a provable debt within rule 13.12, and therefore it falls within category (7).
The fourth possibility is that, if the third is correct, then the court could and should direct the administrators to treat the potential FSD liability more favourably.
Counsel representing the various parties very sensibly divided up the issues between them, so as to ensure that there was no repetition, and it is right to record the courts gratitude for the way the appeals were argued.
Both Briggs J and the Court of Appeal felt constrained by a consistent line of authority, of which the most recent is R (Steele) v Birmingham City Council [2006] 1 WLR 2380, from holding that the potential liability as a result of a FSD issued after the commencement of an insolvent administration or liquidation (which I will refer to as an insolvency event) could constitute a provable debt within rule 12.3, although it appears that they would have so held if they had felt able to do so (see eg Briggs Js reluctance at para 191 of his judgment).
They also considered that the effect of the House of Lords decision in In re Toshoku Finance UK plc [2002] 1 WLR 671 was that the potential liability was to be treated as an expense of the administration.
Before this court, it was common ground that the potential liability under a FSD could not be both a provable debt and an expense of the administration, but there was discussion as to which should be considered first.
In some cases, a liability which would otherwise be a provable debt can be, on special facts, an expense of the administration or liquidation (as in In re ABC Coupler and Engineering Co Ltd (No 3) [1970] 1 WLR 702), which may seem to suggest that the expense issue should be considered first.
However, in the light of the common ground in this case, it appears to me that it is appropriate to consider the provable debt issue first, although it would be wrong not to address the expense question as well.
Before I turn to examine in detail the arguments on the two issues, it is right to say that, at any rate on the face of it, the sensible and fair answer would appear to be that the potential liability of a target, under a FSD issued after an insolvency event, and in particular the liability under a CN issued thereafter, should be treated as a provable debt.
There seems no particular sense in the rights of the pension scheme trustees to receive a sum which the legislature considers they should be entitled to receive having any greater or any lesser priority than the rights of any other unsecured creditor.
It is common ground that if a CN had been issued in respect of a company before an insolvency event, it would give rise to a provable debt, and the courts below considered that, if a CN were issued after an insolvency event, it would give rise to a provable debt if it was based on a FSD issued before the insolvency event.
It appears somewhat arbitrary that the characterisation and treatment of the liability under the FSD regime should turn on when the FSD or CN happens to have been issued, if it is based on a state of affairs which existed before the insolvency event.
The notion that the potential liability under the FSD regime should be a provable debt if the FSD is issued after the administration or liquidation is supported by the fact any section 75 debt would itself be a provable debt, and not a preferential debt, in any insolvent liquidation or administration of an employer.
That is clear from the provisions summarised in para 7 above.
It would be strange if the employer companys statutory obligation to make good a shortfall in its employees pension scheme ranked lower in its insolvency than the more indirect statutory obligation of a target to make that deficiency good ranked in the targets insolvency.
Indeed, it would be somewhat surprising if there was any significant difference in the treatment of the two types of obligation, in the light of the interrelationship between the FSD regime and the section 75 debt as evidenced for instance by section 50(6) of the 2004 Act.
If the decisions below were correct, it would also mean that the legislature had given the Regulator a significantly valuable and somewhat arbitrary power, in what may (in the light of what is said in para 63 below) be an admittedly rare case in practice.
Where the Regulator is proposing to issue a FSD in respect of a company not yet in administration or liquidation, it would be well advised to wait for the insolvency event, if the decisions below are right, because the amount recoverable under a subsequent CN would inevitably be greater than under a CN issued following a FSD issued before the insolvency event.
The liability under the FSD regime could be said to be some sort of indirect liability for past wages of employees, as pensions are often treated as deferred pay.
However, quite apart from the fact that that argument involves a considerable stretch (not least because the liability is not that of the employer or former employer), it would prove too much.
If the potential liability under consideration in these appeals counted as expenses, they would rank ahead of past wages and holiday pay, which have preferential status ie they would fall within category (3), not (5), in para 39 above.
It also seems unlikely that it can have been intended that liability under the FSD regime could rank behind provable debts.
One would have expected that FSDs and CNs would normally be issued in respect of insolvent companies (that certainly appears to have been the invariable experience so far); accordingly, it would mean that, save in very unusual cases, nothing would be paid in respect of most FSDs issued after an insolvency event.
Further, it would be a relatively unusual case where a FSD, let alone a CN, was issued before an insolvency event.
As Briggs J said, the investigations, steps and opportunity for representations, required by the 2004 Act, as summarised in para 34 above, are such that a FSD would rarely be issued for many months after the Regulator is first aware of a possible problem, and the time before a CN could be issued could easily be much more than a year.
With those preliminary observations, I turn to consider whether the liability under a FSD issued after a target has gone into administration or liquidation (ie after an insolvency event) is (i) a provable debt, or (ii) an expense of the administration/ liquidation, and (iii) if it is neither, whether the court can require the administrator or liquidator to treat it as if it was.
Is the liability under a FSD issued after an administration a provable debt?
In the light of the reference in rule 13.12(4) to any liability under an enactment, it appears clear that a liability under a CN, which on any view imposes a duty on the target to pay a sum of money, would be capable of giving rise to a liability.
The question, therefore, is whether the potential liability under a FSD which was issued after an insolvency event is capable of being a liability falling within the ambit of rule 13.12(1).
The definition of provable debt in rule 12.3 is strikingly wide, particularly when the rule is read together with rule 13.12, which defines debt.
It is therefore unsurprisingly not in issue that the consequences for a target of, or at least following, the issuing of a FSD constitute a liability within the meaning of rule 13.12.
However, where a FSD is issued after the target goes into administration or liquidation, the argument which has to be addressed is whether any potential liability thereby created falls within rule 13.12(1), because, if it does not, then it cannot constitute a debt for the purposes of the rule, and therefore cannot be a provable debt for the purposes of rule 12.3.
The primary argument advanced in support of the contention that the potential liability under a FSD notice issued after the insolvency event gives rise to a provable debt was based on the contention that it would be a liability to which the company may become subject after [the insolvency event] by reason of any obligation incurred before that date within rule 13.12(1)(b).
However, it was also argued that, in the light of the very wide ambit of rule 13.12(3) and its reference to future, contingent and matter of opinion, the potential liability would fall within rule 13.12(1)(a), as the potential liability was, as at the date of the insolvency event, a liability to which the company is subject.
Does the potential liability fall within rule 13.12(1)(a)?
It is convenient first to deal with the argument that potential liability under a FSD issued against a company after the start of its administration or liquidation gives rise to a liability which falls under rule 13.12(1)(a).
This argument is based on the simple proposition that the risk of being issued with a FSD is a contingent liability, and is therefore a liability for the purposes of rule 13.12(1)(a) as a result of rule 13.12(3).
If this argument was right, it would avoid the possible problem thrown up by the closing ten words of rule 13.12(1)(b).
The argument would be easy to understand were it not for rule 13.12(1)(b).
Para (b) of rule 13.12(1) contains a limitation, in that it provides that, if a company in liquidation or administration becomes subject to a liability after the date of the insolvency event, then that liability can only be treated as a debt under that paragraph if it arises by reason of any obligation incurred before that date.
If para (a) of rule 13.12(1) could apply to a liability which arises after the insolvency event, then it would not only render para (b) otiose, but it would also effectively override this limitation.
In other words, the very limitation which rule 13.12(1)(a) is being invoked to avoid represents the reason why rule 13.12(1)(a) cannot be invoked.
It is fair to say that it is somewhat ironic to invoke para (b) to limit the ambit of para (a), when it would appear that the purpose of para (b) is to extend the ambit of para (a).
However, the provisions of the Insolvency Rules, and of each rule of those Rules, have to be read in a sensible and coherent way, and one has to read paras (a) and (b) so that they work together.
I agree with the view expressed by David Richards J in In re T & N Ltd [2006] 1 WLR 1728, para 115, that para (a) is concerned with liabilities to which the company is subject at the date of the insolvency event, whereas para (b) is directed to those liabilities to which it may become subject subsequent to that date, and that there is no overlap between these two categories.
Accordingly, if there is a debt or liability in this case, it cannot fall within para (a): the issue is whether it falls within para (b).
Does the potential liability fall within Rule 13.12(1)(b)?
There is no doubt that the liability which is imposed on a target on the issuing of a FSD after the commencement of its administration or liquidation is a liability for the purposes of rule 13.12(1)(b), as it is a liability under an enactment within rule 13.12(4).
The question is, however, whether it can be said to be a liability which arose by reason of any obligation incurred before the insolvency event.
In these cases, a Target companys liability under the FSD scheme arises because it was a member of a group of companies, which, to put it very loosely, fell within the scope of the regime (as the group included a company which had a pension scheme, and that company was a service company, or insufficiently resourced).
In order for the liability in issue to fall within rule 13.12(1)(b), therefore, the fact that the Target company was a member of such a group must amount to a sufficient obligation incurred within the meaning of that rule, before the target went into administration.
Timing is no problem in the present cases, because each of the Target companies in the Lehman and Nortel groups were members of a group which fell within the scope of the regime, as I have used that expression, well before they went into administration.
That issue thus centres on the meaning of the word obligation in rule 13.12(1)(b).
The meaning of the word obligation will, of course, depend on its context.
However, perhaps more than many words, obligation can have a number of different meanings or nuances.
In many contexts, it has the same meaning as liability, but it clearly cannot have such a meaning here.
Indeed, in the context of rule 13.12, it must imply a more inchoate, or imprecise, meaning than liability, as the liability is what can be proved for, whereas the obligation is the anterior source of that liability.
Where a liability arises after the insolvency event as a result of a contract entered into by a company, there is no real problem.
The contract, in so far as it imposes any actual or contingent liabilities on the company, can fairly be said to impose the incurred obligation.
Accordingly, in such a case the question whether the liability falls within para (b) will depend on whether the contract was entered into before or after the insolvency event.
Where the liability arises other than under a contract, the position is not necessarily so straightforward.
There can be no doubt but that an arrangement other than a contractual one can give rise to an obligation for the purposes of para (b).
That seems to follow from rule 13.12(4).
As Lord Hoffmann said, (albeit in a slightly different context) in relation to contingent liabilities arising on a liquidation, in Secretary of State for Trade and Industry v Frid [2004] 2 AC 506, para 19, [h]ow those debts arose whether by contract, statute or tort, voluntarily or by compulsion is not material.
However, the mere fact that a company could become under a liability pursuant to a provision in a statute which was in force before the insolvency event, cannot mean that, where the liability arises after the insolvency event, it falls within rule 13.12(1)(b).
It would be dangerous to try and suggest a universally applicable formula, given the many different statutory and other liabilities and obligations which could exist.
However, I would suggest that, at least normally, in order for a company to have incurred a relevant obligation under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred.
If these two requirements are satisfied, it is also, I think, relevant to consider (c) whether it would be consistent with the regime under which the liability is imposed to conclude that the step or combination of steps gave rise to an obligation under rule 13.12(1)(b).
When deciding whether a particular state of affairs or relationship is sufficient to amount to the incur[ring] of an obligation, by reason of which the liability arose, considerable assistance can, I think, be gained from the majority decision in Winter v Inland Revenue Commissioners, In re Sutherland (decd) [1963] AC 235.
That case was concerned with whether an arrangement was within the expression contingent liabilities in section 50 of the Finance Act 1940.
As Lord Reid explained at p 247, at the relevant date, the position of the company was that, by applying for and accepting allowances in respect of these ships, it had become bound by the statute to pay tax under a balancing charge when it ceased to use these ships in its trade, if the moneys which it received for them exceeded any expenditure on them which was still unallowed.
contingent liability as at the relevant date.
Lord Reid said this at p 248: [I]f an Act says I must pay tax if I trade and make a profit, I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading.
In neither case have I committed myself to anything.
But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event.
In those circumstances, the majority concluded that the obligation was a
Reference to a passage in Lord Hodsons dissenting speech highlights the effect of this reasoning.
At p 257, he said that he thought that the risk of attracting liability is not enough and the argument involves a misconception of what is meant by contingent liabilities in their context, and went on to point out that [t]here may be no day of reckoning; the ships may never be sold; if there is a sale there may be a balancing allowance not a balancing charge.
This contrast is also highlighted by what Lord Guest (who agreed with Lord Reid) said at p 264: The claim for initial allowances for what has been described as depreciation is the voluntary choice of the taxpayer, but, once he has obtained such allowances, he is automatically involved by the operation of law in the payment of balancing charges, if the assets are parted with at a price greater than the written down value in the
circumstances defined in section 292 of the Income Tax Act, 1952
It is true that in Sutherland, the House of Lords was concerned with the meaning of contingent liabilities in the context of estate duty, whereas these appeals are concerned with the meaning of obligation from which a contingent liability derives in insolvency legislation.
It was suggested that the reasoning of Lord Reid should not, therefore, be relied on here.
I do not agree.
Lord Reid gave a characteristically illuminating and authoritative analysis of an issue of principle.
It appears to me that the issue of (i) what is a contingent liability and (ii) what is an obligation by reason of which a contingent liability arises, are closely related.
In Sutherland the House had to decide whether what a company had done was sufficient, in Lord Reids words, to have committed [it]self to a contingent liability.
As I see it, that is much the same thing as having incurred an obligation from which a contingent liability may arise, for the purposes of rule 13.12(1)(b).
I note that the approach to contingent liabilities adopted in Sutherland was considered helpful in two cases concerned with insolvency law decided by judges experienced in the field Pennycuick J In re SBA Properties Ltd [1967] 1 WLR 799, 802D 803E, and David Richards J in In re T & N Ltd, [2006] 1 WLR 1728, paras 48 61.
In the latter case, the judge pointed out at para 61 that the case before him was, as these cases are, in one important respect a stronger case than Sutherland, because the majority did not regard as decisive that the liability to pay the balancing charges would arise only as a result of the company's own choice to sell the ships.
In this case there is no question of volition.
The reasoning of Lord Reid, and of Lord Guest, in Sutherland self evidently supports the argument that the potential FSD regime liabilities in the present cases fall within rule 13.12(1)(b), even where the FSD is not issued until after the relevant insolvency event.
More specifically, if one asks whether those potential liabilities of the Target companies in these two appeals satisfy the requirements suggested in para 77 above, it appears to me that the answer is yes.
As to the first requirement, on the date they went into administration, each of the Target companies had become a member of a group of companies, and had been such a member for the whole of the preceding two years the crucial look back period under the 2004 Act.
Membership of a group of companies is undoubtedly a significant relationship in terms of law: it carries with it many legal rights and obligations in revenue, company and common law.
As to the second requirement, by the date they went into administration, the group concerned included either a service company with a pension scheme, or an insufficiently resourced company with a pension scheme, and that had been the position for more than two years.
Accordingly, the Target companies were precisely the type of entities who were intended to be rendered liable under the FSD regime.
Given that the group in each case was in very serious financial difficulties at the time the Target companies went into administration, this point is particularly telling.
In other words, the Target companies were not in the sunlight, free of the FSD regime, but were well inside the penumbra of the regime, even though they were not in the full shadow of the receipt of a FSD, let alone in the darkness of the receipt of a CN.
So far as the third requirement is concerned, I would simply refer back to the points made in paras 58 63 above.
The earlier authorities
I should refer to the authorities which the Court of Appeal and Briggs J
understandably held bound them to reach a contrary conclusion.
Those authorities were mostly concerned with individual bankruptcy rather than corporate insolvency.
However, the meaning of the expression debt in the two regimes is very similar: rule 12.3 applies to both, and section 382 of the 1986 Act has a very similar definition of provable debt for bankruptcies as rule 13.12 has for liquidations.
In a number of cases, it has been held that, where an order for costs was made against a person after an insolvency process had been instituted against him, his liability for costs did not arise from an obligation which had arisen before issue of the bankruptcy proceedings, even though the costs order was made in proceedings which had been started before that insolvency process had begun see for instance In re Bluck, Ex p Bluck (1887) 57 LT 419, In re British Gold Fields of West Africa [1899] 2 Ch 7, In re A Debtor (No 68 of 1911) [1911] 2 KB 652, and In re Pitchford [1924] 2 Ch 260.
In my view, by becoming a party to legal proceedings in this jurisdiction, a person is brought within a system governed by rules of court, which carry with them the potential for being rendered legally liable for costs, subject of course to the discretion of the court.
An order for costs made against a company in liquidation, made in proceedings begun before it went into liquidation, is therefore provable as a contingent liability under rule 13.12(1)(b), as the liability for those costs will have arisen by reason of the obligation which the company incurred when it became party to the proceedings.
I have little concern about overruling those earlier decisions, although they are long standing.
First, the judgments are very short of any reasoning, and consist of little but assertion.
Secondly, they were decided at a time when the legislature and the courts were less anxious than currently for an insolvency to clear all the liabilities of a bankrupt (as they were all concerned with individual insolvencies).
Although most of the provisions of rule 13.12 and section 382 can be found in section 30(3), (4) and (8) of the Bankruptcy Act 1914, over the past three hundred years, the legislature has progressively widened the definition of provable debts and narrowed the class of non provable liabilities to quote from the written case of Mr Phillips QC who relied on those cases.
Thirdly, those cases are impossible to reconcile logically with the earlier case of In re Smith, Ex p Edwards (1886) 3 Morrell 179, where, on identical facts (save that it was an arbitration rather than litigation) it was held that an order for costs did give rise to a provable debt.
Fourthly, the unsatisfactory nature of those decisions can be seen from the way in which the Court of Appeal sought to evade their consequence in Day v Haine [2008] ICR 1102, a case which I consider to have been rightly decided.
For the same reasons, I consider that the decisions of the Court of Appeal in Glenister v Rowe [2000] Ch 76 and Steele [2006] 1 WLR 2380 were wrongly decided, although I can see how it might be said that they were justified on the basis of stare decisis.
The reasoning of Arden LJ in the latter case at paras 21 23 is instructive, because, as she says, the previous authorities in relation to provable debts suggested a narrower meaning of contingent liability than was adopted by the majority in Sutherland.
That observation neatly illustrates why they were wrongly decided.
The Report of the Review Committee on Insolvency Law and Practice (the Cork Report, 1982, Cmnd 8558), para 1289, described it as a basic principle of the law of insolvency that every debt or liability capable of being expressed in money terms should be eligible for proof so that the insolvency administration should deal comprehensively with, and in one way or another discharge, all such debts and liabilities.
The notion that all possible liabilities within reason should be provable helps achieve equal justice to all creditors and potential creditors in any insolvency, and, in bankruptcy proceedings, helps ensure that the former bankrupt can in due course start afresh.
Indeed, that seems to have been the approach of the courts in the 19th century before the somewhat aberrant decisions referred to in para 88 above.
Thus, in Ex p Llynvi Coal and Iron Co; In re Hide (1871) LR 7 Ch App 28, 32, James LJ described one of the main aims of the bankruptcy regime as to enable the bankrupt to be a freed man freed not only from debts, but from contracts, liabilities, engagements and contingencies of every kind.
If that was true in 1871, it is all the more true following the passing of the 1986 and 2002 Acts, and as illustrated by the amendment to rule 13.12(2) effected following the decision in In re T & N Ltd [2006] 1 WLR 1728, so as to extend the rights of potential tort claimants to prove.
It was suggested that para (m) was included in rule 4.218(3) on the assumption that cases such as those mentioned in para 88 above were rightly decided.
That may be so.
But, even if it is, the fact that a rule has been drafted on the basis that a decision of the Court of Appeal was right does not mean that this court should uphold the decision if satisfied that it was wrong.
Conclusion on the provable debt issue
I would accordingly dismiss these appeals to the extent of holding that the
administrators are bound to meet the liabilities of the Target companies under the FSD regime, but allow the appeals to the extent of holding that these liabilities are to be treated as provable debts.
I have had the opportunity of reading in draft the judgment of Lord Sumption on this issue and I agree with it.
His reference to Carron Iron Co Proprietors v Maclaren (1855) HL Cas 416 and In re Oriental Inland Steam Co (1873 4) LR 9 Ch App 557 appears to me to be very much in point.
I have also found assistance in the careful judgment of Lord Drummond Young in the Outer House in In re Thomas v Burton, liquidator of Ben Line Steamers Ltd [2010] CSOH 174; 2011 SLT 535.
Is the liability under a FSD issued after an insolvency event a liquidation expense?
Given that the potential FSD liability in each of these cases is a debt falling within rule 13.12(1)(b), and therefore a provable debt within rule 12.3, and the acceptance on all sides that it would not therefore be an expense, it is strictly unnecessary to consider this question.
However, it should be addressed as it was fully debated, and the point is of some potential importance, as I do not entirely agree with the courts below as to the effect of the reasoning and decision of the House of Lords in In re Toshoku Finance UK plc [2002] 1 WLR 671.
The question which would arise if the potential liability under the FSD regime did not give rise to a provable debt under rule 13.12 where the FSD is issued after the relevant insolvency event, is whether the liability would be within the expression charges and other expenses incurred in the course of the administration within rule 12.2, and, more particularly, within the expression any necessary disbursements by the administrator in the course of the administration, within rule 2.67(1)(f) the equivalent provision in a liquidation being rule 4.218(3)(m).
The word necessary in rule 2.67(1)(f) carries with it a legal obligation to pay (or, possibly, in exceptional cases, a moral obligation to pay, as to which see the next section of this judgment).
However, that is somewhat circular, as it leaves open the very question which has to be decided, namely whether the liability in question which has been imposed on the company is one which the administrator must pay.
Further, a liability may arise during an administration without falling within rule 2.67(1)(f), without being in the course of the administration.
In Davidson v Robb [1918] AC 304, 321, Lord Dunedin explained that in the course of his employment had a more limited meaning than during the period of his employment and connoted something which is part of his service namely work or the natural incidents connected with the class of work, a view echoed by Lord Russell in Alderman v Great Western Railway Co [1937] AC 454, 459.
While it would be dangerous to treat any formulation as an absolute rule, it seems to me, at any rate subject to closer examination of the authorities and counter arguments, a disbursement falls within rule 2.67(1)(f) if it arises out of something done in the administration (normally by the administrator or on the administrators behalf), or if it is imposed by a statute whose terms render it clear that the liability to make the disbursement falls on an administrator as part of the administration either because of the nature of the liability or because of the terms of the statute.
Thus, if an administrator, on behalf of the company, enters into a transaction which gives rise to tax, or starts (or adopts) proceedings which give rise to a liability for costs, that tax or those costs would fall within the rule, as they arise from his actions as administrator during the administration.
This conclusion is consistent with the authorities on liquidations see eg In re Beni Felkai Mining Co Ltd [1934] 1 Ch 406, In re Mesco Properties Ltd [1979] 1 WLR 558, affirmed [1980] 1 WLR 96 (tax), In re Trent & Humber Shipbuilding Co; Bailey & Leethams Case (1869) LR 8 Eq 94 and In re Wenborn & Co [1905] 1 Ch 413 (costs).
An area in which liquidators have been held liable to meet a statutorily imposed liability is that of property taxes ie business and domestic rates and community charge see, for instance, In re International Marine Hydropathic Co (1884) 28 Ch D 470, In re National Arms & Ammunition Co (1885) 28 Ch D 474, In re Blazer Fire Lighter Ltd [1895] 1 Ch 402, and more recently Exeter City Council v Bairstow [2007] Bus LR 813.
The explanations in the judgments in those cases of the basis on which a liquidator has been held liable for rates and (in Kentish Homes) for community charge as an expense of the liquidation, are not entirely consistent.
Sometimes it was said to be because the liquidator is retaining the property in question for the benefit of the winding up see eg per Baggallay LJ in Marine Hydropathic at 471 and Fry LJ in National Arms at 481.
However, it was also said that the rates should count as an expense on the ground that, because the liquidator remained in rateable occupation of the property in question, the rates for the period should rank as an expense of the liquidation see eg per Bowen LJ in National Arms at 480 and 482, and Vaughan Williams J in Blazer at 406 7.
The latter rationale seems to me to represent the current state of the law see per Lord Hoffmann in Toshoku at para 34 and per David Richards J in Exeter at paras 15 19.
In my view, therefore, the fact that the liability for rates falling due after an insolvency event on property retained by the liquidator ranks as an expense of the liquidation, is based on the proposition that, as a matter of interpretation, the rating (and community charge) legislation imposes such a liability on the liquidator (and the same logic must apply in an administration).
This is consistent with the fact that liability for rates (and community charge), arises from day to day, and the liability is treated as an expense only in respect of the companys occupation of property during the liquidation.
This conclusion derives a degree of support from the fact that, in the context of a liquidation, it is always open to a liquidator to disclaim onerous property (under sections 178 182 of the 1986 Act) and, if he chooses not to do so, it would presumably be as a result of a conscious decision to retain the property for the benefit of the creditors.
An administrator cannot disclaim property, but there is force in the point that the rating authorities should not be worse off because a company opts for administration rather than liquidation, given that the normal reason for preferring administration to liquidation is to seek a better outcome for creditors and/or shareholders of the company see para 3(1) of Schedule B1 to the 1986 Act.
Adopting the approach I have suggested, it appears to me that a potential liability under a FSD or a liability under a CN does not fall within the scope of expenses of an administration within rule 12.2 or rule 2.67(1)(f).
First, there is no question of such a liability resulting from any act or decision taken by or on behalf of the administrator or any act or decision taken during the administration.
The liability self evidently arises out of events which occurred before the insolvency event.
Secondly, I do not consider that the terms of the 2004 Act, properly interpreted, mean that a liability under a CN would be an expense of the administration, if it was not a provable debt under rule 13.12.
It is true that the effect of a CN under section 49(3) of the 2004 Act is that it gives rise to a debt payable by the target once it is issued, but it does not seem to me that that can be sufficient to render the payment of the debt a necessary disbursement by the administrator in the course of the administration.
The mere fact that an event occurs during the administration of a company which a statute provides gives rise to a debt on the part of the company cannot, of itself, be enough to render payment of the debt an expense of the administration.
It would be a debt payable during the period of the administration, but it would not be part of the administration, or a payment which was one of the natural incidents connected with the administration, to use the language of Lord Dunedin in Davidson.
In my view, something more would be required, either from the wording of the 2004 Act or from the nature of the liabilities which it imposes, before a CN issued after the targets insolvency event could be held to be an expense of the administration or liquidation.
The 2004 Act and the FSD Regulations are silent on the issue of the status of the liability under the FSD regime where the target has suffered or suffers an insolvency event.
It is therefore necessary to consider whether there is any indication that can be gathered from the 2004 Act, its aims and procedures, that it was intended that such a liability should rank as an expense of the targets administration or liquidation, if it does not give rise to a provable debt.
For the reasons given in paras 59 62 above, it would be remarkable if a liability under a CN issued to a target pursuant to a FSD issued after the target suffered an insolvency event had priority over the targets other unsecured creditors, when a CN, based on precisely the same facts, would not have such priority if it was issued pursuant to a FSD issued notice issued before the insolvency event.
I accept that it would be curious if a FSD issued after an insolvency event was significantly less effective than one issued before that event, and indeed that it would be unlikely to result in any sum being paid as explained in para 63 above.
However, the notion that liability pursuant to a FSD issued after the target had suffered an insolvency event ranks behind the targets provable debts, is, to my mind, less surprising than the notion that it should rank ahead of them.
First, I consider that the balance of anomalies, as discussed in paras 59 63 above, is such that the former appears a much less unlikely outcome.
Secondly, as a general proposition, once the facts giving rise to a right to raise a claim (in these cases, by issuing a FSD) exist, it would be very unusual for the beneficiary of the right to be better off as a result of a delay in raising the claim, but it would be far from surprising if the beneficiary were worse off as a result of such a delay.
The reason that the courts below reached a different conclusion is best explained by quoting a passage, from the first instance judgment, which the Court of Appeal (in paras 99 101 of Lloyd LJs judgment) expressly approved.
At [2011] Bus LR 766, para 146, Briggs J said that Lord Hoffmanns speech in Toshoku established as a general rule that: [W]here by statute Parliament imposes a financial liability which is not a provable debt on a company in an insolvency process then, unless it constitutes an expense under any other sub paragraph in the twin expenses regimes for liquidation and administration, it will constitute a necessary disbursement of the liquidator or administrator.
That is the general rule, whether the statute expressly refers to companies in an insolvency process as being subject to the liability, or whether the statute achieves the same result by using a criterion for liability which is insolvency neutral.
Any other conclusion would in my judgment attribute an excessive weight to the linguistic method by which different legislation achieved the same result, namely that the statutory obligation in question is a liability of a company in an insolvency process.
While it is fair to say that some observations of Lord Hoffmann in Toshoku, if read on their own, may appear to support that general rule, I consider that Briggs Js summary amounts to an incorrect statement of the law.
In my view, the general guidance given by Lord Hoffmann in Toshoku is to be found in para 46, where he said that the question of whether [any particular] liabilities should be imposed upon companies in liquidation is a legislative decision which will depend upon the particular liability in question.
In a case, such as the present, where (i) the statutory liability is one which could have been imposed before or after liquidation, (ii) the liability does not give rise to a provable debt (as is being assumed for present purposes) and (iii) the statute is completely silent as to how the liability should be treated if it is imposed after an insolvency event, the liability can only be an expense of the liquidation or administration if the nature of the liability is such that it must reasonably have been intended by the legislature that it should rank ahead of provable debts.
It would be wrong to suggest that this is a test which may not need to be refined in future cases, but it appears to me to be supported by the facts and arguments raised on these appeals.
I do not consider that Toshoku takes matters any further in the present case.
Lord Hoffmann explained in para 2 that the liability in Toshoku arose from a statutory provision which stated that: a company is chargeable to corporation tax on profits arising in the winding up of the company.
It may be assessed in respect of an accounting period deemed to commence on the liquidation date , and the liquidator is the proper officer liable to pay the tax . [Other relevant statutory requirements were that] profits must be computed on an accruals basis [and] the computation must be made on the assumption that every amount payable under the relationship will be paid in full as it becomes due.
In other words, unlike the present cases, Toshoku concerned a tax liability which was imposed on a liquidator, as opposed to the company, and it was a tax which only applied (in specified circumstances) to a company which had gone into liquidation.
As Lord Hoffmann said at para 30, [t]here would be little point in a statute which specifically imposed liabilities upon a company in liquidation if they were payable only in the rare case in which it emerged with all other creditors having been paid.
Even in such a case, I consider that it would be appropriate for a court to consider whether the legislature intended the liabilities concerned to rank as an expense, but the point made by Lord Hoffmann would clearly be a very powerful factor as to why it should.
I therefore would conclude that, if the liability in these cases did not rank as a provable debt, it would not count as an expense of the administration.
Does the court have a residual discretion?
If I had taken a different view on the provable debt issue, an alternative argument to that just discussed was that the court has the power to direct the administrator of a Target company to accord to the potential liability under the FSD regime a higher ranking than it would be given under the 1986 Act and the Insolvency Rules.
In other words, that the court could order the administrator to treat the potential FSD liability as a provable debt (category 5 in para 39 above) even though the effect of the legislation is that it should rank lower (namely category 7).
At any rate at first sight, it would be extraordinary if a court, which had decided that a liability did not fall within the definition of provable debts in rule 13.12, could nonetheless go on to decide that it was to be so treated, in the absence of any specific statutory power to do so.
Such a course would appear to be wrong in principle, because it would involve a judge effectively overruling the lawful provisions of a statute or statutory instrument.
It would also be highly problematic in practice because it would throw many liquidations and administrations into confusion: the law would be uncertain, and many creditors who felt that the statutory ranking caused them unfair prejudice would make applications to the court.
If further reasons were required for this conclusion, they may be found in rule 2.67 and in Toshoku.
Rule 2.67(2) and (3), referred to in para 42 above, show that, where the Insolvency Rules wish to give the court the ability to change the priority rules, they say so.
In the course of his speech in Toshoku at para 38, Lord Hoffmann referred to the proposition whether debts should count as expenses of the liquidation is a matter for the discretion of the court and held that there was no such discretion and disapproved Sir Donald Nicholls V Cs comments in In re Kentish Homes Ltd [1993] BCLC 1375.
As Lord Hoffmann made clear in para 41, how a particular liability was to be ranked depended solely on the proper interpretation of the Insolvency Rules.
The justification for a contrary view was based on three paragraphs of Schedule B1 to the 1986 Act (Schedule B1), and a number of decisions where the court has ordered a liquidator to take a particular action.
Para 13 of Schedule 1 entitles an administrator to make any payment which is necessary or incidental to the performance of his functions.
I do not see how that can entitle him, let alone the court to direct him, to treat an unprovable debt as a provable debt (unless, conceivably, there was resulting benefit which would redound for the benefit of the proving creditors, although even then it would be problematic).
It can scarcely be said to be incidental or necessary to a persons statutorily prescribed functions to do something inconsistent with those functions.
Para 65(3) of Schedule B1 precludes an administrator from paying a creditor who is neither secured nor preferential without the sanction of the court.
I cannot see how this provision can be properly interpreted as giving the court a roving commission to change the statutory priorities in a particular case simply because it does not like the consequences of those priorities.
It was no doubt intended to apply where the payment in question is necessary or desirable to achieve one of the administrators statutory functions under paragraph 3 of Schedule B1 to the 1986 Act (eg the companys survival or a more advantageous realisation of the companys assets).
Para 74 of Schedule B1 entitles a creditor to apply to the court if it considers that the administrator proposes to act in a way which would unfairly prejudice it.
This cannot, in my view, apply to a case where the administrator is proposing to do that which the legislation requires him to do.
It applies where the administrator is exercising a power, or discretion, most obviously carrying on the companys business in a certain way or selling off an asset of the company, or not performing an obligation, such as paying off creditors in the order mandated by the legislation.
Again, it cannot have sensibly been intended to give the court a roving commission to vary the clear statutory ranking of liabilities as summarised in para 39 above.
As to the common law, there are a number of cases, starting with In re Condon Ex p James (1874) LR 9 Ch App 609, in which a principle has been developed and applied to the effect that where it would be unfair for a trustee in bankruptcy to take full advantage of his legal rights as such, the court will order him not to do so, to quote Walton J in In re Clark (a bankrupt) [1975] 1 WLR 559, 563.
The same point was made by Slade LJ in In re TH Knitwear (Wholesale) Ltd [1988] Ch 275, 287, quoting Slater J in In re Wigzall, Ex p Hart [1921] 2 KB 835, at 845: where a bankrupts estate is being administered under the supervision of a court, that court has a discretionary jurisdiction to disregard legal right, which should be exercised wherever the enforcement of legal right would be contrary to natural justice.
The principle obviously applies to administrators and liquidators see In re Lune Metal Products Ltd [2007] 2 Bus LR 589, para 34.
However, none of these cases begins to justify the contention that an administrator can be ordered to change the ranking of a particular debt simply because the statutory ranking appears unattractive in this case because it means that a particular debt is ranked lower than other unsecured debts because (as I am assuming) it is not provable according to the statutory formula.
Indeed, observations in Lune Metal, paras 35 38, tend to support the notion that the court cannot sanction a course which would be outside an administrators statutory powers.
It is right to mention that the court has sanctioned an otherwise unauthorised payment where a company in administration wishes to avoid the cost of going into compulsory liquidation.
In such cases, which include In re UCT (UK) Ltd [2001] 1 WLR 436 and Lune Metal, the terms on which the administrators are discharged includes a direction which ensures that the preferential creditors are in no worse a position than if there had been a compulsory liquidation.
However, those cases provide no assistance to the argument that the court can direct a FSD regime liability to be promoted ahead of its statutory ranking, as (i) the direction benefits the creditors with provable debts, (ii) the direction is tied to the discharge of the administrators, not the performance of their on going functions, and (iii) the direction does not involve any conflict with statutory ranking of claims, and in particular, it does not harm the interests of the creditors with provable debts: on the contrary, they benefit from the direction.
In the present cases, I understand the attraction of the argument that the court should order the administrators of the Target companies to treat the potential FSD liabilities as provable debts (if they are not so provable): otherwise, they may be valueless.
However, I come back to the point that, if the effect of the Insolvency Rules is that the liabilities are not provable debts, there is no basis for the court deciding that they are.
It would be wrong for the courts to override the statutory ranking, especially given it would cause significant prejudice to others (in this case the creditors with provable debts).
That is particularly true as the liabilities are statutory, so that the legislature could have dealt with their status in a liquidation or administration (as indeed it did in relation to a section 75 debt).
The argument to the contrary also relied on the fact that the liability of a target under the FSD regime would have been a provable debt if the FSD had been issued before the insolvency event.
That is undoubtedly an argument in favour of the liability where the FSD is issued after an insolvency event being a provable debt, as mentioned above.
However, if the liability is not a provable debt in such circumstances, the argument does not support the contention that the administrator can be required to treat it as if it were.
As already mentioned, the mere fact that the court does not think it fair that a particular statutory liability should not rank as a provable liability under the relevant statutory provisions is not enough to justify a decision to alter the effect of those provisions.
The point can be taken a little further.
The decision of the courts below, that the liability in these cases was an expense of the administration and not a provable debt, was unattractive for the reasons given in paras 59 62 above.
It seems to me that, if, as is suggested by the argument I am considering, the courts had had power to do so, they should have gone on to hold that it would nonetheless direct the administrators to treat the liability as a provable debt.
Such a direction would not merely have been a surprising one, but it would have been one which flew in the face of Lord Hoffmanns observations at paras 38 41 in Toshoku, disapproving In re Kentish Homes Ltd [1993] BCLC 1375.
Conclusion
I would accordingly allow these appeals to the extent of declaring that a Target companys liability under the FSD regime, arising pursuant to a FSD issued after the company has gone into administration, ranks as a provable debt of the company, and does not rank as an expense of the administration.
LORD SUMPTION (with whom Lord Mance and Lord Clarke agree)
I agree with the order proposed by Lord Neuberger and with his reasons.
I add a few observations of my own on a point which might be regarded as a matter of wholly abstract jurisprudence if it were not fundamental to the analysis of the effect of this particular scheme.
The critical question is what constitutes an obligation incurred for the purpose of rule 13.12(1)(b) of the Insolvency Rules 1986.
The context shows it means a legal rule applying before the date when the company goes into liquidation which may, contingently on some future event, give rise to a debt or liability arising after that date.
But it cannot extend to every legal rule which may on any contingency have that effect.
Otherwise every debt or liability would be provable irrespective of the date when it accrued, unless the law changed after the company went into liquidation.
Since the scheme depends on there being a common date as at which the fund falls to be valued and distributed pari passu, that cannot be right.
Some limitation must be read into sub paragraph (b).
But what limitation?
The paradigm case of an obligation within the sub paragraph is a contract which was already in existence before the company went into liquidation.
It is implicit in the argument of those who contend on this appeal that there is no provable debt, in this case that contract is not just the paradigm case but the only one.
Yet when one asks what it is about a contract that qualifies it as a relevant source of obligation, the answer must be that where a subsisting contract gives rise to a contingent debt or liability, a legal relationship between the company and the creditor exists from the moment that the contract is made and before the contingency occurs.
The judgment of Lord Reid in In re Sutherland (decd) [1963] AC 235 was concerned with a very different statutory scheme, but his analysis is nevertheless illuminating because it makes precisely this point at pp 247 8: It is said that where there is a contract there is an existing obligation even if you must await events to see if anything ever becomes payable, but that there is no comparable obligation in a case like the present.
But there appears to me to be a close similarity.
To take the first stage, if I see a watch in a shop window and think of buying it, I am not under a contingent liability to pay the price: similarly, if an Act says I must pay tax if I trade and make a profit I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading.
In neither case have I committed myself to anything.
But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event.
Contract is not the only legal basis on which a contingent obligation of this kind may arise.
A statute may also give rise to one.
A good example is the substantive obligation which English law has always held to be owed by a debtor under a foreign judgment.
It is the basis of the common law action to enforce it.
Another is the obligation of a creditor arising from the statutory scheme of distribution in an English insolvency, not to seek by litigation in a foreign court a priority inconsistent with that scheme: see Carron Iron Co Proprietors v Maclaren (1855) HL Cas 416, 440 per Lord Cranworth LC, In re Oriental Inland Team Co (1873 4) LR 9 Ch App 557, and in the United States Cole v Cunningham (1882) 133 US 107.
In both of these examples, a legal relationship is created between the debtor and other persons, albeit without contract.
In the first, it is the legal relationship with the judgment creditor arising from the fact that the judgment debtor was subject to the jurisdiction of the foreign court, whether by virtue of residence or submission.
In the second, it is the legal relationship of the creditor with the debtor company and with other creditors arising from the statutory scheme of distribution.
If the mandatory provisions of a statute may create a legal relationship between the company and a creditor (or potential creditor) giving rise to a provable debt, then there is no reason why it should not do so contingently upon some future event.
In In re Sutherland decd [1963] AC 235 the companys liability for balancing charges by way of recoupment of capital allowances, which the majority held should be taken into account when valuing its assets, did not exist at the valuation date because at that date it was still contingent upon a future sale of those assets.
It was nevertheless a relevant contingent liability for valuation purposes, because at the valuation date there was a legal relationship between the companies and the Crown arising from the statutory scheme which made capital allowances subject to balancing charges in the contingency of a sale.
In Secretary of State for Trade and Industry v Frid [2004] 2 AC 506 the Secretary of State was subrogated by statute to the claims of employees to compensatory notice pay and redundancy payments.
The liability of the company to meet those claims did not arise until the employees were dismissed, which was after the company went into liquidation.
But the obligation existed before, because the statutory scheme superimposed upon the contract of employment created the legal relationship which made the compensatory notice pay and the redundancy payments due.
Lord Hoffmann, with whom the rest of the committee agreed, said at paras 17, 19: if the Secretary of State had agreed by contract before the insolvency date to guarantee any future liability of the company to pay compensatory notice pay or make redundancy payments to employees under the 1996 Act, the contract of guarantee would have created a contingent liability on the part of the company to reimburse the Secretary of State which was a debt at the insolvency date and became capable of set off when the employees were afterwards paid.
The next question is whether it makes a difference that the contingent liability existed by virtue of a statute rather than a contract and, not being consensual, that it involved no direct contract or other relationship with the employees or the company.
If a statutory origin does not prevent set off in the case of debts due and payable at the insolvency date, I do not see why it should make any difference that the statute creates a contingent liability which exists before the insolvency date but falls due for payment and is paid afterwards.
In the Victoria case of Lofthouse v Commissioner of Taxation [2001] 164 FLR 106, the statute conferred upon the Commissioner an indemnity against the directors of a company if tax payments under the Australian equivalent of PAYE were subsequently held repayable as insolvent transactions (in effect, preferences).
The indemnity was contingent upon the tax being determined to be repayable after the employer had gone into liquidation, but the statutory scheme created the relevant legal relationship between the directors and the Commissioner as soon as the tax payments were made by the company.
They were therefore provable as contingent debts in the insolvency of the directors.
Warren J observed at p 118: The potential liability of the third parties in this proceeding is a contingent liability within the meaning of s 82(1) of the Act because the potential liability arose from an obligation pursuant to an indemnity.
Furthermore, all the objective circumstances giving rise to the potential for the invocation of the chose in action represented by the right to indemnity had transpired prior to the third parties entering into their composition under Pt X of the Bankruptcy Act.
given after the commencement of the insolvency was not provable as a contingent debt, even if the litigation was in progress when the company went into liquidation.
The case law begins with In re Bluck Ex p Bluck (1887) 57 LT 419, and continues with In re British Gold Fields of West Africa [1899] 2 Ch 7, In re A Debtor (No 68 of 1911) [1911] 2 KB 652, In re Pitchford [1924] 2 Ch 260, Glenister v Rowe [2000] Ch 76.
The reasoning of these cases has recently been applied to other claims said to represent contingent liabilities: see R (Steele) v Birmingham City Council [2006] 1 WLR 2380.
There are a number of problems about these cases.
One of them, as it seems to me, is the absence of any real attempt to analyse the effect of the statutory scheme in creating an obligation to meet a liability contingently on some specified event.
In the earlier cases, this can perhaps be regarded as the legacy of the older principle which admitted only contractual debts to proof.
But that consideration cannot explain the more recent decisions.
In my view they were wrongly decided.
In the costs cases, I consider that those who engage in litigation whether as claimant or defendant, submit themselves to a statutory scheme which gives rise to a relationship between them governed by rules of court.
They are liable under those rules to be made to pay costs contingently on the outcome and on the exercise of the courts discretion.
An order for costs made in proceedings which were begun before the judgment debtor went into liquidation is in my view provable as a contingent liability, as indeed it has been held to be in the case of arbitration proceedings: In re Smith, Ex p Edwards (1886) 3 Morrell 179.
In both cases, the order for costs is made against some one who is subject to a scheme of rules under which that is a contingent outcome.
The fact that in one case the submission is contractual while in the other it is not, cannot make any difference under the modern scheme of insolvency law under which all liabilities arising from the state of affairs which obtains at the time when the company went into liquidation are in principle provable.
Of course, an order for costs like many other contingencies to which a debt or liability may arise, depends on the exercise of a discretion and may never be made.
But that does not make it special.
It is not a condition of the right to prove for a debt or liability which is contingent at the date when the company went into liquidation that the contingency should be bound to occur or that its occurrence should be determined by absolute rather than discretionary factors.
In the present case, the Court of Appeal considered itself to be bound by a line of cases in which it was held that a liability for costs arising from a judgment
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These appeals raise questions of some significance arising out of the interrelationship of the statutory schemes relating to the protection of employees pensions and to corporate insolvency.
In order to protect employees from the adverse consequences of an under funded occupational pension scheme, the Pensions Act 2004 (the 2004 Act) introduced a financial support direction (FSD) regime.
This enables the Pensions Regulator in specified circumstances (i) to impose, by the issue of an FSD to some or all of the other group companies (known as targets), an obligation to provide reasonable financial support to the under funded scheme of the service company or insufficiently resourced employer, and (ii) to deal with non compliance with that obligation by imposing, through a Contribution Notice (a CN), a specific monetary liability payable by a target to the trustees.
Many UK registered members of the Lehman group of companies and of the Nortel group of companies have gone into insolvent administration.
One of those Lehman group companies entered into service contracts with, and ran a pension scheme for the benefit of, employees who worked for other group members.
The Nortel group included a company which had a pension scheme, and which was insufficiently resourced to fund that scheme.
The pension scheme (the Scheme) in each case was a final salary scheme, which appears to be, and to have been for some time, in substantial deficit.
The Pensions Regulator subsequently initiated machinery under the 2004 Act to require certain other group members the target companies to provide financial support for the Scheme.
That machinery has been held up so it can be decided how the administrators of a target company should treat that companys potential liability under the FSD regime (in due course the liability under a CN) in a case where the FSD is not served until after the company has gone into administration (or into insolvent liquidation).
Specifically, would the liability under such a requirement rank (a) as an expense of the targets administration, (b) pari passu (i.e. equally) with the target companies other unsecured creditors, or (c) as neither? Under option (a) the liability would rank ahead of the unsecured creditors, and may well be paid in full; under option (b) it would rank equally with those creditors; under option (c) it would rank behind them, and would probably be worthless.
Briggs J and the Court of Appeal concluded that option (b) was not open to them, and preferred option (a) to option (c).
The Supreme Court considers option (b) to be correct, and unanimously allows the appeals to the extent of declaring that a targets liability under the FSD regime, arising pursuant to an FSD issued after the company has gone into administration, ranks as a provable debt of the company, and does not rank as an expense of the administration.
Lord Neuberger gives the main judgment of the Court, with which Lord Mance, Lord Clarke and Lord Toulson agree.
Lord Sumption gives a short concurring judgment, with which Lord Mance and Lord Clarke agree.
The potential liability as a result of an FSD issued after the commencement of an administration or an insolvent liquidation (an insolvent event) can constitute a provable debt within rule 13.12 of the Insolvency Rules 1986 (SI 1925/1986) (the Insolvency Rules).
Whilst the potential FSD regime liabilities in the present cases do not fall within rule 13.12(1)(a) [68] [71], they fall within rule 13.12(1)(b) [83].
It is common ground that if a CN had been issued in respect of a target before an insolvent event, it would give rise to a provable debt.
The courts below considered that, if a CN were issued after an insolvent event, it would give rise to a provable debt if it was based on an FSD issued before the insolvent event.
It appears somewhat arbitrary that the characterisation and treatment of the liability under the FSD regime should turn on when the FSD or CN happens to have been issued, if it is based on a state of affairs which existed before the insolvent event [59].
The courts below felt constrained by a consistent line of authority from reaching the conclusion the Supreme Court has reached, although it appears that they would have so held if they had felt able to do so [56].
These earlier authorities can be overruled: the judgments are very short of reasoning, are inconsistent with another line of authority, and were decided at a time when the legislature and the courts were less anxious than currently for an insolvency to clear all the liabilities of a bankrupt (as they were all concerned with individual insolvencies) [87] [94].
There is no doubt that the liability which is imposed on a target on the issuing of an FSD after an insolvent event is a liability for the purposes of rule 13.12(1)(b), as it is a liability under an enactment within rule 13.12(4).
The question is, however, whether it can be said to be a liability which arose by reason of any obligation incurred before the insolvent event [72].
That issue centres on the meaning of the word obligation in rule 13.12(1)(b) [74].
At least normally, in order for a company to have incurred a relevant obligation under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred.
If these two requirements are satisfied, it is also relevant to consider (c) whether it would be consistent with the regime under which the liability is imposed to conclude that the step or combination of steps gave rise to an obligation under rule 13.12(1)(b) [77].
In these appeals, all these requirements are satisfied, and accordingly the relevant obligation arose before the target companies went into administration.
Given that the potential FSD liability in each of these cases is a provable debt within rule 12.3 of the Insolvency Rules, and therefore it would not be an expense, it is strictly unnecessary to consider whether the liability under an FSD served after an insolvent event would be a liquidation expense, if, as the courts below held, it was not a provable debt [97].
However, given that this issue was fully debated before the Court, and is one of some potential importance, the Court concludes that, if the liability did not rank as a provable debt, it would not count as an expense of the administration [98] [114].
The Court also concludes that if it had taken a different view on the provable debt issue, it would not have held that it had a residual discretion to direct the administrator of a target company to accord to the potential liability under the FSD regime a higher ranking than it would be given under the relevant legislation [115] [127].
Lord Sumption adds some observations about the limitations on what constitutes an obligation incurred for the purpose of rule 13.12(1)(b) of the Insolvency Rules [129] [136].
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Following a trial before HHJ Miller QC and a jury at Belfast Crown Court, Raymond Brownlee was convicted on 1 June 2012 of a number of offences including false imprisonment, making threats to kill and wounding with intent.
He had been represented by senior and junior counsel until the close of the prosecutions case.
But at that stage in the trial, differences arose between Mr Brownlee and his legal team.
Initially, senior counsel intimated to the trial judge that he felt professionally compromised and had to withdraw from his representation of the accused.
When the judge put this to Mr Brownlee, he said that he did not want counsel to withdraw from representing him and that he believed that things had been perhaps taken up the wrong way.
At this point his solicitor intervened to say that he felt that the situation was not irretrievable.
On hearing this, the learned judge decided to give the solicitor the opportunity to consult with his client over the lunch adjournment.
After lunch, Mr Brownlees solicitor informed the court that his client had dismissed his legal team.
The judge asked Mr Brownlee if he was to take it that he wished to dispense with the services of the solicitor and the barristers who had been acting for him.
Mr Brownlee replied that he did and the judge indicated that he intended to proceed with the trial.
He did not permit the prosecution to close the case to the jury but asked the accused man whether there was anything that he wished to say.
Having been informed that there was nothing which Mr Brownlee wished to say, the judge proceeded to charge the jury and, after deliberations, they returned the guilty verdicts.
They also found the defendant not guilty on three further counts, on one of these by direction of the judge.
The case was adjourned in order to permit the defendant to retain the services of new solicitors and counsel.
New solicitors came on record for Mr Brownlee on 29 June 2012.
On 3 July 2012 the judge extended the legal aid certificate which he had granted in favour of the defendant to include senior counsel as well as junior counsel and solicitors.
That decision was taken on foot of representations made to the judge that the sentencing exercise would be complex.
The offences were grave and the pre sentence probation report suggested that the accused man was a dangerous offender and it foreshadowed an indeterminate or extended sentence as the possible disposal.
Correspondence was then exchanged between the accuseds solicitors and the Northern Ireland Legal Services Commission (LSC).
The Department of Justice is the sponsor department of LSC.
On 4 September 2012 the LSC wrote to Mr Brownlees solicitors informing them that the fees payable for the sentencing hearing were fixed according to paragraph 15 of Part IV of Schedule 1 to the Legal Aid for Crown Court Proceedings (Costs) Rules (Northern Ireland) 2005 (the 2005 Rules SR 2005/112), as amended by the Legal Aid for Crown Court Proceedings (Costs) (Amendment) Rules (Northern Ireland) 2011 (the 2011 Rules SR 2011/152).
Despite the fact that counsel who then appeared for the accused was not counsel who had represented him at trial, only the fees stipulated in the 2011 Rules were payable.
In this instance, these were 100 for solicitor, 120 for junior counsel and 240 for senior counsel.
No fees were payable in respect of any preparatory work that counsel would be required to undertake.
It was pointed out that a substantial amount of preparation would be required in order to properly represent Mr Brownlee during the sentencing exercise.
Consideration of the transcripts for five days of evidence and submissions would be necessary.
A decision would have to be taken as to whether a consultant psychiatrist should be engaged.
Detailed examination of the pre sentence report was essential.
Considerable legal research would be required.
The LSC replied to the accuseds solicitors and informed them that no exception could be made to the level of the fixed fees prescribed by the 2011 Rules.
The exceptionality provision contained in the 2005 Rules had been expressly removed by the 2011 Rules and there was therefore no possibility of departing from the stipulated fees.
Following this exchange of correspondence, Mr Brownlees solicitors tried to engage counsel to act for him on the sentencing hearing.
This proved impossible.
Despite approaching various counsel, the chairman of the Bar Council and the Bars pro bono unit, the accuseds solicitors have been unable to obtain the services of senior or junior counsel.
They have been consistently informed that the absence of any allowance for preparation in the fixing of the fee level makes it unfeasible to act on behalf of the appellant for the payment specified.
The statutory scheme
Article 36(3) of the Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 (SI 1981/228 (NI 8)) contains the power to make rules for the purpose of carrying into effect Part III of the Order whose title is Free Legal Aid in Criminal Proceedings.
As amended, article 36(3) provides: [The Department of Justice], after consultation with the Lord Chief Justice, the Attorney General and, where appropriate, the [relevant Rules Committee], and with the approval of [the Department of Finance and Personnel] may make rules generally for carrying [Part III of the 1981 Order] into effect and such rules shall in particular prescribe (d) the rates or scales of payment of any fees, costs or other expenses which are payable under [Part III].
Article 37 sets out, in a non exhaustive list, the matters to which the rule making body must have regard.
Again as amended, it provides: The [Department of Justice] in exercising any power to make rules as to the amounts payable under this Part to counsel or a solicitor assigned to give legal aid, and any person by whom any amount so payable is determined in a particular case, shall have regard, among the matters which are relevant, to (a) the time and skill which work of the description to which the rules relate requires; (b) the number and general level of competence of persons undertaking work of that description; (c) the cost to public funds of any provision made by the rules; and (d) the need to secure value for money, but nothing in this Article shall require him to have regard to any fees payable to solicitors and counsel otherwise than under this Part.
It can be seen, therefore, that a clear enjoinder is given to the rule making body to devise rules that will allow payment to be made which, among other things, reflects the time and skill necessary to carry out particular types of criminal legal aid work.
It necessarily follows that rules which do not cater for payment on the basis of the skill and time required for such work are ultra vires the enabling power.
The Legal Aid for Crown Court Proceedings (Costs) Rules (Northern Ireland) 2005 contained provisions which permitted payment to be made above the standard rate if a case presented exceptional difficulty.
Rule 11(4) provided: (4) Where an advocate considers that, owing to the exceptional circumstances of the case (or part of the case which is the subject matter of the application), the amount payable by way of fees in accordance with paragraphs (2) and (3) [which made provision for the payment of standard fees] would not provide reasonable remuneration for some or all of the work involved, he may apply to the Commission for a Certificate of Exceptionality and the Commission may, in its discretion, grant such application in accordance with paragraph (5).
Rule 11(5) contained a list of matters to be taken into account in deciding whether a Certificate of Exceptionality should be granted.
Again it was made clear that this was a non exhaustive list.
Rule 11(5) provided: When considering an application for a Certificate of Exceptionality, the Commission shall have regard, among the matters which are relevant, to (a) whether the issues involved were significantly more complex than other cases involving the same offence or Class of Offence; (b) whether the volume of evidence (including any un used evidentiary material) was significantly greater than that in other cases involving the same offence or Class of Offence; (c) any novel issues of law which were involved in the case; and
(d) any new precedents established in the case
Under the 2005 Rules, therefore, it would have been open to the new counsel who had been retained for the sentencing exercise to apply for a Certificate of Exceptionality on the grounds that the issues were significantly more complex for them by reason of the fact that they had not previously been involved in the case and that a substantial amount of preparation would be required on that account.
The exceptionality provision was swept away by the 2011 Rules.
Rule 12 of these Rules provided that paragraphs (4) to (8) of rule 11 of the 2005 Rules were to be omitted.
Paragraphs (4) and (5), whereby an uplift in fees could be applied for, were no longer available for that purpose.
The decision of Treacy J
Mr Brownlee applied for judicial review of the departments decision not to allow any modification of the standard fees to be paid for the sentencing hearing in his case.
It was argued that the refusal to allow any payment for the extensive preparatory work that would inevitably be required made it impossible for him to retain counsel.
This amounted to a denial of access to justice.
Treacy J agreed.
At para 47 of his judgment he said: It is clear to me that the inflexibility of the impugned aspect of the scheme is preventing the applicant from being able to make his right to legal aid effective.
This is a consequence of a blanket measure which makes no allowance for the exceptional and unusual circumstances which have arisen.
Whilst there is much to be said for a fixed payment scheme such a scheme must not undermine the principle that lawyers should receive fair remuneration for the work they are required to do.
The critical defect here is the inflexibility of the Regulations and the inability of the scheme to enable adjustments to be made even in exceptional and unusual cases where the failure to do so would lead to injustice.
The judge made an order of mandamus requiring the respondent, the Department of Justice, to take all necessary steps to make the applicant's right to legal aid effective.
He found that a modest adjustment to the scheme under the amended 2005 Rules was required or that some other provision had to be made to deal with the exceptional and unusual circumstances of the case and to avoid the injustice that would otherwise result.
The Court of Appeal decision
The Department of Justice appealed Treacy Js order.
The Court of Appeal allowed the appeal.
Morgan LCJ, delivering the judgment of the court, acknowledged that inadequate remuneration within a legal aid scheme can give rise to a breach of a defendants right to a fair trial under article 6 of the European Convention on Human Rights and Fundamental Freedoms, if an accused consequently finds it impossible to obtain the services of an appropriate lawyer to represent him.
At para 33 of his judgment, however, the Lord Chief Justice said this: the appellant was provided with legal representatives who conducted the trial on his behalf until it was near its end at which stage he dismissed them.
There is nothing to indicate that those representatives would not have continued to act in the sentencing hearing if they had not been dismissed and they, unlike newly instructed counsel, had benefitted from the overall trial fee payable.
In fact, it is clear from a transcript of the hearing before HHJ Miller QC that it was senior counsel who had initiated the process of withdrawal from the case.
He told the judge that he felt professionally compromised and could no longer act for Mr Brownlee.
At that stage, the appellant did not want counsel to withdraw.
There can be no question of counsel having been dismissed by the appellant at that point.
It was only after lunch, having been given time to consult with his solicitor, that Mr Brownlee said, in answer to the judges direct question, that he wanted to dispense with counsels services.
There was no further investigation of the circumstances in which that decision had been reached.
It is entirely possible that the appellant had concluded that he could no longer insist on counsel representing him when counsel had indicated that he was professionally compromised.
Despite the Court of Appeals finding to this effect, it is by no means clear that counsel would indeed have continued to act but for the fact that they had been dismissed by the appellant.
As it happens, in para 36 of the judgment, (which is quoted below), the Court of Appeal foresaw that the sentencing judge might wish to explore further the reasons that the appellant had decided to dispense with the services of his legal team.
It must be presumed that it was felt that such a further investigation might have borne directly on the question of whether, if the appellant was not legally represented, he could have received a fair trial.
Notwithstanding this, it appears that the Court of Appeals conclusion that the appellant had dismissed his legal team for no good reason was central to their decision on the appeal, for at para 36 Morgan LCJ said this: An accused who loses his legal representation in the course of a trial through no fault of his own should be given the opportunity to obtain alternative representation.
Where he cannot do so because of the inadequacy of legal aid funding a breach of article 6 may well follow.
The inflexibility of these Rules potentially raises the possibility of such an outcome.
In this case, however, the material before us suggests that the accused dismissed his counsel and solicitors without any reasonable explanation at a late stage of his trial.
Whether the circumstances of this case are such that even then a breach of article 6 would arise from the absence of an ability to secure further representation by counsel necessitates a careful review of the issues in the sentencing exercise.
The learned trial judge will know the factual basis for the conviction, having heard the evidence.
He will have the opportunity to hear from the author of the pre sentence report and to see the psychiatric report prepared for the appellant if it is relied upon.
He may wish to explore further the reasons for the decision by the appellant to dispense with his original legal team.
He will be in a position to judge the materiality of previous convictions against the circumstances of the offence and the reports.
All of those matters indicate that the decision as to whether the absence of legal representation gives rise to a breach of article 6 is a highly fact specific exercise which should be decided by the trial judge.
The Court of Appeal clearly had it in mind that the trial judge should determine whether the matters which came up during the sentencing hearing would give rise to a breach of article 6 and that that determination should be made as and when those matters became apparent in the course of the hearing.
But the judge had already decided that the issues in the case warranted the grant of a legal aid certificate for senior and junior counsel.
This suggests that he had already concluded that, if the appellant was to have a fair hearing, it was essential that he be legally represented.
In effect, therefore, the Court of Appeals conclusion would have required the judge to revisit a decision which he had already made.
Quite apart from this, it is not difficult to envisage difficulties that a trial judge would face if he or she had to decide, on an ad hoc basis, whether legal representation for the sentencing hearing was required, if that decision was to be made in the course of the hearing itself.
It is clear from the Court of Appeals judgment that they also considered that the appellants contesting of the departments refusal to adjust the standard fee constituted an impermissible collateral challenge to the criminal proceedings.
In para 37 of his judgment the Lord Chief Justice referred to the decision in R (Kebilene) v Director of Public Prosecutions [2000] 2 AC 326 where the House of Lords had held that criminal proceedings should not be subjected to delay by collateral challenges, and that as a general rule the courts would refuse to entertain a judicial review application where the complaint could be raised within the criminal trial and appeal process.
The circumstances in Kebilene were, of course, markedly different from those in the present case.
In Kebilene an application had been made to restrain a prosecution on the basis that its continuation would constitute a violation of article 6.
The House of Lords held that this was an issue which could be dealt with at the trial and, if necessary, on appeal.
Here the appellant does not seek to restrain completion of the criminal process.
On the contrary, he wishes to have legal representation in order to bring the proceedings to a close.
The trial judge is not in a position to undertake a judicial review of the Department of Justice decision to refuse to increase the fee payable for the sentencing hearing.
Unlike the position in Kebilene, therefore, the violation of the article 6 right cannot be cured or catered for in the course of the sentencing hearing.
I do not accept therefore that the judicial review proceedings constituted a collateral challenge to the criminal process.
It is, of course, true that the judge could have considered again the circumstances leading to the withdrawal of counsel who had originally represented the appellant.
It is also true that, on that reconsideration, the judge could have confirmed his decision to grant a defence certificate for senior and junior counsel.
But, from the point of view of the appellant, he was entitled to assert that the judges earlier determination of this question was (and could only be) consistent with the conclusion that he had not forfeited the right to be legally represented.
Indeed, in a case such as the present, where a defendant faces the prospect of a significant prison sentence (in the appellants case an extended or even an indeterminate sentence is a distinct possibility) and where he wishes to be legally represented, a determination by a judge that the sentencing hearing should take place without legal representation could only be made if he had concluded that the defendant had forfeited his right to such representation.
In allowing the Department of Justices appeal, the Court of Appeal relied on the decision in R v UIcay [2007] EWCA Crim 2379.
That case was concerned with regulation 16 of the Criminal Defence Service (General) (No 2) Regulations 2001 (SI 2001/1437) which provides that any application for a change of representative may be refused or granted by the court to whom it is made on grounds which are set out in the regulation.
One of the consistent requirements of regulation 16(2) (a)(i) (iv) is that a legal representative should provide details of the nature of the duty which he believes requires him to withdraw from the case, or the nature of the breakdown in the relationship between him and his client.
At para 31 of the judgment the President of the Queens Bench Division said: The purpose of this part of the Regulations is to ensure that the client does not manipulate the system, seeking to change his lawyers for dubious reasons which include, but are not limited to, the fact that the lawyer offers sensible, but disagreeable advice to the client.
Claims of a breakdown in the professional relationship between lawyer and client are frequently made by defendants, and they are often utterly spurious.
If the judge intends to reject an application for a change of legal representative he may well explain to the defendant that the consequence may be that the case will continue without him being represented at public expense.
The simple principle remains that the defendant is not entitled to manipulate the legal aid system and is no more entitled to abuse the process than the prosecution.
If he chooses to terminate his lawyer's retainer for improper motives, the court is not bound to agree to an
application for a change of representation
It is implicit in this passage that the court would refuse an application for change of representation only where it had decided that the accused had terminated the lawyers retainer for improper motives or was seeking to manipulate the legal aid system.
In the present case, the judge cannot have considered that the appellant was embarked on such a course because he granted a legal aid certificate for the sentencing hearing.
The Court of Appeal in the present case said that the grant of a new legal aid certificate should be taken into account but that this on its own does no more than what was said at para 36 of Ulcay.
This is the passage from that paragraph which the Lord Chief Justice quoted in support of his conclusion as to the limited relevance of the grant of a new legal aid certificate: The fact that the judge was prepared to transfer the legal aid certificate does not mean that he was saying that, whatever the consequences to the trial, new representation must be obtained, and that thereafter he would conduct the trial in accordance with whatever applications were made by new counsel.
The clear implication of what the judge decided was that whilst he was content for new representation to be obtained at public expense and no doubt he hoped that it would, nevertheless he could not and did not abrogate his responsibilities to the interests of justice in the overall context of the trial and its proper conduct and management.
It is important to keep in mind the background against which these observations were made.
The appellant in Ulcay had not only withdrawn instructions from the legal team that had represented him throughout the trial until the close of the prosecution case.
He had purported to withdraw admissions which he had already made in the course of the trial.
In particular, he had asserted that his was not the voice heard on tapes of intercept evidence.
He had previously accepted that it was indeed his voice.
The new legal representatives who had been engaged to act for Ulcay asked for an adjournment of some weeks.
The trial had begun on 5 September 2005 and the withdrawal of original counsel took place on 18 October.
The appellant wanted the trial to be aborted and to begin again before a new jury.
In these circumstances it is not surprising that the trial judge refused to adjourn the trial nor, when he was told by counsel that they could not represent the appellant unless an adjournment of some weeks was granted, that he ordered that the trial must continue.
In the present case there is no question of the appellant wishing to manipulate the system by deferring the sentencing hearing.
Since he has been convicted and is in custody awaiting sentence, it is obviously in his interests to have that part of the process completed.
The observations in para 36 of Ulcay relate to an attempt by the appellant to have his trial aborted.
This does not arise on the present appeal.
In these circumstances, the fact that the trial judge granted a further legal aid certificate is indicative of his view that the engagement of a new legal team was not associated with an attempt by the appellant to manipulate the trial process.
Events following the hearing of the appeal
After the Court of Appeal had heard the Departments appeal but before judgment was delivered, a consultation document was published as part of a review of the 2005 Rules.
A section of this document dealt with the situation that had arisen in the appellants case.
At para 3.6 of the document the following appeared: One area where the 2005 Rules were challenged recently by judicial review proceedings was on their alleged failure to provide appropriate remuneration for a sentence hearing.
This arose because the defendant dismissed his counsel just before conviction and required new counsel to represent him during sentencing.
However, he was unable to secure the services of counsel on the basis that the fees payable did not provide sufficient remuneration for the work involved.
Essentially, this was because the new counsel would have to undertake an amount of preparation work to familiarise themselves with the case before being in a position to properly represent the defendant and, in these circumstances, counsel considered that the fees available did not provide sufficient remuneration.
The circumstances which caused this situation to arise were highly unusual and entirely unforeseen.
This was an unambiguous acknowledgment by the Department that it had not anticipated that new legal representatives might be required to take over at the sentencing stage from those who had appeared for the accused at trial.
More importantly, the consultation document implicitly accepted that the 2005 Rules, in the form that they existed after the changes brought about by the 2011 Rules, had failed to cater for the proper remuneration of counsel briefed for the first time to appear for an accused person after the trial had ended.
This much is clear from a section in the document headed Omissions in the 2005 Rules para 3.16 of which stated: the Department is content that it should make adjustments to the sentence hearing fee contained in the 2005 Rules, where a new legal team is instructed following a defendants conviction, to better reflect the amount of work involved in preparing for and representing the defendant at the hearing.
To achieve this, the Department is proposing to set fees, which could be applied retrospectively, that would be triggered by the volume of evidence served on the defendant by the Public Prosecution Service in relation to his case.
The Department made it clear that, as well as considering responses to the consultation document, it would take into account the judgment of the Court of Appeal and might amend its proposals in relation to sentence hearing fees in light of it.
The consultation exercise took place between 5 July 2013 and 16 August 2013.
Submissions were received from the Bar Council, the Law Society and LSC.
In November 2013 the Department published its report on the consultation.
It set out its conclusion in para 3.2 (sic) of the report as follows: In light of the Court of Appeal judgment, the Department is content that it should proceed and introduce enhanced sentence hearing fees in the 2005 Rules, where a new legal team is instructed following a defendant's conviction, to better reflect the amount of work involved in preparing for and representing the defendant at the sentence hearing.
To achieve this, the Department considers that it would be appropriate to introduce the
fees that were the subject of public consultation
Draft amendment rules were shown to this court in the course of the hearing of the appeal on 5 December 2013.
We were informed that these were to be considered imminently by the Justice Committee of the Northern Ireland Assembly and that it was planned that they should come into force in January 2014.
It was proposed that the rules should operate retrospectively.
Rule 5 of the draft rules intimates an amendment of para 15 of Schedule 1 to the 2005 Rules by the insertion of a new para 15B which will make provision for the payment of additional fees for preparatory work undertaken by a new legal representative for a sentencing hearing.
Discussion
The assessment and payment of fees to a legal representative who has replaced another at the sentencing stage of criminal proceedings was, self evidently, a material consideration which should have been taken into account by the rule making body which introduced amendments to the 2005 Rules by the 2011 Rules.
It has been frankly acknowledged that this situation was not adverted to at the time of the making of the 2011 Rules.
There was therefore an admitted failure to have regard to a relevant factor and, on that account alone, judicial review will lie of the decision to introduce the 2011 Rules without making provision for the payment of fees which would properly reflect the preparatory work which a legal representative, new to the case at the sentencing stage, would have to undertake.
Since article 37 of the 1981 Order requires the rule making body to devise rules that prescribe the payments to be made which reflect the time and skill necessary to carry out particular types of criminal legal aid work, a failure to make provision for remuneration of preparatory work by a new legal representative is, to that extent, ultra vires the enabling provision.
This situation is not relieved by the circumstance that the rule making body must also have regard to the cost to public funds of any provision made by the Rules; and to the need to secure value for money.
Those factors complement the obligation to have regard to the time and skill required to undertake particular forms of work; they do not extinguish it.
At the conclusion of the hearing of the appeal, this court announced that it would allow the appeal for reasons to be given later.
This judgment contains those reasons.
At the time that the appeal was allowed, it was stated that we had concluded that a declaration should be substituted for the order of mandamus made by Treacy J. When he granted judicial review an order of mandamus was appropriate.
Now that the Department has accepted that the 2005 Rules require to be amended to allow for payment for preparatory work undertaken by a new legal representative, mandamus is no longer necessary.
The declaration will be to the effect that the failure of the rule making body to take account of the need to provide for such payment rendered the Rules to that extent unlawful and ultra vires their powers under article 36 of the 1981 Order.
It was urged on this court that a failure to include in the Rules a general exceptionality provision and the prescription of fixed fees for every form of payment for legal work undertaken built into the Rules an inherent defect.
The amount properly payable to reflect the time and skill required in every conceivable situation demanded the inclusion of a dispensing provision to cater for exceptional cases of which this was merely one instance.
The need for a measure of flexibility, or rather, the perils of inflexibility, have been well recognised in Buchanan and Advocate General for Scotland v McLean [2001] SCCR 475, also reported as McLean v Buchanan [2001] 1 WLR 2425.
The potential for injustice inherent in a fixed payment scheme was expressly referred to by Lord Hope in para 45 of his opinion in that case.
And at para 71, Lord Clyde said this about the Criminal Legal Aid (Fixed Payments) (Scotland) Regulations 1999, (SI 1999 No 491): The most obvious, but perhaps not the only, risk may arise from the lack of flexibility in the present Regulations.
No allowance is made for any unusual or exceptional circumstances.
The requirements of fairness in judicial proceedings are rarely, if ever, met by blanket measures of universal application.
Universal policies which make no allowance for exceptional cases will not readily meet the standards required for fairness and justice.
Lord Clyde acknowledged that his observations went further than was required to decide the issue before the Privy Council in that case.
So also in the present appeal.
But his words contain a salutary warning.
While we are satisfied that the new draft rules, since they are to be applied retrospectively, meet the appellants complaint, it cannot be predicted with confidence that a combination of circumstances, at present unforeseen, might not give rise to a similar challenge to that which the appellant has successfully made to the Rules in the present case.
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This appeal concerns the provision of Legal Aid in criminal proceedings in Northern Ireland.
Raymond Brownlee was convicted on 1 June 2012 of a number of offences including false imprisonment, making threats to kill and wounding with intent.
He had been represented by senior and junior counsel until the close of the prosecutions case.
But differences arose at that point between Mr Brownlee and his legal team, which resulted in their no longer acting for him.
The judge indicated that he intended to proceed with the trial.
He did not permit the prosecution to close the case to the jury but asked Mr Brownlee whether there was anything that he wished to say.
Having been informed that there was not, the judge charged the jury, who returned the guilty verdicts.
They also found Mr Brownlee not guilty on three further counts, on one of these by direction of the judge.
The case was adjourned to permit Mr Brownlee to instruct new solicitors and counsel.
New solicitors came on record for Mr Brownlee on 29 June 2012.
On 3 July 2012, following representations made on Mr Brownlees behalf, the judge extended the legal aid certificate which he had granted to include senior counsel as well as junior counsel and solicitors.
It had been submitted that the sentencing exercise would be complex and might result in an indeterminate or extended sentence.
Consequently, a substantial amount of preparation would be required to properly represent Mr Brownlee during the sentencing exercise.
But the fees payable by the Legal Services Commission (LSC) for the sentencing hearing were fixed by the Legal Aid for Crown Court Proceedings (Costs) Rules (Northern Ireland) 2005 (the Rules) at 100 for a solicitor, 120 for junior counsel and 240 for senior counsel.
No fees were payable in respect of any preparatory work that counsel would be required to undertake.
A provision allowing for the payment of exceptional fees had been removed by an amendment in 2011.
Mr Brownlees solicitors were unable to engage counsel to act for him on the sentencing hearing.
They were consistently informed that the absence of any allowance for preparation in the fixing of the fee level makes it unfeasible to act on behalf of the appellant for the payment specified.
Mr Brownlee applied for judicial review of LSCs decision not to allow any modification of the standard fees to be paid for the sentencing hearing in his case.
Treacy J held that the consequent impossibility of retaining counsel amounted to a denial of access to justice.
He made an order of mandamus (an order that instructs a party to do a particular thing) requiring the respondent, the Department of Justice (who are responsible for LSC), to take all necessary steps to make Mr Brownlees right to legal aid effective.
The Department of Justice successfully appealed Treacy Js order.
Morgan LCJ, delivering the judgment of the Court of Appeal, acknowledged that inadequate remuneration within a legal aid scheme can breach a defendants right to a fair trial under article 6 of the European Convention on Human Rights if an accused consequently finds it impossible to obtain the services of an appropriate lawyer to represent him.
But this was a problem of Mr Brownlees own making, so that his sentencing process should not be hindered because of it.
In fact, it is clear from a transcript of the trial that it was senior counsel who had initiated the process of withdrawal from the case.
He told the judge that he felt professionally compromised and could no longer act for Mr Brownlee.
At that stage, the appellant did not want counsel to withdraw.
There can be no question of counsel having been dismissed by the appellant at that point.
It was only after lunch, having been given time to consult with his solicitor, that Mr Brownlee said in answer to the judges direct question that he wanted to dispense with counsels services.
After the Court of Appeal had heard the Departments appeal but before judgment was delivered, a consultation document was published as part of a review of the Rules, which implicitly accepted that they had failed to cater for the proper remuneration of counsel briefed for the first time to appear for an accused person after the trial had ended.
Draft amendment rules were shown to this court in the course of the hearing of the appeal on 5 December 2013.
These were expected come into force in January 2014 with retrospective effect.
The new rules will make provision for the payment of additional fees for preparatory work undertaken by a new legal representative for a sentencing hearing.
The Supreme Court unanimously allows Mr Brownlees appeal and declares that the rule making bodys failure to allow for new legal representatives to be paid for preparatory work was unlawful.
At the conclusion of the hearing of the appeal, this court announced that it would allow the appeal for reasons to be given later.
This judgment contains those reasons.
The assessment and payment of fees to a legal representative who has replaced another at the sentencing stage of criminal proceedings was, self evidently, a material consideration which should have been taken into account by the rule making body which amended the Rules in 2011.
This failure to have regard to a relevant factor justifies judicial review of the decision to amend the Rules in 2011 without making provision for the payment of fees that would properly reflect the preparatory work which a legal representative, new to the case at the sentencing stage, would have to undertake [32].
Article 37 of the Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 requires the rule making body to devise rules prescribing payments to be made to reflect the time and skill necessary to carry out particular types of criminal legal aid work.
A failure to make provision for remuneration of preparatory work by a new legal representative is therefore unlawful.
The cost to public funds of any provision made by the Rules and the need to secure value for money complement this obligation rather than extinguish it [33].
This court concluded that a declaration should be substituted for the order of mandamus made by Treacy J. When he granted judicial review an order of mandamus was appropriate.
Now that the Department has accepted that the Rules require to be amended to allow for payment for preparatory work undertaken by a new legal representative, mandamus is no longer necessary.
The declaration will be that the failure of the rule making body to take account of the need to provide for such payment rendered the Rules to that extent unlawful [34].
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Is it an answer to a refugee claim by an individual who has no political views and who therefore does not support the persecutory regime in his home country to say that he would lie and feign loyalty to that regime in order to avoid the persecutory ill treatment to which he would otherwise be subjected? This is the question of general importance that arises in these appeals which are a sequel to the decision of this court in HJ (Iran) v Secretary of State for the Home Department [2011] 1 AC 596.
In that case, it was held that a gay man was entitled to live freely and openly in accordance with his sexual identity under the Refugee Convention (the Convention) and it was no answer to the claim for asylum that he would conceal his sexual identity in order to avoid the persecution that would follow if he did not do so.
I shall refer to this as the HJ (Iran) principle.
These cases fall to be decided in the light of the latest country guidance for Zimbabwe which is to be found in the decision of the Asylum and Immigration Tribunal (AIT) in RN (Returnees) Zimbabwe CG [2008] UKAIT 00083 to which I shall have to refer in more detail later.
At this stage, it is sufficient to refer to para 216: This campaign [of persecution] has been rolled out across the country not by disciplined state forces but by the loose collection of undisciplined militias who have delivered a quite astonishingly brutal wave of violence to whole communities thought to bear responsibility for the wrong outcome of the March 2008 poll.
It is precisely because of that that any attempt to target specifically those who have chosen to involve themselves with the [Movement for Democratic Change (MDC)] has been abandoned.
In our view, there can be no doubt at all from the evidence now before the Tribunal that those at risk are not simply those who are seen to be supporters of the MDC but anyone who cannot demonstrate positive support for Zanu PF or alignment with the regime.
We were referred to the new country guidance issued by the Upper Tribunal in EM and Others (Returnees) Zimbabwe CG [2011] UKUT 98 (IAC) which states that the situation in Zimbabwe has significantly changed.
But this decision was quashed by the Court of Appeal on 13 June 2012.
It is common ground that it is not material to the present appeals.
The facts
RT was born on 28 May 1981.
She left Zimbabwe legally in February 2002 and arrived in the United Kingdom on 2 March 2002.
She was given leave to enter for six months and began to work for a family as a nanny.
She overstayed her leave.
In 2005, she was refused leave to remain as a student.
On 16 February 2009, she claimed asylum.
The claim was refused by the Secretary of State and her appeal to the AIT was dismissed on 1 July 2009.
IJ Hussain found that she would be able to take any positive steps necessary to show her loyalty to the regime and that there was no real risk of her being subject to ill treatment on return.
Reconsideration was ordered on 8 December 2009.
On the reconsideration, RTs appeal was dismissed by the Upper Tribunal on 2 March 2010.
DIJ Manuell found that she was a credible witness and that she had never been politically active in Zimbabwe or in the United Kingdom.
At para 25 he gave his reasons for concluding that she did not have a well founded fear of persecution on a Convention ground.
Of particular relevance is the finding that she was in a position to explain that she has never been politically involved at home or abroad, should anyone see fit to enquire.
SM was born on 26 September 1982.
She left Zimbabwe in April 2008 using a passport issued in another name and claimed asylum in the United Kingdom on 1 May 2008.
Following refusal of her claim in November 2008, she appealed to the AIT.
Her appeal was dismissed on 29 January 2009.
IJ Lawrence found that she was not a credible witness, had given inconsistent accounts of her involvement with the MDC and had lied in a number of other respects.
On 17 June 2009, reconsideration was ordered on the single issue of whether SM would be at risk on return in view of the decision in RN.
Her appeal was dismissed by IJ Charlton Brown on 3 November 2009.
She too found that SM was not a credible witness.
She said that SM had no connections with the MDC and that, although her mother had left Zimbabwe in 2002 and had been recognised as a refugee in 2003, she had not had difficulties living in Zimbabwe between 2002 and 2008.
On the issue of loyalty to the regime, she said at para 23: Finally, in terms of whether or not this appellant can demonstrate positive support for/loyalty to ZANU PF, it seems clear that she herself has not been linked with the MDC as she has claimed, given her lack of credibility throughout.
As previously stated, she appears to have been able to live in Zimbabwe without problems since her mother left the country in 2002 and quite frankly, given this individuals complete lack of credibility and indeed her inclination to lie as and when required, as the original immigration judge pointed out, no doubt she would be prepared to lie again in the future to the authorities on return to Zimbabwe about any political affiliation she might have.
AM was born on 16 November 1966.
He left Zimbabwe and arrived in the United Kingdom on 25 February 2001 with leave to enter as a visitor.
He remained with leave as a student until 30 November 2007.
He claimed asylum on 28 April 2009.
This was refused.
His appeal was dismissed by the AIT on 15 September 2009 and dismissed again (following reconsideration) on 23 March 2010.
DIJ Shaerf did not find AM to be a credible witness.
Although he was in favour of the MDC (para 46), AM had no political profile and was not politically engaged prior to his departure from Zimbabwe (para 47).
He would be able to account for his absence from Zimbabwe by reference to his studies in the United Kingdom and the breakdown of his marriage whilst he was here.
He had returned to Zimbabwe in 2003 without difficulty.
RT, SM and AM all appealed to the Court of Appeal.
The judgment of the court was given by Carnwath LJ: [2010] EWCA Civ 1285; [2011] Imm AR 259.
Their appeals were allowed.
The court said at para 36 that if individuals are forced to lie about their absence of political beliefs, solely in order to avoid persecution, that seems to us to be covered by the HJ (Iran) principle, and does not defeat their claims to asylum.
In the case of RT, the court said (para 42) that the Upper Tribunal did not address the critical issue raised by RN since: It is not enough that she would be able to explain her lack of political activity abroad.
The question is whether she would be forced to lie in order to profess loyalty to the regime, and whether she could prove it.
Since she was found to be generally credible, there is no other reason to hold that she has failed to prove her case.
The court allowed RTs appeal and upheld RTs asylum claim.
As for SM, at para 46 the court said of para 23 of the decision of the AIT that: it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution.
Nor is willingness to lie the same as ability to prove loyalty to the regime.
On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in [TM (Zimbabwe) v Secretary of
State for the Home Department [2010] EWCA Civ 916].
We will
therefore allow the appeal and remit the case to the Upper Tribunal for redetermination.
In relation to AM, the court said at para 52: As in the first case, the issue was not simply whether the appellant could account for his absence in the UK.
The judge failed to address the issue as to his ability to show his loyalty to the regime.
Unlike RT, he has not been held to be a credible witness.
Accordingly, as in the case of SM, we do not feel able to substitute our own conclusion on this issue.
We will therefore allow the appeal and remit the case to the Upper Tribunal.
The Secretary of State seeks an order that the decisions of the Tribunal should be restored in all three cases, alternatively that the claims should be remitted for further consideration of the sole issue of whether each claimant would be able to prove loyalty to the regime.
KM was born on 5 March 1957.
He left Zimbabwe legally and claimed to have arrived in the United Kingdom in January 2003 on a false South African passport.
He was given six months leave to enter as a visitor.
He claimed asylum on 20 August 2008 and his claim was refused by the Secretary of State.
His appeal was dismissed by the AIT on 1 April 2009.
A fact of central importance was that his son had been granted asylum in the United Kingdom because he had a well founded fear of persecution in Zimbabwe on the grounds that he was a sympathiser of the MDC.
IJ Parkes concluded that KM and his son (on whose evidence he relied) were not reliable witnesses with regard to events in Zimbabwe and that KM could not demonstrate an inability to show loyalty to the regime.
On 11 August 2009, Hickinbottom J ordered reconsideration.
The appeal was dismissed on reconsideration on 23 October 2009.
SIJ Latter said at para 18: In the light of the judges findings of fact I am not satisfied that the appellant established any adequate factual basis to support his claim that he would be at real risk of finding himself in a position where he would be unable to demonstrate loyalty to the regime.
The judge found that the appellant had no profile in Zimbabwe and had not been involved in MDC activities.
There was no reasonable degree of likelihood that the grant of status to his son would be known to those who might call upon him to show loyalty and he also failed to establish any serious possibility of finding himself in a position that such a call would now be made on him.
Finally, he failed to show that his background, his profile or his beliefs were such that he would not be able to demonstrate loyalty.
The Court of Appeal allowed his appeal and remitted the case to the Upper Tribunal.
The leading judgment was given by Pill LJ: [2011] EWCA Civ 275.
The Secretary of State accepted that the appeal should be allowed by the Court of Appeal because it was arguable that the Tribunal had failed to give adequate consideration to the assessment of risk in the light of the guidance in RN.
The issue between the parties was whether there should be a remittal to the Tribunal (as the Secretary of State contended) or the appeal should be allowed outright (as the appellant contended).
It was conceded by the Secretary of State that there was a real risk that the appellants son having obtained asylum because of his MDCs sympathies would come out on the appellants return (para 6 of Pill LJs judgment); and that the fact that KMs son had been granted asylum may place the appellant in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12).
The primary submission of the Secretary of State to the Court of Appeal was that there should be a further opportunity to examine the circumstances of return, for example, the area to which KM would return and whether he was a person who would be returning to a milieu where loyalty to the regime would be assumed (para 13).
At para 15, Pill LJ said that, in the light of the evidence and the guidance in RN, the appellants prospect of demonstrating loyalty to the regime appeared bleak.
He concluded, however, that this was not a case which the court could decide on the basis that only one outcome was possible before the Tribunal, although he regarded the appellants case as strong and it was acknowledged by the Secretary of State that there was a risk of his sons status becoming known (para 29).
At para 27, he gave two reasons for his conclusion by reference to the decision in RN: First, an applicant found not to have been a witness of truth will not be assumed to be truthful about his inability to demonstrate loyalty (paragraph 246).
Secondly, there is recognition, in paragraphs 229 and 230, of categories of people, for example, those returning to more affluent areas and likely to be associated with the regime, who may be returning to a milieu where loyalty to the regime may be assumed and the risk of persecution does not arise.
The country guidance in RN
In RN the AIT summarised the position at para 258 as follows: The evidence establishes clearly that those at risk on return to Zimbabwe on account of imputed political opinion are no longer restricted to those who are perceived to be members or supporters of the MDC, but include anyone who is unable to demonstrate support for or loyalty to the regime or Zanu PF.
To that extent the country guidance in HS (Returning asylum seekers) Zimbabwe CG [2007] UKAIT 00094 is no longer to be followed.
The following points of detail are relevant.
The risk of persecution resulted in particular from the activities at road blocks of ill disciplined militia gangs and War Veterans.
It did not result from the risk of detection at the airport on return to Zimbabwe.
The means used by those manning road blocks to establish whether a person was loyal to the ruling Zanu PF party included requiring them to produce a Zanu PF card or sing the latest Zanu PF campaign songs.
An inability to do these things would be taken as evidence of disloyalty to the party and therefore of support for the opposition (para 81).
In deploying these militia gangs, the regime unleashed against its own citizens a vicious campaign of violence, murder, destruction, rape and displacement designed to ensure that there remains of the MDC nothing capable of mounting a challenge to the continued authority of the ruling party (para 215).
Any attempt by the regime to target those who have chosen to involve themselves with the MDC has been abandoned.
The risk of not being able to demonstrate loyalty to the regime exists throughout the country, in both urban and rural areas (para 226).
The means by which loyalty may be demonstrated will vary depending on who is demanding it.
Production of a Zanu PF card is likely to suffice where an individual is confronted with such a demand, for example, at a road block.
But even that may not protect the holder from serious harm in rural areas where the adverse interest is in the community as a whole, because the area is one in which the MDC made inroads in the Zanu PF vote at the March 2008 elections (para 227).
People living in high density urban areas will face the same risk from militias or War Veterans as those living in rural areas, save that the latter are possibly at greater risk if their area has been designated as a no go area by the militias (para 228).
Finally, at paras 229 and 230, points are made about milieu which Pill LJ noted at para 27 of his judgment, to which I have referred above.
HJ (Iran)
There has been no challenge in these appeals to the correctness of the decision in HJ (Iran) or its essential reasoning.
In the light of the submissions that have been advanced in the present appeals, it is necessary to refer to parts of the judgments in HJ (Iran) in a little detail.
The court recognised as a refugee a gay man who, if he returned to his country of nationality and lived openly as a homosexual, would face a real risk of persecution on the ground of his sexual orientation, and who, in order to avoid this risk, would carry on any homosexual relationships discreetly.
I would accept the analysis of Mr Fordham QC that five principal reasons were given by the court for this conclusion.
First, the treatment of those who lived openly as homosexuals in Iran and Cameroon constituted persecution (para 40 42).
Secondly, sexual orientation was a protected characteristic within the category of membership of a particular social group (para 42).
Thirdly, the underlying rationale of the Convention was that people should be able to live freely, without fearing that they may suffer harm of the requisite intensity or duration because they are, say, black, or the descendants of some former dictator, or gay (para 53): see also paras 52, 65, 67 and 78.
Fourthly, the necessary modification in order to avoid persecution (carrying on any homosexual relationships discreetly) ran contrary to this underlying rationale.
It involved surrendering the persons right to live freely and openly in society as who they are, in terms of the protected characteristic, which was the Conventions basic underlying rationale: see per Lord Rodger at paras 75 76, Lord Hope at para 11 and myself at para 110.
Fifthly, the modification was a response to the feared persecution because of these dangers of living openly (para 40).
There was a difference between a case where the individual would live discreetly because of social pressures (para 61) and the situation where he would behave discreetly in order to avoid persecution because he is gay (para 62).
Only the latter would be entitled to refugee protection, assuming, of course, that he would suffer persecution if he were to live openly as a homosexual.
In the course of its reasoning, the court rejected three arguments advanced on behalf of the Secretary of State.
The first was that it was necessary for a refugee to be able to characterise living discreetly in order to avoid persecution as being itself persecution.
The second was that it was appropriate to see living discreetly in such circumstances as analogous to internal relocation, so that the unduly harsh test applied in relation to internal relocation should be applied here too: see per Lord Hope at paras 20 and 21.
The third was that the question was whether living discreetly was or was not reasonably tolerable to the asylum seeker.
This was the test enunciated by the Court of Appeal in HJ (Iran).
In reaching his conclusion, Lord Rodger (para 69) followed the reasoning of the majority in the High Court of Australia in Appellant S395/2002 v Minister of Immigration (2003) 216 CLR 473.
At para 72, he also referred to the approach adopted in New Zealand, particularly in Refugee Appeal No 74665/03 [2005] INLR 68 where at para 124 the New Zealand Refugee Status Appeals Authority considered that its own approach and that expressed by the majority in Appellant S395/2002 converged on the same point, namely that refugee status cannot be denied by requiring of the claimant that he or she avoid being persecuted by forfeiting a fundamental human right.
Lord Rodger continued: The difference between the High Court and the authoritywhich the authority considered could be important in certain caseswas that it preferred to use a human rights framework in order to determine the limits of what an individual is entitled to do and not to do.
That approach might, for instance, be relevant if an applicant were claiming asylum on the ground that he feared persecution if he took part in a gay rights march.
I respectfully see the attractions of that approach.
But no such issue arises in the present appeals and I prefer to leave the point for consideration in a case where it might be of practical effect.
For present purposes I take the decision of the authority, based on a particularly full and impressive analysis of the relevant materials, as clear support for the High Court of Australias approach that an applicant cannot be denied asylum on the basis that he would, in fact, take effective steps, by suppressing his sexual identity, to avoid the harm which would otherwise threaten him.
I shall return to the New Zealand case later in this judgment.
At para 113 of my judgment, I said that the emphasis in the New Zealand decision was on the fact that refugee status could not be denied to a person who on return would forfeit a fundamental human right in order to avoid persecution.
Like Lord Rodger, I saw the attractions of this approach.
At para 114, I said that a particular attraction of the New Zealand approach was that it facilitated a determination of whether the proposed action by the claimant was at the core of the right or at its margins.
At para 115, I said: It is open to question how far the distinction between harmful action at the core of the right and harmful action at its margin is of relevance in cases of persecution on grounds of immutable characteristics such as race and sexual orientation.
But it is a valuable distinction and there may be more scope for its application in relation to cases concerning persecution for reasons of religion or political opinion.
The principal issues that arise in these appeals
Two principal issues arise.
The first is whether the HJ (Iran) principle can apply to an individual who has no political beliefs and who is obliged to pretend to support a political regime in order to avoid the persecution that he would suffer if his political neutrality were disclosed.
Is the position of such a person analogous to that of a homosexual who is obliged to live a discreet life in order to avoid the persecution that he would suffer if he revealed his sexual orientation?
The second is whether, in the light of the country guidance given in RN, there is a real risk that such a person would face persecution on the grounds that he would be perceived to be a supporter of MDC.
In other words, would he face a risk of persecution on the grounds of imputed political belief? The first issue: can the HJ (Iran) principle apply to individuals who have no political beliefs?
The case of the Secretary of State in outline
The relevant factual premises for a consideration of these issues are that (i) the claimants do not hold any political beliefs and (ii) in practice, in order to avoid the imputation that they do not support the ruling regime (and consequently to avoid maltreatment), there is a real and substantial risk that they will be required to dissemble political loyalty to that regime.
The Court of Appeal were wrong to say at para 36 of their judgment that, if the claimants are forced to lie about their political neutrality or indifference solely in order to avoid persecution, the concealment of their lack of political beliefs would not defeat their claims to asylum.
HJ (Iran) does not establish any such rigid principle.
Rather, what is required is a fact sensitive analysis and consideration of whether interference with the claimants freedom to hold or not hold political opinions is at the core or the margin of the protected right or requires them to forfeit a fundamental human right.
There are two fundamental differences between HJ (Iran) and the present cases.
First, the issue in these cases does not relate to a fundamental or immutable part of the individuals identity or a fundamental human right, since the claimants do not have any political views.
The right in question is freedom of political thought and/or expression.
Since the claimants do not have political views, having to express a particular view which they do not hold is at the margin of the right.
They are not being required to forfeit a fundamental human right in order to avoid being persecuted.
Secondly, the situation contemplated in HJ (Iran) was one in which a person had to conceal a fundamental and immutable part of his identity at all times (at least when not in private).
In these cases, what is contemplated is a situation where a person may on isolated occasions be required to spend a very short amount of time professing a feigned opinion on a matter of politics.
Discussion
It is well established that there are no hierarchies of protection amongst the Convention reasons for persecution, and the well founded fear of persecution test set out in the Convention does not change according to which Convention reason is engaged: see, for example, per Lord Hope in HJ (Iran) at para 10, per Lord Hoffmann in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 651B and per Lord Bingham in Fornah v Secretary of State for the Home Department [2007] 1 AC 412, paras 20 22 (approving the reasoning of Laws J in R v Immigration Appeal Tribunal, Ex p De Melo [1997] Imm AR 43, 49 50).
Thus the Convention affords no less protection to the right to express political opinion openly than it does to the right to live openly as a homosexual.
The Convention reasons reflect characteristics or statuses which either the individual cannot change or cannot be expected to change because they are so closely linked to his identity or are an expression of fundamental rights.
The HJ (Iran) principle applies to any person who has political beliefs and is obliged to conceal them in order to avoid the persecution that he would suffer if he were to reveal them.
Mr Swift accepted that such a person would have a strong case for Convention protection, but he stopped short of an unqualified acceptance of the point.
In my view, there is no basis for such reticence.
The joint judgment of Gummow and Hayne JJ in Appellant S395/2002 contains a passage under the heading Discretion and being discreet which includes the following at para 80: If an applicant holds political or religious beliefs that are not favoured in the country of nationality, the chance of adverse consequences befalling that applicant on return to that country would ordinarily increase if, on return, the applicant were to draw attention to the holding of the relevant belief.
But it is no answer to a claim for protection as a refugee to say to an applicant that those adverse consequences could be avoided if the applicant were to hide the fact that he or she holds the beliefs in question.
And to say to an applicant that he or she should be discreet about such matters is simply to use gentler terms to convey the same meaning.
The question to be considered in assessing whether the applicants fear of persecution is well founded is what may happen if the applicant returns to the country of nationality; it is not, could the applicant live in that country without attracting adverse consequences.
I made much the same point in HJ (Iran) at para 110: If the price that a person must pay in order to avoid persecution is that he must conceal his race, religion, nationality, membership of a social group or political opinion, then he is being required to surrender the very protection that the Convention is intended to secure for him.
The Convention would be failing in its purpose if it were to mean that a gay man does not have a well founded fear of persecution because he would conceal the fact that he is a gay man in order to avoid persecution on return to his home country.
In the context of religious belief, the United Nations High Commissioner for Refugees has said (in my view, rightly): Applying the same standard as for other Convention grounds, religious belief, identity or way of life can be seen as so fundamental to human identity that one should not be compelled to hide, change or renounce this in order to avoid persecution: Guidelines on International Protection: Religion Based Refugee Claims (2004) para 13 (emphasis added).
But what about the person who has no political beliefs and who, in order to avoid persecution, is forced to pretend that he does? Does the right to hold no political beliefs (and say so) attract Convention protection as much as the right to hold and express political beliefs? A useful starting point is the preamble to the Convention, which includes the following: CONSIDERING that the Charter of the United Nations and the Universal Declaration of Human Rights approved on 10 December 1948 by the General Assembly have affirmed the principle that human beings shall enjoy fundamental rights and freedoms without discrimination, CONSIDERING that the United Nations has, on various occasions, manifested its profound concern for refugees and endeavoured to assure refugees the widest possible exercise of these fundamental rights and freedoms.
This emphasis on the importance of human rights in the present context is also reflected in Council Directive 2004/83/EC (the Qualification Directive) whose tenth recital states: This Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union.
In particular this Directive seeks to ensure full respect for human dignity and the right to asylum of applicants for asylum and their accompanying family members.
As Lord Bingham said in Fornah at para 10, the Convention must be interpreted: in accordance with its broad humanitarian objective and having regard to the principles, expressed in the preamble, that human beings should enjoy fundamental rights and freedoms without discrimination and that refugees should enjoy the widest possible exercise of these rights and freedoms.
Lord Steyn made the same point in R v Immigration Appeal Tribunal, Ex p Shah [1999] 2 AC 629, 638H to 639E.
Under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to have to express opinions.
The rights to freedom of thought, opinion and expression are proclaimed by articles 18 and 19 of the Universal Declaration of Human Rights 1948.
As Lord Hope said in HJ (Iran) at para 15: The guarantees in the Universal Declaration are fundamental to a proper understanding of the Convention.
The relevance of that general statement is not diminished by the note of caution sounded by Lord Hope that the Convention has a more limited purpose than the Declaration, in that, for example, persecution is not the same as discrimination simpliciter.
Articles 18 and 19 of the Declaration are given effect internationally by articles 18 and 19 of the International Covenant on Civil and Political Rights 1966 (ICCPR).
Article 18 of the ICCPR deals with the right to freedom of thought, conscience and religion.
Article 19 deals with the right to freedom of opinion and expression.
The United Nations Human Rights Committee has commented on these rights.
In its General Comment No 22 on article 18 (30 July 1993), it said that the right to freedom of thought, conscience and religion in article 18.1 is far reaching and profound (para 1); the terms belief and religion are to be broadly construed (para 2); and article 18 protects theistic, non theistic and atheistic beliefs, as well as the right not to profess any religion or belief (para 2).
In its General Comment No 34 on article 19 (12 September 2011), it said that freedom of opinion and freedom of expression are indispensable conditions for the full development of the person.
They are essential for any society.
They constitute the foundation stone for every free and democratic society (para 2).
All forms of opinion are protected (para 9).
At para 10, it said: Any form of effort to coerce the holding or not holding of any opinion is prohibited.
Freedom to express ones opinion necessarily includes freedom not to express ones opinion.
There is case law in relation to the European Convention on Human Rights to the effect that the guarantee of freedom of thought, conscience and religion under article 9 protects the indifferent or unconcerned, and extends to the right not to hold thoughts or beliefs and not to give expression to them.
In Kokkinakis v Greece (1993) 17 EHRR 397, para 31, the European Court of Human Rights said: As enshrined in Article 9, freedom of thought, conscience and religion is one of the foundations of a democratic society within the meaning of the Convention.
It is, in its religious dimension, one of the most vital elements that go to make up the identity of believers and of their conception of life, but it is also a precious asset for atheists, agnostics, sceptics and the unconcerned.
The pluralism indissociable from a democratic society, which has been dearly won over the centuries, depends on it.
In Buscarini and others v San Marino (1999) 30 EHRR 208, at para 34
unanimous Grand Chamber of the ECtHR repeated this passage and added: That freedom entails, inter alia, freedom to hold or not to hold religious beliefs and to practise or not to practise a religion.
In Buscarini, the applicants were required, contrary to their wishes, to swear an oath on the Holy Gospels in order to take their seats in the San Marino Parliament.
It was held that this requirement was not compatible with article 9.
No part of the Grand Chambers reasoning concerned the strength of the applicants convictions that they should not be required to swear the oath.
The essential point is that the court held that article 9 protects the right of the non believer as well as that of the believer.
I can see no basis in principle for treating the right to hold and not to hold political beliefs differently.
Article 10 of the ECHR provides that everyone has the right to freedom of expression and that this right shall include freedom to hold opinions.
That must include the freedom not to hold opinions.
As Professor Barendt puts it in Freedom of Speech, OUP, 2005 (2nd ed), p 94: The right not to speak, or negative freedom of speech, is closely linked with freedom of belief and conscience and with underlying rights to human dignity, which would be seriously compromised by a legal requirement to enunciate opinions which are not in truth held by the individual.
Mr Husain QC has also drawn attention to some comparative jurisprudence.
In his celebrated judgment in West Virginia State Board of Education v Barnette (1943) 319 US 624, 642 Justice Jackson said: If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.
If there are any circumstances which permit an exception, they do not now occur to us.
The Supreme Court upheld the challenge by Jehovahs Witnesses to the constitutionality of a state requirement that children in public schools salute and pledge loyalty to the US flag.
The court held that the freedom not to speak was an integral part of the right to speak.
At pp 634 635, Justice Jackson said: Nor does the issue as we see it turn on ones possession of particular religious views or the sincerity with which they are held.
While religion supplies the appellees motive for enduring the discomforts of making the issue in this case, many citizens who do not share these religious views hold such a compulsory rite to infringe constitutional liberty.
Similarly, Sachs J in the Constitutional Court of South Africa stated in Christian Education South Africa v Minister of Education 2000 (10) BCLR 1051, para 36: There can be no doubt that the right to freedom of religion, belief and opinion in the open and democratic society contemplated by the Constitution is important.
The right to believe or not to believe, and to act or not to act according to his or her beliefs or non beliefs, is one of the key ingredients of any persons dignity.
It can therefore be seen that under both international and European human rights law, the right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to express opinions.
It is true that much of the case law and commentary is on freedom of belief in the context of religion, rather than other kinds of belief (whether political, philosophical or otherwise).
But I see no basis for distinguishing between the freedom to hold and express different kinds of belief here.
As Sachs J said, the right to believe or not to believe is a key ingredient of a persons dignity.
The right to dignity is the foundation of all the freedoms protected by the Convention.
I repeat what I said in HJ (Iran) at para 113: The right to dignity underpins the protections afforded by the Refugee Convention: see Canada (Attorney General) v Ward [1993] 2 SCR 689, approving Professor Hathaway, Law of Refugee Status (1991), p 108: The dominant view, however, is that refugee law ought to concern itself with actions which deny human dignity in any key way, and that the sustained or systemic denial of core human rights is the appropriate standard.
Freedom to hold and express political beliefs is a core or fundamental right.
As Mr Husain says, it would be anomalous, given that the purpose of the Convention inter alia is to ensure to refugees the widest possible exercise of their fundamental rights and freedoms, for the right of the unconcerned to be protected under human rights law, but not as a religious or political opinion under the Convention.
Mr Swift accepts that political neutrality is an important human right protected by the Convention, but, he submits, only if the individual is a committed political neutral and not one to whom his neutrality is a matter of indifference.
This is because there is no entitlement to protection under the Convention where the interference involves matters which are only at the margins of an individuals right to hold or not hold political opinions, and not at the core of that right.
There is no entitlement to protection where what is required of the applicant does not oblige him to forfeit a fundamental human right.
Mr Swift, therefore, draws a distinction between a person who is a conscientious or committed political neutral (A) and a person who has given no thought to political matters because the subject simply is of no interest to him (B).
He accepts that the Convention protects A from persecution, because his political neutrality is a core or fundamental human right.
The HJ (Iran) principle is capable of applying to A. Refugee status may not be denied to him simply because he would pretend to support a regime in order to avoid persecution.
But Mr Swift says that the HJ (Iran) principle cannot apply to B because, in his case, false support for the regime would cause interference at the margin, rather than the core, of the protected right and would not cause him to forfeit a fundamental human right.
Mr Swift seeks support for the distinction, in particular, from paras 72 and 115 of HJ (Iran) to which I have referred at paras 20 and 21 above.
I would reject this distinction for a number of reasons.
First, the right not to hold the protected beliefs is a fundamental right which is recognised in international and human rights law and, for the reasons that I have given, the Convention too.
There is nothing marginal about it.
Nobody should be forced to have or express a political opinion in which he does not believe.
He should not be required to dissemble on pain of persecution.
Refugee law does not require a person to express false support for an oppressive regime, any more than it requires an agnostic to pretend to be a religious believer in order to avoid persecution.
A focus on how important the right not to hold a political or religious belief is to the applicant is wrong in principle.
The argument advanced by Mr Swift bears a striking resemblance to the Secretary of States contention in HJ (Iran) that the individuals in that case would only have a well founded fear of persecution if the concealment of their sexual orientation would not be reasonably tolerable to them.
This contention was rejected on the grounds that (i) it was unprincipled and unfair to determine refugee status by reference to the individuals strength of feeling about his protected characteristic (paras 29 and 121) and (ii) there was no yardstick by which the tolerability of the experience could be measured (paras 80 and 122).
As regards the point of principle, it is the badge of a truly democratic society that individuals should be free not to hold opinions.
They should not be required to hold any particular religious or political beliefs.
This is as important as the freedom to hold and (within certain defined limits) to express such beliefs as they do hold.
One of the hallmarks of totalitarian regimes is their insistence on controlling peoples thoughts as well as their behaviour.
George Orwell captured the point brilliantly by his creation of the sinister Thought Police in his novel 1984.
The idea if you are not with us, you are against us pervades the thinking of dictators.
From their perspective, there is no real difference between neutrality and opposition.
In Gomez v Secretary of State for the Home Department [2000] INLR 549, a starred decision of the Immigration Appeal Tribunal, Dr Storey put the point well at para 46: It will always be necessary to examine whether or not the normal lines of political and administrative responsibility have become distorted by history and events in that particular country.
This perception also explains why refugee law has come to recognise that in certain circumstances neutrality can constitute a political opinion.
In certain circumstances, for example where both sides operate simplistic ideas of political loyalty and political treachery, fence sitting can be considered a highly political act.
There is no support in any of the human rights jurisprudence for a distinction between the conscientious non believer and the indifferent non believer, any more than there is support for a distinction between the zealous believer and the marginally committed believer.
All are equally entitled to human rights protection and to protection against persecution under the Convention.
None of them forfeits these rights because he will feel compelled to lie in order to avoid persecution.
Secondly, the distinction suggested by Mr Swift is unworkable in practice.
On his approach, the question arises: how important to the individual does the right not to hold political beliefs have to be in order to qualify for protection? On a spectrum of political non belief, at one end is the person who has carefully considered matters engaging the machinery of State, government, and policy (Goodwin Gill and McAdam, The Refugee in International Law, 3rd ed (2007) p 87) and conscientiously decided that he is not interested.
He may, for example, have concluded that effective political governance is beyond the ability of man and that he cannot therefore support any political party or cause.
At the other end is the person who has never given any thought to such matters and has no interest in the subject.
There will also be those who lie somewhere between these two extremes.
Where is the core/marginal line to be drawn? At what point on the spectrum of non belief does the non belief become a core or fundamental human right? The test suggested by Mr Swift would, to say the least, be difficult to apply.
Unless compelled to do so, we should guard against introducing fine and difficult distinctions of this kind.
In my view, there is no justification for calling on immigration judges to apply the distinction suggested by Mr Swift.
It would be likely to be productive of much uncertainty and potentially inconsistent results.
Thirdly, Mr Swifts suggested distinction between core and marginal rights is based on a misunderstanding of what we said in HJ (Iran).
In order to understand what Lord Rodger and I said on the issue, it is necessary first to see what was said by the New Zealand Refugee Status Appeals Authority in Refugee Appeal No 74665/03.
At para 82, the Authority said that if the right sought to be exercised by the applicant is not a core human right, the being persecuted standard of the Convention is not engaged.
But if the right is a fundamental human right, the next stage is to determine the metes and bounds of that right.
The Authority continued: If the proposed action in the country of origin falls squarely within the ambit of that right the failure of the state of origin to protect the exercise of that right coupled with the infliction of serious harm should lead to the conclusion that the refugee claimant has established a risk of being persecuted.
The same point was made at para 90.
For the purpose of refugee determination, the focus must be on the minimum core entitlement conferred by the relevant right.
Thus, where the risk of harmful action is only that activity at the margin of a protected interest is prohibited, it is not logically encompassed by the notion of being persecuted.
The point was repeated at para 120.
At paras 99, 101 and 102, the Authority gave examples of the kind of activity which were at the margin of a protected right.
Prohibition on a homosexual from adopting a child on the grounds of his sexual orientation would not be persecution, because adoption of a child was well on the margin of the right enjoyed by homosexuals to live their lives as homosexuals openly and free from persecution.
The same point was made in relation to (i) the denial to post operative transsexuals of the right to marry, (ii) the denial to homosexuals of the right to marry and (iii) the prosecution of homosexuals for sado masochistic acts.
It was suggested that, whether or not any of these involved breaches of human rights, they could not be said to amount to persecution since the prohibited activities in each case were at the margin of the protected right.
In HJ (Iran), Lord Rodger gave as another possible example the applicant who claimed asylum on the ground that he feared persecution if he took part in a gay rights march.
If a person would be able to live freely and openly as a gay man provided that he did not take part in gay rights marches, his claim for asylum might well fail.
At paras 114 and 115 of my judgment too, I was saying no more than that a determination of whether the applicants proposed or intended action lay at the core of the right or at its margins was useful in deciding whether or not the prohibition of it amounted to persecution.
I remain of that view.
The distinction is valuable because it focuses attention on the important point that persecution is more than a breach of human rights.
What matters for present purposes is that nothing that was said in the Authoritys decision or by us in HJ (Iran) supports the idea that it is relevant to determine how important the right is to the individual.
There is no scope for the application of the core/marginal distinction (as explained above) in any of the appeals which are before this court.
The situation in Zimbabwe as disclosed by RN is not that the right to hold political beliefs is generally accepted subject only to some arguably peripheral or minor restrictions.
It is that anyone who is not thought to be a supporter of the regime is treated harshly.
That is persecution.
For the reasons that I have given, I would reject the restrictive approach suggested by Mr Swift to the application of the HJ (Iran) principle to these cases and hold that it applies to applicants who claim asylum on the grounds of a fear of persecution on the grounds of lack of political belief regardless of how important their lack of belief is to them.
The second issue: imputed political belief
The principle is not in doubt that an individual may be at risk of persecution on the grounds of imputed opinion and that it is nothing to the point that he does not in fact hold that opinion.
Professor Hathaway, The Law of Refugee Status (1991), pp 155 156 states: The focus is always to be the existence of a de facto political attribution by the state of origin, notwithstanding the objective unimportance of the claimants political acts, her own inability to characterise her actions as flowing from a particular political ideology, or even an explicit disavowal of the views ascribed to her by the state.
In Interpreting Article 1 of the 1951 Convention Relating to the Status of Refugees, April 2001, the UNHCR summarised the relevant law well at para 25: It is now generally agreed that imputed or perceived grounds, or mere political neutrality, can form the basis of a refugee claim.
For example, a person may not in fact hold any political opinion, or adhere to any particular religion, but may be perceived by the persecutor as holding such an opinion or being a member of a certain religion.
In such cases, the imputation or perception which is enough to make the person liable to a risk of persecution is likewise, for that reason, enough to fulfil the Convention ground requirement, because it is the perspective of the persecutor which is determinative in this respect.
The application of this principle in any given case raises questions of fact.
Persecution on the grounds of imputed opinion will occur if a declared political neutral is treated by the regime (or its agents) as a supporter of its opponents and persecuted on that account.
But a claim may also succeed if it is shown that there is a real and substantial risk that, despite the fact that the asylum seeker would assert support for the regime, he would be disbelieved and his political neutrality (and therefore his actual lack of support for the regime) would be discovered.
It is well established that the asylum seeker has to do no more than prove that he has a well founded fear that there is a real and substantial risk or a reasonable degree of likelihood of persecution for a Convention reason: R v Secretary of State for the Home Department, Ex p Sivakumaran [1988] AC 958.
I do not believe that any of this is controversial.
How does it apply to the facts of these cases?
The issue that is common to all these cases as regards imputed belief is whether there is a real and substantial risk that the political neutrality of the claimants would be discovered by the militia gangs and War Veterans who man road blocks even if the claimants were to dissemble and say that they support the regime.
This raises two questions namely (i) whether the claimants would be likely to be stopped or face serious interrogation at road blocks at all; and (ii) if yes, whether their pretended support for the regime would be disbelieved.
As regards the first question, the best evidence as to the likelihood of being stopped and interrogated at a road block is provided by RN.
The AITs decision states that the militia groups and War Veterans operate in rural areas and urban districts (para 213) and across the country (para 216).
The risk of persecution arises throughout the country (para 225) and people living in high density urban areas face the same risk from militias and War Veterans as those living in rural areas (para 228).
But those living in more affluent low density urban areas or suburbs are likely to avoid such difficulties (para 229).
If a failed asylum seeker is associated with the regime or is otherwise a person who would be returning to a milieu where loyalty to the regime is assumed, he will not be at risk simply because he spent time in the United Kingdom and sought to extend his stay by making a false asylum claim (para 230).
In other words, it is only if an applicant returns to a milieu where loyalty to the regime is assumed that his claim is likely to fail at the first hurdle.
As for the second question, the immigration judge would have to consider the kind of questions that the applicant might be asked when interrogated at the road block; how effective a liar the applicant would be when asserting loyalty to the regime; how credulous the interrogators would be in the face of such lies; whether the interrogators might ask the applicant to produce a Zanu PF card or sing the latest Zanu PF campaign songs and whether the applicant would be able to produce a card and sing the songs.
It is difficult to see how a judge could provide confident answers to these questions.
He or she would almost certainly be unable to avoid concluding that there would be a real and substantial risk that, if a politically neutral claimant were untruthfully to assert loyalty to the regime, his political neutrality would be discovered.
To summarise, in the light of RN, it is difficult to see how an asylum claim advanced on the basis of imputed political opinion could be rejected, unless the judge was able to find that the claimant would return to a milieu where political loyalty would be assumed and where, if he was interrogated at all, he would not face the difficulties faced by those who were not loyal to the regime in other parts of the country.
If the claimant would return to any other parts of the country, the judge would be likely to conclude that there was a real and substantial risk that a politically neutral person who pretended that he was loyal to the regime would be disbelieved.
Disposal
I can now turn to the disposal of all four appeals in the light of my
conclusion on the two principal issues.
The facts relating to RTs case are set out at paras 4 and 5 above.
The Secretary of State submits that there is no basis for concluding that, if RT were required to profess loyalty to the regime, she would be forced to lie.
There was no record of any evidence as to her political views.
The Tribunal merely found that she had never been politically active.
Mr Swift submits that she may have been a fervent (albeit inactive) supporter of the regime.
But DIJ Manuell found RT to be a credible witness and that she was in a position to explain that she has never been politically involved at home or abroad (para 25).
Her evidence before IJ Hussain (which was accepted) was that on her return she would be required to demonstrate loyalty to the regime, which she could not do because she is not a political person and has not supported the party (para 34).
Unless she would return to a milieu where loyalty to the regime was assumed, the only way that she could avoid the risk of persecution would be to feign support for the regime.
In that event, having regard to my conclusions on the application of the HJ (Iran) principle, the Court of Appeal were right to uphold her claim to asylum.
It is not suggested by Mr Swift that RT would return to a milieu where support for the regime would be assumed and where she would therefore not face the risk of hostile interrogation.
In these circumstances, there was no case for remitting the case to the Tribunal.
I would also reach the same conclusion on the basis of imputed opinion.
The facts relating to SM are set out at para 6 above.
In addition to taking issue with the way in which the Court of Appeal dealt with the HJ (Iran) principle, Mr Swift submits that they appear to have ignored or misunderstood RN where it was made clear (para 241) that a bare assertion that a person will be unable to prove loyalty is not enough for a successful claim, adding that this is especially so where the applicant has been found to be incredible.
At paras 23 and 24 of the decision of IJ Charlton Brown, the judge concluded that, contrary to SMs claim, she had not been linked with the MDC, that she had been able to live in Zimbabwe without problems since 2002, and that she was unable to rely on any of the risk factors identified in RN.
As to this, the Court of Appeal said at para 46: At first sight this is a much less meritorious case, and one can understand the judges reaction to her failure to give credible evidence.
However, it was not enough to hold that she would be willing to lie as and when required, if the reason for doing so would be to avoid persecution.
Nor is willingness to lie the same as ability to prove loyalty to the regime.
On the other hand, in view of her lack of credibility overall, it remains open to question whether her case should fail for lack of proof as in TM.
We will therefore allow the appeal and remit the case to the Upper Tribunal for redetermination.
The Court of Appeal were correct.
For all the reasons stated in RN, the fact that SMs claimed support for the MDC was rejected as being incredible was not decisive.
The central question is whether there was a real and substantial risk that her loyalty to the regime could not be demonstrated.
In view of her lack of credibility throughout, she might have difficulty in demonstrating that she did not have loyalty to the regime.
But the case should be remitted to the Tribunal for that issue to be determined in the light of RN and in the light of what I have said about the HJ (Iran) principle and the issue of imputed opinion.
There is no cross appeal on behalf of SM that her claim for asylum should be recognised by this court.
I would dismiss this appeal.
I have set out the findings by the AIT at para 7 above.
The Court of Appeal allowed AMs appeal on the ground that the immigration judge had failed to address the issue as to his ability to show his loyalty to the regime (para 52).
Like SM, he had not been held to be a credible witness.
For that reason, the Court of Appeal did not feel able to substitute their own conclusion for that of the judge and remitted the case to the Tribunal.
The Secretary of State advances no reasons particular to AMs case (as distinct from the HJ (Iran) principle) for overturning the decision of the Court of Appeal.
There is no cross appeal by AM.
I would, therefore, dismiss this appeal too.
The facts relating to the case of KM are set out at paras 12 to 14 above.
Mr Dove QC submits that the Court of Appeal should have allowed the appeal outright and not remitted the case to the Upper Tribunal for a third hearing.
I have referred at para 14 above to the two reasons given by Pill LJ for his conclusion that, although KMs case was strong, it could not be said that it was bound to succeed before the Tribunal.
The first was that an applicant who had been found to be an untruthful witness would not be assumed to be truthful about his inability to demonstrate loyalty to the regime.
But, as I have already said, the circumstances in Zimbabwe as described in RN mean that the fact that an applicant is lacking in credibility may be a matter of little relevance on the key question of whether he will be able to demonstrate loyalty.
As for the second reason, the milieu to which KM would be returned is likely to be of marginal relevance in this case.
That is because, as was conceded before the Court of Appeal, there was a real risk that the fact that KMs son had been granted asylum in the United Kingdom on account of his MDC sympathies would come out on his return to Zimbabwe (para 6 Pill LJs judgment) and that this might place him in an enhanced risk category by making it more difficult for him to demonstrate his loyalty to the regime (para 12).
I can well understand why the Court of Appeal decided to remit this case to the Tribunal.
But it seems to me that, in the light of the concessions to which I have referred and the fact that KMs case was therefore very strong, it would not be just to subject him to a third Tribunal hearing.
Overall conclusion
For the reasons that I have given, I would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM.
LORD KERR
For the reasons given by Lord Dyson, with which I entirely agree, I too would dismiss the appeals of the Secretary of State in the cases of RT, SM and AM and allow the appeal of KM.
The starting point in consideration of these appeals must be that the purpose of the Refugee Convention is to protect people from persecution.
In the extreme, repressive and anarchic conditions which obtain in Zimbabwe, the risk of being persecuted is all too real and predictable, albeit, on the evidence currently available, the incidence of that persecution is likely to be both random and arbitrary.
As a general proposition, the denial of refugee protection on the basis that the person who is liable to be the victim of persecution can avoid it by engaging in mendacity is one that this court should find deeply unattractive, if not indeed totally offensive.
Even more unattractive and offensive is the suggestion that a person who would otherwise suffer persecution should be required to take steps to evade it by fabricating a loyalty, which he or she did not hold, to a brutal and despotic regime.
As a matter of fundamental principle, refusal of refugee status should not be countenanced where the basis on which that otherwise undeniable status is not accorded is a requirement that the person who claims it should engage in dissimulation.
This is especially so in the case of a pernicious and openly oppressive regime such as exists in Zimbabwe.
But it is also entirely objectionable on purely practical grounds.
The intellectual exercise (if it can be so described) of assessing whether (i) a person would and could reasonably be expected to lie; and (ii) whether that dissembling could be expected to succeed, is not only artificial, it is entirely unreal.
To attempt to predict whether an individual on any given day, could convince a group of undisciplined and unpredictable militia of the fervour of his or her support for Zanu PF is an impossible exercise.
But all of the foregoing is by way of incidental preamble.
The truly critical question in this appeal is whether there is a right in Refugee Convention terms not to have a political opinion.
Ultimately, Mr Swift was driven to accept that there is such a right but he suggested that this right can be attenuated according to the disposition of the person who espouses a strictly apolitical stance.
I consider that this central proposition is fundamentally flawed.
The level of entitlement to protection cannot be calibrated according to the inclination of the individual who claims it.
The essential character of the right is inherent to the nature of the right, not to the value that an individual places on it.
And the need for a clear insight into that critical aspect of the right is well exemplified by the situation in Zimbabwe.
If an apolitical individual fails to demonstrate plausibly that he or she is a sufficiently fervent supporter of Zanu PF, he or she will be deemed to be a political opponent, irrespective of how greatly he or she cherishes the right not to hold a political view.
The status of deemed political opponent, whether it is the product of imputation of political opposition or merely the arbitrary decision of those testing the degree of conviction or fervour with which support for Zanu PF is expressed, is the gateway to persecution and that cannot be dependent on whether the lack of political opinion is due to a consciously held conviction or merely due to indifference.
That is why the emphasis must be not on the disposition of the individual liable to be the victim of persecution but on the mind of the persecutor.
In the present appeals it is clear that the question whether the treatment that the individuals might face if returned to Zimbabwe would amount to persecution is not in issue.
Quite clearly it would be.
Nor is there any reason to doubt that the motivation for simulating support for the regime on their parts would be because of their desire to avoid that persecution.
The only basis, therefore, on which denial of their claim to refugee status can be sustained, is that their right not to hold a political opinion lies at the lower end of the core/marginal spectrum.
As Mr Dove submitted, such an argument requires to be treated extremely circumspectly.
Those instances where the right was found to lie at the marginal end of the continuum all involved a measure of voluntary control over the situation in which the individual who was claiming protection found himself.
That is not the position here.
But, in any event, if the core/marginal dichotomy has any relevance whatever, it is in making an assessment as to whether the species of infringement strikes at the essence of the right or merely at a less important aspect of it.
For the reasons that Lord Dyson has given, it appears to me that the infringement is quintessentially a violation of the central core of the right not to hold a political opinion.
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Is it an answer to a refugee claim by an individual who has no political views and who therefore does not support the persecutory regime in his home country to say that the individual would lie and feign loyalty to that regime in order to avoid the persecution to which he would otherwise be subjected? This is the question which arises in these appeals, which form a sequel to this courts decision in HJ (Iran) v Secretary of State for the Home Department in which it was held that a gay man was entitled to live freely and openly in accordance with his sexual identity and it was no answer to the claim for asylum that he would conceal his sexual identity in order to avoid the persecution that would follow if he did not do so (the HJ (Iran) principle). [1] The country guidance for Zimbabwe, applicable in these cases, found that there is a campaign of persecution perpetrated by undisciplined militias who have delivered a quite astonishingly brutal wave of violence to whole communities thought to bear responsibility for the wrong outcome of the March 2008 election.
Any attempt to target those who are themselves involved with the Movement for Democratic Change (MDC) has been abandoned and those at risk includes anyone who cannot demonstrate positive support for Zanu PF or alignment with the regime.
The means used to establish loyalty include requiring the production of a Zanu PF card or the singing of the latest Zanu PF campaign songs.
Inability to do these is taken as evidence of disloyalty and therefore support for the opposition.
In deploying these militia gangs, the regime unleashed against its own citizens a vicious campaign of violence, murder, destruction, rape and displacement. [2], [15] [16] The first appeal concerns RT, SM and AM.
They arrived in the UK from Zimbabwe at various times between 2001 and 2008 and have each claimed asylum here.
Each of their claims was refused.
RT, while credible, had never been politically active.
SM was not a credible witness and had given inconsistent accounts of her involvement with the MDC and had lied in a number of respects.
On reconsideration it was found that she had no connections with MDC.
AM was found not to be a credible witness and although he was in favour of the MDC, he had no political profile and was not politically engaged prior to his departure from Zimbabwe.
The Court of Appeal allowed the appeals of RT, SM and AM on the basis that if individuals are forced to lie about their absence of political beliefs, solely in order to avoid persecution, that is covered by the HJ (Iran) principle and does not defeat their claims for asylum. [4] [10] The second appeal concerns KM.
He claimed to have arrived in the UK in January 2003 on a false South African passport and claimed asylum on 20 August 2008.
His claim was refused.
While his son
had been granted asylum in the UK because he had a well founded fear of persecution in Zimbabwe on the grounds that he was a sympathiser of the MDC, KM was found by the Tribunal not to have established any adequate factual basis to support his claim that he would be at real risk of finding himself in a position where he would be unable to demonstrate loyalty to the regime.
In the Court of Appeal, although the Secretary of State accepted that the appeal should be allowed because it was arguable that adequate consideration had not been given to the assessment of risk, there was an issue between the parties as to whether the case should be allowed outright or sent back to the Tribunal.
The Court of Appeal allowed the appeal and sent the case back for further decision. [12] [14]
The Supreme Court unanimously dismisses the Home Secretarys appeals in the cases of RT, SM and AM and allows KMs appeal.
The HJ (Iran) principle applies to applicants who claim asylum on the grounds of a well founded fear of persecution for reasons of lack of political belief.
Lord Dyson gives the leading judgment with which Lord Hope, Lady Hale, Lord Kerr, Lord Clarke, Lord Wilson and Lord Reed agree.
Lord Kerr also gives a short concurring judgment.
There are no hierarchies of protection amongst the Refugee Convention reasons for persecution.
Thus the Convention affords no less protection to the right to express political opinion openly than it does to the right to live openly as a homosexual.
The Convention reasons reflect characteristics or statuses which either the individual cannot change or cannot be expected to change because they are so closely linked to his identity or are an expression of fundamental rights.[25] The HJ (Iran) principle applies to any person who has political beliefs and is obliged to conceal them in order to avoid the persecution that he would suffer if he were to reveal them.[26] The right to freedom of thought, opinion and expression protects non believers as well as believers and extends to the freedom not to hold and not to have to express opinions.
There is no basis in principle for treating the right to hold and not to hold political beliefs differently from religious ones.
There can also be no distinction between a person who is a committed political neutral and one who has given no thought to political matters. [32] [45] It is not in doubt that an individual may be at risk of persecution on the grounds of imputed political opinion and that it is nothing to the point that he does not in fact hold that opinion. [53] Persecution on the grounds of imputed opinion will occur if a declared political neutral is treated by the regime as a supporter of its opponents and persecuted on that account.
But a claim may also succeed if it is shown that there is a real and substantial risk that, despite the fact that the asylum seeker would assert support for the regime, he would be disbelieved and his neutrality would be discovered. [55] This gives rise to questions of fact, but it is difficult to see how an asylum claim advanced on the basis of imputed political opinion could be rejected, unless the judge was able to find that the claimant would return to an area where political loyalty would be assumed and where, if he was interrogated, he would not face the difficulties faced by those who were not loyal to the regime in other parts of the country.
If the claimant would return to any other parts of the country, the judge would be likely to conclude that there was a real and substantial risk that a politically neutral person who pretended that he was loyal to the regime would be disbelieved and therefore persecuted. [56] [59]
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This is the judgment of the Supreme Court.
The principal issues in this appeal are whether a civil court (the court) has power to strike out a statement of case as an abuse of process after a trial at which the court has held that the defendant is liable in damages to the claimant in an ascertained sum and, if so, in what circumstances such a power should be exercised.
The driving force behind the appeal is the defendants liability insurers, who say that fraudulent claims of the kind found to exist here are rife and should in principle be struck out as an abuse of the courts process under CPR 3.4(2) or under the inherent jurisdiction of the court.
The facts and judgment at first instance
The claimant was born on 16 June 1976.
On 13 May 2003, while employed by the defendant, he was injured in an accident at work.
He fell from a stacker truck and suffered both a fractured scaphoid bone in his right hand and a comminuted fracture of his left calcaneum, or heel bone.
On 28 October 2003, the defendant admitted liability through its insurers.
On 10 May 2006 the claimant issued a claim form which alleged breach of duty or negligence on the part of the defendant but did not contain detailed particulars of quantum.
On 7 July 2006 the defendant applied for permission to withdraw the admission of liability after seeing medical records which appeared to cast doubt on the claimants account of the accident.
In March 2007 the defendant served an amended defence on liability.
On 28 August 2007, after trial, His Honour Judge Tetlow (the judge) gave judgment for the claimant on liability, with damages to be assessed.
He made an interim award of 2,000 on account of costs.
The defendant subsequently made a voluntary interim payment of 10,000 on account of damages.
On 4 October 2007 the defendant for the first time obtained images of the claimant by means of undercover surveillance.
Until then the defendants case had not been based upon abuse of process.
On 5 October 2007 the claimant signed a witness statement which included the assertion that he was not able to stand for more than 10 to 15 minutes.
The defendant continued to subject the claimant to undercover surveillance, the last such surveillance being on 25 September 2008.
On 17 November 2008 the parties orthopaedic experts met and prepared a joint statement without either expert seeing the surveillance videos.
On 9 December 2008 the claimant served his first schedule of loss.
It was in the sum of 838,616.
On 23 December 2008 the defendant disclosed the surveillance evidence to the claimant and served a re amended defence alleging that the claimants claim was grossly and dishonestly exaggerated and asserting that it should be struck out in its entirety.
Detailed particulars of the dishonesty were given.
The defendant also served a counter schedule setting out a secondary case on quantum.
On 29 January 2009 the claimant made a Part 36 offer to settle for 190,200.
On 9 February 2009 the orthopaedic experts, who had by now seen the surveillance material, met again and prepared a second joint statement.
In May 2009 the Department of Work and Pensions (DWP) disclosed surveillance showing the claimant apparently working without difficulty in 2009.
On 29 June 2009 the claimant served a second schedule of loss valuing the claim at 250,923.
He made a Part 36 offer to settle for 150,000.
On 22 July 2009 the trial of quantum was adjourned because of the DWP disclosure.
On 24 November 2009 the claimants solicitors invited the defendant to attend a joint settlement meeting but the defendant declined to do so.
On 14 December 2009 the claimant served a third schedule of loss in almost the same sum as the second schedule.
The claim was put at 251,481.
All the claimants pleadings and schedules of loss were supported by statements of truth.
That claim was maintained at the trial which took place between 25 and 27 January 2010.
In the light of the joint statement, neither of the orthopaedic experts was called to give oral evidence and the surveillance evidence was not challenged.
Indeed, the principal, if not the only, witness to give oral evidence was the claimant.
There was however a good deal of written medical evidence before the judge, together with extracts from the claimants wifes diary which appeared to show him working and playing football.
On 23 February 2010 the judge handed down a 27 page judgment which analysed the facts and the issues in considerable detail and with impressive clarity.
The critical findings of facts are set out in paras 54 to 61 as follows: 54.
Having rehearsed the evidence at some length it is time to come to some conclusions.
Firstly as to the nature and extent of the disability caused by the injury.
There is no doubt that the Claimant suffered a fracture of the right scaphoid and a serious ankle fracture which required at least two operations for an arthrodesis.
The schedule of loss prepared on 9th December 2008 and signed with a statement of truth by the Claimant maintained the Claimant was at that date still in constant pain taking pain killers, needing to use crutches outside and to wear an ankle brace at all times.
Standing and sitting was limited due to pain; he was still suffering psychiatrically from the effects of the accident.
He had not worked since the accident and was unlikely to do so for the 55. foreseeable future.
In the light of the surveillance evidence the subsequent two schedules opted for a sum of 30,000 instead of the original 47,500 put forward for general damages.
Further the loss of earnings in the second schedule of the 19th June 2009 ran up to 13th October 2008 only, in effect accepting that the orthopaedic experts' conclusion as to the Claimant's fitness for work was correct.
That said the Claimant by his evidence does not accept that that is correct and that position was maintained from the witness box.
I am prepared to accept that the Claimant's ankle injury was sufficiently serious as to require the first arthrodesis; further that the first operation failed necessitating the second one.
Although I accept in the light of subsequent events that the second operation also failed to create complete fusion, the result of that second operation was to render the Claimant asymptomatic to all intents and purposes as is disclosed by the surveillance videos from October 2007 onwards.
I can accept as Messrs O'Connor and Hodgkinson conclude that the Claimant would not be fit for heavy work and would find walking over uneven ground uncomfortable but those are the only outstanding disabilities.
I can also accept their conclusion that the Claimant would have been weight bearing without crutches within six months of the second operation i.e. by March 2007.
Since the Claimant was clearly fit for work in early October 2007 I conclude that the Claimant was fit for work some months earlier than that and capable of getting a job including a job as a site supervisor as he had pre accident, that not being heavy work.
I conclude that the time when the Claimant was fit and should have got back to work as being at the end of June 2007.
I accept that he would not have been able to work before then.
There is no evidence that the ankle even though not properly fused was likely to give rise to problems in the future. 56.
Although the Claimant was not fit for work between the date of the accident and the end of June 2007, in my judgment, I do not conclude he was in that period as housebound and incapable of activity as the Claimant maintains.
The recorded incident of June 2003 of the Claimant, upset at being told that the effects of the injury might be permanent, going out to the pub to drown his sorrows demonstrates greater agility than the Claimant maintains and sounds more probable than the Claimant's now explanation that it all happened at home.
It is rather similar to the Claimant's curious denial of having been convicted of an offence. 57.
I have also concluded that the psychiatric problems alluded to by the psychiatrist were genuine initially and were materially contributed to by the effects of the accident.
I agree with the conclusion of Dr Wood with which Dr Thomas does not appear to disagree that such problems had settled to all intents and purposes by about June 2007.
It is interesting that that conclusion was come to in ignorance of what the surveillance evidence showed.
That ties in nicely with my conclusion as to when the Claimant was able to resume and should have resumed work. 58.
Those conclusions must mean that I reject what the Claimant said to his treating doctors and the medical experts as to ongoing symptoms in and after March 2007.
I do so because; (a) What is seen on the video tapes is absolutely inconsistent with such disabilities; it is also absolutely inconsistent with what is contained in the DWP application form. (b) The Claimant's explanation that when he was being filmed he was taking strong pain killers in order to force himself with the object of getting back into work is just not credible in particular when he is seen on two separate occasions going to and from two separate medical experts' consulting rooms without crutches when leaving and returning home and with crutches when entering and leaving the doctors premises. (c) The Claimant's wife's diary belies any such protestation of ongoing symptoms. 59.
The evidence before me is sufficiently cogent to sustain a claim of fraud not only applying the civil standard of being satisfied on the balance of probabilities but also on the criminal standard of being satisfied beyond reasonable doubt insofar as that standard is materially different when allegations of fraud are made.
In my judgment the Claimant has deliberately lied to the medical men and to the Department of Work and Pensions on the application form when he said he had ongoing symptoms after March 2007.
The Claimant was clearly able to work without difficulty or pain when filmed in October 2007 driving and loading a van with kitchen fitting components and again in 2009 when filmed with the mobile food van.
His wife's diary confirms he was working at various other times.
I can only infer he was working for reward; the diary confirms such a conclusion; the explanations of helping out for free, of pushing himself and of learning the business of a mobile food van with a view to purchase is deliberate falsehood and an attempt to explain away what cannot be explained away.
Messrs O'Connor and 60. 61.
Hodgkinson's final opinion already referred to is in my judgment absolutely right.
I am not able to say on what days the Claimant was gainfully employed but that matters not.
He was fit for work and able to get work and was in a position to do so, as I have found, since the end of June 2007.
I am also satisfied that the Claimant was able to do cooking, washing and other housework and most activities involving DIY and decorating by March 2007 when Mr Hodgkinson considered the Claimant no longer needed crutches.
Any residual disability as regards DIY and decorating would have ceased by the end of June 2007.
He was certainly fit enough to play football by early 2009.
It is urged upon me that the third arthrodesis is attributable to the accident.
In my judgment it is not.
It is attributable to the lies he told Mr Dalal that he was in continuous horrible pain; there can be no doubt that if he had told Mr Dalal the truth namely that he was to all intents and purposes better the surgeon would never have advised him to undergo a further procedure.
The Claimant has got stuck with his own lie; had he told the truth he would be admitting this claim is grossly exaggerated and that he has been claiming benefits under false pretences; this he is not prepared to do as is evidenced by his testimony before me, false as I find, that he is still in pain and needing to use crutches.
In para 62 the judge rejected the claimants evidence that he suffered psychiatric problems after June 2007, except in January 2009 when he was distraught at having been found out.
The judge further rejected any suggestion that any such illness then was caused by the accident.
In para 63 he allowed the loss of earnings claim for the period from the date of the accident to 30 June 2007.
In para 64 he rejected the claimants evidence as to the prospects of promotion.
He did so on the basis that, in the light of the unreliability of the claimants evidence, he would not accept that there were such prospects in the absence of independent evidence.
He accordingly found no future loss.
At para 65, for similar reasons he refused to make a Smith v Manchester award.
He held that the claimant was at no greater disadvantage in the open labour market than he had been before the accident.
He so held on the basis that it behoved the claimant to prove such a disadvantage and that he had only himself to blame for failing to do so.
As to care, he analysed the figures in some detail in para 66 and again said that, if he had been less than generous to the claimant, the claimant had only himself to blame.
He reached similar conclusions as to services, DIY and decorating in paras 67 and 68.
In short, it is plain from the judgment that, because of the behaviour of the claimant and the unreliability of his evidence, the judge drew a series of inferences adverse to him.
It was not suggested that the judge was not entitled to do so.
Indeed none of his conclusions is challenged in this appeal.
It seems almost certain that, if the claimant had advanced an honest claim and given reliable evidence, the measure of damages would have been greater, perhaps significantly greater, than found by the judge.
As to general damages, by the time of the trial the claimant had reduced the figure he had originally contended for to 30,000.
The defendant argued for 10,000.
The judge awarded 18,500.
The parties subsequently agreed that, on the basis of the judges findings of fact, namely that he was fit to return to work by the end of June 2007, the claimants loss of earnings caused by the accident was 63,776.76.
In addition care and assistance were assessed at 5,400 and other services at 1,040.
The total figure found by the judge was thus 88,716.76 before deduction of various benefits and the interim payment of 10,000.
At the end of his principal judgment the judge noted in para 72 that the defendant wished to argue that the court had power to strike out the claim on the ground that it was tainted by fraud and was an abuse of process and that Ul Haq v Shah [2009] EWCA Civ 542; [2010] 1 WLR 616, which was followed in November 2009 by Widlake v BAA Limited [2009] EWCA Civ 1256 (Widlake v BAA), was wrongly decided.
The judge further noted that it was recognised on behalf of the defendant that those decisions were both binding on him.
At a subsequent hearing on 16 April 2010 the judge granted permission to appeal on the basis that there was a real prospect that this court would take a different view from the Court of Appeal in those two cases.
He contemplated that the Court of Appeal would dismiss the appeal leaving the defendant to take his chances here.
The judge also granted a stay of the order in favour of the claimant pending appeal.
At the hearing in 16 April the judge heard argument on interest and costs and considered an application on behalf of the defendant for permission to commence contempt proceedings against the claimant.
As appears below, in our opinion, his decisions in these respects are of some significance in resolving the issues in this appeal.
It is important to note that the defendant did not challenge any of those decisions in its appeals to the Court of Appeal or to this court.
As to interest, it was contended on behalf of the defendant that no interest should be awarded on general or special damages after 30 June 2007.
It relied on the finding that the claimant had lied about the extent of his injuries, about his ability to work and about his need for care and assistance.
It further relied upon the fact that the claimant maintained the lie up to and during the trial.
The judge accepted the defendants submissions as to the claimants behaviour but nevertheless awarded interest over the whole period.
The judge set out the position relating to the claimants Part 36 offers and noted that the defendant did not make a Part 36 offer of its own.
He also observed that the defendant refused to attend a joint settlement meeting saying that its attendance would not change its position regarding the dishonest and fraudulent behaviour of the claimant.
While recognising that the claimant maintained his dishonest stand in his later witness statement and at trial, the judge had regard to the fact that his solicitors were taking a realistic position as to the courts likely findings and were willing to negotiate on that basis.
The defendant, on the other hand, was not willing to negotiate because it wanted more out of the litigation than a settlement, which would probably have been on advantageous terms both as to quantum and as to costs.
In particular it wanted an opportunity of persuading the Supreme Court to strike out the whole claim.
The judge held that, as a result, the claimant was locked in, he had a valid claim and discontinuance was not a sensible option.
He found that in these circumstances the claimants lies as to continuing disability did not affect the defendants attitude to negotiation or settlement.
He referred to the law as stated in Ul Haq v Shah and, in the exercise of his discretion, directed that the claimant should have interest on the damages to which the court had held he was entitled over the whole period.
As to costs, the defendants primary submission before the judge was that the claimant should pay all the defendants costs from the date of the judgment on liability.
In the alternative it contended for no order for costs on the basis that the claimants fraudulent conduct had increased the costs.
The judge correctly directed himself as to the relevant principles by reference to the decision of the Court of Appeal in Widlake v BAA and in particular to paras 36 to 44 of the judgment of Ward LJ, with whom Smith and Wilson LJJ agreed.
He identified these five propositions as relevant to this case. (1) If, as here, the conduct of the claimant is unreasonable the court must take it into account. (2) As regards such conduct, the court should principally enquire into its causative effect.
To what extent did the claimants lies and gross exaggeration cause costs to be incurred or wasted? (3) In addition, the court is entitled in an appropriate case to say that the conduct is so egregious that a costs penalty should be imposed on the offending party.
There is, however, a considerable difference between a concocted claim and an exaggerated claim and the court must be astute to measure how reprehensible the conduct is. (4) Defendants have the means of defending themselves against false or exaggerated claims by making a Part 36 offer. (5) Where the facts are well enough known for the defendant to make a Part 36 offer, failure to make a sufficiently high offer counts against the defendant.
At para 13 of his second judgment the judge summarised the principal factors in this way.
If the claimant had come clean there would have been an earlier trial on quantum.
The claimant persisted in his lies up to and including trial.
On the other hand, unbeknown to the claimant, by October 2007 the defendant knew that he was grossly exaggerating his disability.
The judge said that he understood that the defendant would wish to obtain further evidence to demonstrate the claimants falsity rather than prematurely disclose what it had discovered.
However he recognised that it could be argued that it should have disclosed the video evidence earlier than January 2009.
On the other hand, the defendant did not want to let the claimant off the hook once the video evidence was disclosed, even though the claimant's solicitors were eager to come to terms.
It wanted to obtain, as the judge put it, a clarification of or advance in the law.
The judge added this at para 13(6): Despite the Defendant's pleas to the contrary the Defendant had the means of assessing the true value of the Claimant's claim so soon as they got the video evidence in October 2007 and by obtaining as they did further medical advice from Mr Hodgkinson.
The Defendant was not deflected from ascertaining the true position by the Claimant's continued lies.
They saw through them.
The Claimant was living in a fools paradise until January 2009.
Thereafter his continued denials of recovery fooled no one; it is difficult to tell why he did so; it may be he could not bring himself to own up in part because of the action of the Department of Work and Pensions in investigating his benefit fraud and the Defendant's insurers reporting the Claimant's dishonesty to the police; that is speculation since I do not know when the Claimant became aware of such investigations or complaints.
The judge further added that, in spite of the claimants solicitors wishing to negotiate and making Part 36 offers, which in the event were too high, the defendant was not willing to negotiate and deliberately decided not to make any counter offer when it could have done so.
As a result, although the claimants dishonesty caused the proceedings to be extended, the defendant by its own choice caused them to take longer to get to trial and to end in a trial by their refusal to negotiate with a view to settlement, which would in all probability have been achieved if the defendant had been willing to take part in negotiations.
Moreover the defendant was not fooled by the claimants dishonesty.
The judge ordered the defendant to pay the claimants costs up to February 2008, save that the claimant was to pay the defendants costs of obtaining the surveillance evidence.
He made no order for costs after March 2008.
The defendant has not challenged the judges decision on interest or costs on appeal.
Nor has it challenged the judges refusal to give it permission to bring proceedings for contempt against the claimant.
As to contempt, by CPR 32.14(1), proceedings for contempt may be brought against a person if he makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth.
However, by CPR 32.14(2), such proceedings may only be brought by the Attorney General or with the permission of the court.
The judge held at para 18 that, given his findings, there was a strong prima facie case for believing that the defendant would be able to show that the claimant was guilty of contempt to the criminal standard.
He added that the same was true of the criminal offences of attempting to pervert the course of justice, or to obtain property or a pecuniary advantage by deception.
The only question was whether it was in the public interest that these proceedings should be brought to an end or whether the court should exercise its discretion to give the permission sought.
He held that it was not in the public interest.
He took into account broadly the same considerations as led him to his conclusions on interest and costs.
He further noted that the claimants wrongdoing had been publicly recognised by the judgment in the action.
Finally he said that, if the defendant was dissatisfied, it (or the insurers) could try to persuade the Attorney General to take up the baton.
So far as we are aware, no such attempt was made.
We were informed that the CPS considered whether to prosecute the claimant but concluded that it was not in the public interest to do so.
The Court of Appeal
The appeal to the Court of Appeal came on before Ward and Smith LJJ on 7 October 2010.
They held that they were bound by Ul Haq v Shah and Widlake v BAA to hold that the court had no power to strike out the claim in its entirety.
The Court of Appeal refused permission to appeal to this Court, which subsequently granted it.
Jurisdiction
As stated at the outset, it was submitted on behalf of the defendant that the court has power to strike out the claim both under CPR 3.4(2) and under its inherent jurisdiction.
CPR 3.4(2) provides: The court may strike out a statement of case if it appears to the court a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or (c) that there has been a failure to comply with a rule, practice direction or court order.
Attention was also drawn, both to the overriding objective stated in CPR 1.1 and 1.2 that the court must deal with cases justly, and to the courts general powers of case management in CPR 3.1(2), which includes a power in CPR 3.1(2)(m) to take any other step or make any other order for the purpose of managing the case and furthering the overriding objective.
It was submitted that under those rules the court has ample power to strike out the claimants claim as an abuse of process.
It was further submitted that CPR 3.4(2) should be seen as a codified expression of the pre existing inherent jurisdiction to strike a claim out as an abuse of process.
It was correctly accepted on behalf of the claimant that, in making false statements of truth which he knew to be false and in presenting a dishonest case as to the effect of his injuries and on quantum, he was guilty of a serious abuse of process.
It was initially submitted on his behalf that there was nevertheless no power to strike the claim out for the reasons given by the Court of Appeal in Ul Haq v Shah and Widlake v BAA.
In the alternative, it was submitted either that the court has no power, or that it would be wrong in principle, for the court to strike the claim out after a trial at which the court has held that a defendant is liable to the claimant in an ascertained sum.
In the further alternative, it was submitted that the court should not strike the claim out on the facts of this case.
Reliance was placed in particular upon Ul Haq v Shah and Widlake v BAA.
In Ul Haq v Shah there had been a collision between a car driven by Mr Ul Haq and a car driven by Mrs Shah.
Mrs Shah caused the collision by negligently driving into the back of Mr Ul Haqs car.
Mr Ul Haq claimed for damage to the car and for minor whiplash injuries.
His wife also claimed for minor whiplash injuries.
It was common ground that Mr Ul Haq, his wife and their two children were in the car when the accident occurred.
However there was an issue as to whether Mr Ul Haqs mother was also in the car.
She too made a claim in respect of alleged whiplash injuries.
Her claim was defended on the basis that she was not in the car and so could not have suffered whiplash or any injury as a result of the accident.
At the trial before the recorder, after hearing evidence from Mr Ul Haq, his wife and his mother, the recorder held that Mr Ul Haq and his wife had suffered injury and awarded each a modest sum.
However he held that Mr Ul Haqs mother had not been in the car and that her claim was fraudulent.
He dismissed her claim and ordered her to pay costs on an indemnity basis.
He concluded that Mr Ul Haq and his wife had conspired to support the fraudulent claim and ordered them to pay two thirds of Mrs Shahs costs.
In the result all the claimants incurred a net loss.
Before the recorder it was submitted that the claims of Mr Ul Haq and his wife should be struck out as an abuse of the process of the court under CPR 3.4(2).
It was conceded on behalf of the claimants that the court had power to make such an order under that rule.
The recorder had some doubts as to his jurisdiction but accepted the concession.
On an appeal to Walker J, he held that there was power to strike out a genuine claim, even after the trial of an action, but declined to do so.
In the Court of Appeal, although it was again conceded that there was such a power, the court disagreed and dismissed the appeal for want of jurisdiction.
The principal judgment was given by Smith LJ, with whom Ward and Toulson LJJ agreed.
Toulson LJ added a valuable judgment of his own.
The case was argued entirely on the basis of CPR 3.4(2).
It was not suggested that the substantive rights of Mr and Mrs Ul Haq to damages were affected by their abuse of process in supporting his mothers claim.
Smith LJ noted at para 17 that in nearly 40 years experience she knew of no case in which a judge had refused to award damages for a genuine injury on the ground that the claimant had dishonestly sought to exaggerate the injury or its effects.
As we read the judgments of Smith and Toulson LJJ, their reasoning can be summarised in this way.
It is the policy of the law and the invariable rule that a person cannot be deprived of a judgment for damages to which he is otherwise entitled on the ground of abuse of process (paras 16, 17, 20 and 36).
The Court of Appeal rejected the submission that the principles of insurance law should apply in this context.
As Toulson LJ explained in para 37, there is a special rule of insurance law that an insured cannot recover in respect of any part of a claim in a case where the claim has been fraudulently exaggerated or where a genuine claim has been supported by dishonest devices: Manifest Shipping Co Ltd v Uni Polaris Insurance Co Ltd [2003] 1 AC 469; Agapitos v Agnew [2003] QB 556; and Axa General Insurance Ltd v Gottlieb [2005] 1 All ER (Comm) 445.
The principle relates only to fraudulent insurance claims: see Axa per Mance LJ at para 31.
In addition, it is restricted to the period prior to the issue of proceedings: see Manifest Shipping per Lord Hobhouse at para 77 and Agapitos v Agnew per Mance LJ at paras 47 53.
In Ul Haq v Shah the submission that the court should not have proceeded to give judgment on the claims but could and should have struck out the whole claim as an abuse of process under CPR 3.4(2)(b) was rejected (para 43).
The inclusion of a false claim with a genuine claim or claims does not of itself turn a genuine claim into a false one or justify the striking out of the genuine claim or claims.
To do so would be to deprive a claimant of his substantive rights as a mark of disapproval, which the court has no power to do (para 46).
It was not a case, like Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167, where the conduct of a litigant put the fairness of the trial in jeopardy, even in the broadest sense, in which case the claim might be struck out as an abuse, but a case in which it was not suggested that there could not be a fair trial of the claims of Mr Ul Haq and his wife (paras 25 28 and 47 49).
Further the Court of Appeal said that CPR 3.4 is directed at the control of the process of litigation and is not apt to describe the decision that a judge makes at the end of a trial; at that stage the judge either upholds the claim or dismisses it, he does not strike it out (paras 24 and 29 per Smith LJ).
The point was concisely summarised thus by Toulson LJ in the course of para 50: Where, as in this case, there has been a full trial, the proper course for the judge is to give judgment on the issues which have been tried.
To have struck out the claims of the first and third claimants would have been to invoke a case management power not for a legitimate case management purpose (in other words, for the purpose of achieving a just and expeditious determination of the parties rights, or avoiding an unjust determination where a partys conduct had made a safe determination impossible), but for the very different purpose of depriving those parties of their legal right to damages by way of punishment for their complicity in the second claimants fraudulent claim, which in my judgment he had no power to do.
It was open to him to impose costs sanctions on the first and third claimants, which he did, but that is a different matter.
The principles in Ul Haq v Shah were restated by the Court of Appeal in Widlake v BAA.
We recognise that there have been many cases in which claimants dishonestly inflate their claims or even, as in the case of Mr Ul Haqs mother, fraudulently invent them.
In the last sentence of his judgment referred to above Toulson LJ said that if, as has been suggested, such fraudulent claims have reached epidemic proportions, it may be that prosecutions are needed as a deterrent to others.
We see the force of that.
The first question in this appeal, however, is whether we should decline to follow Ul Haq v Shah and hold that there is power to strike out a claim under CPR 3.4(2), even where there has been a trial of an action and, as here, the judge has been able fairly to assess the damages.
It is striking that there is no appeal from the judges assessment of the claimants damages, namely 88,716.76.
Nor, as explained above, is there any appeal from the judges decisions on interest or costs, or indeed from his decision refusing the defendants application for permission to take proceedings against the claimant for contempt.
We have reached the conclusion that, notwithstanding the decision and clear reasoning of the Court of Appeal in Ul Haq, the court does have jurisdiction to strike out a statement of case under CPR 3.4(2) for abuse of process even after the trial of an action in circumstances where the court has been able to make a proper assessment of both liability and quantum.
However, we further conclude, for many of the reasons given by the Court of Appeal, that, as a matter of principle, it should only do so in very exceptional circumstances.
We are conscious of the fact that there are now many cases decided since the advent of the CPR where it has been held that the court should approach the CPR as a code and that it should decline to have regard to decisions under the RSC.
However, this is an exceptional class of case and it seems to us that it is appropriate to have regard to the way in which the inherent jurisdiction of the court was exercised in cases of abuse of process before the CPR came into force.
The pre CPR authorities established a number of propositions as follows: i) The court had power to strike out a claim for want of prosecution, not only in cases of inordinate and inexcusable delay which caused prejudice to the defendant, but also where the court was satisfied that the default was intentional and contumelious, eg disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court: Birkett v James [1978] AC 297 per Lord Diplock at p 318F G.
In the latter case it was not necessary to show that a fair trial was not possible or that there was prejudice to the defendant.
See also, for example, Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426, per Lord Woolf MR (with whom Waller and Robert Walker LJJ agreed) at p 1436H. ii) In a classic, much followed, statement in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 Lord Diplock described the courts power to deal with abuse of process thus at p 536C: This is a case about abuse of the process of the High Court.
It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right thinking people.
The circumstances in which abuse of process can arise are very varied.
It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power. iii) The court had power to strike out a claim on the ground of abuse of process, even though the effect of doing so would be to extinguish substantive rights.
It follows from the conclusion in Birkett v James that the court could strike out a claim as an abuse of process for intentional and contumelious conduct amounting to an abuse of the process of the court without the necessity to show prejudice that the fact that a strike out might extinguish substantive rights is not a bar to such an order. iv) Although it appears clear that in the vast majority of cases in which the court struck out a claim it did so at an interlocutory stage and not after a trial or trials on liability and quantum, the cases show that the power to strike out remained even after a trial in an appropriate case.
The relevant authorities, such as they are, were considered by Colman J in National Westminster Bank plc v Rabobank Nederland [2006] EWHC 2959 (Comm), where he summarised the position thus in paras 27 and 28: 27.
In my judgment, there can be no doubt that the court does have jurisdiction to strike out a claim or any severable part of a claim of its own volition whether immediately before or during the course of a trial.
This is clear from the combined effect of CPR 1.4, 3.3 and 3.4 as well as 3PD 1.2, and by reason of its inherent jurisdiction. 28.
However, the occasion to exercise this jurisdiction after the start of the trial is likely to be very rare.
The normal course will be for all applications to strike out a claim or part of a claim on the merits to be made under CPR 3.4 or 24.2 and determined well in advance of the trial. v) We agree with Colman J. His conclusions are consistent with Glasgow Navigation Co v Iron Ore Co [1910] AC 293, Webster v Bakewell RDC (1916) 115 LT 678, Harrow LBC v Johnstone [1997] 1 WLR 459, Bentley v Jones Harris & Co [2001] EWCA Civ 1724 per Latham LJ at para 75 and The Royal Brompton Hospital NHST v Hammond [2001] EWCA Civ 550; [2001] Lloyds Rep PN 526, per Clarke LJ at paras 104 109, especially at para 107.
As we see it, the present position is that, whether under the CPR or under its inherent jurisdiction, the court has power to strike out a statement of case at any stage on the ground that it is an abuse of process of the court, but it will only do so at the end of a trial in very exceptional circumstances.
Some assistance is to be derived from Masood v Zahoor [2009] EWCA Civ 650, [2010] 1 WLR 746, where the judgment of the Court of Appeal (comprising Mummery, Dyson and Jacob LJJ) was given by Mummery LJ.
It had been argued that the judge should have struck the claim out as an abuse of process on the ground that some at least of the claims were based on forged documents and false written and oral evidence.
The Court of Appeal referred extensively to the decision of the Court of Appeal in Arrow Nominees Inc v Blackledge and held at para 71 that it was authority for the proposition that, where a claimant is guilty of misconduct in relation to proceedings which is so serious that it would be an affront to the court to permit him to continue to prosecute his claim, then the claim may be struck out for that reason.
It noted that in the Arrow case, the misconduct lay in the petitioners persistent and flagrant fraud whose object was to frustrate a fair trial.
It held that the question whether it is appropriate to strike out a claim on this ground will depend on the particular circumstances of the case.
It added that it was not necessary to express any view as to the kind of circumstances in which (even where the misconduct does not give rise to a real risk that a fair trial will not be possible) the power to strike out for such reasons should be exercised.
It then referred to what this Court agrees is a valuable discussion by Professor Zuckerman in a note entitled Access to Justice for Litigants who Advance their case by Forgery and Perjury in (2008) 27 CJQ 419.
The Court of Appeal expressed its conclusions of principle as follows: 72.
We accept that, in theory, it would have been open to the judge, even at the conclusion of the hearing, to find that Mr Masood had forged documents and given fraudulent evidence, to hold that he had thereby forfeited the right to have the claims determined and to refuse to adjudicate upon them.
We say in theory because it must be a very rare case where, at the end of a trial, it would be appropriate for a judge to strike out a case rather than dismiss it in a judgment on the merits in the usual way. 73.
One of the objects to be achieved by striking out a claim is to stop the proceedings and prevent the further waste of precious resources on proceedings which the claimant has forfeited the right to have determined.
Once the proceedings have run their course, it is too late to further that important objective.
Once that stage has been achieved, it is difficult see what purpose is served by the judge striking out the claim (with reasons) rather than making findings and determining the issues in the usual way.
If he finds that the claim is based on forgeries and fraudulent evidence, he will presumably dismiss the claim and make appropriate orders for costs.
In a bad case, he can refer the papers to the relevant authorities for them to consider whether to prosecute for a criminal offence: we understand that this was done in the present case.
In para 74 the Court of Appeal stressed the importance, if possible, of making an application to strike out at an early stage in order to preserve court resources and save costs.
However, it also appreciated that in a complex case it might not be possible to avoid a full trial.
It appears to us that the approach identified in paras 71 74 of Masood v Zahoor is somewhat different from that in Ul Haq v Shah.
It recognises the possibility of striking out a claim at the end of a trial, whereas, as we read Ul Haq v Shah, it was there held that such a course was not permissible.
We prefer the approach of Masood v Zahoor.
We can summarise what we see as the correct approach in this way.
The language of the CPR supports the existence of a jurisdiction to strike a claim out for abuse of process even where to do so would defeat a substantive claim.
The express words of CPR 3.4(2)(b) give the court power to strike out a statement of case on the ground that it is an abuse of the courts process.
It is common ground that deliberately to make a false claim and to adduce false evidence is an abuse of process.
It follows from the language of the rule that in such a case the court has power to strike out the statement of case.
There is nothing in the rule itself to qualify the power.
It does not limit the time when an application for such an order must be made.
Nor does it restrict the circumstances in which it can be made.
The only restriction is that contained in CPR 1.1 and 1.2 that the court must decide cases in accordance with the overriding objective, which is to determine cases justly.
Under the CPR the court has a wide discretion as to how its powers should be exercised: see eg Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926.
So the position is that the court has the power to strike out a statement of case for abuse of process but at the same time has a wide discretion as to which of its many powers to exercise.
The position is the same under the inherent jurisdiction of the court, so that in the future it is sufficient for applications to be made under the CPR.
We can see no reason why the conclusion reached should be any different, whether the application is made under the CPR or the inherent jurisdiction of the court.
We agree with the Court of Appeal in Masood v Zahoor at para 72 quoted above that, while the court has power to strike a claim out at the end of a trial, it would only do so if it were satisfied that the partys abuse of process was such that he had thereby forfeited the right to have his claim determined.
The Court of Appeal said that this is a largely theoretical possibility because it must be a very rare case in which, at the end of a trial, it would be appropriate for a judge to strike out a case rather than dismiss it in a judgment on the merits in the usual way.
We agree and would add that the same is true where, as in this case, the court is able to assess both the liability of the defendant and the amount of that liability.
We have considered whether the possibility is so theoretical that it should be rejected as beyond the powers of the court.
However it was ultimately accepted on behalf of the claimant that one should never say never.
Moreover we are mindful of Lord Diplocks warning in Hunter quoted at para 35 above that it would be unwise to limit in advance the kinds of circumstances in which abuse might be found.
See also the speech of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1, at 31.
It was submitted that an ascertained claim for damages could only be removed by Parliament and not by the courts.
We are unable to accept that submission.
It is for the court, not for Parliament, to protect the courts process.
The power to strike out is not a power to punish but to protect the courts process.
The European Convention on Human Rights
The right to a fair and public hearing in the determination of civil rights is enshrined in Article 6 of the European Convention on Human Rights (ECHR).
The right includes a right of access to a court: Golder v United Kingdom (1975) 1 EHRR 524.
The court must act compatibly with Article 6: Human Rights Act 1998 section 6(1).
The court is of course itself a public authority: section 6(3).
The right of access is not absolute: Golder at para 38.
In Ashingdane v United Kingdom (1985) 7 EHRR 528 the European Court of Human Rights accepted at para 57 that the right might be subject to limitations.
Contracting States enjoy a margin of appreciation.
However, the essence of the right of access must not be impaired, any limitation must pursue a legitimate aim and the means employed to achieve the aim must be proportionate.
In the instant case the claimant obtained judgment on liability for damages to be assessed.
We accept that that judgment is a possession within the meaning of Article 1 Protocol 1 of the ECHR and that the effect of striking out his claim for damages would be to deprive him of that possession, which would only be permissible if in the public interest and subject to the conditions provided for by law The State has a wide margin of appreciation in deciding what is in the public interest, but is subject to the principle of proportionality: Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301 at paras 31 39.
It is in the public interest that there should be a power to strike out a statement of case for abuse of process, both under the inherent jurisdiction of the court and under the CPR, but the Court accepts the submission that in deciding whether or not to exercise the power the court must examine the circumstances of the case scrupulously in order to ensure that to strike out the claim is a proportionate means of achieving the aim of controlling the process of the court and deciding cases justly.
The exercise of the power
As noted at para 42 above, the court has a wide discretion as to how to exercise its case management powers.
These include the power to strike out the whole or any part of a statement of case at whatever stage it is made, even if it is made at the end of the trial.
However the cases stress the flexibility of the CPR: see eg Biguzzi per Lord Woolf MR at p 1933B, Asiansky Television v Bayer Rosin [2001] EWCA Civ 1792; [2002] CPLR 111 per Clarke LJ at para 49 and Aktas v Adepta [2010] EWCA Civ 1170, [2011] QB 894, where Rix LJ said at para 92: Moreover, it should not be forgotten that one of the great virtues of the CPR is that, by providing more flexible remedies for breaches of rules as well as a stricter regulatory environment, the courts are given the powers and the opportunities to make the sanction fit the breach.
That is the teaching of one of the most important early decisions on the CPR to be found in Biguzzi v Rank Leisure plc.
The draconian step of striking a claim out is always a last resort, a fortiori where to do so would deprive the claimant of a substantive right to which the court had held that he was entitled after a fair trial.
It is very difficult indeed to think of circumstances in which such a conclusion would be proportionate.
Such circumstances might, however, include a case where there had been a massive attempt to deceive the court but the award of damages would be very small.
It was submitted on behalf of the defendant that it is necessary to use the power to strike out the claim in circumstances of this kind in order to deter fraudulent claims of the type made by the claimant in the instant case because they are all too prevalent.
We accept that all reasonable steps should be taken to deter them.
However, there is a balance to be struck.
To date the balance has been struck by assessing both liability and quantum and, provided that those assessments can be carried out fairly, to give judgment in the ordinary way.
The reasons for that approach are explained by the Court of Appeal in both Masood v Zahoor and Ul Haq v Shah.
We accept that such an approach will be correct in the vast majority of cases.
Moreover, we do not accept the submission that, unless such claims are struck out, dishonest claimants will not be deterred.
There are many ways in which deterrence can be achieved.
They include ensuring that the dishonesty does not increase the award of damages, making orders for costs, reducing interest, proceedings for contempt and criminal proceedings.
A party who fraudulently or dishonestly invents or exaggerates a claim will have considerable difficulties in persuading the trial judge that any of his evidence should be accepted.
This may affect either liability or quantum.
In the instant case, as explained above, the claimants fraud and dishonesty led the judge to reject his evidence except where it was supported by other evidence.
The judge naturally refused to draw any inferences of fact in his favour.
It is likely that, if the claimant had told the truth throughout, his damages would have been assessed at a somewhat larger figure than they were in fact.
This is often likely to be the case.
As to costs, in the ordinary way one would expect the judge to penalise the dishonest and fraudulent claimant in costs.
It is entirely appropriate in a case of this kind to order the claimant to pay the costs of any part of the process which have been caused by his fraud or dishonesty and moreover to do so by making orders for costs on an indemnity basis.
Such cost orders may often be in substantial sums perhaps leaving the claimant out of pocket.
It seems to the Court that the prospect of such orders is likely to be a real deterrent.
There was much discussion in the course of the argument as to whether the defendant can protect its position in costs by making a Part 36 offer or some other offer which will provide appropriate protection.
It was submitted that a Part 36 offer is of no real assistance because, if it is accepted, the defendant must pay the claimants costs under CPR 36.10.
We accept the force of that argument.
However, we see no reason why a defendant should not make a form of Calderbank offer (see Calderbank v Calderbank [1976] Fam 93) in which it offers to settle the genuine claim but at the same time offers to settle the issues of costs on the basis that the claimant will pay the defendants costs incurred in respect of the fraudulent or dishonest aspects of the case on an indemnity basis.
In Fox v Foundation Piling Ltd [2011] EWCA Civ 790 the Court of Appeal correctly accepted at para 45 that the parties were entitled to make a Calderbank offer outside the framework of Part 36.
The precise formulation of such an offer would of course depend upon the facts of a particular case, but the offer would be made without prejudice save as to costs and, unless accepted, would thus be available to the defendant when the issue of costs came to be considered by the trial judge at the end of a trial.
The court can also reduce interest that might otherwise have been awarded to a claimant if time has been wasted on fraudulent claims.
As to contempt, we do not accept the submission that it cannot be an effective sanction for the kind of behaviour evidenced in this case.
We were referred to a number of examples.
In South Wales Fire and Rescue Service v Smith [2011] EWHC 1749 (Admin) an application was made to commit the defendant to prison for contempt of court on the ground that, having been injured at work as a fireman, he made a false claim that since his accident he had been unable to work.
The case thus has some similarities to the instant case.
The Divisional Court sentenced him to 12 months imprisonment for the contempt.
The sentence was suspended for 12 months on certain terms because of the particular circumstances of the case, notably the delays since the offence.
However, the case is of some importance because it set out the general approach of the courts to this type of case.
In giving judgment, with which Dobbs J agreed, Moses LJ said this at paras 2 7: 2.
For many years the courts have sought to underline how serious false and lying claims are to the administration of justice.
False claims undermine a system whereby those who are injured as a result of the fault of their employer or a defendant can receive just compensation. 3.
They undermine that system in a number of serious ways.
They impose upon those liable for such claims the burden of analysis, the burden of searching out those claims which are justified and those claims which are unjustified.
They impose a burden upon honest claimants and honest claims, when in response to those claims, understandably those who are liable are required to discern those which are deserving and those which are not. 4.
Quite apart from that effect on those involved in such litigation is the effect upon the court.
Our system of adversarial justice depends upon openness, upon transparency and above all upon honesty.
The system is seriously damaged by lying claims.
It is in those circumstances that the courts have on numerous occasions sought to emphasise how serious it is for someone to make a false claim, either in relation to liability or in relation to claims for compensation as a result of liability. 5.
Those who make such false claims if caught should expect to go to prison.
There is no other way to underline the gravity of the conduct.
There is no other way to deter those who may be tempted to make such claims, and there is no other way to improve the administration of justice. 6.
The public and advisors must be aware that, however easy it is to make false claims, either in relation to liability or in relation to compensation, if found out the consequences for those tempted to do so will be disastrous.
They are almost inevitably in the future going to lead to sentences of imprisonment, which will have the knock on effect that the lives of those tempted to behave in that way, of both themselves and their families, are likely to be ruined. 7.
But the prevalence of such temptation and of those who succumb to that temptation is such that nothing else but such severe condemnation is likely to suffice.
We have set out those paragraphs verbatim because we agree with them and in order to make clear to all what is the correct approach to contempt of court on the facts of cases such as this.
The approach in that case was followed by the Divisional Court in Nield v Loveday [2011] EWHC 2324 (Admin) and in Lane v Shah [2011] EWHC 2692 (Admin), where sentences were imposed of between three and nine months imprisonment.
Although contempt proceedings have to be brought in the High Court whereas the underlying proceedings may be in the county court, there should be no practical difficulty in that regard: see eg Ali v Esure Services Ltd [2011] EWCA Civ 1582.
The defendant indicated some reluctance to proceed by way of proceedings for contempt.
We, however, see no difficulty in proceedings by way of contempt in such cases, provided of course that the relevant facts can be proved.
It was submitted in the course of argument that there might be difficulties in inviting the trial judge to hear applications for permission to bring proceedings for contempt.
However, in the absence of special circumstances, we cannot see any difficulty in the trial judge hearing both the application for permission and, if permission is granted, the proceedings themselves.
On the contrary, it seems to us that the trial judge is likely to be best placed to hear both.
Such an approach is likely to be both the most economical and the most just way to proceed.
The only circumstances in which that would not be the case would be where there was apparent bias on the part of the judge: see eg Wilkinson v S [2003] EWCA Civ 95; [2003] 1 WLR 1254, per Hale LJ at para 25.
Finally, the possibility remains of criminal proceedings being brought.
It would be open to the judge to refer the matter to the CPS or the DPP in an appropriate case.
The test in every case must be what is just and proportionate.
It seems to us that it will only be in the very exceptional case that it will be just and proportionate for the court to strike out an action after a trial.
The more appropriate course in the civil proceedings will be that proposed in both Masood v Zahoor and Ul Haq v Shah.
Judgment will be given on the claim if the claimants case is established on the facts.
All proper inferences can be drawn against the claimant.
The claimant may be held entitled to some costs but is likely to face a substantial order for indemnity costs in respect of time wasted by his fraudulent claims.
The defendant may well be able to protect itself against costs by making a Calderbank offer.
Moreover, it is open to the defendant (or its insurer) to seek to bring contempt proceedings against the claimant, which are likely to result in the imprisonment of the claimant if they are successful.
It seems to us that the combination of these consequences is like to be a very effective deterrent to claimants bringing dishonest or fraudulent claims, especially if (as should of course happen in appropriate cases) the risks are explained by the claimants solicitor.
It further seems to us that it is in principle more appropriate to penalise such a claimant as a contemnor than to relieve the defendant of what the court has held to be a substantive liability.
We note two points by way of postscript.
First, nothing in this judgment affects the correct approach in a case where an application is made to strike out a statement of case in whole or in part at an early stage.
As the Court of Appeal put it in Masood v Zahoor at para 73 (set out above) in a passage with which we agree, one of the objects to be achieved by striking out a claim is to stop proceedings and prevent the further waste of precious resources on proceedings which the claimant has forfeited the right to have determined.
Secondly, nothing in this judgment affects the case where the fraud or dishonesty taints the whole claim.
In that event, if the court is aware of it before the end of the trial, judgment will be given for the defendant and, if it comes to light afterwards, it will be open to a defendant to raise the issue in an appeal.
Application to the facts
If the approach set out above is applied to the facts of this case, we conclude that this is not an appropriate case in which to strike the action out instead of giving judgment for the claimant.
It would not be proportionate or just to do so.
It would therefore be wrong in principle to do so.
We accept the submission that this is a serious case of abuse of process.
The claimant persistently maintained his claim on a basis or bases which he knew to be false, both before he was found out and thereafter at the trial.
Nevertheless, as a matter of substantive law, he had suffered significant injury as a result of the defendants breach of duty and, on those findings of fact, subject to the deductions referred to below was entitled to damages amounting to 88,716.76.
The judge then made the orders for costs and interest referred to above which he explained in detail and which the defendant does not challenge on appeal.
He further refused the defendant permission to bring contempt proceedings for the reasons explained in his judgment.
The defendant has not appealed against that decision.
But for the particular circumstances of this case, which the defendant (or its insurer) was determined to bring as a test case, it seems likely that permission would have been granted to bring proceedings for contempt, which would have had every prospect of success.
We note by way of further postscript that substantial sums fall to be deducted from the sum of 88,716.76 referred to above before any money is paid to the claimant.
The interim payment of 10,000 must of course be deducted.
So must the value of the various state benefits which the claimant received.
That value is not agreed but we were a given a figure of over 63,000.
Whatever the true figures turn out to be, it seems unlikely that the claimant will receive much, if anything, out of the award of 88,716.76.
CONCLUSION
Although we have accepted the defendants submission that the court has power under the CPR and under its inherent jurisdiction to strike out a statement of case at any stage of the proceedings, even when it has already determined that the claimant is in principle entitled to damages in an ascertained sum, we have concluded that that power should in principle only be exercised where it is just and proportionate to do so, which is likely to be only in very exceptional circumstances.
We have further concluded that this not such a case.
Submissions upon the precise form of the order and on costs should be made within 28 days.
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On 13 May 2003 the Respondent was injured in an accident at work.
In May 2006 the Respondent issued a claim against the Appellant, his former employer, alleging breach of duty and/or negligence.
In August 2007 the county court gave judgment for the Respondent on liability, with damages to be assessed at a later date.
Between October 2007 and September 2008 the Appellant subjected the Respondent to undercover surveillance.
This revealed the Respondent was grossly exaggerating the effect of his injuries and his incapacity to work.
In December 2008 the Respondent served his first schedule of loss.
He claimed damages of 838,616 including a claim for loss of earnings up to October 2008.
Soon afterwards the Appellant disclosed the surveillance evidence to the Respondent.
At the same time it served a re amended defence asserting that the Respondents claim was dishonestly exaggerated and should be struck out in its entirety.
The Respondent subsequently served two further schedules of loss valuing the claim at approximately 250,000.
All of the Respondents pleadings and schedules of loss were supported by statements of truth.
The trial on damages took place in January 2010.
The Respondent did not challenge the surveillance evidence.
The judge held there was no doubt the Respondent had suffered serious fractures which required at least two operations.
However he also found that the evidence established beyond reasonable doubt that the Respondent had fraudulently misstated the extent of his injuries and had deliberately lied to the medical experts and to the Department of Work and Pensions.
The judge found that the Respondent had been fit for work and able to get work since the end of June 2007.
Before that date he had been unable to work, but was not as housebound and incapable of activity as he claimed.
On the basis of these findings the judge awarded the Respondent damages for loss of earnings between the date of the accident and 30 June 2007.
In addition, he awarded general damages of 18,500 and damages for additional care and assistance.
The total award was 88,716.76.
The Appellant submitted that the court had power to strike out the claim in its entirety on the ground that it was tainted by fraud and was an abuse of process.
Both the judge and the Court of Appeal (Ward and Smith LJJ) held they were bound by the decisions of the Court of Appeal in Ul Haq v Shah [2009] EWCA Civ 542 and Widlake v BAA [2009] EWCA Civ 1256 to refuse the application on the ground that the court had no power to strike out a statement of case in such circumstances.
The Supreme Court unanimously holds that the court does have jurisdiction to strike the claim out for abuse of process, but declines to exercise the power in the present case.
The judgment of the Court is given by Lord Clarke.
The issues in the appeal are (1) whether, following a trial at which the court has held that the defendant is liable in damages to the claimant in an ascertained sum, the court nevertheless has power to strike out the claimants
statement of case on the basis that it is an abuse of process; and (2) if so, in what circumstances that power should be exercised [1].
In Ul Haq v Shah the Court of Appeal held there is an invariable rule that a person cannot be deprived of a judgment for damages to which he is otherwise entitled on the ground that he is guilty of an abuse of process [25] [28].
The principles in Ul Haq were restated by the Court of Appeal in Widlake v BAA [31].
Notwithstanding those decisions, the court does in fact have power to strike out a statement of case even after the trial of an action where the court has been able to make a proper assessment of both liability and the amount of damages [33].
The language of the Civil Procedure Rules supports the existence of a jurisdiction to strike a claim out for abuse of process even where to do so would defeat a substantive claim.
The express words of CPR 3.4(2)(b) give the court power to strike out a statement of case on the ground that it is an abuse of the courts process.
It is common ground that deliberately to make a false claim and to adduce false evidence is an abuse of process.
It follows from the language of the rule that in such a case the court has power to strike out the statement of case.
There is nothing in the rule itself to qualify this power.
The only restriction is that contained in CPR 1.1 and 1.2 that the court must decide cases in accordance with the overriding objective of determining cases justly [41].
The position is the same under the inherent jurisdiction of the court, so that in future it is sufficient for applications to be made under the CPR [42] However as a matter of principle the court should only exercise this power in very exceptional circumstances [36], [65].
Under the CPR the court has a wide discretion as to how its powers should be exercised.
The power to strike out a claim at the end of a trial should only be exercised if the court is satisfied that the partys abuse of process was such that he had thereby forfeited the right to have his claim determined.
This is a largely theoretical possibility.
It must be a very rare case in which, at the end of a trial, it would be appropriate for a judge to strike out a case rather than dismiss it in a judgment on the merits in the usual way.
The same is true where, as in this case, the court is able to assess both the liability of the defendant and the amount of that liability [43].
This conclusion is compatible with the European Convention on Human Rights (ECHR).
In deciding whether or not to exercise the power to strike out the court will examine the circumstances of the case scrupulously.
It will only strike out the claim if this is a proportionate means of achieving the aim of controlling the process of the court and dealing with cases justly [46] [48].
It is very difficult to think of circumstances in which such a measure would be proportionate.
However they might include a case where there had been a massive attempt to deceive the court but the award of damages would be very small [49].
The Court rejects the submission that unless exaggerated claims are struck out, dishonest claimants will not be deterred.
There are many other ways in which deterrence can be achieved.
These include ensuring that the dishonesty does not increase the award of damages, making orders for costs (including indemnity costs), reducing interest, proceedings for contempt and criminal proceedings.
In appropriate cases adverse inferences can also be drawn against the claimant [52],[61].
In the present case the Respondent accepts that in making statements of truth which he knew to be false and in presenting a dishonest case as to the effect of his injuries and on quantum, he was guilty of a serious abuse of process [24].
Nevertheless, as a matter of substantive law the Respondent did suffer significant injury as a result of the Appellants breach of duty.
In all the circumstances it would not be proportionate or just to strike the claim out.
The appeal is therefore dismissed [63] [65].
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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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This appeal arises in the course of long running proceedings known as the Franked Investment Income (FII) Group Litigation.
The FII Group Litigation brings together many claims concerning the way in which advance corporation tax and corporation tax used to be charged on dividends received by UK resident companies from non resident subsidiaries.
The Respondents to this appeal are claimants within the FII Group Litigation whose cases have been selected to proceed as test claims on certain common issues (the Test Claimants).
These issues are being determined in phases, with the courts decisions affecting not just the other claims within the FII Group Litigation, but potentially also a number of other sets of proceedings brought by corporate taxpayers against the Commissioners for Her Majestys Revenue and Customs (HMRC).
The Test Claimants case is that the differences between their tax treatment and that of wholly UK resident groups of companies breached the EU Treaty provisions which guarantee freedom of establishment and free movement of capital.
They seek repayment by HMRC of the tax wrongly paid, together with interest, dating back to the UKs entry to the EU in 1973.
Restitutionary claims for the recovery of money must normally be brought within six years from the date on which the money was paid.
As an exception to that general rule, section 32(1)(c) of the Limitation Act 1980 provides that, in respect of an action for relief from the consequences of a mistake, the limitation period only begins to run when the claimant has discovered the mistake or could with reasonable diligence have discovered it.
Before the Court of Appeal, the Test Claimants argued that, where a claimant is seeking to recover money paid under a mistake of law, the effect of section 32(1)(c) is to postpone the commencement of the limitation period until such time as the true state of the law is established by a judicial decision from which there lies no right of appeal.
In their cases, the Test Claimants said that this was when, in 2006, the Court of Justice of the European Union decided that relevant aspects of the UK tax regime were incompatible with EU law.
HMRC argued that time instead began to run in 2001, when the Court of Justice decided that other aspects of the UK tax regime breached EU law.
The Court of Appeal found in favour of the Test Claimants on this issue.
On appeal to the Supreme Court, HMRC argued that section 32(1)(c) of the Limitation Act 1980 applies only to mistakes of fact and not to mistakes of law, or alternatively that the Test Claimants could reasonably have discovered their mistake more than six years before they issued their claims in 2003.
On either approach, a proportion of the claims would be time barred.
The Supreme Court unanimously allows the appeal, but for differing reasons.
The majority (Lord Reed, Lord Hodge, Lord Lloyd Jones and Lord Hamblen) hold that section 32(1)(c) of the Limitation Act 1980 applies to claims for the restitution of money paid under a mistake of law, with time beginning to run when the claimant discovers or could with reasonable diligence have discovered their mistake in the sense of recognising that they have a worthwhile claim.
It leaves the application of that test to the facts of this case for the High Court, after the parties have had an opportunity to amend their pleadings.
The minority (Lord Carnwath, Lord Briggs and Lord Sales) would have held that section 32(1)(c) has no application to mistakes of law.
Lord Reed and Lord Hodge give the main judgment, with which Lord Lloyd Jones and Lord Hamblen agree.
Lord Briggs and Lord Sales give a partially dissenting judgment, with which Lord Carnwath agrees.
Should HMRC be allowed to argue that section 32(1)(c) does not apply to mistakes of law? The Court rejects the Test Claimants various objections to HMRC arguing at this stage of the proceedings that section 32(1)(c) of the Limitation Act 1980 does not apply to mistakes of law.
Cause of action estoppel is a legal doctrine which stops a party from raising points which might have been but were not raised and decided in earlier proceedings [61] [62].
As it operates only to prevent the raising of points which were essential to the existence or non existence of a cause of action, and the effect of limitation instead is to render an otherwise valid claim unenforceable, this doctrine does not prevent HMRC from making their current challenge [63].
Issue estoppel is a related legal doctrine which stops a party from raising points which were not raised in earlier proceedings or were raised unsuccessfully [64] [68].
As the question of when the limitation period commenced was not argued or determined in the first phase of the FII Group Litigation, and as it would not have been possible for HMRC to make their current limitation challenge before the lower courts, this doctrine does not prevent HMRC from making that challenge now [69].
Further, HMRCs challenge does not amount to an abuse of process, when seen in the context of group litigation which raises novel issues of unparalleled complexity, and which was the subject of case management decisions as to the order in which these issues were to be addressed [78] [79].
It is readily understandable why in the first phase of the litigation HMRC focused on arguments which, if successful, would have made it unnecessary to mount this wider challenge [80].
On the basis of those factors, as well as the substantial value of the claims, the importance of the issue to other claimants both within and outside the FII Group Litigation, and the potential to remedy any prejudice through an order for costs, the Supreme Court allows HMRC to withdraw their concession that section 32(1)(c) applies to mistakes of law, and now to make the contrary case [94] [100].
That case places in question two of the most important decisions on the law of limitation of recent times: Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2006] UKHL 49 (Deutsche Morgan Grenfell) and Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (Kleinwort Benson) [1], [172].
What is the test for the discoverability of a mistake under section 32(1)(c)? In Deutsche Morgan Grenfell, the House of Lords tied the date of discoverability of a mistake of law to the date when the truth as to whether the claimant has a well founded cause of action is established by a decision of a court of final jurisdiction [167] [170], [213].
Section 32(1)(c) cannot be intended to have that effect, as
limitation periods apply regardless of whether the substance of the claim is disputed, and regardless of whether there is in truth a well founded cause of action [177] [179], [199] [202], [213].
Such an approach 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 [173] [174], and perpetuates the problems associated with distinguishing between matters of fact and matters of law [195], [213], [250].
Given those very unfortunate consequences, for which there is currently no prospect of Parliament enacting a legislative solution, it is appropriate for the Supreme Court to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability [250] [253].
The correct approach is that time begins to run under section 32(1)(c) when the claimant discovers, or could with reasonable diligence discover, his mistake in the sense of recognising that a worthwhile claim arises [193], [209].
That approach brings section 32(1)(c) into line with section 32(1)(a), and with other analogous provisions of the 1980 Act [180] [196], [213].
Does section 32(1)(c) apply to mistakes of law? Section 32(1)(c) applies to mistakes of law, as the House of Lords decided in Kleinwort Benson.
Although that decision was not supported by convincing reasoning [148] [161], and although 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, the ordinary meaning of the words of that provision include such actions [220] [221], [242] [243].
Excluding claims based on a mistake of law would frustrate the purpose of section 32(1)(c), which is to relieve claimants from the necessity of complying with a time limit at a time when they cannot reasonably be expected to do so [220] [221], [242] [243].
Including such claims does not have unacceptable consequences for legal certainty, particularly now that the approach to discoverability in Deutsche Morgan Grenfell is departed from [225] [229], [242] [243].
How should the test for discoverability of a mistake under section 32(1)(c) be applied to the facts of this case? The Court of Appeal applied the approach to discoverability wrongly established in Deutsche Morgan Grenfell, such that HMRCs appeal must be allowed [254].
The Supreme Court cannot, however, determine in the abstract the point in time when the Test Claimants could with reasonable diligence have discovered their mistake.
That question is left for the High Court to determine, after the parties have had an opportunity to amend their pleadings [255].
Dissenting judgment In their partially dissenting judgment, Lord Briggs and Lord Sales conclude that section 32(1)(c) does not apply to payments made on the basis of a mistake of law [258].
They consider that the House of Lords was wrong to decide otherwise in Kleinwort Benson [274] [285] and that the proper course now is to overrule that decision [298], [303].
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 [289] across a wide range of cases [293], going well beyond the narrow equitable principle which was intended to apply [296].
This introduces large inroads into the overall purpose of the legislation by undermining legal certainty [259].
The approach taken by the majority to the issue of discoverability does not provide an adequate answer to these objections [278], [297] and could prove unfair and unworkable in practice [259], [298].
On the footing that the majoritys interpretation of section 32(1)(c) has prevailed, however, Lord Briggs and Lord Sales agree that it is appropriate to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability [304].
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Unlike some other systems, English law recognises the freedom of individuals to dispose of their assets by will after death in whatever manner they wish.
There are default succession rules in the event of intestacy, but by definition those only come into play if the deceased left no will.
Otherwise the law knows of no rule of automatic succession or forced heirship.
To this general rule, the statutory system of family provision imposes a qualification.
It has provided since 1938 for the court to have power in defined circumstances to modify either the will or the intestacy rules if satisfied that they do not make reasonable financial provision for a limited class of persons.
That power was first introduced by the Inheritance (Family Provision) Act 1938 (the 1938 Act).
The present statute is the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act).
The key features of the operation of the 1975 Act are four.
First, it stipulates no automatic provision; rather the will (or the intestacy rules) apply unless a specific application is made to, and acceded to by, the court and a specific order for provision is made.
Second, only a limited class of persons may make such an application; they are confined to spouses and partners (civil or de facto), former spouses and partners, children, and those who were actually being maintained by the deceased at the time of death.
Third, all but spouses and civil partners who were in that relationship at the time of death can claim only what is needed for their maintenance; they cannot make a claim on the general basis that it was unfair that they did not receive any, or a larger, slice of the estate.
Those three features are laid down expressly in the 1975 Act.
The fourth feature is well established by case law both under this Act and its predecessor of 1938.
The test of reasonable financial provision is objective; it is not simply whether the deceased behaved reasonably or otherwise in leaving the will he did, or in choosing to leave none.
Although the reasonableness of his decisions may figure in the exercise, that is not the crucial test.
The present case concerns one kind of claimant, namely an adult child who has lived quite independently of her parent, the deceased testator, for many years, but who is in straitened financial circumstances.
That is only one of the types of case which may raise difficult individual questions under the 1975 Act, which have to be resolved on a case by case basis.
Applications by spouses may do so, whether living with the deceased at the time of death or separated or divorced.
Some cases involve difficult balancing of competing claims by several persons upon limited estates.
Yet others involve assessing the circumstances in which the deceased was supporting the claimant in some way up to the time of his death; those circumstances may give rise to a claim that future maintenance is reasonably required, or they may demonstrate that support was given in circumstances in which there is no obligation to continue it after death.
Some of the factors inevitably dealt with in this judgment may apply also to types of case other than those of adult children living separately from the deceased, but there is no occasion for this court to attempt to meet every difficulty to which claims for family provision may give rise.
The facts of the present case
The testator, Mrs Jackson, was widowed after only four years of marriage and when expecting her only child, a daughter, now Mrs Ilott.
In 1978, when Mrs Ilott was 17, she left home secretly to live with her boyfriend, of whom Mrs Jackson did not approve.
There followed a lifelong estrangement between mother and daughter which lasted 26 years until the formers death in 2004 at the age of 70.
Mrs Ilott married the man she left home to live with, without telling her mother at the time, although the latter learned of it afterwards.
They are still together, and have had five children.
They have lived their entire married lives independent of any financial connection whatever with Mrs Jackson, and for much the greatest part of that time in complete isolation from her.
District Judge Million reviewed in some detail the evidence of the very limited contacts which mother and daughter had over the extended intervening years.
Mrs Jackson had kept a diary and Mrs Ilott gave her own detailed account.
There had been three attempts at reconciliation, but all had foundered.
The first, after the birth of the first of Mrs Ilotts children in Spring 1983, had lasted the longest.
It had been fostered by Mr Ilotts mother, and had resulted in Mrs Jackson visiting the new mother in hospital and in several subsequent telephone calls between them.
However, these had not in the main been amicable and they ended after an unpleasant row between Mr Ilott and Mrs Jackson, as to which the District Judge held that Mrs Ilotts evidence about what her husband had said was deliberately evasive.
Later conversations between mother and daughter occurred many years later in 1994 and 1999 after chance encounters in public places, but these were very short lived and also failed to establish significant common ground.
District Judge Million went on to find that Mrs Jackson was capricious and unfair in many of the criticisms of Mrs Ilott recorded in letters, and that her decision to exclude her altogether from her estate was harsh and unreasonable.
He found that the hurt felt by Mrs Jackson at the original and sustained rupture of her family, and what she saw as being deprived of her grandchildren, was so entrenched that little short of rejection by Mrs Ilott of her husband would have satisfied her; a written apology sent at one stage by Mrs Ilott did not meet her needs.
Equally, he found that Mrs Ilott and her husband contributed to some of the difficulties in sustaining a reconciliation.
It will be necessary later to refer to the limits to the relevance of these findings.
Whatever the rights and wrongs of the family feud may have been, there is no doubt that it was sustained for a quarter of a century and was the reason why Mrs Jackson decided not to make any provision for her daughter in her will.
This was not a decision taken in haste.
She had made it at least as early as Spring 1984, when she made a will and recorded a letter of wishes.
This was at a time when there was some contact between mother and daughter, during the first attempt at reconciliation and about two months before the row which ended it.
The side letter of wishes stated her decision as follows, after referring to Mrs Ilotts initial departure from home in 1978: She did not get in touch with me and I heard from her husbands parents that she had a baby boy.
When I heard about this, I visited her in hospital and took flowers and brought up her perambulator and other presents.
However, she made herself very unpleasant and wished to have nothing to do with me.
Therefore she receives nothing from me at my death.
There is no reason to think that Mrs Ilott was aware of this 1984 will at the time that it was made, nor to suppose that it had anything to do with the breakdown of the then fragile attempt at reconciliation.
But the decision remained firm and Mrs Jackson reiterated it in 2002 when she made her last will, and again left a side letter.
It similarly stated her settled conclusion that no provision should be made for Mrs Ilott, saying that she felt no moral or financial obligation towards her in view of what had happened, and it instructed her executors to resist any claim which Mrs Ilott might make.
Mrs Ilotts evidence made clear that her mother told her of this decision and the District Judge found that she and her family had managed their lives for many years without any expectation of benefit from the estate.
Apart from a modest legacy to a benevolent association connected with her late husbands employment, Mrs Jacksons will left her estate to charities with which she had had no particular connection during her lifetime, but which represented her freely made and considered choice of beneficiaries.
The estate, of which the largest single component was a house in the home counties, was worth in round figures 486,000.
Mrs Ilotts financial circumstances were conservatively described by the District Judge as modest.
The family lived in a house rented from a Housing Association.
At the time of his decision, four of the children were living at home, one of them, aged 20, in work.
Mrs Ilott had elected since the birth of the first of their children to remain at home and was not employed except as her husbands bookkeeper for 240 pa.
Her husband had intermittent work as a supporting actor and earned a little over 4,100 pa net after charging some expenses such as car costs which brought some benefit in kind.
Leaving aside any small contribution from the 20 year old son, the rest of the family income was in the form of child benefit (1,878) and working tax credits (8,112).
The family was also entitled to housing benefit and council tax benefit, together worth about 5,100 pa.
The District Judge assessed the net annual income, after including the limited benefit in kind, at 20,387.
He then allowed for some limited, and unspecified, earning capacity in Mrs Ilott, at least in part time work, although in the past her decision to remain at home for the children was perfectly understandable.
The family had lived on that or similar income for many years.
Mrs Ilott was not insolvent.
The family had a small sum by way of savings (about 4,000).
They lived within their means.
But the clear evidence was that she and her family were distinctly limited in what they could do.
The household equipment was all old and much of it worn out, but they could not afford to replace it as necessary.
The car had cost 245 and kept breaking down.
The carpets and decoration needed renewal but they could not provide for this.
They had never been able to afford a family holiday.
They could not contemplate, for example, music or sports lessons for the children.
Before both the Court of Appeal and this court it was common ground that some of the benefits received by Mrs Ilott and her family were subject to a means test based on available savings or capital.
Both housing benefit and council tax benefit are not payable if there are savings in excess of 16,000, other than in the form of the capital value of the family home.
Neither working tax credit nor child benefit is similarly affected by capital.
As will be seen, the incidence of benefits was central to the re evaluation of the claim which the Court of Appeal made.
Mrs Ilott was entitled to buy her present home at a concessionary price, as a sitting tenant.
The price at the time of the hearing before the District Judge was 186,000, but by the time of the Court of Appeal judgment now under appeal it had fallen to 143,000.
The statutory framework
The 1975 Act, as it stood at the time of Mrs Jacksons death in 2004 and omitting subsequent amendments to include civil partners as qualified claimants and to give further definition to those whom the deceased was maintaining at the time of death, provided as follows. 1.
Application for financial provision from deceaseds estate (1) Where after the commencement of this Act a person dies domiciled in England and Wales and is survived by any of the following persons the wife or husband of the deceased; a former wife or former husband of the (a) (b) deceased who has not remarried; (ba) any person (not being a person included in paragraph (a) or (b) above) to whom subsection (1A) below applies; a child of the deceased; (c) (d) any person (not being a child of the deceased) who, in the case of any marriage to which the deceased was at any time a party, was treated by the deceased as a child of the family in relation to that marriage; (e) any person (not being a person included in the foregoing paragraphs of this subsection) who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased; that person may apply to the court for an order under section 2 of this Act on the ground that the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant. (1A) This subsection applies to a person if the deceased died on or after 1 January 1996 and, during the whole of the period of two years ending immediately before the date when the deceased died, the person was living (a) and in the same household as the deceased, (2) (b) as the husband or wife of the deceased.
In this Act reasonable financial provision (a) in the case of an application made by virtue of subsection (1)(a) above by the husband or wife of the deceased (except where the marriage with the deceased was the subject of a decree of judicial separation and at the date of death the decree was in force and the separation was continuing), means such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance; in the case of any other application made (b) by virtue of subsection (1) above, means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance. [Supplemental provisions relating to persons treated as 2. (3) being maintained by the deceased] Powers of court to make orders (1) Subject to the provisions of this Act, where an application is made for an order under this section, the court may, if it is satisfied that the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant, make any one or more of the following orders an order for the making to the applicant (a) out of the net estate of the deceased of such periodical payments and for such term as may be specified in the order; (b) an order for the payment to the applicant out of that estate of a lump sum of such amount as may be so specified; (c) an order for the transfer to the applicant of such property comprised in that estate as may be so specified; (d) an order for the settlement for the benefit of the applicant of such property comprised in that estate as may be so specified; an order for the acquisition out of property (e) comprised in that estate of such property as may be so specified and for the transfer of the property so acquired to the applicant or for the settlement thereof for his benefit; an order varying any ante nuptial or post (f) nuptial settlement (including such a settlement made by will) made on the parties to a marriage to which the deceased was one of the parties, the variation being for the benefit of the surviving party to that marriage, or any child of that marriage, or any person who was treated by the deceased as a child of the family in relation to that marriage; [supplemental provisions for the form of [allows the court to order part of the estate to be (2) periodical payments orders] (3) set aside to meet periodical payments orders] (4) An order under this section may contain such consequential and supplemental provisions as the court thinks necessary or expedient for the purpose of giving effect to the order or for the purpose of securing that the order operates fairly as between one beneficiary of the estate of the deceased and another and may, in particular, but without prejudice to the generality of this subsection (a) order any person who holds any property which forms part of the net estate of the deceased to make such payment or transfer such property as may be specified in the order; (b) vary the disposition of the deceaseds estate effected by the will or the law relating to intestacy, or by both the will and the law relating to intestacy, in such manner as the court thinks fair and reasonable having regard to the provisions of the order and all the circumstances of the case; confer on the trustees of any property (c) which is the subject of an order under this section such powers as appear to the court to be necessary or expedient. 3.
Matters to which court is to have regard in exercising powers under section 2 (1) Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceaseds estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters, that is to say the financial resources and financial needs (a) which the applicant has or is likely to have in the foreseeable future; (b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future; (c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future; (d) any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased; (e) deceased; (f) any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased; (g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant. the size and nature of the net estate of the (2) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(a) or 1(1)(b) of this Act, the court shall in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the age of the applicant and the duration (a) of the marriage; the contribution made by the applicant to (b) the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family; and, in the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce. (2A) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(ba) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to (a) the age of the applicant and the length of the period during which the applicant lived as the husband or wife of the deceased and in the same household as the deceased; (b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family. (3) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(c) or 1(1)(d) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the manner in which the applicant was being or in which he might expect to be educated or trained, and where the application is made by virtue of section 1(1)(d) the court shall also have regard (a) to whether the deceased had assumed any responsibility for the applicants maintenance and, if so, to the extent to which and the basis to the liability of any other person to upon which the deceased assumed that responsibility and to the length of time for which the deceased discharged that responsibility; (b) to whether in assuming and discharging that responsibility the deceased did so knowing that the applicant was not his own child; (c) maintain the applicant. (4) [additional considerations applicable to applications made under section 1(1)(e) by persons being maintained by the deceased.] In considering the matters to which the court is (5) required to have regard under this section, the court shall take into account the facts as known to the court at the date of the hearing. (6) In considering the financial resources of any person for the purposes of this section the court shall take into account his earning capacity and in considering the financial needs of any person for the purposes of this section the court shall take into account his financial obligations and responsibilities.
Maintenance
The concept of reasonable financial provision is thus, by the closing words of section 1(1), made central to the jurisdiction to depart from the will or intestacy rules, as the case may be.
In the case of current spouses or civil partners, subsections 1(2)(a) and (aa) say that reasonable financial provision is what it would be reasonable for the applicant to receive, whether or not required for maintenance.
The supplementary provisions of section 3(2) add for applicants in that limited class the direction to the court to have regard to the provision that the spouse or civil partner might have been expected to obtain in the event of divorce or dissolution, so that the assessment of this kind of claim may well be an exercise similar to that undertaken by the family court on an application for financial remedies after divorce or dissolution with, of course, the difference that the other spouse or partner is now dead.
In the case of all other applicants, however, section 1(2)(b) makes clear that reasonable financial provision means such provision as it would be reasonable for the applicant to receive for maintenance.
This limitation to maintenance provision represents a deliberate legislative choice and is important.
Historically, when family provision was first introduced by the 1938 Act, all claims, including those of surviving unseparated spouses, were thus limited.
That demonstrates the significance attached by English law to testamentary freedom.
The change to the test in the case of surviving unseparated spouses was made by the 1975 Act, following a consultation and reports by the Law Commission: Law Com No 52 (22 May 1973) and Law Com No 61 (31 July 1974).
The latter report made it clear that the recommendation was designed not to introduce, even in the case of surviving present spouses, a general power to re write the testators will, but rather to bring provision for such spouses into line with the developing approach of the family court.
That court had by then relatively recently acquired expanded powers to make lump sum and property adjustment orders, which were not limited to maintenance provision but increasingly recognised other factors such as the length of the marriage, the contributions to the family and so on (see section 25 Matrimonial Causes Act 1973).
The mischief to which the change was directed was the risk of a surviving spouse finding herself in a worse position than if the marriage had ended by divorce rather than by death.
For claims by persons other than spouses the maintenance limitation was to remain, and has done so.
See in particular paras 14, 16, 19 and 24.
The concept of maintenance is no doubt broad, but the distinction made by the differing paragraphs of section 1(2) shows that it cannot extend to any or every thing which it would be desirable for the claimant to have.
It must import provision to meet the everyday expenses of living.
In re Jennings, deceased [1994] Ch 286 was an example of a case where no need for maintenance existed.
The claimant was a married adult son living with his family in comfortable circumstances, on a good income from two businesses.
The proposition that it would be reasonable provision for his maintenance to pay off his mortgage was, correctly, firmly rejected see in particular at 298F.
The summary of Browne Wilkinson J in In re Dennis, deceased [1981] 2 All ER 140 at 145 146 is helpful and has often been cited with approval: The applicant has to show that the will fails to make provision for his maintenance: see In re Coventry (deceased) [1980] Ch 461.
In that case both Oliver J at first instance and Goff LJ in the Court of Appeal disapproved of the decision in In re Christie (deceased) [1979] Ch 168, in which the judge had treated maintenance as being equivalent to providing for the well being or benefit of the applicant.
The word maintenance is not as wide as that.
The court has, up until now, declined to define the exact meaning of the word maintenance and I am certainly not going to depart from that approach.
But in my judgment the word maintenance connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him.
The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature.
This does not mean that the provision need be by way of income payments.
The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure.
Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable a him to continue to carry on a profit making business or profession may well be for his maintenance.
Thus in that case a claim against a large estate by an adult son failed when it was put as a claim for a capital sum to meet the capital transfer tax payable on a sizeable gift made to the claimant by the deceased during his lifetime, which gift the former had wasted away.
The judge made the assumption, perhaps generously to the claimant, that bankruptcy would be likely if such a legacy were not directed, but that did not make the suggested sum provision for maintenance; the claimant was well able to work, despite a chequered history of drifting from occupation to occupation, and even if bankrupt was well capable of maintaining himself.
The level at which maintenance may be provided for is clearly flexible and falls to be assessed on the facts of each case.
It is not limited to subsistence level.
Nor, although maintenance is by definition the provision of income rather than capital, need it necessarily be provided for by way of periodical payments, for example under a trust.
It will very often be more appropriate, as well as cheaper and more convenient for other beneficiaries and for executors, if income is provided by way of a lump sum from which both income and capital can be drawn over the years, for example on the Duxbury model familiar to family lawyers (see Duxbury v Duxbury (Note) [1992] Fam 62).
Lump sum orders are expressly provided for by section 2(1)(b).
There may be other cases appropriate for lump sums; the provision of a vehicle to enable the claimant to get to work might be one example and, as will be seen, the present case affords another.
As Browne Wilkinson J envisaged (obiter) in In re Dennis (above) there is no reason why the provision of housing should not be maintenance in some cases; families have for generations provided for the maintenance of relatives, and indeed for others such as former employees, by housing them.
But it is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the claimant.
Munby J (as he then was) rightly made this point clear in In re Myers [2004] EWHC 1944 (Fam); [2005] WTLR 851 at paras 89 90 and 99 101.
He ordered, from a very large estate, provision which included housing, but he did so by way not of an outright capital sum but of a life interest in a trust fund together with power of advancement designed to cater for the possibility of care expenses in advanced old age.
If housing is provided by way of maintenance, it is likely more often to be provided by such a life interest rather than by a capital sum.
Reasonable financial provision
The condition for making an order under the 1975 Act is that the will, or the intestacy regime, as the case may be, does not make reasonable financial provision for the claimant (section 1(1)).
Reasonable financial provision is, by section 1(2), what it is reasonable for [the claimant] to receive, either for maintenance or without that limitation according to the class of claimant.
These are words of objective standard of financial provision, to be determined by the court.
The Act does not say that the court may make an order when it judges that the deceased acted unreasonably.
That too would be an objective judgment, but it would not be the one required by the Act.
Nevertheless, the reasonableness of the deceaseds decisions are undoubtedly capable of being a factor for consideration within section 3(1)(g), and sometimes section 3(1)(d).
Moreover, there may not always be a significant difference in outcome between applying the correct test contained in the Act, and asking the wrong question whether the deceased acted reasonably.
If the will does not make reasonable financial provision for the claimant, it may often be because the deceased acted unreasonably in failing to make it.
For this reason it is very easy to slip into the error of applying the wrong test.
It is necessary for courts to be alert to the danger, because the two tests will by no means invariably arrive at the same answer.
The deceased may have acted reasonably at the time that his will was made, but the circumstances of the claimant may have altered, for example by supervening chronic illness or incapacity, and the deceased may have been unaware of the full circumstances, or unable to make a new will in time.
In re Hancock, deceased [1998] 2 FLR 346 illustrates another possibility.
The deceased had acted entirely reasonably in leaving his business land to those of his children who were active in the business, but after his death part of the land acquired a development value six times its probate assessment, and, that being the case, there was a failure to make reasonable provision for another daughter who was in straitened circumstances.
Thus there can be a failure to make reasonable financial provision when the deceaseds conduct cannot be said to be unreasonable.
The converse situation is still clearer.
The deceased may have acted unreasonably, indeed spitefully, towards a claimant, but it may not follow that his dispositions fail to make reasonable financial provision for that claimant, especially (but not only) if the latter is one whose potential claim is limited to maintenance.
In In re Jennings, for example, the deceased had unreasonably failed, throughout the minority of his son, the claimant, to discharge his maintenance obligations towards him.
Many might say, as indeed the trial judge did, that this failure imposed an obligation on the deceased belatedly to provide for his son.
But by the time of his death many years later the son had made his own successful way in the world and stood in no need of maintenance; his claim accordingly failed, correctly, in the Court of Appeal.
The right test was well set out by Oliver J in In re Coventry [1980] Ch 461 at 474 475 in a passage which has often been cited with approval since: It is not the purpose of the Act to provide legacies or rewards for meritorious conduct.
Subject to the courts powers under the Act and to fiscal demands, an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases or, if he chooses to do so, to leave that disposition to be regulated by the laws of intestate succession.
In order to enable the court to interfere with and reform those dispositions it must, in my judgment, be shown, not that the deceased acted unreasonably, but that, looked at objectively, his disposition or lack of disposition produces an unreasonable result in that it does not make any or any greater provision for the applicant and that means, in the case of an applicant other than a spouse for that applicants maintenance.
It clearly cannot be enough to say that the circumstances are such that if the deceased had made a particular provision for the applicant, that would not have been an unreasonable thing for him to do and therefore it now ought to be done.
The court has no carte blanche to reform the deceaseds dispositions or those which statute makes of his estate to accord with what the court itself might have thought would be sensible if it had been in the deceaseds position.
Next, all cases which are limited to maintenance, and many others also, will turn largely upon the asserted needs of the claimant.
It is important to put the matter of needs in its correct place.
For current spouses and civil partners (section 1(2)(a) and (aa)), need is not the measure of reasonable provision, but if it exists will clearly be very relevant.
For all other claimants, need (for maintenance rather than for anything else, and judged not by subsistence levels but by the standard appropriate to the circumstances) is a necessary but not a sufficient condition for an order.
Need, plus the relevant relationship to qualify the claimant, is not always enough.
In In re Coventry the passage cited above was followed almost immediately by another much cited observation of Oliver J: It cannot be enough to say here is a son of the deceased; he is in necessitous circumstances; there is property of the deceased which could be made available to assist him but which is not available if the deceaseds dispositions stand; therefore those dispositions do not make reasonable provision for the applicant.
There must, as it seems to me, be established some sort of moral claim by the applicant to be maintained by the deceased or at the expense of his estate beyond the mere fact of a blood relationship, some reason why it can be said that, in the circumstances, it is unreasonable that no or no greater provision was in fact made.
Oliver Js reference to moral claim must be understood as explained by the Court of Appeal in both In re Coventry itself and subsequently in In re Hancock, where the judge had held that there was no moral claim on the part of the claimant daughter.
There is no requirement for a moral claim as a sine qua non for all applications under the 1975 Act, and Oliver J did not impose one.
He meant no more, but no less, than that in the case of a claimant adult son well capable of living independently, something more than the qualifying relationship is needed to found a claim, and that in the case before him the additional something could only be a moral claim.
That will be true of a number of cases.
Clearly, the presence or absence of a moral claim will often be at the centre of the decision under the 1975 Act.
Oliver Js reference to necessitous circumstances not by themselves always being sufficient is illustrated by Cameron v Treasury Solicitor [1996] 2 FLR 716.
The claimant was the former wife of the deceased.
She had been divorced from him 19 years before his death and their matrimonial finances had been settled by a lump sum paid to her as a clean break.
There had been no financial relationship between them for the next 19 years, although they had remained in touch.
The fact that she was in necessitous circumstances was held not to create any obligation on him to provide for her from his estate; that there was no other claimant and his small estate passed as bona vacantia to the Crown did not alter the fact that their personal and financial relationship was long in the past.
Thus cases of long estrangement may, according to the judges assessment of the particular facts, be an example of the proposition that needs are not always enough to justify a claim under the Act.
In most cases of clean break matrimonial settlement, the family court order will these days incorporate, as often as not by consent, a direction under section 15 that neither spouse shall be entitled to make any claim under the 1975 Act from the estate of the other.
Nor, if the conclusion is that reasonable financial provision has not been made, are needs necessarily the measure of the order which ought to be made.
It is obvious that the competing claims of others may inhibit the practicability of wholly meeting the needs of the claimant, however reasonable.
It may be less obvious, but is also true, that the circumstances of the relationship between the deceased and the claimant may affect what is the just order to make.
Sometimes the relationship will have been such that the only reasonable provision is the maximum which the estate can afford; in other situations, the provision which it is reasonable to make will, because of the distance of the relationship, or perhaps because of the conduct of one or other of the parties, be to meet only part of the needs of the claimant.
It has become conventional to treat the consideration of a claim under the 1975 Act as a two stage process, viz (1) has there been a failure to make reasonable financial provision and if so (2) what order ought to be made? That approach is founded to an extent on the terms of the Act, for it addresses the two questions successively in, first, section 1(1) and 1(2) and, second, section 2.
In In re Coventry at 487 Goff LJ referred to these as distinct questions, and indeed described the first as one of value judgment and the second as one of discretion.
However, there is in most cases a very large degree of overlap between the two stages.
Although section 2 does not in terms enjoin the court, if it has determined that the will or intestacy does not make reasonable financial provision for the claimant, to tailor its order to what is in all the circumstances reasonable, this is clearly the objective.
Section 3(1) of the Act, in introducing the factors to be considered by the court, makes them applicable equally to both stages.
Thus the two questions will usually become: (1) did the will/intestacy make reasonable financial provision for the claimant and (2) if not, what reasonable financial provision ought now to be made for him?
There may be some cases in which it will be convenient to separate these questions, particularly if there is an issue whether there was any occasion for the deceased to make any provision for the claimant.
But in many cases, exactly the same conclusions will both answer the question whether reasonable financial provision has been made for the claimant and identify what that financial provision should be.
In particular, questions arising from the relationship between the deceased and the claimant, questions relating to the needs of the claimant, and issues concerning the competing claims of others, are all equally applicable to both matters.
The Act plainly requires a broad brush approach from the judge to very variable personal and family circumstances.
There can be nothing wrong, in such cases, with the judge simply setting out the facts as he finds them and then addressing both questions arising under the Act without repeating them.
Nor should there normally be any occasion for a split hearing.
Moreover, Goff LJs observations ought not to be thought to mean that the approach of an appeal court should differ as between the two parts of the process.
Whether best described as a value judgment or as a discretion (and the former is preferable), both stages of the process are highly individual in every case.
The order made by the judge ought to be upset only if he has erred in principle or in law.
An appellate court will be very slow to interfere and should never do so simply on the grounds that its judge(s) would have been inclined, if sitting at first instance, to have reached a different conclusion.
The well known observations of Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360 esp at 1373 1374 are directly in point.
It is to kill the parties with kindness to permit marginal appeals in cases which are essentially individual value judgments such as those under the 1975 Act should be.
The present case, as it happens, is an example of much to be regretted prolongation, and presumably expensive prolongation, of the forensic process.
Submissions were made in the present case as to the date at which the facts fall to be assessed.
The answer is given by section 3(5).
Where a court has to assess whether reasonable financial provision has been made, and/or what it should be, the relevant date is the date of hearing.
Of course, on an appeal, if the question is whether the trial judge made an error of principle the facts and evidence must be taken as they stood before him.
And if it should fall to the appellate court to remake the decision on the merits, as ordinarily it should not, any request to adduce further evidence will have to be judged by ordinary Ladd v Marshall principles (see [1954] 1 WLR 1489).
The course of proceedings in the present case
District Judge Million found that the deceaseds will did not make reasonable provision for Mrs Ilott.
He awarded her 50,000.
Mrs Ilott was dissatisfied with the amount and appealed.
Her claim has varied over time, but both before the District Judge and on appeal from him she sought capital provision amounting to half or more of the estate.
The charitable beneficiaries, who had not appealed thus far, then cross appealed challenging the conclusion that there had been any failure of reasonable financial provision.
The appeal and cross appeal came on before Eleanor King J (as she then was) with a tight timetable.
She was invited to deal first with the cross appeal.
She concluded that the District Judge had erred in law/principle in asking himself whether the deceased had acted reasonably rather than whether there had been a failure to make reasonable provision, and that he should have held that there was no lack of reasonable provision.
The cross appeal having thus been allowed, Mrs Ilotts appeal on quantum did not arise.
Mrs Ilott appealed to the Court of Appeal against King Js decision.
She succeeded, because that court held that the District Judge had not made the error claimed.
He had perhaps at one stage been at risk of appearing to found his decision upon his judgment about the reasonableness of the deceaseds decision to make no provision for her daughter, going in some little detail into the rights and wrongs of the failed attempts at reconciliation.
But he had then gone on properly to confront the section 3 factors and to pose the correct question as set out in In re Coventry, which he cited, namely whether, objectively viewed, reasonable financial provision for the claimant had been made.
The court remitted back to the High Court Mrs Ilotts appeal as to the amount of the order.
That appeal then came before Parker J, who upheld the District Judges order.
Mrs Ilott then appealed that decision also.
The Court of Appeal, thus visiting the case for a second time, held that the District Judge had fallen into two errors of principle in arriving at his award of 50,000.
It proceeded to make its own evaluation of the claim.
It awarded Mrs Ilott (1) 143,000 to buy the house she lived in and (2) an option to receive a further 20,000 in one or more instalments.
The present appeal to this court is from that last order.
Whether or not there have been avoidable delays at various stages, in particular in mounting the first appeal to the Court of Appeal, the whole process has taken an unconscionable time.
The deceased died in July 2004.
The appeal before this court was argued in December 2016.
The decision of the Court of Appeal now under appeal
The Court of Appeal [2016] 1 All ER 932 held that the District Judge had fallen into two fundamental errors of principle.
It was these which justified it in re evaluating the claim for itself.
Those two errors were said to be: i) he had held that the award should, in the light of the long estrangement and Mrs Ilotts independent life and lack of expectation of benefit, be limited, but he had not identified what the award would have been without these factors and thus the reduction attributable to them; and ii) he had made his award of 50,000 without knowing what the effect of it would be upon the benefits which Mrs Ilott and her family presently received.
Having on these grounds set aside the order of the District Judge, the Court of Appeal arrived at its own assessment of the proper award by the following route. i) It held that in order to balance the claims on the estate fairly it was necessary to treat a claimant who is in receipt of state benefits in the same way as a claimant who is elderly or disabled, as having for that reason increased needs for living expenses.
The benefits, it held, must be preserved. ii) Accordingly it made an award of a capital sum sufficient to enable the claimant to buy the house in which she lived.
That was an award expressly made on the basis that it would not affect benefits entitlement.
The court added that it would, if the claimant chose, enable her to augment her income later by way of equity release. iii) It then added a further award of 20,000.
This was expressed as an option with provision for drawing in instalments at the election of the claimant.
Although that sum was said to be such as to provide a small additional income, it too was expressly awarded in order to enable the claimant to draw it down bit by bit in such a way as to avoid any impact on benefit entitlement.
These principal conclusions were expressed by the court in the leading judgment of Arden LJ as follows: 60.
In my judgment, what the court has to do is to balance the claims on the estate fairly.
There is no doubt that, if the claimant for whom reasonable financial provision needs to be made is elderly or disabled and has extra living costs, consideration would have to be given to meeting those.
In my judgment, the same applies to the case where a party has extra financial needs because she relies on state benefits, which must be preserved.
Ms Reed submits that the provision of housing would not do this.
I disagree.
The provision of housing would enable her both to receive a capitalised sum and to keep her tax credits.
If those benefits are not preserved then the result is that achieved by DJ Millions order in this case: there is little or no financial provision for maintenance at all. 61.
The claim of the appellant has to be balanced against that of the Charities but since they do not rely on any competing need they are not prejudiced by what may be a higher award than the court would otherwise need to make. 62.
In my judgment, the right course is to make an award of the sum of 143,000, the cost of acquiring the Property, plus the reasonable expenses of acquiring it.
That would remove the need to pay rent though some of that money may be required for meeting the expenses that she will have as owner.
As Ms Stevens Hoare submits, having the Property will enable her to raise capital (by equity release) when she needs further income in the future. 63.
In addition, I would add to the award a further sum to provide for a very small additional income to supplement her state benefits without the necessity of an equity release.
If my Lords agree, I would provide that she has an option, exercisable by notice in writing to the [executors] within two months of the date of this order (or within such longer period as the appellant and [they] may agree) to receive a capital sum not exceeding of 20,000 out of the estate for this purpose.
According to the current Duxbury tables in At a Glance for 2015/6, the sum 20,000 [sic] would if invested give her 331 net income per year for the rest of her life.
This is not a large amount because of the factors which weigh against her claim, particularly the fact that she is an adult child living independently, Mrs Jacksons testamentary wishes and to a small extent the appellant's estrangement from Mrs Jackson. 64.
The option may be exercised in part more than once provided that the total sum of 20,000 is not thereby exceeded.
I have expressed the provision of a capital sum as an option so that, if the award of a capital sum would result in the loss of benefits, she can if she wishes take a lesser sum, or (as she may prefer to do if she is advised that her benefits will not be prejudiced) she may take the lesser sum and spend it, and then exercise the option for an amount or amounts not exceeding the balance.
The first suggested error
The Court of Appeal held that the first error was revealed by para 67 of the judgment of the District Judge.
He had said this: 67.
In my judgment all of the above factors has produced an unreasonable result in that no provision at all was made for Mrs Ilott in her mothers will in circumstances where Mrs Ilott is in some financial need.
However, I also accept that Mrs Ilott has not had any expectancy of any provision for herself.
Mr and Mrs Ilott have managed their life over many years without any expectancy that Mrs Ilott would receive anything.
That does not mean that the result is a reasonable one in the straightened financial circumstances of the family.
But it does mean, in my judgment that any provision now must be limited.
As to that, the Court of Appeal said, at para 35: at the end of para 67 of his judgment DJ Million states that because of the appellant's lack of expectancy and her ability to live within her means, her award should be limited.
In the paragraphs which follow he does not state how he has limited the award to reflect those matters Those matters might justify a less generous award than would otherwise be made, but, even if that was so, it was wrong in law to state that the award had been limited for those reasons without explaining what the award might otherwise have been and to what extent it was limited by the matters in question.
It was a situation in which reasons were required so that the appellant could consider whether the reductions were excessive (which might give her an arguable error for the purposes of any appeal), and it is of the essence of a judicial decision that adequate reasons are given on material matters.
The Act requires a single assessment by the judge of what reasonable financial provision should be made in all the circumstances of the case.
It does not require the judge to fix some hypothetical standard of reasonable provision and then either add to it, or discount from it, by percentage points or otherwise, for variable factors.
To the contrary, the section 3 factors, which are themselves all variables and which are likely often to be in tension one with another, are all to be considered so far as they are relevant, and in the light of them a single assessment of reasonable financial provision is to be made.
There is no warrant in the Act for requiring a process of the kind suggested by the Court of Appeal.
If the judge were to arrive at a figure for reasonable financial provision without one or more of the relevant facts in the case, he would not be undertaking the assessment required by the Act.
Which of the facts is he to ignore for the purpose of arriving at a hypothetical or headline figure, before adjusting it?
The District Judge did not make the suggested or any error in taking into account the nature of the relationship between the deceased and the claimant.
In many cases this will be of considerable importance.
If, by contrast with the present case, the claimant were a child of the deceased who had remained exceptionally and confidentially close to her mother throughout, had supported and nurtured her in her old age at some cost in time and money to herself, and if she had been promised many times that she would be looked after in the will, it could not be said that the judge was required first to assess reasonable financial provision on the basis of some supposed norm of filial relationship, neither particularly close nor particularly distant, and then to lift the provision by an identified amount to recognise the special closeness between the two ladies.
But without going through any such exercise, and yet adhering to the concept of maintenance, a judge ought in such circumstances to attach importance to the closeness of the relationship in arriving at his assessment of what reasonable financial provision requires.
In the paragraphs leading up to the one criticised by the Court of Appeal, this Judge had dutifully worked his way through each of the section 3 factors.
The long estrangement was the reason the testator made the will she did.
It meant that Mrs Ilott was not only a non dependent adult child but had made her life entirely separately from her mother, and lacked any expectation of benefit from her estate.
Because of these consequences, the estrangement was one of the two dominant factors in this case; the other was Mrs Ilotts very straitened financial position.
Some judges might legitimately have concluded that the very long and deep estrangement had meant that the deceased had no remaining obligation to make any provision for her independent adult daughter as indeed did Eleanor King J when it appeared that she had scope to re make the decision.
As it was, the judge was perfectly entitled to reach the conclusion which he did, namely that there was a failure of reasonable financial provision, but that what reasonable provision would be was coloured by the nature of the relationship between mother and daughter.
The second suggested error
The Court of Appeal described this as follows: 36.
The second fundamental error in my judgment is this.
The judge was required to calculate financial provision for the appellants maintenance.
Yet he did not know what effect the award of 50,000 would have on her state benefits.
He made a working assumption at the end of para 74 of his judgment that the effect of a large capital payment (which would include an award such as he ultimately made) would disentitle the family to most if not all of their state benefits, Failure to verify this assumption undermined the logic of the award.
That proposition was allied to the conclusion which appears at the end of para 60 of the judgment, cited above, namely that there would be little or no benefit for Mrs Ilott in the District Judges award because of the effect it would have on state benefits.
What the court meant was that capital beyond 16,000 would disentitle Mrs Ilott from two of the benefits her family received, namely housing benefit and council tax benefit (see para 9 above).
Since those two benefits paid a little over 5,000 per year to the family, the court was no doubt right to say that the reduction in benefits would equal or probably exceed the annual sum produced if the District Judges capital award were invested on Duxbury lines.
addressing.
He recorded it as follows.
It is relevant to note the case made for Mrs Ilott which the District Judge was 70.
At the end of his final submissions, under pressure from me to quantify his claim, Mr Smith descended to some figures.
On behalf of Mrs Ilott he sought: (1) 186,000 to permit her to purchase their own home (with a discount under the right to buy provisions); (2) 53,000 to pay for a single storey extension to the house, to give more living room for the family (including the four children who live at home); (3) A capitalised sum equivalent to an income of 10,000 per year for life. (He put no figure on this, but the Duxbury tables in At A Glance indicate a sum of 173,000 for a woman aged 46.); (4) Some further capital sum to permit the refurbishment and re equipment of the house after its purchase.
According to a list produced during the final hearing such a sum might amount to 40,950 (27,450 plus 13,500). 71.
The claimant also produced a proposed annual budget for the family which totalled 34,600.
Allowing for Mr Ilotts income from his part time earnings at 5,304 (that is 4,164, plus 900 plus 240), and the current child benefit of 1,570, this would have required an additional annual income of 27,776.
Capitalised for life for a female aged 46 years would require a sum of about 562,000 (using figures from At a Glance).
This exceeds the size of the estate. 72. was presented in an ill thought out and unhelpful way. 73.
I must keep in mind that under section 1(2)(b) of the Act the financial provision is for maintenance that is, income based.
Mr Smiths justification for the capital sum sufficient to buy the family home was that it would free up income which would be spent otherwise on rent.
But, because of the incidence of housing benefit, the net income released would be about I regret to say that the claimants case on these matters 912 per year (76 per month).
This is the net amount of rent paid by the family after housing benefit. 74.
Further, I was presented with no figures which showed the net effect (after benefits and tax credits) of providing an income of 10,000 per year.
Also, when advancing the proposal for a capitalised sum I was presented with no figures to show the net effect which took into account the state benefits which the family receive.
I assume that the practical consequence of a large capital payment would be that the family would lose most, if not all, of their benefits.
None of these consequences appeared to have been thought through. 75.
I have therefore been left to deal with this case with a more rough and ready approach.
Faced with this position, the District Judge rejected the distinctly ambitious claim made.
Nobody now suggests he was not entitled to do that.
He did not fail to address the impact on benefits of any order which he might make.
On the contrary, although he had been provided on behalf of Mrs Ilott with no materials at all on this (as clearly he should have been if it was her case that the point was relevant), he was, unsurprisingly as a District Judge sitting regularly in the Principal Registry of the Family Division, sufficiently familiar with the structure of state benefits to work on the basis of the likely consequences for them.
As can be seen, he specifically addressed the impact of benefits twice.
First, in rejecting the part of the claim which was for the purchase price of the house, he concluded, correctly, that the income effect of enabling Mrs Ilott to buy the house would be limited to about 912 pa precisely because Housing Benefit was meeting the bulk of the rent.
He might have added that that figure would be reduced by house maintenance costs which were presently met by the landlords.
Secondly, he made the assumption (which can only have been in favour of the claimant) that a capital award of the kind that he made would disentitle her from most if not all of the benefits presently received.
He appears to have been (correctly) distinguishing between benefits and credits (and probably including child benefit in the latter).
If so, he was right.
If not, then he over rather than under estimated the effect of such an award, since working tax credits and child benefit (between them about 10,000 pa) would be unaffected.
Although the Court of Appeal criticised him for not calling of his own motion for chapter and verse on the relevance of capital to benefits claims, it cannot be suggested that he was wrong to the disadvantage of the claimant in either of these conclusions.
The real gravamen of the Court of Appeals criticism is not so much that the District Judge did not verify the benefits rules, but that he produced an award which had little or no value to the claimant because of the impact on benefits.
If that were so, and certainly if it were done in ignorance of the true position, it might indeed be a legitimate error of principle justifying an appellate court in setting aside his order.
But in fact it was not only not done in ignorance; it was not an award of little or no value to the claimant.
It was a central feature of Mrs Ilotts financial position that although the family could manage just on its income, this was at the cost of being unable to maintain the ordinary domestic equipment on which every household depends.
She produced a telling list of the equipment which needed replacement, and of elementary refurbishment required, in order to enable the household to function adequately.
The District Judge referred to it directly at para 70(4), set out above.
Although some of the list itemised repairs to the structure, which would chiefly arise only if the house were to be purchased, and although no doubt some of the other items may not have been costed conservatively, one has only to read the document to see that Mrs Ilott made a strong case for the necessity of spending a substantial sum on items which could properly be described as necessities for daily living.
They included such things as essential white goods, basic carpeting, floor covering and curtains, and the replacement of worn out and broken beds.
That list did not include other similar necessities such as a reliable car, nor a holiday.
Although the District Judge arrived at his figure of 50,000 by reference to the income which it might produce, perhaps because he interpreted the statutory requirement for the award to be for maintenance as pointing to such an approach, these items which Mrs Ilott needed to make the household function properly can perfectly sensibly fit within the concept of maintenance.
The Court of Appeal rightly said that the 1975 Act is not designed to provide for a claimant to be gifted a spending spree.
But this kind of necessary replacement of essential household items is not such an indulgence; rather it is the maintenance of daily living.
Moreover, how the claimant might use the award of 50,000 was of course up to her, but if a substantial part of it were spent in this way, the impact on the familys benefits would be minimised, because she could put the household onto a much sounder footing without for long retaining capital beyond the 16,000 ceiling at which entitlement to Housing and Council Tax Benefits is lost.
Conclusions
It follows that the District Judge did not, on fuller analysis, make either of the two errors on which the Court of Appeal relied to revisit his award.
That is enough to require this court to set aside the order of the Court of Appeal.
The claimant pressed on this court the submission that the District Judges award was vitiated by errors other than those attributed to him by the Court of Appeal.
It was said that he wrongly took the level of tax credits and child benefit (he attributed half to Mrs Ilott and thus about 4,000 pa) as a benchmark of basic maintenance income as recognised by the government.
True it is that he referred to this as an indication of minimum income needs, and checked his figure of 50,000 against the capital sum which would produce an annual 4,000 on a Duxbury basis, namely about 69,000.
But he did not make his award on this basis.
He confronted the submission for the charities that Mrs Ilotts maintenance needs should be met by the sum of about 3,000 5,000 to pay for driving lessons and to see her back into work.
He concluded that her reasonable needs were significantly greater than simply driving lessons and a small starter sum of capital.
He accordingly provided a much greater capital sum, saying that there was a significant degree of approximation in it.
Since he made clear that the award was limited to take account of the estrangement, and given the arguments put before him, his order is not to be taken as vitiated by erroneous reliance on the level of income produced by the working tax credits and child benefit.
It was in fact an award which met many of Mrs Ilotts needs for maintenance.
There was nothing about it which was outside the generous ambit of judgment available to him.
His order ought to be restored.
There were in any event a number of potential difficulties about the Court of Appeals proposed order.
Plainly some judges might legitimately have concluded that this was a case in which reasonable financial provision for the claimant should be made by way of housing, even though the actual benefit of doing so would be much reduced by loss of housing benefit.
In the absence of error of principle by the District Judge the occasion for the Court of Appeal to say what its own order might have been did not of course arise.
But even if it had arisen, the right order would be likely to have been a life interest in the necessary sum, rather than an outright payment of it.
There was no discussion of this question in the judgment.
The rather incidental reference to the possibility of equity release was founded no doubt on a tactically astute argument advanced on behalf of Mrs Ilott in the Court of Appeal, designed to clothe the claim for the price of the house with a vestige of income provision, but it was not supported by any evidence of how the figures might work, nor of the impact on benefits which understandably concerned the court.
It also seems likely that in the absence of a discretionary trust the additional option to draw down 20,000 at will would fall foul of exactly the same capital disqualification rules as to benefits, because those rules treat capital which is available to the claimant, but of which he has deprived himself, as being in his possession: see Housing Benefit Regulations 2006, SI 213/2006, regulations 49 & 50, (consolidated with the Council Tax Benefit Regulations SI 215/2006), together with the Guidance Manual issued to officers by the Department of Work and Pensions BW1 (13 September 2013), to which it does not seem the Court of Appeal was referred.
The treatment of benefits by the Court of Appeal at its para 60, cited above, might raise difficulty if taken literally.
The court clearly cannot have meant that dependence on benefits increases the claimants needs, as disability is likely to do.
In some circumstances, different from those of the present case, receipt of state support greater than the testator could sensibly provide may be an understandable reason why it was reasonable for the deceased not to make financial provision for the claimant see for example the observations of Stamp J in In re E, deceased [1966] 1 WLR 709 at 715C.
More generally, benefits are part of the resources of the claimant, and it is relevant to consider whether they will continue to be received.
The court must have meant that, at least if they are means tested, receipt of them is likely to be a very relevant indication of her financial position.
More critically, the order under appeal would give little if any weight to the quarter of a century of estrangement or to the testators very clear wishes.
The Court of Appeal indeed offered the view (at para 51) that these factors counted for little, and that Mrs Ilotts lack of expectation of any benefit from the estate was likewise of little weight, in part because the charities had no expectation of benefit either.
Those observations should be treated with caution.
The claim of the charities was not on a par with that of Mrs Ilott.
True, it was not based on personal need, but charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes.
More fundamentally, these charities were the chosen beneficiaries of the deceased.
They did not have to justify a claim on the basis of need under the 1975 Act, as Mrs Ilott necessarily had to do.
The observation, at para 61 of the Court of Appeal judgment, cited above, that, because the charities had no needs to plead, they were not prejudiced by an increased award to Mrs Ilott is, with great respect, also erroneous; their benefit was reduced by any such award.
That may be the right outcome in a particular case, but it cannot be ignored that an award under the Act is at the expense of those whom the testator intended to benefit.
It was not correct to say of the wishes of the deceased that because Parliament has provided for claims by those qualified under section 1 it follows that that by itself strikes the balance between testamentary wishes and such claims (para 51(iv)).
It is not the case that once there is a qualified claimant and a demonstrated need for maintenance, the testators wishes cease to be of any weight.
They may of course be overridden, but they are part of the circumstances of the case and fall to be assessed in the round together with all other relevant factors.
Lastly, for the reasons adverted to above, it was not correct that so long and complete an estrangement was of little weight.
The Court of Appeal suggested that this was so because (a) the claimant had not wished for the estrangement, (b) she had made a success of her life as a mother and home maker and (c) it might well be that the estrangement was not really a matter of fault on either side, thus simply, in effect, a sad fact of family life.
It was certainly true that the claimant had made a success of her home life, but that does not bear at all on the relationship between mother and daughter.
As to the other two considerations, the District Judge had indeed held that both sides were responsible for the continuation of the estrangement, whilst attaching the greater responsibility to the deceased.
These matters of conduct were not irrelevant, but care must be taken to avoid making awards under the 1975 Act primarily rewards for good behaviour on the part of the claimant or penalties for bad on the part of the deceased.
It is clear that the District Judge gave effect to his findings as to the causes of the estrangement in allowing the claim, as he was entitled to do, but it does not follow that the relationship between mother and daughter was of insignificant weight to the exercise, and he rightly held that it was not.
Disposal
For all these reasons, the appeal of the charities should be allowed.
The order of the Court of Appeal should be set aside and the order of the District Judge restored.
This court was told that this appeal was brought by the charities largely on principle because of the possible impact of the decision below on other cases, and that some arrangement has been arrived at between these parties in the event that the appeal succeeded.
Given the very protracted nature of these proceedings, that is clearly likely to have been sensible, but the court has rightly not been concerned with its details, and it has no relevance to the order now made.
LADY HALE: (with whom Lord Kerr and Lord Wilson agree)
This case raises some profound questions about the nature of family obligations, the relationship between family obligations and the state, and the relationship between the freedom of property owners to dispose of their property as they see fit and their duty to fulfil their family obligations.
All are raised by the facts of this case but none is answered by the legislation which we have to apply or by the work of the Law Commission which led to it.
Maxwell, 1950), Michael Albery commented: In his book on The Inheritance (Family Provision) Act 1938 (Sweet & The protection of the rights of the family as an essential unit in society is a primary concern of most systems of law.
Complete freedom of testation, as enjoyed under English law for a brief period of 47 years, is therefore by the standards of contemporary jurisprudence an anomaly.
In many modern legal systems, mostly those descended from Roman Law, complete freedom of testation is unknown.
Members of the family enjoy fixed rights of inheritance to the estate of a deceased, which leave only limited scope for the deceased to make his own dispositions.
In some systems, consanguinity is preferred to affinity.
The claims of descendants of the deceased are favoured over the claims of a surviving spouse.
The theory is that the property belongs to the family or lineage rather than to the owner for the time being and should pass down the blood line.
Other systems favour affinity over consanguinity.
Early English law also recognised certain fixed rights of inheritance, but these were only between husbands and wives, and the limited rights given to widows and widowers disappeared long ago.
In 1971, the Law Commission published a wide ranging consultation paper on Family Property Law (Working Paper No 42), discussing, among other things, both community of property between husbands and wives and fixed rights of inheritance for spouses and children.
In the course of discussing the latter, the Commission suggested (para 4.13) that: The principle of absolute freedom of testation is acceptable only if the view were taken that it is more important to be able to dispose of property than to meet natural and legal obligations to the family.
We do not believe this view to have any degree of support.
Nevertheless, although they raised the possibility that a surviving spouse might have fixed inheritance rights, they rejected the idea that a surviving child might do so.
In their view, the moral obligation to provide for children was as great as that to provide for a spouse.
But children play less part in building up the family assets than do spouses; are more likely to be self supporting adults independent of their parents; and it would be difficult for a fixed rights system to distinguish between dependent and independent adult children.
The better solution, therefore, was discretionary family provision rather than fixed rights (para 4.16).
When the Commission came to make their Report in relation to the various matters canvassed in their Working Paper, they concluded that it was neither necessary nor desirable to introduce a system of fixed inheritance rights for the surviving spouse: see First Report on Family Property: A New Approach (1973, Law Com No 52).
This was on the basis that their proposals for improving the system of discretionary family provision would be implemented.
Those proposals were contained in their Second Report on Family Property: Family Provision on Death (1974, Law Com No 61) and implemented in the Inheritance (Provision for Family and Dependants) Act 1975, with which (as amended) we are concerned in this case.
Freedom of testation is thus the default position in the law of England and Wales, subject to the courts limited discretionary powers.
Freedom of testation seems also to enjoy strong support from public opinion, although the need to interfere in certain circumstances is also recognised.
When the Law Commission returned to the subjects of intestacy and family provision in 2008, family forms were a great deal more varied than they had been in the early 1970s.
Many more couples lived together without marrying.
Many more children were born to unmarried parents.
Many more married or unmarried partners separated and formed new relationships, often blending children from earlier relationships with children from the new.
The Commission recommended a variety of improvements in the present law, but none which is directly relevant to the dilemma posed by this case (see Intestacy and Family Claims on Death, Consultation Paper No 191, 2009, and Law Com No 331, 2011).
However, the Commission did have the benefit of two empirical studies of attitudes towards inheritance, both of them under the auspices of the highly respected National Centre for Social Research, the findings of which are of some interest.
G Morrell, M Barnard and R Legard, The Law of Intestate Succession: Exploring Attitudes Among Non Traditional Families (NatCen, 2009) used focus groups of people from such non traditional families to explore attitudes on the basis of a series of vignettes.
This revealed strong emotional support for testamentary freedom, linked to ideas of individualism and human rights.
But underlying this was an assumption of reasonableness, that testators had good reasons for doing what they did, and that it would not necessarily be possible to ascertain what their reasons were, so it should be assumed that they were reasonable.
Nevertheless, there were circumstances in which it should be possible to challenge a will.
One was where there was good reason to think that the will did not reflect the true wishes of the testator.
The other was where his decisions were clearly unreasonable: this might be because they were unfair, cutting someone out of a will who had contributed directly or indirectly to the deceaseds wealth or who had earned a share by caring for the deceased while he was alive.
It might also be unfair to cut children out of wills because of the contribution they had made to enriching the lives of their parents or to exclude a potential beneficiary who was disabled or vulnerable and the alternative was that the state would have to look after him.
When it came to the intestacy rules, however, different opinions were expressed about the claims of adult descendants: some who viewed the importance of the bloodline as paramount took the view that adult children should always be able to benefit from the deceaseds estate.
Others took a more flexible view, depending on the relative claims and needs of surviving partners and adult children.
The other study was by A Humphrey, L Mills and G Morrell of the National Centre and G Douglas and H Woodward of Cardiff University, Inheritance and the family: attitudes to will making and intestacy (NatCen, 2010).
This used a combination of quantitative and qualitative approaches.
The quantitative study asked for respondents views on will making and what should happen on intestacy in a variety of scenarios.
One was a married man survived by his wife and two children over 18. 80% thought that the whole estate should go to the widow or that she should have priority over the children, 16% thought it should be shared equally, and the remainder that the children should have priority or get it all.
There was stronger support for the grown up children when a woman died survived by a man with whom she had lived for 25 years and their two children over 18.
A quarter thought that the estate should be shared equally and almost a quarter thought that the children should have priority or have it all.
There was even stronger support if a man died survived by a wife and grown up children from his first marriage. 35% thought that the estate should be shared equally and 19% that the children of the first marriage should have priority or get it all.
The qualitative study explored the reasons for respondents views, including their views on testamentary freedom, and found three approaches: complete testamentary freedom in all circumstances; challenging a will being permitted in some circumstances; and challenging a will being permitted in all circumstances.
Some favoured the entitlement of children to challenge based on lineage and expectations.
These respondents tended to favour equal distribution amongst descendants.
Others favoured an entitlement based on need or providing care for the deceased.
The overriding influence on those who favoured a right to challenge in all circumstances was the importance of retaining property within the family.
When it came to the intestacy rules, there were some who felt that the age of descendants should have no effect on their entitlement; some who felt that adult descendants were less entitled than child descendants; and some who felt that age should not affect entitlement as such but should affect how and when the descendant actually inherited their share of the estate.
It will therefore be seen that, unsurprisingly, there is a variety of reasons why people believe that descendants should be entitled to a share of the deceaseds estate.
The bloodline or lineage is undoubtedly one of these, and seems to have featured strongly in both studies.
Another is need, whether stemming from disability or poverty, although others felt strongly that descendants should be treated equally irrespective of need.
And a third is desert, having earned a share by caring for the deceased or contributing directly or indirectly to the acquisition of his wealth.
The point of mentioning all this is to demonstrate the wide range of public opinion about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere.
That range of opinion may very well be shared by members of the judiciary who have to decide these claims.
The problem with the present law is that it gives us virtually no help in deciding how to evaluate these or balance them with other claims on the estate.
Nor does the Law Commission Report which led to the 1975 Act.
That Report recommended that any child or child of the family of the deceased should be able to apply, irrespective of age, sex or marital status, thus removing the restrictions imposed by the 1938 Act (para 79).
The argument against doing that was that it might encourage able bodied sons capable of supporting themselves to apply for provision from the estate, thereby possibly incurring costs to be paid from the estate and reducing the share of the surviving spouse or other beneficiaries; but the Commission argued that such sons (or even daughters!) could not succeed unless the deceased had failed to make reasonable provision for them (para 74).
The Commission considered limiting adult claims to children who were actually dependent on the deceased when he died, but rejected that because: this would rule out a claim against the estate of a parent who had unreasonably refused to support an adult child during his life time where it would have been morally appropriate to provide such support.
Moreover an adult child, who is fully self supporting at the time of the parents death, may quite suddenly thereafter cease to be so.
Hence their final recommendation was to remove all age limits leaving the court to distinguish between the deserving and the undeserving (para 76).
But the Commission gave no further guidance as to who should be thought deserving and who should not.
The only guidance the court is given is: (1) the threshold question is whether the estate makes reasonable financial provision for the applicant; (2) if it does not, the actual provision to be ordered is limited to what is reasonable for the claimants maintenance (unless the applicant is a spouse or civil partner); and (3) that in deciding both of those questions, the court has to have regard to the matters listed in section 3 (see para 11 above).
These look at the actual and foreseeable financial resources and needs of the applicant, any other applicant and any beneficiary; the obligations and responsibilities of the deceased towards any applicant or beneficiary; the size and nature of the estate; any physical or mental disability of any applicant or beneficiary; and any other matter, including the conduct of the applicant or any other person, which the court may consider relevant.
In the case of children, the court must also consider the manner in which the claimant has been, is being or might be expected to be educated or trained.
Section 1(7) of the 1938 Act, requiring the court to have regard to any reasons given by the deceased for making or not making the dispositions in his will, has been repealed: the reasonableness or otherwise of the testators dispositions was to be tested objectively; the Commission agreed with Michael Albery that if the testators reasons were good and founded on fact they would be relevant under other matters, so there was no need to mention them separately (para 3.23).
As Black LJ wisely observed when this case first came before the Court of Appeal: [2011] EWCA Civ 346; [2011] 2 FCR 1, para 88: A dispassionate study of each of the matters set out in section 3(1) will not provide the answer to the question whether the will makes reasonable financial provision for the applicant, no matter how thorough and careful it is. [S]ection 3 provides no guidance about the relative importance to be attached to each of the relevant criteria.
So between the dispassionate study and the answer to the first question lies the value judgment to which the authorities have referred.
It seems to me that the jurisprudence reveals a struggle to articulate, for the benefit of the parties in the particular case and of practitioners, how that value judgment has been, or should be, made on a given set of facts.
How then is the court to distinguish between the deserving and the undeserving? It might be thought, for example, that in the case of a large estate consisting mostly of inherited property, the children ought to inherit even if they are not in need.
But that would run counter to the restriction of their claims to reasonable maintenance.
It would also run counter to the approach long taken in the law of inter vivos financial provision for adult children.
Thus in Lord Lilford v Glynn [1979] 1 WLR 78, the judge had ordered a father, in addition to making periodical payments and providing for his daughters education, to make an immediate settlement upon them of 25,000 (a not inconsiderable sum in those days).
The Court of Appeal held that a father even the richest father ought not to be regarded as under financial obligations [or] responsibilities to provide funds for the purpose of such settlements as are envisaged in this case on children who are under no disability and whose maintenance and education is secure (p 85).
That, of course, was a value judgment which may or may not have been based on a view that such provision ought to be earned.
But it could be justified under the Matrimonial Causes Act 1973, because it contains age limits on the provision which may be ordered for children unless they are disabled, with the obvious aim of seeing them into adulthood and beyond that only to the end of their education.
The 1975 Act contains no such age or disability related limits.
So once again we are driven to ask what makes an adult child deserving or undeserving of reasonable maintenance?
One factor which is not in the list, but which does feature elsewhere in family law, is the public interest in family members discharging their responsibilities towards one another so that these do not fall upon the state.
In the well known case of Hyman v Hyman [1929] AC 601, the House of Lords held that the courts statutory powers to order a divorced husband to maintain his former wife were granted partly in the public interest to provide a substitute for this husbands duty of maintenance and to prevent the wife from being thrown upon the public for support (per Lord Atkin, at p 629; see also Lord Hailsham LC, at p 608).
However, while the common law recognised a husbands duty to maintain his wife and his infant children (reluctant though it was to provide effective means of enforcing this), it did not recognise a duty to maintain adult children.
Public law, similarly, has not (at most periods) imposed the intra familial maintenance duties which are known, for example, in French law.
So what, if anything, is the relevance of the fact that an applicants household is very largely dependent on state benefits (in this case some 75% of their income) to the threshold question, let alone to the quantification of any order to be made?
For these reasons, I have every sympathy for the difficult position in which District Judge Million found himself.
He was faced with the complete disinheritance of an adult child in favour of charities in which the deceased had shown little or no interest while alive.
The adult child was in straitened circumstances, living in rented accommodation which was almost entirely financed by the public purse, through housing and council tax benefit.
These benefits were means tested by reference to income and to capital and would be lost if there were capital of more than 16,000.
The family lived within its modest means, but these too were largely derived from the public purse, the husbands meagre earnings being supplemented by tax credit, child tax credit and child benefit.
Apart from child benefit, these were means tested, but by reference only to income and not capital.
The household goods were old and dilapidated the family could do with another car, some furniture and carpets and white goods, and had never had a holiday, so it might be regarded as reasonable to spend money on these and thus quite quickly reduce a capital sum to below 16,000 without incurring penalties.
On the other hand, mother and daughter had been estranged since the daughter left home to live with and then marry her husband, of whom the mother disapproved, three attempts at reconciliation having failed.
The mother had left a letter explaining why she had disinherited her daughter, which the district judge did not find wholly founded on truth.
So what was he to do? A respectable case could be made for at least three very different solutions: (1) He might have declined to make any order at all.
The applicant was self sufficient, albeit largely dependent on public funds, and had been so for many years.
She had no expectation of inheriting anything from her mother.
She had not looked after her mother.
She had not contributed to the acquisition of her mothers wealth.
Rather than giving her mother pleasure, she had been a sad disappointment to her.
The law has not, or not yet, recognised a public interest in expecting or obliging parents to support their adult children so as to save the public money.
Thus it is not surprising that Eleanor King J regarded this as the reasonable result: [2009] EWHC 3114 (Fam); [2010] 1 FLR 1613.
The Court of Appeal allowed the appeal on the basis that the District Judge had not erred in law and the exercise of his discretion had not been plainly wrong, so Eleanor King J should not have interfered.
But Sir Nicholas Wall P commented that (as Wilson LJ had observed when giving permission to appeal) had the District Judge dismissed the claim I doubt very much whether the appellant would have secured reversal of that dismissal on appeal (para 59). (2) He might have decided to make an order which would have the dual benefits of giving the applicant what she most needed and saving the public purse the most money.
That is in effect what the Court of Appeal did, by ordering the estate to pay enough money to enable her to buy the rented home which the housing association was willing to sell to her and a further lump sum to draw down as she saw fit.
Housing is undoubtedly one of the first things that anyone needs for her maintenance, along with food and fuel.
This was benefits efficient from her point of view, because it preserved the familys claims to means tested income benefits.
It was benefits efficient from the publics point of view, because it saved the substantial sums payable in housing benefit.
She would lose the benefit of the landlords repairing obligations, but how valuable this would be is a matter of speculation.
It is difficult to reconcile the grant of an absolute interest in real property with the concept of reasonable provision for maintenance: buying the house and settling it upon her for life with reversion to the estate would be more compatible with that.
But the court envisaged her being able to use the capital to provide herself with an income to meet her living costs in future. (3) He might have done what in fact he did for the reasons he did.
He reasoned that an income of 4,000 per year would provide her with her share of the households tax credit entitlement and capitalised this in a rough and ready way, taking into account some future limited earning potential, at 50,000.
He did not expressly consider, and was not presented with the information to enable him to consider, the effect that this would have on the familys benefit entitlements, and in particular the fact that they would lose their entitlement to housing benefit until their capital was reduced below 16,000.
Some might think that the best choice was between options (1) and (2).
Option (1) was not, however, open to the Court of Appeal this time round and is not open to this Court now.
The case for option (2) is that, if it is reasonable for the applicant to receive some support, it is reasonable for that support to be meaningful to her and her family, as well as to the public purse.
Securing her accommodation is more meaningful than proving her with a capital sum which will be of little use unless she is able properly to reduce it within a relatively short time.
This is not to down play the public interest in charitable giving and the importance of legacies in the funding of charitable activities.
But just as the applicant had no expectation of a legacy, neither did the charities.
However, the greater the weight attached to testamentary freedom, the smaller the provision which might be thought reasonable in an unusual case such as this.
It is, as Black LJ observed, a value judgment.
The District Judge did not make his order on the express basis that it would enable the applicant to buy much needed household goods and have a family holiday, but that will be its beneficial effect.
Hence I agree with Lord Hughes that it was entirely open to him to make the order that he did, and just as it should not have been disturbed first time round it should not have been disturbed this time either.
I have written this judgment only to demonstrate what, in my view, is the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance.
I regret that the Law Commission did not reconsider the fundamental principles underlying such claims when last they dealt with this topic in 2011.
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The appeal arises out of a claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act (the Act), brought against the estate of Mrs Jackson by her daughter, Mrs Ilott.
Mrs Ilott and her mother had been estranged for the majority of the 26 years preceding Mrs Jacksons death in 2004.
The estrangement began when Mrs Ilott left home at 17 to live with her now husband, with whom she has five children.
Since that time Mrs Ilott has lived independently of her mother but in straitened financial circumstances.
Mrs Ilott and her family received a number of benefits, with a net annual income of around 20,000.
In her last will of 2002, Mrs Jackson left the majority of her estate to a number of charities, and made no provision for her daughter.
This was a decision Mrs Jackson had made as early as 1984, reflected in her will of that year.
Mrs Ilott had been aware for many years of this decision and had lived without any expectation of benefit from the estate.
The District Judge found that Mrs Jacksons will did not make reasonable financial provision for Mrs Ilott and awarded her 50,000.
The charitable beneficiaries under the will initially challenged the finding that there was any lack of reasonable provision, but that challenge failed and the dispute has since proceeded only on the issue of the quantum of the award, which Mrs Ilott appealed as too low.
The Court of Appeal held the District Judge had made two errors of principle in his approach.
Firstly, he held the award should be limited in light of the long estrangement and lack of expectation of benefit, but did not identify what the award would have been without these factors and the reduction attributable to them.
Secondly, he made his award without knowing what the effect of it would be on the benefits which Mrs Ilott and her family presently received, some of which were subject to a means test and which would not payable if Mrs Ilott had savings in excess of 16,000.
The Court of Appeal re evaluated the claim for itself, and awarded Mrs Ilott 143,000 to buy the home she lived in, and an option to receive 20,000 in one or more instalments.
The award was designed to avoid affecting Mrs Ilotts benefits entitlement.
The Supreme Court unanimously allows the charities appeals.
Lord Hughes gives the judgment, with which the rest of the Court agrees.
Lady Hale gives a supplementary judgment, with which Lord Kerr and Lord Wilson agree.
The District Judge did not make either of the two errors on which the Court of Appeal relied to revisit his award, and so the Court of Appeals order must be set aside and the District Judges order restored.
The matters to which the court must have regard in exercising its power to award reasonable financial provision are listed under s.3 of the Act.
For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for her to receive for maintenance only.
This is an objective standard, to be determined by the court.
The limitation to maintenance provision represents a deliberate legislative choice and demonstrates the significance attached by English law to testamentary freedom.
Maintenance cannot extend to any or everything which it would be desirable for the claimant to have, but is not limited to subsistence level.
The level at which maintenance may be provided is clearly flexible and falls to be assessed on the facts of each case, as at the date of hearing.
Although maintenance is by definition the provision of income rather than capital, it may be provided by way of a lump sum. [12 25] As to the first suggested error, the process suggested by the Court of Appeal is not warranted by the Act.
The Act does not require the judge to fix some hypothetical standard of reasonable provision and then increase or discount it with reference to variable factors.
All of the s.3 factors, so far as they are relevant, must be considered, and in light of them a single assessment of reasonable financial provision should be made.
The District Judge worked through each of the s.3 factors, and was entitled to take into account the nature of the relationship between Mrs Jackson and Mrs Ilott in reaching his conclusion.
As to the second suggested error, the District Judge specifically addressed the impact on benefits twice.
The Court of Appeals criticism that his award was of little or no value to Mrs Ilott was unjustified.
A substantial part of the award could be spent on replacing old and worn out household equipment which the family had previously been unable to afford.
This fell within the provision of maintenance of daily living, and would avoid Mrs Ilott retaining capital for long above the 16,000 threshold. [29 41] Reasonable financial provision can in principle include the provision of housing, but ordinarily by creating a life interest rather than a capital and inheritable sum, which possibility appeared not to have been considered by the Court of Appeal.
To the extent that the benefits means test was relevant, it was likely to apply also to the additional sum of 20,000 apparently awarded with a view to avoiding that test.
The statement in the Court of Appeal that a claimant in receipt of benefits should be treated in the same way as a disabled claimant was problematic; what must have been meant was that receipt of means tested benefits is likely to be a relevant indication of a claimants financial position.
Finally, the Court of Appeals order gave little weight to Mrs Jacksons very clear wishes and the long period of estrangement.
The Court of Appeals justification for this approach was that the charities had little expectation of benefit either.
This approach should be treated with caution, given the importance of testamentary bequests for charities, and because the testators chosen beneficiaries, whether relatives, charities or otherwise, do not need to justify their claim either by need or by expectation. [44 47] Lady Hale in her judgment reviews the history of the Act and preceding legislation.
She comments on the unsatisfactory state of the law, giving as it does no guidance as to the weight of the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance.
The approach under the Act invariably involves a value judgment, which may be problematic as there is a wide range of opinion among the public and the judiciary about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere. [49 66]
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These three appeals raise a number of issues concerning the duty of local housing authorities towards homeless people who claim to be vulnerable, and therefore to have a priority need for the provision of housing accommodation under Part VII of the Housing Act 1996.
Those issues turn on the interpretation of the 1996 Act, but some of them also involve consideration of the Equality Act 2010.
Part VII of the Housing Act 1996
As its title indicates, Part VII of the 1996 Act is concerned with homelessness, and it imposes duties on local housing authorities to provide assistance and advice, or suitable accommodation, to those who are homeless or threatened with homelessness.
By virtue of subsections (1) (3) of section 175, a person is homeless if there is no accommodation (i) which is available for his occupation, (ii) which he is entitled to occupy by virtue of an interest, by virtue of a court order, under a licence, a statute or rule of law, (iii) to which he can secure entry or (in the case of mobile accommodation) which he can place and reside in, and (iv) which it would be reasonable for him to continue to occupy.
Section 176 explains that accommodation is only to be treated as available for a person if it is also available for any other person who normally resides, or who might reasonably be expected to reside with him.
Section 177 contains examples of circumstances in which it would not be reasonable for a person to occupy accommodation which would otherwise be available to him.
By virtue of section 175(4) a person is threatened with homelessness if it is likely that he will become homeless within 28 days.
If a person (referred to as an applicant) applies to a local housing authority (an authority) for accommodation or assistance in obtaining accommodation, and the authority have reason to believe that he is or may be homeless or threatened with homelessness, then, subject to certain exceptions which are irrelevant for present purposes, section 183 provides that the subsequent sections of Part VII apply.
If the authority have reason to believe that an applicant may be homeless or Priority need is of central relevance to these appeals, and section 189(1) threatened with homelessness, section 184 requires them to make inquiries whether an applicant is eligible for assistance and if so what duties are owed to him (and to inform the applicant of their decision).
Sections 188, 190, 192 and 193 impose duties on authorities depending on the status of the applicant.
There are three statuses of importance when deciding on the extent of an authoritys duties, namely eligibility for assistance, priority need, and intentional homelessness.
Eligibility for assistance and intentional homelessness are respectively defined in sections 183(2) and 191, and neither is in point for the purposes of the instant appeals.
identifies those who have priority need for accommodation as being: (a) a pregnant woman or a person with whom she resides or might reasonably be expected to reside; (b) a person with whom dependent children reside or might reasonably be expected to reside; (c) a person who is vulnerable as a result of old age, mental illness or handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside; (d) a person who is homeless or threatened with homelessness as a result of an emergency such as flood, fire or other disaster.
Section 189(2) enables the Secretary of State to specify further descriptions of priority need and to amend or repeal any part of subsection (1).
By the Homelessness (Priority Need for Accommodation) (England) Order 2002 (SI 2002/2051), the Secretary of State added four new priority need categories.
They are (i) children between 16 and 18, other than certain children for whom local authority childrens services have responsibility, (ii) those under 21 who were between 16 and 18, in care or fostered (other than certain students), (iii) those over 21 who are vulnerable as a result of having been in care (other than certain students), or having served in the armed forces or having been in custody, and (iv) those who are vulnerable as a result of leaving accommodation on account of violence or threats of violence.
Under section 188, if the authority have reason to believe that an applicant may be homeless and have a priority need, they must secure that accommodation is available for his occupation pending a decision as to the duty owed to him.
Section 190 is concerned with cases where an authority are satisfied that an applicant is homeless but became homeless intentionally.
If such an applicant also has priority need, the authority must provide him with (a) accommodation for a period which is sufficient to give him a reasonable opportunity to find alternative accommodation, and (b) advice and assistance in securing such accommodation section 190(2).
Section 190(3) provides that, if such an applicant does not have priority need, he shall only be provided with such advice and assistance.
Sections 192 and 193 are concerned with cases where an authority are satisfied that an applicant is homeless, but did not become homeless intentionally.
Section 192 applies where the authority are satisfied that such an applicant does not have priority need.
In such a case, the authority must provide the applicant with advice and assistance in attempting to secure accommodation, and they may (but not must) secure that accommodation is available to him section 192(2) and (3).
Section 193 applies where the authority are satisfied that such an applicant has priority need.
In such a case, subject to exceptions which are irrelevant for present purposes, the authority must secure that accommodation is available for the applicant.
Sections 195 and 196 are concerned with cases where the authority are satisfied that an applicant is threatened with homelessness, and for present purposes it suffices to say that an authoritys obligations in such a case reflect the obligations in sections 190, 192 and 193 in relation to the actual homeless.
Section 202 entitles an applicant to seek an internal review of an authoritys decision, inter alia, under sections 190 to 193 and 195, or as to the suitability of any accommodation offered to him.
The procedure under any such review is governed by section 203.
Section 204 permits any applicant who is dissatisfied with the outcome of any such review to appeal to the County Court on a point of law.
An appeal lies from the decision of the County Court to the Court of Appeal, and from there to the Supreme Court, but in each case permission to appeal is needed in the normal way.
The Equality Act 2010
Section 4 of the 2010 Act lists the protected characteristics, and they include disability, which is itself defined in section 6 as including mental or physical impairment, whose nature is further explained in Schedule 1.
Section 13 deals with direct discrimination generally, and it involves A treat[ing] B less favourably than A treats or would treat others because of a protected characteristic.
By virtue of section 15(1), discrimination against a disabled person also occurs if (a) A treats B unfavourably because of something arising in consequence of Bs disability, and (b) A cannot show that the treatment is a proportionate means of achieving a legitimate aim. (This definition effects a statutory reversal of the majority House of Lords decision in Lewisham LBC v Malcolm [2008] UKHL 43, [2008] 1 AC 1399.) Section 19 deals with indirect discrimination.
Section 29(1) and (2) provides that a person concerned with providing a service to the public must not discriminate against a person by not providing the service or as to the terms on which the service is provided.
Section 29(6) specifically outlaws discrimination by [a] person in the exercise of a public function which is not the provision of a service.
Section 29(7) imposes a duty to make reasonable adjustments on a person who provides a service to the public or who exercises another public function.
Section 20(1) and (2) states that where a person, A, has to make adjustments, the obligation involves satisfying three requirements, of which only one is potentially relevant in the present context, namely that identified in section 20(3) which provides: The first requirement is a requirement, where a provision, criterion or practice of As puts a disabled person at a substantial disadvantage in relation to a relevant matter in comparison with persons who are not disabled, to take such steps as it is reasonable to have to take to avoid the disadvantage.
Section 149 contains the public sector equality duty (the equality duty) and it provides: A public authority must, in the exercise of its functions, have due regard to the need to (a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act; (b) advance equality of opportunity between persons who share a relevant protected characteristic [which by subsection (7) includes disability] and persons who do not share it; (c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it. (3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to (a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic; (b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it; (c) encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low. (4) The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons disabilities.
Pursuant to various provisions of the Act, the Secretary of State has power to make regulations as to the determination of disability, and that power has been exercised through the Equality Act 2010 (Disability) Regulations 2010 (2010/2128).
Regulation 3 provides that, unless the addiction was the result of medically prescribed drugs or other medical treatment, addiction to alcohol, nicotine or any other substance is to be treated as not amounting to an impairment for the purposes of the [2010] Act.
Regulation 4 provides that certain other conditions, including a tendency to steal should not be treated as amounting to an impairment under the 2010 Act, but that this should not prevent them from being taken into account where it aggravates the effect of any other condition.
The facts of the three appeals in summary
Johnson v Solihull Metropolitan Borough Council.
Craig Johnson was born in 1975 and has been a persistent offender since 1991.
He has been convicted of 78 offences, mostly stealing, and has been in and out of prison.
Shortly following his most recent release in April 2010, he made an unsuccessful application to Solihull Metropolitan Borough Council (Solihull) for accommodation under Part VII, on the ground that he had priority need under section 189(1)(c).
He made a further application in October 2011.
He claimed to be vulnerable because (i) he had become addicted to heroin while in prison, (ii) he had lower back trouble and cant climb up stairs, (iii) he suffered from sleeping problems, depression and paranoia, and (iv) he suffered from asthma.
Solihull considered his application and rejected his contention that he was vulnerable and therefore in priority need.
He exercised his right to seek a review.
On 8 May 2012, Gemma Thompson of Solihulls Housing Strategy, Policy and Spatial Planning Services Department notified him of the outcome of the review.
She rejected his claim to be vulnerable and therefore in priority need.
In the review letter, Ms Thompson said: i) She should ask herself whether [Mr Johnson], when homeless, would be less able to fend for [himself] than an ordinary homeless person so that injury or detriment to [him] would have resulted when a less vulnerable person would be able to cope without harmful effect, and explained that her conclusion was that he would not be less able to fend for [himself] than an ordinary homeless person for reasons she proceeded to give. ii) She was not satisfied that [Mr Johnson is] suffering from depression or had suffered from depression. iii) She also highlight[ed] that research from Homeless Link has shown that mental health problems and homelessness are closely linked both as a cause and as a result of homelessness, and after quoting some figures continued [t]his clearly shows that the fact that [Mr Johnson is] suffering from depression does not necessarily mean that [he is] vulnerable.
Given that [he is] not receiving any treatment for depression, [she was] not satisfied that [he] suffer[ed] from a particular form of depression that would make [him] vulnerable.
Despite suffering from knee and back pain it has no significant impact upon [Mr Johnson] and [he] would be able to continue with treatment provided by [his] GP and/or physiotherapist. iv) v) So far as drug use is concerned, [a]lthough [he is] taking heroin at present [he does] not appear to have suffered any irreversible secondary medical problems.
The evidence shows that [Mr Johnson has] the ability to remain abstinent from drugs [and] whilst it may be harder for [Mr Johnson] to remain off drugs while street homeless, nevertheless [he] can maintain the support that [he] currently ha[s] and would reasonably be able to remain off drugs, and [e]ven if [he does] slip back into using drugs, this would not necessarily be anything unusual in relation to homeless people, as shown by a survey. vi) She acknowledged that Mr Johnson had been in and out of prison since the age of 16, but she was not satisfied either that he had been instititutionalised, having been out of prison for two years and managed [his] affairs, or that he would suffer injury or detriment if [he was] street homeless. vii) Finally, she consider[ed] whether [his] circumstances taken as a whole [made him] vulnerable, and stated that his ability to fend for [himself] is not significantly compromised, and that she was satisfied that there is nothing that differentiates you from other homeless people.
Mr Johnson appealed to the Birmingham County Court and His Honour Judge Oliver Jones QC dismissed his appeal, on the ground that the review did not include any significant misdirection of law and resulted in a conclusion which a reasonable reviewer could have arrived at.
Mr Johnsons appeal to the Court of Appeal was also dismissed effectively on the same ground [2013] EWCA Civ 752, [2013] HLR 524.
In the course of her ex tempore judgment (with which Jackson and McCombe LJJ agreed), Arden LJ said at para 6 that, when determining whether a person is vulnerable within the meaning of section 189(1)(c), a local housing authority must pay close attention to the particular circumstances of the individual, but also was bound to discharge its obligations by taking into account its own burden of homeless persons and finite resources.
Hotak v Southwark London Borough Council.
Sifatullah Hotak was born in Afghanistan 25 years ago and was granted leave to remain in the UK as a refugee in 2011.
He has significant learning difficulties, with a measured IQ on one test of 47, a history of self harming, and symptoms of depression and post traumatic stress disorder.
His brother, Ezatullah, entered the UK in 2006, and has recently been granted leave to remain, albeit for a limited period.
Sifatullah Hotak is reliant on his brother to prompt him to carry out such routine activities as washing, changing his clothes, and undertaking personal care routines, and to organise health appointments, meals, the making of benefit claims, and the finding of accommodation.
The two brothers lived in a room in a flat in Peckham, Southwark, from July 2010, until they had to vacate in March 2011 because the flat was overcrowded.
Ezatullah Hotak was ineligible under Part VII owing to his immigration status, but he arranged for his brother, who was not ineligible, to apply to Southwark London Borough Council (Southwark) for accommodation for both of them on the ground that Sifatullah Hotak was in priority need, by virtue of section 189(1)(c), and his brother was a person with whom he resided and indeed could reasonably be expected to reside.
Southwark provided the brothers with temporary accommodation under section 188, but in due course rejected the application for accommodation under section 193 on the ground that, while Sifatullah Hotak was homeless, eligible for assistance, and had not become homeless intentionally, he was not in priority need because, if homeless, he would be provided with the necessary support by his brother.
Southwark nonetheless rightly accepted that they were obliged to provide advice and assistance to Sifatullah Hotak under section 192.
Sifatullah Hotak, through his brother, sought a review of that decision, and the review, carried out by Kojo Sarpong, Southwarks Review Team Leader, confirmed the decision, and declined to exercise the discretionary power to provide accommodation under section 192(3).
The review letter is dated 30 June 2011, and it runs to almost six fairly closely typed pages.
It includes the following statements: i) [T]he Council must ask itself whether the applicant, when street homeless, is less able to fend for himself/herself so that injury or detriment will result where a less vulnerable street homeless person would be able to cope without harmful effect. ii) [W]e do not believe [that under] section 189 an authority is required to make provisions for households who are comprised of adults in reasonable physical health. v) iv) iii) [I]t is reasonable to expect a fit and healthy adult to attempt to house and support his brother whilst they are homeless together.
In addition [Ezatullah Hotak] has confirmed that he currently looks after [his brother] and he would continue to do so if they were street homeless together.
We acknowledge that [Sifatullah Hotak] has learning difficulties and disabilities and it would be reasonable to assume that he may find difficulty in finding and maintaining accommodation.
If on his own and street homeless [he] may also be at risk .
However, we are satisfied that his brother is capable of providing him with continued housing and support if they were street homeless together.
Even though we acknowledge that he has learning disabilities and difficulties, we are satisfied that Ezatullah [Hotak] would assist him if
street homeless and his circumstances do not confer priority need
Sifatullah Hotak, again acting through his brother, appealed against this review to the Lambeth County Court.
His Honour Judge Blunsdon dismissed his appeal, and his decision was upheld by the Court of Appeal for reasons given by Pitchford LJ, with whom Moore Bick and Richards LJJ agreed [2013] EWCA Civ 515, [2013] PTSR 1338.
The sole point in the Court of Appeal, as in this Court, was whether, as a matter of law, the reviewing officer was entitled to take into account the fact that Sifatullah Hotak could be expected to receive help and support from his brother if he was homeless.
If, as the Court of Appeal held, that fact could be taken into account, then it is conceded on Sifatullah Hotaks behalf that this appeal must fail whereas, if it could not be taken into account, Southwark concedes that Sifatullah Hotak would be vulnerable and his appeal must succeed.
Kanu v Southwark London Borough Council.
Patrick Kanu is currently aged 48, and has physical problems, including back pain, hepatitis B, hypertension and haemorrhoids, as well as psychotic symptoms and suicidal ideation.
His wife assists him in taking the necessary drugs, but stress raises his hypertension to what his doctors characterise as quite dangerous levels, which requires an increase in the dose of the relevant drugs.
An order for possession had been made against Mr Kanu in respect of his home, a flat in Devonshire House, London SE1, in January 2011.
Having made an initial application (which was rejected by Southwark on grounds which were subsequently found to be bad), Mr Kanu applied in early November 2011 to Southwark for accommodation on the ground that he had not become homeless intentionally and in priority need under section 189(1)(c).
Although their Medical Assessment Service advised that he should be treated as having priority need because he was at risk of self harming and of harming others, Southwark decided that while Mr Kanu had not become homeless intentionally and was eligible for advice and assistance, he was not in priority need.
Mr Kanu sought a review of this decision, and a review dated 17 April 2012 confirmed the decision.
However this review was quashed by an order made by HHJ Blunsdon in the Lambeth County Court.
This led to a further review, contained in a letter dated 21 March 2013 which also confirmed the decision, and went on to consider and reject the possibility of voluntarily providing Mr Kanu with accommodation under section 192(3).
The review, which was carried out by Bernadette Emmanuel, a Reviews Officer of Southwark, runs to no less than 14 fairly closely typed pages.
The letter includes the following: i) While accepting that Mr Kanu may be vulnerable, Ms Emmanuel noted that [he] has a wife and adult son included on his homelessness application, who form members of his household and it has been confirmed during interviews with [Mr Kanu] and his wife that he relies upon both his wife and son to provide him with assistance needed for him to perform the tasks of daily living that he is unable to perform for himself. ii) Ms Emmanuel was not satisfied that if [Mr Kanus] household was faced with street homelessness they would be at risk of injury or detriment greater than another ordinary street homeless person due to Mr Kanus wife and son's ability to fend for the whole household, including [Mr Kanu]. iii) She did not believe that an authority is required to make provisions for households who are comprised of or include adults in reasonable physical health. iv) Mr Kanu has been able to continue any treatment even when he was threatened with homelessness, when he became homeless and during periods when he stated that his illness was severe enough to require him to visit hospital on an emergency basis. v) Ms Emmanuel referred to the medical evidence that Mr Kanu had thoughts of self harming but had not done so, and said that she was not satisfied that [he] would be more at risk of committing suicide than another ordinary homeless street person, and she also considered that Mrs Kanu has already demonstrated an ability to prevent him from self harming. vi) Mr Kanu had not encountered any significant difficulties maintaining his present accommodation and that he has been actively seeking employment, and that he would be able to fend for himself if street homeless. vii) As to the haemorrhoids, Ms Emmanuel said that he was not being treated for them and they would not lead to problems. viii) In respect of the hepatitis B and high blood pressure, the doctors had prescribed medication and medical treatments and the information available shows that [Mr Kanu] with assistance from his family has been compliant with his treatments and [Ms Emmanuel was] satisfied that he could continue to do so if street homeless. ix) The letter also stated that consideration had been given to the Disability and Equality Act 2010 and that the public sector equality duty informs the decision making process; however it does not override it.
Mr Kanu appealed to the Lambeth County Court, where Mr Recorder Matthews allowed his appeal.
This was mainly on the ground that the review had wrongly proceeded on the basis that the view that, if homeless, Mr Kanu would be looked after by his family was not on its own sufficient to prevent him from being vulnerable: Ms Emmanuel should have gone on to ask herself whether he would nonetheless be vulnerable, and she failed to do so.
The Recorder also considered there was no evidence that Mr Kanu would get adequate access to treatment when street homeless, as well as thinking that the review had not taken into account the evidence that Mr Kanus condition had worsened in certain respects.
He also considered that the references to the equality duty were so perfunctory that they showed that no real regard had been had to it.
Southwark appealed to the Court of Appeal and their appeal was successful [2014] EWCA Civ 1085, [2014] PTSR 1197.
In his judgment (with which Aikens and Kitchin LJJ agreed), Underhill LJ considered each of the grounds upon which the Recorder had allowed Mr Kanus appeal and held that they were ill founded.
Essentially, he considered that the main ground amounted to a criticism that Ms Emmanuel should have checked with the medical experts before concluding that Mr Kanu would, when homeless, not be vulnerable if looked after by his wife.
However, said Underhill LJ, there was ample evidence in relation to his physical health and a good deal of evidence as to his mental health to enable Ms Emmanuel to reach a conclusion on an issue which doctors were [not] peculiarly qualified to answer (para 42).
He was similarly unimpressed with the other grounds, holding that the public sector equality duty add[ed] nothing to the duty under section 193(2) so far as the issue of priority need is concerned (para 55), and that, in the particular circumstances of this case, it add[ed] nothing to the enquiry under section 189(1)(c) (para 57).
The principal issues raised in these appeals
These three appeals all thus concern the assessment of an applicants vulnerability for the purpose of determining whether he can claim to have a priority need under section 189(1)(c) of the 1996 Act.
The issues which section 189, and in particular subsection (1)(c), throws up were well described by Lord Walker of Gestingthorpe in Runa Begum v Tower Hamlets London Borough Council [2003] UKHL 5, [2003] 2 AC 430, para 114.
He said that [e]stablishing priority need may call for the exercise, and sometimes for a very difficult exercise, of evaluative judgment and the identification of a vulnerable person may present real problems.
The three principal issues which have been discussed in these appeals are as follows: i) Does the assessment of whether an applicant is vulnerable for the purposes of section 189(1)(c) of the 1996 Act involve an exercise in comparability, and, if so, by reference to which group of people is vulnerability to be determined? ii) When assessing vulnerability, is it permissible to take into account the support and assistance which would be provided by a member of his family or household to an applicant if he were homeless? iii) What effect, if any, does the public sector equality duty under section 149 of the 2010 Act have on the determination of priority need under section 189 of the 1996 Act in the case of an applicant with a disability or any other protected characteristic?
Although these were the three issues which were identified as being in dispute on these appeals, a number of other points emerged during the hearing which should also be mentioned, and I shall turn to them before addressing the three main issues.
Some points of significance
First, the vulnerability with which section 189(1)(c) is concerned is an applicants vulnerability if he is homeless.
It is true that para (c) uses the present tense and does not expressly link the word vulnerable to any specific situation.
However, the context of the word renders it clear that it is concerned with an applicants vulnerability if he is not provided with accommodation.
Part VII is concerned with the provision of accommodation, and section 189 is directed to those who are entitled to accommodation rather than advice and assistance in finding it.
Thus, the plain inference is that section 189(1)(c) directs an enquiry as to the applicants vulnerability if he remains or becomes a person without accommodation.
As was said by Lord Griffiths in R v Oldham Metropolitan Borough Council, Ex p Garlick [1993] AC 509, 519E, when referring to Part III of the Housing Act 1985, the predecessor of Part VII of the 1996 Act, it is primarily to do with the provision of bricks and mortar and not with care and attention for the gravely disabled which is provided for in other legislation and see the fuller discussion in R (M) v Slough Borough Council [2008] UKHL 52, [2008] 1 WLR 1808, paras 7 29 per Lady Hale.
Secondly, when assessing whether or not an applicant is vulnerable, an authority must, as Arden LJ said in para 6 of her judgment in the Johnson case, pay close attention to the particular circumstances of the applicant.
Indeed, as Ms Thompson, the reviewing officer in Mr Johnsons case rightly said (see para 21(vii) above), the issue of vulnerability must be determined not so much by reference to each of the applicants problems, but by reference to them when taken together.
Thus, the question whether an applicant is vulnerable must involve looking at his particular characteristics and situation when homeless in the round.
Thirdly, Arden LJ was not right to go on to say that the authority must, or even can, tak[e] into account its own burden of homeless persons and finite resources when assessing whether an applicant is vulnerable.
In making that observation it may well be that Arden LJ thought that she was following earlier guidance given by Auld LJ in Osmani v Camden London Borough Council [2004] EWCA Civ 1706, [2005] HLR 325, para 38(4) which she had quoted in the preceding paragraph of her judgment.
However, as all counsel in these appeals rightly agreed, an authoritys duty under Part VII of the 1996 Act is not to be influenced or affected by the resources available to the authority.
Once they have determined the status of an applicant under Part VII of the 1996 Act, their duty to that applicant is as defined in the Act: the fact that the authority may be very short of money and/or available accommodation cannot in any way affect whether an applicant is in priority need.
In so far as a balancing exercise between housing the homeless and conserving local authority resources is appropriate, it has been carried out by Parliament when enacting Part VII.
Of course, an authoritys resources may be relevant in relation to a number of aspects of its duty under Part VII of the 1996 Act (see eg per Lord Hoffmann in Holmes Moorhouse v Richmond upon Thames London Borough Council [2009] UKHL 7, [2009] 1 WLR 413, para 13), but they can have no part to play when assessing whether an applicant is vulnerable.
Fourthly, certain expressions seem to have entered the vocabulary of those involved in homelessness issues, which can lead to difficulties when they are applied to strictly legal problems.
In particular, for instance, street homelessness and fend for oneself are expressions which one finds, in one or more of the review letters in the present appeals.
Such expressions may be useful in discussions, but they can be dangerous if employed in a document which is intended to have legal effect.
There are obvious dangers of using such expressions.
They may start to supplant the statutory test, which is normally inappropriate in principle, and, when they originate from a judgment, they may be apt for the particular case before the court, but not necessarily for the general run of cases.
Additionally, they may mean different things to different people.
The expression fend for oneself was used by Waller LJ in R v Waveney District Council, Ex p Bowers [1983] QB 238, 244H, and no doubt was a useful way of expressing oneself in the context of that case (which was concerned with section 2(1)(c) of the Housing (Homeless Persons) Act 1977, which was effectively identical to section 189(1)(c) of the 1996 Act).
However, it is not the statutory test, and at least to some people a person may be vulnerable even though he can fend for himself.
Furthermore, the expression could mislead.
For instance, where, as in two of the instant appeals, the issue is whether an applicant is vulnerable if he will be fully supported by a family member, the answer most people would give would be no, if the test is literally whether he could fend for himself.
The expression street homeless is also much used, but it is not to be found in the 1996 Act (although it is to be found, and indeed defined in section 71 of the Housing (Wales) Act 2014, which is concerned with the meaning of vulnerable).
It seems to have entered into the Court of Appeals vocabulary in the judgment of Auld LJ, in Osmani see paras 23 28 and para 38(7).
When Lord Hughes raised the question of the precise meaning of street homeless with counsel during argument, it took until the following day before he got a clear answer.
The expression can plainly mean somewhat different things to different people.
Homeless, as defined in the 1996 Act, is an adjective which can cover a number of different situations, and the very fact that the statute does not distinguish between them calls into question the legitimacy of doing so when considering the nature or extent of an authoritys duty to an applicant.
Fifthly, as Ms Rhee pointed out, the use of statistics to determine whether someone is vulnerable is a very dangerous exercise whatever the correct test of vulnerability under section 189(1)(c) may be.
The point was very well put by Underhill LJ in Ajilore v Hackney London Borough Council [2014] EWCA Civ 1273, para 58, where he was discussing statistical evidence relied on in a section 202 review in relation to an applicant who was said to be a suicide risk if he was made homeless: [E]ven if it is right, as seems plausible enough even in the absence of statistics, that the incidence of suicide is higher among homeless people than in the remainder of the population, I am not sure how that is relevant to the question which the reviewing officer had to decide.
It might show only that a disproportionate number of people with the kind of history or personality that renders them specially liable to attempt suicide tend to be made homeless.
The fact that there might be disproportionately many such people in the homeless population would not in itself mean that they were any the less vulnerable within the meaning of section 189 (1)(c) any more than it would if there were a disproportionately large number of homeless people suffering from severe mental illness.
The question of who constitutes the ordinary homeless person cannot be answered purely statistically.
Sixthly, to characterise those who fall within paragraphs (a), (b) and (d) of section 189(1) as vulnerable is a mistake.
I mention that because it was suggested that this was a helpful approach when deciding how to interpret paragraph (c).
The linking characteristic of the people who fall within the four paragraphs is that they have priority need, not that they are vulnerable.
The statute only uses the word vulnerable in paragraph (c), and that is because not all those who fall within the specific classes referred to in that paragraph, namely old age, mental illness or handicap or physical disability, are within the scope of the paragraph: it is only those who are vulnerable.
On the other hand, Parliament has decided that everyone who is pregnant, living with dependent children, or is homeless as a result of an emergency is in priority need.
The Secretary of State drew the same distinction between the first two and the last two of the additional categories added by the Order referred to at para 9 above.
Seventhly, the reviews in the Hotak and Kanu cases reveal a belief on the part of some reviewing officers which is quite mistaken and should be recorded as such.
Thus, in her review in the Kanu case, Ms Emmanuel suggested that a local housing authority was not required to make provisions for households who are comprised of or include adults in reasonable physical health see para 31(iii) above and the same point was made (I think) in the Hotak review see para 26(ii) above.
This is plainly wrong.
It is clear from the wording of section 189(1)(c) that (i) an applicant can be vulnerable even if he resides or can be expected to reside with a third party, and (ii) once an authority has decided that an applicant is vulnerable, then the duty to house him extends to such a third party.
It is nothing to the point that the third party is not vulnerable.
Of course, if the support which the third party would give to the applicant can be taken into account when deciding whether the applicant is vulnerable (the second issue identified in para 35(ii) above), then the fact that the third party is in good physical and mental health may be of some relevance, but that is as far as the third partys state of health can go in playing any part in determining an applicants vulnerability.
Eighthly, the cases reveal a disagreement as to whether section 189(1)(c) gives rise to a two stage test (i) whether the applicant is vulnerable, and (ii) whether it is as a result of old age, mental illness or handicap or physical disability or other special reason or whether there is a single, composite test.
This is a somewhat arid argument, and I am unconvinced that it is sensible to force housing authorities and reviewing officers into a straitjacket on this sort of issue.
In any event, the correct answer may depend on the facts of the particular case.
However, given the reference to other special reason , and given the fact that in many cases there will be a mixture of reasons as to why an applicant is said to be vulnerable, I suspect that the one stage test will probably be more practical in most cases.
and, having considered them, I will deal with the three appeals.
Vulnerability: a comparative concept, but compared with what?
There have been a number of decisions of the Court of Appeal on the issue of whether or not an applicant was vulnerable within the meaning of section 189(1)(c) or its statutory predecessor.
When it comes to the proper approach to the issue, there are two decisions which have been frequently referred to.
The first is Ex p Bowers [1983] QB 238, where at pp 244H 245A, Waller LJ said vulnerable in the context of this legislation means less able to fend for oneself so that injury or detriment will result when a less vulnerable man will be able to cope without harmful effects.
The second, which has proved particularly influential, is R v Camden London Borough Council, Ex p Pereira (1998) 31 HLR 317, where at p 330 in the last paragraph of his judgment, Hobhouse LJ gave fuller guidance.
In a passage similar to that in Bowers, but with an important addition, he said that the authority must ask themselves whether the applicant when homeless [will be] less able to fend for himself than an ordinary homeless person so that injury or detriment to him will result when a less vulnerable man would be able to cope without harmful effects (emphasis added).
To the same effect, he said this a little later: It must appear that his inability to fend for himself whilst homeless will result in injury or I turn now to the three issues which have been argued between the parties, detriment to him which would not be suffered by an ordinary homeless person who was able to cope.
Waller LJs formulation suffers from the rather fundamental defect that it seeks to explain who is a vulnerable person by reference to a less vulnerable one, which is logically circular and therefore highly questionable.
Although the first of the two sentences I have quoted from Hobhouse LJs judgment suffers from the same problem, his guidance is potentially more helpful.
However, I think that it should be approached with caution essentially for two reasons.
First, it has been treated in some decisions of courts and reviewing officers almost as a statutory definition, when it was simply intended to be guidance to Camden housing authority as to how to approach Mr Pereiras application, which was being remitted for reconsideration.
Thus, no doubt because there was no question of Mr Pereira being supported by a family member, Hobhouse LJ used the expression fend for himself, which I have discussed above.
The second reason for treating Hobhouse LJs guidance with caution is that the term ordinary homeless person can plainly be interpreted in more than one way, as Mr McGuire QC rightly submitted.
One feature which the reasoning in all the previous cases share in this connection is the notion that vulnerability has to be assessed comparatively as is clear from the two cases just referred to.
However, in these appeals, it is argued on behalf of Mr Johnson that this is wrong, and that there is no need for a comparable against which to judge whether an applicant is vulnerable for the purposes of section 189(1)(c).
Although the argument was advanced by Mr Luba QC with his usual ability and fluency, it is not right.
As Lord Wilson pointed out in argument, vulnerable, like virtually all adjectives, carries with it a necessary implication of relativity.
In the very type of case under consideration, it can fairly be said that anyone who is homeless is vulnerable, as Lord Glennie pointed out in Morgan v Stirling Council [2006] CSOH 154, [2006] HousLR 95, para 4.
Accordingly, as he went on to suggest, it follows that section 189(1)(c) must contemplate homeless people who would be more vulnerable than many others in the same position (especially given the words or other special reason which show that vulnerability arising from many causes is covered).
Mr Luba contended that anyone who cannot cope without harm with homelessness is vulnerable.
But that formulation merely restates the problem and does so by reference to non statutory wording (including the word cope which may have similar problems to the expression fend for himself).
Virtually everyone who is homeless suffers harm by undergoing the experience, and therefore one is thrown back on the notion of a homeless person who suffers more harm than many others in the same position.
Accordingly, I consider that the approach consistently adopted by the Court of Appeal that vulnerable in section 189(1)(c) connotes significantly more vulnerable than ordinarily vulnerable as a result of being rendered homeless, is correct.
But that leaves open the question of the comparator group.
In Ex p Pereira 31 HLR 317, 330, as explained above, Hobhouse LJ suggested that the comparator was the ordinary homeless person, which is, as I have mentioned, an uncharacteristically imprecise expression.
It could mean (i) the ordinary person if rendered homeless, or (ii) the ordinary person who is actually homeless (a) viewed nationally, or (b) viewed by reference to the authoritys experience.
At least judging from the decisions to which we were referred, this uncertainty was initially not resolved thus, it seems to have been left open in Auld LJs summary of the legal principles in Osmani, at para 38(4) and (5).
However, shortly thereafter, in Tetteh v Kingston upon Thames London Borough Council [2004] EWCA Civ 1775, [2005] HLR 21, para 21, Gage LJ seems to have assumed that the ordinary homeless person was a notional homeless person based on the particular authoritys experience.
That also seems to have been the approach of Arden LJ in Johnson [2013] HLR 524, at paras 18 and 20, as pointed out by Gloster LJ in Ajilore, at para 14, an approach which she also adopted.
While it is not entirely clear, this suggests that the test being adopted is possibility (ii)(b), but it may be (ii)(a).
Despite the argument of Mr Rutledge QC to the contrary, in my judgment that is not the right approach.
I do not consider that it would be right for the comparison to be based on the group of people in England and Wales who are homeless ie possibility (ii)(a); still less do I consider that the comparison should be based on the group of people who are homeless in the area of the relevant authority ie possibility (ii)(b).
In my view, possibility (i) is correct.
It does not seem probable that Parliament intended vulnerability to be judged by reference to what a housing officer thought to be the situation of an ordinary actual homeless person.
Such an assessment would be more likely to lead to arbitrary and unpredictable outcomes than if one takes the ordinary person if rendered homeless, and considers how the applicant would fare as against him.
Equally importantly, if the comparison is with the ordinary actual homeless person, then especially if possibility (ii)(b) were correct as Sedley J pointed out in R v Hammersmith & Fulham London Borough Council, Ex p Fleck (1997) 30 HLR 679, 681, there would be a real risk that a sick and vulnerable individual (and I do not use the word vulnerable in its statutory sense) is going to be put out on the streets, which he described as a reproach to a society that considers itself to be civilised.
In my opinion, properly understood, both Waller LJ in Bowers and Hobhouse LJ in Pereira intended the vulnerability comparison under section 189(1)(c) to be with an ordinary person if made homeless, not with an ordinary person actually homeless.
That seems to me to be apparent from Waller LJs reference to a less vulnerable man, as opposed to a less vulnerable homeless man.
I think it also follows from Hobhouse LJs reference (in a passage at p 330 which I have not so far quoted) to an individual who suffer[s] from some mental or physical handicap which makes him unable to cope with homelessness as someone who would fall within section 189(1)(c).
There was no suggestion that, if such a person could be said to be ordinary in the context of the actual homeless, he would fall outside the section.
Accordingly, I consider that, in order to decide whether an applicant falls within section 189(1)(c), an authority or reviewing officer should compare him with an ordinary person, but an ordinary person if made homeless, not an ordinary actual homeless person.
In fact as Lady Hale has pointed out, comparing an applicant with other homeless people is not the precisely accurate comparison.
Section 189 is concerned with those who have need for accommodation.
Accordingly, strict accuracy suggests that, when assessing his vulnerability for the purposes of section 189(1)(c), an applicant should be compared with an ordinary person who is in need of accommodation.
I am unpersuaded that that could ever lead to a different result from a comparison with an ordinary person who is homeless, but, given that I have been anxious to emphasise the primacy of the statutory words, it would be wrong not to acknowledge this point.
Before leaving this point, I should mention that Mr Rutledge argued that Parliament had impliedly approved what was said by Hobhouse LJ in Pereira by having made subsequent amendments to Part VII of the 1996 Act without in any way amending section 189(1)(c).
This is a useful opportunity to emphasise that this is a misconceived argument for the reasons which Lady Hale and I gave in R (N) v Lewisham London Borough Council [2014] UKSC 62, [2014] 3 WLR 1548, paras 167 168 and 143 148, which, albeit in dissenting judgments, represent the law on this topic.
As Mr Luba rightly said, there is a stronger argument that the substantial re enactment of section 21(1)(c) of the 1977 Act as section 189(1)(c) of the 1996 Act can be said to suggest Parliamentary approval of Bowers, but even that is a weak argument, as (i) it is not a powerful point of principle (see the citations in paras 145 146 of R (N) v Lewisham London Borough Council), (ii) the re enactment was not in identical language, (iii) there is nothing to suggest that Bowers had been viewed by the courts as laying down a definition of universal application, (iv) there is nothing to suggest that Parliament was aware of the decision as laying down a principle, and (v) in any event, the passage relied on is logically flawed in so far as it is said to be a definition (see para 49 above).
Vulnerability: the relevance of support from family members
In Hotak, the reviewing officer, His Honour Judge Blunsdon, and the Court of Appeal all came to the conclusion that an applicant who would otherwise be vulnerable within section 189(1)(c) might not be vulnerable if, when homeless, he would be provided with support and care by a third party (often no doubt a family member with whom he was living).
In my judgment, that conclusion, which was subsequently followed in Kanu, is correct, but it has to be applied with considerable circumspection.
As explained in para 37 above, an applicants vulnerability under section 189(1)(c) has to be assessed by reference to his situation if and when homeless.
In other words, it is not so much a clinical assessment of his physical and mental ability (to use a shorthand expression): it is a contextual and practical assessment of his physical and mental ability if he is rendered homeless (which, as just explained, must be compared with the ability of an ordinary person if rendered homeless).
The fact that it is a contextual and practical question points strongly in favour of the conclusion that, when deciding if he is vulnerable, one must take into account such services and support that would be available to the applicant if he were homeless.
Such a conclusion is also supported by consideration of the purpose of Part VII of the 1996 Act generally and section 189 in particular.
Part VII is aimed at assisting the homeless, and as Lord Hoffmann observed in ORourke v Camden London Borough Council [1998] AC 188, 193, it involves public money [being] spent on housing the homeless not merely for the private benefit of people who find themselves homeless but on grounds of general public interest.
As he went on to explain, for example, proper housing means that people will be less likely to suffer illness, turn to crime or require the attention of other social services.
Virtually everyone is better off housed than homeless, but it is those people who will be more vulnerable in practice if they are homeless who could be expected to receive priority treatment.
It would seem contrary to common sense if one were to ignore any aspect of the actual or anticipated factual situation when assessing vulnerability.
It is also relevant to note that paras (a), (b) and (d) of section 189(1) are all concerned with practical situations.
As Lord Wilson pointed out, this conclusion is supported by considering an applicant with a physical or mental condition which, if not treated, would render him vulnerable, but which can be satisfactorily treated by regular medication.
If such an applicant, when homeless, would be perfectly capable of visiting a doctor to obtain a prescription and a pharmacist to collect his medication, and then of administering the medication to himself, it would be unrealistic to describe him as vulnerable, when compared with an ordinary person when homeless.
Mr Brown QC tried valiantly to meet that point, but it does not appear to me that it is answerable.
Once one accepts that point, it is very hard to see any logical reason for ignoring any support or assistance which an applicant would receive when homeless.
For similar reasons, it is also very hard to see any principled basis for disregarding support or assistance simply because it would come from the authority (eg through its social services department) or from a family member.
Unlike Lady Hale, I do not consider that it matters, at least in principle, whether the support is provided pursuant to a legal obligation.
As I see it, although I have sympathy with the notion in terms of policy, the conclusion that support only qualifies if provided pursuant to a legal obligation involves implying a limitation into the statute.
Having said that, I agree with Lady Hale that housing authorities can only take third party support into account where they are satisfied that, as a matter of fact, the third party will provide such support on a consistent and predictable basis.
In that connection, the question whether there is a legal obligation on the third party to provide the support could sometimes be relevant, in that it may be said to be intrinsically more likely that a person will continue to provide support if he or she has a legal obligation to do so.
So, where an otherwise vulnerable applicant would not be vulnerable if he was receiving third party support, the question is simply one of fact: will the third party provide the support on a consistent and predictable basis?
Mr Brown did, however, make one very powerful point.
Section 189(1)(c) extends priority need not only to a vulnerable applicant but also to a person with whom he resides or could be expected to reside.
If such a person is prepared to look after the applicant when they are both homeless, then the applicant may not qualify as having priority need and they will not receive accommodation, whereas if that person refuses to look after the applicant, they will both qualify under section 189(1)(c) and receive accommodation.
That indeed is the effect of the decisions in Hotak and Kanu.
Further, as Lady Hale pointed out, an even starker example could arise where a mother, who has been provided with accommodation for herself and her disabled child under section 189(1)(b), loses priority status when her child comes of age.
In such circumstances, her child might only be vulnerable if she was not prepared to look after him if homeless, so they would both be housed if she refused to care for the child, but they would not be housed if she acted as any caring mother would be expected to act.
This point gives rise to a real concern whether the view I have expressed in paras 62 64 above can be correct.
However, in the end, I do not consider that it undermines it.
The curious, indeed somewhat distasteful, consequence of that conclusion where it is a family member (as it normally would be) residing with the applicant who provides the support cannot justify changing that conclusion generally: it would involve the tail wagging the dog.
Nor can one imply an exception into the general principle that support is to be taken into account when assessing vulnerability: at least on its own, the fact that a statutory provision is capable of producing a distasteful result in some circumstances cannot justify some sort of judicially created legislative exception.
While it cannot be denied that Mr Browns point has force, I think that the apparent paradox which he identifies is, on analysis readily explicable.
The primary focus of section 189(1)(c) is on the putative vulnerable applicant, and the inclusion of a third party in the provision of accommodation is either to avoid breaking up the household or family unit or to benefit the vulnerable person, and not to benefit the third party.
If one is looking at the applicant, the only relevant factual question when it comes to the issue of support is what support he would receive; the fact that the answer to this question may produce counter intuitive results in relation to a third party with whom he lives is therefore not as surprising as it seems at first blush.
The purpose of Part VII of the 1996 Act is not to reward the virtuous, but to deal with a practical problem.
In any event, it is by no means obvious that the curious outcome identified by Mr Brown is attributable to a Parliamentary oversight.
While some may think that it would be appropriate to make an exception for care when provided by a family member, it may equally be thought that, if such care is provided, it would place an excessive burden on housing authorities and work unfairly on other applicants, if it was disregarded when assessing the applicants vulnerability, however perverse the result may seem when viewed from the perspective of the family members position.
While an otherwise vulnerable applicant may not be vulnerable if he would be provided with care and support when homeless, it is very important indeed to emphasise that the mere fact that such support would be available may not prevent the applicant from being vulnerable.
Thus, the observation in the Hotak review that, because Ezatullah Hotak looks after his brother and he would continue to do so if they were street homeless together (see para 26(iii) above) does not of itself mean that Sifatullah Hotak would therefore not be vulnerable.
It is still incumbent on the reviewing officer to ask whether, even when looked after by his commendable brother, he would be vulnerable.
The same point applies in Kanu, where the review letter relied on Mr Kanus wife and son's ability to fend for the whole household, including [Mr Kanu] see para 31(ii) above: this conclusion does not of itself necessarily mean that Mr Kanu would not be vulnerable.
Equally dangerous is the preceding sentence in the Hotak letter, namely it is reasonable to expect a fit and healthy adult to attempt to house and support his brother while they are homeless together, at least if it is intended to suggest that there was an irrebuttable, or even a strong, presumption that a person will do what it is reasonable to expect him to do.
I accept that it is not unreasonable to expect members of the same family to support each other if they are living together, but (i) whether a particular applicant will in fact receive support and if so what support, must be a case specific question, to which the answer must be based on evidence (which can of course include appropriate inferences), (ii) in a particular case, the level of support may have to be so high to obviate vulnerability that it goes beyond what can be expected on any view, and (iii) as already explained, the fact that there may very substantial support does not of itself necessarily mean that the applicant will not be vulnerable.
Thus, in some cases, the support may be every bit as good as the applicant would receive if he were housed, but it would still not prevent him from being vulnerable.
Accordingly, the reviewing officer must always consider very carefully whether the applicant would be vulnerable, after taking into account any support which would be available.
The point was very well made by Pitchford LJ in para 42 of his judgment in Hotak, where he said this (albeit that it must be corrected to allow for the fact that fending for oneself is not quite the appropriate test): Even if the reviewing officer is satisfied that the support network would remain in place it may not, in a situation of homelessness, be sufficient to enable the applicant to fend for himself as would the average homeless person.
For example, the old age or mental ill health or physical disability of the applicant may be such that no amount of support will enable the applicant to cope with homelessness as would a robust and healthy homeless person.
The Equality Act 2010
The complaint raised under the 2010 Act against the review in the Kanu case by Ms Mountfield QC is that it failed to comply with the equality duty in that Ms Emmanuel accorded insufficiently careful or critical scrutiny to Mr Kanus disability, and to the consequences to him of the adverse decision that he was not vulnerable.
The equality duty has been the subject of a number of valuable judgments in the Court of Appeal.
Explanations of what the duty involves have been given by Dyson LJ (in relation to the equivalent provision in the Race Relations Act 1976) in Baker v Secretary of State for Communities and Local Government [2008] EWCA Civ 141, [2009] PTSR 809, paras 30 31,Wilson LJ (in relation to section 49A of the Disability Discrimination Act 1995, as inserted by section 3 of the Disability Discrimination Act 2005, the predecessor of section 149 of the 2010 Act) in Pieretti v Enfield London Borough Council [2010] EWCA Civ 1104, [2011] PTSR 565, paras 28 and 32, and McCombe LJ in Bracking v Secretary of State for Work and Pensions [2013] EWCA Civ 1345, [2014] Eq LR 40, para 26 which pulls together various dicta, most notably those of Elias LJ in R (Hurley & Moore) v Secretary of State for Business, Innovation and Skills [2012] EWHC 201 (Admin), paras 77 78 and 89.
I do not propose to quote those passages in extenso: they are not challenged in these appeals, and in my view, at least as at present advised, rightly so.
As Dyson LJ emphasised, the equality duty is not a duty to achieve a result, but a duty to have due regard to the need to achieve the goals identified in paras (a) to (c) of section 149(1) of the 2010 Act.
Wilson LJ explained that the Parliamentary intention behind section 149 was that there should be a culture of greater awareness of the existence and legal consequences of disability.
He went on to say in para 33 that the extent of the regard which must be had to the six aspects of the duty (now in subsections (1) and (3) of section 149 of the 2010 Act) must be what is appropriate in all the circumstances.
Lord Clarke suggested in argument that this was not a particularly helpful guide and I agree with him.
However, in the light of the word due in section 149(1), I do not think it is possible to be more precise or prescriptive, given that the weight and extent of the duty are highly fact sensitive and dependant on individual judgment.
As was made clear in a passage quoted in Bracking, the duty must be exercised in substance, with rigour, and with an open mind (per Aikens LJ in R (Brown) v Secretary of State for Work and Pensions [2008] EWHC 3158 (Admin), [2009] PTSR 1506, para 92.
And, as Elias LJ said in Hurley and Moore, it is for the decision maker to determine how much weight to give to the duty: the court simply has to be satisfied that there has been rigorous consideration of the duty.
Provided that there has been a proper and conscientious focus on the statutory criteria, he said that the court cannot interfere simply because it would have given greater weight to the equality implications of the decision.
Pieretti is particularly in point as it concerned the interrelationship of Part VII of the 1996 Act and what is now the 2010 Act, and the Court of Appeal rightly held that what is now the public sector equality duty applied to a housing authority when performing its functions under Part VII.
At para 28, Wilson LJ referred to the six specified aspects of the duty in the predecessor to subsections (1) and (3) of section 149 as complement[ing] the duties of local authorities under Part VII.
The specific issue in the case was whether the reviewing officer had complied with what was the statutory predecessor of the equality duty, when deciding that the applicant and his wife were voluntarily homeless because they had failed to pay the rent due on their previous home as a result of which they were evicted.
The Court of Appeal held that, on the specific facts of the case, the reviewing officer was in breach of her duty under section 49A(1)(d), because she fail[ed] to make further inquiry in relation to some such feature of the evidence presented to her as raised a real possibility that the applicant was disabled in a sense relevant to whether he acted deliberately and in particular to whether he acted in good faith per Wilson LJ at paras 35 36.
In cases such as the present, where the issue is whether an applicant is or would be vulnerable under section 189(1)(c) if homeless, an authoritys equality duty can fairly be described as complementary to its duty under the 1996 Act.
More specifically, each stage of the decision making exercise as to whether an applicant with an actual or possible disability or other relevant protected characteristic falls within section 189(1)(c), must be made with the equality duty well in mind, and must be exercised in substance, with rigour, and with an open mind.
There is a risk that such words can lead to no more than formulaic and high minded mantras in judgments and in other documents such as section 202 reviews.
It is therefore appropriate to emphasise that the equality duty, in the context of an exercise such as a section 202 review, does require the reviewing officer to focus very sharply on (i) whether the applicant is under a disability (or has another relevant protected characteristic), (ii) the extent of such disability, (iii) the likely effect of the disability, when taken together with any other features, on the applicant if and when homeless, and (iv) whether the applicant is as a result vulnerable.
Mr Underwood QC argued that the equality duty added nothing to the duty of an authority or a reviewing officer when determining whether an applicant is vulnerable.
I quite accept that, in many cases, a conscientious reviewing officer who was investigating and reporting on a potentially vulnerable applicant, and who was unaware of the fact that the equality duty was engaged, could, despite his ignorance, very often comply with that duty.
However, there will undoubtedly be cases where a review, which was otherwise lawful, will be held unlawful because it does not comply with the equality duty.
In Holmes Moorhouse [2009] 1 WLR 413, at paras 47 52, I said that a benevolent and not too technical approach to section 202 review letters was appropriate, that one should not search for inconsistencies, and that immaterial errors should not have an invalidating effect.
I strongly maintain those views, but they now have to be read in the light of the contents of para 78 above in a case where the equality duty is engaged.
Ms Monaghan QC supported Ms Mountfields case that the equality duty would apply in a case where an applicant had a relevant protected characteristic.
She also suggested that the effect of section 15 of the 2010 Act was to render unlawful a decision that such an applicant was not vulnerable because he could rely on the support of a third party.
I do not accept that submission.
Even assuming that it can be said that section 15(1)(a) is satisfied and such a decision amounted to what may be characterised as prima facie unlawful discriminatory treatment (which I would leave open, not least because it was not fully argued before us or even raised below), it seems to me that the treatment would be lawful pursuant to section 15(1)(b) on the basis that it was a proportionate means of achieving a legitimate aim.
Section 189(1)(c) is part of a scheme whose aim is to assist homeless people generally, and in particular to allocate the scarce resource of accommodation available to an authority to particular classes of homeless people.
In section 189(1), Parliament has decided the principles by reference to which that allocation is to be effected, and those principles cannot possibly be described as unreasonable.
When an authority assesses what support and care would be available to an applicant with a relevant protected characteristic, and whether that would, as it were, take him out of section 189(1)(c), it is simply putting Parliaments decision into effect.
Conclusions on these appeals
Mr Kanus appeal should be allowed, and Southwarks decision quashed.
The review letter is a full and considered document, but it suffers from the errors of (i) assessing Mr Kanus vulnerability by reference to another ordinary street homeless person, and (ii) assuming that an authority is entitled to treat members of a household as not vulnerable if one of them is mentally and physically healthy see paras 31(ii) and (iii) above.
It is plain that an appeal against a review cannot succeed in every case where the wrong comparator has been invoked or a wrong legal assumption is made.
Indeed, I do not think that Mr Kanus appeal could succeed if the only error was the reference to street homeless.
But in this case, the important factor to my mind is that Mr Kanu had and has what appears to be a pretty strong case for claiming to be vulnerable.
It is therefore quite conceivable that the review would have gone the other way if the right comparator had been used.
I would not, however, have allowed his appeal based on the equality duty.
While some might find the outcome of the review surprising, in my view, albeit in a rather prolix and slightly confusing way, Ms Emmanuel did approach the question of Mr Kanus vulnerability in a sufficiently full and considered way to satisfy the equality duty.
The letter appears to identify each aspect of his disability; to address with care the questions of how they would be dealt with if he was homeless; how they would affect him, if he was homeless; whether he would therefore be vulnerable; and why, in Ms Emmanuels view, he would not.
In forming this view, I do not place significant weight on the fact that she specifically mentioned the equality duty (although she gave the 2010 Act the wrong name) see para 31(ix) above.
If the earlier part of the letter had not complied with the duty, I doubt very much that the throw away reference to the equality duty could have saved it.
We were told that Mr Kanus medical condition had deteriorated since the review decision had been made, and that he was in hospital.
We were also told that, to their credit, Southwark had written to his solicitors indicating that he should make a fresh application as his deteriorating health justified a fresh Part VII application being made (following the guidance in Tower Hamlets London Borough Council v Rikha Begum [2005] EWCA Civ 340, [2005] 1 WLR 2103).
Mr Johnson can raise the same argument as Mr Kanu as to the use of the wrong comparator, and he can also raise the argument that the reviewing officer, Ms Thompson, wrongly relied on statistical evidence see para 21(i) and (iii) above.
Nonetheless, I would dismiss his appeal.
The review letter in his case is in my opinion a clear example of a review whose conclusion is not impeached by the fact that the proper comparator was not invoked nor indeed by the fact that the reviewing officer inappropriately relied on statistical evidence.
Thus, it appears clear from the review letter that Ms Thompson concluded that Mr Johnson did not suffer from depression, and therefore her comparison with ordinary actually homeless people and her reliance on the statistics were irrelevant as they would only come into play if he did suffer from depression see para 21(ii) above.
She also found that his physical ailments were irrelevant to the issue of vulnerability, for reasons which seem to me to be unexceptionable see para 21(iv) above.
Similarly, she concluded that his experiences in prison did not render him vulnerable see para 21(vi) above.
As to Mr Johnsons heroin problem, assuming (without deciding) that actual or potential problems with drugs fall within the expression other special reason, it appears to me that the finding that Mr Johnson was not vulnerable on this ground cannot be faulted.
It is true that the passages from the review letter quoted at para 21(v) above include references to the wrong comparator and statistical evidence.
However, as with the depression and physical complaints, I consider that those references are irrelevant.
That is because the earlier passages, read fairly, amount to a finding that his drug problems would have no significant effect on Mr Johnsons situation if he was homeless as he was not misusing drugs, and, even if he did misuse them, he [would] maintain the support that he currently [had].
It is fair to say that the passage dealing with Mr Johnsons drugs problem is not conspicuous for its clarity, but that appears to be its effect.
It is also germane to bear in mind that the equality duty does not extend to Mr Johnsons misuse of drugs (or to his predilection
for thieving) in the light of the Regulations referred to in para 18 above
I turn, finally to Mr Hotak.
It is clear that his appeal must be dismissed as it was agreed between counsel that the outcome of the appeal turned entirely on the answer on the second main issue, and, as I am against Mr Hotak in relation that point, his appeal must fail.
However, I must confess to real disquiet about that conclusion.
It does appear to me that the reviewing officer in his case went wrong in the same way as the reviewing officer in Mr Kanus case compare paras 26(i) and (ii) with paras 31(ii) and (iii) above and he also appears to have proceeded on the basis that he was entitled to assume that Ezatullah Hotak would continue to support Sifatullah Hotak if he was homeless see para 26(iii) above.
I readily accept that even the combination of the errors of (i) using a comparator based on the ordinary actual homeless person, (ii) referring to street homeless, (iii) apparently thinking that there was no duty to provide accommodation, and (iv) apparently thinking that a person could be assumed to support a vulnerable brother may not render a review decision bad in law.
Thus, there is a powerful case for saying that the third and fourth points were merely badly expressed (as otherwise it is unclear why the letter went on to consider Sifatullah Hotaks situation).
However, given the fact that Sifatullah Hotak appears to have had a strong case for saying that he did fall within section 189(1)(c), I would have taken the same view of his appeal as that of Mr Kanu.
However, I do not think that it would be right to allow Mr Hotaks appeal on a ground which has not been raised on his behalf at any stage of these proceedings not even in writing or orally on his appeal to this court.
We were told that, very properly, Southwark were continuing to house the Hotak brothers pending the outcome of this appeal.
I am well aware of the pressures on both the personnel and the financial resources of housing authorities in general, and of Southwark in particular.
However, in the light of his unusual degree of disability and concerning circumstances, I would very much hope that, despite the fact that we are dismissing his appeal, Sifatullahs potential homelessness will be reconsidered by Southwark.
Since we made this judgment available in draft to counsel for the parties, an application was made on behalf of Mr Hotak requesting the court to consider whether to quash the review letter in his case in the light of what is said in paras 87 and 88 above and by Lady Hale in para 102 below.
Rather than delay handing down the decision, we have asked Southwark to make submissions on this application, whereupon we will decide how to dispose of it.
In the event, however, I would dismiss the appeals in Hotak v Southwark London Borough Council (subject to what I say in para 89 above) and in Johnson v Solihull Metropolitan Borough Council, and would allow the appeal in Kanu v Southwark London Borough Council.
Counsel can no doubt agree appropriate forms of order.
LADY HALE: (dissenting in part)
Glossing the plain words of statutory provisions is a dangerous thing, as these cases show only too clearly.
The statutory provision says simply that: The following have a priority need for accommodation . (c) a person who is vulnerable as a result of old age, mental illness or handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside.
Yet we had reached the point where decision makers were saying, of people who clearly had serious mental or physical disabilities, that you are not vulnerable, because you are no more vulnerable than the usual run of street homeless people in our locality; and further, that if a person living with you, or who might reasonably be expected to live with you, is able and willing to look after you on the streets then you are not vulnerable.
In my view, both of those propositions are wrong.
The first question is whether it is necessary to introduce any comparison into the word vulnerable.
Adjectives are capable of bearing an objective meaning: one can say that a person is mentally ill without setting a comparative standard.
But I appreciate that there usually is some comparative standard implicit if I say that a person is tall, I probably mean that he is taller than average or perhaps taller than me.
It is also the case that many old people and most people who suffer from mental illness or handicap or physical disability are for that reason alone vulnerable in the dictionary sense of being susceptible to harm.
But the legislator did not provide that they were all in priority need, only that they are in priority need if they are vulnerable as a result.
The concept of being vulnerable must therefore have been intended to add something to those other characteristics.
But what?
To answer that, one needs to know what they will be vulnerable to or at risk of harm from.
The obvious answer is that they must be at risk of harm from being without accommodation: the object of the section is to identify those groups who have a priority need for accommodation.
Is that enough by itself? The problem, of course, is that we are all to some extent at risk of harm from being without accommodation women perhaps more than men, but it is easy to understand how rapidly even the strongest person is likely to decline if left without anywhere to live.
So this is why a comparison must be implied.
The person who is old, mentally disordered or disabled, or physically disabled, must as a result be more at risk of harm from being without accommodation than an ordinary person would be.
This is what I understand Lord Neuberger to mean by an ordinary person if homeless.
I agree.
The comparison is with ordinary people, not ordinary homeless people, still less ordinary street homeless people.
And it is ordinary people generally, not ordinary people in this locality.
It is when we come to the second proposition that I venture to disagree with Lord Neubergers view.
In my view, the source of the predicted third party support makes a difference.
I accept that, when considering whether the person concerned is more at risk of harm from being without accommodation than others, it is right and proper to take into account the statutory services which will be available to him in any event.
He will still be able to get the medication he needs.
He should still be able to obtain medical and nursing care from the National Health Service.
He should still be able to obtain counselling and other community services available for people with mental disorders or disabilities.
There is a statutory duty to supply such services and a corresponding right to receive them.
Charitable services are another matter, unless these are provided by arrangement with the statutory services in fulfilment of their statutory duties.
There is no legal obligation to provide charitable services.
Charitable services may come and go there may be a regular soup or sandwich run in some places at some times but not everywhere always.
Charitable services will set their own criteria for whom they will help and whom they will turn away.
Charitable services may run out of money.
I appreciate that the days are long gone when we could even think that the statutory services have a bottomless pit of money.
But we are all agreed that this is not a context in which local authorities are entitled to take their own resources into account.
But if they are entitled to take third party support into account, it must at the very least be consistent and predictable and reasonable to expect the third party to provide it for this particular person.
That is one reason for doubting whether it is appropriate to take family support into account but there is another more important one.
I do not see how it can be consistent with the intention of the statute to take into account help which may be available from other members of the household, that is, those already living with the vulnerable person or those who might reasonably be expected to do so.
These will usually be other family members, including cohabitants, although they might be friends who have been sharing a home together.
Most people who live together help one another to some extent, and especially if the person who needs help is old, mentally disordered or disabled, or physically disabled.
It would be a sad world indeed if they did not.
I do not believe that this provision was catering only for that sad world.
It is premised on there being at least one member of the household who is vulnerable and one or more others who are not.
Both the vulnerable and the non vulnerable qualify as being in priority need.
The non vulnerable can apply on behalf of them both.
It is difficult to think that Parliament contemplated that the non vulnerable could only apply on behalf of them both if he was not looking after the vulnerable one.
Why on earth would Parliament want to give such a heartless person priority and priority over the person who was fulfilling his familial duties?
This is a separate point from the perverse incentive that taking into account help from household members would produce.
It is a point about the people whom Parliament is most likely to have wanted to single out as having a priority need.
The section draws no distinction between those who are and those who are not providing help to their old or disabled house mate, but if Parliament had wanted to distinguish between the two, it would surely have found the helpful one more worthy of priority than the unhelpful.
This view of the matter is at least consistent with that of all members of the House of Lords in R v Tower Hamlets London Borough Council, Ex p Ferdous Begum, reported with R v Oldham Metropolitan Borough Council, Ex p Garlick [1993] AC 509.
The applicant was a 24 year old Bangladeshi woman who lacked all hearing, speech and education.
She could communicate only through a form of sign language unique to her.
She arrived in the United Kingdom with her parents, sisters and a brother.
Her fathers application for accommodation under the forerunner to the 1996 Act was declined on the ground that the family had become homeless intentionally, having left accommodation in Bangladesh which it was reasonable for them to continue to occupy.
The daughter, with the help of her father and solicitor, then made her own application, contending that because of her incapacity she could not have acquiesced in any act or omission of her father rendering her homeless.
The local authority held that if she could not acquiesce in her fathers behaviour, neither could she acquiesce in making her own application.
The majority of the House of Lords accepted, not only that she could not apply, but also that her father could not apply on her behalf.
But this was very clearly on the basis that, had the family not become homeless intentionally, the father would have been in priority need because of his daughters vulnerability.
Lord Griffiths said this (p 519G): Many vulnerable people are cared for in the community by their relatives or other good hearted people with whom they live.
If such a carer should have the misfortune to become homeless then [section 189(1)(c)] gives him the status of priority need, and provided his homelessness was not intentional, he will qualify for an offer of accommodation which will enable him to continue to look after the vulnerable person.
Lord Slynn of Hadley disagreed with the majority.
In his view the father could apply on behalf of the daughter who lacked the capacity to do so.
But he agreed with them on the point made above, at p 522E: If the vulnerable person is alone with no existing carer, he may need special accommodation.
If he is not alone but has an existing carer or family who might reasonably be expected to reside with him then the accommodation must be available for their occupation also.
It might, of course, be said that no one took the point which is now taken in this case.
In fact the reverse was the case.
It was an essential part of the argument of counsel for the local authority, Mr Underwood QC, that, if a homeless person was mentally incapable of making an application, but had a carer in the same household who was unintentionally homeless, the carer would be entitled to accommodation (under the predecessor to section 189(1)(c)) for them both.
Counsel in this case has cited no authority at all for the proposition that the existence of a carer within the same household can mean that a person who is otherwise obviously vulnerable is not to be so taken.
Ex p Ferdous Begum is the closest the cases get to discussing the point and it is all the other way.
In my view, therefore, Sifatullah Hotak remains vulnerable for the purpose of section 189(1)(c) of the 1996 Act despite the devoted care which he receives from his brother Ezatullah.
As it is clear that the authority would have accepted that he was vulnerable were it not for his brothers support, I would allow the appeal and declare that the appellant is in priority need.
But even if I were wrong about that, I would allow his appeal.
It is true that the issue of law upon which Mr Hotak was given permission to appeal to this court was whether the local authority was entitled to take into account the existence of third party support and assistance.
But within the grounds of appeal was an attack upon the courts application of the principles laid down in R v Camden London Borough Council, Ex p Pereira (1998) 31 HLR 317 and Osmani v Camden London Borough Council [2004] EWCA Civ 1706.
This court has agreed upon a substantial modification of those principles, with the result that the local authority misdirected themselves in law in at least two respects: We do not believe . that an authority is required to make provisions for households who are comprised of adults in reasonable physical health, and we are not satisfied that he will be at more risk of harm, injury or detriment than another ordinary street homeless person if he were street homeless .
There is, as it seems to me, good reason to predict that, even taking into account his brothers help, the local authority would now conclude that Mr Hotak remained more vulnerable than an ordinary person.
To decline to give him the same relief as we have given for those reasons to Mr Kanu is surely the triumph of form over substance.
Had his counsel been asked whether he also adopted the argument of counsel for Mr Kanu, should he fail on his main point, he would, I am sure, have said yes.
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Under section 188 of the Housing Act 1996 (the 1996 Act) local authorities have a duty to secure that accommodation is made available for applicants who are homeless and have priority need.
Priority need is defined in section 189(1) of the 1996 Act and includes at paragraph (c) persons who are vulnerable as a result of old age, mental illness or handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside.
The Appellants applied for accommodation on the basis that they had priority need.
The First Appellant has very significant learning difficulties and symptoms of depression and PTSD.
He is cared for by his brother.
Southwark Borough Council (Southwark) refused his application on the grounds that, if homeless, he would be provided with the necessary support by his brother.
The Second Appellant has multiple physical problems as well as psychotic symptoms and suicidal ideation.
He was deemed by Southwark not to be in priority need because he would not be at a greater risk of injury or detriment than an ordinary street homeless person due to the ability of his wife and son to fend for the whole household.
The Third Appellant claimed to be vulnerable because he had become addicted to heroin while in prison and was in poor physical and mental health.
Solihull Metropolitan Borough Council (Solihull) found that he was not in priority need on the basis that he would not be less able to fend for himself than an ordinary homeless person.
The First and Third Appellants were unsuccessful in the courts below.
The Second Appellant succeeded in the County Court but lost in the Court of Appeal.
Three issues arise in the present appeal: (1) Does the assessment of whether an applicant is vulnerable for the purposes of section 189(1)(c) of the 1996 Act involve an exercise in comparability, and, if so, by reference to which group of people is vulnerability to be determined? (2) When assessing vulnerability, is it permissible to take into account the support which would be provided by a family member to an applicant if he were homeless? (3) What effect, if any, does the public sector equality duty under section 149 of the Equality Act 2010 (the 2010 Act) have on the determination of priority need under the 1996 Act in the case of an applicant with a disability or any other protected characteristic?
Lord Neuberger (with whom Lord Clarke, Lord Wilson and Lord Hughes agree) dismisses the First Appellants appeal, but Lady Hale would have allowed his appeal.
All five Justices allow the Second Appellants appeal and dismiss the Third Appellants appeal.
On the first issue in the appeal, vulnerable in section 189(1)(c) connotes that the applicant must be significantly more vulnerable than an ordinary person who happened to be in need of accommodation [55, 59].
The decisions of the Court of Appeal on this issue have all accepted that vulnerability has to be assessed comparatively [48] [50].
This is correct; vulnerable carries a necessary implication of relativity.
It can fairly be said that anyone who is homeless is vulnerable.
So, it follows that section 189(1)(c) must contemplate homeless people who would be more vulnerable than many others in the same position [51].
Parliament probably did not intend vulnerability to be judged by reference to what a housing officer thought to be the situation of an actual homeless person.
Such an approach would be more likely to lead to arbitrary and unpredictable outcomes.
The comparator could not be an ordinary homeless person in the area of the relevant authority as this could lead to unacceptable outcomes with vulnerable people being put out on the streets [56].
The 1996 Act does not refer to street homeless as a category or distinguish between the situations which may constitute homelessness; this calls into question the authority making use of the term in assessing their duty to an applicant [42] As to the relevance of support from family members, an applicants vulnerability under section 189(1)(c) has to be assessed by reference to his situation if and when homeless, which involves a contextual and practical assessment of the applicants physical and mental ability when homeless.
As such, any services and support that would be available to the applicant if he were homeless must be taken into account [62].
This conclusion is supported by the purpose of the legislation in question.
Those who are more vulnerable in practice if they are homeless can be expected to receive priority treatment.
It would be contrary to common sense to ignore any aspect of the actual or anticipated factual situation when assessing vulnerability [63].
It does not matter whether the support is provided pursuant to a legal obligation, but housing authorities can only take third party support into account where they are satisfied that it will be provided on a consistent and predictable basis [65].
The primary focus of section 189(1)(c) is on the applicant, not the benefit of the third party and it would place an excessive burden on housing authorities if family support were disregarded.
However, the mere fact that support is available does not of itself prevent the applicant from being vulnerable; there must be a case specific analysis of whether the support can obviate the vulnerability [69] [70].
On the third issue in the appeal, the weight and extent of the public sector equality duty are highly fact sensitive and dependent on individual judgment [74].
The authoritys equality duty was complementary to its duty under the 1996 Act.
Each stage of the decision must be made with the equality duty well in mind and the officer must focus very sharply on: (i) whether the applicant has a relevant protected characteristic, (ii) its extent, (iii) its likely effect, when taken together with any other features, on the applicant if and when homeless, and (iv) whether the applicant is vulnerable as a result [78].
Lady Hale would have allowed the First Appellants appeal.
She concludes that, while any statutory services which will be available to an applicant should be taken into account when assessing his vulnerability, family support should not [93].
It is not consistent with the intention of the statute to take into account help which may be available from other members of the household.
Both the vulnerable person and their non vulnerable family member qualify as being in priority need.
The 1996 Act permits the non vulnerable family to apply on behalf of both themselves and the vulnerable person.
Parliament did not intend applications to be made by a family member who was not looking after the vulnerable person [95].
There is House of Lords authority for this proposition and none for the suggestion that the existence of a carer within the same household can mean that a person who is otherwise obviously vulnerable is not to be treated as such [99].
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This appeal arises out of divisions which have arisen within a Sikh sect associated with three Gurdwaras (Sikh temples) in Bradford, Birmingham and High Wycombe.
It raises two questions arising out of the trusts on which the Gurdwaras are held.
The questions are (i) the extent to which it is open to trustees to alter, or restrict, the terms of the trusts upon which they hold property, and (ii) the extent to which the court can and should refuse to determine issues of religion or religious belief in legal proceedings.
The Court of Appeal confined itself to issue (ii).
They decided that the whole dispute was non justiciable and ordered a permanent stay of the entire proceedings, thus making it unnecessary to deal with issue (i).
The factual background
On 22 April 1987, fourteen men, all Sikhs living in or near Birmingham, attended a meeting at which certain decisions were passed unanimously according to a memorandum (the April 1987 memorandum).
An unchallenged translation of the April 1987 memorandum records that it was decided that: under the guardianship of His Holiness Brahamgiani, revered 108 Sant Maharaj Baba Gian Singh Ji of Nirmal Kutia Johal, and on his orders, wishes and instructions, another Gurdwara be established in the Midlands area of England for the benefit and forever success of the Sikh faith, brotherhood and the devotee congregations .
His Holiness there referred to was the then holder of the office of Holy Saint, and known for the purpose of these proceedings as the First Holy Saint.
The First Holy Saint had succeeded the original Holy Saint (who had died in 1971), as the religious head of the abode of saints at Nirmal Kutia in the Indian village of Johal.
The memorandum also recorded that it was decided that another large gathering be called on 17 May 1987.
A meeting duly took place on 17 May 1987, which was attended by twenty eight men, and which resulted in decisions which were recorded in another memorandum (the May 1987 memorandum).
This memorandum, again in an unchallenged translation, records a number of decisions.
First, that, under the Supreme Authority of the First Holy Saint (referred to in the memorandum as His Holiness), a Gurdwara be established in the Midlands area, which was to be similar to a Gurdwara which had been acquired in Bradford in 1982.
Secondly, that this Gurdwara be established in Birmingham under the discipline and headship of His Holiness.
Thirdly, that the Gurdwara and all services shall always be conducted according to the orders and wishes of His Holiness.
The fourth decision was that only adherents of Sikh faith could be a trustee or on the management committee.
Fifthly, it was decided to look for a building for the Gurdwara and to purchase it according to orders from His Holiness.
Finally, a committee of nineteen men was recorded as formed to serve.
Meanwhile, donations were being collected from devotees, and a property at Oldbury, Birmingham (the Birmingham Gurdwara) was found and, on 17 September 1987, it was inspected by the First Holy Saint.
According to a memorandum (the September 1987 memorandum) of that date, he gave his approval with delight to its purchase.
The memorandum records that he gave the responsibility of managing [the Birmingham] Gurdwara to five men, of whom four, the first, second and third respondents and Tarlochan Singh (the original trustees) were described as trustees.
The September 1987 memorandum also stated that only Maharaj Sri 108 Sant Maharaj Baba Gian Singh Ji Nirmal Kutia, Johlan will have the authority to change any trustee, management member and the whole management system of the Gurdwara Sahib in any form at any time.
The Birmingham Gurdwara was then purchased with a combination of the donations collected from devotees and loans, which were subsequently discharged from further donations.
The Birmingham Gurdwara was transferred to the original trustees by a transfer dated 19 November 1987 (the transfer).
The transfer referred to the original trustees as Trustees of the Gurdwara Amrit Parchar Dharmik Diwan (UK) Birmingham (to whom we will refer generically as the Birmingham trustees), and to the property transferred as know[n] for identification only as an Office Block but which is to be known as a Sikh Temple.
The transfer contained a covenant by the original trustees with the transferor that for ten years the property would not be used other than as a Temple, Synagogue or Church.
On 15 January 1991, the original trustees executed a Deed of Trust (the 1991 Deed), under which they declared in clause 1 that they were the duly appointed trustees of the Gurdwara Amrit Parchar Dharmik Diwan (UK) Birmingham, which they defined as the Society (Amrit Parchar refers to a form of baptism).
The Society was described in clause 1 as a religious organisation preaching and practising the Sikh faith, following the teachings of [the First Holy Saint] resident at Nirmal Kutia (the Saint) or his successor.
Clause 2 referred to the Birmingham Gurdwara (defined as the property), and in clause 3 the original trustees declared that they held it as Trustees for the Society to be dealt with as may be directed in writing by the Saint or his successor.
In Clause 4, the original trustees declared that the trust for sale on which the property was held would not be exercised without the consent in writing and the direction of the Saint or his successor.
Clause 5 empowered the Saint or his successor at any time [to] remove the Birmingham trustees or any of them and appoint new trustees.
Clause 7 provided that, in the event of the Society being wound up or ceasing to exist, the property and all other assets in the hands of the Birmingham trustees shall be held in trust for the Saint or his successor.
At around this time, on 24 February 1991, the Constitution of the Society (the 1991 constitution) was drawn up and signed by a number of men including the first, second, third and fourth respondents.
The 1991 constitution applied to the communities which worshipped at both the Bradford and the Birmingham Gurdwaras.
It described the Societys aims and objects as including [t]o preach Sikhism, doctrine of Holy Shri Guru Granth Sahib and teachings of Ten Gurus from Guru Nanak Dev Ji to Guru Gobind Singh Ji, as well as others, including encouraging ceremonial baptism, discouraging the use of alcohol and smoking, encouraging Panjabi education, and establishing a Sikh information centre and libraries.
Clause 10 of the 1991 constitution stated that changes in the Societys management committee could only be made by [the first Holy Saint] or his successor, and, at the end of the constitution there was added PS Word successor in the above text means Sant Harbhajan Singh Ji (Brakat), who was at that time the assistant to the first Holy Saint (hereinafter Sant Harbhajan Ji).
On 20 September 1993, a property was acquired at High Wycombe (the Wycombe Gurdwara) with the assistance of donations and loans from devotees.
The transfer was made to the sixth and eighth appellants and the fifth and sixth respondents (the Wycombe trustees), who were described as holding the property upon the trusts declared by a Deed of even date herewith.
By that Deed, the Wycombe trustees declared that they held the Wycombe Gurdwara in accordance with [the Societys] constitution.
At that time, or shortly afterwards, the 1991 constitution was replaced by a new constitution (the 1993 constitution) which applied to the communities which worshipped at the Bradford, Birmingham and Wycombe Gurdwaras (the three Gurdwaras).
The 1993 constitution was in very similar terms to the 1991 constitution and, in particular, it included the same clause 10 and PS as the 1991 constitution.
On 31 August 2001, the First Holy Saint appointed the third appellant as one of the Birmingham trustees in place of Tarlochan Singh.
Three months later, the First Holy Saint died and was succeeded by Sant Harbhajan Ji, who died a few months later in March 2002.
It is the appellants pleaded case that, on 20 March 2002, the ninth appellant, Saint Sant Jeet Singh Ji Maharaj (Sant Jeet Singh), was then recognised as the head of Nirmal Kutia Johal in India, and thereby became the Third Holy Saint, as confirmed by a formal written resolution signed by 24 saints and eleven dignitaries.
On 13 July 2003, at a joint meeting of the management committees of the three Gurdwaras, Sant Jeet Singh was recognised as the Third Holy Saint, in a resolution signed by a number of men, including the first, second, third, fourth, fifth and sixth respondents.
On 31 December 2003, a revised Constitution (the 2003 constitution) for the three Gurdwaras was agreed in Nirmal Kutia, and it was signed by various men, including the six respondents.
This 2003 constitution was quite similar to the 1991 and 1993 constitutions, but it had somewhat more aims and a few further provisions.
It referred to the consent of Sant Jeet Singh and his successor being required for certain changes in personnel, and contained a NOTE at the end stating that [t]he word successor means His Holiness Sant Baba Jaspal Singh .
New trust deeds were prepared in respect of each of the Birmingham and Bradford Gurdwaras.
That in respect of the Bradford Gurdwara was executed on 13 February 2004.
However, the first, second and third respondents (as three of the four Birmingham trustees) refused to execute the new trust deed in respect of the Birmingham Gurdwara.
By deeds executed on 8 June 2004 and 20 June 2006, Sant Jeet Singh purported to remove the first, second, third and fourth respondents as Birmingham trustees, and to replace them with the second, third, fourth and fifth appellants.
By another deed dated 12 June 2008, Sant Jeet Singh purported to remove the fifth and sixth respondents as Wycombe trustees, and to replace them with the sixth, seventh and eighth appellants and two other men.
On 8 October 2008, the first, second and third respondents (as the other three Birmingham trustees) purported to remove the third appellant as a trustee and to replace him with the fourth respondent.
The procedural history
On 25 June 2008, the appellants issued proceedings in the High Court seeking various heads of relief, including removal of the first, second, third and fourth respondents as Birmingham trustees, and as members of its management committee, and for connected relief (as well as for relief in connection with the Wycombe Gurdwara).
Paras 3 6 of the particulars of claim explained that Birmingham Gurdwara was a place of Sikh worship, that Sikhism involves worshipping ten successive Gurus, that the Nirmalas are a sect of the Sikh religion founded by the tenth Guru, Gobind Singh Ji, that the original Holy Saint started preaching in about 1920, and that Nirmal Kutia is the abode of the saints of Nirmal, a sect which is distinguished by its adherence to baptism and strict adherence to Rehet Maryada, the Sikh code of conduct.
In para 28, it was stated that the three Gurdwaras were religious endowments having the purpose of the advancement of tenets of the Holy Saints of Nirmal sect.
Although the particulars of claim were rather long, the essence of the claim in relation to the trusteeship of the Birmingham Gurdwara was that Sant Jeet Singh, as the successor of the First Saint, had the right to remove and appoint trustees under the 1991 Deed, and that he had validly removed the first, second, third and fourth respondents as Birmingham trustees and as management committee members in June 2004.
They sought similar relief in respect of the trusteeship and management committee of the Wycombe Gurdwara.
The Defences of the respondents did not admit paras 3 5 and denied para 28, of the particulars of claim.
More specifically, it was alleged in the Defences that the Second Holy Saint died in March 2002 without appointing a successor, and, in any event, the expression successor in the 1991 Deed only applied to the Second Holy Saint.
The respondents contended that the 1991 Deed could not validly extend the power to remove or appoint trustees to anyone other than the First Holy Saint.
The respondents also raised counterclaims, which included a claim for declarations that the first, second, third and fourth respondents were the Birmingham trustees, and that Sant Jeet Singh had no power of removal or appointment of Birmingham trustees or any other power in relation to the Birmingham Gurdwara or its management.
The appellants wished to amend their particulars of claim, and the respondents not only opposed this on the ground that the claim had no realistic prospect of success, but sought to strike out the claim as it raised issues which were said to be unjusticiable.
Those two issues came before His Honour Judge David Cooke, sitting as a judge of the High Court in the Birmingham District Registry.
On 12 September 2011, he gave the appellants permission to amend their particulars of claim, and dismissed the respondents application to strike out the claim [2011] EWHC 2442 (Ch).
He gave the respondents permission to appeal on the latter point.
The amended particulars of claim were served a week later.
The respondents appealed to the Court of Appeal on the issue of justiciability and also on the permission to amend (for which they obtained permission to appeal from the Court of Appeal).
The Court of Appeal allowed their appeal for reasons contained in a judgment given by Mummery LJ (with whom Hooper and Pitchford LJJ agreed) [2012] PTSR 1697.
He held that there were no judicial or manageable standards by which the issues could be judged, because they turned on the question who is the successor of the original founder of the temple trusts, which was an issue which depends on the religious beliefs and practices of Sikhs generally and the Nirmal Kutia Sikh institution in particular, and which is not justiciable by the English courts see para 77.
The appellants now appeal to this Court.
When considering the arguments, it is only necessary to deal with those which relate to the Birmingham Gurdwara and the Birmingham trustees, as there are no different arguments which relate to the Wycombe Gurdwara and the Wycombe trustees.
The issues
During the course of the argument before us, four issues emerged as likely to be in dispute, if this case were to go to trial on the basis that all issues were justiciable.
It may be that there would be other issues, but, as far as this appeal is concerned, we should concentrate on the four issues.
The first issue is whether the respondents are right in suggesting that the 1991 Deed was invalid if and in so far as it purported, by clause 5, to confer the power to appoint and dismiss trustees on anyone other than the First Holy Saint.
The second issue, which only arises if the appellants are right on the first issue, is whether the reference to the successor of the First Holy Saint in the 1991 Deed is to be read as limited to Sant Harbhajan Ji, ie the anticipated, and actual, immediate successor to the First Holy Saint, as the respondents contend, or whether it extended to each subsequent successor, as the appellants argue.
The third issue, which only arises if the appellants are right on the first and second issues, is whether Sant Jeet Singh is indeed a successor to the First Holy Saint ie whether he is indeed the Third Holy Saint as the appellants contend and the respondents deny.
During argument, it appeared that the respondents wished to raise a fourth issue, albeit that it may be an aspect of the third issue, namely that Sant Jeet Singh has departed from the tenets of mainstream Sikhism and is on character grounds unfit to be the successor.
It is regrettable that this issue, even if it is only relied on as an aspect of the third issue, should only have become apparent during the hearing of an appeal in the Supreme Court against a pre trial decision of the Court of Appeal based on the parties respective pleaded cases.
We required the respondents to give written particulars of their case in connection with the fourth issue, to which the appellants responded, but that all had to take place after the hearing had concluded.
Before considering these issues, it is right to say that it is very hard to see how the decision of the Court of Appeal to stay the proceedings generally could possibly have been justified in the light of the first two issues, especially as they should logically be considered first.
The question whether the original trustees, who were apparently resident in England and held property in England, had the power to execute a document such as the 1991 Deed, turns solely on the English law of trusts, and cannot conceivably involve an unjusticiable issue.
As to the second issue, it turns on a question of interpretation of the 1991 Deed, and it would be more than strange if a pure question of interpretation of a trust deed executed in England relating to property in England and clearly intended to be governed by English law, could not be resolved by an English court.
If the respondents succeed on either of these two issues, the claim would fail.
On the other hand, it is at least understandable why it might be said that the third and fourth issues are not justiciable.
In those circumstances, the sensible approach to adopt is to deal with the first two issues in turn, then to deal with the principles of non justiciability, and decide whether the Court of Appeal was right at least in relation to those issues, and finally to mention two procedural points.
The first issue: was clause 5 of the 1991 Deed invalid?
The respondents case on the first issue relies on the points that the terms of the trust on which the Birmingham Gurdwara was acquired, and the basis upon which donations were sought and paid for the purpose of acquiring the Birmingham Gurdwara (and, no doubt, the basis upon which any further donations were paid to the original trustees until the 1991 Deed was executed) were those set out in the April 1987 memorandum, the May 1987 memorandum and the September 1987 memorandum (together the 1987 memoranda).
In these circumstances, runs their argument, it was not open to the original trustees to vary the terms of the trust as they purported to do in clause 5 of the 1991 Deed by extending the right to appoint and dismiss trustees from the First Holy Saint to his successor .
The appellants answer to this has two prongs.
First, it is said that there is a general principle that, where money or other property is made over to trustees for somewhat indefinite charitable purposes, it is open to the trustees (indeed it may be incumbent on them) to ensure the preparation of a more formal and more specific document setting out the terms of the trust.
Secondly, the appellants contend that the relevant respondents (ie those concerned with the Birmingham Gurdwara rather than the Wycombe Gurdwara), as trustees and/or as active management committee members, cannot challenge the validity of the 1991 Deed, especially as they have for many years acted as if they held office under its terms.
In support of both arguments, Mr Mark Herbert QC relied on the reasoning of Sir Herbert Cozens Hardy MR in Attorney General v Mathieson [1907] 2 Ch 383.
In that case, the Rev John Wilkinson, who appears to have run various charities in the Stoke Newington area of London, including the Mildmay Mission to the Jews, received 1350 from a lady, who lived in the area and suggested to him that the money might be used for a convalescent home.
When he pointed out that the provision of a home and school for children was more pressing, she said Use it for that or any other way you like, and he then used it to purchase a property, Cromwell Lodge, in his own name, and without any declaration of trust.
He then used the remainder of the money to fit out and equip Cromwell Lodge, which he then used as a school and home for Jewish children.
A year later, in September 1885, a trust deed was executed conveying Cromwell Lodge, together with other property, to trustees (including Mr Wilkinson) on trust for the purposes of the Mission, namely to preach the Gospel to Jews in Great Britain and Ireland (and also in foreign parts if it is deemed desirable), employing in the prosecution of the work activities including homes for destitute children, agencies for procuring employment and assisting emigration, night schools , sewing classes, and for promoting the salvation of souls.
The 1885 Deed contained various other provisions, relating to matters such as the trustees powers of sale, investment and appointment of a director (inevitably, Mr Wilkinson).
The question before the Court of Appeal in Mathieson was whether the Attorney Generals consent to the proposed sale of Cromwell Lodge was required under the Charitable Trusts Act 1853, which turned on the question whether the 1885 Deed was binding on the trustees, or whether, as Kekewich J had held, the 1885 Deed made no difference to Mr Wilkinsons powers see at p 387.
If the former view was correct then the trustees could not apply the proceeds of sale of Cromwell Lodge as income; if the latter view was right, they could do so only with the consent of the Attorney General.
The Court of Appeal disagreed with Kekewich J, and held that the latter view was right.
Sir Herbert Cozens Hardy MR said at p 394 that the trustees appointed under the 1885 Deed: do not, and cannot, challenge the validity of the trust deed under which they are acting, and it is plain that it would be a breach of trust to apply the proceeds of the sale of the house as income.
Even if Mr Wilkinson could originally have done this, they are now bound to treat the proceeds of sale as capital, and invest it accordingly.
Sir Herbert then continued: There is, moreover, a further difficulty in the way of the trustees.
When money is given by charitable persons for somewhat indefinite purposes, a time comes when it is desirable, and indeed necessary, to prescribe accurately the terms of the charitable trust, and to prepare a scheme for that purpose.
In the absence of evidence to the contrary, the individual or the committee entrusted with the money must be deemed to have implied authority for and on behalf of the donors to declare the trusts to which the sums contributed are to be subject.
If the individual or the committee depart from the general objects of the original donors, any deed of trust thus transgressing reasonable limits might be set aside by proper proceedings instituted by the Attorney General, or possibly by one of the donors.
But unless and until set aside or rectified, such a deed must be treated as in all respects decisive of the trusts which, by the authority of the donors, are to regulate the charity.
And it is irrelevant to urge that the donors did not originally give
any express directions on the subject
Thus, there were two strands to the decision in Mathieson.
The first is that trustees who have been appointed under the terms of a trust deed cannot challenge the validity of the deed.
That would presumably be justified on the ground that the only basis upon which they have any title to involve themselves in the affairs of the trust is as trustees, and they cannot therefore impugn the very document under which they achieved that status.
They would be almost tantamount to denying their own title.
The second strand in the decision is that, where a charitable trust is initially created by donors in general or vague terms, it is open to the trustee to execute a more specific deed which limits the terms of the trust, provided it does not conflict with the terms on which the donors made their donations and that a challenge to any terms of the specific deed must be made by the Attorney General (or possibly by the donors).
There does not appear to have been much discussion or development of the principles laid down in Mathieson, either in the textbooks or in the cases.
Counsel have drawn our attention to two subsequent first instance decisions where the second strand of the decision was considered.
In In re Orphan Working School and Alexandra Orphanages Contract [1912] 2 Ch 167, Parker J followed the second strand of the decision, although, as he said, the subsequent trust deed in his case widened rather than narrowed the trusts on which the property in question was held see at p 180.
However, he upheld the validity of the deed on the ground that the committee of the charity concerned were the agents for declaring the trusts, and what they declare is prima facie to be considered as carrying out the intention of the donors.
The second strand of the decision in Mathieson was also considered by Walton J in the unreported decision of Jeeves v Imperial Foods Ltd, Pension Scheme (unreported, 27 January 1986).
As he explained, there may be many occasions in law in which a fund is held on trust, but at the particular point there is no final definitive trust deed.
He went on to say that it may very well be that a person who had contributed to the fund in question would be in a position to object to some provision which was never contemplated, but which was put or attempted to be put into the final trust deed.
On behalf of the respondents, Mr Mark Hill QC suggested that we could decide this first issue in the respondents favour, on two grounds namely (i) the 1991 Deed plainly went further than the donors would have envisaged, or the terms of the 1987 memoranda permitted, and (ii) the original trustees did not, as a matter of general trust law, have the ability to allocate the right to appoint or dismiss trustees in any event.
We would reject the contention that we should accept ground (i), at any rate at this interlocutory stage.
It is questionable whether the respondents, or at least those who were appointed as Birmingham trustees, can get round the first strand of the decision in Mathieson.
It is true that they did not become trustees as a result of the 1991 Deed, as they became trustees when they purchased the Birmingham Gurdwara.
But if that prevents the first strand in Mathieson applying, it would appear to mean that, in Mathieson itself, Mr Wilkinson could have impugned the 1885 Deed which he prepared and executed, as he had become a trustee when the money was handed over to him in 1884.
It seems to us questionable whether the Master of the Rolls would have envisaged that Mr Wilkinson was in a different position in this connection from the other trustees.
Like Mr Wilkinson, the first, second and third respondents declared that they were trustees of the relevant trust, and set out the terms of that trust, in the relevant Deed and signed it.
As to the second strand in Mathieson, the precise status of the 1987 memoranda is not entirely clear, but, even assuming in the respondents favour that the 1987 memoranda do govern the terms of the trust as far as they go and that clause 5 goes further than those memoranda, it is not inconsistent with what is contained in them.
On the respondents case, the 1987 memoranda limit the power of appointment and dismissal of trustees to the First Holy Saint and are silent as to that power after his death; if that is right, then according that power to his successors was merely an administrative extension of, and not inconsistent with, what was in the memoranda.
Certainly, there is nothing in clause 5 which is, at least on the face of it, inconsistent with any provision of the 1987 memoranda, or which appears, in the words of the Master of the Rolls, to depart from the general objects of the original donors.
Subject at any rate to Mr Hills ground (ii), clause 5 of 1991 Deed may well be the sort of provision which could have been perfectly properly included in a definitive deed of the type which Sir Herbert Cozens Hardy MR and Parker J respectively sanctioned in Mathieson and Orphan Working School respectively, namely to prescribe accurately the terms of the charitable trust.
Quite apart from this, again subject to ground (ii), in view of what was said towards the end of the second passage quoted from Mathieson, we have considerable doubts whether anyone other than the Attorney General (or, conceivably, any of the original donors) would be entitled to raise the point.
In any event, we note that the 1991 Deed has been expressly treated as valid at least on one occasion in August 2001 when a new trustee was appointed, and was not challenged for twelve years, and that may provide another difficulty for the respondents.
Mr Hills ground (ii) is based on the proposition that the trust in this case was formed before 1991, namely (at the latest) when the Birmingham Gurdwara was transferred to the original trustees.
On that basis, he contends that at that point the power to appoint (and dismiss) trustees was crystallised in accordance with section 36(1) of the Trustee Act 1925, which limits the power to: (a) the person or persons nominated for the purpose of appointing new trustees by the instrument, if any, creating the trust; or (b) if there is no such person, or no such person able and willing to act, then the surviving or continuing trustees or trustee for the time being, or the personal representatives of the last surviving or continuing trustee.
In these circumstances, runs the respondents argument, section 36(1)(a) applied so long as the First Holy Saint lived, and, when he had died, section 36(1)(b) came into effect, and it was not open to the trustees to delegate their power of appointment thereunder for the future to anybody else.
It is true that the power of trustees of a fully constituted charitable trust do not include the right to delegate the power to dismiss or appoint trustees to a third party, unless of course the trust deed gives them that power see the discussion in Underhill and Hayton, Law of Trusts and Trustees (18th edition, 2010) paras 51(1)(b) and 51(11).
However, where the principle in Mathieson applies, it seems to us that trustees must have the power to include new provisions in the trust deed which they would not normally have the power to impose in the case of a fully constituted trust.
Accordingly, it is at least arguable that, where the terms of a trust are so sparse that the trustees have implied authority for and on behalf of the donors to declare the trusts to which the sums contributed are to be subject, that authority extends to including a provision such as clause 5 of the 1991 Deed.
It is worth noting that the 1885 deed of trust in Mathieson provided that the trustees could delegate their management powers to a director, and that the first director, Mr Wilkinson, should have power to appoint his successor see at p 386.
We have expressed our views on the various points raised by the first issue in an intentionally tentative basis, as we consider that, if the respondents wish to pursue this first issue at trial, they should be free to do so.
It would not be right for us to decide any of the various points at this interlocutory stage, given that (i) the law in this area is surprisingly undeveloped, (ii) the issue, and the points to which it gives rise, have not been fully pleaded even now, (iii) the resolution of those issues is very likely indeed to be fact sensitive, (iv) the facts of this case are both unusual and unclear, (v) the arguments of the parties have changed as the proceedings have progressed, and (vi) the various points have not been considered by Judge Cooke or by the Court of Appeal.
Mr Herbert did not press us to rule in the appellants favour on the issues: indeed, it was his case that we ought not to determine them.
We think that that was a wise decision.
The second issue: the meaning of successor
The question is whether the reference in the 1991 Deed to his successor is to the Second Holy Saint, or whether it includes all subsequent Holy Saints.
On the face of the 1991 Deed, it appears to us that, as a matter of language, his successor could be limited to the immediate next Holy Saint, or it could extend to each successive Holy Saint.
It is true that it is expressed in the singular, but the effect of section 61(c) of the Law of Property Act 1925 provides that [i]n all deeds, unless the context otherwise requires, [t]he singular includes the plural and vice versa.
Given that there is no indication that the trusts declared by the 1991 Deed were intended to be limited in time, and indeed the natural implication is very much the other way, we can see great difficulties for the respondents argument on this second issue.
However, we do not think it right to resolve the second issue either.
The factual matrix is always important when construing a document, and, while it by no means always justifies live evidence when an issue of interpretation of a document is contested, it does so in this case for reasons (iii) to (vi) set out in para 34 above.
In addition, although the force of the point is blunted by the fact that even the earliest Constitution, the 1991 Constitution, was signed after the 1991 Deed, it is conceivable that the respondents may be able to derive some assistance from the PS at the end of the 1991 and 1993 Constitutions and the Note at the end of the 2003 Constitution.
Those words may have been included not to limit the meaning of successor in the Constitutions, but merely to identify the current successor, or for some other reason, but their natural meaning could be to limit the meaning of successor in the 1991 and 1993 Constitutions to the Second Holy Saint, and in the 2003 Constitution to Sant Baba Jaspal Singh as successor to Sant Jeet Singh.
However, the absence of any such PS or Note from the 1991 Deed could well prove a problem for the respondents as could the fact that a time limited constitution would seem to be a less implausible concept than a time limited charitable trust deed.
The third and fourth issues: non justiciability generally
The third and fourth issues raise the questions whether Sant Jeet Singh is indeed the third Holy Saint, and whether the doctrines to which he and the appellants subscribe and/or his personal qualities comply with the religious aims and purposes underlying the 1991 Deed.
It was such issues which the Court of Appeal held were unjusticiable, and it is to the question of non justiciability to which we now turn.
Mummery LJ took as his starting point the decision of the House of Lords in Buttes Gas and Oil Co. v Hammer (No 3) [1982] AC 888, which he described at para 26 as the clearest and most authoritative guidance that can be found in the authorities about the basis on which a line is drawn between justiciable and non justiciable issues.
Buttes Gas arose out of an action for slander whose real object was to obtain a decision of the English court about the boundary between the territory of three Gulf states, a question upon which the validity of the parties off shore drilling rights depended.
The House held that issue to be non justiciable, and struck out the proceedings.
The single reasoned speech was delivered by Lord Wilberforce.
The case is so well known that we may perhaps be forgiven for summarising his reasons quite shortly.
Lord Wilberforce, with the support of the rest of the House, considered that there was a general principle in English law of judicial restraint or abstention that the courts will not adjudicate upon the transactions of foreign sovereign states.
This was not, in his view, a principle of discretion but a principle of law inherent in the very nature of the judicial process (pp 931 932).
Having summarised the allegations in the case before the House, Lord Wilberforce said this at p 938: Leaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive) there areto follow the Fifth Circuit Court of Appeals no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no mans land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were unlawful under international law.
Mummery LJ regarded this statement as authority for the proposition that in the absence of objective juridical standards (judicial or manageable standards) by which to decide an issue, a court must regard it as non justiciable.
He put the present case in the same category because he considered that the same principle applied when the acts complained of were guided by religious beliefs whose justification was incapable of objective assessment.
Even assuming that that is an accurate classification of the issues in this action, it seems to us that Mummery LJ misunderstood the reasoning of Buttes Gas.
Lord Wilberforces reference to judicial and manageable standards was a quotation from the decision of the Fifth Circuit Court of Appeals in the United States litigation between the same parties upon substantially the same issues.
That was in turn based on the celebrated decision of the United States Supreme Court in Underhill v Hernandez (1897) 168 US 250 about the act of state doctrine.
The reason why the Fifth Circuit Court of Appeals regarded the issue as non justiciable was not that judges were incapable of deciding questions of international law.
Nor was that why Lord Wilberforce agreed with them.
Quite apart from the fact that he was himself an international lawyer of some distinction, he points out at p 926F that English courts had on a number of occasions decided issues about the international boundaries of sovereign states without difficulty.
The issue was non justiciable because it was political.
It was political for two reasons.
One was that it trespassed on the proper province of the executive, as the organ of the state charged with the conduct of foreign relations.
The lack of judicial or manageable standards was the other reason why it was political.
Both points are made in the short passage from the Fifth Circuit Court of Appeals decision cited at p 936 of Lord Wilberforces speech.
As can be seen from Lord Wilberforces summary of the facts at pp 922 925 and 937, this was because the dispute arose out of the way in which the four states concerned had settled the issue of international law by a mixture of diplomacy, political pressure and force in a manner adverse to the interests of Occidental Petroleum.
Occidental wished to obtain a judicial decision that that settlement had been the result of an unlawful conspiracy.
This involved assessing decisions and acts of sovereign states which had not been governed by law but by power politics.
It is difficult to imagine that such a conclusion could have been reached in any other context than the political acts of sovereign states, for the acts of private parties, however political, are subject to law.
The actors are answerable to municipal courts of law having jurisdiction over them and applying objective, external legal standards.
There is a number of rules of English law which may result in an English court being unable to decide a disputed issue on its merits.
Some of them, such as state immunity, confer immunity from jurisdiction.
Some, such as the act of state doctrine, confer immunity from liability on certain persons in respect of certain acts.
Some, such as the rule against the enforcement of foreign penal, revenue or public laws, or the much criticised rule against the determination by an English court of title to foreign land (now circumscribed by statute and by the Brussels Regulation and the Lugano Convention) are probably best regarded as depending on the territorial limits of the competence of the English courts or of the competence which they will recognise in foreign states.
Properly speaking, the term non justiciability refers to something different.
It refers to a case where an issue is said to be inherently unsuitable for judicial determination by reason only of its subject matter.
Such cases generally fall into one of two categories.
The first category comprises cases where the issue in question is beyond the constitutional competence assigned to the courts under our conception of the separation of powers.
Cases in this category are rare, and rightly so, for they may result in a denial of justice which could only exceptionally be justified either at common law or under article 6 of the Human Rights Convention.
The paradigm cases are the non justiciability of certain transactions of foreign states and of proceedings in Parliament.
The first is based in part on the constitutional limits of the courts competence as against that of the executive in matters directly affecting the United Kingdoms relations with foreign states.
So far as it was based on the separation of powers, Buttes Gas and Oil Co. v Hammer (No 3) [1982] AC 888, 935 937 is the leading case in this category, although the boundaries of the category of transactions of states which will engage the doctrine now are a good deal less clear today than they seemed to be forty years ago.
The second is based on the constitutional limits of the courts competence as against that of Parliament: Prebble v Television New Zealand Ltd [1995] 1 AC 321.
The distinctive feature of all these cases is that once the forbidden area is identified, the court may not adjudicate on the matters within it, even if it is necessary to do so in order to decide some other issue which is itself unquestionably justiciable.
Where the non justiciable issue inhibits the defence of a claim, this may make it necessary to strike out an otherwise justiciable claim on the ground that it cannot fairly be tried: Hamilton v Al Fayed [2001] 1 AC 395.
The basis of the second category of non justiciable cases is quite different.
It comprises claims or defences which are based neither on private legal rights or obligations, nor on reviewable matters of public law.
Examples include domestic disputes; transactions not intended by the participants to affect their legal relations; and issues of international law which engage no private right of the claimant or reviewable question of public law.
Some issues might well be non justiciable in this sense if the court were asked to decide them in the abstract.
But they must nevertheless be resolved if their resolution is necessary in order to decide some other issue which is in itself justiciable.
The best known examples are in the domain of public law.
Thus, when the court declines to adjudicate on the international acts of foreign sovereign states or to review the exercise of the Crowns prerogative in the conduct of foreign affairs, it normally refuses on the ground that no legal right of the citizen is engaged whether in public or private law: R (Campaign for Nuclear Disarmament) v Prime Minister [2002] EWHC 2777 (Admin); R (Al Haq) v Secretary of State for Foreign and Commonwealth Affairs [2009] EWHC 1910.
As Cranston J put it in the latter case at para 60, there is no domestic foothold.
But the court does adjudicate on these matters if a justiciable legitimate expectation or a Convention right depends on it: R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2003] UKHRR 76.
The same would apply if a private law liability was asserted which depended on such a matter.
As Lord Bingham of Cornhill observed in R (Gentle) v Prime Minister [2008] 1 AC 1356, para 8, there are issues which judicial tribunals have traditionally been very reluctant to entertain because they recognise their limitations as suitable bodies to resolve them.
This is not to say that if the claimants have a legal right the courts cannot decide it.
The defendants accept that if the claimants have a legal right it is justiciable in the courts, and they do not seek to demarcate areas into which the courts may not intrude.
In Bruker v Marcovitz [2007] 3 SCR 607, the Supreme Court of Canada had to deal with very similar questions in the context of religious beliefs.
A wife whose marriage had been dissolved by the courts of Quebec sued her ex husband for damages for refusing to give her a get.
This would have enabled her to contract a second marriage which would be lawful as a matter of Jewish religious law.
The parties had agreed at the time of their separation to appear before the rabbinical court to obtain a get when their civil divorce became final.
The Court of Appeal had declined to decide the claim on the ground that the substance of this obligation was religious and moral in nature, and not justiciable.
The Supreme Court disagreed.
Citing Syndicat Northcrest vs Amselem, [2004] 2 S.C.R. 551, 2004 SCC 47 at para 50, they accepted that the courts should avoid judicially interpreting and thus determining, either explicitly or implicitly, the content of a subjective understanding of religious requirement, obligation, precept, commandment, custom or ritual.
But this did not prevent them from giving effect to the civil consequences of religious acts.
So, while a court could not enforce the husbands religious obligations as such, their religious nature was consistent with their being enforced as a civil contract.
The court was divided, the minority (Deschamps and Charron JJ) taking the view that the wifes inability to obtain a purely religious benefit, namely the right to a religious remarriage, was incapable of giving rise to a claim for civil damages.
But they accepted the essential position adopted by the majority, that a court is thus not barred from considering a question of a religious nature, provided that the claim is based on the violation of a rule recognized in positive law (para 122).
The third and fourth issues: religious doctrine
This distinction between a religious belief or practice and its civil consequences underlies the way that the English and Scottish courts have always, until recently, approached issues arising out of disputes within a religious community or with a religious basis.
In both jurisdictions the courts do not adjudicate on the truth of religious beliefs or on the validity of particular rites.
But where a claimant asks the court to enforce private rights and obligations which depend on religious issues, the judge may have to determine such religious issues as are capable of objective ascertainment.
The court addresses questions of religious belief and practice where its jurisdiction is invoked either to enforce the contractual rights of members of a community against other members or its governing body or to ensure that property held on trust is used for the purposes of the trust.
We consider each circumstance in turn.
The law treats unincorporated religious communities as voluntary associations.
It views the constitution of a voluntary religious association as a civil contract as it does the contract of association of a secular body: the contract by which members agree to be bound on joining an association sets out the rights and duties of both the members and its governing organs.
The courts will not adjudicate on the decisions of an associations governing bodies unless there is a question of infringement of a civil right or interest.
An obvious example of such a civil interest is the loss of a remunerated office.
But disputes about doctrine or liturgy are non justiciable if they do not as a consequence engage civil rights or interests or reviewable questions of public law.
The governing bodies of a religious voluntary association obtain their powers over its members by contract.
They must act within the powers conferred by the associations contractual constitution.
If a governing body of a religious community were to act ultra vires, for example by seeking a union with another religious body which its constitution did not allow, a member of the community could invoke the jurisdiction of the courts to restrain an unlawful union.
See Barker v OGorman [1971] Ch 215, which concerned a challenge to a proposed union between the Methodist Church and the Church of England on the ground that the Methodist Conference had no power to vary the doctrinal standards of the former church.
It is a case involving a private Act of Parliament (the Methodist Church Union Act 1929) rather than a contract.
But the principles of ultra vires are the same.
See also Long v Bishop of Cape Town (1863) 4 Searle 162 PC, 176 per Lord Kingsdown.
Similarly, members of a religious association who are dismissed or otherwise subjected to disciplinary procedure may invoke the jurisdiction of the civil courts if the association acts ultra vires or breaches in a fundamental way the rules of fair procedure.
The jurisdiction of the courts is not excluded because the cause of the disciplinary procedure is a dispute about theology or ecclesiology.
The civil court does not resolve the religious dispute.
Nor does it decide the merits of disciplinary action if that action is within the contractual powers of the relevant organ of the association: Dawkins v Antrobus [1879] 17 Ch D 615.
Its role is more modest: it keeps the parties to their contract.
In McDonald v Burns 1940 SC 376, Lord Justice Clerk Aitchison stated (at pp 383 384): In what circumstances, then, will the Courts entertain actions arising out of judgments of ecclesiastical bodies: Speaking generally, in either of two situations (first) where the religious association through its agencies has acted clearly and demonstrably beyond its own constitution, and in a manner calculated to affect the civil rights and patrimonial interests of any of its members, and (secondly) where, although acting within its constitution, the procedure of its judicial or quasi judicial tribunals has been marked by gross irregularity, such fundamental irregularity as would, in the case of an ordinary civil tribunal, be sufficient to vitiate the proceedings.
But a mere irregularity in procedure is not enough.
In short, the irregularity alleged must not be simply a point of form, or a departure from prescribed regulation, but must go to the honesty and integrity of the proceedings complained of.
We turn to the courts enforcement of trusts.
The courts have jurisdiction to determine disputes over the ownership, possession and control of property held on trusts for religious purposes.
Where people set up a trust to govern the purposes for which property is to be acquired and held, they are performing a juridical act which creates interests that the civil law will protect.
The courts have repeatedly exercised jurisdiction in disputes over the ownership of property which were caused by religious disagreements.
Many of the cases date from the 19th century and are Scottish, because of the propensity towards schism of the Scottish Presbyterian churches at that time.
But the same principles applied in English law and, subject to the statutory jurisdiction of the court to approve cy prs schemes, which we discuss below, they remain valid in both jurisdictions.
In a series of cases in which, as a result of a schism, parties disputed who had the beneficial interest in property which was held in trust for a religious community, the rule was established that the civil courts would ascertain the foundational and essential tenets of a faith in order to identify who was entitled to the property.
This rule replaced the former rule, which applied at least in Scotland, that the courts would not investigate the religious grounds of a schism but would give effect to the majority view within the religious community.
In Craigdallie v Aikman (1813) 1 Dow 1, 14 16 Lord Eldon established the principle of both English law and Scots law that in the event of a division within a voluntary religious body, the property held for the purposes of the association will go to the part of the body that adheres to its fundamental religious principles, as identified in its contract of association.
In the English case of Attorney General v Pearson (1817) 3 Mer 353, 400 401, 36 ER 136, 150) he stated [W]here a congregation become dissentient among themselves, the nature of the original institution must alone be looked to as the guide for the decision of the Court, and that to refer to any other criterion, as to the sense of the existing majority, would be to make a new institution, which is altogether beyond the reach, and inconsistent with the duties and character, of this Court.
The House of Lords considered the matter again in General Assembly of the Free Church of Scotland v Overtoun [1904] AC 515 (1904 7 F (HL) 1).
In that case a Bench of seven Law Lords confirmed the rule in Craigdallie v Aikman.
That rule has been applied since then.
Most recently, the Inner House of the Court of Session has applied the rule in Smith v Morrison 2011 SLT 1213.
In that case, Lord Drummond Youngs opinion contains a careful historical analysis of development of the principle.
We agree with his opinion (at para 101) that in every case it is the trust deed or other agreement that determines what are the fundamental principles on which the congregation associated.
We also agree with his view (at paras 113 116) that the law looks to the fundamental principles and essential standards of the body rather than minor matters of administration and minor changes in doctrine in ascertaining the scope of the trust.
Lord Drummond Young cited (at para 118) the opinion of Lord President Cooper in the unreported case of Mackay v Macleod (10 January 1952) in the context of a competition between two parties, each claiming to be the beneficiaries entitled to certain trust property.
The Lord President stated: In such a case it is the duty of the Court to take cognisance of relevant matters of belief, doctrine and church government for the purpose, but only for the purpose, of informing themselves as to the essential and distinguishing tenets of the Church in question, and of discovering the differences, if any, which can be detected in the principles to which the competing claimants respectively profess adherence. (Our emphasis).
This clear line of authority contradicts the idea that a court can treat a religious dispute as non justiciable where the determination of the dispute is necessary in order to decide a matter of disputed legal right.
Again, as Lord Davey said in Free Church of Scotland v Overtoun (at pp 644 645) the civil courts do not have the right to discuss the truth or reasonableness of any of the doctrines of [a] religious association.
He stated The more humble, but not useless, function of the civil Court is to determine whether the trusts imposed upon property by the founders of the trust are being duly observed.
The principles established in the church cases apply equally to other religions.
In Hasanali v Mansoorali (Privy Council Appeal No 79 of 1945) (unreported, 1 December 1947), the Board in an appeal from the High Court of Judicature at Nagpur was concerned with the right to the use of property belonging to members of a Muslim community of the Ismailia Shia sect in the Central Provinces in India.
The dispute within the religious community was whether an earlier leader of the sect, who was the 46th Dai or missionary, had validly appointed his successor before he died in 1840 CE.
The authority of the current Dai, who was the 51st Dai, depended upon the validity of the nomination of the 47th Dai and his successors.
The method by which a Dai nominated his successor as leader of the sect was by Nas e Jali, a form of declaration by the Dai.
The declaration gave his successor civil powers as head of the sect and as trustee of its property as well as ecclesiastical powers as religious leader.
The Board examined the tenets of the sect and the surviving evidence of what had occurred on the day on which the former leader died, before concluding that the Dai had made a valid declaration marking out his successor.
It also ruled on the question whether the current Dais excommunication of members of his community complied with the procedures in the constitution of the religious community.
The immigrations of the 20th century have diversified the religious landscape of the United Kingdom and the principles of the church cases have been applied equally to other religious communities in this country.
In Varsani v Jesani [1999] Ch 219, the Court of Appeal dealt with a dispute over the use of a temple in London which was held in trust for a Hindu sect.
The original purpose of the charity was the promotion of the faith of Swaminarayan according to the teachings and tenets of Muktajivandasji.
A schism occurred in the community when in 1984 allegations of misconduct were raised against the successor, whom Muktajivandasji had nominated before his death in 1979.
The majority of the community accepted his authority.
But a minority thought that he had disqualified himself by his behaviour from the office of successor.
The Court of Appeal held that, but for the extension of the courts jurisdiction to make a scheme cy prs in section 13 of the Charities Act 1960, it would have had to apply the law laid down by the Craigdallie, AG v Pearson and Free Church cases.
In both jurisdictions the court has power to make a scheme cy prs.
Among the grounds on which the trust purposes of a charity may be reorganised is where the original purposes, in whole or in part, have since they were laid down, ceased to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift. (section 13(1)(e)(iii) of the Charities Act 1993).
In Scotland, similar provision is made for the reorganisation of both non charity public trusts and also charitable trusts in section 9 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 and sections 39 42 of the Charities and Trustee Investment (Scotland) Act 2005 respectively.
This power may provide a means of avoiding the judicial determination of a religious dispute.
But if it is not available, the court cannot shirk its duty to determine a matter of civil right.
The respondents referred to the judgments of Gray J in Blake v Associated Newspapers Ltd [2003] EWHC 1960 and Simon Brown J in R v Chief Rabbi of the United Hebrew Congregations of Great Britain and the Commonwealth, Ex p Wachmann [1992] 1 WLR 1036 in support of their contention that the dispute in this case was non justiciable.
But neither case supports that contention.
In the former case the court stayed an action for defamation by Mr Blake against the publisher of the Daily Mail for describing him as a self styled or imitation bishop.
The claimant had relinquished his status as a priest within the Church of England and had established with a Mr Palmer an organisation called The Province for Open Episcopal Ministry and Jurisdiction.
Mr Palmer had purported to consecrate him a bishop.
The case raised questions of doctrine and ecclesiology: the question was whether he was a bishop or merely a self styled bishop.
We do not think that the court was correct to refuse to adjudicate on that issue on the ground that it was non justiciable.
The claim was a civil claim in tort and the court will enter into questions of disputed doctrine if it is necessary to do so in reference to civil interests.
See also Forbes v Eden (1867) LR 1 Sc & Div 568 HL, Lord Cranworth (at pp 581 582), Lord Colonsay (at p 588).
The problem that such defamation claims face, which will usually doom them to failure, is that they raise issues of religious opinion on which people may hold opposing views in good faith.
The expression of such views without malice is likely to be protected by the defence of honest comment what used, until Joseph v Spiller [2011] 1 AC 852, to be called fair comment.
The ratio of the judgment in Wachmann was that the Chief Rabbis decision that the applicant was not religiously and morally fit to hold office as a rabbi did not raise an issue of public law which was amenable to judicial review.
The case is not an authority for a proposition that the legality of such disciplinary proceedings is not justiciable.
If the claim had been presented as a challenge to the contractual jurisdiction of a voluntary association, the court would have had jurisdiction to consider questions of ultra vires and allegations of breaches of natural justice: see Long v Bishop of Cape Town (above); R v Imam of Bury Park Mosque, Luton, Ex parte Sulaiman Ali CA 12 May 1993 QB COF 91/1247/D (The Times, 20 May 1993) in which Roch LJ cited Denning LJs judgment in Lee v Showmens Guild of Great Britain [1952] 2 QB 329, 342; Brentnall v Free Presbyterian Church of Scotland 1986 SLT 471.
In Scotland, the wider scope of the supervisory jurisdiction of the Court of Session, which extends to those who exercise a jurisdiction conferred by private contract, would have allowed the challenge to be in the form of an application for judicial review as an alternative to a claim based on contract: West v Secretary of State for Scotland 1992 SC 385, Lord President Hope at pp 399 400.
Accordingly, unless the parties are able to resolve their differences, for example by a reorganisation of the trust purposes cy prs, the court may have to adjudicate upon matters of religious doctrine and practice in order to determine who are the trustees entitled to administer the trusts.
Subject to further amendment of the parties cases, the question whether Sant Jeet Singh has power to appoint and dismiss trustees may depend on issues such as (i) what are the fundamental tenets of the First Holy Saint and the Nirmal sect, (ii) what is the nature of the institution at Nirmal Kutia in India, (iii) what steps or formalities were needed for a person to become the successor of the First Holy Saint, and (iv) in relation to the fourth issue whether the teachings and personal qualities of Sant Jeet Singh comply with the fundamental religious aims and purposes of the trust.
Conclusion and ancillary matters
For these reasons, we would allow this appeal and restore the order of Judge Cooke.
In so doing, we are reinstating the permission he accorded to the appellants to amend their particulars of claim, subject to certain reservations stipulated in his order.
Although the Court of Appeal entertained an appeal against that order, they did not rule on it.
We can see no good reason why an appellate court should interfere with a case management decision of this sort.
It is not as if the hearing is imminent, and, as we have indicated, the respondents appear to wish to expand their case.
There is one other matter we should mention.
In his judgment, Judge Cooke made it clear that he did not consider that expert evidence would be appropriate.
Whether that was right before the respondents made it clear that they wished to raise what we have called the fourth issue need not be decided.
What is clear is that, in the light of the fourth issue, there is a strong case for saying that expert evidence should be permitted.
In the light of that, as well as in the light of our decision on the points raised by the appeal, we propose to order that these proceedings be remitted to the High Court for appropriate further directions, without prejudice to the parties consenting to all further directions which they agree are needed.
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This appeal relates to disputes which have arisen within a Sikh sect associated with three Gurdwaras (Sikh temples) in Bradford, Birmingham and High Wycombe.
It raises two questions concerning the trusts on which the Gurdwaras are held.
The questions are (i) the extent to which it is open to trustees to alter, or restrict, the terms of the trusts upon which they hold property, and (ii) the extent to which the court can and should refuse to determine issues of religion or religious belief in legal proceedings.
In April 1987, fourteen men attended a meeting at which they decided to establish a Gurdwara under the guardianship of His Holiness Brahamgiani, revered 108 Sant Maharaj Baba Gian Sing Ji of Nirmal Kitia Johal.
His Holiness was the then holder of the office of Holy Saint (the First Holy Saint), the religious head of the abode of saints at Nirmal Kutia in the Indian village of Johal.
The next month a further meeting decided that this Gurdwara, which was to be similar to a Gurdwara which had been acquired in Bradford in 1982, be established under the Supreme Authority of the First Holy Saint.
In September 1987 the First Holy Saint approved a property at Oldbury, Birmingham (the Birmingham Gurdwara), which was purchased with a combination of donations from devotees and loans.
The First Holy Saint gave the responsibility of managing the Birmingham Gurdwara to the first, second and third respondents (the original trustees), to whom the Birmingham Gurdwara was then transferred.
In January 1991 the original trustees executed a Deed of Trust (the 1991 Deed), in which they declared themselves to be the trustees of a religious organisation preaching and practicing the Sikh faith and following the teachings of the First Holy Saint (the Society).
Clause 5 of the 1991 Deed (clause 5) empowered the Saint or his successor to remove the Birmingham trustees and appoint new trustees.
A month later the constitution of the Society was signed, Clause 10 of which stated that only the First Holy Saint or his successor could make changes to the Societys management committee.
In September 1993, a property was acquired at High Wycombe (the Wycombe Gurdwara) and transferred to the sixth and eight appellants and the first and sixth respondents, who were declared to hold the property in accordance with the Societys constitution.
In November 2001, the First Holy Saint died and was succeeded by Sant Harbhajan Ji, who died a few months later in March 2002.
In July 2003, at a joint meeting of the management committees of the three Gurdwaras, Sant Jeet Singh was recognised as the Third Holy Saint.
Following the respondents refusal to execute a new trust deed, Sant Jeet Singh purported to remove them as trustees and replace them with the second eighth appellants.
The appellants issued proceedings in the High Court seeking various heads of relief, including removal of the first, second, third and fourth respondents as Birmingham trustees and the removal of the fifth and sixth respondents as Wycombe trustees.
The respondents sought to strike out the claim on the ground that it was unjusticiable.
Judge Cooke dismissed the application, but the Court of Appeal allowed the respondents appeal, holding that the issue turned on religious beliefs which were not justiciable by the English courts.
The appellants now appeal to the Supreme Court.
The Supreme Court unanimously allows the appeal.
The judgment is given by Lord Neuberger, Lord Sumption and Lord Hodge, with whom Lord Mance and Lord Clarke agree.
The issues should all go to trial.
Depending on the facts, the powers of the respondents as trustees may have extended to agreeing a provision such as clause 5, and in any event they may not be entitled to challenge its validity.
Further, while courts do not adjudicate on the truths of religious beliefs, the courts have jurisdiction to determine disputes over the ownership, possession and control of property held on trusts for religious purposes.
During argument four issues emerged as likely to be in dispute: 1) Whether, as the appellants contend, clause 5 is valid insofar as it accords the power to appoint and dismiss trustees on persons other than the First Holy Saint; 2) If the appellants are right on the first issue, whether the reference to the successor of the First Holy Saint in clause 5 is to be read as limited to Sant Harbhajan Ji, the immediate successor to the First Holy Saint, or whether it extended to subsequent successors; 3) If the appellants are right on the first and second issues, whether Sant Jeet Singh is indeed successor to the First Holy Saint; and 4) Whether Sant Jeet Singh has departed from the tenets of mainstream Sikhism and is on character grounds unfit to be the successor [19].
The first issue: was clause 5 of the 1991 Deed invalid? In Attorney General v Mathieson [1907] 2 Ch 383, the Court of Appeal held that where a charitable trust is initially created by donors in general or vague terms, it is open to the trustee to execute a more specific deed which limits the terms of the trust, provided it does not conflict with the terms on which the donors made their donations [26].
Where the principle in Mathieson applies, it would appear that trustees must have the power to include new provisions in the trust deed which they would not normally have the power to impose in the case of a fully constituted trust [33].
It is at least arguable that, where the terms of a trust are so sparse that the trustees have implied authority on behalf of the donors to declare the trusts to which the sums contributed are to be subject, that authority extends to including a provision such as clause 5.
It would not be right to resolve this issue at an interlocutory stage for a number of reasons, including the fact that the issue has not been fully pleaded, the parties arguments have changed as the proceedings progressed, the various points have not been fully considered in the courts below, and the resolution of this issue is very likely to be fact sensitive [33 34].
The second issue: the meaning of successor On the face of the 1991 Deed, it appears that, as a matter of language, his successor could be limited to the immediate next Holy Saint, or could extend to each successive Holy Saint.
It would not be right to resolve this second issue at this interlocutory stage for much the same reasons given in relation to the first issue [36].
The third and fourth issues: non justiciability generally The term non justiciability refers to a case where an issue is inherently unsuitable for judicial determination by reason only of its subject matter.
Such cases generally fall into one of two categories.
The first category comprises cases where the issue in question is beyond the constitutional competence assigned to the courts.
Once the forbidden area is identified, the court may not adjudicate on the matters within it, even if it is necessary to do so in order to decide some other issue which is itself justiciable.
A paradigm case is the non justiciability of proceedings in Parliament [41 42].
The second category comprises cases based neither on private legal rights or obligations, nor on reviewable matters of public law.
These issues are non justiciable if the court were asked to decide them in the abstract; however, such issues must nevertheless be resolved if their resolution is necessary in order to decide some other issue which is in itself justiciable [43].
The third and fourth issues: religious doctrine The courts do not normally adjudicate on the truths of religious beliefs or on the validity of particular rites.
But where a claimant asks the court to enforce private rights and obligations which depend on religious issues, the judge may have to determine such religious issues as are capable of objective assessment [45].
The courts have jurisdiction to determine dispute over the ownership, possession and control of property held on trusts for religious purposes.
Where people set up a trust to govern the purposes for which property is to be acquired and held, they are performing a juridical act which creates interests that the civil law will protect [49].
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Part III of the Matrimonial and Family Proceedings Act 1984 was enacted to give the English court the power to grant financial relief after a marriage had been dissolved (or annulled) in a foreign country.
This appeal raises for the first time at this appellate level the proper approach to the operation of Part III of the 1984 Act.
Mr and Mrs Agbaje (the husband and the wife) were married for 38 years prior to their divorce in 2005 on the husbands petition in Nigeria.
They were born in Nigeria, but both have British and Nigerian citizenship.
All five children of the family were born in England.
The wife has been living in England continuously since 1999, when the marriage broke down.
The assets are about 700,000, of which 530,000 represents two houses in London in the husbands name, and the balance represents properties in Nigeria.
The Nigerian court awarded the wife a life interest in a property in Lagos (which, as found by the Nigerian court, had a capital value of about 86,000) and a lump sum which was the equivalent of about 21,000.
Munby J acceded to an ex parte application by the wife for leave to make an application under Part III, and confirmed his decision on the husbands application to set it aside.
On the substantive hearing Coleridge J made an order which was intended to enable the wife to house and maintain herself in London by providing her with 65% of the proceeds of sale (expected to be about 275,000) of the house in which she has been living.
His order is the equivalent of a 39% award to the wife.
The Court of Appeal (Ward, Longmore and Jackson LJJ) allowed the husbands appeal, principally on the ground that the judge had given insufficient weight to the connections of the case with Nigeria: [2009] EWCA Civ 1, [2009] 3 WLR 835.
An Appeal Committee of the House of Lords granted leave to appeal from that decision.
Matrimonial and Family Proceedings Act 1984, Part III
The background to Part III of the 1984 Act
The background to Part III was concern at the hardship to wives and children caused by the effect of a combination of the liberality of the rules relating to recognition of foreign divorces and the restrictive approach of some foreign jurisdictions to financial provision.
The problem became apparent in a series of cases in the 1970s in which there had been a foreign divorce in proceedings (both judicial and extra judicial) instituted by the husband in which no financial provision had been made for the wife.
In those cases the divorce was entitled to recognition in England, e.g. because of a real and substantial connection with the foreign country (under the rule in Indyka v Indyka [1969] 1 AC 33) or because of the husbands citizenship of that country (Recognition of Divorces and Legal Separations Act 1971, now the Family Law Act 1986).
As a result the parties were regarded as no longer married, and the court was not able to make an order in her favour for financial relief: Turczak v Turczak [1970] P 198, in which it was held that, following a Polish divorce, there was no power to order maintenance under the Matrimonial Causes Act 1965 because the parties were no longer husband and wife; Torok v Torok [1973] 1 WLR 1066, in which Ormrod J drew attention to the fact that, if a divorce were obtained in Hungary on the basis of the husbands Hungarian nationality, it would have to be recognised, and the English court would have no jurisdiction under the Matrimonial Proceedings and Property Act 1970 to deal with the house in England where the wife and children were living, even though the Hungarian court was unlikely to award maintenance.
As a result of these cases there were calls for legislation to give the English court jurisdiction to grant ancillary relief after a foreign divorce: e.g. Karsten (1970) 33 MLR 205 and (1972) 35 MLR 299; Pearl [1974] CLJ 77.
In Quazi v Quazi [1980] AC 744, which was decided in 1979, the husband had pronounced a talaq in Pakistan.
The question was whether the English court had jurisdiction on the wifes petition to dissolve the marriage and make consequential orders relating to a house in Wimbledon in which the wife was living with their son and which belonged to the husband, and to make provision for their financial support.
It was held by the House of Lords that the talaq was to be recognised under the 1971 Act.
Consequently there was no subsisting marriage and no power in the English court to make financial provision.
In the Court of Appeal Ormrod LJ (as he had become) drew attention to the urgent need for attention by Parliament to deal with the problem.
In the House of Lords Lord Scarman agreed (at 819) that there was need for reform, and expressed the hope that the matter would be referred to the Law Commissions.
The matter was then referred to the Law Commissions.
In 1980 the Law Commission for England and Wales published a Working Paper on Financial Relief after Foreign Divorce (Working Paper No 77 (1980)), which was supplemented by a Scottish Law Commission Consultation Paper in 1981.
Both Commissions published Reports in 1982: Law Com No 117 and Scot Law Com No 72.
The Law Commissions recommended that the law be reformed to allow financial provision to be ordered after a foreign divorce not only in cases where no financial provision had been made, or could have been made, in the country where the divorce was granted, but also where the provision was inadequate.
The Law Commission for England and Wales also recommended a filter mechanism requiring leave of the court to make an application to the English court.
Part III of the 1984 Act
As a result of the work of the Law Commissions, Part III (applying to England and Wales) and Part IV (applying to Scotland) of the Matrimonial and Family Proceedings Act 1984 were enacted.
The law in Northern Ireland is equivalent to Part III of the 1984 Act: SI 1989 No 677 (NI 4).
There are significant differences between Part III and Part IV, to which it will be necessary to revert.
Part III applies to annulment and judicial separation as well as to divorce, but for ease of exposition only divorce will be referred to in this account.
By section 12, where a marriage has been dissolved, by means of judicial or other proceedings in an overseas country, and the divorce is entitled to be recognised as valid in England and Wales, either party to the marriage may apply to the court in the manner prescribed by rules of court for an order for financial relief under Part III.
A filter mechanism is established by section 13: (1) No application for an order for financial relief shall be made under this Part of this Act unless the leave of the court has been obtained in accordance with rules of court; and the court shall not grant leave unless it considers that there is substantial ground for the making of an application for such an order. (2) The court may grant leave under this section notwithstanding that an order has been made by a court in a country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property to the applicant or a child of the family. (3) Leave under this section may be granted subject to such conditions as the court thinks fit.
Section 15(1) sets out the jurisdictional requirements: (a) domicile in England and Wales of either of the parties on the date of the application for financial provision or on the date when the divorce in the foreign country took effect; or (b) habitual residence of either of the parties for one year ending on the date of the application or the foreign divorce; or (c) a beneficial interest by either or both, at the date of the application, in a dwelling house in England and Wales which was at some time during the marriage used as a matrimonial home.
Section 16 provides: the connection which the parties to the marriage have with (1) Before making an order for financial relief the court shall consider whether in all the circumstances of the case it would be appropriate for such an order to be made by a court in England and Wales, and if the court is not satisfied that it would be appropriate, the court shall dismiss the application. (2) The court shall in particular have regard to the following matters (a) England and Wales; (b) the connection which those parties have with the country in which the marriage was dissolved or annulled or in which they were legally separated; (c) country outside England and Wales; (d) any financial benefit which the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a country outside England and Wales; in a case where an order has been made by a court in a (e) country outside England and Wales requiring the other party to the marriage to make any payment or transfer any property for the benefit of the applicant or a child of the family, the financial relief given by the order and the extent to which the order has been complied with or is likely to be complied with; the connection which those parties have with any other (f) any right which the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any country outside England and Wales and if the applicant has omitted to exercise that right the reason for that omission; the availability in England and Wales of any property in (g) respect of which an order under this Part of this Act in favour of the applicant could be made; (h) is likely to be enforceable; (i) divorce, annulment or legal separation. the length of time which has elapsed since the date of the
the extent to which any order made under this Part of this Act
On the substantive hearing the court is given power by section 17 to make (inter alia) the orders in sections 23 (financial provision orders) and 24 (property adjustment orders) of the Matrimonial Causes Act 1973, and pension sharing orders within the meaning of Part I of the 1973 Act.
The powers of the court to make orders are more restrictive where jurisdiction depends on the matrimonial home having been in England and Wales: section 20.
In deciding whether to apply its powers under section 17, and, if so, in what manner, the court must (by section 18) have regard, so far as material to this appeal, to three matters.
First, the court is to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen (section 18(2)).
Second, as regards the exercise of those powers in relation to a party to the marriage, the court is to have regard to the matters mentioned in section 25(2)(a) (h) of the 1973 Act (section 18(3)).
Third, where a foreign court has made an order for payments or the transfer of property by a party to the marriage, in considering the financial resources of the other party to the marriage, the court is to have regard to the extent to which that order has been, or is likely to be, complied with (section 18(6)).
Section 18(2) of the 1984 Act is in the same terms as section 25(1) of the Matrimonial Causes Act 1973, which also directs attention to all the circumstances of the case, and section 25(2) of the 1973 Act contains the familiar list of factors to be taken into account in the exercise of the statutory discretion, which is designed to achieve a fair outcome: White v White [2001] 1 AC 596; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618.
The facts
The husband is aged 71, and is a barrister in Nigeria.
He lives in Lagos.
The wife is aged 68.
She lives in a house in Lytton Road, New Barnet, Hertfordshire (the Lytton Road property) which is in the husbands sole name.
She undertakes occasional work as a carer, and is in receipt of a basic state pension supplemented by pension credit as well as a small Nigerian occupational pension.
Both parties were born in Nigeria.
In the 1960s each of them came to England to live.
The husband came in 1961 to read for the Bar, and the wife came in 1962 to study and work.
They met in December 1965 and were married in London in May 1967.
There were five children of the family, the eldest born to the wife in 1965 shortly before she had met the husband and four children of the marriage, born in 1967, 1969, 1973 and 1980.
All the children were born in England.
In 1972 the parties acquired United Kingdom citizenship and each now has dual British and Nigerian nationality.
In September 1973 the husband returned to Nigeria to qualify there and to set up a legal practice.
In May 1974 the wife and the children joined the husband in Nigeria, but all the children were educated in England except the youngest.
In November 1975 the husband purchased the Lytton Road property.
The wife says that it was a matrimonial home, and the husband says that it was purchased for the purpose of providing a home for the children (and their nanny) when they were in England.
Between 1978 and 1982 the family lived at 76 Ijeshatado Road, Lagos, and from 1982 to 1999 at Plot 2, Tin Can Island, Lagos (Tin Can Island).
In 1999, the parties separated after 32 years of marriage.
The wife moved to England and settled at the Lytton Road property, where she has since lived.
The husband remained in Nigeria although he purchased an investment property in Windmill Drive, NW2 (the Windmill Drive property) in 2002 which he says (and which the Nigerian court accepted) was bought for the youngest child.
The husband issued divorce proceedings in the High Court of Lagos on June 4, 2003.
The wifes case was that, although she knew that the husband had initiated divorce proceedings in Nigeria, she did not receive a copy of the husbands petition until December 10, 2003.
She issued her divorce petition on December 8, 2003 in Barnet County Court based on her habitual residence in England and Wales for at least one year.
On February 24, 2004, the wife filed an answer and cross petition in the Lagos proceedings seeking ancillary relief, including a claim that Tin Can Island and the Lytton Road property (and subsequently the Windmill Drive property) be settled on her.
The wife also sought two cars, and a lump sum of 10 million naira (about 42,000) as a maintenance allowance for her during her lifetime.
The husband made an application in England for a stay of the wifes divorce proceedings.
The wife made an application in Lagos for a stay of the Lagos proceedings, and also applied in England for an anti suit injunction restraining the Lagos proceedings.
In November 2004 Ryder J dismissed the wifes application for an anti suit injunction, but he envisaged that she might apply in England for an order under Part III of the 1984 Act.
The husbands application for a stay was adjourned pending the wifes application for a stay in the Lagos proceedings.
In the course of those proceedings, the wife sought to withdraw her claim for ancillary relief and gave evidence that she wanted her ancillary relief claims to be determined in London.
On June 2, 2005 the judge in Nigeria, Nicol Clay J, granted a decree nisi on the husbands petition (based on three years separation), and dismissed the wifes cross petition.
The judge refused the wifes request that her ancillary relief claims should be determined in London.
She ordered that Tin Can Island, the former matrimonial home, be settled on the wife for life (as the husband had agreed) under the Nigerian Matrimonial Causes Act 1990, section 72(1).
That section gives the court power to require the parties to make such a settlement of property to which the parties are, or either of them is, entitled, as the court considers just and equitable; but it does not give power to the court to order an outright transfer.
She also ordered the husband to make a payment of a lump sum of 5 million naira (about 21,000) as maintenance for life.
The judge dismissed the wifes claims in respect of the London properties (and a Nigerian property) on the basis that she had failed to prove any financial contribution towards their purchase.
Decree absolute was granted by the High Court of Lagos on September 2, 2005.
The application for leave
It is necessary to set the course of the application for leave out in some detail for two reasons.
The first reason is that the Court of Appeal was critical of Coleridge J for his reliance on Munby Js judgment on the husbands application to set aside the order for leave.
The second reason is that the enormous delay caused by the husbands application to set aside gives rise to considerable disquiet about the procedure in Part III proceedings.
At the end of September 2005, the wife sought leave to apply for an order for financial relief pursuant to section 13(1) of Part III.
Leave was granted by Munby J at the end of November 2005: [2005] EWHC 3459 (Fam).
Munby J referred to the very considerable discrepancy between the aggregate value of what the English court would consider to be the relevant matrimonial assets and the actual provision to the wife, and concluded (at [7]): that that very significant discrepancy, and the very modest amount of the provision made for this wife following a marriage of that length in relation to a case where there appear to be significant assets, is such that, having regard, as I do, to each of the facts and matters set out in section 16(2) of the Act, there are established substantial grounds for making this application within the meaning of section 13(1).
In February 2006, the wife issued her application for periodical payments, a property adjustment order in respect of the Lytton Road property, and a lump sum order.
At the end of April 2006, the husband issued an application to set aside the grant of leave.
He conceded that the court had jurisdiction to make an order under Part III on the basis of the wifes habitual residence in England.
In July, 2006 Charles J ordered that the application be listed for a one day hearing fixed for November 17, 2006 before Munby J, and gave directions for the filing of evidence.
Munby J delivered a reserved judgment on December 18, 2006 in which he set out the facts and the law in the fullest detail over 28 single spaced pages: [2006] EWHC 3285 (Fam).
He reaffirmed the views expressed in his judgment on the ex parte application about the effect of the significant discrepancy between the matrimonial assets and what the wife was awarded.
He accepted that it was not necessary to make a finding of exceptional circumstances.
He was satisfied that there were exceptional circumstances and that the wife would suffer hardship real hardship if leave were not given, being faced with the unenviable choice of either remaining homeless in England, where she was based and wanted to stay, or returning to Nigeria: [57] [60].
Munby J ordered that the application for relief be limited to (a) a periodical payments order; (b) a property adjustment order in relation to the Lytton Road property; and (c) a lump sum order.
Leave was made subject to a number of conditions pursuant to section 13(3), in particular that the principal findings of fact made by Nicol Clay J were to stand in the Part III proceedings; and that neither party was permitted to adduce valuation evidence of the Nigerian properties.
The matter was further delayed until the question of costs was dealt with, and an order was not entered until March 16, 2007.
Munby J refused the husband permission to appeal.
The husband applied to the Court of Appeal for permission to appeal on April 11, 2007.
His application was refused on paper by Thorpe LJ, and on June 18, 2007 the husband renewed his application for permission before Wilson and Wall LJJ, who dismissed the application: [2007] EWCA Civ 681.
The consequence was that the leave process took from September 2005 until June 2007 to be completed, and that the substantive hearing did not come on until April 2008.
This is a shocking delay, to which has to be added the time taken in appeals to the Court of Appeal and this court.
As indicated above, the filter mechanism for leave in section 13 was recommended by the Law Commission.
The Working Paper suggested that the ground for leave be that in all the circumstances the case was a proper one to be heard, but it added (para 53, n 195) that the court would have an inherent power to deal with individual cases in the most convenient way, e.g. by adjourning an application for leave to enable evidence to be filed by the other side; and by dealing with applications for leave inter partes and (if leave is given) with the substantive matters at the same hearing.
The Law Commission Report recommended that the filter should require the applicant to establish a substantial ground for the making of the application, and if necessary Rules of Court could specify the circumstances in which the respondent could object: para 2.3.
Rule 3.17 of the Family Proceedings Rules provides for the ex parte application where leave is sought under Part III.
But a subsequent application to set aside is not specifically provided for under the Rules, although it is of course a fundamental rule of procedure that the court may set aside the making an ex parte order on the application of the respondent.
Concern has been expressed at the delay caused by applications to set aside: see Jordan v Jordan [2000] 1 WLR 210, 222 per Thorpe LJ, and Munby J and Ward and Longmore LJJ in the present proceedings.
It is clear that something must be done to prevent the waste of costs and court time, and prejudice to the applicant, caused by applications to set aside which have only questionable chances of success.
That must of course be balanced by a proper application of the threshold of substantial ground.
But as Deane J said in the Federal Court of Australia in an entirely different context, the word substantial is not only susceptible of ambiguity: it is a word calculated to conceal a lack of precision: Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees Union (1979) 42 FLR 331, 348.
In the present context the principal object of the filter mechanism is to prevent wholly unmeritorious claims being pursued to oppress or blackmail a former spouse.
The threshold is not high, but is higher than serious issue to be tried or good arguable case found in other contexts.
It is perhaps best expressed by saying that in this context substantial means solid.
Once a judge has given reasons for deciding at the ex parte stage that the threshold has been crossed, the approach to setting aside leave should be the same as the approach to setting aside permission to appeal in the Civil Procedure Rules, where (by contrast with the Family Proceedings Rules) there is an express power to set aside, but which may only be exercised where there is a compelling reason to do so: CPR r 52.9(2).
In practice in the Court of Appeal the power is only exercised where some decisive authority has been overlooked so that the appeal is bound to fail, or where the court has been misled: Barings Bank plc v Coopers & Lybrand [2002] EWCA Civ 1155; Nathan v Smilovitch [2007] EWCA Civ 759.
In an application under section 13, unless it is clear that the respondent can deliver a knock out blow, the court should use its case management powers to adjourn an application to set aside to be heard with the substantive application.
The substantive hearing: Coleridge J and the Court of Appeal
The matter came before Coleridge J on April 3 and 4, 2008 and he delivered an unreserved judgment.
He relied on Munby Js second judgment for the chronology and the relevant law.
He directed himself that he was unfettered by any hardship test, and if an order was appropriate the provision made after a foreign order should be the minimum required to overcome the injustice, i.e. not a complete re run of the proceedings as if these were domestic ancillary relief proceedings, relying on A v S (Financial Relief after Overseas US Divorce) [2003] 1 FLR 431 (Bodey J).
He took into account the following matters in particular.
The parties had a longstanding real connection with the United Kingdom, its culture and way of life.
In particular they were British citizens, and all the children were British and were born in England.
The wife had been resident in England for nearly 10 years, had strong connections there and would continue to make her main home there.
The parties had bought two properties in England.
But it was not an English ancillary relief case.
He took into account, in particular, the length of the marriage and the needs of the wife.
He ordered that the wife should receive a lump sum equal to 65% of the gross proceeds of sale of the Lytton Road property.
This would be about 275,000 comprising 225,000 to meet her housing need and 50,000 to supplement her income and provide for her when she could not work.
As a condition of the order, the wife agreed to relinquish her life interest in Tin Can Island.
The award of 275,000 represented 39% of the total assets.
Coleridge J refused the husbands application for permission to appeal, and on an application to the Court of Appeal for permission, Wilson LJ adjourned the application to be heard with appeal to follow if permission were granted.
The Court of Appeal (Ward, Longmore and Jackson LJJ) gave permission to appeal and allowed the appeal: [2009] EWCA Civ 1, [2009] 3 WLR 835.
The main judgment was given by Ward LJ.
The principal elements of his reasoning were as follows.
The true question was whether the foreign order provided an unjust result.
Disparity in potential awards was an obvious factor to which regard must be had, but it should not be permitted to dominate because (as he put it) London was perceived to be the divorce capital of the world.
The focus should be on whether, objectively speaking, substantial justice or injustice was done overseas, a fortiori when the foreign court was the appropriate forum for granting the divorce and regulating the financial consequences of the dissolution.
Coleridge J had not adequately referred to the parties connection with Nigeria.
He had not addressed the need for respect and deference to be paid to the Nigerian court.
He had not expressly addressed the factors in section 16(2)(d),(e) and (f) (the right to apply in Nigeria and the award in Nigeria).
It was not enough to find that a serious injustice was done to the wife in Nigeria simply because there was no power to make a transfer of property order there, and it was not in accord with the purpose of section 16 for the English court to sit on appeal from the judgment of a foreign court, which was effectively what Coleridge J had done.
Coleridge J had relied too much on Munby Js judgment.
He had not explained why the case hinged on the parties connection with England, why the connection with Nigeria was not the more important factor, why the Nigerian proceedings did not command full deference for reasons of comity, why no substantial injustice was done to the wife in Nigeria and why justice would be done to the husband if, within months of the conclusion of those proceedings, he were to be forced to litigate the matters afresh in England notwithstanding the earlier acceptance by the courts of Nigeria as the appropriate forum for the resolution of the divorce and ancillary relief claims.
In view of those matters the discretion was to be exercised afresh by the Court of Appeal.
The parties had a more significant connection with Nigeria than with England, and Nigeria, not England, was the natural and appropriate forum for the resolution of the wifes claims.
No substantial injustice was done to the wife in Nigeria notwithstanding the absence of a power to transfer the Tin Can Island property to her.
Although she would suffer real hardship in England, having exhausted the lump sum designed to provide for her sustenance in Nigeria (as she asked for it there), comity commanded respect for the overseas order and it would not be appropriate to grant her what Ward LJ described as even another nibble at the cherry.
The appeal
There is little difference between the approach of Coleridge J and the Court of Appeal, and this appeal could be disposed of simply by considering whether Coleridge J had taken the relevant factors into account and weighed them properly.
But the approach of the judge and the Court of Appeal does raise a number of questions of principle which require attention before the question whether there were any grounds for interference with the exercise of discretion is addressed.
Those questions are these: (1) To what issue the matters listed in section 16(2) are directed. (2) What role (if any) forum non conveniens principles or comity have to play in the exercise of the discretion. (3) Whether the applicant must show exceptional circumstances, or hardship, or serious injustice, before an order can be made. (4) To what matters the court should have regard in deciding whether, and in what way, to exercise its powers under section 17, and in particular whether there is a principle that the court is limited to making an order which represents the minimum necessary to remedy the hardship or injustice.
The relevance of the section 16(2) factors
Munby J [2006] EWHC 3285 (Fam), ([37]) and Coleridge J (at page 3 of his judgment), and the Court of Appeal (at [16]) considered that the question for determination in section 16 is whether it was appropriate for an order to be made.
This is in error.
On the substantive hearing Part III directs the court to two principal areas of fact or appreciation.
First, section 16(2) sets out matters to which the court must have regard for the purposes of section 16(1).
Second, section 18(2) and (3) refer to the matters to which the court is to have regard in deciding whether to exercise the powers under section 17.
The factors in section 16(2) are not expressed to be relevant to the question whether an order is to be made.
They are the matters to which regard must be had in considering whether it would be appropriate for such an order to be made by a court in England and Wales (section 16(1)).
There is no ambiguity in the language, and it is therefore not necessary to resort for confirmation to the sidenote to section 16 or the Law Commission Report.
The sidenote is Duty of the court to consider whether England and Wales is appropriate venue for application.
The Law Commissions explanatory note on the draft Bill included this on what became section 16: It is intended that it should be possible to raise the issue of appropriateness of the English court separately from, or together with, the matters relevant to the exercise of the courts discretion in deciding whether to exercise its powers and if so in what way (Report, page 29)
Consequently both Munby J and Coleridge J and the Court of Appeal, were in error to the extent that they treated section 16 itself as determining the criteria by which the question whether the order for financial provision was to be made.
That question depends on the combined effect of sections 17 and 18, to which it will be necessary to revert.
The error is not likely, however, to have any significant practical importance.
By section 18(2) the court is to have regard to all the circumstances of the case, and several of the factors in section 16(2) will plainly be relevant to the question of whether an order is to be made, and, if so, what order: for example, the financial benefit which the applicant has received; or whether the applicant has failed to take advantage of a right under the foreign law to claim financial relief.
So also because the list in section 16(2) is not exhaustive (The court shall in particular have regard ), matters which are not expressly referred to in section 16(2), such as hardship or injustice, may be taken into account for the purpose of determining whether it is appropriate that the English court should make an order, just as they can be taken into account under section 18.
Forum non conveniens and comity
The second question relates to the role of forum non conveniens and principles of comity in the exercise under section 16.
The doctrine of forum non conveniens, it hardly needs to be said, is that a stay of English proceedings will be granted if another forum is more appropriate in the sense of more suitable for the ends of justice.
It was definitively adopted from Scots law by the decisions of the House of Lords in The Abidin Daver [1984] AC 398 and Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460, and was applied to stays of English matrimonial proceedings in de Dampierre v de Dampierre [1988] AC 92.
The doctrine was in its infancy in England when the Law Commission reported and when the 1984 Act was enacted substantially in line with the Law Commissions draft Bill.
In several decisions the Court of Appeal has drawn an analogy between the exercise in Part III, of determining whether it is appropriate for an order to be made by a court in England and Wales, and the grant of stays on the ground of forum non conveniens.
For example, in Jordan v Jordan [2000] 1 W.L.R. 210, 220, a Part III case, Thorpe LJ said that de Dampierre v de Dampierre [1988] AC 92 establishes the importance of fixing the primary jurisdiction before competitive litigation in more than one jurisdiction has unnecessarily depleted available assets.
It is equally important to outlaw unnecessary competitive litigation after the primary jurisdiction identified by common consent has performed its essential function to divide assets and income.
See also Holmes v Holmes [1989] Fam 47, 54 55, 59; Moore v Moore [2007] 2 FLR 339, at [109].
In the present case Ward LJ relied (at [44] [45]) on the classic stay cases, Spiliada Maritime Corpn v Cansulex Ltd and de Dampierre v de Dampierre, to conclude that substantial justice had been done in Nigeria, and that an order should not have been made in England under Part III.
Having referred to the fact that Ryder J had refused to grant the wife an anti suit injunction (and no doubt would have granted the husband a stay of the English proceedings), Ward LJ concluded that it would need some compelling reason to conclude one day that the husband would be entitled to a stay of the English proceedings on the basis that substantial justice could be done in the appropriate forum (or that the wife would not be entitled to an anti suit injunction), only to decide very soon afterwards that a serious injustice had been inflicted on the wife in the proceedings concluded by the court overseas.
Ward LJ considered (at [53]) that there should be: symmetry between the rules relating to stays and anti suit injunctions on the one hand and the exercise of jurisdiction under section 16 on the other.
It is through that prism that section 16 must be viewed in a case like the one before us.
But the forum non conveniens principles were developed to deal with cases in which it was necessary to decide which of two jurisdictions was the appropriate one in which proceedings were to be brought.
Section 16 does not impose a statutory forum non conveniens test.
It does not require the court to determine the only appropriate forum where the case may be tried more suitably for the interests of the parties and the ends of justice.
No choice between jurisdictions is involved.
The whole basis of Part III is that it may be appropriate for two jurisdictions to be involved, one for the divorce and one for ancillary relief.
Many of the factors in section 16(2) have much in common with those which would be relevant in a forum non conveniens enquiry, but they are not directed to the question of which of two jurisdictions is appropriate.
They are directed to the question whether it would be appropriate (which is the meaning of the word conveniens in forum conveniens) for an order to be made by a court in England and Wales when ex hypothesi there have already been proceedings in a foreign country (including proceedings in which financial provision has been made).
Little assistance can therefore be obtained from the stay cases (and still less from the anti suit injunction cases) in the Part III exercise.
The task for the judge under Part III is to determine whether it would be appropriate for an order to be made in England, taking account in particular of the factors in section 16(2), notwithstanding that the divorce proceedings were in a foreign country which may well have been the more appropriate forum for the divorce.
The next question is whether principles of comity will add anything useful to the analysis.
Comity is a term of very elastic content: Dicey, Morris & Collins, Conflict of Laws, 14th ed (2006), paras 1 008 et seq; Collins, in Reform and Development of Private International Law (ed Fawcett, 2002), 89.
But in the present context it may be relevant in three respects.
First, comity is sometimes used not simply in the sense of courtesy to foreign states and their courts, but also in the sense of rules of public international law which establish the proper limits of national legislative jurisdiction in cases involving a foreign element.
In that sense it will be contrary to comity for United Kingdom legislation to apply in a situation involving a foreign country when the United Kingdom has no reasonable relationship with the situation.
That is not the case here.
There is nothing internationally objectionable in legislation which gives a court power to order financial provision notwithstanding a foreign decree of divorce, whether or not the foreign court has ordered financial provision, provided that the forum has an appropriate connection with the parties or their property.
The whole point of the factors in section 16(2) is to enable the court to weigh the connections of England against the connections with the foreign jurisdiction so as to ensure that there is no improper conflict with the foreign jurisdiction.
That is why in Holmes v Holmes [1989] Fam 47, at 53, Purchas LJ was right to note that section 16 reflected the principles of comity as between competent courts.
The second relevant sense in which comity is used is that a court in one country should not lightly characterise the law or judicial decisions of another country as unjust.
But in the present context it is hardly necessary to resort to comity to establish that elementary principle.
The third sense in which comity may be relevant is that it is said to be the basis for the enforcement and recognition of foreign judgments.
Part III allows the court to supplement the order of a foreign court.
Nigerian maintenance orders are enforceable in England under the Maintenance Orders (Facilities for Enforcement) Act 1920: SI 1959/377.
But there is no obligation to recognise such orders in the sense that they must be regarded as determining the rights of the spouses to financial relief.
It is not likely that the Nigerian order is to be regarded in England as a final judgment, since it is subject to variation by the court which made it: Nigerian Matrimonial Causes Act 1990, section 73(1)(j).
It is not necessary to consider whether it was capable of creating any issue estoppels because Munby J ordered that the crucial findings of fact in the Nigerian proceedings were to stand in the Part III proceedings, including the fact that the wife had failed to prove that she had contributed to the acquisition of the London properties.
But, although the point does not arise on this appeal, a warning note must be struck about the position with regard to States to which Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) applies.
The effect of sections 15(2) and 28(4) of the 1984 Act is that the jurisdictional provisions of Part III and Part IV respectively are subject to the Brussels I Regulation (and the Lugano Convention).
Those sections do not address the question whether a judgment in a Brussels I Regulation State making financial provision on divorce (or refusing to make such provision) would be entitled to recognition so as to prevent an award under Part III or Part IV.
For the purposes of the Brussels I Regulation and the Lugano Convention there is a distinction between maintenance which is within the scope of the Regulation (Article 5(2), which confers jurisdiction on the courts of the maintenance creditors domicile, in addition to that of the debtors domicile under Article 2); and rights in property arising out of a matrimonial relationship (rgimes matrimoniaux) which are expressly excluded from the scope of the Regulation.
These are autonomous concepts: Case 143/78 de Cavel v de Cavel (No 1) [1979] ECR 1055; Case 120/79 de Cavel v de Cavel (No 2) [1980] ECR 731.
The Brussels II Revised Regulation (Council Regulation (EC) 2201/2003 on jurisdiction and the recognition of judgments in matrimonial matters and matters of parental responsibility) does not apply to the property consequences of the marriage or any other ancillary measures (Recital (8)), or to maintenance obligations (Recital (11)).
It is only necessary to mention that if an award of maintenance had been made in another Member State, the question might arise as to whether the application in England under Part III would be precluded on the basis that the issue of maintenance had been determined in the other jurisdiction and that that determination was entitled to recognition.
That would depend, at least in part, on whether the application was to be characterised as relating to maintenance or to rights in property arising out of a matrimonial relationship.
Case C 220/95 Van den Boogaard v Laumen [1997] ECR I 1147, [1997] QB 759 shows that a transfer of property may be in the nature of maintenance if it is intended to ensure the support of a spouse; but a transfer of property which serves only the purpose of a division of property is not in the nature of maintenance, and concerns rights in property arising out of a matrimonial relationship.
See also Schlosser Report on the Accession Convention to the Brussels Convention ([1979] OJ C59), para 50; Moore v Moore [2007] 2 FLR 339 (CA).
This is an area which involves difficult questions which do not arise for decision on this appeal.
Hardship, injustice, exceptionality and an award of the minimum extent
necessary to remedy the injustice
In its Working Paper (para 48) the Law Commission said that the proposals should be concerned primarily to give a remedy in those exceptional cases where a spouse, usually the wife, had been deprived of financial relief in circumstances where an English court might be driven to hold that it would be unjust to recognise the foreign decree.
It went on to say (at para 51): 51 [W]e think that it should be made clear by express statutory provision that the object of the discretion is to provide for the occasional hard case.
We consider, therefore, that the court should be given power to entertain an application for a financial provision or property adjustment order notwithstanding the existence of a valid foreign divorce, if in the light of all the circumstances of the case (and in particular certain specified circumstances) the case would otherwise be one where serious injustice might arise.
Our present inclination is not to favour any requirement that the applicant must establish the facts of the case to be exceptional since he may well belong to a religious or ethnic group in which it is not uncommon, for example, for a wife to be divorced abroad without having a right to claim financial relief.
The Report did not revert to the question of an express provision for hardship, and Part III contains no express reference to hardship, injustice or exceptionality.
There has been a tendency in the Family Division and in the Court of Appeal to regard hardship as a condition for the exercise of the jurisdiction rather than as an important factor to be taken into account where it is present.
There has been a similar tendency in the Court of Appeal to treat the element of exceptionality in the same way, by saying that the jurisdiction should be exercised only in exceptional circumstances: Holmes v Holmes [1989] Fam 47, 59; Hewitson v Hewitson [1995] Fam 100, 105.
It is true that at least one of the purposes of Part III is to remit hardships which have been experienced in the past in the presence of a failure in a foreign jurisdiction to afford appropriate financial relief: Holmes v Holmes at P57, per Purchas LJ.
But hardship is not a pre condition of the exercise of the jurisdiction.
Thorpe LJ pointed out, correctly, in Jordan v Jordan [2000] 1 WLR 210, 221: as a matter of logic it does not follow that hardship is a necessary prerequisite and I doubt that it was open to Cazalet J. [in N v N (Foreign Divorce: Financial Relief) [1997] 1 FLR 900] to hold that an applicant must prove some hardship or injustice in order to obtain the court's leave.
Parliament might have so legislated, but it did not.
The statutory criteria are fully expressed.
A case in which the applicant crosses the barriers contained in sections 13 and 16 without proving some specific hardship or injustice is perfectly conceivable.
The proposal in the Law Commission Working Paper that the court should have the power to order financial relief following a foreign divorce if the case would otherwise be one where serious injustice might arise was not followed through in the Law Commission Reports draft Bill and finds no place in Part III.
Thorpe LJ was right to say in Jordan v Jordan (in the same passage at 221) that injustice is not a necessary pre condition.
Although they are not pre conditions, both hardship and injustice will of course be relevant factors for the court to take into consideration under both section 16 and section 18.
The next question is on what basis the order for financial provision should be made.
Among the provisional recommendations of the Law Commission Working Paper were that English law should govern the principles on which a court granted financial relief, the court should be able to make any financial order it might have made in English divorce proceedings, and should exercise its powers in accordance with the guidelines laid down in section 25 of the Matrimonial Causes Act 1973: paras 56 57, and recommendations (8) and (9).
This recommendation was also made in the Report, and in the provisions of the draft Bill which became sections 17 and 18.
In decisions at first instance, however, it has been held that it is only appropriate for the English court to intervene with financial relief to the minimum extent necessary so as to remedy the injustice perceived to exist without intervention: A v S (Financial Relief after Overseas US Divorce and Financial Proceedings) [2003] 1 FLR 431, at [98], a decision of Bodey J, applied by Coleridge J in the present case.
There is no statutory basis for this limitation, and it is contrary to principle.
For a example a talaq entitled to recognition may be granted abroad in a big money case when almost all relevant connecting factors are with England.
In those circumstances there would be no reason not to apply English law so as to give the same provision for the wife as she would have obtained had there been divorce proceedings in England.
There would be no need for any enquiry as to the minimum required to remedy the injustice.
Nor, if the wife had independent means, would an enquiry into hardship be necessary or relevant.
But equally it is not the intention of the legislation in England and Wales to allow a simple top up of the foreign award so as to equate with an English award.
This is apparent from a comparison of Part III with the Scottish provisions of Part IV.
The Scottish provisions have the effect that if certain jurisdictional criteria, and certain conditions, are fulfilled, then the application for financial relief is treated as a purely domestic application in Scottish matrimonial proceedings.
The explanation is to be found in the Scottish Law Commission Report (Scot.
Law Com.
No 72, 1982): 2.12 The problem is to find a solution which will enable financial provision after a foreign divorce to be claimed and awarded in appropriate cases, but will not enable it to be claimed or awarded in inappropriate cases 2.13 It is here that we find ourselves differing from the Law Commission.
They prefer a solution in which there are wide grounds of jurisdiction and in which it is left to the courts, guided by a list of factors to be taken into account, to sift out cases where an award would be inappropriate.
We prefer a solution in which there are stricter grounds of jurisdiction and the legislation identifies certain cases as inappropriate in advance.
In our view, a system based on rules is likely to be fairer to defenders and less objectionable to other countries than a system which depends almost entirely on judicial self restraint.
We accept that strict rules on jurisdiction may exclude some cases which a judge in his discretion might allow to proceed.
A power to award financial provision after a foreign divorce is, however, a new and exceptional one in our law, and we would rather proceed with caution .
The consequence was that the Scottish provisions in Part IV of the 1984 Act provided that the court could entertain an application for an order for financial provision in Scotland after a divorce in a foreign country, if certain jurisdictional requirements and conditions were satisfied: section 28(1).
But once these were satisfied, the case was to be treated as if it were a Scottish divorce.
The jurisdictional requirements were that (a) the applicant was domiciled or habitually resident in Scotland on the day when the application was made; and (b) the other party to the marriage was domiciled or habitually resident in Scotland when the application was made; or was domiciled or habitually resident in Scotland when the parties last lived together as husband or wife; or was, when the application was made, an owner or tenant of, or had a beneficial interest in, property in Scotland which had at some time been a matrimonial home of the parties: section 28(2).
The conditions were that: (a) the divorce fell to be recognised in Scotland; (b) the other party to the marriage initiated the proceedings for divorce; (c) the application was made within 5 years after the date when the divorce took effect; (d) a court in Scotland would have had jurisdiction to entertain an action for divorce between the parties if such an action had been brought in Scotland immediately before the foreign divorce took effect; (e) the marriage had a substantial connection with Scotland; and (f) both parties were living at the time of the application: section 28(3).
Once these conditions were fulfilled, in disposing of the application under section 28, the court shall exercise its powers so as to place the parties, in so far as it is reasonable and practicable to do so, in the financial position in which they would have been if the application had been disposed of, in an action for divorce in Scotland, on the date on which the foreign divorce took effect: section 29(2).
In determining what is reasonable and practicable the court shall have regard to the parties resources and any order of the foreign court: section 29(3).
This is not the solution adopted in Part III.
Section 18 could have provided that, once England and Wales was to be regarded as the appropriate forum under section 16, then the case was to be treated as a purely English proceeding for financial relief.
But it did not do so.
Instead a more flexible approach was deliberately adopted.
There will be some cases, with a strong English connection, where it will be appropriate to ask what provision would have been made had the divorce been granted in England.
There will be other cases where the connection is not strong and a spouse has received adequate provision from the foreign court.
Then it will not be appropriate for Part III to be used simply as a tool to top up that provision to that which she would have received in an English divorce.
The proper approach
To take up some of the points made in the preceding paragraphs, the proper approach to Part III simply depends on a careful application of sections 16, 17 and 18 in the light of the legislative purpose, which was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where there were substantial connections with England.
There are two, inter related, duties of the court before making an order under Part III.
The first is to consider whether England and Wales is the appropriate venue for the application: section 16(1).
The second is to consider whether an order should be made under section 17 having regard to the matters in section 18.
There are two reasons why the duties are inter related.
First, neither section 16(2) nor section 18(2) and (3) refers to an exhaustive list of matters to be taken into account.
Section 16(1) directs the court to have regard to all the circumstances of the case and section 16(2) refers the court to certain matters in particular.
Second, some of the matters to be considered under section 16 may be relevant under section 18, and vice versa.
An obvious example would be that section 16(2)(e) refers the court to the financial provision which has been made by the foreign court.
Plainly that would be relevant under section 18.
So also the direction in section 18(6) to the court, in considering the financial resources of a party, to have regard to whether an order of a foreign court has been complied with would plainly be relevant in considering whether England is the appropriate venue.
It is not the purpose of Part III to allow a spouse (usually, in current conditions, the wife) with some English connections to make an application in England to take advantage of what may well be the more generous approach in England to financial provision, particularly in so called big money cases.
There is no condition of exceptionality for the purposes of section 16, but it will not usually be a case for an order under Part III where the wife had a right to apply for financial relief under the foreign law, and an award was made in the foreign country.
In such cases mere disparity between that award and what would be awarded on an English divorce will certainly be insufficient to trigger the application of Part III.
Nor is hardship or injustice (much less serious injustice) a condition of the exercise of the jurisdiction, but if either factor is present, it may make it appropriate, in the light of all the circumstances, for an order to be made, and may affect the nature of the provision ordered.
Of course, the court will not lightly characterise foreign law, or the order of a foreign court, as unjust.
The amount of financial provision will depend on all the circumstances of the case and there is no rule that it should be the minimum amount required to overcome injustice.
The following general principles should be applied.
First, primary consideration must be given to the welfare of any children of the marriage.
This can cut both ways as the children may be being supported by the foreign spouse.
Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place within this jurisdiction.
Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse.
Subject to these principles, the court has a broad discretion.
The reasons why it was appropriate for an order to be made in England are among the circumstances to be taken into account in deciding what order should be made.
Where the English connections of the case are very strong there may be no reason why the application should not be treated as if it were made in purely English proceedings.
The full procedure for granting ancillary relief after an English divorce does not apply in Part III cases.
The conditions which can be attached to leave, together with the courts case management powers, can be used to define the issues and to limit the evidence to be filed, as was done by Munby J in this case.
This enables the jurisdiction to be tailored to the needs of the individual case, so that the grant of leave does not inevitably trigger a full blown claim for all forms of ancillary relief.
This case
To the extent, therefore, that Coleridge J considered that there was a rule that the provision made under Part III should be the minimum required to overcome an injustice, he was in error, but there is no cross appeal on quantum.
It is not therefore necessary to consider whether a different result would have been justified, particularly since the total provision ordered in both jurisdictions did not fall markedly short of what the wife would have received in a purely English proceeding.
The Court of Appeal erred in principle in applying traditional forum non conveniens principles, and its criticisms of Coleridge Js conclusions did not meet the necessary threshold for interference with the exercise of discretion.
To the extent that the Court of Appeal took the view that Coleridge J relied too much on Munby Js judgment, the criticism is in reality one of lack of adequate reasoning.
Coleridge Js judgment was an unreserved judgment given after a 2 day hearing against the background of a full exposition of the facts and the law (over, to repeat, some 28 single spaced pages) in the same case by Munby J. Coleridge J was fully entitled to incorporate by reference Munby Js account of the background facts.
To the very limited extent that further facts were to be found (principally as regards the wifes earnings) Coleridge J made appropriate findings.
He cannot be criticised for failing to refer to every relevant factor in section 16(2).
What the wife received and to what she was entitled in Nigeria were obvious.
The judges reasons (particularly in the light of his incorporation of Munby Js judgment) have to be read on the assumption that the judge knew how he should perform his functions and which matters he should take into account, particularly when those matters had not only been fully set out by Munby J but are familiar to every experienced judge in the Family Division: cf.
Piglowski v Piglowska [1999] 1 WLR 1360, 1372 (in relation to the exercise of discretion by reference to the factors in section 25 of the Matrimonial Causes Act 1973).
Because the Court of Appeal wrongly applied traditional forum non conveniens principles, it erred in criticising Coleridge J for failing to identify which court had the closest and most appropriate connection with the parties or for failing to identify Nigeria as the natural and appropriate forum to deal with the divorce.
The English connections were substantial, if not overwhelming, and Coleridge J plainly took the relevant matters in section 16(2) into account.
It was not so much that there was a very large disparity between what the wife received in Nigeria and what she would have received in England, but that there was also a very large disparity between what the husband received and what the wife received such as to create real hardship and a serious injustice.
There was no basis for interference with the exercise of discretion.
The appeal will be allowed and the order of Coleridge J restored.
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Mr and Mrs Agbaje were married for 38 years.
Both Nigerian by birth, they had met in England in the 1960s and acquired UK citizenship in 1972.
All five of their children were born (and all but one educated) in England, and in 1975 Mr Agbaje bought a property in England called Lytton Road in which their children stayed with a nanny.
But for the majority of their married life Mr and Mrs Agbaje lived in Nigeria.
They separated in 1999, at which point Mrs Agbaje came to live in Lytton Road.
She has lived here ever since.
In 2003 Mr Agbaje issued divorce proceedings in the Nigerian courts in which Mrs Agbaje sought ancillary relief.
The Nigerian court awarded her a life interest in a property in Lagos (with a capital value of about 86,000) and a lump sum equivalent to about 21,000.
Part III of the Matrimonial and Family Proceedings Act 1984 was enacted to give the English court the power to grant financial relief after a marriage has been dissolved (or annulled) in a foreign country.
Mrs Agbaje sought such relief.
The High Court granted her leave (as required under Part III) and ultimately ordered that she should receive a lump sum equal to 65% of the sale proceeds of Lytton Road (equivalent to about 275,000) on condition that she relinquish her life interest in the Lagos property.
The award represented 39% of the total assets.
The Court of Appeal set aside the whole of the English award principally on the ground that the High Court had given insufficient weight to the connections of the case with Nigeria.
Put broadly, the overarching issue for the Supreme Court was: what is the proper approach for courts to take when considering applications made under Part III?
The Supreme Court unanimously allowed the wifes appeal and restored the order of the High Court.
The judgment of the Court was delivered by Lord Collins.
The Court held that Part III is to be applied in light of the purpose of the Act, which was the alleviation of the adverse consequences of no, or no adequate, financial provision being made by a foreign court in a situation where the parties had substantial connections with England ([71]).
In applying Part III, the English courts should not be deciding whether it would be appropriate for an order to be made by a court in England or Wales as opposed to a foreign court.
The whole point of Part III is to allow for relief in circumstances where there have already been proceedings in a foreign country ([50]).
Relevant to the question of whether an order should be made and, if so, what order, will be a number of factors such as the financial benefit which the applicant has already received, or whether the applicant has failed to take advantage of a right under the foreign law to claim financial relief.
The hardship or the injustice which would result if no award were made will be relevant factors, although neither are pre conditions to an award under Part III ([41] [44] and [60] [61]).
Although there was no principle that an English court could only make an award that was the minimum necessary to remedy the injustice which would otherwise occur, it was equally not the intention of the legislation to allow a simple top up of the foreign award so as to equate with an English award in every case ([62] [65]; [72]).
If the connection with England is not strong and a spouse has received adequate provision from the foreign court, it will not be appropriate for Part III to be used to top up the award.
If the English connections are strong, however, it may be appropriate to do so ([70]).
The amount of financial provision awarded under Part III will depend on all the circumstances of the case.
But three general principles should be applied.
First, primary consideration should be given to the welfare of any child of the marriage.
Second, it will never be appropriate to make an order which gives the claimant more than she or he would have been awarded had all proceedings taken place within this jurisdiction.
Third, where possible the order should have the result that provision is made for the reasonable needs of each spouse ([73]).
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The question raised by this appeal is whether there exists a power under the Immigration Act 1971 (the 1971 Act) to grant immigration bail to a person who can no longer be lawfully detained.
Factual Background
B has a long and complex immigration history which it is necessary to refer to in some detail.
He has been in the United Kingdom since 1993.
Between 5 February 2002 and 11 March 2005, he was detained under section 21 of the Anti terrorism, Crime and Security Act 2001.
He appealed to the Special Immigration Appeals Commission (SIAC) against that decision using a false identity.
The relevant provisions of the 2001 Act were repealed by the Prevention of Terrorism Act 2005 (the 2005 Act) following the decision of the House of Lords in A and others v Secretary of State for the Home Department [2004] UKHL 56; [2005] 2 AC 68.
B was then released from detention on 11 March 2005, and made subject to a control order under the 2005 Act.
He was admitted to the Royal Free Hospital on the 12 March 2005 as a voluntary psychiatric patient where he remained, save for one night, until 11 August 2005.
On 11 August 2005 B was notified, in accordance with regulations under section 105 of the Nationality Immigration and Asylum Act 2002, of the Secretary of States decision to make a deportation order against him on national security grounds, under sections 3(5) and 5(1) of the 1971 Act.
B was arrested and detained under immigration powers contained in paragraph 2(2) of Schedule 3 to the 1971 Act pending the making of the deportation order.
He was detained at HMP Woodhill and, the following day, transferred to HMP Long Lartin.
On 17 August 2005, B appealed to SIAC against that decision, once again using the same false identity.
Bs grounds of appeal contended, inter alia, that his removal to Algeria would be in breach of the United Kingdoms obligations under the UN Refugee Convention and unlawful as incompatible with his rights under article 3 of the European Convention on Human Rights and Fundamental Freedoms (ECHR).
The Secretary of State has never disputed that, if deported to Algeria, B would be at real risk of treatment incompatible with article 3 ECHR and that only with specific individual assurances from the Algerian government could he be lawfully and safely removed to Algeria.
On 11 May 2006, Her Majestys Government informed the Algerian Government that it proposed to deport B and requested certain information about him.
On 16 May 2006, specific assurances as to the treatment of B were sought from Algeria.
On 10 July 2006, the Algerian authorities confirmed that the details of his identity given by B were those of an individual present in Algeria.
On 17 July 2006, SIAC heard the national security case in Bs appeal against the Secretary of States decision to make a deportation order.
On 12 January 2007, pursuant to rule 39(1) of the Special Immigration Appeals Commission (Procedure) Rules 2003, SIAC directed B to provide specified particulars of his true identity and to consent to provide a non invasive sample for the purposes of DNA testing.
B consented to provide a DNA sample but refused to provide the particulars of his true identity.
On 19 July 2007, SIAC ordered B to provide details of his true identity.
A penal notice was attached to the order.
On 30 July 2008, SIAC gave judgment in the national security case against B, holding that the Secretary of States case on the risk to national security had been made out.
SIAC concluded that, notwithstanding his mental health difficulties, B had played a leading role in facilitating communications for Algerian terrorists, as well as being responsible for the procurement of false documentation and high technology equipment.
The hearing of the case on safety on return did not take place at that time because of the unresolved question of Bs true identity.
On 18 August 2009, the Secretary of State applied to SIAC for an order that B be committed to prison for contempt for disobeying the order of 19 July 2007.
Following an adjournment in the hope of resolving the issue of Bs identity, the committal application was eventually heard on 11 October 2010.
In its judgment delivered on 26 November 2010 SIAC held that B had deliberately and contumeliously disobeyed its order and, taking into account all the circumstances including that Bs mental illness may have reinforced his decision not to comply with SIACs order, imposed a prison sentence of four months.
The operation of the order was suspended until the final determination of any appeal.
On 21 July 2011, the Court of Appeal by a majority dismissed his appeal (B (Algeria) v Secretary of State for the Home Department [2011] EWCA Civ 828).
B appealed to the Supreme Court which on 30 January 2013 dismissed the appeal (B (Algeria) v Secretary of State for the Home Department [2013] UKSC 4; [2013] 1 WLR 435).
B then served his sentence of 4 months imprisonment in HMP Belmarsh and was released on 5 April 2013.
On 11 April 2006, SIAC had decided in principle that B could be granted bail.
However, save for one night, throughout the period from 11 March 2005 B remained in either prison or hospital until his discharge from hospital to bail accommodation on 18 January 2011.
B was voluntarily readmitted to hospital in February 2011 and on further occasions thereafter.
Following his release from prison after serving his sentence for contempt, two sets of bail conditions were set by SIAC to run in parallel depending on whether B was an in patient at a psychiatric hospital or residing at his bail accommodation.
On 23 January 2014, B applied to vary his bail conditions which, he maintained, constituted an unlawful deprivation of liberty.
At a hearing on 28 and 29 January 2014 SIAC considered the application of the Hardial Singh principles (R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704) to the circumstances of Bs case, including the prospect of Bs removal to Algeria.
In its judgment of 13 February 2014, SIAC found that in the absence of a change of mind by B there is no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away.
Following this ruling, the Secretary of State did not authorise the further detention of B, although Bs advisers only became aware of this on or about 6 June 2014.
In its judgment of 13 February 2014 SIAC also held that the conditions of bail did not constitute a deprivation of liberty.
However, it subsequently directed a review of Bs bail conditions, which were relaxed by an order dated 16 May 2014.
On 14 May 2014 the Secretary of State applied under rules 11B and 40 of the Special Immigration Appeals Commission (Procedure) Rules 2003 to strike out Bs appeal against the notice of decision to deport him, on the grounds of his continuing refusal to comply with the order of 19 July 2007.
On 1 July 2014, in the light of Bs continuing contempt of court, SIAC struck out Bs appeal.
B maintained that, following SIACs findings on 13 February 2014, his detention could no longer lawfully be authorised as it would be incompatible with Hardial Singh principles.
He contended that if that were so, and he could not lawfully be detained, SIAC no longer had jurisdiction to grant bail to B or to impose bail conditions.
In its judgment of 1 July 2014, SIAC rejected these submissions, concluding that it continued to have jurisdiction to impose bail conditions on B.
B then applied for permission to apply for judicial review of SIACs decision of 1 July 2014 on its bail jurisdiction, there being no right of appeal against that decision.
Irwin J, sitting as a High Court Judge, heard that application by agreement between B and the Secretary of State, and on 14 August 2014 he granted B permission to apply for judicial review of that decision, dismissed the application for judicial review, and granted permission to appeal to the Court of Appeal.
B appealed to the Court of Appeal which on 6 May 2015 gave judgment allowing both appeals (B (Algeria) v Secretary of State for the Home Department (No 2) [2015] EWCA Civ 445; [2016] QB 789). (1) The Court of Appeal allowed Bs appeal in relation to SIACs bail jurisdiction on the ground that SIAC had no jurisdiction to impose bail conditions on B if his detention would be unlawful. (2) The Court of Appeal also allowed Bs appeal against the strike out of Bs SIAC appeal and remitted the matter to SIAC.
On 15 September 2016 SIAC refused the application to strike out Bs appeal against the decision to make a deportation order against him.
The Secretary of State then indicated that she no longer opposed Bs appeal.
Accordingly, in a judgment dated 12 December 2016 SIAC confirmed its decision to allow Bs appeal against the notice of intention to deport him.
The Secretary of State did not seek permission to appeal.
As a result of this ruling allowing the substantive deportation appeal, Bs bail fell away and it is common ground that the immigration bail power is now unavailable.
On 9 November 2015, the Supreme Court granted the Secretary of State permission to appeal against the decision of the Court of Appeal on the issue of SIACs bail jurisdiction.
Statutory provisions
The Secretary of States power to detain or control a person pending deportation is set out in paragraph 2 of Schedule 3 to the 1971 Act which provides in material part, as amended: (2) Where notice has been given to a person in accordance with Regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not detained in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). (4A) Paragraphs 22 to 25 of Schedule 2 to this Act apply in relation to a person detained under sub paragraph (1), (2) or (3) as they apply in relation to a person detained under paragraph 16 of that Schedule. (5) A person to whom this sub paragraph applies shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by the Secretary of State. (6) The persons to whom sub paragraph (5) above applies are (b) a person liable to be detained under sub paragraph (2) or (3) above, while he is not so detained.
The power to grant immigration bail and impose bail conditions derives from paragraphs 22 and 29 of Schedule 2 to the 1971 Act so far as relevant, as amended.
Paragraph 22 governs bail in general and paragraph 29 governs bail pending appeal.
Section 3 of the Special Immigration Appeals Commission Act 1997 (the 1997 Act) extends to SIAC the power to grant bail and impose bail conditions that is conferred on an immigration officer not below the rank of chief immigration officer or the First tier Tribunal (the FTT) by paragraphs 22 and 29 of Schedule 2 to the 1971 Act.
Section 3 of the 1997 Act provides in material part: (1) In the case of a person to whom section (2) below applies, the provisions of Schedule 2 to the Immigration Act 1971 specified in Schedule 3 to this Act shall have effect with the modifications set out there. (2) This subsection applies to a person who is detained under the Immigration Act 1971 if the Secretary of State certifies that his detention (a) is necessary in the interests of national security, (b) or (c) he is detained following a decision to make a deportation order against him on the ground that his deportation is in the interests of national security.
Paragraphs 1 and 4 of Schedule 3 to the 1997 Act modify paragraphs 22 and 29 of Schedule 2 to the 1971 Act respectively so that, in deportation cases heard in SIAC, they provide as follows: 22. (1) The following, namely a person detained under paragraph 16(1) (a) above pending examination; (aa) a person detained under paragraph 16 (1A) above pending completion of his examination or a decision on whether to cancel his leave to enter; and a person detained under paragraph 16(2) (b) above pending the giving of directions, may be released on bail in accordance with this paragraph. (1A) The Special Immigration Appeals Commission may release a person so detained on his entering into a recognizance or, in Scotland, bail bond conditioned for his appearance before an immigration officer at a time and place named in the recognizance or bail bond or at such other time and place as may in the meantime be notified to him in writing by an immigration officer. (2) The conditions of a recognizance or bail bond taken under this paragraph may include conditions appearing to the Special Immigration Appeals Commission to be likely to result in the appearance of the person bailed at the required time and place; and any recognizance shall be with or without sureties as the Commission may determine. (3) In any case in which the Special Immigration Appeals Commission has power under this paragraph to release a person on bail, the Commission may, instead of taking the bail, fix the amount and conditions of the bail (including the amount in which any sureties are to be bound) with a view to its being taken subsequently by any such person as may be specified by the Commission; and on the recognizance or bail bond being so taken the person to be bailed shall be released. 29(1) Where a person (in the following provisions of this Schedule referred to as an appellant) has an appeal pending under Part 5 of the Nationality, Immigration and Asylum Act 2002 or section 2 of the Special Immigration Appeals Commission Act 1997 or a review pending under section 2E of that Act and is for the time being detained under Part I of this Schedule, he may be released on bail in accordance with this paragraph and paragraph 22 does not apply. (2) The Special Immigration Appeals Commission may release an appellant on his entering into a recognizance or, in Scotland, bail bond conditioned for his appearance before the Commission at a time and place named in the recognizance or bail bond. (5) The conditions of a recognizance or bail bond taken under this paragraph may include conditions appearing to the person fixing the bail to be likely to result in the appearance of the appellant at the time and place named; and any recognizance shall be with or without sureties as that person may determine.
The power of arrest and re detention of persons on bail under paragraphs 22 and 29 of Schedule 2 is provided for under paragraph 24 of Schedule 2 to the 1971 Act which provides: 24. (1) An immigration officer or constable may arrest without warrant a person who has been released by virtue of paragraph 22 above (a) if he has reasonable grounds for believing that that person is likely to break the condition of his recognizance or bail bond that he will appear at the time and place required or to break any other condition of it, or has reasonable ground to suspect that that person is breaking or has broken any such other condition; or (b) if, a recognizance with sureties having been taken, he is notified in writing by any surety of the suretys belief that that person is likely to break the first mentioned condition, and of the suretys wish for that reason to be relieved of his obligations as a surety; and paragraph 17(2) above shall apply for the arrest of a person under this paragraph as it applies for the arrest of a person under paragraph 17. (2) A person arrested under this paragraph (a) if not required by a condition on which he was released to appear before an immigration officer within twenty four hours after the time of his arrest, shall as soon as practicable be brought before the First tier Tribunal or, if that is not practicable within those 24 hours, before in England and Wales, a justice of the peace, in Northern Ireland, a justice of the peace acting for the petty sessions area in which he is arrested or, in Scotland, the sheriff; and (b) if required by such a condition to appear within those 24 hours before an immigration officer, shall be brought before that officer. (3) Where a person is brought before the First tier Tribunal, a justice of the peace or the sheriff by virtue of sub paragraph (2)(a), the Tribunal, justice of the peace or sheriff (a) if of the opinion that that person has broken or is likely to break any condition on which he was released, may either (i) direct that he be detained under the authority of the person by whom he was arrested; or (ii) release him, on his original recognizance or on a new recognizance, with or without sureties, or, in Scotland, on his original bail or on new bail; and if not of that opinion, shall release him on (b) his original recognizance or bail.
On 12 May 2016 the Immigration Bill 2016 received royal assent.
Section 61 of the Immigration Act 2016 provides in material part: (3) A person may be released and remain on bail under paragraph 22 or 29 of Schedule 2 to the Immigration Act 1971 even if the person can no longer be detained under a provision of the Immigration Acts to which that paragraph applies, if the person is liable to detention under such a provision. (4) The reference in subsection (3) to paragraph 22 or 29 of Schedule 2 to the Immigration Act 1971 includes that paragraph as applied by any other provision of the Immigration Acts. (5) Subsections (3) and (4) are to be treated as always having had effect.
On 9 November 2015, the Supreme Court granted the Secretary of State permission to appeal on the issue of SIACs bail jurisdiction.
The Secretary of State indicated that she did not propose to rely on section 61 of the Immigration Act 2016 on this appeal.
The appeal has been heard on the basis of the statutory provisions as they were at the time of the Court of Appeals decision.
Hardial Singh principles
The Hardial Singh principles form an important part of the background to these proceedings.
In Hardial Singh itself Woolf J. laid down the following propositions (at p 706D G): Since 20 July 1983, the applicant has been detained under the power contained in paragraph 2(3) of Schedule 3 to the Immigration Act 1971.
Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations.
First of all, it can only authorise detention if the individual is being detained in one case pending the making of a deportation order and, in the other case, pending his removal.
It cannot be used for any other purpose.
Secondly, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose.
The period which is reasonable will depend upon the circumstances of the particular case.
What is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to seek to exercise his power of detention.
In addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time.
Over time these principles have been elaborated and refined.
In R (WL (Congo)) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, Lord Dyson JSC summarised them as follows (at para 22): With regard to determining what is a reasonable period Lord Dyson (at para 104) repeated his earlier conclusion in Is case (at para 48): It is common ground that my statement in R (I) v Secretary of State for the Home Department [2003] INLR 196, para 46 correctly encapsulates the principles as follows: (i) the Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) the deportee may only be detained for a period that is reasonable in all the circumstances; (iii) if, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period, he should not seek to exercise the power of detention; (iv) the Secretary of State should act with reasonable diligence and expedition to effect removal.
It is not possible or desirable to produce an exhaustive list of all the circumstances that are or may be relevant to the question of how long it is reasonable for the Secretary of State to detain a person pending deportation pursuant to paragraph 2(3) of Schedule 3 to the Immigration Act 1971.
But in my view they include at least: the length of the period of detention; the nature of the obstacles which stand in the path of the Secretary of State preventing a deportation; the diligence, speed and effectiveness of the steps taken by the Secretary of State to surmount such obstacles; the conditions in which the detained person is being kept; the effect of detention on him and his family; the risk that if he is released from detention he will abscond; and the danger that, if released, he will commit criminal offences.
Discussion
I take as my starting point that adopted by the Court of Appeal at paragraph 23 of the judgment of Lord Dyson MR.
It is uncontroversial.
On 13 February 2014 SIAC ruled that there was no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away.
The Secretary of State accepts that there was thereafter no further authority for the detention of B under paragraph 2(2) of Schedule 3 to the 1971 Act.
It is, therefore, common ground that B could not lawfully be detained following the ruling of 13 February 2014 because to do so would exceed the implied limits on the exercise of administrative power to detain for immigration purposes as determined in Hardial Singh.
At the heart of this case lies a dispute between the parties as to the correct approach in principle to the availability of immigration bail when the Hardial Singh limit on actual detention is reached.
The Secretary of State submits that at that point the individual can be moved onto or kept on bail as an alternative to detention, as a means of getting or keeping him out of detention that is, or is about to become, or would be unlawful.
Moreover, at that point the ability to exercise control over him in the form of bail conditions is retained.
Bs position, by contrast, is that bail is predicated on lawful detention with the result that when the Hardial Singh limit on actual detention is reached the ability to grant or maintain bail also simultaneously falls away.
On behalf of the Secretary of State, Mr Tam urges the court to adopt a purposive interpretation of the relevant legislation.
He submits that it is consistent with the purpose of the bail power for it to be construed so that bail is available regardless of whether the individual is lawfully detained or would hypothetically be lawfully detained.
The bail power has been provided in order to remove an individual from detention.
That purpose would be served whether the detention is lawful or unlawful at the time that bail is granted and the detention is terminated.
The bail power, he submits, constitutes a practical solution which permits the termination of unwanted or unwarranted detention, regardless of the separate question of whether that detention is lawful or unlawful.
He then draws attention to the fact that at one end of the spectrum of cases dealt with by the immigration system are those of dangerous criminals and those who pose a risk to national security.
It is, he submits, particularly important that bail should be available in such cases.
Here he refers to the fact that bail conditions can be of greater stringency than conditions which can be attached to temporary admission or temporary release.
The availability of bail, he argues, therefore helps to protect the public from such risks if detention is no longer appropriate.
While accepting that practical difficulties may arise in the categories of case referred to by Mr Tam in circumstances where continuing detention becomes unlawful on Hardial Singh grounds, I can see no basis for adopting the purposive approach for which the Secretary of State contends, resting as it does on a disregard of the issue of the lawfulness of any continuing detention.
It is a fundamental principle of the common law that in enacting legislation Parliament is presumed not to intend to interfere with the liberty of the subject without making such an intention clear (Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, 111E; R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74, 122E F per Lord Bridge).
Thus, in In re Wasfi Suleman Mahmod [1995] Imm AR 311, 314 Laws J, observed: While, of course, Parliament is entitled to confer powers of administrative detention without trial, the courts will see to it that where such a power is conferred the statute that confers it will be strictly and narrowly construed and its operation and effect will be supervised by the court according to high standards.
In the present case our particular focus is not on a power of executive detention, but on a power to grant bail.
Nevertheless, and despite the fact that the purpose may be to effect a release from detention, I consider that this similarly attracts the presumption of statutory interpretation because the conditions which may be attached to a grant of bail are capable of severely curtailing the liberty of the person concerned.
It was common ground before us that bail under the 1971 Act may be subject to conditions which constitute a deprivation of liberty within article 5(1)(f) ECHR.
As Mr Tam frankly accepts, the ability to exercise control through the use of what may be stringent conditions of bail in part underlies the purposive interpretation for which he contends.
Moreover, this is, to my mind, a situation where the principle of legality is in play.
As Lord Hoffmann observed in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131D G: Fundamental rights cannot be overridden by general or ambiguous words.
This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process.
In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual.
In these circumstances, we are required to interpret the statutory provisions strictly and restrictively.
It is common ground that being detained is a condition precedent to the exercise of the power to grant bail conferred by paragraphs 22 and 29 of Schedule 2 to the 1971 Act.
The power of SIAC to grant bail under section 3, Special Immigration Appeals Commission Act 1997 is similarly based on the person being detained.
The Court of Appeal (at para 30) described the bail power as predicated on the individual being detained.
Paragraph 22 of Schedule 2 confers a power to release on bail in the case of three categories of person, namely a person detained under paragraph 16(1) pending examination, a person detained under paragraph 16(1A) pending completion of his examination or a decision on whether to cancel his leave to enter, and a person detained under paragraph 16(2) pending the giving of directions.
Each category is defined by reference to the person being detained under paragraph 16 of Schedule 2.
Similarly, paragraph 29 applies to a person who is for the time being detained under Part I of this Schedule.
Applying the strict approach to interpretation which I consider is required here, these provisions must be taken to refer to detention which is lawful.
This conclusion is reinforced by the fact that in respect of each category to which it applies paragraph 16 refers to detention under the authority of an immigration officer.
This makes clear that the provision is not addressing the mere fact of detention; this must refer to a lawful authorisation for detention.
As the Court of Appeal concluded in the present case, it would be extraordinary if Parliament had intended to confer the power to grant bail where a person had been unlawfully detained or could not lawfully be detained.
The words employed are certainly not appropriate to refer to a state of purported detention or to embrace both lawful and unlawful detention.
I consider that detained in paragraphs 22 and 29 refers to lawfully authorised detention.
On behalf of the Secretary of State, Mr Tam submits that detained is used only to define the state of affairs which must exist at the time when the power is first exercised.
Clearly the power to grant bail can continue to be exercised after the person has ceased to be detained.
However, this fails to address whether there needs to be a continuing power to detain as a pre condition to the grant of bail.
Here it seems to me that unless there is a continuing power to detain, the system of bail within Part 1 of Schedule 2 would encounter substantial difficulties in its operation.
In this regard, Ms Harrison on behalf of B, draws attention to certain features attending the grant of bail.
First, paragraph 22(1A) and paragraph 29(2) require the detained person to enter into a recognizance to appear before an immigration officer at a named time and place.
When he does so it is then for the immigration officer to re fix bail if he or she considers it appropriate to do so and to determine any appropriate conditions. (R (AR (Pakistan)) v Secretary of State for the Home Department [2016] EWCA Civ 807, para 26).
It is difficult to see how this would operate if there were no continuing power of detention.
As Ms Harrison points out, bail could be re fixed but until it is the individual cannot simply be at liberty, neither detained nor granted temporary admission.
Secondly, and more fundamentally, Ms Harrison points to a situation in which it becomes necessary to re detain the person on bail, for example because he or she is in breach of the conditions of bail.
This would not be possible in the absence of a subsisting lawful power to detain.
In the absence of such a power, conditions of bail and recognizances entered into would be unenforceable.
In response Mr Tam first places reliance on the breach of bail conditions.
However, in such circumstances the legal authority for detention cannot be found in the grant of bail or in the breach of conditions of bail but must be found in an ongoing lawful power to detain, as appears from Stellato v Ministry of Justice [2010] EWCA Civ 1435; [2011] QB 856 and R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 (Admin), authorities to which I shall return later in this judgment.
Secondly, he makes the point that under the Hardial Singh principles a power of detention may sometimes revive, for example because of a change of circumstances in the foreign state concerned or because of a change in the risk which the individual presents.
While that may well occur from time to time in individual cases, it is no answer to Ms Harrisons objection which is directed at the operation of the system of immigration bail.
I note, moreover, that there is no possibility of that occurring in the present case where not only did SIAC conclude on 1 July 2014 that Bs detention could no longer be authorised as it would be incompatible with Hardial Singh principles, but the Secretary of State has not authorised Bs continuing detention since that finding of SIAC.
The present case, it appears, falls within the category contemplated by Lord Dyson JSC in WL (Congo) at para 144 where, however grave the risk of absconding or the risk of serious offending, it ceases to be lawful to detain a person pending deportation.
Once that position is reached there is, in my view, no longer a power of detention under paragraph 16 and there is therefore no longer a power to grant bail under paragraphs 22 or 29.
The Secretary of State next draws attention to paragraph 21 of Schedule 2 which concerns temporary admission or release of persons liable to detention or detained in non deportation cases (ie the equivalent provisions to paragraphs 2(5) and (6) of Schedule 3 of the 1971 Act).
Paragraph 21 as amended provides for the release or temporary admission of persons liable to detention or detained: 21.
Temporary admission or release of persons liable to detention (1) A person liable to detention or detained under paragraph 16(1), (1A) or (2) above may, under the written authority of an immigration officer, be temporarily admitted to the United Kingdom without being detained or be released from detention; but this shall not prejudice a later exercise of the power to detain him. (2) So long as a person is at large in the United Kingdom by virtue of this paragraph, he shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by an immigration officer.
Mr Tam submits that the respective structures of the powers to grant temporary admission or release under paragraph 21 and the power to grant bail under paragraph 22 are similar; paragraph 21 refers to a person liable to detention or detained whereas paragraph 22 refers to a person detained.
He submits that this difference of wording serves only to identify that bail is available only if the individual is actually detained, while temporary admission is also available if the individual has not been actually detained.
Thereafter, he submits, the approach adopted by the House of Lords in R (Khadir) v Secretary of State for the Home Department [2005] UKHL 39; [2006] 1 AC 207 ought to apply equally to both of these ameliorating possibilities.
The power to admit temporarily and the power to grant bail should be held to continue so long as the power to detain exists, even if it cannot be lawfully exercised.
The approach to which he refers is to be found in the speech of Lord Brown in Khadir at paras 31 33. 31.
For my part I have no doubt that Mance LJ was right to recognise a distinction between the circumstances in which a person is potentially liable to detention (and can properly be temporarily admitted) and the circumstances in which the power to detain can in any particular case properly be exercised.
It surely goes without saying that the longer the delay in effecting someones removal the more difficult will it be to justify his continued detention meanwhile.
But that is by no means to say that he does not remain liable to detention.
What I cannot see is how the fact that someone has been temporarily admitted rather than detained can be said to lengthen the period properly to be regarded as pending . his removal. 32.
The true position in my judgment is this.
Pending in paragraph 16 means no more than until.
The word is being used as a preposition, not as an adjective.
Paragraph 16 does not say that the removal must be pending, still less that it must be impending.
So long as the Secretary of State remains intent upon removing the person and there is some prospect of achieving this, paragraph 16 authorises detention meanwhile.
Plainly it may become unreasonable actually to detain the person pending a long delayed removal (ie throughout the whole period until removal is finally achieved).
But that does not mean that the power has lapsed.
He remains liable to detention and the ameliorating possibility of his temporary admission in lieu of detention arises under paragraph 21. 33.
To my mind the Hardial Singh line of cases says everything about the exercise of the power to detain (when properly it can be exercised and when it cannot); nothing about its existence.
In its judgment in the present proceedings SIAC drew attention to the distinction drawn by Lord Brown between the existence of a power to detain, which can subsist even where actual detention would be unlawful, and the unlawful exercise of that power.
The power to detain continues to exist even if actual detention would be unlawful provided that there is some prospect of removal being effected.
It noted that Khadir had not been disapproved by the Supreme Court in WL (Congo).
In the present case SIAC considered that there remained some prospect of removal so that the power to detain persisted under paragraph 2 of Schedule 3.
The fact that detention today would be unlawful did not necessarily prevent lawful detention in the future.
As a result it concluded that the power to grant bail also subsisted and could be exercised.
That reasoning was decisively rejected by the Court of Appeal.
On this further appeal Mr Tam submits that the value of the decision in Khadir is that its acceptance of the continuing existence of the power to detain and thus the continuing availability of temporary admission or temporary release allows a purposive construction of the three layered mechanism provided by Schedule 2 ie detention, bail, temporary admission or temporary release.
In particular, he submits that as both bail and temporary admission or temporary release are ameliorating possibilities of alternatives to detention, it is sensible for both powers to persist for some duration beyond the point at which actual detention can no longer continue.
In my view, Khadir provides no assistance to the Secretary of State in the present case, for the reasons given by Lord Dyson MR (at paras 29 31).
They may be summarised as follows: (1) Khadir is a decision not on detention or on the power to grant bail under paragraphs 22 or 29, but on the power to grant temporary admission under paragraph 21. (2) There is a material difference between the wording of paragraph 21, on the one hand, and paragraphs 22 and 29 on the other.
The distinction between a person detained and a person liable to be detained is clear and must have been deliberate. (3) The House of Lords in Khadir held that the distinction between the existence and the exercise of the power to detain was material to the power to grant temporary admission to a person liable to detention.
There is no warrant for applying that distinction to the different question of whether there is a power to grant bail to a person who may not lawfully be detained at the time when it is proposed to grant bail.
On behalf of the Secretary of State it is then submitted that the interpretation of paragraphs 22 and 29 favoured by the Court of Appeal would lead to impracticability in their application and that this casts doubt on its reading.
First, it is submitted that, if there is no power to grant bail unless there is a power to detain, on an application for bail the FTT or an immigration officer would have to determine Hardial Singh issues as a jurisdictional matter.
It is submitted that Parliament could not have intended the FTT or immigration officers to engage in such an exercise which is difficult enough in a case of actual detention but which would be much more difficult or even logically impossible in the hypothetical context required by this reading of paragraphs 22 and 29.
As a result bail applications could require two or three days of Hardial Singh enquiry simply to decide whether there is jurisdiction to grant bail.
Here Mr Tam further submits that the FTT does not have jurisdiction to decide whether detention is lawful. (See Konan at para 30 and WL (Congo) at para 118.) I consider that there is little or no substance in these contentions for the following reasons: (1) It is unlikely that an applicant for bail will seek to challenge the jurisdiction of the FTT to grant bail.
Similarly, the Secretary of State is unlikely to maintain that an applicants detention is unlawful.
I accept, however, that, as it is a matter of jurisdiction, there may be cases in which the FTT should properly take the point of its own motion. (2) The power to grant bail is expressly conferred on the FTT or a Chief Immigration Officer by paragraphs 22 and 29 of Schedule 2.
If an issue as to the legality of detention were to arise on a bail application, it would fall to be addressed in that context.
If the judge concluded that detention was unlawful, the Secretary of State could be expected to direct release of the applicant on temporary admission.
If she maintained the view that detention was lawful, the matter could be raised urgently in the Administrative Court.
I note that, in the context of SIAC, where an applicant puts the legality of his detention in issue, concurrent judicial review proceedings can be lodged and the Chair of SIAC is able to exercise the jurisdiction of the Administrative Court.
That is, in fact, what occurred in the present case. (3) The FTT is clearly entitled to address the Hardial Singh principles.
Consideration on a bail application of whether detention was lawful would not, in any event, require the FTT to depart significantly from what is currently required of it.
The current guidance (Bail Guidance for Immigration Judges Presiding over Immigration and Asylum Hearing, Presidential Note 1 of 2012, Judge Michael Clements, 11 June 2012 at paras 5,17 and 18) recognises that the lawfulness of detention may be a relevant factor in bail proceedings, as has the High Court in the SIAC jurisdiction (R (Othman) v SIAC [2012] EWHC 2349 (Admin)).
Secondly, the Secretary of State submits that it appears from the statutory scheme that the grant of bail was intended to be an exercise conducted by relatively junior immigration officers or even by police officers with less specialist immigration experience and that, accordingly, it is very unlikely that Parliament intended that the lawfulness of detention should be investigated before the grant of bail.
This is equally unconvincing.
So far as the capabilities of immigration officers are concerned, I agree with the observations of Lord Dyson MR (at para 35).
Immigration officers are charged by Parliament with taking many difficult decisions, which require care, individual consideration and the exercise of judgement and which may involve fact finding.
These decisions are of enormous consequence to the lives of the persons concerned.
In particular, in considering whether to grant temporary admission an immigration officer may have to consider whether a person is liable to detention under paragraph 21.
Contrary to the submission of Mr Tam, I cannot see that application of the Khadir test of some prospect of the individuals removal is a significantly less complex exercise than the application of the Hardial Singh principles.
Thirdly, the Secretary of State submits that an arrest by a police officer for an actual or apprehended breach of bail would require the officer to consider the Hardial Singh principles and assess whether the prescribed limit of a power to detain had been reached.
However, the power of arrest conferred by paragraph 24(1)(a) is exercisable by a police officer if he has reasonable grounds for believing that that person is likely to break the condition of his recognizance or bail bond.
Unlike the power to order re detention in paragraph 24(3), it does not depend on a continuing power to exercise immigration detention.
Fourthly, the Secretary of State points to the consequences which might follow if detention were unlawful on other grounds.
Here, particular reliance is placed on WL (Congo), where detention was unlawful because it was based on an unpublished policy which conflicted with a published policy, and on R (SK (Zimbabwe)) v Secretary of State for the Home Department [2011] UKSC 23; [2011] 1 WLR 1299, where detention was unlawful because of missed detention reviews required by a published policy.
It is said that it would be absurd if there were no power to grant bail in such circumstances.
In my view, there is no absurdity here.
Once detention had been authorised on a lawful basis there would be power to grant bail.
Accordingly, I consider that the spectre of impracticability conjured up by Mr Tam is illusory and does not cast any doubt on my reading of paragraphs 22 and 29.
There is no reason to conclude that Parliament must have intended to confer a power to grant bail where a person is detained unlawfully.
On the contrary, I have no doubt that the statutory provisions with which we are concerned require a lawful power to detain as a pre condition to a grant of bail.
In any event, if administrative inconvenience is a consequence the remedy lies with Parliament.
For these reasons I agree with the conclusion of Lord Dyson MR that bail may not be granted under paragraphs 22 and 29 of Schedule 2 where a person is unlawfully detained purportedly under paragraph 2(2) of Schedule 3 to the 1971 Act or where a person not currently in detention could not lawfully be detained under that provision.
In his judgment in the Court of Appeal in the present case, Lord Dyson MR, having arrived at the conclusion that the word detained in paragraphs 22 and 29 of Schedule 2 should be construed as meaning lawfully detained, advanced a further, independent basis for his conclusion, namely that the power to grant bail presupposes the existence of and the ability to exercise the power to detain lawfully.
In support of this conclusion he drew attention to Mitchell v Mitchinham (1823) 2 D & R 722 and In re Amand [1941] 2 KB 239 which, he observed, demonstrate that the writ of habeas corpus can still issue where a person is on bail.
As a matter of legal instinct, the proposition that the ability to exercise a lawful power to detain is a precondition to a power to grant bail seems entirely sound.
Not only does it seem correct as a matter of principle, but also the lack of a lawful power to detain is likely, without more, to give rise to practical difficulties.
As I have explained earlier in this judgment, that would, in my view, be the position in relation to immigration bail if the Secretary of States submissions were accepted in the present case.
Although we have been referred on this appeal to a number of authorities relating to the scope and availability of habeas corpus, including those referred to by Lord Dyson MR, I have not found these decisions of any great assistance.
Nevertheless, there is a considerable body of modern authority which supports Lord Dysons statement of principle.
The decision of the Court of Appeal in Stellato v Ministry of Justice [2011] QB 856 is strongly supportive of this approach.
The claimant having been released on licence from a prison sentence refused to comply with the conditions of his licence on the ground that he was entitled to be released unconditionally.
He was returned to prison.
A Divisional Court of the Queens Bench Division dismissed his claim for judicial review.
His appeal was allowed by the Court of Appeal which granted a declaration that he was entitled to immediate release but stayed the declaration to permit a petition to the House of Lords and granted him conditional bail.
He refused to comply with the bail conditions and, as a result, was arrested and returned to prison pursuant to an order of a Lord Justice who, the next day, ordered that his bail be revoked and that he remain in custody until the end of the stay granted by the Court of Appeal.
Following the dismissal by the House of Lords of the Home Offices appeal, he was released unconditionally and he then brought an action for false imprisonment and breach of his rights under article 5 ECHR against the Ministry of Justice as successor to the Home Office.
In those proceedings the question arose whether the stay or the breach of bail conditions provided legal authority for his detention.
The Court of Appeal (Maurice Kay, Stanley Burnton and Patten LJJ) held that they did not.
Stanley Burnton LJ explained (at para 21) that the only authority for the continued detention was the original sentence of imprisonment and the legislation which was the subject of the courts judgment.
He continued: 23.
Turning to the effect of the orders of Hughes LJ, I consider that the answer is to be found in the nature of a grant of bail.
In principle, a grant of bail is not an order for the detention of the person to whom it is granted.
To the contrary, it is a grant of liberty to someone who would otherwise be detained.
The legal justification for his detention is to be found elsewhere: in the case of a person suspected of crime, in the powers of arrest of a constable under a warrant issued by a magistrates court (see section 1 of the Magistrates Courts Act 1980), or without a warrant (see section 24 of the Police and Criminal Evidence Act 1984), and powers to remand pending trial or further hearing.
Similarly, there is statutory authority for detention in immigration cases: see, for example, paragraph 16 of Schedule 2 to, and paragraph 2 of Schedule 3 to, the Immigration Act 1971. 24.
A grant of bail may be conditional or unconditional.
A condition of bail does not impose an obligation on the person granted bail.
It is a true condition.
It qualifies the grant of liberty made by the grant of bail.
If the person granted bail does not comply with the conditions of his bail, he is liable to be returned to custody.
If so, the legal authority for his detention is not the grant of bail, or his breach of the conditions of his bail, but the authority for his detention apart from the order for bail.
All that his breach of the conditions of his bail does is to disentitle him to bail.
Similarly, in R (Konan) v Secretary of State for the Home Department [2004] EWHC 22 Admin, where the claimants alleged that their immigration detention had been unlawful, Collins J, in rejecting a submission on behalf of the Secretary of State that bail was an alternative remedy, stated (at para 30): An adjudicator in considering a bail application is not determining (indeed, he has no power to determine) the lawfulness of the detention.
The grant of bail presupposes the power to detain since a breach of a bail condition can lead to a reintroduction of the detention.
That the grant of bail is not a determination of the legality of detention was emphasised by Lord Dyson JSC in R (WL (Congo)) v Secretary of State for the Home Department [2012] 1 AC 245, para 118, and Hughes LJ in R (Omar Othman) v Special Immigration Appeals Commission [2012] EWHC 2349 (Admin), para 18.
I also note that in Ismail v United Kingdom (2014) 58 EHRR SE6, para 16, the United Kingdom expressly submitted, on the authority of Konan and Lumba, that article 5(4) ECHR was not applicable since a bail application was not a procedure under domestic law to challenge the lawfulness of immigration detention and emphasised that, under domestic law as interpreted by the courts, a decision to release a person on bail, subject to conditions designed to ensure his future attendance, presupposed the legality of the power to detain.
On behalf of the Secretary of State Mr Tam relies before us on a line of cases concerning foreign national offenders in which bail had been granted to an individual, whose detention had become or was about to become unlawful, as a means of ending the detention and continuing the individuals management whilst he was on bail.
These decisions include R (Bashir) v Secretary of State for the Home Department [2007] EWHC 3017 (Admin); R (A, MA, B and E) v Secretary of State for the Home Department [2008] EWHC 142 (Admin); R (O) v Secretary of State for the Home Department [2008] EWHC 2596 (Admin); R (Adewale) v Secretary of State for the Home Department [2009] EWHC 1289 (Admin); R (Wang) v Secretary of State for the Home Department [2009] EWHC 1578 (Admin); R (D) v Secretary of State for the Home Department [2009] EWHC 1655 (Admin); R (Ahmed) v Secretary of State for the Home Department [2010] EWHC 625 (Admin); R (Hussein) v Secretary of State for the Home Department [2010] EWHC 2651 (Admin) and R (HY) v Secretary of State for the Home Department [2010] EWHC 1678 (Admin).
On this basis, he submits that the Secretary of States contention in the present proceedings is the conventionally accepted approach to the question of bail and that this includes the imposition of bail conditions as an alternative to detention after actual detention has become unlawful for Hardial Singh reasons.
The difficulty with this submission, however, is that in these first instance decisions, which include one of my own, the power to grant bail appears to have been assumed without the present issue having been directly addressed.
Nevertheless, the notion that the power to grant bail presupposes the existence and the ability to exercise a power to detain lawfully is not necessarily a principle of universal application.
While the clearest possible words would be required to achieve a contrary result, Parliament could do so.
It would be a question of construction in each case whether that result had been achieved.
Thus in Stellato Stanley Burnton LJ observed (at para 25) that the general principles which he had set out in paragraphs 23 and 24 (quoted above) are subject to any statutory provision.
Moreover, following a suggestion by Lord Hughes during the course of argument on this appeal, it became apparent that the provisions governing police bail in sections 34, 37 and 41, Police and Criminal Evidence Act 1984 may be exceptions to the general principle stated by the Court of Appeal.
In this regard, I also draw attention to section 61, Immigration Act 2016.
In view of such possible statutory inroads into the principle stated by the Court of Appeal, I prefer to found my conclusions in the present case on the interpretation of the provisions of Schedule 2.
In the present case it is common ground that B could not lawfully be detained following the ruling of SIAC on 13 February 2014 that there was no reasonable prospect of removing [B] to Algeria and thus the ordinary legal basis for justified detention of B under the Immigration Acts has fallen away.
Furthermore, it has not been suggested that this is a case in which, on the application of Hardial Singh principles, a lawful power of detention subsequently revived as a result of a change of circumstances.
In these circumstances I conclude, for the reasons set out above, that in the absence of a power of lawful detention there was no power to grant bail to B pursuant to paragraph 22 of Schedule 2 to the 1971 Act.
In these circumstances I do not consider it necessary to address the arguments which we have heard on article 5 ECHR which, in my view, adds nothing to the resolution of the issues before the court on this appeal.
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The Respondent (B) has been in the UK since 1993.
He was originally detained under section 21 of the Anti Terrorism, Crime and Security Act 2001 and was subsequently subject to a control order under the Prevention of Terrorism Act 2005.
On 11 August 2005, he was notified of the Secretary of States intention to make a deportation order against him on national security grounds.
He was detained under Schedule 3 of the Immigration Act 1971 (the 1971 Act) pending deportation.
He appealed, using a false identity, to the Special Immigration Appeals Commission (SIAC) against his deportation.
The UK Government sought assurances from the Algerian authorities that, if returned to Algeria, B would not be subject to treatment incompatible with Article 3 of the European Convention on Human Rights (ECHR).
On 10 July 2006, the Algerian authorities confirmed that the details of his identity given by B were those of an individual present in Algeria.
On 19 July 2007, SIAC ordered B to provide details of his true identity.
On 30 July 2008, SIAC held that the Secretary of States case against B on the risk to national security had been made out.
On 26 November 2010, SIAC held that B had disobeyed its earlier order of 19 July 2007 and imposed a prison sentence on B of four months.
Following his eventual release from prison, bail conditions were imposed on B.
On 13 February 2014, SIAC held that there was no reasonable prospect of removing B to Algeria and the ordinary legal basis for justified detention under the Immigration Acts therefore fell away.
Thereafter, the Secretary of State did not authorise Bs further detention and his bail conditions were relaxed.
Bs appeal against the notice of decision to deport him was struck out by SIAC in light of his continuing contempt of court.
SIAC also rejected Bs submission that, following SIACs findings of 13 February 2014, it no longer had jurisdiction to grant bail to B or to impose bail conditions.
This decision was upheld by the High Court.
B appealed to the Court of Appeal, which allowed his appeal on the ground that SIAC had no jurisdiction to impose bail conditions on B if his detention would be unlawful.
On 12 December 2016, SIAC allowed Bs substantive deportation appeal.
As a result, Bs bail fell away and it is common ground that the immigration power is now unavailable.
The Supreme Court granted the Secretary of State permission to appeal against the decision of the Court of Appeal on the issue of SIACs bail jurisdiction.
The Supreme Court unanimously dismisses the appeal.
Lord Lloyd Jones gives the lead judgment with which the other Justices agree.
The so called Hardial Singh principles concerning the operation of the detention power contained in paragraph 2 of Schedule 3 to the 1971 Act form an important part of the background to this appeal.
These principles are that (i) the Secretary of State must intend to deport the person and can only use the detention power for that purpose; (ii) the deportee may only be detained for a reasonable period; (iii) if it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period then he should not seek to exercise the power of detention; and (iv) the Secretary of State should act with reasonable diligence and expedition to effect removal [24 25].
At the heart of the case is a dispute about what the correct approach to the availability of immigration bail is when the Hardial Singh limit on actual detention is reached.
The Secretary of State suggested that a purposive interpretation of the legislation should apply so that bail is available regardless of whether the individual is lawfully detained or would hypothetically be lawfully detained [28].
The Court saw no basis for such an approach.
It is a fundamental principle of the common law that Parliament is presumed not to intend to interfere with the liberty of the subject without making such an intention clear.
This was a situation where the principle of legality was in play.
Accordingly, the Court was required to interpret the statutory provisions strictly and restrictively [29].
It was common ground that being detained was a condition precedent to the exercise of the power to grant bail conferred by paragraphs 22 and 29 of Schedule 2 to the 1971 Act.
Applying the strict approach to interpretation, the Court found that the reference to detained means lawful detention [30 31].
Furthermore, detained does not only refer to the state of affairs which must exist at the time when the power is first exercised.
Unless there is a continuing power to detain, the system of bail would encounter substantial difficulties in operation [32].
Where it ceases to be lawful to detain a person pending deportation there is no longer a power of detention under paragraph 16 of Schedule 2, and there is therefore no longer a power to grant bail under paragraphs 22 or 29 [33].
The Secretary of State submitted that as both bail and temporary admission or temporary release are ameliorating possibilities of alternatives to detention, it is sensible for both powers to persist for some duration beyond the point at which actual detention can no longer continue.
Temporary admission or release is covered by paragraph 21 of Schedule 2.
However, unlike paragraphs 22 and 29, it refers to a person liable to be detained and not detention which is a material difference.
Accordingly, the comparison does not assist the Secretary of State [34 39].
The Court did not agree with the Secretary of States submission that the interpretation of paragraphs 22 and 29 favoured by the Court of Appeal would lead to impracticability in their application.
In any event, if administrative inconvenience is a consequence the remedy lies with Parliament [40 45].
The Court found considerable modern authority which supported the Court of Appeals statement of principle that the power to grant bail presupposes the existence of and the ability to exercise the power to detain lawfully. [47 51].
However, this is not necessarily a principle of universal application.
While the clearest possible words would be required to achieve a contrary result, Parliament could do so [53].
In the circumstances it was not necessary to address the arguments under Article 5 ECHR which added nothing to the resolution of the issues on appeal [56].
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KV, a national of Sri Lanka and of Tamil ethnicity, comes to the UK and claims asylum.
He alleges that he was tortured by government forces there in the course of detention on suspicion of association with the LTTE (the Tamil Tigers).
He has five long scars on his back and two shorter scars on his right arm, all of which were on any view the product of branding with a hot metal rod.
He contends that they are evidence of the torture.
But the tribunal in effect concludes that the scars represent wounding which was Self Inflicted By Proxy (wounding SIBP), in other words which was inflicted by another person at KVs own invitation in an attempt on his part to manufacture evidence in support of a false asylum claim.
It dismisses his appeal against the refusal of asylum.
By a majority the Court of Appeal, [2017] EWCA Civ 119, [2017] 4 WLR 88, dismisses his further appeal and, in doing so, makes controversial observations about the limit of the role of a medical expert in contributing to the evidence referable to a claim of torture.
Now KV brings a third appeal to this court.
This court must address the Court of Appeals controversial observations.
They raise the point of general public importance which precipitated the grant to him of permission to appeal.
But the disposal of his appeal will instead depend on whether he persuades us of an error of law, in particular an error of reasoning, in the dismissal of his appeal on the part of the tribunal.
Background
KV was born in 1986 and lived in Sri Lanka until his arrival in the UK in February 2011.
He made his claim for asylum promptly.
In March 2011 he was interviewed on behalf of the Home Office.
His account was that he had worked in his fathers jewellery shop; (a) that in 2003 he had begun to assist the Tamil Tigers in valuing (b) jewellery which its members had brought to him and, with his father, in melting their gold at their request; (c) continued to assist in those ways until 2008; that, while never having been a member of the Tamil Tigers, he had (d) that government forces had arrested him in May 2009 and detained him in a camp until, with outside help, he had escaped from it in February 2011; and that during his detention they had beaten him with gun butts or (e) wooden poles every few days and, having learnt of the assistance given by him to the Tamil Tigers in respect of its gold and other valuables, had thereby sought to extract information from him about where they were kept.
At the interview KV produced photographs of the scars on his back and right arm which, he said, were the product of an occasion of torture in about August 2009.
It is important to note that in this initial interview his account, to which he has consistently adhered, was that his captors had first applied hot metal rods to his arm while he was conscious; that the pain had rendered him unconscious; that, while he remained unconscious, they had applied the rods to his back; that, when he regained consciousness, they had further increased the severity of the pain by pouring petrol on him and threatening to set him alight; and that some three months had elapsed before the skin had healed into scars.
Later in March 2011 the Home Office refused KVs claim for asylum.
It identified various perceived inconsistences in his account; and, in relation to his scars, it noted that he had produced no medical evidence in support of his account of torture, which it did not accept.
In May 2011 the First tier Tribunal dismissed KVs appeal against the refusal of his claim for asylum.
But the Upper Tribunal held that an error of law had vitiated the dismissal and it directed that the appeal be reheard.
It then identified the appeal as an appropriate vehicle for the issue of general guidance to medical experts invited to analyse scars allegedly caused by torture, in particular if suggested on the contrary to represent wounding SIBP; and so the appeal was directed to be heard by a panel of judges in the Upper Tribunal itself.
In the event the appeal was heard over three days by three of the most experienced judges of the Upper Tribunal, namely Judge Storey, Judge Dawson and Judge Kopieczek.
The tribunal (as the Upper Tribunal will hereafter be described) permitted a charity, the Helen Bamber Foundation (the HBF), to intervene in the appeal.
The HBF is recognised by the Home Office as a responsible provider both of expert support and treatment to those who have suffered torture or other serious harm and of medical reports intended to help UK public authorities to determine whether allegations of such suffering are true.
On 22 May 2014 the tribunal explained its dismissal of KVs appeal in a mammoth document, entitled Determination and Reasons which contains 368 paragraphs on 78 pages, [2014] UKUT 230 (IAC).
Massive effort on the part of each of the three judges plainly underlies the determination.
As a result of it the tribunal issued six propositions of general guidance to those preparing medico legal reports in relation to scars borne by asylum seekers who allege them to be the product of torture and particularly when, on the contrary, wounding SIBP is more than a fanciful possibility.
The Court of Appeal, however, considered that wounding SIBP was generally so unlikely that it was inappropriate to issue the guidance.
In particular the court disagreed with the apparent suggestion in the guidance that medical experts should routinely consider it even when not canvassed by the Home Office as being a reasonably possible explanation of the asylum seekers scarring.
So the court directed that the tribunals guidance be treated as of no effect.
This court has not been invited to review whether it was right to jettison it.
The tribunal subjected KVs evidence, together with that of his two brothers and his uncle, to appropriately rigorous analysis.
It recognised that throughout the three years since his arrival in the UK his accounts of his experiences in Sri Lanka had been broadly consistent and that background country information, including that set out in para 32 below, had confirmed the existence of a practice on the part of state forces there of torturing detainees by burning them with soldering irons.
It nevertheless concluded that various aspects of his evidence were unconvincing, including in relation to his alleged work for the Tamil Tigers, the frequency and severity of his alleged beatings during the years of his alleged detention, the circumstances of his alleged escape and the surprising immunity of his father from arrest and detention.
But the tribunals substantial reservations about KVs credibility recede into the background in the light of its helpful identification of the central issue as follows: 337.
If the appellants scarring was caused by torture in detention then the possibility of the appellants account being true, notwithstanding the identified shortcomings, becomes a real one.
The tribunal thereupon embarked upon a detailed analysis of the medical evidence referable to KVs scarring, to some of which it will be necessary to return.
Its conclusion was as follows: 364.
In relation to the medical evidence, we have found that whilst it assisted in eliminating some possible causes, it left us with only two that were real possibilities: that the appellant was tortured as claimed; that his scarring was SIBP.
Of these two real possibilities, we have found, on analysis, that the former claim does not withstand scrutiny.
Certainly we cannot say in his case that the evidence inexorably points to SIBP, but given that we have concluded it is left as the only real possibility that we have not been able to discount, taking the evidence as a whole, we are satisfied that he has not shown his account is reasonably likely to be true.
Thereupon the tribunal volunteered an emphatic rejection of almost all of KVs evidence: 365.
We find that after 2003 he remained in Colombo and at no stage then or thereafter did he come to the adverse attention of the army or police before coming to the UK.
One should respectfully place a question mark against the tribunals disclaimer in para 364 of any conclusion that the evidence inexorably pointed to wounding SIBP.
If your inquiry into the disputed circumstances of a past event leads you to conclude that there are only two real possibilities and if you then proceed to reject one of them (indeed in this case to reject it in terms which could not be more absolute: see para 365), you are necessarily concluding that the other real possibility represents what happened.
Evidence of Dr Zapata Bravo
KV presented several pieces of medical evidence to the tribunal but much of it proved to be of limited use.
The most important was that given by Dr Zapata Bravo.
He was qualified both in internal (particularly chest) medicine and in psychiatry; had clinical experience of surgery; and had been subject to the apparently rigorous training of the HBF in the assessment of the physical and psychological effects of torture.
On examination of KV in October 2013 Dr Zapata Bravo noted five scars on his back and two scars on his right upper arm, more particularly described as follows: (a) a flat scar on the left side of the back, just below the shoulder blade, measuring 130 x 11 mm and in the shape of an elongated and narrow parallelogram; (b) (a), slightly shorter but in the same shape; a flat scar on the right side of the back, at a level equivalent to that at a flat scar on the right side of the back, underneath that at (b), shorter a flat scar on the right side of the back, just below the waist, a flat scar on the left side of the back, underneath that at (a), shorter a slightly raised scar on the right upper arm, measuring 50 x 15 mm in a flat scar on the right upper arm, below that at (f), but longer (75mm) (c) but parallel to it and in the same shape; (d) but parallel to it and in the same shape; (e) underneath that at (d), shorter but parallel to it and in the same shape; (f) the shape of a parallelogram; and (g) and in a different, oval, shape.
It was the opinion of Dr Zapata Bravo that the scars at (a) and (b) had in the past been joined together, as had the scars at (c) and (d), but that in each case they had become separated when the scarring in the small of the back, where the injury had been less severe, had disappeared.
Thus, he reasoned, there had originally been five rather than seven scars, reflective of five burns caused (he had no doubt) by application of a hot metal rod.
He added that the scar at (f) was the only raised scar and indicated burning even more profound than elsewhere.
He could not be more precise than to say that KV had sustained the injuries prior to September 2010.
For present purposes the most important part of the evidence of Dr Zapata Bravo was the distinction which he drew between the scars at (a) to (e) on the back and those at (f) and (g) on the arm.
It was a distinction confirmed by photographs placed before the tribunal.
The doctor pointed out that the scars on the back were long, narrow and parallel and that in particular their edges were precise.
This perfect branding, as he described it, could not have occurred while KV was conscious: even if, when conscious, he had been forcibly held down, his reflex reaction to pain would have blurred the edges of the area burnt and thus of the resulting scars.
But those on the arm were different.
Here the branding was not perfect.
The edges were blurred.
They were not parallel to each other.
Their length, their width and their shape were different from each other; and they did not replicate the shape of a rod.
The different presentation of the scars on the arm from those on the back indicated to him that the former represented burns caused while KV had not been unconscious and so had been reacting to the pain by reflex flinching and other movements which had blurred the branding effect.
And here the doctor proceeded to note that KV had indeed consistently maintained that he had not been unconscious when his arms had been burnt but had then, as a result, fallen into unconsciousness before his back was burnt.
Dr Zapata Bravos conclusion was that his clinical findings were highly consistent with KVs account of torture; and that the other hypothesis, namely of wounding SIBP, was unlikely.
Istanbul Protocol
Dr Zapata Bravo explained in his report that his training by the HBF in relation to the effects of suggested incidents of torture had been in accordance with the Manual on the Effective Investigation and Documentation of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, usually known as the Istanbul Protocol, submitted to the UN High Commissioner for Human Rights in 1999.
As was said in its introduction, the manual was the result of three years of effort on the part of more than 75 experts in law, health and human rights, representing 40 organisations from 15 countries.
The principles of effective investigation etc were collected into Annex 1 of the manual and were adopted by the General Assembly of the UN on 4 December 2000 (Resolution 55/89).
The manual provides as follows: 187.
For each lesion and for the overall pattern of lesions, the physician should indicate the degree of consistency between it and the attribution given by the patient.
The following terms are generally used: (a) Not consistent: the lesion could not have been caused by the trauma described; (b) Consistent with: the lesion could have been caused by the trauma described, but it is non specific and there are many other possible causes; (c) Highly consistent: the lesion could have been caused by the trauma described, and there are few other possible causes; (d) Typical of: this is an appearance that is usually found with this type of trauma, but there are other possible causes; (e) Diagnostic of: this appearance could not have been caused in any other way than that described. 188.
Ultimately, it is the overall evaluation of all lesions and not the consistency of each lesion with a particular form of
torture that is important in assessing the torture story
It follows that, in concluding that his clinical findings were highly consistent with KVs account of torture, Dr Zapata Bravo was framing his conclusion in accordance with para 187(c) of the manual.
The Controversial Observations
The tribunal did not suggest that, in concluding that his findings were highly consistent with KVs account of torture, Dr Zapata Bravo had exceeded the limit of his role.
On the contrary, it cited authority to the effect that one of the functions of a medical report in relation to scars was to offer a clear statement in relation to their consistency with the history given.
Nor did the Home Secretary submit to the Court of Appeal that Dr Zapata Bravos conclusion had been in any way professionally inappropriate.
But in the Court of Appeal Sales LJ (with whom Patten LJ agreed) made observations to the opposite effect.
He said: 33.
In making this latter statement [that his findings were highly consistent with KVs story], Dr Zapata Bravo seems to have moved from an assessment whether the relevant lesions (ie the burns scars) could have been caused by the trauma described (ie the application of a heated metal rod) a matter on which he was capable of giving a view based on his medical expertise and which he had already addressed by saying that the scars were diagnostic of such trauma into an expression of view that he was disposed to accept the claimants account of how heated metal rods came to be applied to his skin.
Dr Zapata Bravo seemed to use the Istanbul Protocol highly consistent classification, but inappropriately in relation to the claimants story, which is something different from the trauma to which that classification is expressly directed. 34.
In my judgment, at this point he rather trespassed beyond his remit as an expert medical witness into the area where it was for the UT to make an assessment of all the evidence 35. [P]ara 187 of the Protocol focuses, appropriately in my view, on the question of the likely immediate cause of a lesion or wound on the body of the complainant (in our case, application of a heated metal rod to the claimants skin), which is a proper subject for expert medical evidence [I]n any event, where a medical expert is providing evidence for use in the tribunal, they should seek guidance primarily from the relevant Tribunal Rules and Practice Direction In the course of a dissenting judgment in which he concluded that the reasoning of the tribunal had been unsatisfactory and that the court should have remitted KVs appeal to it for fresh determination, Elias LJ in para 110 disagreed with the observations of the majority that Dr Zapata Bravo had exceeded the proper limit of his role in the manner alleged.
In this further appeal the Home Secretary has felt unable to defend the observations of the majority and, with the benefit of the full argument which the Court of Appeal never enjoyed, nor, to be fair to counsel, never invited, it is clear that they are erroneous.
In their supremely difficult and important task, exemplified by the present case, of analysing whether scars have been established to be the result of torture, decision makers can legitimately receive assistance, often valuable, from medical experts who feel able, within their expertise, to offer an opinion about the consistency of their findings with the asylum seekers account of the circumstances in which the scarring was sustained, not limited to the mechanism by which it was sustained.
Had the contribution of Dr Zapata Bravo been limited to confirming KVs account that the scarring was caused by application of a hot metal rod, it would have added little to what was already a likely conclusion.
But, when he proceeded to correlate his findings of a difference in the presentation of the scars on the back and those on the arm with KVs account of how the alleged torture had proceeded, he was giving assistance to the tribunal of significant potential value; and it never suggested that he lacked the expertise with which to do so.
In para 33 of his judgment, set out in para 19 above, Sales LJ suggested that the references in para 187 of the Istanbul Protocol to the trauma described relate only to the mechanism by which the injury is said to have been caused.
That is too narrow a construction of the word trauma.
It is clear that in the protocol the word also covers the wider circumstances in which the injury is said to have been sustained.
Paragraph 188 of the protocol, set out in para 16 above, which Sales LJ had himself quoted in para 31 of his judgment, guides the expert towards the type of evaluation which is important in assessing the torture story.
Paragraph 105 of the protocol recommends that, in formulating a clinical impression for the purpose of reporting evidence of torture, experts should ask themselves six questions, including whether their findings are consistent with the alleged report of torture and whether the clinical picture suggests a false allegation of torture.
Paragraph 122 says: The purpose of the written or oral testimony of the physician is to provide expert opinion on the degree to which medical
findings correlate with the patients allegations of abuse
In another case of alleged torture, namely SA (Somalia) v Secretary of State for the Home Department [2006] EWCA Civ 1302; [2007] Imm AR 1 236, the Court of Appeal, by the judgment of Sir Mark Potter, President of the Family Division, held in paras 27 and 28 that the task for which an asylum seeker tendered a medical report was to provide a clear statement as to the consistency of old scars found with the history given , directed to the particular injuries said to have occurred as a result of the torture or other ill treatment relied on as evidence of persecution.
In paras 29 and 30 Sir Mark quoted paras 186 and 187 of the Istanbul Protocol and commended them as particularly instructive for those requested to supply medical reports in relation to alleged torture.
In RT (medical reports causation of scarring) Sri Lanka [2008] UKAIT 00009 the Asylum and Immigration Tribunal in para 37 described the SA (Somalia) case as a landmark authority in the identification of the purpose of a medical report in relation to alleged torture and in the indorsement of the Istanbul Protocol.
It is no surprise that the European Court of Human Rights should have adopted a similar construction of the role of the expert in accordance with the Istanbul Protocol: in Mehmet Eren v Turkey (2008) (Application No 32347/02), it relied in para 43 upon the conclusion of a medical report about the consistency of the clinical findings with the applicants account of serious ill treatment while he was in police custody.
Again, no surprise that, in para 3.2 of its Guidelines on the Judicial Approach to Expert Medical Evidence dated June 2010, the International Association of Refugee Law Judges should have recognised the function of the report as being to provide expert opinion on the degree of correlation between the asylum seekers presentation and his allegations of torture.
And indeed, no surprise that, in para 3.3 of his instruction to case workers entitled Medico Legal Reports from the Helen Bamber Foundation and the Medical Foundation Medico Legal Report Service dated July 2015, the Home Secretary should have required them to give due consideration to medical opinions given on behalf of those organisations upon the degree of consistency between the clinical findings and the account of torture.
The reader will have noticed that, in making the erroneous observations quoted in para 19 above, Sales LJ added in para 35 that the primary source of guidance for experts in such circumstances should be the Tribunal Rules and the Practice Direction rather than the Istanbul Protocol.
This was a point to which he returned in para 94, as follows: Contrary to what some of the expert witnesses in this case seem to have thought, it is the Practice Direction, not the Istanbul Protocol, which provides the relevant authoritative guidance as to their duty, helpful though parts of the Istanbul Protocol might be as a reference resource.
Sales LJ was there referring to Practice Direction 10 in Part 4 of the Practice Directions of the Immigration and Asylum Chambers of the First tier Tribunal and the Upper Tribunal, dated 10 February 2010 and amended on 13 November 2014.
But there is no inconsistency between that Practice Direction and the protocol.
Of course the expert must comply with the Practice Direction, including in particular the requirement in paras 10.2 and 10.4 not to offer an opinion outside the area of his expertise.
But the Practice Direction does not address the specific area addressed by the protocol, namely the investigation of torture.
When invited to investigate an allegation of torture, the expert should therefore recognise the protocol as equally authoritative in accordance with the Court of Appeals decision in the SA (Somalia) case, cited in para 22 above.
But Ms Harrison QC on behalf of the HBF made a further submission to the Court of Appeal, repeated before us, that in a case of alleged torture experts are entitled to express the view that they believe that the person has suffered the torture.
She cited R (AM) v Secretary of State for the Home Department [2012] EWCA Civ 521, in which Rix LJ, with whom Moses LJ and Briggs J agreed, observed in paras 29 and 30 that the expert had believed the appellants account of torture and that her belief constituted independent evidence of torture which had disentitled the Home Secretary from continuing to detain her.
It is not clear from the judgment of Rix LJ whether the expert had in terms said that she believed the appellant.
But, as he pointed out in para 15, she had, when categorising her findings in accordance with para 187 of the Istanbul Protocol (set out in para 16 above), in effect chosen the most positive category, namely (e) Diagnostic of could not have been caused in any other way than that described in relation to one of the scars.
Such a diagnosis was indeed tantamount to belief in the accuracy of the description of how that scar had been caused.
A corresponding placement of a conclusion within the most negative category, namely (a) Not consistent could not have been caused by the trauma described would be tantamount to disbelief in the accuracy of the description.
Where, however, more usually, the expert places his or her conclusion within categories (b), (c) or (d), there is no room, nor sanction in the protocol, for the expression of belief or otherwise in the account given.
The conclusion about credibility always rests with the decision maker following a critical survey of all the evidence, even when the expert has placed his conclusion within category (a) or (e).
Indeed, in an asylum case in which the question is only whether there is a real possibility that the account given is true, not even the decision maker is required to arrive at an overall belief in its truth; the inquiry is into credibility only of a partial character.
Disposal of the Appeal
In his dissenting judgment Elias LJ set out in detail his concerns about the reasoning of the tribunal in rejecting KVs claim of torture.
In an attempt not to overburden this present judgment with analogous factual detail, I will confine it to a review of three main points.
The first relates to KVs account, confirmed by the appearance of the scars on the back, that the burns there had been inflicted while he was unconscious.
He said that the burns on his arms had made him lose consciousness.
But the bigger question, rightly addressed by the tribunal, was how he had remained unconscious while the burns on the back were inflicted.
This in turn raised the question: how long would it have taken to inflict the burns on the back? In their written reports none of the experts had addressed this question.
But, at the end of his oral evidence by telephone, Dr Zapata Bravo, when asked, suggested that it would have taken ten minutes to inflict the burns on the back but added that his suggestion was speculative.
But could KV have remained unconscious for ten minutes? The doctors answer was hesitant: it was that he might possibly have done so if he had been in a bad state of health, with loss of weight as a result of malnutrition, and if he had not eaten nor taken fluids.
Another expert, Dr Allam, who had been asked a general question about the usual speed of recovery of consciousness, had already written, in fair conformity with Dr Zapata Bravos later hesitant hypothesis, that an individuals state of health could affect the speed of recovery.
In the end, however, the tribunal found it to be an unlikely hypothesis that KV did not regain consciousness for the period of about ten minutes while the alleged torturers inflicted the burns on the back.
Although the tribunal there attached central importance to an estimate of ten minutes given off the cuff and stressed to have been speculative, and although it seems altogether to have discounted Dr Zapata Bravos hesitant explanation for more prolonged unconsciousness, it is in my opinion hard for an appellate court to rule that it had not been entitled to conclude that this part of KVs account was unlikely.
Its conclusion on this point cannot, however, mark the end of an overall inquiry into the existence of a real possibility that the scars reflected torture.
The second point relates to Dr Zapata Bravos pivotal opinion that the different, blurred, edges to the scars on the arm indicated the infliction of burns during consciousness, which correlated with the account which KV had always given.
The problem arises from the reasons given by the tribunal for rejecting the conclusion which he based upon it.
It said: 348. we do not consider that Dr Zapata Bravos conclusion that the appellants scarring was highly consistent with his account of having been tortured is justified when account is taken of the doctors own evidence indicating (i) it was clinically unlikely, given their precise edging, that his scarring could have been inflicted unless he was unconscious; and (ii) that it was clinically unlikely a person could remain unconscious throughout multiple applications of hot metal rods to his arms and back, unless he was anaesthetised The paragraph raises big questions.
Why does the summary of the doctors evidence at (i), in relation to precise edging, fail to limit the reference to scarring to scarring on the back? Why does the summary of his evidence at (ii) address a hypothesis, contrary to that which he (and KV himself) had advanced, that he had remained unconscious throughout the application of the rods to his arms as well as to his back? By the time it came to draft para 348, had the tribunal mislaid the pivotal point?
The answer given to these questions by Sales LJ in para 21(ii) of his judgment was that in his oral evidence Dr Zapata Bravo must have said or have appeared to say that the scars on the arm as well as on the back were precisely defined and that complete analgesia would have been required to produce all of them.
Sales LJ observed that KV had failed to provide the court with a transcript of the doctors oral evidence and that, without a transcript, there was no basis for criticising the tribunal.
But it is dangerous for us who work in appeal courts to assume that the answer to an apparent mistake at first instance must lie in oral evidence not recorded in the judgment and not transcribed for the purposes of the appeal.
The court of first instance should be expected to record the oral evidence on which it places reliance.
Stung by the observations of Sales LJ, KV has provided to this court for the purposes of his further appeal a transcript of all the oral evidence given to the tribunal; and with great respect, it is clear and agreed that in his oral evidence Dr Zapata Bravo never wavered from his clinical findings of a difference in the scars as between the back and the arm, nor from the significance which he had attached to it.
The Home Secretary correctly invites us to be realistic.
We must accept that the drawing of a fine tooth comb through any judicial survey of complex evidence written across 368 paragraphs is likely to discover a tangle in it.
In para 12 of his judgment in SS (Iran) v Secretary of State for the Home Department [2008] EWCA Civ 310 Lord Neuberger of Abbotsbury observed that appeal courts should be particularly wary of interfering with evidential conclusions made in relation to claims for asylum, in which, among other things, the paucity and fragility of the evidence are likely to be acute.
On the other hand he added: given the potentially severe, even catastrophic, consequences of a mistaken rejection of an appeal, where fear of ill treatment (or worse) is alleged, it is plainly right to scrutinise any [such] decision very carefully Paragraph 348 of the tribunals determination contains more than a minor tangle.
It represents its reason for rejecting Dr Zapata Bravos categorisation of high consistency in accordance with para 187(c) of the Istanbul Protocol.
The tribunal there mislaid the difference in the scars on the arm to which he had attached such significance.
But it needed to address it.
Elias LJ said in para 108: In my judgment the [tribunal] had to find an explanation for the different appearance of these scars and it could not characterise his account of being tortured as implausible without having done so.
That was his judgment.
It should also, I suggest, be ours.
The third point arises out of the tribunals final conclusion that there were only two real possibilities, namely that KV had been tortured and that his wounding was SIBP.
The point is that the likelihood of both possibilities had to be compared with each other before either of them could be discounted.
And the contention is that, when it came to compile the final section of its determination entitled Assessment of the Appellants Appeal, and in particular the final subsection, entitled Conclusion, in which it discounted the possibility of torture, the tribunal made no reference to the likelihood, or rather on any view the unlikelihood, that the wounding was SIBP.
That there was extensive torture by state forces in Sri Lanka in 2009 was well established in the evidence before the tribunal.
For example at para 187 of its determination it quoted an EU report dated October 2009 as follows: International reports indicate continual and well documented allegations of widespread torture and ill treatment committed by state forces (police and military) particularly in situations of detention.
The UN Special Rapporteur on Torture has expressed shock at the severity of the torture employed by the army, which includes burning with soldering irons and suspension of detainees by their thumbs.
By contrast, evidence of wounding SIBP on the part of asylum seekers was almost non existent.
The tribunal referred at para 11 to just one unreported decision in 2011 in which it had concluded that the wounding had been SIBP.
Dr Zapata Bravo said that, in the field of immigration, neither he nor any colleague to whom he had spoken had experience of wounding SIBP.
He contrasted it with tribal and ritual scarring, administered with social consent, which no one had suggested to account for the scars in question.
His and the other medical evidence before the tribunal indicated that the wounding of a body which that person deliberately achieved by his own hand was slightly less uncommon; but that there were parts of a body which that person could not burn without assistance and that they certainly included the burnt parts of KVs back.
Dr Zapata Bravo said that in the literature he had found only one statement referable to a persons burning of himself by use of a proxy.
Very rarely, it had said, an accomplice might be asked to cause a wound in a place the person cannot reach.
There is no doubt that, particularly in the light of the serious lack of KVs credibility in several other areas of his evidence, the tribunal was correct to address the possibility of wounding SIBP.
But, in assessing the strength of the possibility, it had to weigh the following: It is an extreme measure for a person to decide to cause himself to (a) suffer deep injury and severe and protracted pain. (b) Moreover KV needed someone to help him to do it. (c) Wounding SIBP is, in the words of Sales LJ at para 93 of his judgment, generally so unlikely. (d) If KVs wounding was SIBP, the wounds on his back could have been inflicted only under anaesthetic and so he would have needed assistance from a person with medical expertise prepared to act contrary to medical ethics. (e) If his wounding was SIBP, an explanation had to be found for the difference in both the location and in particular the presentation of the scarring as between the back and the arm. (f) If his wounding was SIBP, an explanation had to be found for the number of the wounds, namely the three wounds on the back, albeit now represented by five scars, and the two wounds on the arm.
As Elias LJ observed in para 99, one or two strategically placed scars would equally well have supported a claim of torture.
Elias LJ offered a summary in para 101: In my view very considerable weight should be given to the fact that injuries which are SIBP are likely to be extremely rare.
An individual is highly unlikely to want to suffer the continuing pain and discomfort resulting from self inflicted harm, even if he is anaesthetised when the harm is inflicted.
Moreover, the possibility that the injuries may have been sustained in this way is even less likely in circumstances where the applicant would have needed to be anaesthetised.
This would in all probability have required the clandestine co operation of a qualified doctor who would have had to be willing to act in breach of the most fundamental and ethical standards, and who had access to the relevant medical equipment.
That was his view.
It should also, I suggest, be ours.
I propose that we should direct the tribunal to determine afresh KVs appeal against the refusal of asylum.
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KV, who is a Sri Lankan national of Tamil ethnicity, arrived in the UK in February 2011 and claimed asylum.
He has scars on his arm and back which he says are the result of torture, but the Home Secretarys case is that they were self inflicted by proxy (SIBP), that is, by another person at his invitation.
KVs account is that although he was not a member of the LTTE (Tamil Tigers), he used to melt gold for them.
He says he was detained and tortured by the Sri Lankan government, who sought to extract information about where the gold and other valuables were kept.
He alleges that the government applied hot metal rods to his arm while he was conscious, the pain rendered him unconscious, and that while he remained unconscious they applied the rods to his back.
He appealed unsuccessfully to the First tier Tribunal (FTT) against the Home Secretarys refusal of his claim for asylum.
The Upper Tribunal (the tribunal) reheard his appeal as the FTTs decision had been vitiated by an error of law.
The tribunal found various aspects of KVs evidence unconvincing but recognised that if his scarring was indeed caused by torture then there was a real possibility his story was true.
Dr Zapata Bravo, a medical expert, advised that the scars were caused by burning with a hot metal rod.
Furthermore, the scarring on KVs arm had blurred edges but the scarring on his back had such clearly defined edges that he must have been unconscious while the burns were inflicted.
He concluded that his clinical findings were highly consistent with KVs account of torture, and that it was unlikely the scars were SIBP.
The tribunal nevertheless dismissed KVs appeal, finding that (i) it was clinically unlikely, given their precise edging, that his scarring could have been inflicted unless he was unconscious; and (ii) that it was clinically unlikely a person could remain unconscious throughout multiple applications of hot metal rods to his arms and back, unless he was anaesthetised .
On appeal, the Court of Appeal (CA) held by a majority that the assessment made by the tribunal was legitimately open to it and could not be criticised as perverse or irrational.
Furthermore, it was beyond Dr Zapata Bravos remit as an expert medical witness to state his opinion that his findings were highly consistent with KVs account of torture as a whole.
Elias LJ dissented.
The Supreme Court (Lady Hale, Lord Wilson, Lady Black, Lord Briggs and Lord Kitchin) unanimously allows the appeal and remits KVs appeal against the refusal of asylum to the Upper Tribunal for fresh determination.
Lord Wilson gives the only judgment.
The 1999 Manual on the Effective Investigation and Documentation of Torture and other Cruel, Inhuman or Degrading Treatment or Punishment, known as the Istanbul Protocol, guides medical experts to indicate for each lesion the degree of consistency between it and the cause given by the patient, on a scale from not consistent to diagnostic of.
The Istanbul Protocol provides that ultimately, it is the overall evaluation of all lesions, and not the consistency of each lesion with a particular form of torture that is important in assessing the torture story.
Thus, in concluding that his clinical findings were highly consistent with KVs account, Dr Zapata Bravo framed his conclusion in accordance with the Istanbul Protocol [15] [17].
In the Supreme Court, the Home Secretary felt unable to defend the CAs observations that Dr Zapata Bravo had gone beyond his remit.
In their difficult task of analysing whether scars are the result of torture, decision makers can legitimately receive assistance from medical experts who feel able to offer an opinion about the consistency of their findings with the asylum seekers account about the circumstances in which the scarring was sustained, not limited to the mechanism by which it was sustained.
The CAs suggestion that the references in the Istanbul Protocol to the trauma described relate only to the mechanism by which injury is said to have been caused is too narrow a construction of the word trauma [20] [21].
On the other hand, unless an expert finds that the trauma described is either not consistent with or diagnostic of the alleged torture, it would be beyond his or her remit to state that he or she believed the appellant.
The conclusion about credibility always rests with the decision maker following a survey of all the evidence [25].
This approach is consistent with that of the Court of Appeal in a previous case of alleged torture, and that of the European Court of Human Rights [22] [23].
An expert investigating an allegation of torture should recognise the Istanbul Protocol as equally authoritative to the relevant Practice Direction on expert evidence in immigration and asylum cases at the FTT and the tribunal [24].
As for the decision of the tribunal, Elias LJ in his dissenting judgment had noted various problems with the tribunals reasons for rejecting KVs account of torture [26].
In particular, the tribunals summary of the doctors evidence lacked apparent awareness that the scarring with precise edging was only on KVs back, and addressed a hypothesis, not advanced by the doctor or KV, that KV was unconscious while the hot metal rods were applied to his arms as well as to his back [28].
Given KVs serious lack of credibility in several areas, the tribunal was correct to address the possibility of wounding SIPB.
However, when the tribunal concluded that there were only two real possibilities either that KV had been tortured or that the wounding was SIBP and when it rejected the former, it failed to take into account the fact that self infliction of wounds is inherently unlikely.
There is evidence of extensive torture by state forces in Sri Lanka at the relevant time.
By contrast, evidence of wounding SIBP on the part of asylum seekers is almost non existent.
It is an extreme measure for a person to decide to cause himself deep injury and severe pain.
Moreover, if KVs wounding was SIBP, the wounds on his back could only have been inflicted under anaesthetic so he would have needed the assistance of someone with medical expertise.
The Supreme Court approves Elias LJs view that very considerable weight should be given to the fact that injuries which are SIBP are likely to be extremely rare [31] [35].
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It is not often that, as in this case, the question of the construction of a charterparty arises in the Chancery Division.
The issue between the parties is whether one of them is an Affiliate of the charterer for the purposes of provisions in a charterparty by which both the owner and the charterer agreed to indemnify and hold each other harmless (including in the case of the charterer its Affiliates) in relation to certain liabilities.
The charterparty provides (in clause 1): In this Charter Agreement the following words and expressions shall have the meanings hereby assigned to them except where the context otherwise requires: a) Affiliate means any subsidiary of the Charterer or a company of which the Charterer [is] a Subsidiary or a company which is another Subsidiary of a company of which the Charterer is a Subsidiary.
For the purposes of this definition Subsidiary shall have the meaning assigned to it in Section 736 of the Companies Act 1985.
By clause 1.2 a reference to any statute or statutory provision is to include a reference to any amendment, extension, consolidation or replacement thereof.
Although for the purposes of this dispute the relevant provisions are to be found in the Companies Act 1985 (as amended by the Companies Act 1989) identical provisions are re enacted by the Companies Act 2006, and the issue on this appeal is of some general importance.
The statutory definition of subsidiary is incorporated by reference in other legislation (e.g. Transport Act 2000, section 65; Enterprise Act 2002, section 223; Energy Act 2004, section 196).
Incorporation of the statutory definition in commercial contracts (of which this case is an example) is very common.
In this case it has had an unexpected result which has arisen through a combination of two factors.
The first factor is that, as will be seen, the statutory definition of subsidiary in important respects uses the term member which normally connotes the person on the share register.
The second factor flows from a difference between English and Scots law and practice relating to the holding of shares by way of security: under Scots law and practice the mortgagee is registered as the holder of the shares, by contrast with the position in England, where commonly an equitable charge by way of deposit of the share certificate will constitute the security.
As Lord Hope and Lord Rodger explain fully in their judgments, under Scots law the only way in which a fixed security over shares can be taken is by fiduciary transfer of the shares to the creditor (fiducia cum creditore).
The security is known as a share pledge, under which registration of the creditor as holder of the shares constitutes the security.
The unexpected result may be (if the Court of Appeal was right) that, in the somewhat unusual circumstances of this case, a company which would otherwise undoubtedly be the subsidiary of another company ceased to be so when the shares in the former company were charged by the latter company to a Scottish bank.
To oversimplify considerably, a major question on the appeal is whether, for the purposes of the statutory provision and the contract, the putative holding company remained a member notwithstanding that the shares which it owned were charged to, and registered in the name of, the mortgagees nominee company.
The facts
The charterparty was entered into on February 4, 1994.
The owner was Farstad Shipping A/S (Farstad) and the charterer was then called Aberdeen Service Company (North Sea) Ltd (Asco UK Ltd or the Charterer).
The chartered vessel was the Far Service (the Vessel) and the charter was, initially, for 5 years with an option to extend for up to a further 5 years.
The Vessel was to supply and/or assist and/or service offshore installations.
The charter in fact continued until at least December 2005.
The charterparty contained mutual exceptions and indemnities to lay out a regime allocating risk and responsibility in respect of the main types of liability situations that might arise as between Farstad and the Charterer.
In particular Farstad was to defend and hold harmless the Charterers, its Affiliates and Customers, in respect of any loss or damage to the Vessel or to other property of Farstad (clause 33.5).
Asco UK Ltd is a wholly owned subsidiary of what is now called ASCO plc, formerly ASCO Group plc (ASCO), a major oil and gas logistics company.
Enviroco Ltd (Enviroco) carries on business (inter alia) in the industrial cleaning of ships.
Until 1999 it too was a wholly owned subsidiary of ASCO.
In November 1999, in connection with a joint venture with Stoneyhill Waste Management Ltd (Stoneyhill), the shares in Enviroco were converted into equal numbers of A and B ordinary shares with ASCO retaining the A shares and Stoneyhill holding the B shares.
The effect of the amended Articles of Association was that ASCO had the right to appoint a majority of directors.
In addition, pursuant to an agreement with Stoneyhill, ASCO was entitled to exercise a majority of the voting rights in Enviroco.
The A shares were registered in the name of ASCO and the B shares were registered in the name of Stoneyhill.
ASCO and Enviroco are both registered in Scotland, and in May 2000 ASCO executed a Deed of Pledge, governed by Scots law, in favour of the Bank of Scotland (the Bank), for itself and as agent and Security Trustee for a syndicate of banks, to secure facilities granted or to be granted by some of the banks.
By the Deed of Pledge ASCO pledged, charged and assigned to the Bank the A ordinary shares held by it in Enviroco, and agreed to register, or procure the registration of the shares in the name of the Bank or its nominees until the secured liabilities were repaid.
The shares were then registered in the name of Bank of Scotland Branch Nominees Ltd (the Nominee).
The Deed of Pledge provided that until the security became enforceable the full voting and other rights and powers in respect of the Shares were exercisable by ASCO and that ASCO would be appointed as proxy in relation to the voting of the shares until the security was enforced.
No voting rights or other powers were exercised by the Bank or the Nominee, all dividends were paid to ASCO and the security was never enforced.
The proceedings
On July 7, 2002 Enviroco was employed to clean the oil tanks of the Vessel.
While the tanks were being cleaned by Envirocos employees, a fire occurred in the engine room causing substantial damage to the Vessel and the death of an Enviroco employee.
On March 26, 2007 Farstad issued proceedings in Scotland claiming damages from Enviroco amounting to approximately 2.7 million in respect of losses allegedly suffered by Farstad as a consequence of the incident in 2002.
Enviroco sought to rely on the mutual exception and indemnity clauses on the basis that it was an Affiliate of Asco UK Ltd because each of them was a subsidiary of ASCO.
The principal issue is whether the fact that, in accordance with Scottish practice, the shares in Enviroco were registered in the name of the Banks nominee company has the result that Enviroco was not a subsidiary of ASCO at the relevant time and therefore not an Affiliate for the purposes of the charterparty.
In December 2007 Enviroco issued these proceedings in England seeking a declaration that on the true and proper construction of the charterparty Enviroco was an Affiliate of the Charterer.
Subsidiaries: the statutory definitions
There are many situations in which company law takes account of groups of companies: see Gower and Davies, Principles of Modern Company Law, 8th ed. 2008, para 9 16.
They include financial reporting, the control of transactions between a company and its directors, or of the purchase of a companys own shares.
It is plainly important and necessary to define what is meant by a subsidiary for these and other purposes.
There is a special definition for accounting purposes in section 1162 and schedule 7 of the 2006 Act, previously in section 258 and schedule 10A of the 1985 Act (inserted by the Companies Act 1989).
The definition for general purposes is in section 1159 and schedule 6 of the 2006 Act, previously in sections 736 and 736A of the 1985 Act as amended by the Companies Act 1989.
Greene Committee and the Companies Acts 1928 and 1929
The Companies Act 1928 was the first to deal with the definition of subsidiary, by amending the Companies Acts 1908 to 1917 prior to their consolidation into the Companies Act 1929.
The terms holding company and subsidiary were defined for the purpose of new accounting provisions in sections 122 to 128 of the 1929 Act, which gave effect to the recommendations of the Company Law Amendment Committee (the Greene Committee), 1926, Cmd 2657.
Section 127 of the 1929 Act (re enacting section 40 of the 1928 Act) provided that a company would be deemed to be a subsidiary company of another company if the latter held shares, directly or through a nominee, and (a) the amount of the shares so held was more than 50% such as to entitle the shareholder to more than 50% of the voting power; or (b) the shareholder had power (other than under security documents) to appoint the majority of the board.
Where a company the ordinary business of which included lending held shares in another company as security only, no account was to be taken of the shares so held in determining if that other company was a subsidiary: section 127(2).
The provisions made no use of the concept of member.
Cohen Committee in 1945 and the Companies Acts 1947/1948
The Cohen Committee on Company Law Amendment recommended in 1945 (Cmd 6659) a revised definition of holding company and subsidiary, where there existed either (a) control of the subsidiary through the board of directors and ownership (direct or indirect) of shares in the subsidiary, or (b) beneficial ownership (direct or indirect or through subsidiaries) of more than half of the subsidiarys equity share capital.
The recommendations also envisaged that, as before, shares held as security only by a company the ordinary business of which included lending would continue to be left out of account.
The Committees focus was on the beneficial ownership of shares and not on the status of membership.
The changes made by the Companies Act 1947 (consolidated in the Companies Act 1948) were in terms different from those proposed by the Cohen Committee, and introduced the concept of membership into that part of the definition which related to control of composition of the board.
By section 154(1)(a) of the 1948 Act a company was deemed to be a subsidiary of another if, but only if, (a) that other either (i) is a member of it and controls the composition of its board of directors, or (ii) holds more than half in nominal value of its equity
share capital
Special provision was made to deal with shares held by nominees or by way of security in section 154(3)(b),(c),(d), the broad effect of which was that shares held or powers exercisable were to be treated as held or exercisable by the beneficial owner or by the grantor of the security.
The Jenkins Committee, the Companies Act 1967, and the Companies Act 1985 as
originally enacted
The Jenkins Committee (Company Law Committee, 1962, Cmnd 1749) recommended that there should be an amended definition of subsidiary based solely on membership and control (i.e. the first part of the formula in the 1948 Act) because the definition in the 1948 Act could result in a company being a subsidiary of two other companies, and because non voting and restricted voting equity shares had become more common with the result that a company might own a majority of shares without controlling the composition of the board: paras 149 150 and 156.
But this part of the Jenkins Committees proposals was not adopted in the Companies Act 1967, with the consequence that the definition in the 1948 Act continued to apply.
As originally enacted, section 736(1) of the original 1985 Act was in the same terms as section 154(1) of the 1948 Act, with the provisions dealing with nominees and mortgagees now in section 736(4).
The European Communitys Seventh Council Directive on consolidated accounts
and the changes to the 1985 Act
The Seventh Council Directive on consolidated accounts (83/349/EEC of June 13, 1983) required changes in the subsidiary/holding company definition used for accounting purposes.
The Companies Act 1989, which implemented the Directive, introduced a new subsidiary/holding company definition for accounting purposes in sections 258 and 259 and schedule 10A (now section 1162 and schedule 7 of the 2006 Act).
Section 258(2) defined the parent undertaking/subsidiary undertaking by reference to four alternative criteria, two of which used the concept of membership: section 258(2)(b) (it is a member of the undertaking and has the right to appoint or remove a majority of its board of directors) and section 258(2)(d) (it is a member of the undertaking and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the undertaking).
Section 258(3) provided that an undertaking was to be treated as a member of another undertaking (b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking or any of its subsidiary undertakings.
Schedule 10A contained provisions explaining and supplementing those in section 258.
They included provisions (paras 7 and 8) that rights held by a person as nominee for another were to be treated as held by that other and that rights attached to shares held by way of security were to be treated as held by the person providing the security.
The 1989 Act also amended the subsidiary/holding company definition in section 736, with supplementary provisions in section 736A (now section 1159 and schedule 6 of the 2006 Act).
Sections 736 and 736A were similar, but not identical, to section 258 and schedule 10A.
In particular, with some minor drafting differences, section 736 contained three of the four criteria in section 258(2) (that is, all except the criterion of dominant influence by virtue of the memorandum or articles or of a control contract: section 258(2)(c), and see also section 258(4) for the criteria of actual dominant interest and unified management).
Section 736A contained provisions which were similar to (in the case of nominees) or identical to (in the case of shares held as security) to those in schedule 10A.
But one important difference for the purposes of this appeal is that sections 736 and 736A contained no equivalent to section 258(3) deeming an undertaking to be a member if shares in the putative subsidiary were held by a person acting on behalf of the undertaking.
So far as material to this appeal, sections 736 and 736A of the 1985 Act provide: 736 Subsidiary, holding company and wholly owned subsidiary (1) A company is a subsidiary of another company, its holding company, if that other company (a) holds a majority of the voting rights in it, or is a member of it and has the right to appoint or (b) remove a majority of its board of directors, or (c) is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it, (3) 736A Provisions supplementing section 736 In this section company includes any body corporate. (1) The provisions of this section explain expressions used in section 736 and otherwise supplement that section. (2) In section 736(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares to vote at general meetings of the company on all, or substantially all, matters. (3) In section 736(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters; and for the purposes of that provision a company shall be treated as having the right to (a) appoint to a directorship if (i) a persons appointment to it follows necessarily from his appointment as director of the company, or (ii) the directorship is held by the company itself; and (b) a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship. (5) Rights held by a person in a fiduciary capacity shall be treated as not held by him. (6) Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence. (7) Rights attached to shares held by way of security shall be treated as held by the person providing the security (a) where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions; (b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests. (12) In this section company includes any body corporate.
The decisions below and the appeal
No reliance was placed by Enviroco on section 736(1)(a) or (b), but it was common ground that ASCO controls alone, pursuant to an agreement with other shareholders or members [i.e. Stoneyhill], a majority of the voting rights in Enviroco, which would therefore be a subsidiary of ASCO within section 736(1)(c) if ASCO were a member of Enviroco.
Mr Gabriel Moss QC sitting as a Deputy Judge in the Chancery Division held that: (a) as a matter of contractual interpretation, Enviroco was an Affiliate of the Charterer notwithstanding that ASCOs shares in Enviroco had been pledged to the Bank of Scotland by a method which involved the registration of the shares in the name of the Nominee as a member of Enviroco by way of security; and (b) a company remained a holding company of its subsidiary within the meaning of section 736(1)(b) and 736(1)(c) even after it had given all of its shares as security to a lender and the lender or its nominee had been registered as holder of the shares as part of the perfection, protection or enforcement of its security.
The Court of Appeal (Mummery, Longmore and Patten LJJ) allowed an appeal by Farstad and held that the definition provision in clause 1(a) of the charterparty was an unequivocal direction that the statutory definition was to be applied, and that Enviroco was not a subsidiary of ASCO within sections 736 and 736A of the 1985 Act, because: (1) by providing that the putative holding company is to be a member of the subsidiary, both sections 736(1)(b) and (c) require the putative holding company actually to be a member of the subsidiary within the definition of member of a company in section 22 of the 1985 Act, that is, to be registered as a member; (2) that requirement could not be satisfied by virtue of the attribution provisions in sections 736A(6) and 736A(7); and (3) sections 736 and 736A had to have the same meaning when applied to the charterparty so that no different construction was available in the commercial context.
Envirocos arguments on the appeal to this Court are these.
It puts at the forefront an argument on policy.
It says that the version of section 736 introduced by the 1989 Act was intended to bring the definition of holding company and subsidiary into line with the new definitions of parent undertaking and subsidiary undertaking introduced by section 258.
It cannot have been the intention of Parliament, in enacting a new and stricter definition of holding company and subsidiary, to enable easy evasion of the statutory restrictions imposed on holding and subsidiary companies by the use of nominees, or to displace those restrictions by the use of ordinary security arrangements with ordinary lending institutions.
From that basis Enviroco goes on to put two separate arguments for the conclusion that Enviroco is a subsidiary of ASCO.
The first is that ASCO is a member within the meaning of section 736(1)(c).
The second is that the attribution provisions of section 736A(6) and (7) have the same effect.
The first argument is developed in this way.
The reference to member in section 736(1)(c) (and in section 736(1)(b)) does not require the putative parent company to be named in the subsidiarys register of members since sections 736 and 736A expressly apply not only to companies (companies formed and registered under the Companies Acts) which have a register of members, but also to all other forms of body corporate, whether or not incorporated in Great Britain, and whether or not they have any register of members or equivalent, and so the use of the word member in the two subsections could not have been intended to denote or require entry on a register of members.
The effect of the original section 736 of the 1985 Act was that the putative parent company was not required to be on the register, and Parliament did not intend, and did not legislate for, any change in that regard in 1989.
The reference to member is intended to refer to the holding of rights of membership (as distinct from the holding of shares, a concept of no application in the case of bodies corporate without any share capital, such as companies limited by guarantee) rather than actual entry on the register.
The second argument is that the attribution provisions in sections 736A(6) and (7) attribute to the putative holding company the membership rights enjoyed by a nominee for the holding company (section 736A(6)) or by a chargee holding shares charged by the putative holding company (section 736A(7)), so that it is the holding company which has those rights and is thereby the member for the purposes of section 736.
The meaning of member and the attribution provisions
Members
Section 22 of the 1985 Act (now section 112 of the 2006 Act), provides: Definition of member (1) The subscribers of a companys memorandum are deemed to have agreed to become members of the company, and on its registration shall be entered as such in its register of members. (2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, is a member of the company.
That definition applies to all bodies corporate which are formed and registered under the legislation.
Enviroco is a company formed and registered under the 1985 Act.
The starting point is that the definition of member in what is now section 112 of the 2006 Act (section 22 of the 1985 Act for the purposes of this appeal) reflects a fundamental principle of United Kingdom company law, namely that, except where express provision is made to the contrary, the person on the register of the members is the member to the exclusion of any other person, unless and until the register is rectified: In re Sussex Brick Company [1904] 1 Ch 598 (retrospective rectification of register did not invalidate notices).
Ever since the Companies Clauses Consolidation Act 1845 and the Companies Act 1862 membership has been determined by entry on the register of members.
The companies legislation proceeds on that basis and would be unworkable if that were not so.
Among the many provisions relating to members are these: (1) a member will be bound by alterations in the companys articles, subject to specified exceptions (section 25, 2006 Act); (2) there are elaborate provisions relating to the register of members (sections 113 et seq), including a duty to keep an index of members (section 115) and rights to inspect and require copies (sections 116 121), and documents in hard copy form must be sent to a member at his address as shown in the register of members (schedule 5, Part 2); (3) a subsidiary cannot be a member of its holding company (section 136); (4) elaborate provision is made for voting by members, by proxies appointed by members, and by joint holders (sections 281 et seq); (5) the company must send its annual accounts and report to every member (section 423); (6) unlawful distributions may be recovered from a member who knows or has reasonable grounds for believing that it is unlawfully made (section 847(2)).
For those and other purposes the legislation makes it clear that the member is the person on the register, and where it is necessary to apply the legislation to persons who are not on the register, special provision is made.
Thus where the shares are bearer shares, special provision is made to allow the bearer to be deemed to be a member (section 122(3)).
So also the right of a member to bring a derivative claim or present an unfair prejudice petition is expressly extended to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law (sections 260(5) and 994(2)).
There is no basis for construing section 736(1)(c) (or section 736(1)(b)), taken alone, in any different sense.
There is no equivalent, either in section 736 or section 736A, to the deeming provision in section 258(3)(b) where, for accounting purposes, an undertaking is to be treated as a member of another undertaking if shares in the latter are held on its behalf.
The absence of such a provision is indicative, although not decisive, and, as will be seen, the reason for its absence is a matter for conjecture only.
The attribution provisions
The second argument is that the effect of attribution provisions in sections 736A(6) and (7) is to attribute to ASCO the membership rights enjoyed by the Nominee.
In effect this argument amounts to much the same thing as saying that they are to be read as if section 258(3)(b) were part of section 736A.
Section 736A(6) provides that rights held by a person as nominee for another shall be treated as held by the other, and section 736A(7) provides in principle that rights attached to shares held by way of security shall be treated as held by the person providing the security.
These are in substantially the same terms as schedule 10A, paras 7 and 8, supplementing section 258.
Neither of these provisions says anything about membership.
They are concerned with rights, not status, and plainly refer back to the voting rights and the right to appoint or remove the board in section 736(1)(a) (c), and their elaboration in sections 736A(2) and (3), which provide, respectively, that in section 736(1)(a) and (c) the references to voting rights are to rights conferred on shareholders in respect of their shares, and in section 736(1)(b) the reference to appoint or remove a majority of the board is to the right to appoint or remove directors holding a majority of voting rights.
Those are the rights held or rights attached to shares.
The fact that the similar provisions in schedule 10A, paras 7 and 8 were supplemented by section 258(3) is a strong, but not decisive, additional reason for not construing sections 736A(6) and (7) in the way for which Enviroco contends.
The argument from history
Nor is there anything in the history of the legislation to affect these conclusions.
It is true that from the 1947 Act until the 1985 Act special attribution provisions dealt with nominees and mortgagees in such a way as to treat the beneficial owner/person providing the security as a member where necessary, but there is no secure basis for using those provisions to interpret the amendments made by the 1989 Act.
Enviroco uses the Parliamentary history of the 1989 Act relating to what became sections 258 and 736 736A in two ways, the second much more elaborate than the first.
The first argument is that the fact that it was never suggested that the introduction of the requirement of membership in section 736(1) was a change in the law supports an inference that no change was intended.
The second argument is based on what happened in the passage of the 1989 Companies Bill through its committee stages in the House of Lords and the House of Commons.
In the House of Lords amendments were made in the Bill both to what became section 258 and sections 736 and 736A, which included a provision (draft section 736(5)(d)), which was identical to what became section 258(3) (undertaking shall be treated as a member of another undertaking (b) if any shares in that other undertaking are held by a person acting on behalf of the undertaking . ).
Then substantial amendments were introduced at the committee stage in the House of Commons to include provisions which became the attribution provisions in schedule 10A (supplementing section 258) and sections 736A(6) and (7).
At that time the deemed membership provision in what became section 736A was deleted, but not the equivalent provision in what became section 258(3).
Nevertheless, speaking for the Government, Mr Maude in the House of Commons and Lord Fraser of Carmyllie in the House of Lords said that the definition of subsidiary in what became sections 258 and 736 overlapped, and that the amendments were designed to ensure that where they overlapped, they do so perfectly: see Hansard (HC Debates), 22 June 1989, Standing Committee D, col 473 and Hansard (HL Debates), 9 November 1989, col 1020.
Enviroco argues that the overall effect is that the draftsman took the view that the membership deeming provision in both the earlier drafts of sections 258 and 736/736A was unnecessary in the light of the attribution provisions in what became schedule 10A, paras 7 and 8 and (in the same terms) section 736A(6), (7), but by oversight it was not deleted from what became section 258(3).
It is true that, in the unusual situation of the present case, where ASCO has turned Enviroco into a joint venture company and where it has charged the shares to a Scottish bank, the legislation does lead to a result which is certainly odd and possibly absurd.
But there is no relevant ambiguity in section 736 and no clear statement which casts any light on any question of interpretation which arises on this appeal.
The ministerial statements fall far short of a case for the application of even the most generous application of Pepper v Hart [1993] AC 593.
The drafting history (to the extent it may be looked at: cf Ward v Commissioner of Police of the Metropolis [2005] UKHL 32, [2006] 1 AC 23, at 27) does not throw any light on the reason for the omission from section 736 or section 736A of a provision equivalent to section 258(3).
It does seem likely that there was an error.
The ministerial statements do not assist on the question whether the deeming provision was incorrectly omitted from sections 736 and 736A, or incorrectly retained in section 258(3).
The more likely explanation is that it was incorrectly omitted from section 736A.
There is therefore no clear basis on which the court must be abundantly sure that there is a drafting error of the nature which the Court can correct: Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586 at 592.
The exercise which Enviroco would require from the Court would be an impermissible form of judicial legislation.
Enviroco has made much of the danger of evasion of statutory regulation which could occur if the Court of Appeals construction were right, and the Deputy Judge and Longmore LJ were troubled by this.
The problem of construction has been recognised by textwriters for some time (especially Gore Browne on Companies, 44th ed (1986), vol 1, Supplement 45, pp 1.019 1.020, para 1.6.1), but no material was put forward to suggest that advantage had been taken, in the 20 years or so since the provisions were enacted, of what was described by Enviroco as a loophole.
If there were such material, or if there had been an error, then the relevant provisions of the 2006 Act, section 1159 and schedule 6, could be amended by regulation, subject to negative resolution, under the power given to the Secretary of State in section 1160.
That would be a legitimate route, by contrast with the exercise, which Enviroco in effect asks this Court to undertake, of judicial re drafting of sections 736 and 736A.
Contractual construction
Nor is there any basis for construing the definition differently because it is incorporated in a contract.
The starting point is that if the terms of a statute are incorporated into a contract by reference, the contract has to be read as if the words of the statute are written out in the contract and construed, as a matter of contract, in their contractual context: see Adamastos Shipping Co Ltd v Anglo Saxon Petroleum Co Ltd [1959] AC 133, 152, 184.
It is true that it is likely that, if they had addressed their minds to it, the parties would not have envisaged that a subsidiary would cease to be so merely because the shares in it were charged to a Scottish bank.
But the Court is in no position to re write the contract for the parties.
Thus if the parties had been alive to the possibility and had been presented with it, it is by no means clear that Farstad would have been willing to exempt from liability a sister company of the Charterer which was only 50% owned by ASCO.
This is not a case in which it can be said that applying the wording of section 736 flouts business commonsense: The Antaios [1985] AC 191, 201.
Nor is it a case in which it could be said that something must have gone wrong with the language: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 913; Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, at [15].
Nor is there anything in the factual matrix to suggest that the words of section 736 and 736A have a different meaning or construction in the charterparty from the meaning that they would have in the statutory context.
For those reasons I would dismiss the appeal.
LORD HOPE
I agree with Lord Collins and Lord Rodger that the appeal must be dismissed.
I wish to add only a brief footnote to what Lord Rodger has said about the position in Scots law.
The question whether there was any room for a difference of view between English and Scots law as to the effect of the entry of a person on the register of a company as a member was considered in Elliot v Mackie & Sons Ltd; Elliot v Whyte 1935 SC 81.
In that case the trustees and executors of the deceased founder of a well known private company had executed transfers of shares in favour of two of their number and a third party to enable them to qualify as directors of the company under the articles.
This was because the trustees and executors wished to have an adequate representation on the board of directors of the company.
The certificates were endorsed to make it plain that the transfers were purely nominal and done only in order to enable the transferees to qualify as directors, the beneficial interest remaining in the transferors.
This initiative was objected to by some of the beneficiaries under the deceaseds testamentary settlement.
They maintained, among other things, that registration of the transfers was ultra vires of the company because the companys articles provided that shares must be held by a director in his own name and right, and that the register should be rectified because the transferees names had without sufficient cause been entered in the register.
The argument that registration of the transfers was ultra vires of the company because the shares were not held in the transferees own right as they had no beneficial interest in them was rejected.
It was still the practice in Scotland at that time for notice of trusts to be taken in company registers.
But Lord President Clyde did not think that this made the relation between the registered trustee and the company in any way different from that which existed in the case of other shareholders.
Applying the law as summarised by Lord President Inglis in Muir v City of Glasgow Bank (1878) 6 R 392, 399, he said that the trustee has the full right of property in the shares and consequently incurs personally the full liabilities of a shareholder: 1935 SC 81, 90.
He then added these words, at pp 90 91: The matter is one in which it is most undesirable to have different interpretations, north and south of the Border, of an expression in common use in the articles of companies whose affairs are regulated by a legislative system which is intended to apply, generally, to both countries; and, whatever view might have been taken had the matter arisen rebus integris I think it is too late to open a question which (in England) authority and practice, and (in Scotland) practice conform to that authority, has closed.
The expression in common use to which this passage refers is the provision in the companys articles that the qualification was the holding of a certain number of shares in the directors own name and right.
But the underlying point which determined the issue was the effect of the entry of the transferees names on the register as members of the company, as to which the law on both sides of the Border is the same.
The fact that the certificates on the back of the transfers disclosed that the transfers were purely nominal was insufficient to prevent shares that were actually held in trust from constituting a directors qualification.
As Lord Morison said, at p 92, it was of no concern to the company whether the shareholder was the owner of the shares which he held, or whether third parties were the owners or had interests in them.
These statements of the law have never been questioned, and I am in no doubt that the same reasoning must be applied in this case.
The transaction which led to the entry of Bank of Scotland Branch Nominees Ltd on the register of members of Enviroco Limited in place of Asco Group plc was the agreement between Asco and the Bank of Scotland which led to the transfer to the Bank by Asco of all its shares in Enviroco in security of its obligations to the Bank.
The terms of that agreement were set out in the Deed of Pledge, which makes it plain that as between the parties to it this was a transaction in security.
But so far as Enviroco itself and all third parties are concerned, Asco must be taken to have transferred to the Bank absolutely and without any qualification all the rights of membership attached to the shares that were previously vested in Asco.
It was deprived of those rights as soon as the entry of its name on the register was replaced by that of Nominees.
The problem that the Charterpartys use of the statutory definition of subsidiary to define the word affiliate has given rise to is due to the fact that Scots law insists that, to create a security over shares, the holder of the security the mortgagee, in other words must be entered as a member in the register of shareholders of the company.
This requirement can be traced back to the rule expressed in the Latin brocard traditionibus, non nudis pactis, transferuntur rerum dominia.
Equitable transfers are not recognised in Scots law.
A mere agreement will not do.
Something more is needed to make the agreement effective in a question with third parties.
As a general rule this consists of the taking of possession of the security subjects in a way that is appropriate to their nature and characteristics.
Enviroco was a company incorporated in Scotland with its registered office in Aberdeen.
The lex situs of its shares was Scotland: Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387, per Staughton LJ at p 405.
So Scots law governed what was required to create a security over them.
The Bank was entitled to insist upon the delivery into its hands of an instrument of transfer, so that Nominees could be entered in the register of members of Enviroco in place of Asco.
The fact that the way the law of Scotland works as to the granting of rights in security over shares in a Scottish company is different from the way security rights may be created over shares under English law must be taken together with its consequences.
However much one might have wished that effect might be given in Scots law to the fact that the entry of the Nominees in the companys register as a member of the company although ex facie absolute was truly in security only, this is no longer if it ever was possible.
I have not been able to trace any Scots authority that would support such an argument and, for the reasons referred to in Elliot v Mackie & Sons, I think that it would stand no chance of being successful.
I agree with the judgment of Lord Collins.
I add a short comment on the
LORD RODGER
effect of the form of security granted by Asco over its shares in Enviroco.
As Lord Collins has explained, the critical question is whether, on 7 July 2002, when the fire occurred on the MV Far Service, Enviroco was a subsidiary of Asco plc (Asco) in terms of section 736(1)(c) of the Companies Act 1985 (the 1985 Act).
For subsection (1)(c) to apply, Asco had to be a member of Enviroco on that date.
Unquestionably, Asco had at one time been a member of Enviroco, but on 11 May 2000 Asco entered into a Deed of Pledge with the Bank of Scotland (the Bank) in order to secure certain obligations and liabilities of Asco to the Bank and certain other lenders.
Although the agreement was described as a Deed of Pledge, the security which it created did not depend on the transfer of possession of the security subjects.
Rather, in terms of clause 2(A), Asco pledged, charged and assigned all its shares in Enviroco to the Bank.
By clause 3(A), until the relevant liabilities had been discharged in full, Asco had to register, or procure the registration of, the shares in the name of the Bank or its nominees and it had to procure that the Bank or its nominees remained the registered holder of the shares until the relevant liabilities had been so discharged.
In short, the security was to be created by transferring title in the shares to the Banks nominees.
This would give the Banks nominees a real right in the shares in the event of Ascos insolvency.
Asco took the steps required by clause 3(B) of the Deed of Pledge, with the result that on 18 May 2000 the register of members of Enviroco was amended to remove the name of Asco and to add the name of the nominees of the Bank as a member.
When this was done, Bank of Scotland Branch Nominees Ltd (Nominees) appeared on the register as a member, holding the shares which had previously been held by Asco when it was a member.
Ex facie the register, therefore, Asco was no longer a member of Enviroco and had been replaced by Nominees.
Of course, if and when Asco discharged its relevant liabilities, under clause 11 of the Deed, the Bank was required to transfer or cause its nominees to transfer all of the shares in Enviroco back to Asco.
At that point which had not been reached by 7 July 2002 Asco would have been restored to the register of members and the register would have been altered to show Asco as holding the shares in Enviroco.
As at 7 July 2002, however, Asco did not appear on the register of members of Enviroco and Nominees did.
Prima facie, therefore, Enviroco was not a subsidiary of Asco in terms of section 736(1)(c) of the 1985 Act since Asco was not a member of Enviroco.
I respectfully agree with Lord Collins analysis, at paras 4143, of section 736A and with his conclusion that nothing in that section expands the expression member in section 736(1)(c) or supplements, or in any way affects, the requirement that the parent should be a member of the subsidiary.
It follows that the appeal must fail for the reasons which Lord Collins gives, unless it can be said that, since the purpose of Ascos transfer of the shares to Nominees was to make Nominees holder of the shares in security only, according to Scots law Asco was to be regarded as remaining, in substance, a member of Enviroco for all purposes except giving effect to the security.
It is only right to point out that no such argument was advanced by counsel for Enviroco at the hearing of the appeal rightly, in my view.
It is, of course, the case that, under clause 5(A) of the Deed of Pledge, for the most part Asco retained the right to exercise all the powers pertaining to the shares.
But the mechanism adopted to achieve this confirms that the powers themselves were actually vested in Nominees.
For instance, so far as the voting rights are concerned, the arrangement was that, until the security became enforceable, the Bank was to secure that Nominees appointed Asco to act as its proxy in relation to the voting of the shares.
Asco was, in effect, to be constituted a procurator in rem suam for this purpose.
This arrangement had to be made precisely because Asco was not a member of Enviroco and so could not vote at general meetings of the company; by contrast, Nominees was a member and so would be entitled to vote in respect of the shares.
The arrangement ensured that Asco was able to exercise the right to vote, as agreed in clause 5(A), even though it was not a member of Enviroco.
There do not appear to be any Scottish cases which discuss the position of a creditor to whom shares have been transferred in security.
But in Gloag and Irvine, Law of Rights in Security Heritable and Moveable and Cautionary Obligations (1897), p 505, Mr Irvine pointed out that, by going upon the register, the security holder renders himself liable in all the obligations of a member of the company in terms of the articles of association.
The security holder is registered individually, and individually he is liable.
The author went on, at p 506, to refer to the well known decisions of the First Division and of the House of Lords as to the position of trustees who were members of the City of Glasgow Bank when it went into liquidation, due to the fraud of its directors, in October 1878.
The liability of members was unlimited.
Under reference to the decision of the House of Lords in Lumsden v Buchanan (1865) 4 Macq 950, Lord President Inglis summarised the relevant law in Muir v City of Glasgow Bank (1878) 6 R 392, 399: Persons becoming partners of a joint stock company, such as the Western Bank, and being registered as such, cannot escape from the full liabilities of partners either in a question with creditors of the company or in the way of relief to their copartners, by reason of the fact that they hold their stock of the company in trust for others, and are described as trustees in the register of partners and the other books and papers of the company. (At that time, under Scots law it was permissible in certain cases for entries on the register to describe members as trustees.) The decision of the First Division holding the trustees fully liable as contributories was upheld by the House of Lords: (1879) 6 R (HL) 21.
Mr Irvine rightly saw that the same reasoning must apply to a security holder who is entered on the register of members of a company in respect of the shares transferred to him.
The decisions in Muir and similar cases arising out of the liquidation of the City of Glasgow Bank brought ruin on many people who had merely held shares as trustees.
The decisions therefore indicate with remorseless clarity that anyone who is entered on the register of a company as a member in any capacity is quite simply a member, with all the relevant rights and liabilities.
That being so, on July 7 2002 Nominees was in all respects the relevant member of Enviroco holding the shares transferred to it.
There is therefore no room for the view that, somehow, under Scots law Asco rather than Nominees should be regarded as the member of Enviroco because Asco had transferred its shares to Nominees in security only.
Mr Irvine went on, Law of Rights in Security, pp 506 507, to identify a number of corresponding drawbacks for the debtor that result from granting a security which depends on transferring the shares to the security holder.
The present case draws attention to another drawback for certain companies which grant such a security.
In all the circumstances the appeal must fail for the reasons given by Lord Collins.
LORD MANCE
For the reasons given by Lord Collins, supplemented by those given by Lord Hope and Lord Rodger, I agree that this appeal should be dismissed.
LORD CLARKE
I was initially attracted by the appellants case.
On any sensible view of the facts Enviroco was throughout a subsidiary of Asco.
However, I have reluctantly concluded that there is no escape from the conclusion stated by Lord Hope at para 58 that, when Asco transferred its shares to Nominees, it must be taken to have transferred them absolutely and without any qualification of all the rights of membership attached to the shares that were previously vested in Asco.
It was deprived of those rights as soon as the entry of its name on the register was replaced by that of Nominees.
I am persuaded by Lord Hope and Lord Rodger that under Scots law, as Lord Rodger puts it at para 69, anyone who is entered on the register of a company is quite simply a member, with all the relevant rights and liabilities.
Moreover, that is so, even where, as here the shares have been transferred to Nominees in security only.
I also agree with Lord Collins for the reasons he gives that, try as one might, there is no basis upon which it is legally possible to reach any other conclusion as a matter of construction of sections 736 or 736A of the 1985 Act as amended.
While I agree with him that it looks likely that the omission from those sections of a provision equivalent to section 258(3) was an error, I also agree with him that the correction of it would amount to impermissible judicial legislation.
As Lord Collins explains at para 50, it could have been done in the 20 years or more since the 1989 Act and it could now be done by regulation.
For the reasons given by Lord Collins, Lord Hope and Lord Rodger I too would dismiss the appeal.
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Farstad Supply A/S owned a vessel called the Far Service.
On 4 February 1994, Aberdeen Service Company (North Sea) Ltd (Asco UK Ltd) chartered the Far Service from Farstad.
Asco UK Ltd is a wholly owned subsidiary of ASCO plc, a major oil and gas logistics company registered in Scotland.
They wished to use the Far Service to supply and service offshore installations.
Enviroco Ltd cleans ships on an industrial scale among other things and is also registered in Scotland.
Until 1999 it too, like Asco UK Ltd, was a wholly owned subsidiary of ASCO plc.
In November 1999, in connection with a joint venture with Stoneyhill Waste Management Ltd, Envirocos shares were converted into equal numbers of A and B ordinary shares.
ASCO plc held the A Shares whereas Stoneyhill held the B Shares.
By their 1994 contract, known as a charterparty, both Farstad and Asco UK Ltd agreed to indemnify and hold each other harmless in relation to certain liabilities.
Importantly, Farstad further agreed to indemnify Asco UK Ltds Affiliates, who were defined by reference to the meaning of subsidiary in section 736 of the Companies Act 1985, including any amendments.
On 7 July 2002, Enviroco was employed to clean the oil tanks of the Far Service.
While the tanks were being cleaned, a fire occurred causing the death of one of Envirocos employees and substantial damage to the Far Service.
Farstad, the owner of the Far Service, brought a claim in Scotland against Enviroco for losses it allegedly suffered as a consequence of the fire.
Farstad claimed approximately 2.7 million.
Enviroco sought to rely on the indemnity clauses in the 1994 charterparty on the basis that it was an Affiliate of Asco UK Ltd because each of them was a subsidiary of ASCO plc.
Prior to the fire, ASCO plc had entered into a Deed of Pledge with the Bank of Scotland in order to secure some of its obligations.
By a Scottish share pledge, ASCO plc gave the Bank of Scotland security over the A ordinary shares held by it in Enviroco by re registering the shares in the name of the banks nominee company.
Whether or not Enviroco could rely on the indemnity depended on whether the fact that the shares in Enviroco were registered in the nominees name meant that Enviroco was not a subsidiary of ASCO plc at the time of the fire and therefore not an Affiliate for the purposes of the 1994 charterparty.
Whether or not Enviroco was a subsidiary of ASCO plc in turn depended on whether ASCO plc was a member of Enviroco at the relevant time.
The Court of Appeal decided that because the shares were registered in the name of the banks nominee company at the time of the fire, ASCO plc was not a member of Enviroco.
Thus Enviroco was not a subsidiary of ASCO plc so it could not rely upon the indemnity clauses.
The Supreme Court unanimously dismisses Envirocos appeal and holds that Enviroco was not a subsidiary because ASCO plc was not a member of Enviroco.
Lord Collins gives the main judgment.
Lord Hope and Lord Rodger give shorter judgments elucidating the position in Scots law.
The legislation makes clear that a member of a company is the person on the register.
Where it is necessary to apply the legislation to persons who are not on the register, special provisions are made [35] [39].
This is an unusual case.
ASCO plc turned Enviroco into a joint venture company and then charged the shares to a Scottish bank by following the necessary Scots law procedure.
However, to find in Envirocos favour would have required the Court to engage in an impermissible form of judicial legislation [49].
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The question at issue on this appeal is whether a sewerage undertaker under the Water Industry Act 1991 has a statutory right to discharge surface water and treated effluent into private watercourses such as the Respondents canals without the consent of their owners.
Discharge into a private watercourse is an entry on the owners land, and as such is an unlawful trespass unless it is authorised by statute.
It is common ground that no express statutory right is conferred by the Water Industry Act.
The question is therefore whether it should be implied.
A statutory right to commit what would otherwise be a tort may of course be implied.
But since this necessarily involves an interference with the rights of others, the test has always been restrictive.
The implication must be more than convenient or reasonable.
It must be necessary.
As a general rule, this will involve showing either that the existence of the power is necessarily implicit in the express terms of the statute, or else that the statutory purpose cannot be effectually achieved without the implication.
In particular a right to commit what would otherwise be a tort may be implied if a statutory power is incapable of being exercised or a statutory duty is incapable of being performed without doing the act in question: Manchester Corporation v Farnworth [1930] AC 171, 183 (Viscount Dunedin), Allen v Gulf Oil [1981] AC 1001, 1013 (Lord Wilberforce).
The law before 1991
It has been said that a court should not routinely investigate the statutory predecessors of provisions in a consolidation statute: R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349, 388 (Lord Bingham of Cornhill).
This is not so much a rule of construction as a valuable warning against the over ready assumption that a consolidating Act means exactly the same as the enactments which it replaces.
There are, however, cases where a consolidating Act cannot be understood without reference to the state of the law as it was when it was enacted.
This is one of them.
Until 1973, sewerage services in England were generally provided by local authorities, initially under powers conferred by local Acts of Parliament and then under powers successively conferred by the Public Health Acts of 1848, 1875 and 1936.
The Water Act 1973 transferred the sewerage and water supply functions of local authorities to statutory regional water authorities.
The Water Act 1989 privatised the water industry, transferring the sewerage and the water supply functions of the regional water authorities to commercial water undertakers and sewerage undertakers, and comprehensively restated the powers and duties of those charged with these functions.
The Water Industry Act 1991 is a consolidating Act which was passed on the recommendation of the Law Commission in order to tidy up the statute law relating to water and sewerage services.
It consolidates with amendments the provisions of the Act of 1989, together with a number of other statutes concerned with water management.
At the same time, the Water Consolidation (Consequential Provisions) Act 1991 repealed a number of earlier statutory provisions, including some thought to be spent and unnecessary: see section 3(1).
It is on these changes that the issues on this appeal turn.
No right to discharge from public sewers into private watercourses has ever been expressly conferred by statute.
It is, however, common ground that such a right existed at least until 1989 and was the basis on which the industry operated for many years.
In Durrant v Branksome Urban District Council [1897] 2 Ch 291, the Court of Appeal held that a right to discharge surface water and treated effluent into private watercourses was impliedly conferred on local authorities by the Public Health Act 1875.
Section 15 of that Act imposed on local authorities a duty to cause such sewers to be made as might be necessary for effectually draining their district.
The extent of that duty was largely demand led.
This was because section 21 entitled any owner or occupier of premises in a local authoritys area to connect to a public sewer, and section 18 provided that a local authority should not be entitled to discontinue the use of a sewer unless it made available another sewer which was as effectual for the use of those served by the existing one.
The critical sections from which the Court of Appeal derived the right of discharge into private watercourses were sections 16 and 17.
Section 16 empowered a local authority to carry any sewer through, across or under any street or road or, on notice to the owner or occupier, any land within their district.
Section 17 was a proviso in the following terms: Nothing in this Act shall authorise any local authority to make or use any sewer, drain or outfall for the purpose of conveying sewage or filthy water into any natural stream or watercourse, or into any canal pond or lake until such sewage or filthy water is freed from all excrementitious or other foul or noxious matter such as would affect or deteriorate the purity and quality of the water in such stream or watercourse or in such canal pond or lake.
The Court of Appeal did not say that an implied right of discharge into private watercourses was necessary to the efficacy of a local authoritys statutory powers and duties.
Nor did they derive it from the mere existence of a power under section 16 to lay sewage pipes through streets, roads or private land.
Since the Public Health Act 1875 conferred extensive powers of compulsory purchase on local authorities for the purpose of enabling them to perform their sewerage functions, neither point would have been sound.
What they said, adopting the reasoning of North J, the trial judge, was that the right of discharge was implicit in the express terms of section 17, which by restricting the right to discharge foul water into any watercourse impliedly recognised the existence of a right to discharge treated effluent and surface water: see pp 295 (North J), 302 (Lindley LJ), 303 (Lopes LJ), 304 305 (Chitty LJ).
There was no provision requiring local authorities to pay for mere exercise of their rights under sections 16 and 17, but they were required by section 308 to pay full compensation for any damage caused by the exercise of any of their powers.
This was held to be a sufficient answer to any objection based on the adverse effect on property owners.
All of the features of the Public Health Act 1875 on which the Court of Appeal relied in Durrants Case were reproduced in the Public Health Act 1936, which replaced the earlier Act and continued to govern the sewerage powers of local authorities and then of the regional water authorities and privatised sewerage undertakings until 1991.
In particular section 17 of the Act of 1875 (the protection against discharges of foul water) and section 308 (the compensation provision) were re enacted with no material changes as sections 30 and 278 of the Act of 1936.
When the water industry was privatised by the Water Act 1989, the transfer of sewerage functions and associated assets, rights and duties from the regional water authorities to the new sewerage undertakers was achieved by section 4 of the Water Act 1989 and by schemes made under that section.
The object of the schemes was to transfer the property, rights and liabilities of the regional water authorities: see section 4(1).
Their contents were regulated by Schedule 2, paragraph 2(1) of which provided that with effect from the transfer date the scheme would transfer to the privatised undertakers in accordance with its provisions all the property, rights and liabilities of the statutory water boards which were not required to be transferred to the National Rivers Authority.
In accordance with that provision, the transfer scheme in this case transferred to the undertaker on the transfer date all property, rights and liabilities to which the water authority is entitled or subject immediately before that date.
The object of these provisions is to achieve a seamless transfer of the relevant functions, assets, powers and duties to the new undertakers.
Under section 4(1), the Secretary of State was empowered to appoint the transfer date on which the functions of the regional water authorities would be transferred to the new undertakers and the transfer schemes would come into effect.
Section 194(3)(b) of the Water Act 1989 provided that among other
provisions Part II, Chapter III (Provision of Sewerage Services) should automatically come into force on the transfer date, i.e. simultaneously with the transfer of the rest of the undertaking.
Part II, Chapter III included all the relevant provisions governing the duties of the privatised sewerage undertakers.
These included sections 67 and 69.
Section 67 imposed on the privatised sewerage undertakers the duty of effectually draining their area.
Section 69 provided that Schedule 8 should have effect for transferring to sewerage undertakers the functions of water authorities relating to the provision of sewerage services and for making amendments of the enactments relating to the transferred functions.
Subject to immaterial amendments, Schedule 8, paragraph 1 applied to the privatised sewerage undertakers certain of the provisions of the Public Health Act 1936 which had governed the powers of the regional water authorities since their inception in 1973, as if references in those provisions to a water authority were references to a sewerage undertaker.
The incorporated provisions of the Act of 1936 included section 22 (which prevented them from discontinuing the use of a sewer without providing an alternative sewer), section 30 (the protection against the discharge of foul water into watercourses), section 34 (the right of the owner or occupier of any premises to void his drains or sewers into a public sewer) and section 278 (the obligation to make full compensation for any damage sustained by the exercise of the undertakers powers).
These provisions included all the provisions of the 1936 Act previously found in the Act of 1875 from which the Court of Appeal in Durrants Case had derived a general right of discharge into private watercourses.
The draftsman must therefore have intended in 1989 that that right should subsist.
The legislation of 1991
All of these features can be traced through the labyrinthine scheme of amendments, repeals and re enactments into the legislation of 1991, but with significant changes of both form and context.
Section 94 of the Water Industry Act 1991, which corresponds to section 15 of the Act of 1875, provides: (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 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.
Sections 106 and 116 re enact the provisions originally found in sections 21 and 18 respectively of the Act of 1875 conferring a right on owners and occupiers of premises to connect to a public sewer and forbidding local authorities to discontinue the use of a sewer without providing another equally effective sewer for the use of those served by it.
Sections 158 and 159 substantially re enact the power to lay pipes across streets, roads and other land which dated back to section 16 of the Act of 1875.
The protection against the use of the powers conferred by the Act to discharge foul water into any watercourse, which was originally enacted as section 17 of the Act of 1875 and section 30 of the Public Health Act 1936, is now to be found in modified form in section 117(5) and (6) of the Water Industry Act.
These provide: (5) Nothing in sections 102 to 109 above or in sections 111 to 116 above shall be construed as authorising a sewerage undertaker to construct or use any public or other sewer, or any drain or outfall (a) in contravention of any applicable provision of the Water Resources Act 1991; or (b) for the purpose of conveying foul water into any natural or artificial stream, watercourse, canal, pond or lake, without the water having been so treated as not to affect prejudicially the purity and quality of the water in the stream, watercourse, canal, pond or lake. (6) A sewerage undertaker shall so carry out its functions under sections 102 to 105, 112, 115 and 116 above as not to create a nuisance.
The provision for compensation for damage caused by any exercise of sewerage powers, which had originally been found in section 308 of the Act of 1875 and section 278 of the Act of 1936, is now represented by the provisions of Schedule 12 of the Water Industry Act 1991, which are at the same time more specific and more elaborate.
Paragraph 2 of Schedule 12 is confined to the pipe laying functions of a sewerage undertaker.
It confers a right to compensation in respect of the depreciation of the value of land on which pipe laying works are carried out, injurious affection of other land, and other loss or damage attributable to the exercise of an undertakers power to lay pipes through private land.
Paragraph 4 confers a right of full compensation for damage occasioned by the exercise by a sewerage undertaker of its powers under the relevant sewerage provisions.
I will return later to this expression.
The issues
There are two bases on which a right of discharge into private watercourses might be implied into the current statutory regime.
The first is that a right corresponding to the one recognised by the Court of Appeal in Durrants Case is implied into the corresponding provisions of the Water Industry Act 1991.
The effect of such an implication would be to authorise discharge from future sewage outfalls as well as from those already in use when the Water Industry Act 1991 came into force.
The second possibility is that the only right of discharge into private watercourses which survives under the Act of 1991 is a right of discharge from existing outfalls which were already in use on 1 December 1991 when the Act came into force.
The alleged general right of discharge: section 159 of the Water Industry Act 1991
The argument for the sewerage undertakers on this appeal is that a general right to discharge into private watercourses should be implied into the Water Industry Act 1991 from the power conferred on an undertaker by section 159 to lay pipes across private land for the purpose of carrying out its functions, together with the definition of those functions in section 94.
The problem which confronts this argument is that the particular provisions of the earlier legislation which justified the implication of such a right before 1991 are re enacted in the Water Industry Act 1991 in a somewhat different form and as part of a much more elaborate statutory scheme in which such an implication is more difficult to accommodate.
For substantially that reason the Court of Appeal rejected an identical argument in British Waterways Board v Severn Trent Water Ltd [2002] Ch 25.
The judgments, and particularly that of Chadwick LJ, contain a detailed analysis of the relevant provisions of the Water Industry Act which makes it unnecessary to repeat the exercise here.
In summary, the Court of Appeal held that the Water Industry Act had to be construed as a coherent scheme in its own right, without any a priori assumption that it was intended to reproduce everything in the previous statute law.
They considered that that scheme did not include an implied right of discharge into private watercourses, for five main reasons.
The first was that section 159 merely authorised the laying of pipes across private land and in itself provided no basis for any implication about the places where those pipes were authorised to discharge.
Second, any power derived from section 159 to discharge into private watercourses would not be qualified by the statutory protection in section 117(5) and (6) against the discharge of foul water.
This was because in the Act of 1991 these provisions qualify only specified sections of the Act, not including section 159.
Therefore, if such a right existed, it would authorise the discharge not only of treated effluent and surface water but foul water, routinely and in unlimited quantities.
Third, the provisions of Schedule 12, paragraph 2 of the Act of 1991 for compensation for the exercise of a water undertakers statutory power to lay pipes through private land did not extend to damage caused by discharges from those pipes.
The wider duty under paragraph 4 to pay compensation for damage occasioned by a sewerage undertakers exercise of its powers under the relevant sewerage provisions, would not apply because the relevant sewerage provisions is a defined term and does not include section 159.
Fourth, although section 159 applied to both water and sewerage undertakers, section 165 conferred an express power of discharge from pipes on water undertakers only.
On the face of it, the distinction was deliberate.
Fifth, a right of discharge into private watercourses was not necessary to the exercise by the sewerage undertaker of its statutory powers or the performance of its statutory duties.
They could discharge into rivers or the sea, or onto their own land, or onto private land or watercourses by agreement with the owner.
Any rights which they required but could not obtain (or could not obtain on reasonable terms) could be acquired by compulsory purchase, paying the proper statutory measure of compensation.
The Courts conclusion is summarised by Chadwick LJ at para 71: The fallacy, as it seems to me, lies in the underlying (but unspoken) premise that Parliament must have intended that sewerage undertakers should have facilities to discharge (which, plainly, they do require in order to carry out their functions) without paying for those facilities.
Whether or not that premise could have been supported in the context of a public authority charged with functions imposed in the interests of public health, it cannot be supported, as it seems to me, in the context of legislation enacted following a decision to privatise the water industry.
We were invited to hold that British Waterways Board v Seven Trent Water Ltd was wrongly decided.
In my view we should decline that invitation.
The reasoning of the Court of Appeal in that case is compelling as applied to the only argument that they were actually considering, namely that a power of discharge could be derived from sections 94(1) and 159 of the Act of 1991.
Survival of pre existing rights of discharge
This issue might have arisen in British Waterways Board v Severn Trent Water Ltd. That case arose out of a dispute about discharges from a sewer outfall into the Stourbridge canal which had been constructed by a regional water authority in about 1976, under the previous statutory regime.
The relevant outfall was therefore already in use at the transfer date pursuant to a right enjoyed by the regional water authorities under the Public Health Act 1936 and transferred to the privatised sewerage undertakers under the Water Act 1989.
However, no argument was addressed to the Court of Appeal in that case about the significance of this fact.
Its factual and legal significance is, however, critical to the outcome of the present appeal.
Manifestly, the purpose of a sewer is to carry away effluent and surface water and discharge it elsewhere.
A sewer can be lawfully used only if it is lawful to discharge from it.
A sewerage undertaker bringing an outfall into use for the first time after 1 December 1991 can reasonably be expected to have obtained any necessary consents to discharge onto private property in advance of laying the pipes, either by negotiation or by compulsory purchase in the course of the planning or the works.
But if the outfall was already in use at that date, it cannot do this.
The pipes will already have been laid.
The location of their outfalls will have been determined.
Where they discharge into a private watercourse, those outfalls will have been created under a statutory regime which entitled the sewerage undertaker or its statutory predecessors to discharge from them.
The compulsory acquisition of such a right cannot be achieved overnight.
Statutory procedures have to be observed, which may include a public inquiry.
It is obvious, and confirmed by the evidence in this litigation, that by 1989 drainage from the existing public sewerage system depended to some extent on outfalls into private watercourses.
After well over a century in which sewerage authorities were entitled as of right to construct and discharge from such outfalls one would expect the degree of dependence to be significant.
Unless the entitlement to discharge from existing outfalls into private watercourses survives the transfer to privatised water undertakers, the consequence is that in law such discharge must cease forthwith on 1 December 1991.
Any continuing discharge thereafter will become tortious from that date.
Under the Water Industry Act, the statutory duties of a sewerage undertaker include a duty to operate the system of public sewers so as effectually to drain their area (section 94) and a duty to allow the owners or occupiers of premises to connect to the public sewer system (section 106).
Moreover, the undertaker is not permitted to discontinue the use of a sewer until it has provided an alternative sewer capable of serving as effectually (section 116).
The result, if the right to discharge into private watercourses ceases as the canal owners suggest, is to make it impossible for the sewerage undertakers lawfully to perform their statutory functions or observe the statutory restrictions on the discontinuance of existing sewers from the moment that the new Act comes into force.
This state of affairs will continue thereafter for a considerable period while the existing sewerage system is partially redesigned and rebuilt or the necessary easements are acquired by negotiation or compulsory purchase.
When pressed to say how a sewerage undertaker was to comply with this view of the law immediately after 1 December 1991, the canal owners had no answer except that the law would not in practice be enforced by injunction but that if it was they must block the outfalls and allow surface water and treated effluent to backwash through the system into the streets.
In fact, section 116 of the Act would rule out even that possibility.
This is not just a practically inconvenient way of dealing with an issue which engages an important public interest.
It is legally incoherent.
Without the clearest possible indication that Parliament intended such a preposterous result, I decline to accept that it is the effect of the current legislative scheme.
In my opinion, when the Water Industry Act 1991 (i) imposed on the privatised sewerage undertakers duties which it could perform only by continuing for a substantial period to discharge from existing outfalls into private watercourses, (ii) at the same time applied to them the statutory restrictions in section 116 on discontinuing the use of existing sewers, it implicitly authorised the continued use of existing sewers.
A restriction on discontinuing the use of an existing sewer until an alternative has been constructed is not consistent with an obligation to discontinue its use forthwith under the law of tort.
The inescapable inference is that although there is no provision of the Act of 1991 from which a general right of discharge into private watercourses can be implied, those rights of discharge which had already accrued in relation to existing outfalls under previous statutory regimes survived.
The basis of this implication is not section 30 of the Public Health Act 1936, whose statutory predecessor was the basis of the decision in Durrants Case, but section 116 of the 1991 Act viewed against the background of the general duties of sewerage undertakers under the Act.
It follows that the repeal of section 30 by the Water Consolidation (Consequential Provisions) Act 1991 is irrelevant.
In any event, its repeal would not affect rights of discharge which had already accrued by virtue of the use of existing outfalls: see section 16(1)(c) of the Interpretation Act 1978.
It is true that although over a period of time after the coming into force of the Water Industry Act new rights of discharge could have been acquired by negotiation or compulsory purchase or existing sewers or outfalls replaced, the effect of the conclusion which I have reached is that a sewerage undertaker is entitled under the Water Industry Act 1991 to continue discharging into private watercourses from existing outfalls indefinitely.
The solution is therefore more extensive than the problem.
But that is a lesser anomaly and one which is inherent in the nature of the issue.
Once one concludes that because of the time required to do these things after the law was changed, the right of discharge for existing outfalls must survive, it is not possible to arrive by a process of construction at a positive obligation to address the issue after transfer in a different way by acquiring new easements or replacing sewers or outfalls.
I should finally deal with the suggestion that this conclusion leaves the owners of private watercourses in a worse position than they were under the Water Act 1989, because of the more limited provisions for compensation for damage and the more limited protections available against abuse.
This is a serious objection to the attempt to imply a general right to discharge into private watercourses from section 159 of the 1991 Act, as the Court of Appeal pointed out in British Waterways Board.
It does not give rise to difficulty if, as I consider, a more limited right to continue discharging from existing outfalls into private watercourses is to be implied from the restrictions in section 116 on discontinuing the use of existing sewers.
As far as compensation is concerned, Schedule 12, paragraph 4 of the Water Industry Act confers a right of full compensation for any exercise by a sewerage undertaker of its powers under the relevant sewerage provisions.
Unlike section 159, section 116 is one of the relevant sewerage provisions: see section 219(1).
Turning to the question of statutory protection, the Act of 1991 contains a large number of protections against the abusive or harmful use by undertakers of their statutory powers.
This is not the place to examine all of them, and many are of no potential relevance.
The most important are to be found in sections 117(5) and 186(3).
Section 117(5)(b) protects against the discharge of foul water into watercourses.
It is the successor of section 17 of the Public Health Act 1875 and section 30 of the Act of 1936.
Section 186(3) protects against the injurious affection without consent of any canal or watercourse or the supply, quality or fall of water in any canal or watercourse.
Both provisions expressly qualify powers derived from specified provisions of the Act, which do not include section 159 but do include section 116.
Conclusion
I would accordingly allow the appeal to the extent of declaring that subject to section 117(5) of the Water Industry Act 1991, the Appellants are entitled to discharge into the Respondents canals from any sewer outfall which was in use on or before 1 December 1991.
For the avoidance of doubt, I should make it clear that this in no way affects any binding agreement under which the parties may have regulated for themselves the use of particular outfalls.
We were informed that here may be such agreements with some proprietors, but we have not been concerned with them.
I would leave the precise form of the declaration to be agreed between counsel.
LORD TOULSON
I agree that under the Water Industry Act 1991 sewerage undertakers are impliedly empowered to continue to discharge surface water and other non pollutant water through sewers vested in them into watercourses to which they were already discharging at the time the Act came into force, but have no right to create new outfalls into canals or rivers without the agreement of the body which owns or is responsible for the canal or river.
The case has assumed a complexity which I do not think is necessary.
In disagreeing with the Court of Appeal, I have sympathy with the court which seems to me to have been led into a forest.
The reasons for my conclusions are simple and accord essentially with those given by Lord Sumption.
As to the broader power claimed by the appellants, the argument that section 159 gives to a sewerage undertaker the right to create a new public sewer by connecting pipework, laid under the powers given to it by the section, into a river or canal without the agreement of the river or canal owner or operator, is in my view untenable for the reasons given by the Court of Appeal in British Waterways Board v Severn Trent Water Ltd (summarised by Lord Sumption).
The purpose of section 159 is to enable a sewerage undertaker to obtain the means of access for foul or surface water to reach wherever it proposes (lawfully) to treat or dispose of the water (such as a sewage treatment plant), and no more.
To treat the section as silently empowering the undertaker to dispose of the water by discharging it onto the land of another person without their consent requires an unnatural and unwarranted reading of the section.
The appellants argument for giving the section a wider meaning is based on comparison with the Public Health Acts 1875 to 1961.
That argument overlooks the major change in the scheme of water legislation introduced by the Water Act 1989 (which was consolidated, with other enactments, by the 1991 Act).
The 1989 Act did much more than to introduce privatisation of the water industry.
Its purposes, stated in the long title, included to amend the law relating to the provision of sewers and the treatment and disposal of sewage.
It provided a much more comprehensive statutory code than the previous legislation.
There is no warrant for assuming that Parliament intended under the new legislative scheme that the privatised authorities should have a general right to create new outfalls, discharging water onto the property of other parties, without having to pay for the facility.
On the question of the lawfulness of the continued use of public sewers established prior to the coming into force of the Act, I agree with Lord Sumption that the answer lies in section 116 of the 1991 Act, read in conjunction with sections 106(1) and 117(5) and (6).
Under section 106 the owner of premises in the area of a sewerage undertaker has the right to have his drains or sewer communicate with the undertakers public sewers and has a continuing right thereby to discharge foul water and surface water from those premises.
Section 116 prohibits the sewage undertaker from depriving that person of the use of the public sewer for that purpose, unless the undertaker provides alternative means of communication (which Parliament cannot realistically have supposed that the undertaker would be in a position to do instantly on the passage of the Act).
Section 117(5) provides that nothing in section 116 is to be construed as authorising a sewerage undertaker to use a public sewer for the purpose of conveying foul water into any natural or artificial stream, watercourse, canal, pond or lake, without the water having been treated so as not prejudicially to affect the purity and quality of the water into which it is being discharged.
Section 117(6) also requires a sewerage undertaker to carry out its functions under section 116 in such a way as not to create a nuisance.
The conditions for section 116 to apply are, in the words of subsection (1), that the sewer is a public sewer which is vested in the undertaker, but I do not understand it to be disputed that the relevant sewers are public sewers as defined in section 219 of the 1991 Act: public sewer means . a sewer for the time being vested in a sewerage undertaker in its capacity as such, whether vested in that undertaker by virtue of a scheme under Schedule 2 to the Water Act 1989 or Schedule 2 to this Act or under section 179 above or otherwise .
As a matter of history, it would appear that the sewers vested in the sewerage undertakers by virtue of schemes under Schedule 2 to the 1989 Act but I do not see that it is necessary to refer to the 1989 Act for any other purpose.
Since section 116 of the 1991 Act expressly prohibits a sewerage undertaker from discontinuing the use of an existing public sewer vested in it, unless it creates an alternative means of disposal, it thereby impliedly (if not expressly) empowers the undertaker to continue to use such sewers, subject to the qualifications in section 117(5) and (6) that the undertaker must not cause pollution or a nuisance.
For those reasons, it seems to me that the answers to the questions in this case are to be found within the sections of the 1991 Act to which I have referred.
Save where necessary for the limited purpose of establishing as a fact that a sewer is a public sewer vested in a sewerage undertaker within the definition section in the 1991 Act, I see no need to go back to examine the position under the 1989 Act.
There is no claim for damages for trespass during the period when the 1989 Act was in force.
However, if it were necessary to do so, I would conclude that there was no trespass during that period.
Section 69 of the 1989 Act provided that Schedule 8 to the Act should have effect for the purpose of transferring to sewerage undertakers the functions of water authorities relating to sewerage services and for making amendments of the enactments relating to the transferred functions.
Paragraph 1 of Schedule 8 provided that references to water authorities in sections 30 and 278 of the Public Health Act 1936 were to be construed as references to sewerage undertakers.
Those sections re enacted the sections in the 1875 Act which were the subject of the decision in Durrants case, as explained in para 6 of Lord Sumptions judgment.
Reading those sections as amended by paragraph 1 of Schedule 8 to the 1989 Act (ie as applying to sewerage undertakers from the commencement of the 1989 Act), the conclusion is clear in my view that sewerage undertakers did not commit the tort of trespass by continued use of the public sewers which they inherited.
Although that historical examination of the position under the 1989 Act is unnecessary to my conclusion about the 1991 Act, it fortifies it for this reason.
If, as I have concluded, sewerage undertakers did not commit the tort of trespass between 1989 and 1991 by continued use of public sewers vested in them under schemes made under the 1989 Act, Parliament cannot be taken to have intended to change that position by the 1991 Act, which was presented to it as a consolidation Act with minor immaterial amendments explained in the Law Commissions report.
Consolidation Acts have a speedy parliamentary process precisely because they are not intended to involve changes meriting detailed scrutiny.
It follows also from what I have said that I do not think that it is necessary to invoke the provisions of the Interpretation Act; but if I am wrong, I would agree with Lord Neubergers analysis of its effect.
LORD NEUBERGER (with whom Lord Clarke and Lord Hughes agree)
This appeal raises two questions in relation to the statutory right of sewerage undertakers to discharge surface water and treated effluent from their sewers into streams and private watercourses.
The first question is whether sewerage undertakers have such a right in relation to all their sewers, irrespective of when they came into use ie present and future sewers.
The second question, which only arises if the answer to the first question is no, is whether sewerage undertakers have such a right in relation to any of their sewers, and, if so, whether it is those which were in use immediately before (i) the transfers effected pursuant to the Water Act 1989 (the 1989 Act) or (ii) the coming into force of the Water Industry Act 1991 (the 1991 Act).
In my view, the composite answer to these questions is that sewerage
undertakers have the statutory right to discharge surface water and treated effluent into streams and canals (subject to payment of compensation for any damage thereby caused), but only in respect of outfalls in existence before the coming into force of the 1991 Act.
I agree with the reasons given by Lord Sumption and Lord Toulson although I would place greater weight on the assistance which can be gained from the provisions of the earlier legislation relating to public sewers and the Interpretation Act 1978 (the 1978 Act).
The relevant statutory provisions
The statutory provisions relating to sewerage before 1989
By section 13 of the Public Health Act 1875, all existing and future sewers within their districts were vest[ed] in local authorities.
Certain rights were granted to local authorities, including, in section 16, the right to construct sewers into, through or under any lands whatsoever in their district.
Duties were also imposed on local authorities, including the duty to provide and maintain sewers to drain their districts in section 15, and the duty to enable property owners and occupiers to be connected to sewers in section 21.
The right to discharge from sewers was not expressly granted to local authorities by the 1875 Act.
However, section 17 of the 1875 Act stated that [n]othing in the Act authorise[s] the use of sewers constructed under the Act for the purpose of conveying sewage or filthy water into any natural stream or watercourse until such sewage or filthy water is freed from all foul or noxious matter.
Section 308 of the 1875 Act contained a rather generally expressed right to full compensation to anyone who suffered damage as a result of the exercise of a local authoritys statutory rights with regard to sewerage.
The Public Health Act 1936 repealed the relevant provisions of the 1875 Act, and re enacted many of its provisions in very similar, if somewhat more modern, terms.
The opening part of subsection (1) of section 20, the successor to section 13 of the 1875 Act, provided that any sewers vested in a local authority under the 1875 Act shall continue to be vested in them.
Section 20(1)(b) of the 1936 Act stated that all sewers subsequently constructed by local authorities shall also vest in them.
Sections 14, 15, 22, 34 and 278(1) of the 1936 Act were to the same effect as, respectively, sections 15, 16, 18, 21 and 308 of the 1875 Act, albeit that section 15 of the 1936 Act was considerably more detailed in its terms than section 16 of the 1875 Act.
Section 30 of the 1936 Act was in very similar terms to section 17 of the 1875 Act, although it used somewhat different language, referring to foul water [having to be] so treated as not to affect prejudicially the purity and quality of the water rather than sewage or filthy water [having to be] freed from all foul or noxious matter, and it extended its reach to artificial, as well as natural, watercourses and streams, and to canals.
The provisions of section 17 of the 1875 Act, supported by those of sections 15, 16, and 308, were held by the Court of Appeal in Durrant v Branksome Urban District Council [1897] 2 Ch 291 to lead to the inevitable or irresistible inference that a local authority could discharge treated effluent and surface water from its sewers, whether constructed before or after 1875, into natural streams and watercourses see at pp 302, 303 and 304 305 per Lindley, Lopes and Chitty LJJ respectively.
In other words, the Court of Appeal held that the 1875 Act impliedly granted a right to discharge from that sewer, a right whose width was cut down by section 17.
That right was continued by the 1936 Act, as it contained provisions which were very similar to those in the 1875 Act, and in particular section 30 and, albeit of lesser significance in this connection, sections 14, 15 and 278, whose statutory predecessors were considered by the Court of Appeal to support its conclusion in Durrant [1897] 2 Ch 291.
The statutory rights and duties of local authorities in relation to sewerage became vested in water authorities pursuant to sections 14 and 15 of the Water Act 1973.
Section 14(2) provided that the functions of local authorities under, inter alia, sections 15 24 and 27 31 of the 1936 Act shall be exercisable by water authorities, and that references [therein] to a local authority shall be construed as references to a water authority.
Para 33 of Schedule 8 to the 1973 Act amended section 20 of the 1936 Act to make it clear that all sewers in an area were vested in the relevant water authority.
The Water Act 1989
During the 1980s, as part of the drive for privatisation, it was decided that the water supply and sewerage functions of water authorities should be taken out of public ownership and vested in water undertakers and sewerage undertakers respectively.
This was effected through the medium of the 1989 Act, which provided for the creation of these new undertakers in section 11.
Section 4(1)(a) of the 1989 Act stated that the sewerage functions of water authorities should become the functions of the new sewerage undertakers from a day appointed by the Secretary of State, and section 11 enabled the Secretary of State or the Director General of Water Services to appoint a company as a sewerage undertaker for any area of England and Wales.
Section 4(1)(b) provided for schemes under Schedule 2 for the division of the property, rights and liabilities of the water authorities to, inter alia, the sewerage undertakers.
The effect of section 67 of the 1989 Act, which replaced section 14 of the 1936 Act, was to impose a duty on sewerage undertakers from the date of the transfer of the sewerage functions to drain the area for which it was responsible.
Section 153 of, and Schedule 19 to, the 1989 Act empowered sewerage undertakers to lay sewers, and they effectively replaced section 15 of the 1936 Act.
Section 69 of the 1989 Act stated that Schedule 8 had the effect of transferring to sewerage undertakers the functions of water authorities relating to the provision of sewerage services and for making amendments of the enactments relating to the transferred functions.
By para 1 of Schedule 8, such functions included those set out in sections 22, 30 and 34 and (at least in so far as it related to surviving sections of the provisions of the 1936 Act) section 278 of the 1936 Act.
However, section 20 of the 1936 Act was repealed by the 1989 Act.
Para 2 of Schedule 2 to the 1989 Act was concerned with transfers by scheme, and it provided that there should be transferred to a sewerage undertaker the property, rights and liabilities of a water authority, and para 2(3) stated: The property, rights and liabilities of a water authority that shall be capable of being transferred shall include (a) property, rights and liabilities that would not otherwise be capable of being transferred or assigned by the water authority; (b) property situated anywhere ; (c) rights and liabilities under enactments, including (i) such rights and liabilities as may arise after the transfer date by virtue of enactments amended or repealed by this Act and, in pursuance of provision contained in Schedule 26 to this Act, may be the subject of an allocation made by a scheme under this Schedule; and (ii) other rights and liabilities under enactments which are amended or repealed by this Act subject to a saving; (d)
In so far as it dealt expressly with the ownership of, or equivalent rights over, existing sewers, the 1989 Act was laconic.
Section 153(1) granted powers to sewerage undertakers to lay and maintain sewers, and section 153(2)(a) provided that sewers so laid should be vested in that undertaker (subject to irrelevant exceptions).
However, they were not concerned with existing sewers, which were obliquely referred to in section 153(6), which stated that the provisions of section 153 were without prejudice to the vesting of anything in a company appointed to be a sewerage undertaker, in accordance with a scheme under Schedule 2 Section 70, which dealt with sewers which crossed two local authority areas, referred in subsection (1) to such sewers being vested in a water authority and set out how they were to be treated [f]or the purposes of any scheme under Schedule 2, and subsection (3) referred to a case [w]here any part of a sewer is vested in any sewerage undertaker by virtue of this section.
The definition of public sewer in section 189(1) was a sewer vested in a sewerage undertaker whether . by virtue of a scheme under Schedule 2 or under section 153.
On the same day as the 1989 Act came into force, 1 September 1989, various transfers came into effect, as contemplated by section 4.
They were (or at least the one we were shown was) expressed in relatively general terms, so far as identifying what precisely was transferred to the new sewerage undertaker, namely the property, rights and liabilities specified in .
Schedule 2.
With effect from 1 September 1989, the new sewerage undertakers took over the sewerage rights and responsibilities of the previous water authorities, subject of course to such amendments as were laid down in the 1989 Act.
The 1991 legislation
Some two years later, the law relating to the water supply and sewage industries was comprehensively re enacted and consolidated in 1991, principally by the 1991 Act, but also by the Water Consolidation (Consequential Provisions) Act 1991 (the 1991 Consolidation Act), which received Royal Assent on the same day, 25 July 1991.
The long title of the 1991 Act described its purpose as being to consolidate enactments relating to the supply of water and the provision of sewerage services, with amendments to give effect to recommendations of the Law Commission.
The long title of the 1991 Consolidation Act explained that its purpose was to effect consequential amendments and repeals, and for transitional and transitory matters and savings, in connection with the consolidation of certain enactments in the Water Industry Act 1991, and to repeal certain related enactments which are spent or unnecessary.
As the long title to the 1991 Act indicated, its purpose was largely to consolidate the law, but it was also to implement the recommendations of the Law Commission, which were made in a report presented in April 1991, Law Com No 198.
Although there were some recommendations relating to drainage, none of them impinges on the issues raised in this appeal.
Accordingly, much of the 1991 Act simply re enacted the provisions of the 1989 Act and (in so far as they related to water and sewerage services) the surviving provisions of the 1936 Act, sometimes with modifications.
Such provisions included sections 158 and 159, which gave sewerage (and water) undertakers the power to lay pipes in streets and in other land respectively (replacing paragraph 1 of Schedule 19 to the 1989 Act).
Section 94 imposed a duty on sewerage undertakers to operate a sewerage system so as effectually to drain their area (replacing section 67 of the 1989 Act), and section 106 required them to allow the owners or occupiers of premises to connect to the public sewer system (replacing section 34 of the 1936 Act).
Section 116(1) empowered a sewerage undertaker to discontinue and prohibit the use of any public sewer, subject to providing an alternative and equally effective sewer (replacing section 22 of the 1936 Act).
Section 117(5) provided that nothing in section 116 entitled a sewerage authority to discharge foul water into a natural or artificial waterway (replacing, albeit in a limited respect, section 30 of the 1936 Act).
Section 179 of the 1991 Act provided that, subject to agreement to the contrary and subject to certain other exceptions, any sewer laid by an undertaker shall vest in the [sewerage] undertaker which laid it.
The definition of public sewer in section 219 includes any sewer vested in [an] undertaker by virtue of a scheme under Schedule 2 to the Water Act 1989.
Paragraph 4(1) of Schedule 12 to the 1991 Act effectively replaced section 278 of the 1936 Act in relation to sewerage undertakers.
By Schedule 3, the 1991 Consolidation Act repealed certain statutory provisions, including section 30 of the 1936 Act.
Section 2(5) of the 1991 Consolidation Act provided that those repeals were without prejudice to sections 16 and 17 of the Interpretation Act 1978.
The Interpretation Act 1978
The 1978 Act lays down general rules applicable to the interpretation of statutes.
Section 16(1)(c) of that Act provides that where an Act repeals an enactment, the repeal does not, unless the contrary intention appears, affect any right, privilege, obligation or liability acquired, accrued or incurred under that enactment.
The traditional view is that section 16(1)(c) (like its statutory predecessors) applies only to existing or vested rights.
However, the precise nature of a vested right is somewhat elusive.
The problem is very close to that thrown up by the presumption against retrospective legislation, which was illuminatingly discussed by Lord Rodger in Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, paras 186 201.
At para 196, Lord Rodger said this of the cases on vested rights: It is not easy to reconcile all the decisions.
This lends weight to the criticism that the reasoning in them is essentially circular: the courts have tended to attach the somewhat woolly label vested to those rights which they conclude should be protected from the effect of the new legislation.
If that is indeed so, then it is perhaps only to be expected since, as Lord Mustill observed in LOffice Cherifien des Phosphates v Yamashita Shinnihon Steamship Co Ltd [1994] 1 AC 486, 525A, the basis of any presumption in this area of the law is no more than simple fairness, which ought to be the basis of every general rule.
At para 201, Lord Rodger suggested that the test could well be expressed thus: would the consequences of applying the statutory provision retroactively, or so as to affect vested rights or pending proceedings, be so unfair that Parliament could not have intended it to be applied in these ways? In answering that question, a court would rightly have regard to the way the courts have applied the criterion of fairness when embodied in the various presumptions.
The first question
So far as the first question is concerned, Mr Karas QC, on behalf of United Utilities, a sewerage undertaking, relied primarily to support his case for a positive answer, on the provisions of section 159 of the 1991 Act.
I would reject that case and there is nothing I can usefully add to what Lord Sumption and Lord Toulson say in paras 13 15 and 26 28 of their respective judgments.
At least in relation to sewers laid after the 1991 Act came into force, United Utilities argument is not supported by the language of section 159 or any other provision of the 1991 Act.
It is inconsistent with some other provisions of the 1991 Act, and it is not supported by any practical considerations (although it is fair to add that it is not undermined by any practical considerations either).
The reasoning of all three members of the Court of Appeal in British Waterways Board v Severn Trent Water Ltd [2002] Ch 25, summarised in para 14 above, appears to me to be unanswerable.
The second question
The question whether sewerage undertakers can claim any rights in respect of any outfalls must ultimately turn on the 1991 Act, but in my view, the issue should be addressed by first identifying the water authorities rights in respect of outfalls from public sewers immediately before the 1989 Act came into force.
Mr Karass argument is that it is a necessary inference from the terms of the 1991 Act that sewerage undertakers have a right to discharge from existing outfalls.
A court should not be easily persuaded that a new right has been created by implication, particularly where that right (i) interferes with the private rights of third parties (in this case waterway owners), and (ii) arises out of a long and detailed statute.
There is in my view a strong presumption that (i) private rights are only to be taken away by a statute by means of clear and specific words, and (ii) where a statute deals in considerable detail with the rights and obligations in a certain field, it is intended to be exhaustive particularly where the legislation is both consolidating the law and giving effect to Law Commission recommendations.
Accordingly, in my judgment, the inference which we are invited to draw is, at least in principle, far more likely to be justified if sewerage undertakers had the right to discharge from existing outfalls under the 1989 Act, when their sewerage functions started, than if they did not.
The rights vested in the sewerage undertakers by the 1989 Act were based on the rights vested in the water authorities, whose rights and obligations in relation to sewers and sewerage were derived from the 1936 Act, as amended.
Accordingly, I start by addressing the position under the 1936 Act, and only then turn to the 1989 and 1991 Acts.
For the reasons I shall give below, it appears to me that there are two alternative reasons for concluding that the new water undertakers had the right to discharge from existing outfalls under the 1989 Act, and one reason for concluding that that right continued under the 1991 Act.
The position prior to the 1989 Act
As explained in para 43 above, the provisions of section 17 of the 1875 Act, supported by those of sections 15, 16 and 308, were held by the Court of Appeal in Durrant [1897] 2 Ch 291 to lead to the inevitable or irresistible inference that a local authority could discharge treated effluent and surface water from its sewers (subject to payment of compensation in case of damage), and that right continued under the 1936 Act.
As I see it, the effect of the reasoning in Durrant is that the inclusion of section 17 in the 1875 Act had two relevant consequences.
First, it indicated clearly that Parliament intended that local authorities had the right to discharge from the sewers vested in them by section 13.
Secondly, it equally clearly cut down the way in which that right could be exercised.
As to the first point, section 17 did not itself grant the right: it merely enabled the courts confidently to conclude that the right was intended by Parliament to be granted to local authorities under the 1875 Act.
As to the second point, it is clear from the terms of section 17 itself that that right was capable of being cut down or regulated by statute.
These two points apply equally to the 1936 Act.
Accordingly, as at the date the 1989 Act came into force, water companies had vested in them the right (subject to payment of compensation in case of damage) to discharge water through existing outfalls, by virtue of the continued existence of section 30 (supported by sections 14, 15 and 278) of the 1936 Act as amended by the 1973 Act.
The first argument in relation to the 1989 Act
It appears to me that the reasoning in Durrant compels the conclusion that the 1989 Act impliedly granted the new sewerage undertakers the right to discharge from outfalls from sewers vested in them (subject to payment of compensation in case of damage).
Section 30 of the 1936 Act (the provision which precluded discharge of foul water) was not repealed by the 1989 Act; indeed, by virtue of paragraph 1 of Schedule 8 to that Act, it remained in force, save that it was amended so as to apply to sewerage undertakers.
Given that it was held in Durrant [1897] 2 Ch 291 that section 17 of the 1875 Act, the statutory predecessor of section 30 of the 1936 Act, had the effect of implying a right in water authorities to discharge from their sewers into canals and streams prior to September 1989, then, in the absence of a good reason to the contrary, section 30 as amended by the 1989 Act must have had the same effect in relation to those sewers when vested in the new sewerage undertakers after August 1989.
Far from there being a good reason to the contrary, there are two significant factors which support this conclusion.
The first is based on the statutory provisions.
As mentioned above, the Court of Appeal in Durrant [1897] 2 Ch 291 placed some reliance on other provisions of the 1875 Act.
Albeit in re enacted and modified form, those provisions remained in existence after the 1989 Act was in force.
Sections 15 and 16, which had been replaced by sections 14 and 15 of the 1936 Act, were in turn replaced by sections 67 and 153 of the 1989 Act, and section 308 was replaced by section 278 of the 1936 Act, which continued to apply after 1989 by virtue of paragraph 1 of Schedule 8.
Secondly, the practical implications of a new sewerage undertaker having no right of discharge from existing outfalls of existing sewers from the date of the transfer under the 1989 Act are striking.
Such an undertaker was, from the date of the transfer of sewerage functions to it, under statutory duties to drain its area, to permit people to connect into its sewers for the purposes of drainage, and to provide new sewers in the event of shutting off existing sewers.
A sewerage undertaker could only have complied with such obligations in practice if it had a right of discharge from the existing outfalls of the sewers vested in it.
Lord Sumption and Lord Toulson develop this argument more fully in paras 17 18 and 30 35 of their respective judgments, albeit in relation to the 1991 Act, but the argument is equally sound in relation to the 1989 Act.
The alternative argument under the 1989 Act
Were the argument based on the 1989 Acts retention and amendment of section 30 of the 1936 Act to be rejected, I would accept United Utilities alternative argument that the transfers to sewerage undertakers pursuant to the 1989 Act included the water authorities existing rights of discharge.
This would be on the basis that the water authorities rights of discharge from existing outfalls under the 1936 Act (as amended by the 1973 Act) constituted property or (as I tend to think is more likely) rights, which would have been transferred as part of the water authorities property, rights and liabilities in section 4(1)(b) of the 1989 Act.
It seems to me that, whether such rights were property or rights, they were vested in the water authorities, and it would be unrealistic to think that the 1989 Act could have intended that they be removed when the functions of those authorities were being transferred to other entities.
In the absence of any transitional provisions, the ability to be able to discharge through existing outfalls was essential: indeed, it was an integral part of the sewerage authorities continuing functions and duties, as explained in para 66 above.
It would have been so unfair, or the better but equally appropriate expression may be so absurd, if the water authorities existing rights of discharge had been removed by the 1989 Act that Parliament could not have intended it, to quote Lord Rodger in Wilson [2004] 1 AC 816, para 201.
In answer to this, Mr McCracken QC for the Manchester Ship Canal Company Limited, a canal owner, relies, first, on the precise terms of paragraph 2(3) of Schedule 2 to the 1989 Act, and, secondly, on the anomalous nature of the right involved.
As to the first point, he says that paragraph 2(3) restricts the breadth of the expression property, rights and liabilities, and in particular that subparagraph (c)(ii) limits the transferable rights to those under enactments which are amended or repealed by this Act subject to a saving.
He points out that section 30 of the 1936 Act was amended by the 1989 Act without a saving provision.
I do not accept that argument, because, in my view, paragraph 2(3) was intended to widen, not to narrow, the meaning of property, rights and liabilities, as is apparent from the phrase shall include.
In any event, it is highly arguable that (i) the right involved was not in fact granted under section 17 of the 1875 Act as I have explained in para 62 above, and (ii) section 30 of the 1936 was not relevantly amended for the purpose of subparagraph (c)(ii).
However, given that paragraph 2(3) is not a definition provision, it is not necessary to consider those two points.
Mr McCrackens second argument is summarised in para 64 of Arden LJs judgment in the Court of Appeal, where she said that she thought that the right of discharge enjoyed by the water authorities was not within the expression property, rights and liabilities, as used in section 4 and elsewhere in the 1989 Act.
She explained that this was because the implied right of discharge was not a right in the usual sense and was simply an incident of the statutory functions of the sewerage undertaker.
For my part, I do not see why the fact that a right is implied or incidental prevents it from falling within the word rights in the 1989 Act, or indeed from being a vested right for the purposes of section 16(1)(c) of the 1978 Act.
This view is reinforced by the fact that the precise legal characterisation of the rights of local authorities as a result of sewers being statutorily vested in them appear to be somewhat unclear see the discussion in Taylor v North West Water (1995) 70 P & CR 94, 96 110.
Thus, there is, as was pointed out by Lord Russell CJ in Bradford v Mayor of Eastbourne [1896] 2 QB 205, 211, a number of cases which support his view that the vesting [under section 13 of the 1875 Act] is not a giving of the property in the sewer and in the soil but giving such ownership and such rights only as are necessary for the purpose of carrying out the duties of a local authority.
Yet there can be no doubt but that those rights were regarded as vested rights which survived the repeal of section 20 of the 1936 Act, and were transferred to sewerage undertakers pursuant to the 1989 Act.
The 1989 Act: conclusion
Accordingly, it seems to me to follow that the sewerage undertakers had an implied right (subject to payment of compensation in case of damage) to discharge from existing outfalls from the sewers vested in them in 1989, because (i) the provisions of the 1989 Act conferred such a right on them by implication in accordance with the reasoning in Durrant or, if that is wrong, (ii) the implied right to discharge from those outfalls enjoyed just before the 1989 Act came into force was transferred by the water authorities to them.
The effect of conclusion (i) is, as I see it, that the right to discharge applied to outfalls created after 1989, including those from sewers brought into use after the 1989 Act came into force, as section 30 (as amended to apply to the sewerage undertakers) continued in force, and, following the reasoning in Durrant, so did the right to discharge.
The position under the 1991 legislation
Section 30 of the 1936 Act (as amended by the 1973 and 1989 Acts) was repealed by the 1991 Consolidation Act (and section 278 of the 1936 Act was effectively replaced with new compensation provisions in the 1991 Act), and therefore there was no further express statutory basis, as established in Durrant [1897] 2 Ch 291, for saying that any sewerage undertakers could claim any right of discharge in respect of outfalls created after 1991.
As Arden LJ rightly pointed out in para 22 of her judgment in the Court of Appeal, although section 30 of the 1936 Act, which she called the foul water proviso, was re enacted in the 1991 Act, it was only in a limited form by section 117(5) so that there was no foul water proviso applying to the pipe laying power.
Accordingly, as section 30 was repealed, the sewerage undertakers cannot rely on the arguments which, in my view, justify their first argument under the 1989 Act.
However, the repeals effected by the 1991 Consolidation Act were, rather unusually and arguably unnecessarily, expressly without prejudice to section 16 of the 1978 Act, which applies unless a contrary intention appears.
Far from the contrary intention appearing, it seems to me clear that the factual context of the Acts of 1991, as discussed in paras 17 18 and paras 30 35 of the judgments of Lord Sumption and Lord Toulson, and more summarily discussed in paras 66 67 above, strongly supports the statutory presumption that the existing right to discharge from existing outfalls survived the repeal of section 30 (and the replacement of section 278) of the 1936 Act by the 1991 Act.
Indeed, it seems to me that the notion that the 1991 Act removed the rights of discharge in relation to existing outfalls from sewers vested in the sewerage undertakings is even more unlikely than the notion that this was the effect of the 1989 Act.
The 1989 Act was intended to give effect to a wholesale overhaul of the water and sewerage industries, and in particular to bring them into private ownership, and to subject them (subject to modifications to protect the public interest) to market forces.
While it is impossible to accept for the practical reasons already mentioned that in 1989 private sewerage companies were to be deprived of the right to discharge from existing sewers and were to be left to negotiate what rights they could, the proposition is not fanciful, at least in principle.
However, even in principle, it seems very unlikely indeed that such a deprivation could have been intended to have been effected sub silentio, without any consultation or recommendation from the Law Commission, by the 1991 legislation, and in particular by two Acts whose purposes were as described in their long titles (as set out in para 51 above).
My scepticism is reinforced by the fact that it is even more unlikely that such a deprivation was intended so soon after the 1989 Act.
Some concern was expressed in argument about the fact that the right of discharge (which in the light of this conclusion exists under the 1991 Act) is potentially more onerous on waterway owners, than the right when it existed under the 1936 Act.
I agree with what Lord Sumption says about this in para 22 above.
Quite apart from that, as explained in para 62 above, the right identified in Durrant was, as I see it, a right of discharge, which could be qualified by the provisions of the same or other legislation.
I see no cause for concern if Parliament, having given a right of discharge, is free to change the terms as to conditions and compensation (subject to complying with common law and human right principles) upon which such discharge can be effected.
On the contrary: such a conclusion appears to me to make good sense.
Conclusion
In these circumstances, it appears to me to follow that sewerage undertakers had, and therefore continue to have, a statutory right to discharge surface water and treated effluent from existing outfalls from sewers which had been vested in them by the time that the 1991 Act came into force, but not from subsequently created outfalls or outfalls from sewers which they may have laid after that date.
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The question at issue on this appeal is whether, under the Water Industry Act 1991, a sewerage undertaker has a statutory right to discharge surface water and treated effluent into private watercourses such as the Respondents canals without the consent of their owners and, if so, whether the right extends to any sewer or only to those which were in existence in 1991 when new sewerage legislation was passed.
This depends on the construction of the Water Industry Act 1991, a consolidating Act which was passed in order to tidy up the statute law relating to water and sewerage services.
It consolidates with amendments the provisions of the Act of The Water Industry 1989, together with a number of other statutes concerned with water management.
At the same time, the Water Consolidation (Consequential Provisions) Act 1991 repealed a number of earlier statutory provisions, including some thought to be spent and unnecessary.
It is on these changes that the issues on this appeal turn.
The Supreme Court unanimously allows the appeal to the extent of declaring, in accordance with the second possibility, that subject to section 117(5) of the Water Industry Act 1991, the Appellants are entitled to discharge into the Respondents canals from any sewer outfall which was in use on or before 1 December 1991.
The leading judgment is given by Lord Sumption.
Discharge into a private watercourse is an entry on the owners land, and as such is an unlawful trespass unless it is authorised by statute.
It is common ground that no express statutory right is conferred by the Water Industry Act.
The question is therefore whether it should be implied.
A statutory right to commit what would otherwise be a tort may of course be implied.
But since this necessarily involves an interference with the rights of others, the test has always been restrictive.
The implication must be more than convenient or reasonable.
It must be necessary.
As a general rule, this will involve showing either that the existence of the power is necessarily implicit in the express terms of the statute, or else that the statutory purpose cannot be effectually achieved without the implication.
In particular a right to commit what would otherwise be a tort may be implied if a statutory power is incapable of being exercised or a statutory duty is incapable of being performed without doing the act in question [2].
There are two bases on which a right of discharge into private watercourses might be implied into the current statutory regime.
The first is that a right corresponding to the one recognised
by the Court of Appeal in Durrant v Branksome Urban District Council [1897] 2 Ch 291 under earlier legislation is implied into the corresponding provision of the Water Industry Act 1991.
In particular section 159 (which confers a power to lay pipes).
The effect of such an implication would be to authorise discharge from future sewage outfalls as well as from those already in use when the Water Industry Act 1991 came into force.
The second possibility is that the only right of discharge into private watercourses which survives under the Act of 1991 is a right of discharge from existing outfalls which were already in use on 1 December 1991 when the Act came into force [12].
The first basis must be rejected because the language and scheme of the current legislation differs significantly from that of the legislation in force at the time of Durrants Case.
However, a right of discharge, limited to outfalls from sewers in existence when the Act of 1991 came into force, exists on the second basis.
When the Water Industry Act 1991 (i) imposed on the privatised sewerage undertakers duties which it could perform only by continuing for a substantial period to discharge from existing outfalls into private watercourses and (ii) at the same time applied to them the statutory restrictions in section 116 on discontinuing the use of existing sewers, it implicitly authorised the continued use of existing sewers.
A restriction on discontinuing the use of an existing sewer until an alternative has been constructed is not consistent with an obligation to discontinue its use forthwith under the law of tort.
The inescapable inference is that although there is no provision of the Act of 1991 from which a general right of discharge into private watercourses can be implied, those rights of discharge which had already accrued in relation to existing outfalls under previous statutory regimes survived [19].
Lord Sumption rejects the suggestion that this conclusion leaves the owners of private watercourses in a worse position than under the Water Act 1989, because of the more limited provisions for compensation for damage and the more limited protections available against abuse.
It does not, he considers, give rise to difficulty if a more limited right to continue discharging from existing outfalls into private watercourses is to be implied from the restrictions in section 116 on discontinuing the use of existing sewers [22].
In a concurring judgment, Lord Toulson concludes that the answers to the questions in this case are to be found within the sections of the 1991 Act.
There is, in Lord Toulsons opinion, no need to go back to examine the position under the 1989 Act.
There is no claim for damages for trespass during the period when the 1989 Act was in force.
However, if it were necessary to do so, he would conclude that there was no trespass during that period [36].
In a further concurring judgment, Lord Neuberger identifies two questions in the appeal.
The first question is whether sewerage undertakers have such a right in relation to all their sewers, irrespective of when they came into use i.e. present and future sewers.
The second question, which only arises if the answer to the first question is no, is whether sewerage undertakers have such a right in relation to any of their sewers, and, if so, whether it is those which were in use immediately before (i) the transfers effected pursuant to the Water Act 1989 or (ii) the coming into force of the Water Industry Act 1991 [38].
In Lord Neubergers view the composite answer to these questions is that sewerage undertakers have the statutory right to discharge surface water and treated effluent into streams and canals (subject to payment of compensation for any damage thereby caused), but only in respect of outfalls in existence before the coming into force of the 1991 Act.
He agrees with the reasons given by Lord Sumption and Lord Toulson although would place greater weight on the provisions of the earlier legislation relating to public sewers and the Interpretation Act 1978 [39].
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The respondents to the Lord Advocates appeal in these three cases are Raymond Jude, Michael Hodgson and Josh Birnie.
They were each detained as suspects for questioning at a police station under sections 14 and 15 of the Criminal Procedure (Scotland) Act 1995.
Their detentions took place prior to the decision of this court in Cadder v HM Advocate [2010] UKSC 43, 2011 SC(UKSC) 13; [2010] 1 WLR 2601.
As was the practice at that time, they did not have access to legal advice either before or during their police interviews.
In the course of their interviews they said things in reply to questions put to them by the police on which the Crown relied at their trials.
They were convicted and sentenced to various periods of imprisonment.
They then appealed against these convictions.
Their appeals were still current when the judgment in Cadder was delivered on 26 October 2010.
Among other grounds of appeal in the High Court of Justiciary the respondents advanced submissions which raised a devolution issue.
This was that the leading of evidence of statements which they made during their police interviews was a breach of their rights under articles 6(3)(c) and 6(1) of the European Convention on Human Rights and that, in terms of section 57(2) of the Scotland Act 1998, the Lord Advocate had no power to lead that evidence.
They referred to the decision in Cadder in support of this ground of appeal.
For Birnie it was also submitted that the reliance by the Crown upon his admissions in these circumstances deprived him of a fair trial, to which he was entitled under article 6(1) of the Convention and at common law.
The Crowns response to these submissions was that, for various reasons, the principle that was established in Cadder did not apply in these cases.
The High Court of Justiciary decided to deal with this response as a preliminary issue, and it was referred to a court of five judges.
On 11 May 2011 the Appeal Court (the Lord Justice-Clerk (Gill) and Lords Osborne, Eassie, Clarke and Mackay of Drumadoon) repelled the Crowns objections and continued the appeals for hearing on the remaining grounds of appeal: [2011] HCJAC 46, 2011 SLT 722.
The Crown was given leave to appeal against that decision to this court under para 13 of Schedule 6 to the Scotland Act 1998.
The issues raised by the Crowns response to the devolution issue were as follows: (1) that in the case of each respondent section 118(8) of the Criminal Procedure (Scotland) Act 1995 was an absolute bar to any challenge to the evidence of the police interviews, as objection was not taken at or before the trial to the leading of that evidence; (2) that each of the respondents had waived their right of access to a lawyer when they were interviewed; (3) that by failing to object to the evidence through their respective legal representatives they had waived the right to take the point as a ground of appeal; and (4) in Judes case only, that the point had been taken too late as section 100(3B) of the Scotland Act 1998, as amended by section 1 of the Convention Rights Proceedings (Amendment) (Scotland) Act 2009, provides that any proceedings brought on the ground that an act of a member of the Scottish Executive is incompatible with the Convention rights must be brought before the end of the period of one year beginning with the date on which the act complained of took place.
The Crown did not seek leave to appeal from the Appeal Courts decision in relation to the application of section 118(8) of the 1995 Act.
Leave was sought and granted in relation to the issues of waiver and the application to Judes case of section 100(3B) of the Scotland Act.
In his written case to this court the Lord Advocate made it clear that he did not intend to pursue the point that the respondents had waived their right to object to the admissibility of the evidence of the police interviews because their legal representatives did not object to that evidence at the trial.
This was because he accepts that, at the time when the respondents were tried, a person who was detained under section 14 of the 1995 Act did not have an express right in Scots law to legal advice before or during his police interview.
As for the issue of individual waiver, his position was that the only point in these appeals which was likely to be of importance for future cases was that raised in the case of Birnie.
Unlike the other two respondents Birnie made an unsolicited statement following his police interview, having declined the opportunity to have access to a lawyer prior to and while making it.
The advocate depute, Miss Cherry QC, confined her submissions about waiver in these three cases to the question whether Birnie waived his right to a lawyer when he made his unsolicited statement.
She made no submissions in support of the proposition that the respondents had waived their right to a lawyer at their police interviews.
That issue was however the subject of detailed submissions in the Lord Advocates reference in McGowan (Procurator Fiscal, Edinburgh) v B, which was heard at the same time as these appeals.
The court has issued a separate judgment in that case: [2011] UKSC 54.
In the result the only matters which remain for consideration in relation to these three appeals are (1) whether the time bar referred to in section 100(3B) of the Scotland Act 1998, as amended, applies to Judes appeal, (2) whether Birnie waived his right of access to a lawyer when he made his unsolicited statement following his police interview and (3) whether the reliance by the Crown upon his admissions in these circumstances deprived him of his right to fair trial under article 6(1) of the Convention.
No issue now arises in regard to the preliminary points that were taken by the Crown in Hodgsons appeal.
Section 100(3B)
Jude went to trial in the High Court of Justiciary at Aberdeen on an indictment which libelled one charge of breach of the peace, one charge of lewd and libidinous conduct, three charges of indecent assault and two charges of assault with intent to rape.
On 5 June 2008 he was convicted of one charge of indecent assault and of both charges of assault with intent to rape.
On 28 August 2008 he lodged a notice of his intention to appeal against his conviction.
On 17 February 2009 his appeal was deemed to have been abandoned because his note of appeal had not been lodged within the period referred to in section 110(1)(a) of the 1995 Act.
On 5 October 2010 he lodged an application for extension of time under section 111(2) of that Act along with a note of appeal.
His application for extension of time was granted on 6 October 2010 and his note of appeal was received on the same date.
It is plain, and not disputed, that the time bar which would have otherwise have applied under section 110 of the 1995 Act was removed when the Appeal Court decided on 6 October 2010 to grant Judes application for an extension of time under section 111(2).
At the end of his judgment in Cadder Lord Rodger drew attention to the provisions of section 100 of the Scotland Act, as amended by the Convention Rights Proceedings (Amendment) (Scotland) Act 2009: 2011 SC(UKSC) 13, paras 104-106.
In its amended form, the relevant provisions of that section are as follows: (1) This Act does not enable a person (a) to bring any proceedings in a court or tribunal on the ground that an act is incompatible with the Convention rights, or (b) to rely on any of the Convention rights in any such proceedings, unless he would be a victim for the purposes of article 34 of the Convention (within the meaning of the Human Rights Act 1998) if proceedings in respect of the act were brought in the European Court of Human Rights.
(3) This Act does not enable a court or tribunal to award any damages in respect of an act which is incompatible with any of the Convention rights which it could not award if section 8(3) and (4) of the Human Rights Act 1998 applied.
(3A) Subsection (3B) applies to any proceedings brought on or after 2 November 2009 by virtue of this Act against the Scottish Ministers or a member of the Scottish Executive in a court or tribunal on the ground that an act of the Scottish Ministers or a member of the Scottish Executive is incompatible with the Convention rights.
(3B) Proceedings to which this subsection applies must be brought before end of (a) the period of one year beginning with the date on which the act complained of took place, or (b) such longer period as the court or tribunal considers equitable having regard to all the circumstances, but that is subject to any rule imposing a stricter time limit in relation to the procedure in question.
(3E) The reference in subsection (3A) to proceedings brought on or after 2 November 2009 includes proceedings relating to an act done before that date.
As Lord Rodger observed in para 104 of his judgment in Cadder, the effect of these provisions was not mentioned by any of the counsel who appeared to argue that case in the Supreme Court.
Nevertheless he went on to express his opinion on it.
He referred in the following paragraph to the fact that the amendment to section 100 was made in response to the decision of the House of Lords in Somerville v Scottish Ministers [2007] UKHL 44, 2008 SC (HL) 45, [2007] 1 WLR 2734, in which it was held that the time limit in section 7(5) of the Human Rights Act 1998 did not apply to proceedings in relation to Convention rights brought by reference to the Scotland Act 1998.
Having set out the terms of the section in its amended form, he said that the proceedings in Cadders case were proceedings to which that section applied.
So, by reason of section 100(3B), to be competent any such proceedings would need to have been commenced before the end of a year beginning with the date on which the Crown led the evidence, or within such longer period as the court considered equitable having regard to all the circumstances: paras 105-106.
I endorsed what he said in those paragraphs in para 60 of my own judgment, when I included appeals that had been brought timeously among the list of cases that would have to be dealt with in the light of Cadder on the basis that a person who was detained must have had access to a lawyer before being questioned by the police.
The Crowns attempt to rely on Lord Rodgers analysis in support of its argument that Judes appeal was out of time because the act that was relied on took place more than one year before the lodging of his note of appeal was rejected by the Appeal Court.
The Lord Justice Clerk said that he could not follow why Lord Rodger should have taken the view that section 100(3B) applied to these proceedings.
In his opinion it applied only to claims made in civil proceedings and then only when they were brought by virtue of the Scotland Act.
That was not so in Judes case, as his appeal had been brought under the 1995 Act: 2011 SLT 722, paras 37-38.
Lord Rodgers observations in paras 105-106 of Cadder were of course obiter.
They must nevertheless be treated with respect.
He was, after all, a master of the art of statutory construction.
As he declared in one of his unpublished lectures, for him the subject of attention in these matters always was the text of the statute.
His hope was that, by immersing himself in the text and the scheme of the legislation, he would be able to see what the experts who had devoted months and months to preparing and adjusting the text saw and, more importantly, what they meant and how it should be applied.
His dissenting judgment in Martin v Most [2010] UKSC 10, 2010 SC (UKSC) 40 provides ample evidence of his concern for accuracy and for attention to the detail of the language used by the draftsmen and women when carrying out this exercise.
He brought to the question as to the meaning and effect of section 100(3B) his deep familiarity with the provisions of the Human Rights Act 1998 which he had developed since he first engaged with the subject in Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2003] UKHL 37, [2004] 1 AC 546, paras 157-163, and his participation in the carefully argued decision of the House of Lords in Somerville.
As Lord Hamilton points out (see para 40, below), he referred to the Somerville case in para 105 of his judgment in Cadder when he was describing the context in which the amendments to section 100 were made.
The challenge to the accuracy of his conclusion that section 100(3B) applies to proceedings brought by way of an appeal under the 1995 Act raises two questions.
The first is whether, as the Lord Justice Clerk indicated in para 38 of his opinion, that section is rendered inapplicable simply because criminal appeals are brought under the 1995 Act and not under the Scotland Act.
The second is whether the wording of the amended section 100 of the Scotland Act itself shows that it has no application to any criminal proceedings, even at the stage of an appeal.
I do not think that it is difficult to see why it did not occur to Lord Rodger that the fact criminal appeals are brought under the 1995 Act of itself meant that these appeals lay outside the scope of section 100(3B) of the Scotland Act.
He would have concentrated on the wording of the Scotland Act, as I would too.
Section 100(3B) refers to proceedings brought by virtue of this Act against the Scottish Ministers or a member of the Scottish Executive.
As I said in Somerville, 2008 SC (HL) 45, para 10, anybody who wishes to bring proceedings against a member of the Scottish Executive on the ground that an act or a failure to act is incompatible with the Convention rights, or to rely on the Convention rights in any proceedings, needs to know whether he must do this under sections 6 to 8 of the Human Rights Act or whether he must do so, or can do so only, on the ground that the act or the failure to act is contrary to the provisions of the Scotland Act.
This is so whether the proceedings in question are civil or criminal, as issues about Convention rights may arise irrespective of the nature of the jurisdiction that the court or tribunal is being called upon to exercise.
A criminal appeal in which it is said that the leading and relying on evidence by the Lord Advocate was contrary to the appellants Convention rights, and that in terms of section 57(2) of the Scotland Act he had no power to lead that evidence, falls plainly into the category of a proceeding that is by virtue of the Scotland Act.
It is the Scotland Act which provides the basis for the appeal.
The fact that the procedure under which the complaint is made is provided by the 1995 Act is neither here nor there so far as this point is concerned.
So I think that the key to the soundness or otherwise of Lord Rodgers reasoning lies in the answer that is to be given to the second question.
Section 100(3A) of the Scotland Act refers to any proceedings brought on or after 2 November 2009 by virtue of that Act.
In para 106 of his judgment Lord Rodger said that the proceedings in Cadder were proceedings brought on the ground that it was incompatible with articles 6(1) and (3)(c) for the Lord Advocate to lead evidence of answers elicited by the police questioning.
In my opinion it would not be a misuse of language to use the word brought in relation to proceedings which take the form of an appeal under section 106 of the 1995 Act.
After all, section 106(3) of that Act states that by an appeal under subsection (1) of that section a person may bring under review of the High Court any alleged miscarriage of justice in the proceedings in which he was convicted.
The word bring is not used in section 175 which provides for appeals in summary proceedings, but the idea that the appellant is bringing appeals under that procedure is not unreasonable.
The wording of section 106(3) also suggests that it would not be a misuse of language to say that the appeal was a separate proceeding from the proceedings in which the appellant was convicted.
But that is not an end to the problems that have to be solved in order to understand what is meant by the word proceedings in section 100(3A).
One must go back to the opening subsection, which Lord Rodger did not mention in para 106 of his judgment in Cadder.
It makes the same distinction as that which is to be found in section 7(1) of the Human Rights Act 1998 between (a) bringing proceedings in a court or tribunal on the ground that an act is incompatible with the Convention rights and (b) relying on any of the Convention rights in any such proceedings.
Section 100(1)(a) of the Scotland Act does not reproduce exactly the wording of section 7(1)(a) of the Human Rights Act, as it does not refer to the appropriate court or tribunal which section 7(2) explains as meaning such court or tribunal as may be determined in accordance with rules.
The words in any such proceedings do not reproduce exactly the wording of section 7(1)(b) of the Human Rights Act either, as the equivalent phrase in that Act is in any legal proceedings.
But I think that they have the same effect.
I read the word such in subsection (1)(b) as referring back to the words in a court or tribunal in subsection (1)(a).
The distinction between subsections (1)(a) and (1)(b) of section 7 of the Human Rights Act is maintained by section 7(5) of that Act, which provides expressly that proceedings under subsection (1)(a) must be brought before the end of the period to which it refers.
It does not impose any time bar on proceedings of the kind referred to in section 7(1)(b).
The question then comes to be whether the reference in section 100(3A) of the Scotland Act to any proceedings brought must be taken to refer to proceedings of the former kind only, and not to proceedings of the kind referred to in section 100(1)(b).
It seems to me, although it does not of course say so expressly, that the wording of section 100(3A) shows that it has that effect and that the time bar in section 100(3B) does not apply to proceedings of the kind referred to in section 100(1)(b).
The point is that proceedings of the kind referred to in subsection (1)(b) are proceedings that have been brought by someone other than the person who maintains that the act in question is incompatible with the Convention rights.
In the case of the proceedings referred to in subsection (1)(a), the person to whom the time bar is applied is the person who has brought those proceedings before the court or tribunal in order to obtain a remedy.
It is the civil courts that have jurisdiction in cases of that kind, as the rules to which I referred in R v Kansal (No 2) [2002] 2 AC 69, para 63 make clear in the case of the Human Rights Act.
The absence of a time bar on the bringing of proceedings of the kind referred to in section 100(1)(a) of the Scotland Act was the problem that was addressed in Somerville, where it was held that the limitations which section 7(5) of the Human Rights Act imposed on remedies sought under that Act did not apply where the case that was brought was that the act or failure to act was outside competence under the Scotland Act: 2008 SC (HL) 45, para 38.
The question then is, into which category do appeals that are brought under the 1995 Act fall for the purposes of the Scotland Act? By whom are these proceedings brought?
The Lord Justice Clerk said an appeal is part of the prosecution process brought against the appellant by a member of the Scottish Executive: para 38.
There is no doubt that this is a correct description of the proceedings up to and including the trial in which the appellant was convicted.
The Advocate Depute, Mr Brodie QC, conceded that this was so, and I think that he was right to make this concession.
But that is not an end of the matter.
The Lord Advocate is the master of the instance.
The proceedings are brought in his name.
He remains in control of them even after they have been brought into court, and this is so even after the verdict has been returned: Hume, Commentaries on the Law of Scotland Respecting Crimes, (1844), vol II at p 134; Montgomery v HM Advocate 2001 SC (HL) 1, pp18-19.
The focus of attention changes when there is an appeal, but the proceedings remain throughout under the ultimate control of the Lord Advocate.
The purpose of those proceedings is to secure the conviction and punishment of those who are guilty of committing acts of the kind that the law regards as criminal.
That is their only purpose, and it remains their purpose from the start to the very end.
The conclusion that an appeal against conviction or sentence, like any other proceeding in any of the criminal courts in Scotland, is still part of the prosecution process that has been brought in the public interest by the Lord Advocate seems to me to be inescapable.
It is only fair to Lord Rodger to point out that he mentioned section 100(3B) because he was concerned, as I was too, to try to minimise the effect of the decision in Cadder: see para 60, where to assist this process I invoked the principle of legal certainty.
But I am persuaded that the advice which he was offering in paras 105-106 of his judgment was mistaken.
I agree with the Appeal Court that the time bar in section 100(3B) of the Scotland Act has no bearing on Judes appeal.
I am fortified in this view by the fact the 1995 Act contains in sections 109 and 110 its own system of time limits for the bringing of solemn appeals, as it does in section 176 for an application by stated case.
It would be very odd to find, in a case where the High Court had already granted an extension under section 111(2) of the period referred to in section 110(1)(a) of the 1995 Act or under section 181(1) of that Act in an appeal by stated case, that it was open to the Crown to invoke another time limit under another section in a different Act.
It is not easy to identify the precise scope or ambit of the mischief which the amendment that section 100(3B) introduced into the Scotland Act was intended to remedy: see Bennion on Statutory Interpretation, 5th ed (2008), p 929, where the importance of achieving precision on this point is emphasised.
The fact that the amendment was enacted in response to the decision in Somerville does not exclude the possibility that the time bar was intended to have a wider application than the facts of that case, by themselves, might suggest.
But the concluding words of section 100(3B) show that the draftsman was aware that stricter time limits might be found in legislation relating to the procedure in question and that it was not the intention that it should override those other time limits or decisions made under a dispensing power to extend them.
So I think that one can be reasonably confident that the view which I have arrived at by studying the language of these provisions is not contrary to what Parliament had in mind when it introduced this amendment.
Birnies unsolicited statement
According to the agreed statement of facts and issues, two issues arise in Birnies appeal.
The first is whether he was offered rights of access to a solicitor prior to and during the taking of his unsolicited statement after his police interview.
The second is whether, if he was offered them, he expressly waived those rights.
But an examination of the facts shows that this formulation of the issues does not accurately focus the real point which is at issue on this branch of the case.
This is because Birnie was offered access to a solicitor before he made his unsolicited statement and he did decline the offer expressly.
It is best focused by the additional ground of appeal that was advanced in his case in the High Court of Justiciary: see para 2, above.
The question that it poses is whether reliance by the Crown upon the admissions that he made in his unsolicited statement deprived him of the fair trial to which he was entitled under article 6(1) of the Convention.
Reference was also made in that ground of appeal to his right to a fair trial at common law.
That, of course, does not raise an issue which can be considered by this court, as it is not a devolution issue.
But there is, in practice, no difference between these two bases for invoking the right to a fair trial.
Birnie went to trial in the Sheriff Court at Aberdeen on 7 December 2009 charged with abduction and assault with intent to rape, a breach of the peace and a contravention of section 127(1)(a) of the Communications Act 2003 by sending sexually explicit messages to a female complainer.
He pled guilty to the statutory offence during the trial, and his plea of not guilty to the charge of breach of the peace was accepted at that stage.
The Crown led evidence at his trial of answers he gave to the police while he was being questioned as a detainee under section 14 of the 1995 Act without access to a solicitor.
It also led evidence of an unsolicited statement which he made to the police following that interview.
The jury found him guilty of the first charge under deletion of various averments including that of intent to rape.
The facts which provide the background to the argument in Birnies case are as follows.
He was interviewed under caution in a police station on Friday 14 August 2009 between 1034 and 1220 hrs with a break between 1118 and 1206 hrs.
At the time of his interview he was 18 years of age.
He had been on probation since 2008 in respect of a charge of breach of the peace with a sexual aggravation, and he was a registered sex offender.
He had been convicted on two occasions of a breach of the notification requirements of sections 83 and 94 of the Sexual Offences (Scotland) Act 2003.
He had also previously been interviewed by the police as a suspect.
As already mentioned in para 1, above, he was not told that he had a right of access to legal advice prior to or during his police interview as it was not the practice at that time for this to be offered to persons detained under section 14 of the 1995 Act.
Birnie made no admissions during the first stage of his interview apart from being at the locus with the female complainer [AR] referred to in the abduction charge and kissing her.
He said that this was consensual.
He was asked during his interview what expression he would use to describe touching his girl friends private parts, to which he replied with a question: fit like poking her? When asked to explain what he meant by this, he said that it meant putting his fingers in her vagina.
After they had completed their questioning about the abduction the interviewing officers charged Birnie with abducting the complainer [AR], with indecent assault and with two charges of breach of the peace, and they arrested him.
He was then cautioned and interviewed in relation to another female complainer, to whom he admitted sending a series of text and email messages.
After further questioning he was charged with sending indecent messages to that complainer.
Following the interview Birnie was, according to an entry in a police notebook, on the verge of tears.
At 1223 hrs he asked what was happening to him.
He was told that he was to be kept in custody over the weekend to appear in Aberdeen Sheriff Court on Monday 17 August 2009.
On being advised of this he burst into tears and said spontaneously I poked her.
He was asked by one of the interviewing officers whether he was referring to the complainer [AR], to which he replied Yes.
He was told to say nothing further but that other officers would attend later to speak to him if he wished to make any further comments.
At 1235 hrs he was asked if he wished a solicitor informed of his arrest and was told that a duty solicitor could be contacted on his behalf.
He gave the name of a solicitor.
It was not until about two hours later, at 1428 hrs, that a message was left with the solicitors secretary to advise him of the arrest.
Birnie also asked that his mother be told of his arrest, but this was not possible as she was apparently not available to answer the telephone.
Birnie then told the police that he wished to make a further statement, which he did at about 1345 hrs on 14 August 2009 to two police officers who had not had any prior involvement in the inquiry.
Before he made his statement, which it is agreed was unsolicited, he was asked whether he wished to consult a solicitor before making it.
He replied that he did not.
He was asked whether he wished a solicitor to be present while he was making it.
He again said that he did not.
He was then cautioned and asked whether he understood the caution, to which he replied Yeah.
He then said: I want to admit poking [AR].
She asked me to do it and we did give each other love bites.
He was asked to say what he meant by poking, to which he replied that meant putting your fingers in her vagina.
He then said: I never locked her in.
I never locked her in her house.
I asked her several times if she wanted to leave but she says No. I didnt threaten her in any way.
It is plain from this narrative that Birnie was offered rights of access to a solicitor before he made his statement and he was also asked whether he wished to have a solicitor present while he was making it.
He expressly declined both of these offers.
The question is whether, on these facts, his statement was admissible.
The Crown submits that it was.
This is because the statement was severable from the prior police interview on two grounds: first, it was preceded by a valid waiver of the right of access to a solicitor and, second, because it was voluntary and not elicited by police questioning.
The Appeal Court did not address its reasoning to these points, although it had been addressed on them in the course of the hearing of the appeal.
The Lord Justice Clerk said in para 32 of his opinion that he accepted that the rights of a detainee or of an accused person under article 6 were capable of being waived, but that the argument for the Crown failed in the case of each of the three respondents.
This was because the law at the time did not allow the accused to have access to a lawyer at the time of the pre-trial procedure and because the consent to be interviewed in each case was not informed by legal advice.
He dealt more fully with the latter ground for rejecting the Crowns argument in para 34, where he said: Furthermore, a valid waiver can proceed only on the basis of an informed decision.
Since the right allegedly waived was that of access to legal advice, I cannot see how any of the appellants could waive that right when, ex hypothesi, he had not reason to think that he had any such right and had not had access to legal advice on the point
The agreed facts show that Birnie was told that he had this right before he made his unsolicited statement following his police interview.
As for the objection that he did not have access to legal advice on the point before he declined the offer of access to a solicitor, I would hold that the answer to it is that there is no absolute rule that the accused must have been given legal advice on question whether or not he should exercise his right of access to a lawyer before he can be held to have waived it: see my judgment in McGowan (Procurator Fiscal, Edinburgh) v B [2011] UKSC 54.
Lord Kerr says that it is an indispensible prerequisite that there must be some means of ascertaining the reason why the accused did not avail himself of this right: para 53, below.
But it was not suggested at any time in the course of the argument that an absolute rule to that effect is to be found in the jurisprudence of the Strasbourg court nor do I find this in Lord Kerrs analysis of the authorities in McGowan.
This point is of crucial importance to the proper exercise of the jurisdiction that has been given to this court by the Scotland Act.
The only question for us is whether the absence of such an inquiry amounted in itself to a breach of a Convention right.
That is the limit of our jurisdiction.
A rule of the kind that Lord Kerr has suggested might perhaps be recognised at common law.
But it is not for us to say how the law and practice respecting crimes should be developed by the common law in Scotland.
That must be left to the High Court of Justiciary, whose decisions on all matters relating to the domestic criminal law of Scotland are final.
The fact that the accused did not receive legal advice on the point and was not asked why he did not want to speak to a lawyer need not be left out of account altogether for the purposes of article 6.
These are circumstances which can be taken into account in the assessment as to whether he understood the right that was being waived.
But they are no more than that.
I do not think that the Strasbourg jurisprudence requires us to hold that it would necessarily be incompatible with articles 6(1) and 6(3)(c) of the Convention for the Lord Advocate to lead and rely on evidence of answers given by a suspect during a police interview just because it was not ascertained why he did not want to speak to a lawyer.
A descent to that level of detail in the laying down of incontrovertible rules is contrary to the approach that the court itself has adopted.
The President of the court, Sir Nicolas Bratza, said in a paper which he gave in Edinburgh in March 2011 that the Strasbourg court has been careful, in general, to leave the national authorities to devise a more Convention-compliant system without itself imposing specific requirements on the State: [2011] EHRLR 505, 510.
The Supreme Court should, I believe, be no less careful in the way that it deals with Scottish criminal law and procedure.
There remains the question whether the statement is properly to be regarded as severable from the police interview so that it can be held to be voluntary and not elicited by the previous police questioning.
It is not in doubt that an unsolicited admission which is truly spontaneous and voluntary is admissible.
In Cadder Lord Rodger observed that it is quite common for those who have been arrested to decide to make admissions to the police and not to exercise their right to obtain legal advice before doing so: 2010 SLT 1125, para 96.
A person can confess if he is willing to do so, and his confession will be admissible if it is truly voluntary.
The common law test as to what may be regarded as voluntary was described in Manuel v HM Advocate 1958 JC 41, 48 by Lord Justice General Clyde.
He said that, to be voluntary, the statement must have been freely given and not given in response to pressure or inducement and not elicited by questioning other than what is directed simply to elucidating what has been said.
The crucial question then is whether this statement freely given? Or was it the result of some kind of pressure or inducement by the police?
We were not referred to any jurisprudence of the Strasbourg court on this precise point.
But in Oregon v Elstad 470 US 298 (1985), pp 317-318 Justice OConnor, giving the opinion of the US Supreme Court, observed that some courts had applied that courts precedents, including Miranda v State of Arizona 384 US 436 (1966), relating to confessions obtained under coercive circumstances to situations involving wholly voluntary admissions, requiring a passage of time or break in events before a second, fully warned statement can be deemed voluntary.
She went on to add these words: Far from establishing a rigid rule, we direct courts to avoid one; there is no warrant for presuming coercive effect where the suspects initial inculpatory statement, though technically in violation of Miranda, was voluntary.
The relevant inquiry is whether, in fact, the second statement was also voluntarily made.
In Missouri v Seibert (2004) 542 US 600, where the suspect made an initial confession without having been given a Miranda warning, a majority of the court held that his second statement after a Miranda warning was inadmissible.
They rejected the minoritys criticism that this was inconsistent with Elstad, on the ground that the failure to give the warning in Elstad was a good-faith mistake which was open to correction by careful warnings before systemic questioning in that particular case took place: p 615.
In R v Cherie McGovern (1990) 92 Cr App R 228 the Court of Appeal held that a second interview, where a solicitor was present, was tainted by the fact that at her first interview which took place the previous day the appellant had been denied access to a solicitor.
There were special features in that case.
The appellant, who was aged 19, pregnant and of limited intelligence, was said to have been particularly vulnerable.
Farquharson LJ said at p 234 that if the solicitor who was present at the second interview had known that the appellant had been wrongfully denied access to a solicitor at the first interview he would in all probability not have allowed the second interview to take place.
Such authorities as there are on this issue suggest that each case must be examined carefully on its own facts.
There are signs in this case, as in R v Cherie McGovern, that Birnie was particularly vulnerable when he made what I have referred to as his statement.
It was unsolicited.
He was no longer being interviewed.
But the interval between his making it and the end of the police interview was very short.
He had just been told that he was to be detained over the weekend, and he had been crying.
It is at least questionable whether he would have made this statement if he had said that he wished to consult a solicitor and he had then received the legal advice to which he was entitled before making it.
This is not a question that needs to be answered in every case.
But in the circumstances of this case it is not one that can be left out of account in considering whether there was a breach of the right to a fair trial.
I think that it is plain that there is room for argument as to whether the statement that Birnie made was truly voluntary and in any event whether, taking all the circumstances into account, it was fair to admit this evidence.
Lord Kerr says that on the available evidence the only possible conclusion is that that it has not been established that Birnies decision not to consult a solicitor was an effective waiver of his right to legal consultation: see para 57, below.
But here again the limits of our jurisdiction must be respected.
It is not our function to act as a second court of appeal on matters that depend on the application of the domestic law.
The question whether there has been a breach of the fundamental Convention right to a fair trial is within our jurisdiction.
But, as I would hold that it was not necessarily incompatible with articles 6(1) and 6(3)(c) of the Convention for the Lord Advocate to lead and rely on this evidence, I consider that the question of fairness for the purposes of article 6(1) must be examined in the light of all the facts and circumstances.
This is pre-eminently a matter for determination in the first instance by the High Court of Justicary.
As the Appeal Court has not yet addressed itself to this issue, I would remit it to that court for determination as part of the continued hearing of Birnies appeal.
Conclusion
I would dismiss the Crowns appeal on the question whether section 100(3B) of the Scotland Act 1998 applies in this case.
I would dismiss its appeals on the issue as to waiver in regard to the police interviews in all three cases.
I would allow its appeal on the question whether it was incompatible with Birnies right to a fair trial under article 6 of the Convention for the Crown to lead and rely on the evidence of the statement which he made following his police interview and remit that matter for determination by the High Court of Justiciary.
I am in full agreement with the judgments of Lord Hope and Lord Hamilton on these appeals and would dispose of them as Lord Hope proposes.
I am in full agreement with the judgments of Lord Hope and Lord Hamilton on these appeals and would dispose of them as Lord Hope proposes.
I agree with Lord Hope as to the disposal of all three of these appeals and adopt his narrative of the pertinent circumstances.
I also adopt his reasoning in relation to Birnies unsolicited statement.
I add a few words of my own on the issue of interpretation of section 100(3B).
The question is whether an appeal against a conviction, obtained on indictment or on complaint, is proceedings brought by virtue of [the Scotland Act] against [the Lord Advocate] within the meaning of subsection (3A) of the Scotland Act (as amended by the Convention Rights Proceedings (Amendment) (Scotland) Act 2009).
The scope of subsection (3A) must ultimately be determined by the statutory language used.
But it is necessary to have regard to that language in the context of the legislation in which it appears and, in my view, in the context also of such other legitimately available material as may assist in the exercise of interpretation.
This may involve identifying the mischief at which the enactment was directed.
In Bennion on Statutory Interpretation, 5th ed (2008), p 938 it is stated: These presumptions [that Parliament intended to suppress the mischief and that it did not intend to apply coercive measures going wider than was necessary to remedy the mischief in question] as to Parliaments intention may help in construing an enactment whose wording is doubtful.
The importance of the mischief goes further than this, however.
We cannot be sure whether there is real doubt or not unless we have the mischief in mind.
This is one function of the informed interpretation rule.
In the consideration of opposing constructions of an enactment in relation to a particular factual situation, we may find that bringing the mischief into account helps to decide whether the enactment is intended to be given a wider or narrower construction.
The first thing to notice is that the amendment made by the 2009 Act is an amendment to section 100 itself by adding two subsections to it.
That suggests that the intendment of the legislature was to make an improvement, as it saw it, to the effect of section 100 as originally enacted.
The nature of that intended improvement is not difficult to find.
As Lord Rodger himself said in Cadder v HM Advocate 2011 SC (UKSC) 13, at para 105: In Somerville v Scottish Ministers [2008 SC (HL) 45] the House of Lords held that the time limit in section 7(5) of the Human Rights Act 1998 did not apply to proceedings in relation to Convention rights brought by reference to the Scotland Act 1998.
It followed that, subject to any common law limitations or any specific statutory time limit, such proceedings could be brought at any time.
The Scottish Parliament eventually responded to that decision by passing the Convention Rights Proceedings (Amendment) (Scotland) Act 2009, which amended section 100 of the Scotland Act so as to introduce a one-year time-limit like the one in section 7(5) of the Human Rights Act.
Somerville was a civil case in which the House of Lords relied significantly upon section 100 of the Scotland Act (as originally enacted) as well as on the other provisions of that statute.
Of course, the statutory response may, intentionally or inadvertently, have been wider than to deal with the prior statutory effect which was thought to be undesirable.
But all the indications are the other way.
The limitation on the bringing of proceedings provided for by section 100(3B) is for practical purposes identical to that provided by section 7(5) of the Human Rights Act 1998.
That subsection applies, and applies only, to proceedings brought under section 7(1)(a).
Such proceedings are civil proceedings (R v Kansal (No 2) [2002] 2 AC 69, per Lord Hope of Craighead at paras 58-63).
This is to be contrasted with section 7(1)(b) which allows for reliance on the Convention right or rights concerned in any legal proceedings a term defined comprehensively by section 7(6).
Such reliance can accordingly be had in criminal as well as in civil proceedings.
It is difficult to suppose that the Scottish Parliament would have, in effect, adopted the exact language used for civil proceedings in the Human Rights Act if it had intended to provide for criminal as well as for civil proceedings.
Further, it is difficult to conceive why the Scottish Parliament should think it appropriate to provide for criminal appeals a limitation period such as that made by section 100(3A) and (3B).
The Criminal Procedure (Scotland) Act 1995 makes its own provision for the timeous taking of appellate steps.
Section 106 allows a person convicted on indictment, with leave granted in accordance with section 107, to appeal in accordance with that Part of the Act to the High Court against various things, including conviction and sentence.
Section 109(1) prescribes that, where a person desires to appeal against any of the things referred to in section 106(1), he shall within two weeks of the final determination of the proceedings, lodge with the Clerk of Justiciary written intimation of intention to appeal .
Section 110(1)(a) provides that, in the case of an appeal against conviction, the convicted person may, subject to section 111(2), within eight weeks of lodging intimation of intention to appeal lodge a written note of appeal .
A shorter (four weeks) period is allowed for appeals other than appeals against conviction (section 110(1)(b)).
Section 111(2) provides: Any period mentioned in section 109(1) or 110(1)(a) of this Act may be extended at any time by the High Court in respect of any convicted person .
Thus, as regards proceedings on indictment, the 1995 Act provides its own (much shorter) temporal restrictions on bringing appeals with a similar power in the court to extend the period on equitable grounds.
As regards summary proceedings, section 175 allows a convicted person to appeal with leave to the High Court.
The more usual mode of appeal is by stated case (section 176), for which again a short timetable is prescribed.
Section 181(1) empowers the High Court to direct that such further time as it may think proper be afforded to the applicant to comply with the requirements as to time.
The statute recognises other common law modes of appeal (by, for example, bill of suspension).
At common law there was no time limit for the bringing of a suspension but acquiescence in the judgment complained of might be inferred from undue delay (Renton and Brown Criminal Procedure, para 33-09).
A statutory time limit (three weeks) for bringing a bill of suspension was introduced by section 6(1) of the Criminal Procedure (Legal Assistance, Detention and Appeals) (Scotland) Act 2010.
It is difficult to suppose that, in inserting section 100(3)(A) and (3B) into the Scotland Act in 2007, the Scottish Parliament had in mind common law remedies in summary matters.
Accordingly, there are persuasive reasons, in my view, for concluding that subsections (3A) and (3B) of section 100 (as amended) were designed to apply only to civil proceedings.
Although not spelt out in the legislation, that restriction is consistent with the statutory language used.
Against that background the expression any proceedings brought by virtue of this Act against [the Lord Advocate] is to be construed.
It is conceded, inevitably, that criminal proceedings at first instance are not within the ambit of section 100(3A).
While Part VII of the 1995 Act (headed Solemn Proceedings) is dealt with distinctly from Part VIII (headed Appeals from Solemn Proceedings), it involves, in my view, some artificiality of language to construe any proceedings brought as apt to include an appeal taken against conviction or sentence.
In effect, there are single proceedings initiated by service of the indictment or complaint, the appeal by a convicted person being a step taken within these single proceedings.
I am not persuaded that the terms of section 106(3) (By an appeal under subsection (1) above a person may bring under review of the High Court any alleged miscarriage of justice) assist in determining whether an appeal is proceedings (distinct from the prosecution) brought by the convicted person.
More importantly, in my view, the expression any proceedings brought in subsection (3A) appears to pick up the language to bring any proceedings in subsection (1)(a), which in turn reflects the language of section 7(1)(a) of the Human Rights Act a provision concerned with civil proceedings (supra).
In any event, if there is ambiguity about the interpretation of subsection (3A), the considerations referred to earlier would, in my view, conclusively point to a criminal appeal not being within the scope of this provision.
There remains for consideration by virtue of this Act.
Some elaboration of that phrase is provided by section 126(11) which tells us that by virtue of includes by and under.
In Somerville an issue was whether the obiter observations by Lord Hope and by Lord Rodger in R v HM Advocate 2003 SC (PC) 21 as to the effect of the Scotland Act (and in particular section 100(1) of it) were well founded.
In R Lord Rodger had said at para 123: Section 100 has a counterpart in section 7 of the Human Rights Act, subsection (1) of which is expressed slightly more fully: (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.
Especially in the light of that provision, I would infer from section 100(1) of the Scotland Act that the Act itself enables a person, who claims that an act or proposed act of a member of the Scottish Executive is incompatible with his Convention rights, to bring proceedings in a court or tribunal or to rely on his Convention rights in any proceedings in a court or tribunal.
Convention rights and the remedies for vindicating them belong in the sphere of public rather than private law.
What particular form the remedy or reliance will take depends on the court or tribunal, and on the jurisdiction, in which the matter arises.
In an appropriate court the person affected can seek damages under the Scotland Act in respect of an incompatible act. .
The majority in Somerville in effect approved that approach namely, that section 100 was, by inference, an enabling provision which, among other things, allowed a victim of an infringement of section 57(2) to rely on the Convention right or rights concerned in any legal proceedings, including criminal proceedings.
Thus, while the procedural vehicle by which a person convicted in solemn proceedings brings his conviction or sentence under review is by an appeal under section 106 of the 1995 Act, it is the Scotland Act which enables him in that appeal to rely upon the alleged infringement of that right or those rights.
Both statutes have thus a part to play.
While I think it is a nice question, I have come with hesitation to the view that it can meaningfully be said that an appeal which relies upon an alleged infringement of a Convention right is one brought by virtue of the Scotland Act.
I would accordingly not support the High Courts reasoning in this respect.
As Lord Hope has pointed out (in para 5 of his judgment), the advocate depute has confined her challenge to the outcome of the appeals in Jude, Hodgson and Birnie to the claim that Birnie had waived his right to a lawyer when he made an unsolicited statement following his police interview, having declined the opportunity to have access to a lawyer prior to and while making it.
It is not now argued that Jude or Hodgson waived their right to a lawyer.
It is, of course, suggested that the Appeal Court was wrong in each of the cases in concluding that an effective waiver of their rights under article 6 of ECHR could only be made after they had received legal advice.
A further discrete ground was advanced on behalf of the Lord Advocate in the case of Jude to the effect that section 100(3B) of the Scotland Act 1998, as amended by section 1 of the Convention Rights Proceedings (Amendment) (Scotland) Act 2009, precluded a challenge to the Lord Advocates leading evidence of the statement which Jude made because that challenge was made too late.
I agree with all that Lord Hope and Lord Hamilton have had to say on that subject and do not propose to expatiate further on it.
As I stated in my judgment in the reference (McGowan, Procurator Fiscal v B) I agree with Lord Hope that there is no absolute rule to be derived from the case-law of the European Court of Human Rights (ECtHR) that an effective waiver of the right to legal assistance can only take place after the person purporting to waive the right has received legal advice on whether that course should be followed.
I believe that generally this will be the most effective way of ensuring that there has been an effective waiver but Strasbourg jurisprudence has not yet developed to the point where that is an essential prerequisite.
That fact alone would not have deterred me from concluding that this was necessary if I had felt that the article 6 rights of the respondents could not otherwise be secured see my judgment in Ambrose v Harris (Procurator Fiscal, Oban) [2011] UKSC 43, 2011 SLT 1005.
But I am not persuaded that the only possible means of ensuring that there has been an effective waiver is by having the suspect who waives the right receive legal advice on that course before he does so.
I have explained in my judgment in McGowan why I consider that such safeguards as are currently available in Scottish law to protect the interests of a suspect are not efficacious to ensure that a decision not to have legal assistance constitutes an effective waiver.
In particular, I have pointed out that it is an indispensable prerequisite that there must be some means of ascertaining the reason that a decision not to avail of this fundamental right has been taken.
Birnies case strikingly illustrates the elementary need for some inquiry to be made of a suspect as to why he has decided not to have the advice of a solicitor before interview unless the reasons for that are otherwise clearly obvious.
Although he was no stranger to the criminal law, Birnie was only eighteen years old when he was interviewed by police.
Following interview he was on the verge of tears.
When he was told that he was going to be kept in custody he broke down and made what has been said to be an unsolicited admission.
It is difficult to imagine that this admission and Birnies breaking down were unrelated to his being told that he was going to be detained over the weekend.
At 12.35 pm, some twelve minutes after he had made the admission, he was asked whether he wished to have a solicitor contacted on his behalf.
He nominated a firm of solicitors to contact but a message was not left with that firm until some two hours later.
He also wanted his mother to be informed of his arrest but that proved impossible.
The fact that he wanted both his solicitors and his mother to be informed that he was in detention is at least relevant to his state of mind at that time and his ability to cope without legal assistance during any further questioning.
Birnie told police that he wanted to make a statement some time before 1.45 pm notably, some 43 minutes before the solicitors whom he had been asked to be informed of his arrest were given that information.
Before he made his further statement at 1.45 pm he was asked whether he wished to consult his solicitor before making it and he replied that he did not, and when asked whether he wished to have a solicitor present while he was making it, again said that he did not.
In the circumstances the second inquiry might seem otiose but it was the product of a pro forma procedure.
Some such procedure is, of course, required to ensure that a consistent practice is followed but, because of the routine way in which it must be applied, it is hardly the most efficient way to examine whether a suspect has fully understood the importance of the right which is being relinquished.
Lord Hope has observed that Birnie expressly declined both offers of legal assistance.
This is true but it seems to me inescapable that his decision to do so could not in any circumstance be regarded as an effective waiver of his right to legal counsel and I believe that it is inconceivable that any court could be satisfied of that to the requisite standard.
Birnie was not asked why he did not want to speak to a lawyer, notwithstanding that he had nominated a firm of solicitors something over an hour before.
He was not told that he could speak to a solicitor by telephone.
No inquiry was made as to whether the decision to make a statement at that time was related to the intention of police to detain him over the weekend.
That this was, at the very least, a distinct possibility must have been obvious to the police officers who interviewed him.
Quite apart from the fact that the unsolicited statement was made shortly after he had been interviewed without having been informed of his right to legal assistance and leaving aside the possible impact that this might have on the admissibility of his later statement, the circumstances in which his unsolicited statement was made raise substantial and inevitable doubts that his waiver of the fundamental right to legal assistance was effective.
For these reasons I would hold that it is unnecessary to remit Birnies case to the Appeal Court.
I am of the view that, on the available evidence, the only possible conclusion is that it has not been established that Birnies decision not to consult a solicitor was an effective waiver of his right to legal consultation.
For these reasons I consider that it has not been - and on the available evidence cannot be - established that Birnies decision not to consult a solicitor constituted an effective waiver of his right to legal consultation.
On that account, I would dismiss the appeal in his case.
I would dismiss the appeals in Jude and Hodgson for the reasons given by Lord Hope.
In para 29 of his judgment Lord Hope has fastened on my statement (at para 53 above) that it is an indispensable prerequisite that there must be some means of ascertaining the reason that an accused did not wish to avail himself of the right to legal assistance and has characterised this as an absolute or incontrovertible rule.
I had not intended to propound any new principle, much less an inflexible rule.
In saying that a means must exist for understanding why someone has declined to exercise his right to legal assistance before finding that there has been an effective waiver, I was merely reflecting what I understand to be the unmistakable effect of current Strasbourg jurisprudence.
I was not constructing some unheralded, disquieting rule.
This can be demonstrated by a few simple propositions: (i) For a waiver to the right to legal assistance to be effective, there must be a knowing and intelligent decision to waive the right.
I do not understand the majority in this case to suggest otherwise; (ii) In a case where the effectiveness of the waiver is in dispute, it is for the prosecution to prove that it is effective.
Again I do not believe that this is controversial; (iii) It is well recognised that reasons other than those which would qualify as sufficient to support the conclusion that a knowing and intelligent decision has been made will frequently motivate a suspect to decline the right to legal assistance; (iv) In order for the prosecution to show that such reasons do not obtain and that a knowing and intelligent decision has been made, it is necessary to have some insight into why the right has been declined.
The requirement that a means exist of obtaining that insight does not involve the creation of some startling new rule.
It merely follows the flight of the arrow of logic to its obvious destination.
In these circumstances, I respectfully question whether the passage from the paper by the President of ECtHR, Sir Nicolas Bratza, quoted by Lord Hope has any relevance to the current debate.
Sir Nicolas had made the entirely unexceptionable statement that the Strasbourg court has been careful to refrain from imposing specific requirements on the State.
Quite so but that does not impinge on the conclusion that I have reached about the effect of the case-law of the European Court of Human Rights.
I have merely indicated where I believe the jurisprudence of that court in this area leads.
It was not my intention to descend to a level of detail in laying down an incontrovertible rule.
Indeed, I have made it clear that an inquiry into the reasons for a purported waiver is required only when those reasons are not obvious from the circumstances in which it was made.
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The Respondents were each detained as suspects for questioning at a police station under sections 14 and 15 of the Criminal Procedure (Scotland) Act 1995.
Their detentions took place prior to the decision of this Court in Cadder v HM Advocate [2010] UKSC 43, and they did not have access to legal advice either before or during their police interviews.
In the course of their interviews, they each made statements which were later relied on by the Crown at their trials.
They were convicted and sentenced to various periods of imprisonment.
They appealed, and their appeals were still current when the judgment in Cadder was delivered on 26 October 2010.
The Respondents argued, on the basis of Cadder, that the leading of evidence of the statements they made during their police interviews was a breach of their rights under Articles 6(3)(c) and 6(1) of the European Convention on Human Rights, and that, in terms of section 57(2) of the Scotland Act 1998, the Lord Advocate had no power to lead that evidence.
For Birnie, it was also submitted that the reliance by the Crown upon his admissions in these circumstances deprived him of a fair trial, to which he was entitled under Article 6(1) and at common law.
The Crowns objections to the devolution issue were repelled by the Appeal Court, and the Crown appealed to the Supreme Court.
On the question whether the Respondents had waived their right to legal assistance, the Lord Advocates position before the Court was that the important point in these appeals was that raised in the case of Birnie.
Unlike the other two Respondents, Birnie made an unsolicited statement following his police interview, having declined the opportunity to have access to a lawyer prior to and while making it.
The outstanding matters before the Court were therefore: (i) Whether the time bar referred to in section 100(3B) of the Scotland Act 1998, as amended, applies to Judes appeal; (ii) Whether Birnie waived his right of access to a lawyer when he made his unsolicited statement following his police interview; and (iii) Whether the reliance by the Crown upon the appellants admissions in these circumstances deprived him of his right to a fair trial under Article 6(1) of the Convention.
The Supreme Court unanimously dismisses the Crowns appeal on the question whether section 100(3B) of the Scotland Act 1998 applies in this case.
It unanimously dismisses its appeals on the issue as to waiver in regard to the police interviews of Jude and Hodgson.
By a majority of 4 1, it allows the appeal on the question whether it was incompatible with Birnies right to a fair trial for the Crown to lead and rely on the evidence of the statement which he made following his police interview and remits that matter for determination by the High Court of Justiciary.
Lord Hope gives the leading judgment.
Lord Kerr gives a partly dissenting judgment.
(1) Time Bar: Section 100(3B) of the Scotland Act 1998, as amended, provides that any proceedings brought on the ground that an act of a member of the Scottish Executive is incompatible with the Convention rights must be brought before the end of the period of one year beginning with the date on which the act complained of
took place.
The question is whether that section applies to proceedings brought by way of an appeal under the 1995 Act [6].
A criminal appeal under section 57(2) of the Scotland Act falls plainly into the category of a proceeding that is by virtue of the Scotland Act.
The fact that the procedure under which the complaint is made is provided by the 1995 Act is irrelevant as far as this point is concerned, and does not render section 100(3B) inapplicable[13].
The opening subsection of section 100 makes the same distinction as that found in section 7(1) of the Human Rights Act 1998 between bringing proceedings on the basis of Convention rights, and relying on Convention rights in any such proceedings.
The wording is not exactly the same in the two Acts, but the assumption is that they have the same effect.
The time bar under section 7(5) of the Human Rights Act refers only to proceedings under section (1)(a) and not those under (1)(b) [15].
The time bar in section 100(3B) has the same effect, so it does not apply to proceedings of the kind referred to in section 100(1)(b).
The point is that proceedings under that section are proceedings that have been brought by someone other than the person who maintains that the act in question is incompatible with the Convention rights [16].
An appeal against conviction or sentence is still part of the prosecution process that has been brought by the Lord Advocate [17].
Further, the 1995 Act contains its own system of time limits for the bringing of appeals.
It would be very odd if an appeal were subject to two different time limits under two different Acts [18]. (2) Waiver.
Birnie was offered rights of access to a solicitor before he made his statement and was also asked whether he wished to have a solicitor present while he was making it.
He expressly declined both offers [26].
There is no absolute rule that the accused must have been given legal advice on the question whether or not he should exercise his right of access to a lawyer before he can be held to have waived it: see McGowan (Procurator Fiscal, Edinburgh) v B [2011] UKSC 54 [28].
It was not suggested in the course of argument that an absolute rule requiring reasons for the accuseds decision to waive his right to legal assistance is to be found in the jurisprudence of the Strasbourg court.
The only question for this Court is whether the absence of such an inquiry amounted in itself to a breach of a Convention right.
It is not for the Supreme Court to say how the law and practice respecting crimes should be developed by the common law in Scotland.
The fact that the waiver was made without legal advice and without reasons being requested may be taken into account in the assessment as to whether Birnie understood the right that was being waived.
But Strasbourg does not require the Court to hold that it would necessarily be incompatible with Article 6 to rely on statements made to police just because it was not ascertained why the suspect did not want to speak to a lawyer.
The Strasbourg court has been careful, in general, to leave the national authorities to devise a more Convention compliant system without itself imposing specific requirements on the State.
The Supreme Court should be no less careful in the way that it deals with Scottish criminal law and procedure [29].
There is room for argument as to whether Birnies statement was truly voluntary and in any event whether, taking all the circumstances into account, it was fair to admit this evidence.
The question of overall fairness for the purposes of Article 6(1) must be examined in the light of all the facts and circumstances, and is therefore a matter for determination by the High Court of Justiciary [33].
For Lord Kerr, it is an indispensable prerequisite that there must be some means of ascertaining the reason that the right to legal assistance has been waived [53].
On the available evidence, it has not been established that there was an effective waiver by Birnie of his right to legal assistance [57].
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The appellant Ms Vida Poshteh arrived in this country in 2003 as a refugee from Iran, where she had been subject to imprisonment and torture.
She gained indefinite leave to remain in 2009.
She lives with her son born in 2007.
In October 2009 she applied to the respondent council for accommodation as a homeless person.
Since then she has been housed in temporary accommodation provided by the council, which has been continued pending this appeal.
The appeal arises from her refusal in November 2012 of a final offer of permanent accommodation at 52a Norland Road, London W11.
Her grounds in short were that it had features which reminded her of her prison in Iran, and which would exacerbate the post-traumatic stress disorder, anxiety attacks and other conditions from which she suffered.
Following a review, these grounds were held insufficient to justify her refusal.
The councils decision was upheld on appeal by the County Court (HH Judge Baucher), and by the Court of Appeal (Moore-Bick and McCombe LJJ, Elias LJ dissenting).
Permission to appeal to this court was granted on two issues: (1) Whether Ali v Birmingham City Council [2010] 2 AC 39 should be departed from in the light of Ali v United Kingdom (2015) 63 EHRR 20 and if so to what extent; (2) Whether the reviewing officer should have asked himself whether there was a real risk that the appellants mental health would be damaged by moving into the accommodation offered, whether or not her reaction to it was irrational, and if so, whether he did in fact apply the right test.
The first issue raises an issue of general importance relating to the application in this context of article 6 of the European Convention on Human Rights.
The second is directed to the reasoning of the reviewing officer in the particular case.
The law
It is unnecessary to rehearse the relevant provisions of the Housing Act 1996 Part VII in any detail.
As is well known, the local housing authority is under a duty to secure provision of suitable accommodation for a person who is homeless and in priority need, and has not become homeless intentionally.
The critical provisions in this case are section 193(7) and (7F) which deal with circumstances in which the duty ceases: (7) The local housing authority shall also cease to be subject to the duty under this section if the applicant, having been informed of the possible consequence of refusal and of his right to request a review of the suitability of the accommodation, refuses a final offer of accommodation under Part 6.
(7F) The local housing authority shall not - (a) make a final offer of accommodation under Part 6 for the purposes of subsection (7); unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer.
In the present case the issue turned not on the suitability of the accommodation, but on whether it was reasonable for the appellant to accept it.
The decision-makers task was described by Ward LJ in Slater v Lewisham London Borough Council [2006] EWCA Civ 394 (in terms which have not been criticised): In judging whether it was unreasonable to refuse such an offer, the decision-maker must have regard to all the personal characteristics of the applicant, her needs, her hopes and her fears and then taking account of those individual aspects, the subjective factors, ask whether it is reasonable, an objective test, for the applicant to accept.
The test is whether a right- thinking local housing authority would conclude that it was reasonable that this applicant should have accepted the offer of this accommodation.
(para 34)
The applicant may request a review of an adverse decision, by a senior officer who was not involved in the original decision (section 202).
If the decision is confirmed, reasons must be given (section 203(4)).
An appeal lies to the county court on a point of law only (section 204(1)).
The proper approach of the court when reviewing such a decision was explained by Lord Neuberger in Holmes-Moorhouse v Richmond upon Thames London Borough Council [2009] UKHL 7; [2009] 1 WLR 413, paras 46ff.
As he said: 47.
review decisions are prepared by housing officers, who occupy a post of considerable responsibility and who have substantial experience in the housing field, but they are not lawyers.
It is not therefore appropriate to subject their decisions to the same sort of analysis as may be applied to a contract drafted by solicitors, to an Act of Parliament, or to a courts judgment.
50.
Accordingly, a benevolent approach should be adopted to the interpretation of review decisions.
The court should not take too technical a view of the language used, or search for inconsistencies, or adopt a nit-picking approach, when confronted with an appeal against a review decision.
That is not to say that the court should approve incomprehensible or misguided reasoning, but it should be realistic and practical in its approach to the interpretation of review decisions.
The facts
The background facts are set out in the leading judgment of McCombe LJ in the Court of Appeal.
For present purposes it is sufficient to refer to the sequence of events following the offer of the accommodation in Norland Road on 14 November 2012.
It was a first floor, two-bedroom flat in a purpose-built block dating from about 1985, owned by the Notting Hill Housing Group (NHHG).
The living-room had two windows, one round window three feet in diameter, and the other rectangular three feet by five feet.
Ms Poshteh went to see the flat on 16 November 2012, accompanied by a representative from NHHG.
Her concerns about the physical features, not mentioned during the visit, were first raised in her letter of 29 November 2012, in which she said: [I] found the property scary given my history of post- traumatic stress.
The windows in the sitting room were circle shaped and other windows were too small.
The windows appeared to me as cell windows.
I found them quite frightening and reminded me of when I was in prison in my country.
I suffer from post-traumatic stress disorder, depression, panic and anxiety attacks, insomnia and nightmares due to torture that I experienced whilst back home in Iran.
I therefore do not find it suitable to live in as my permanent home She enclosed letters from a therapist, and her GP (a Dr Sharma), which referred to her mental state and past trauma, and the need to avoid accommodation in a high rise building requiring a lift, but said nothing about the shape of the window.
Her letter was treated by the council as a request for a review, which, following reference to the councils own medical advisers, led to confirmation of the decision.
However, following her appeal to the county court, the council agreed to carry out a further review.
A solicitors letter written on her behalf on 30 August 2013 expanded on her experience when viewing the property.
This repeated her concerns, but for the first time stated that viewing the flat had sent her into a panic attack.
The letter asserted (incorrectly) that the flat was in a high rise block with a lift.
The solicitors also provided further letters relating to her medical condition, including a further letter from Dr Sharma, who understood the flat had been rejected - because the windows were very small and round and she felt like she was back in a prison and this made her scared because it reminded her of the torture she was subjected to.
She thought that this type of property would be very unsuitable for her as it would continually trigger memories of her time in prison and the torture she suffered and this would not be good for mental state.
A clinical therapist (Ms Baroni) wrote: In my opinion the effect of being housed in accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life would inevitably remind her of both the cell she was confined in for six months, and the interrogation rooms she was tortured in on many occasions if she were housed in accommodation which would be frightening and stressful for her she might suffer a serious relapse and not be able to look after her son safely.
On 7 October 2013 Ms Poshteh attended an interview with the reviewing officer.
According to his note of the interview, her main reason for refusing the property was the round window in the living room which she said was exactly similar to the round windows of her cell in Iran.
The note continues: When I questioned the applicant further about the window she admitted that the round window in the living room of the property was not exactly like the window in the prison cell.
In fact, the applicant acknowledged that the window in the prison cell was much smaller and did not let in much light at all.
She agreed with my description that it was like a porthole window.
The applicant also acknowledged that there was a second large rectangular window located in the living room.
However, she advised that it still led her to have a panic attack when she viewed the property.
She stated that she could not adequately explain how she felt to the officer from NHHG who accompanied her to the viewing After discussion of other features of the flat which do not appear to have caused her serious concern, the note continues: Applicant stated at the interview that the property would have been OK as TA [temporary accommodation] but not as a permanent offer of accommodation in which she would have to live for ever.
She confirmed again that this was because of the window which led her to think about her bad past She stated that she could not accept the property because of the round window in the living room.
The reviewing officers decision came in a letter dated 17 October 2013, running to ten pages.
He outlined the history of the case, including the medical evidence, the solicitors representations and the matters raised at the interview of 7 October, and he described the dimensions and physical features of the accommodation.
The critical part begins at para 39 where, having found that the accommodation was objectively suitable, he said: I nevertheless acknowledge that objectively suitable accommodation may be unsuitable for a particular applicant if it causes them to suffer from symptoms of mental illness.
Indeed, the main issue in reviewing our homelessness decision is to consider whether this offer of accommodation was reasonable for you to have accepted given your history of imprisonment and ill-treatment in Iran and your subsequent diagnosis of PTSD and associated problems of severe anxiety and depression.
He then gave his reasons for answering that question in the affirmative (paras 41-45).
He acknowledged that accommodation which is, for example, cramped or contains small or barred windows could exacerbate symptoms of PTSD in someone who has experienced trauma in prison.
However, he thought it highly relevant that the medical evidence, while reporting her own concerns, did not purport to state that the property was unsuitable on medical grounds or that it was not reasonable for her to accept it.
The clinical therapist had spoken of very small dark rooms without windows at a normal height and looking out onto everyday life as inevitably reminding her of her detention; but the reviewing officer did not think the property met this description.
He turned to consider whether the assertions she had made to her physicians about the window size and the arrangement in the living room were consistent with the floor plan and photographs provided by NHHG: Far from being small, the circular window is in fact seven square feet in size and provides sufficient natural light to meet the relevant edition of the building regulations.
When we discussed this at interview you acknowledged that the circular window was in fact much larger than the circular window in your prison cell, and that the only similarity lay in the fact that both were circular.
Moreover, the circular window was not the only window in the living room, natural light being also provided by a large rectangular bay window (15 square feet in size) with views onto the street.
The combination of these two windows far from creating the dark and airless conditions normally associated with a prison cell, maximised natural light in the living room.
He continued: 45.
Therefore, I cannot accept as objectively reasonable your assertion that the size or design of the window in the living room was reminiscent of a prison cell or that the windows or layout of the living room is such that it recreated the conditions of confinement or incarceration that is likely to have a significant impact on your mental health
Having considered other factors, including the physical health of her and her child, he referred also to what he described as a social housing crisis in this borough and a severe shortage of permanent accommodation locally, which he regarded as a highly relevant factor in concluding that the offer was suitable and reasonable for her to have accepted (para 51).
The proceedings
As already noted, Ms Poshteh appealed unsuccessfully to the County Court.
In the Court of Appeal there was a difference of view, McCombe LJ, with whom Moore-Bick LJ agreed, held that the reviewing officer had properly considered the relevant issues and reached a valid decision.
Elias LJ held otherwise, focussing principally on the reasoning at the key passage in para 45 of the letter (set out above).
As he put it: 50.
The premise is that unless the relevant inciting stressor was one which, objectively considered, was reminiscent of a prison cell or recreated the conditions of confinement or incarceration, which this property did not, the panic attacks could effectively be ignored or at least treated as sufficiently trivial as not to be likely to affect her mental health.
He thought this approach was flawed: If as a matter of fact the appellant would be likely to suffer panic or anxiety of such a nature and degree as to create a significant risk of damaging her mental health, it matters not whether it is an explicable or rational reaction.
It would still be reasonable for the appellant to refuse the property, as in the El- Dinnaoui case.
Alternatively, the officer might possibly have reasoned that absent an objectively explicable inciting stressor, any panic or anxiety induced by the premises would be minimal and unlikely to have an effect on the appellants mental health.
If so, the analysis is still in my opinion flawed because there was no proper evidence to justify that inference.
It is true that the medical evidence was to the effect that small and dark premises, obviously reminiscent of a prison cell, may well trigger the attacks, but that did not discount the possibility that the attacks may occur in other circumstances.
In my judgment there was no basis for inferring simply from the nature of the inciting stressor that the attacks could not be significant enough to damage her mental health.
(para 51)
Moore-Bick LJ summarised what he understood to be the critical difference between the other judgments, and gave his own comment: 62.
The point on which my Lords are divided is whether Mr Stack wrongly dismissed as objectively unreasonable Ms Poshtehs assertion that the round window in the living room reminded her of her prison cell and as a result ignored her evidence of experiencing a panic attack when she visited the property.
If that were the case, I should agree with Elias LJ that he misdirected himself.
Ms Poshtehs reaction to the round window, as evidenced by her panic attack, was an objective fact, even if it was irrational, and was a matter to be taken into account.
However, reading para 45 as a whole in the context of the preceding paragraphs, I am not persuaded that Mr Stack did ignore Ms Poshtehs reaction when reaching his conclusion What Mr Stack actually said was that he did not accept as objectively reasonable her assertion that the size or design of the windows in the living room were reminiscent of a prison cell or that the windows or layout of the room recreated the conditions of confinement or incarceration that were likely to have a significant impact on her mental health.
The first of those observations cannot in my view be criticised, since the size and design of the windows were not on any objective view reminiscent of a prison cell.
Whether the windows or layout of the room recreated conditions of confinement or incarceration that were likely to have a significant impact on Ms Poshtehs mental health, on the other hand, was a matter of judgment which had to be determined by reference not only to the nature of the inciting stressor or her perception of the property but to the evidence as a whole
In the case to which Elias LJ referred (El-Dinnaoui v Westminster City Council [2013] EWCA Civ 231; [2013] HLR 23), the appellants wife had a medically-confirmed history of anxiety due to fear of heights.
They were offered a flat on the 16th floor.
She became distressed on leaving after the inspection and collapsed at the lift, and an ambulance had to be called.
The councils decision that this flat was suitable or reasonable for her to occupy was held by the Court of Appeal to be perverse and so unlawful.
Issue (1) application of article 6.1
Article 6.1 of the Convention provides: In the determination of his civil rights and obligations everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law
In Ali v Birmingham City Council [2010] 2 AC 39 this court decided that the duties imposed on housing authorities under Part VII of the 1996 Act did not give rise to civil rights or obligations, and that accordingly article 6 had no application.
In Ali v United Kingdom (2015) 63 EHRR 20 the European Court of Human Rights (in a chamber presided over by the President Judge Raimondi) held that article 6.1 did apply, but accepted in any event that the procedure applied under the Act conformed to its requirements.
The government did not at that stage ask for the issue to be referred to the Grand Chamber.
This appeal provides the first opportunity for this court to decide whether the approach of the Strasbourg court should now be followed in this country, and if so with what practical consequences.
The Secretary of State, as intervener, has invited us to confirm the decision of this court that article 6 has no application.
His concern is as to the effect on decision-making procedures of extending article 6 into both this and other areas of government activity relating to community care and education.
The domestic authorities
In Ali v Birmingham City Council the courts conclusion that article 6 was not engaged by section 193 turned principally on the nature of the right so granted.
In the words of the headnote: a distinction could be drawn between the class of social security and welfare benefits whose substance was defined precisely, and which could therefore amount to an individual right of which the applicant could consider herself the holder, and those benefits which were, in their essence, dependent upon the exercise of judgment by the relevant authority; that cases in the latter category, where the award of services or benefits in kind was dependent upon a series of evaluative judgments by the provider as to whether the statutory criteria were satisfied and how the applicants need ought to be met, did not amount to a civil right within the autonomous meaning which was given to that expression for the purposes of article 6 The right to accommodation under section 193 was held to fall within the latter category, and therefore outside the scope of article 6.
This was the unanimous conclusion of the court following detailed consideration of the authorities domestic and European.
The case was decided against the background of two domestic cases, in which this or related issues had been discussed at the highest level, but not decided: Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430 (in which the House had proceeded on the assumption, without deciding, that article 6 was engaged by section 193); and R (A) v Croydon London Borough Council [2009] 1 WLR 2557 (relating to a local authority decision whether or not to provide accommodation for a child in need under section 20(1) of the Children Act 1989).
In the latter case Lady Hale (with whom the other justices agreed), found it unnecessary to reach any firm conclusions on the application of article 6 (para 34), but, after a review of the authorities, commented that she would be most reluctant to accept, unless driven by Strasbourg authority to do so, that article 6 requires the judicialisation of claims to welfare services of this kind, where every decision about the provision of welfare services has resource implications for the public authority providing the service (para 44).
Concurring, but without specific agreement from the rest of the court, Lord Hope felt that it could now be asserted with reasonable confidence that the authoritys duty under section 20(1) did not give rise to a civil right (para 65).
In Ali itself, Lord Hope giving the leading speech (agreed by Lady Hale and Lord Brown) noted Lord Hoffmanns observation in Runa Begum (paras 42-44) that it was not in the public interest for funds allocated to social welfare schemes to be unduly consumed in administration and legal disputes, quoting with approval the joint dissenting opinion in Feldbrugge v The Netherlands (1986) 8 EHRR 425, 443, para 15: 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.
Lord Hope observed that the article had now been extended to public law rights, such as social security or other cash under publicly funded schemes, but that no clearly defined stopping point to this process of expansion had been identified.
He saw the instant case as an opportunity to introduce a greater degree of certainty into this area of public law (paras 5-6).
He noted that in Runa Begum the House had preferred not to decide the question, one reason being the wish not to inhibit the government from developing the arguments in the Strasbourg court should it become necessary to do so (para 31); the balance of advantage now pointed in the direction of taking a decision and so ending the unhealthy uncertainty in the law (para 32).
Reviewing the judgments in Runa Begum itself (paras 38-39), he noted with approval comments by Lord Bingham that to hold this to be a civil right would go further then Strasbourg had yet gone; by Lord Hoffmann that the whole scheme of Part VII was shot through with discretions ; by Lord Millett that, given the authority's discretion as to how it will discharge its duties and the fact that ultimately this called for an exercise of judgement, the claim could not be said to be for an individual, economic right flowing from specific rules laid down in a statute.
He reviewed the relevant authorities since Runa Begum, including the Croydon case.
Of the Strasbourg authorities Lord Hope noted in particular Tsfayo v United Kingdom [2007] BLGR 1; 48 EHRR 18, commenting there had been no dispute that the claim to housing benefit in that case concerned the determination of the applicants civil rights: This was not surprising, as the case fell within the mainstream of cases such as Salesi v Italy 26 EHRR 187 and Mennitto v Italy 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.
(para 42) He referred to a number of straws in the wind in other cases pointing the other way, and supporting a distinction between - ... the class of social security and welfare benefits that are of the kind exemplified by Salesi v Italy 26 EHRR 187 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.
(para 43) He referred for example to Loiseau v France (Application No 46809/99), 18 November 2003 (unreported), para 7 where the court had referred 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.
He concluded that article 6 was not engaged by decisions taken by the review officer (para 49).
Lord Collins referred also to the decision in Schuler-Zgraggen v Switzerland (1993) 16 EHRR 405, relating to a contributory invalidity scheme, in which the Strasbourg court had spoken of the claim as being for an individual, economic right flowing from specific rules laid down in a federal statute (para 65).
He distinguished the content of the statutory duty under section 193 which lacks precision and gave no right to any particular accommodation.
Such factors together with the essentially public nature of the duty meant that it did not give rise to an individual economic right (para 73).
To similar effect, Lord Kerr acknowledged the difficulty of finding a principled basis for the distinction between social security payments and social welfare provision, given that both require the expenditure of public resources, provide a valuable resource to the recipient; and are activated by a need on the part of the beneficiary.
He concluded however that - 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 v Italy (1993) 26 EHRR 187 or Mennitto v Italy (2000) 34 EHRR 1122 models.
This is not an assertable right as that term was used in Stec v United Kingdom (2005) 41 EHRR SE 295.
(para 75)
I should note briefly Nzolameso v Westminster City Council [2015] UKSC 22; [2015] PTSR 549, the most recent Supreme Court decision to which we were referred on Part VII of the 1996 Act (taken with the Children Act 2004).
That was principally concerned with the circumstances in which the authority could reasonably make a final offer of accommodation in another area (in that case more than an hour away from where she and her family had lived for many years).
The councils decision was set aside on the facts of the case.
However, the court recognised the pressures facing authorities dealing with such cases, and the range of considerations which needed to be taken into account, including the resources available to them, the availability of accommodation in their own areas, and the similar pressures on adjoining authorities.
Finally, of the domestic authorities, mention should be made of R (King) v Secretary of State for Justice [2016] AC 384; [2015] UKSC 54, in which it was held that a disciplinary decision by a prison governor to order segregation did not engage article 6.1.
Lord Reed (in a judgment agreed by the other members of the court) referred (para 113) to the Grand Chamber judgment in Boulois v Luxembourg (2012) 55 EHRR 32, concerned with release on licence, in which the court had said that for the civil limb of article 6.1 to be engaged there must be a dispute over a right which can be said, at least on arguable grounds, to be recognised under domestic law, adding (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.
Later in the judgment Lord Reed noted that the article had also been applied to cases concerning rights in public law regarded as closely resembling rights in private law, such as rights to state benefits.
He commented that in Ali v Birmingham City Council - 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.
(para 121)
Ali v United Kingdom
I turn to the judgment of the Strasbourg court.
As part of the history of the case (paras 20-24) it referred to extracts from Lord Hopes judgment in Ali v Birmingham City Council (paras 20-24), but without further discussion of the courts reasoning.
Under a section headed Judicial consideration of Part VII of the Housing Act 1996 it referred to only two cases: Adan v Newham London Borough Council [2002] 1 WLR 2120 CA, and Runa Begum in this court.
Of the former, the judgment noted that the Court of Appeal had set aside the order of the County Court on jurisdictional grounds, but had gone on in an extended obiter dictum to consider the effect of article 6: In this regard, Hale LJ opined that the right to accommodation under section 193 is more akin to a claim for social security benefits than it is a claim for social or other services, where the authorities have a greater degree of discretion and resource considerations may also be relevant.
(para 32) Of Runa Begum, the judgment referred to the courts conclusion that the review mechanism under Part VII complied with article 6, assuming it applied.
On the issue whether article 6 did apply, the only citation was of the comments of Lord Millett (paras 91 and 93), in which he had noted the features which took the case beyond the existing case law, and which made it inappropriate for determination by the ordinary judicial process; but had found it more difficult, at least in principle, to justify withdrawing it from the protection of article 6.1.
The court summarised the submissions of the parties, including the submission on the part of the UK government that the applicant had only a general right to be housed, not to any specific property; this was contrasted with the provision of a financial benefit where both the entitlement and the amount were determined by a clear set of conditions (para 49).
Under the heading The Courts assessment the judgment began by setting out general principles including the need to start from the interpretation of the relevant provisions by the domestic courts (para 54).
On the application of those principles to the facts of the case, it is appropriate to set out the substance of the reasoning in full: 56.
In the case of [Runa] Begum the House of Lords accepted that section 193(2) of the 1996 Act imposed a duty on the Council to secure that accommodation was available for occupation by Ms Begum.
Thus, a duty was owed which was enforceable by Ms Begum and which related to a matter of acute concern for her.
In the present case the Council acknowledged in its letter of 7 November 2006 to the applicant that it owed her the main housing duty to provide accommodation to her and her family The Government also accept that she had a general right to be housed although the applicant could not point to any property to which she had any right.
57.
The Court is satisfied that in the present case the applicant had a legally enforceable right by virtue of section 193 of Part VII of the 1996 Act to be provided with accommodation, albeit that this was a right that could cease to exist in certain conditions Moreover, the court proceedings in question clearly concerned a dispute over the continuing existence, if not the content, of that right; the dispute was genuine and serious; and the result of the proceedings was directly decisive for the right in question.
It therefore falls to the Court to decide whether or not the right in question was a civil right for the purposes of article 6 para 1 of the Convention.
58.
It is now well-established that disputes over entitlement to social security or welfare benefits generally fall within the scope of article 6 para 1 of the Convention [the footnote cites eg Tsfayo v United Kingdom 48 EHRR 18 para 40, Feldbrugge v Netherlands 8 EHRR 425, Deumeland v Germany (1986) 8 EHRR 448 and Schuler-Zgraggen v Switzerland 16 EHRR 405].
The Court has even recognised a right to a non- contributory welfare benefit as a civil right [citing eg Salesi v Italy (1993) 26 EHRR 187, para 19, and Tsfayo v United Kingdom, para 40].
However, the present case differs from previous cases concerning welfare assistance, as the assistance to be provided under section 193 of the 1996 Act not only was conditional but could not be precisely defined [comparing eg Tsfayo, in which the dispute concerned a fixed financial amount of housing benefit].
It concerns, as the Government noted, a benefit in kind and the Court must therefore consider whether a statutory entitlement to such a benefit may be a civil right for the purposes of article 6 para 1 59.
It is true that accommodation is a benefit in kind and that both the applicants entitlement to it and the subsequent implementation in practice of that entitlement by the Council were subject to an exercise of discretion.
Nonetheless, the Court is not persuaded that all or any of these factors necessarily militate against recognition of such an entitlement as a civil right.
For example, in Schuler-Zgraggen v Switzerland 16 EHRR 405, in which the applicants entitlement to an invalidity pension depended upon a finding that she was at least 66.66% incapacitated, the Court accepted that article 6 para 1 applied.
In any case, the discretion in the present case had clearly defined limits: once the initial qualifying conditions under section 193(1) had been met, pursuant to section 206(1) the Council was required to secure that accommodation was provided by one of three means, namely by providing accommodation itself; by ensuring that the applicant was provided with accommodation by a third party; or by giving the applicant such advice and assistance to ensure that suitable accommodation was available from a third party.
In this regard, the Court agrees with Hale LJ in Adan v Newham London Borough Council, in which she opined that the right to accommodation under section 193 is more akin to a claim for social security benefits than it is a claim for social or other services, where the authorities have a greater degree of discretion and resource considerations may also be relevant.
60.
In light of the above, as far as the applicability of article 6 para 1 is concerned, the Court sees no convincing reason to distinguish between the applicants right to be provided with accommodation, as acknowledged by the Council in its letter of 7 November 2006, and the right to housing benefit asserted by the applicant in Tsfayo.
Article 6 para 1 therefore applies and, as such, the applicant had a right to a fair hearing before an independent and impartial tribunal.
Having decided that article 6 did apply, the court agreed with the domestic courts that the procedure under Part VII was compliant, notwithstanding that the County Court did not have jurisdiction to conduct a full rehearing of the facts (para 83), but taking as a whole the legislative welfare scheme by virtue of which the applicant, as a homeless person, derived her civil right to be provided with accommodation (para 87).
Discussion of issue (1)
The review of the domestic authorities noted above, from Runa Begum onwards, shows a continuing debate on this issue, against the background of the uncertain Strasbourg jurisprudence.
The unanimous judgment of this court in Ali v Birmingham City Council was intended to settle the issue at domestic level, after a full review of all the relevant Strasbourg authorities.
Against this background it is necessary to consider whether the reasoning in the recent Chamber decision makes it necessary or appropriate for us to depart from that decision.
The Chamber acknowledged (in line with the Grand Chamber decision in Boulois) the weight to be given to the interpretation of the relevant provisions by the domestic courts.
It is disappointing therefore that it failed to address in any detail either the reasoning of the Supreme Court, or indeed its concerns over judicialisation of the welfare services, and the implications for local authority resources (see para 23 above).
Instead the Chamber concentrated its attention on two admittedly obiter statements, respectively by Hale LJ (as she then was) in the Court of Appeal in Adan, and Lord Millett in Runa Begum.
However, its treatment of these two statements is open to the criticism that they were taken out of context, and without regard to their limited significance in the domestic case law.
In Adan the application of article 6 had been conceded by counsel.
It is not clear that the passage quoted from the judgment of Hale LJ (para 55) was doing more than recording the basis of the concession.
It is true that the passage was mentioned with approval by Lord Hoffmann in Runa Begum (paras 66-69).
However, her own considered view on the issue is apparent from both her own judgment in the Croydon case, and her agreement with the leading judgment in Ali (in which Adan did not merit a mention).
Nor is it clear from the decision that the Chamber fully appreciated the width of the discretion given to the authority, including questions of resource allocation (emphasised by Lady Hale herself in other cases).
Lord Milletts comments needed to be read with the following sentence of his speech, which expressed his view that most European states possess limited judicial control of administrative decisions so that, if article 6 did not apply, such decisions might be outside judicial control altogether (para 93).
It would have been interesting to know to what extent that perception of the inadequacies of other administrative law systems was shared by the members of the Chamber, with the benefit of their more direct knowledge.
In any event, Lord Milletts views on this point were not shared by the rest of the House, and were overtaken by the considered and unanimous view of this court in Ali itself.
Questionable also, with respect, is the Chambers reliance on the decision in Schuler-Zgraggen v Switzerland as an example of entitlement subject to discretion.
As Lord Collins pointed out in Ali (at para 61), it was treated by the 1993 court as a claim to an individual economic right flowing from specific rules laid down in the statute.
The case report shows that the statute in question gave a right to a full invalidity pension where incapacity of at least 66.66% was established (para 35).
Once that level of incapacity was established, the financial entitlement followed as a matter of right, not discretion.
It is hard to see any fair comparison with the range of factors, including allocation of scare resources, to which authorities are entitled to have regard in fulfilling their obligations under the housing legislation.
In fairness to the Chamber, it may be that this was not spelt out in the governments submissions, as fully as it has been in recent domestic cases (see eg para 27 above).
Our duty under the Human Rights Act 1998 section 2 is take account of the decision of the court.
There appears to be no relevant Grand Chamber decision on the issue, but we would normally follow a clear and constant line of chamber decisions (see Manchester City Council v Pinnock [2011] 2 AC 104, para 48).
This might perhaps be said of some of the previous decisions referred to in the judgment, including most recently Tsfayo v United Kingdom (2006) in which the application of article 6 was conceded by the government.
However, it is apparent from the Chambers reasoning (see para 58 cited above) that it was consciously going beyond the scope of previous cases.
In answer to Lord Hopes concern that there was no clearly defined stopping point to the process of expansion, its answer seems to have been that none was needed.
That is a possible view, but one which should not readily be adopted without full consideration of its practical implications for the working of the domestic regime.
The scope and limits of the concept of a civil right, as applied to entitlements in the field of public welfare, raise important issues as to the interpretation of article 6, on which the views of the Chamber are unlikely to be the last word.
In my view, this is a case in which, without disrespect to the Chamber, we should not regard its decision as a sufficient reason to depart from the fully considered and unanimous conclusion of the court in Ali.
It is appropriate that we should await a full consideration by a Grand Chamber before considering whether (and if so how) to modify our own position.
Issue (2) - the correct test and reasons
I turn to the second issue which was the subject of decision in the courts below.
In this court Mr Westgate QC for Ms Poshteh supports the judgment of Elias LJ.
In addition he relies on the public sector equality duty under section 149 of the Equality Act 2010 as underlying the sharp focus which should have been given by the officer to the effects of the applicants disability.
For this purpose, he has subjected the decision letter to exhaustive critical analysis.
In summary he says that letter fails to explain the link between the objective reasonableness or otherwise of Ms Poshtehs assertion that the round window reminded her of a prison cell, and the rejection of her claim that it would have a significant impact on her mental health.
Nor did the letter-writer address adequately the subjective factors underlying her claim.
In particular he should have addressed explicitly the panic attack suffered by her when she visited the property.
This was a subjective fact, even if (as she was said to have admitted at the interview) the round window was not exactly like the one in her prison cell.
In my view, the appeal on this issue well illustrates the relevance of Lord Neubergers warning in Holmes-Moorhouse (para 7 above) against over-zealous linguistic analysis.
This is not to diminish the importance of the responsibility given to housing authorities and their officers by the 1996 Act, reinforced in the case of disability by the Equality Act 2010.
The length and detail of the decision-letter show that the writer was fully aware of this responsibility.
Viewed as a whole, it reads as a conscientious attempt by a hard-pressed housing officer to cover every conceivable issue raised in the case.
He was doing so, as he said, against the background of serious shortage of housing and overwhelming demand from other applicants, many no doubt equally deserving.
He clearly understood the potential importance of considering her mental state against the background of her imprisonment in Iran.
His description of the central issue (para 39) has not been criticised.
It is true that he did not in terms address her claim to have suffered a panic attack.
But it is hard to criticise him for giving little weight to an incident which she had not mentioned at the time, either to the NHHG officer who accompanied or in her initial letter, nor apparently to either of her medical advisers.
In this respect it was a very different case from El-Dinnaoui, to which Elias LJ referred (para 17 above), where the effect was immediate and obvious, and consistent with previous medical advice.
Nor, on the other side, did he hold against her her admission at interview that, whatever her reaction during the visit, the flat would have been acceptable on a temporary basis.
In any event, the issue for him was not her immediate reaction on one short visit, but how she would reasonably have been expected to cope with living there in the longer term.
On that he was entitled to give weight to the medical evidence submitted by her, and to consider how far it supported her case.
Taken in isolation the first sentence of para 45 could have been better expressed.
But read in the context of the preceding paragraphs the tenor is reasonably clear.
The medical evidence was based on a false premise; the assertions she had apparently made to them about the physical features of the property did not match the facts.
This was a point he had fairly put to her at the interview, and she was unable to provide a convincing answer.
It might well have been unreasonable to offer her (in the clinical therapists words) accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life.
But that was not a reasonable description of this particular property, nor a sufficient ground for her not accepting it.
Seen in that light there is no difficulty in understanding his reasoning overall.
Nor does it disclose any error of law.
Finally I should notice Mr Westgates invitation to the court to address questions related to the standard of review by the court.
He developed an elaborate argument by reference to recent authorities supporting a more flexible approach in different contexts, particularly where fundamental rights are a stake (eg Pham v Secretary of State for the Home Department [2015] 1 WLR 1591).
This issue was not one on which permission to appeal was given, nor has Mr Westgate offered any convincing reason for extending its scope.
I bear in mind also Lord Neubergers comments on the potentially profound constitutional implications of a decision to replace the traditional Wednesbury tests for administrative decisions in general (R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2016] AC 1355, para 132).
I would agree with Mr Westgate that, since the creation of a statutory right of appeal to the county court, recourse to the highly restrictive approach adopted 30 years ago in the Puhlhofer case (R v Hillingdon London Borough Council, Ex p Puhlhofer [1986] AC 484) is no longer necessary or appropriate.
However, the principles governing the right of appeal to the county court under the 1996 Act have been authoritatively established by the House of Lords in Runa Begums case and others following it (including Holmes-Moorhouse), and should be taken as settled.
Proliferation of authorities
Before leaving the case, I feel bound to say something about the volume of authorities presented in the court bundles.
UKSC Practice Direction 6 deals with the form and content of such volumes (paras 6.5.2ff).
The appellants are responsible for production of authorities in paper form in sufficient numbers for the court, subject in due course to the courts decisions on costs.
Paragraph 6.5.5 states: I would accordingly dismiss the appeal on the second issue.
The Court has on numerous occasions criticised the over- proliferation of authorities.
It should be understood that not every authority that is mentioned in the parties printed cases need be included in the volumes of authorities.
They should include only those cases that are likely to be referred to during the oral argument or which are less accessible because they have not been reported in the Law Reports.
In this case the court was presented with eight bundles, including more than 90 cases, reproduced in full, together with 20 other items of statutory material, guidance and textbook extracts (extending in total to some 2,700 pages).
The intervention of the Secretary of State was accompanied by two additional bundles, extending to more than 1,000 pages, and including 13 further authorities.
The most relevant cases were helpfully, and correctly (PD6 para 6.5.2), brought together in the appellants volumes 1 and 2.
Of the remainder the vast majority were not referred to in oral argument, and were unlikely on any view to be more than peripheral to the determination of the issues on which permission had been given.
I take as an example volume 4 headed Precedent - whether to depart from previous/follow Europe (or not).
This volume included no less than seven House of Lords or Supreme Court authorities, totalling almost 350 pages.
The volume was not opened during the hearing.
The propositions which the cases were apparently intended to support were familiar, uncontentious, and adequately summarised with appropriate citations, in the printed cases.
Similarly, the subjects covered by volume 6 (absence of proper reasons and standard of scrutiny) can be taken as sufficiently familiar to the court not to require extensive citation; still less the inclusion in the bundle of the whole of the Wednesbury case [1948] 1 KB 223 (12 pages), Edwards v Bairstow [1956] AC 14 (26 pages) and Kennedy v Charity Commission [2015] AC 455 (107 pages).
It is essential that those involved in the preparation of these bundles, whether as counsel or solicitors, take full responsibility for keeping their contents within reasonable bounds and exercise restraint.
The warning against proliferation of authorities is intended for the protection not just of the court, but more for the parties on whom the costs will ultimately fall.
In many cases (as I assume in this case) they will be borne in one way or another from public sources.
Conclusion
For these reasons I would dismiss the appeal, and confirm the decision of the reviewing officer.
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The appellant arrived in the UK in 2003 as a refugee from Iran, where she had been subject to imprisonment and torture.
She gained indefinite leave to remain in 2009, the year in which she applied to the respondent council for accommodation as a homeless person.
Part VII of the Housing Act 1996 includes the statutory provisions under which local housing authorities are required to secure provision of suitable accommodation for a person who is homeless and in priority need, and has not become homeless intentionally.
Sub sections 193(7) and (7F) contain the critical provisions in this case, dealing with the circumstances in which that duty ceases, namely when the applicant refuses a final offer of accommodation.
However, the housing authority shall not make a final offer of accommodation unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer.
In November 2012 the respondent offered the appellant accommodation in Norland Road, London in a first floor, two bedroom flat.
The appellants concerns about the physical features of the property (including the small size of the windows) were first raised in correspondence of 29 November 2012, including a letter from the appellants therapist and her GP, and in a solicitors letter of 30 August 2013.
The appellant ultimately refused this final offer of permanent accommodation at the property on the basis that it had features which reminded her of her prison in Iran and which would exacerbate her post traumatic stress disorder, anxiety attacks and other conditions.
The issue in the case turned not on the suitability of the accommodation, but whether it was reasonable for the appellant to accept it.
Following a review these grounds were held to be insufficient to justify her refusal.
The councils decision was upheld on appeal by the county court and by the Court of Appeal.
The Supreme Court unanimously dismisses the appeal and confirms the decision of the review officer.
Lord Carnwath gives the judgment, with which the other Justices agree.
Two issues arise on this appeal: (1) whether the Supreme Court should depart from the its own decision in Ali v Birmingham City Council [2010] 2 AC 39 in light of the European Court of Human Rights (ECtHR) judgment in Ali v United Kingdom (2016) 63 EHRR 20, and if so to what extent; and (2) whether the reviewing officer should have asked himself whether there was a real risk that the appellants mental health would be damaged by moving into the accommodation offered, whether or not her reaction to it was irrational, and if so, whether he did in fact apply the right test [3].
Ali v Birmingham City Council In Ali v Birmingham City Council the Supreme Court decided that the duties imposed on housing authorities under Part VII of the Housing Act 1996 did not give rise to civil rights or obligations and so Article 6 of the European Convention on Human Rights did not apply to it.
In Ali v United Kingdom the ECtHR held that Article 6.1 did apply, but accepted that in any event the procedure applied under the Housing Act conformed to its requirements [18].
The review of the domestic authorities shows a continuing debate on this issue, against the backdrop of uncertain Strasbourg jurisprudence.
The unanimous judgment of the Supreme Court in Ali v Birmingham City Council was intended to settle the issue at domestic level after a full review of the Strasbourg authorities [32].
The Chamber in Ali v United Kingdom acknowledged the weight to be given to the interpretation of the relevant provisions by the domestic courts and it is thus surprising that it failed to address in any detail either the Supreme Courts reasoning or its concerns over judicialisation of the welfare services.
The Chamber instead focused on two obiter remarks by Hale LJ (as she then was) and Lord Millett; its treatment of these two statements is open to the criticism that they were taken out of context [33, 34].
Further questions can also be raised about the Chambers reliance on the decision in Schuler Zgraggen v Switzerland as an example of entitlement subject to discretion: the statute in question gave a right to a full invalidity pension where incapacity of at least 66.66% was established.
It is hard to see any fair comparison with the range of factors to which authorities are entitled to have regard in fulfilling their obligations under the housing legislation [35].
The Courts duty under the Human Rights Act 1998 is to have regard to the decision of the Strasbourg court Section.
There appears to be no relevant Grand Chamber decision on the issue, but the Supreme Court would normally follow a clear and constant line of chamber decisions.
In Ali v United Kingdom it is apparent from the Chambers reasoning that it was consciously going beyond the scope of previous cases and its answer to Lord Hopes concern that there was no clearly defined stopping point to the process of expansion seems to have been that none was needed.
That is a possible view, but one which should not readily be adopted without full consideration of its practical implications for the working of the domestic regime [36].
This is a case in which the Supreme Court should not regard the Chambers decision as a sufficient reason to depart from its own fully considered and unanimous conclusion in Ali v Birmingham City Council.
It is appropriate to await a full consideration by the Grand Chamber before considering whether (and if so how) to modify the domestic position [37].
The reviewing officers approach The appeal on this issue well illustrates the relevance of the warning against over zealous linguistic analysis.
This is not to diminish the importance of the responsibility given to housing authorities under the 1996 Act (and reinforced in the case of disability by the Equality Act 2010).
The decision letter viewed as a whole reads as a conscientious attempt by a hard pressed housing officer to cover every conceivable issue raised in the case: he clearly understood the importance of considering her mental state against the background of her imprisonment in Iran [39].
Although the officer did not in terms address the appellants claim to have suffered a panic attack, it is hard to criticise him for giving little weight to an incident which she had not mentioned at the time, nor apparently to her medical advisers.
The issue for him was not her immediate reaction on one short visit, but show she would reasonably have been expected to cope with living there in the longer term.
On that he was entitled to give weight to the medical evidence submitted by her, and consider how far it supported her case [40].
It might well have been unreasonable to offer her accommodation with very small dark rooms without windows at a normal height and looking out onto everyday life, but that was not a reasonable description of this particular property, nor a sufficient ground for her not accepting it.
There is no difficulty in understanding the officers reasoning overall, nor does it disclose any error of law [41].
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There are two issues in this case, both of them simple to state but neither of them simple to answer.
First, what is the test for deciding whether a person lacks the mental capacity to conduct legal proceedings on her own behalf (in which case the Civil Procedure Rules require that she has a litigation friend to conduct the proceedings for her)? Second, what happens if legal proceedings are settled or compromised without it being recognised that one of the parties lacked that capacity (so that she did not have the benefit of a litigation friend and the settlement was not approved by the court as also required by the CPR)? Can matters be re opened long after the event or does the normal rule of English law apply, which is that a contract made by a person who lacks capacity is valid unless the other party to the contract knew or ought to have known that she lacked that capacity in which case it is voidable (the rule in Imperial Loan Co Ltd v Stone [1892] 1 QB 599)?
These issues are of very considerable importance, particularly in personal injury cases.
On the one hand, there is the need to protect people who lack capacity from making settlements which are disadvantageous to them.
On the other hand, people are assumed to have capacity to make their own decisions and should only be deprived of the right to do so in clear cases.
There is also a public interest in upholding bargains which everyone, but particularly the other party, thought were valid when they were made and in putting an end to litigation.
The spectre looms of many personal injury claims which insurers thought had been settled long ago being reopened on the basis of an incapacity which they had no reason to suspect at the time.
The real culprits, they would say, are the claimants original legal advisers (if she had any) against whom she will almost always have a claim for professional negligence.
The history of this case
On 25 June 1999, there was a road accident on a dual carriageway near the entrance to a roundabout in Goldthorpe (which is roughly half way between Doncaster and Barnsley in South Yorkshire).
Mr Burgin, who was riding a motorcycle in the offside lane, struck Ms Dunhill, who was crossing the road having emerged from between parked vehicles in the nearside lane.
She suffered a severe closed head injury along with soft tissue injury to both legs.
On 13 May 2002, shortly before the limitation period ran out, she issued a claim for damages in the Barnsley county court.
She claimed still to be suffering from a complete loss of the senses of smell and taste, some hearing loss, forgetfulness, headaches, personality change, low moods and tearfulness, anxiety, mood swings, occasional suicidal ideation and self mutilation.
She claimed general damages for pain, suffering and loss of amenity, and special damages (totalling 2,262.92) for travelling expenses and 10 hours care a day for six months followed by one hour a day for two years, the total claim being limited to 50,000.
It was accompanied by two reports from a consultant surgeon specialising in accident and emergency medicine.
Mr Burgin denied liability and alternatively alleged contributory negligence.
The case was listed for a trial on the issue of liability at the Sheffield county court on 7 January 2003.
Ms Dunhill was at court, accompanied by a mental health advocate, and represented by counsel and a trainee solicitor.
One of her witnesses to the accident did not arrive and negotiations took place towards a settlement.
The claim was eventually compromised for the total sum of 12,500 with costs.
This was embodied in a consent order, which was signed by both counsel and placed before the judge.
This provided that (i) the defendant pay the claimant the sum of 12,500 in full and final settlement of her claim by 28 January 2003; (ii) the defendant pay the claimants costs, to be the subject of detailed assessment if not agreed; and (iii) there be detailed assessment of the claimants community legal service costs.
On any view this was a gross undervaluation of her claim, which her current advisers would put at over 2,000,000 on a full liability basis and the defendants would put at around 800,000.
In July 2006, Mrs Dunhill sought the advice of new solicitors.
In December 2008, nearly six years after the consent order was made, her litigation friend issued proceedings on her behalf for professional negligence against her former solicitors and counsel.
Those proceedings have been stayed pending further order.
On 11 February 2009, her litigation friend issued the present proceedings.
These took the form of an application in the original action, seeking (i) a declaration that the claimant did not have capacity at the time of the purported settlement of the matter on 7 January 2003, and (ii) that the consent order be set aside and directions given for the further conduct of the claim.
Such applications are known as Masterman Lister proceedings, after the case of Masterman Lister v Brutton & Co (Nos 1 and 2) [2002] EWCA Civ 1889, [2003] 1 WLR 1511.
It was agreed between the parties that there should first be a trial of whether or not the compromise and consent order made on 7 January 2003 required the approval of the court.
This depended on two issues: (i) whether Mrs Dunhill was a patient within the meaning of Part 21 of the Civil Procedure Rules, which regulates the procedure to be adopted in proceedings involving children and (as the Rules then were) patients; and (ii) what the consequences were if she was such a patient, specifically whether this meant that the compromise and consent order should have been approved by the court under CPR 21.10.
The defendant has not sought retrospective approval of the settlement.
Issue (i) was tried by Silber J in February 2011: [2011] EWHC 464 (QB).
The parties were agreed that the test of whether a person was a patient was whether she had the mental capacity to conduct the proceedings.
They further agreed that this was to be judged by reference to her capacity to make the decisions likely to be required of her in the course of the proceedings, a test derived from the judgment of Chadwick LJ in Masterman Lister.
But they disagreed as to whether this test was to be applied to the proceedings which she had actually brought, on the advice of her legal representatives, or whether it was to be applied to the proceedings as they might have been brought had her lawyers given her different advice.
If it was the former, then the most difficult decision she had to take was whether to accept the sum which was offered on 7 January 2003, so in practice the question was whether she was able to understand matters well enough to make that decision.
If it was the latter, the defendant concedes that she did not have the capacity to conduct the larger and much more complicated claim which should have been brought.
Silber J decided that capacity was to be judged by reference to the decisions which the claimant was actually required to take in the action as drafted and not to the decisions which she might have been required to take had it been differently framed.
In practice this meant whether she had capacity to make the compromise on 7 January 2003.
He held that, on the evidence, the presumption that she did have that capacity had not been rebutted: [2011] EWHC 464 (QB), para 97.
In the light of that decision, issue (ii) did not arise.
The claimant appealed on the point of law.
The Court of Appeal held that the judge should not have confined himself to the actual decision required of her on 7 January 2003, but should have considered her capacity to conduct the proceedings as they should have been framed.
Ward LJ concluded at [2012] EWCA Civ 397, para 29: Since capacity to conduct proceedings includes . the capacity to give proper instructions for and to approve the particulars of claim, the claimant lacked that capacity.
For her to have capacity to approve a compromise she needed to know . what she was giving up and, as is conceded, she did not have the faintest idea that she was giving up a minor fortune without which her mental disabilities were likely to increase.
As a result, the case was remitted to the High Court to determine issue (ii).
This was now framed as whether CPR 21.10 has any application where the claimant has brought a claim in contravention of CPR 21.2, so that in the eyes of the defendant and the court she appeared to be asserting that she was not under a disability? No doubt this reformulation was intended by the defendant to hammer home that the general rule in contract is that laid down in Imperial Loan Co Ltd v Stone.
Bean J decided that where a civil claim is issued, the Civil Procedure Rules are incorporated into any agreement made to settle the case and that CPR 21.10(1) required that this settlement be approved by the court irrespective of how matters appeared at the time.
Hence the settlement was void, the court order should be set aside and the case should go for trial: [2012] EWHC 3163 (QB); [2012] 1 WLR 3739.
Between the hearing before Bean J in early October 2012 and his judgment in November 2012, this court had given the defendant permission to appeal against the decision of the Court of Appeal on issue (i).
Accordingly Bean J certified, with the parties consent, that the conditions were met for a leapfrog appeal under sections 12 to 16 of the Administration of Justice Act 1969 on issue (ii).
This was in order that both issues could be heard together if this court gave the defendant permission to appeal on issue (ii), which it duly did in March 2013.
The whole question of the proper approach to the problem is therefore before this court.
As so often happens, the parties do not agree on precisely how the issues should be formulated and new arguments have been introduced to bolster the decisions reached in the courts below.
The defendant, in particular, has a sense of grievance at the way in which the issues and the arguments have shifted over time.
But in this court we have to do our best to arrive at the right result and thus to allow all relevant arguments to be deployed before us unless this would be unfair to an opposing party.
There is no unfairness here.
Everyone has been well aware from the outset of what the underlying questions are and each party has had sufficient time to respond to all the arguments deployed.
Indeed we are grateful to them for the assistance which we have received.
The test of capacity
In 2002 when this claim was launched and 2003 when it was compromised, CPR 21.1(2)(b) to the Civil Procedure Rules 1998 (SI 1998/3132 (L 17)) defined a patient as a person who by reason of mental disorder within the meaning of the Mental Health Act 1983 is incapable of managing and administering his own affairs.
This was much the same definition as that in Order 80, rule 1, of the former Rules of the Supreme Court, which referred to his property and affairs; this phrase also used to appear in Part VII of the Mental Health Act 1983 as the definition of those over whose property and affairs the Court of Protection might take control; and in section 38(2) of the Limitation Act 1980 as the definition of those under a disability in respect of whom limitation periods did not begin to run.
It suggests a global inability to manage and administer all ones property and affairs, whereas of course a person may be able to manage some of his affairs but not others.
The general approach of the common law, now confirmed in the Mental Capacity Act 2005, is that capacity is to be judged in relation to the decision or activity in question and not globally.
Hence it was concluded in Masterman Lister that capacity for this purpose meant capacity to conduct the proceedings (which might be different from capacity to administer a large award resulting from the proceedings).
This was also the test adopted by the majority of the Court of Appeal in Bailey v Warren [2006] EWCA Civ 51, [2006] CP Rep 26, where Arden LJ specifically related it to the capacity to commence the proceedings (para 112).
It would have been open to the parties in this court to challenge that test, based as it was mainly upon first instance decisions in relation to litigation and the general principle that capacity is issue specific, but neither has done so.
In my view, the Court of Appeal reached the correct conclusion on this point in Masterman Lister and there is no need for us to repeat the reasoning which is fully set out in the judgment of Chadwick LJ.
Under the Rules as amended when the Mental Capacity Act 2005 came into force (the Civil Procedure (Amendment) Rules 2007 (SI 2007/2204 (L20)), patients in rule 21.1(1)(a) has been replaced by protected parties, and in rule 21.1(2)(d) a protected party is defined as a party, or intended party, who lacks capacity to conduct the proceedings.
Thus the current test is stated in the same terms as that which was applicable to these proceedings.
The current rule 21.1(2)(c) defines lacks capacity to mean lacks capacity within the meaning of the 2005 Act.
Given that the courts had already arrived at a test of capacity on which the 2005 Act test was closely modelled, it seems unlikely that this has introduced any differences between the old and the new law.
But that question does not arise in this case, where the issue is what is meant by the proceedings which the party must have the capacity to conduct.
This is a question of construing the Rules.
Rule 21.2(1) provides that a protected party must have a litigation friend to conduct proceedings on his behalf.
By rule 21.4(3), a litigation friend must be someone who can fairly and competently conduct proceedings on behalf of the patient.
This in itself suggests a focus on proceedings in general rather than on the proceedings as framed.
Furthermore it applies right at the start of any proceedings.
Indeed, as will be seen later, rule 21.10 applies to claims which are settled before any proceedings have begun.
Read as a whole, therefore, rule 21 posits a person with a cause of action who must have the capacity to bring and conduct proceedings in respect of that cause of action.
The proceedings themselves may take many twists and turns, they may develop and change as the evidence is gathered and the arguments refined.
There are, of course, litigants whose capacity fluctuates over time, so that there may be times in any proceedings where they need a litigation friend and other times when they do not.
CPR 21.9(2) provides that when a party ceases to be a patient (now, a protected person) the litigation friends appointment continues until it is ended by a court order.
But a party whose capacity does not fluctuate either should or should not require a litigation friend throughout the proceedings.
It would make no sense to apply a capacity test to each individual decision required in the course of the proceedings, nor, to be fair, did the defendant argue for that.
There are, of course, statements in the cases which might suggest a different approach.
In Masterman Lister, Kennedy LJ (para 18) quoted with approval the test described by Boreham J in the limitation case of White v Fell (unreported) 12 November 1987 (which the best efforts of counsel in this case have been unable to find for us): To have that capacity she requires first the insight and understanding of the fact that she has a problem in respect of which she needs advice .
Secondly, having identified the problem, it will be necessary for her to seek an appropriate adviser and to instruct him with sufficient clarity to enable him to understand the problem and to advise her appropriately .
Finally, she needs sufficient mental capacity to understand and make decisions based upon, or otherwise give effect to, such advice as she may receive.
Applied to the facts of this case, this could suggest that, having identified a problem and gone to a lawyer, all that is needed is the capacity to understand and make decisions based upon the actual advice given by that lawyer.
The same might be said of the test as stated by Chadwick LJ at para 75 of Masterman Lister: For the purposes of Order 80 and now CPR Pt 21 the test to be applied, as it seems to me, is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings.
Equally, of course, those words could be read in the opposite sense, to refer to the advice which the case required rather than the advice which the case in fact received.
In truth, such judicial statements, made in the context of a different issue from that with which we are concerned, are of little assistance.
But they serve to reinforce the point that, on the defendants argument, the claimants capacity would depend upon whether she had received good advice, bad advice or no advice at all.
If she had received good advice or if she had received no advice at all but brought her claim as a litigant in person, then she would lack the capacity to make the decisions which her claim required of her.
But if, as in this case, she received bad advice, she possessed the capacity to make the decisions required of her as a result of that bad advice.
This cannot be right.
I would hold, therefore, that the test of capacity to conduct proceedings for the purpose of CPR Part 21 is the capacity to conduct the claim or cause of action which the claimant in fact has, rather than to conduct the claim as formulated by her lawyers.
Judged by that test, it is common ground that Mrs Dunhill did not have the capacity to conduct this claim.
The effect of incapacity
It follows that Mrs Dunhill should have had a litigation friend when the proceedings were begun, as required by CPR 21.2(1).
As Kennedy LJ pointed out in Masterman Lister, at para 30, Order 80 and CPR Pt 21 are worded in such a way as to indicate that in that event the litigation is ineffective and decisions made in the course of litigation are invalid see for example, Order 80, rr 2(1) and 10, CPR rr 21.2(1) and 21.10(1), but CPR r 21.3(4) does suggest a solution.
It provides: Any step taken before a child or patient has a litigation friend, shall be of no effect, unless the court otherwise orders.
Kennedy LJ went on to say that Provided everyone has acted in good faith and there has been no manifest disadvantage to the party subsequently found to have been a patient at the relevant time I cannot envisage any court refusing to regularise the position (para 31).
But of course, everything must depend upon the particular facts.
It might be appropriate retrospectively to validate some steps but not others.
In this case, we have not been asked to validate anything, but no doubt we could do so of our own motion if we thought it just.
I would not think it just to do so.
While every other step in the proceedings might be capable of cure, the settlement finally disposing of the claim is not.
For obvious reasons, we have not been asked retrospectively to validate the settlement and consent order made on 7 January 2003.
CPR 21.10(1) relevantly provides: Where a claim is made (a) by or on behalf of a child or patient [now protected party] (b) against a child or . patient [now protected party], no settlement, compromise or payment and no acceptance of money paid into court shall be valid, so far as it relates to the claim, by, on behalf of or against the child or patient [now protected party], without the approval of the court.
The embodiment of this settlement in a consent order did not constitute the approval of the court for the purpose of this rule.
The purpose of the rule is to impose an external check on the propriety of the settlement and the accompanying practice direction sets out the evidence which must be placed before the court when approval is sought (see now 21PD.6).
Given the finding that Mrs Dunhill was a patient at the time, does this automatically mean that the settlement and court order are of no effect?
The defendant makes two arguments that the rule does not have that effect.
The first is that the rule only applies where the patient (or protected party) has a litigation friend.
Only then is the other party to the settlement put on notice that the settlement requires the approval of the court.
Despite the particulars of injury given in the Particulars of Claims in this case, it has never been suggested that this defendant either knew or ought to have known of the claimants lack of capacity.
As a general proposition, the other party is unlikely to be in a position to know the details of his opponents mental faculties unless these are fully explored in medical reports to which he has access.
The problem with the defendants argument is that it involves writing words into the rule which are not there.
If anything, the words hint at the reverse, as they refer to a claim made by or on behalf of a patient or protected party.
As CPR r 21(2)(a) says, it is the task of a litigation friend to conduct proceedings on behalf of a patient or protected person.
Although there are other circumstances in which a claim may be made on behalf of a child or protected party, the inclusion of by suggests proceedings conducted by the patient herself.
Equivalent wording is not used in relation to claims made against a patient or protected person; but clearly the same rule must apply to settlements made by or on behalf of claimants or defendants.
Defendants who lack capacity require as much protection as claimants against improvident settlements.
To disapply the rule where there was no litigation friend would in each case require the words having a litigation friend to be written into the rule.
Furthermore, in Dietz v Lennig Chemicals Ltd [1969] 1 AC 170, the House of Lords held that the compromise rule embodied in the predecessor to CPR 21.10(1) applied to the settlement of a claim made on behalf of a child before any proceedings were begun.
Following this decision, in Drinkall v Whitwood [2003] EWCA Civ 1547, [2004] 1 WLR 462, Simon Brown LJ pointed out that the claim in CPR 21.10 must mean the cause of action rather than any proceedings in which the claim is asserted.
This is clear from the wording of CPR 21.10(2), which provides the procedure whereby settlements made before proceedings are begun are approved by the court (that is, as pointed out in Dietz, by a simplified process rather than having to issue a claim in the ordinary way): Where (a) before proceedings in which a claim is made by, or on behalf of, or against a child or patient [now, protected party] (whether alone or with any other person) are begun, an agreement is reached for the settlement of the claim; and (b) the sole purpose of proceedings on that claim is to obtain the approval of the court to a settlement or compromise of the claim, the claim must (i) be made using the procedure set out in Part 8 (alternative procedure for claims); and (ii) include a request to the court for approval of the settlement or compromise.
The claim at the end of (a) must necessarily predate the commencement of proceedings.
If the claim in CPR 21.10(2) predates the commencement of proceedings, there is no reason why the claim in CPR 21.10(1) should not also do so.
If there are not yet any proceedings, there can be no litigation friend.
There is no obvious way to read a limitation to cases where the party lacking capacity has a litigation friend into CPR 21.10(1) as it applies to proceedings which have already been started but not as it applies where proceedings have not yet begun.
Nor would it make any practical sense to do so.
The other party is, if anything, in a rather better position to assess whether his opponent may lack capacity to conduct the proceedings after they have begun than he is beforehand.
Dietz and Drinkall were both cases in which the defendant wished to resile from the compromise of a childs claim which had not yet been finally approved by the court.
In Bailey v Warren, the Court of Appeal held that there was no reason to distinguish between claims involving children and claims involving patients in this respect.
Hence a settlement made before proceedings began by a person who lacked capacity to conduct proceedings on his claim required the approval of the court under CPR 21.10(1) (although in that case the court gave the settlement its approval).
In Bailey v Warren, the Court of Appeal also rejected the defendants second argument.
This is of a more fundamental nature than his argument upon the construction of the Rules, although he uses it to bolster his construction argument, for he says that without the limitation for which he contends the rule would be ultra vires.
This argument was foreshadowed by Chadwick LJ in Masterman Lister, at para 68: To my mind it is not self evident that rules 10 and 12 [the predecessors to CPR 21.10(1) and 21.11] have any application where the plaintiff brings a claim in contravention of rule 2 so that, in the eyes of the defendant and the court, he is asserting that he is not under a disability.
If rules 10 and 12 were intended to apply in such a case (which I doubt) then it would be open to question whether the rule making body had power to change the substantive law expounded in Imperial Loan Co Ltd v Stone [1892] 1 QB 599 and Hart v OConnor [1985] AC 1000.
In Imperial Loan Co Ltd v Stone [1892] 1 QB 599, the Court of Appeal held that a contract made by a person who lacked the capacity to make it was not void, but could be avoided by that person provided that the other party to the contract knew (or, it is now generally accepted, ought to have known) of his incapacity.
As Mr Rowley points out on behalf of the defendant, this rule is consistent with the objective theory of contract, that a party is bound, not by what he actually intended, but by what objectively he was understood to intend.
The rule in Imperial Loan was applied by the Judicial Committee of the Privy Council in Hart v OConnor [1985] AC 1000, a case from New Zealand, where the issue was whether this only applied if the contract was fair.
Overruling prior New Zealand authority to the contrary in Archer v Cutler [1980] 1 NZLR 386, but consistently with the decision of the High Court of Australia in McLoughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243, the Board held that a contract made by a person who was ostensibly sane could not be set aside simply because it was unfair but only if there was equitable fraud which would also avail a sane person.
This rule, it is argued, applies just as much to the settlement of civil claims as it does to any other sort of contract.
Once the parties to ordinary civil litigation have reached agreement, it is not for the court to interfere in their bargain.
If they desire to embody it in a consent order, they can do so simply by having it entered and sealed by a court officer under CPR 40.6(2).
They do not have to submit it for the approval of any judicial officer.
In this case, it was simply a matter of courtesy to show the order to the judge, who had (no doubt) been waiting patiently or getting on with other business while the negotiations were proceeding.
Matrimonial proceedings are different, because the parties cannot oust the jurisdiction of the court, and so if they want their agreement embodied in a court order, they cannot avoid at least a degree of judicial scrutiny.
Neither the Rules of the Supreme Court nor the Civil Procedure Rules can change the substantive law unless expressly permitted so to do by statute: see In re Grosvenor Hotel Ltd (No 2) [1965] Ch 1210.
Thus, it is argued, section 1 of the Civil Procedure Act 1997 gave the Civil Procedure Rule Committee power to make rules governing the practice and procedure to be followed in the civil courts and as further provided in Schedule 1 to the Act.
Paragraph 4 of that Schedule provides that the Rules may modify the rules of evidence, thus showing that where it is intended that the Rules could modify the substantive law, express provision is made for this.
The comment made by Chadwick LJ in Masterman Lister was obiter dictum, because it was there held that the claimant did not lack capacity to litigate.
In Bailey v Warren, it was pointed out that the cases of Dietz and Drinkall had not been cited in Masterman Lister.
Dietz is of particular relevance, because it was there argued (on behalf of the party who was trying to uphold the unapproved settlement) that the compromise rule as embodied in the Rules of the Supreme Court, Order 80, rule 11 (the predecessor to CPR 21.10(1)) was ultra vires (see counsels reply at p 179).
This argument was dealt with by Lord Pearson (with whom Lord Reid and Lord Pearce certainly agreed) as follows, at p 189: There was a suggestion made in the course of the argument that the Compromise Rule, if it meant what it appears to say if invalid means of no legal effect is ultra vires.
I do not accept that suggestion.
When the claim of an infant or other person under disability is before the court, the court needs, for the purpose of protecting his interests, full control over any settlement compromising his claim.
In my view, the making and re making of the Compromise Rule were valid exercises of the rule making power under the Judicature Acts, which is now contained in section 99 of the Act of 1925.
Mr Rowley rightly points out that Dietz was a childs claim, where the common law of contract is different, so their Lordships did not have to address their minds to the position of persons who lacked capacity.
In practical terms, of course, it is a great deal easier to know whether one is dealing with a child than it is to know whether one is dealing with a patient or protected party.
But the fact that a childs contracts may be avoided in rather wider circumstances than may the contracts of a patient or protected party does not alter the fact that both are subject to the same compromise rule and for the same reasons.
It did not occur to the Court of Appeal to distinguish between them in Bailey v Warren.
It is fair to say that Lord Pearson gives no reason for his acceptance that the compromise rule is within the powers of the rule making body.
Given that it applies to claims compromised before proceedings are brought, it is carving out a substantial but quite specific exception to the common law rule in Imperial Loan Co Ltd v Stone.
Nevertheless, we are bound by Dietz unless there is a very good reason to depart from it.
Mr Melton, on behalf of the claimant, also points out that paragraph 1 of Schedule 1 to the Civil Procedure Act 1997 expressly provides that Among the matters which Civil Procedure Rules may be made about are any matters which were governed by the former Rules of the Supreme Court or the former county court rules .
This could certainly be read as conferring an express power to make rules of court modifying the substantive law to the extent that the previous rules did so, whether or not those rules were within the powers which the previous rule making bodies had been given.
Agency
Having reached the conclusion that the Compromise Rule is intra vires and applies to this case, there is no need to address a further argument made on behalf of Ms Dunhill.
This is to the effect that counsel was acting as her agent, rather than a mere messenger, when making the settlement on 7 January 2003.
It has been held that the principals incapacity terminates a contract of agency, whether or not it is known to the agent (Yonge v Toynbee [1910] 1 KB 215), and this must logically apply also to the initial formation of a contract of agency.
This means that the agent lacks any actual authority to make a contract on behalf of the incapacitated principal, whether or not the other party to the contract knows of the incapacity.
Thus, it is said, the rule in Imperial Loan Co Ltd v Stone does not apply to a contract concluded by an agent on behalf of a principal who lacks the capacity to make it.
Nor, it is said, could there be any apparent authority if the principal lacked capacity at the time of making the initial representation as to the agents authority, again whether or not the other party knew of this.
Reliance is placed, in particular, upon a passage in Bowstead & Reynolds on Agency (19th ed, (2010) para 2 009).
This argument has led the current editor of that work, Professor Peter Watts, to reconsider and disavow what is there stated.
The authorities are indeed in a state of some confusion, as is amply demonstrated by A.H Hudson at (1959) 37 Canadian Bar Review 497.
It would be most unwise for this court to express any opinion, one way or another, as to the present state of the law.
Fortunately, the issue does not arise.
Policy
Much was made in the course of argument of the competing policy arguments, some of which I touched upon at the outset of this judgment.
In particular, Mr Rowley emphasised the need for finality in litigation, the stresses and strains which prolonged litigation places upon both litigants and the courts, the difficulty of re opening cases such as this so long after the event, and the alternative protection given to the parties by their legal advisers, who should bear the consequences of their own mistakes.
Against this Mr Melton emphasised the disadvantages of claims for professional negligence when compared with claims for personal injuries, principally the discount for the chance that the claim might not have succeeded and the inability to make a periodical payments order.
He also points out that lack of insight is a common feature in head injury cases, so that the parties should be encouraged to investigate capacity at the outset.
A litigant in person would, of course, have no legal advisers against whom to make a claim, but the legal position cannot differ according to whether or not a party is, or is not, represented by lawyers.
Policy arguments do not answer legal questions.
But to the extent that they are at all relevant to the issues before us, the policy underlying the Civil Procedure Rules is clear: that children and protected parties require and deserve protection, not only from themselves but also from their legal advisers.
The notes to Order 80 in the last (1999) edition of the Supreme Court Practice stated that among the objects of the compromise rule was to protect minors and patients from any lack of skill or experience of their legal advisers which might lead to a settlement of a money claim for far less than it is worth, a sentiment which has been carried forward into the current edition of Civil Procedure.
Conclusion
I would therefore dismiss both appeals and uphold the order made by Bean J.
On the test properly to be applied, Ms Dunhill lacked the capacity to commence and to conduct proceedings arising out of her claim against Mr Burgin.
She should have had a litigation friend from the outset and any settlement should have been approved by the court under CPR 21.10(1).
We have not been invited to cure these defects nor would it be just to do so.
The consent order must be set aside and the case go for trial.
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On 25 June 1999 the respondent, Ms Dunhill, was struck by a motorcycle driven by the appellant, Mr Burgin, when crossing the road.
She suffered a severe head injury.
In May 2002 she issued a claim against Mr Burgin for damages limited to 50,000 for her injuries.
On the day of the trial, settlement negotiations took place and Ms Dunhill, after advice from her counsel and solicitor, decided to compromise her claim for 12,500 plus costs, which was embodied in a consent order put before the judge.
Ms Dunhill had in fact suffered very serious injuries and this settlement represented a gross undervalue of her claim, if she could establish that Mr Burgin had been negligent.
In 2006 she consulted new solicitors.
A litigation friend was appointed to act on her behalf, who applied for a declaration that she had not had mental capacity at the time of the settlement and that the consent order should be set aside with directions for the future conduct of the claim.
Two preliminary issues arose.
The first was the test for deciding whether a person lacks the mental capacity to conduct legal proceedings on her own behalf.
The second was the consequence if legal proceedings were compromised without it being recognised that one of the parties lacked that capacity, so that the requirement in Part 21.10 of the Civil Procedure Rules (CPR) that the compromise must be approved by a court was not complied with.
The High Court held that capacity was to be judged by reference to the decisions which Ms Dunhill had actually been required to take in the action as drafted rather than those which she might have been required to take had the action been differently framed.
On this basis she did have capacity.
The Court of Appeal ruled that she had to have capacity to conduct the more complicated action which ought to have been brought and Ms Dunhill had lacked that capacity.
When the case was remitted to the High Court, it held that her lack of capacity rendered the settlement void as it had not been approved by the court as required by CPR 21.10.
The Supreme Court gave permission to Mr Burgin to appeal against both findings.
The Supreme Court unanimously dismisses the appeals.
It holds that, on the test properly to be applied, Ms Dunhill lacked the capacity to commence and conduct proceedings arising out of her claim against Mr Burgin.
The consent order must be set aside and the case proceed to trial.
Lady Hale gives the only judgment.
Test for capacity The general approach of the common law, now enshrined in the Mental Capacity Act 2005, is that capacity is to be judged in relation to the decision or activity generally and not globally.
On the issue before the court the question was Ms Dunhills capacity to conduct the proceedings.
CPR 21 posits a person with a cause of action who must have the capacity to bring and conduct proceedings in respect of that cause of action.
This could not depend on whether that person received good advice, bad advice or no advice at all.
The test of capacity to conduct proceedings for the purpose of CPR 21 is the capacity to conduct the claim or the cause of action which the claimant in fact has rather than to conduct the claim as formulated by her lawyers, and on this test it was common ground that Ms Dunhill lacked that capacity [13 18].
The effect of incapacity It followed that Ms Dunhill should have had a litigation friend when the proceedings were begun.
Although the court had power to validate steps taken without a litigation friend retrospectively, it was not just to do so in this case in relation to a settlement and consent order made without the external check on its propriety required by CPR 21.10.
The consequence was that the settlement was of no effect.
The terms of CPR 21 did not enable Mr Burgin to rely on the fact that he had not been on notice of Ms Dunhills incapacity [22].
A settlement of a claim was an established exception to the general position under English law in respect of a contract made by a person who lacks capacity, which is valid unless this fact was or ought to have been known [23 30].
Although there was a need for finality in litigation, and the difficulty of re opening cases such as this so long after the event was recognised, the policy underlying the CPR was clear: that children and protected parties require and deserve protection, not only from themselves but also from their legal advisers [32 33].
Accordingly the consent order must be set aside and the case go for trial [34].
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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.
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A special rule has been developed for cases brought by persons who contract mesothelioma after being wrongly exposed to asbestos, known as the Fairchild exception after the decision of the House of Lords in Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22.
This provides that defendants whose breaches of their duty of care materially increase the risk of mesothelioma are jointly and severally liable for the damage suffered if mesothelioma does in fact develop.
The rule relaxes the usual requirement that a claimant must show that it is more likely than not that the harm he has suffered has been caused by the defendants breach, in order to reflect the fact that medical science cannot presently determine which asbestos fibre or fibres has caused the mesothelioma to develop, often decades later.
The issue in these two appeals was whether this special rule applies in cases where only one defendant is proved to have exposed the victims to asbestos, but where the victims were also at risk of developing the disease from environmental exposure to asbestos in the general atmosphere.
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 at the age of 74.
Mrs Costello had worked in an office at factory premises manufacturing steel drums for employers who were found to have wrongly exposed her to asbestos, although the level of that exposure was very light.
This was calculated by the trial judge to have increased her total level of exposure, over the general environmental exposure, by 18%.
Mr Barre Willmore is the husband and administrator of the estate of the late Dianne Willmore who died of mesothelioma on 15 October 2009 aged 49.
She was found to have been exposed to asbestos at her secondary school.
In Mrs Costellos case, the judge held that the Fairchild exception did not apply and that she had failed to establish that her occupational exposure to asbestos was the likely cause of her disease.
This decision was reversed by the Court of Appeal, which entered judgment on liability with damages to be assessed.
The judge in Mrs Willmores case applied the Fairchild exception and awarded her damages of 240,000.
The Court of Appeal upheld his decision.
The defendants in each case appealed to the Supreme Court, arguing that the Fairchild exception should have been held to be inapplicable when proceedings are directed against one defendant.
They submitted that, in such cases, liability could only be established if a claimant could prove on the balance of probability that the mesothelioma was caused by the defendants exposure ie that such exposure had at least doubled the risk of the victim developing mesothelioma.
The Supreme Court unanimously dismisses the appeals.
It holds that the Fairchild exception applies to cases of mesothelioma involving a single defendant and that there is no requirement for a claimant to show that the defendants breach of duty doubled the risk of developing the disease.
The main judgment is given by Lord Phillips, with each of the other justices adding shorter judgments concurring in the result.
Numbers in square brackets below are to paragraphs in the judgment.
Knowledge about mesothelioma is based in part on medical science and in part on statistical analysis or epidemiology.
It is summarised at [19] and in the annex after [112].
Much remains still to be discovered.
The courts may revert to the conventional causation test if advances in medical science in relation to this disease make such a step appropriate [70][142][208].
The decision in Fairchild was made in the context of claims against multiple employers who had each been found to be in breach of duty.
It left open the question of whether the principle applied where other possible sources of injury were similar but lawful acts of someone else or a natural occurrence.
In the subsequent case of Barker v Corus [2006] UKHL 20 the House of Lords answered this question by refining the exception so as to render each employer liable only for the proportion of damages which represented his contribution to the risk.
Parliament then intervened to overturn this apportionment of damages, by providing in section 3 of the Compensation Act 2006 that where a person was liable under the common law in tort to a victim who had contracted mesothelioma, that liability was for the whole of the damage caused by the disease, jointly and severally with any other responsible person.
Parliament has therefore legislated to impose draconian consequences on an employer or his insurers who has been responsible for only a small proportion of the overall exposure of a claimant to asbestos and the court had to have regard to this when considering the issues in these appeals [58][131][167][185].
The Fairchild exception did apply to single defendant cases [103][113].
The doubles the risk test for causation was therefore only potentially relevant in connection with the question of what constituted a material increase of risk.
There was no justification for adopting the test as a benchmark for this.
Whether exposure was too insignificant to be taken into account, having regard to the overall exposure, was a matter for the judge on the facts of the particular case [107 108].
Epidemiological evidence alone is not a satisfactory basis for making findings of causation.
The exercise of comparing the statistical relationship between exposure and the incidence of the disease with the experience of the individual victim is particularly problematic in mesothelioma cases because of the very long latency of the disease [97 102][163][172] Accordingly the appeals must be dismissed.
Even though the judge in Mrs Costellos case did not expressly consider whether the exposure in her case materially increased the risk, if he had thought it insignificant he would have said so [109].
In Mrs Willmores case, the challenges to the judges findings of fact also failed.
The court considered that they had been very generous to Mrs Willmore but that it was not justified in taking the exceptional step of disturbing them [166]
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Council Directive 79/7/EEC on the Progressive Implementation of the Principle of Equal Treatment for Men and Women in Matters of Social Security is concerned with state benefits, including old age and retirement pensions.
It provides by article 4 that there shall be no discrimination whatsoever on ground of sex either directly, or indirectly by reference in particular to marital or family status .
The material provisions of the Directive have direct effect.
Article 7.1(a) of the Directive provided that it was to be without prejudice to the right of member states to exclude from its scope the determination of pensionable age for the purpose of granting old age and retirement pensions.
The United Kingdom has exercised that right.
The combined effect of (i) the Social Security Contributions and Benefits Act 1992, section 44, (ii) the definition of pensionable age in section 122 of the Act, and (iii) the Pensions Act 1995, Schedule 4, paragraph 1, is that a woman born before 6 April 1950 becomes eligible for the state retirement pension (referred to in the legislation as a Category A retirement pension) at the age of 60, and a man born before 6 December 1953 becomes eligible at the age of 65.
The pensionable age of younger persons will converge over a period of time and will eventually be the same, but these changes do not affect the present appeal.
At the time which is relevant to this appeal, the acquired gender of a transsexual person was not recognised for the purpose of determining the qualifying age for a state pension, if that person was and remained party to a subsisting marriage.
The question at issue on this appeal is whether that state of affairs was compatible with the Directive.
The United Kingdom statutory framework
Until 2005, the law made no provision for gender reassignment in any of the three jurisdictions of the United Kingdom.
A person was for all legal purposes treated as having the gender determined by the application of biological criteria at birth without regard to any psychological characteristics or later surgical intervention.
In Goodwin v United Kingdom (2002) 35 EHRR 18, the European Court of Human Rights held that this was incompatible with article 8 of the European Convention on Human Rights and that, so far as it prevented a transsexual from contracting a valid marriage with a person of the same birth gender, it was also incompatible with article 12.
In consequence, Parliament enacted the Gender Recognition Act 2004, which received royal assent on 1 July 2004 and came into force on 4 April 2005.
Section 1 of the Act provided that a person could apply to a Gender Recognition Panel for a full gender recognition certificate recording a change of his or her birth gender on the basis of living in the other gender.
The applicants new gender was referred to as the acquired gender.
Sections 2 and 3 of the Gender Recognition Act deal with the criteria for determining whether a change of gender has occurred.
Section 2 provides that the Gender Recognition Panel is required to grant the application if the applicant has or has had gender dysphoria, has lived in the acquired gender for at least two years up to the date of the application, intends to live in the acquired gender until death and satisfies the evidential requirements laid down by section 3.
Section 3 requires the Panel to be furnished with a report from two medical practitioners or from a medical practitioner and a psychologist.
If the Panel concludes having regard to the evidence required by section 3 that the criteria in section 2 are satisfied, it must grant the application.
By section 9 of the Act, where a full certificate is issued, the acquired gender thereafter becomes the persons gender for all purposes.
Schedule 5, paragraph 7 of the Gender Recognition Act deals specifically with the effect of a full gender recognition certificate on eligibility for a state pension.
It provides that once the certificate has been issued, any question of entitlement to a state retirement pension is to be decided as if the persons gender has always been the acquired gender.
Accordingly, where the person was a man immediately before the issue of the certificate but had attained the age at which a woman would have attained pensionable age, she is to be treated as having attained pensionable age upon the issue of the certificate.
At the time that the Gender Recognition Act was passed a valid marriage could subsist in law only between a man and a woman.
This had always been the law, but had been confirmed by the Matrimonial Causes Act 1973, section 11(c).
For this reason, the 2004 Act made special provision for married applicants, whose change of legally recognised gender would otherwise have resulted in their being married to a person of the same gender as themselves.
This will be referred to below as the marriage condition.
By section 4(2) an unmarried applicant who satisfied the criteria for gender recognition in sections 2 and 3 was entitled to a full gender recognition certificate, whereas by section 4(3) a married applicant who satisfied the same criteria was entitled only to an interim gender recognition certificate.
Unlike a final gender recognition certificate, an interim gender recognition certificate did not itself effect any change in the applicants legally recognised gender.
It merely entitled a married applicant to apply to have the marriage annulled by a court.
The Matrimonial Causes Act 1973 (as amended), section 12(g), provided that upon the issue of an interim gender recognition certificate the applicants marriage became voidable.
By section 13(2A) of the same Act, the court was then bound to grant a decree of nullity, provided that proceedings to that end were instituted within six months from the date of issue of the interim gender recognition certificate, and subject to certain other conditions which are irrelevant for present purposes.
Only when this had been done did the applicant become entitled to a full gender recognition certificate.
The court granting the decree of nullity was required by section 5(1) of the Gender Recognition Act to issue the full certificate.
Shortly after the Gender Recognition Act was passed, Parliament passed the Civil Partnership Act 2004, which received royal assent on 18 November 2004 and came into force on 5 December 2005.
The Act provided for the legal recognition of same sex partnerships upon registration.
A civil partnership was not a marriage but had substantially the same legal consequences as a marriage.
Once the Civil Partnership Act had come into force, a married person to whom an interim gender recognition certificate had been issued could, after obtaining the annulment of the marriage, enter into a civil partnership with his or her former spouse.
These statutory arrangements were changed by the Marriage (Same Sex Couples) Act 2013, which came into full force on 10 December 2014.
The Act of 2013 provided for same sex couples to enter into a marriage.
Schedule 5 amended section 4 of the Gender Recognition Act 2004 so as to provide that a Gender Recognition Panel must issue a full gender recognition certificate to a married applicant if the applicants spouse consents.
The Act of 2013 does not apply retrospectively and does not affect the present appeal.
The relevant statutory provisions are attached.
The situation of MB
MB (the initials have been used in these proceedings to protect her anonymity) was born on 31 May 1948 and was registered at birth as a man.
MB was married on 21 September 1974.
In 1991 she began to live as a woman and in 1995 underwent sex reassignment surgery.
MB has not applied for a gender recognition certificate since the coming into force of the Gender Recognition Act.
This is because she and her wife continued and still continue to live together and wish to remain married.
For religious reasons, they are unwilling to see their marriage annulled, even if it can be replaced by a civil partnership.
On 31 May 2008 MB attained the age of 60.
On 28 July 2008, she applied for a state retirement pension, backdated to 31 May 2008, on the footing that she was a woman.
The application was rejected on 2 September 2008 on the ground that in the absence of a full gender recognition certificate, she could not be treated as a woman for the purpose of determining her pensionable age.
That decision was subsequently upheld by the First tier Tribunal (18 November 2009), the Upper Tribunal (13 September 2013) and the Court of Appeal (31 July 2014).
Permission to appeal was granted by the Supreme Court of the United Kingdom on 11 March 2015.
The arguments
The principal arguments for MB may be summarised as follows: (1) The Court of Justice has already recognised that the prohibition in article 4(1) of the Directive of discrimination on grounds of sex extends to discrimination between persons of a given birth gender and persons who have acquired the same gender by later reassignment: P v S and Cornwall County Council (Case C 13/94) [1996] ECR I 2143, para 20; Richards v Secretary of State for Work and Pensions (Case C 423/04) [2006] ECR I 3585, paras 24, 29 30. (2) MB accepts that in principle it is for member states to determine by their domestic law the conditions on which a persons change of gender may be legally recognised: KB v National Health Service Pensions Agency and Secretary of State for Health (Case C 117/01) [2004] ECR I 541, para 35; Richards v Secretary of State for Work and Pensions (Case C 423/04) [2006] ECR I 3585, para 21.
But she submits that the power to impose conditions is confined to conditions relating to the objective physical or psychological characteristics which determine whether an applicant is a man or a woman: see Richards, at para 38 (and cf the opinion of Advocate General Jacobs at para 57).
It may not be used to impose conditions relating to such matters as marital status which have nothing to do with the determination of an applicants gender. (3) Since the holder of an interim gender recognition certificate must have satisfied the physical and psychological criteria for gender recognition, the imposition of a further condition for obtaining a full certificate which applies to married applicants only constitutes unlawful discrimination. (4) Even if it were legitimate to impose the marriage condition for the purpose of protecting the status of marriage as a relationship between a man and a woman, that could not justify imposing the same condition on eligibility for a state retirement pension, to which marital status is likewise irrelevant. (5) Although MBs primary case is that the Gender Recognition Act directly discriminates against her on grounds of sex, she also contends that it discriminates indirectly, because the evidence is that the great majority of persons who have undergone gender reassignment have been reassigned from male to female.
For the above reasons, it cannot be justified.
The principal arguments for the Secretary of State may be summarised as follows: (1) The decision of the Court of Justice in Richards was concerned with discrimination arising from the absence at the relevant time of any provision in English law for recognising gender reassignment.
That lacuna has been filled in the United Kingdom since 2005.
The decision is of limited relevance to the conditions on which gender reassignment may lawfully be recognised under a comprehensive legislative scheme for recognition. (2) At the time when Richards was decided, the Court of Justice had already recognised in KB that it was for member states to determine those conditions, and it reaffirmed that principle in Richards itself: see para 15(2) above.
A corresponding principle is applied under the European Convention on Human Rights: Goodwin v United Kingdom, para 103. (3) The United Kingdom may properly make the recognition of gender change dependent on a process of registration or certification, as the Gender Reassignment Act does.
Under the Act, a person born a man is not a woman merely by virtue of establishing that she has the qualifying social, physical and psychological characteristics.
A full certificate must have been issued. (4) There is no reason why the conditions for the issue of that certificate should be limited to satisfaction of the social, physical and psychological criteria of gender.
Gender reassignment has significant social implications which the law may also regulate.
The conditions may therefore properly reflect criteria such as the status of marriage, which are legitimate social considerations not regulated by EU law.
In acknowledging, as para 103 of Goodwin does, that it was for national law to determine the conditions for recognising gender reassignment, the European Court of Human Rights acknowledged that they may include conditions under which past marriages cease to be valid.
This was implicitly accepted by the Court of Justice in Richards, when it adopted the principle thus stated at para 21. (5) Since the decision in Goodwin, the European Court of Human Rights has upheld the marriage condition as being in itself compatible with the Human Rights Convention (Parry v United Kingdom (Application No 42971/05)) as well as a similar condition in corresponding legislation in Finland (Hamalainen v Finland (2014) 37 BHRC 55).
The reason was that, although the Convention requires states to recognise the acquired gender of transsexual persons, it does not require them to allow marriages between same sex couples.
In the absence of such a requirement, a state which does not recognise same sex marriages has a legitimate interest in maintaining the traditional concept of marriage between a man and a woman.
That interest justified the imposition of the marriage condition in the Finnish legislation.
The proviso could not be regarded as disproportionate given that a civil partnership was available to same sex couples as an alternative to marriage. (6) No question of indirect discrimination arises.
Even on the footing that most gender reassignments are male to female, there is no reason to regard it as any more difficult for a male to female transsexual to qualify for a full gender recognition certificate than it is for a female to male transsexual.
The Supreme Courts conclusion
The Supreme Court is divided on the question, and in the absence of Court of Justice authority directly in point considers that it cannot finally resolve the appeal without a reference to the Court of Justice.
The question
The question referred is whether Council Directive 79/7 EEC precludes the imposition in national law of a requirement that, in addition to satisfying the physical, social and psychological criteria for recognising a change of gender, a person who has changed gender must also be unmarried in order to qualify for a state retirement pension.
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This case concerns Council Directive 79/7/EEC on the Progressive Implementation of the Principle of Equal Treatment for Men and Women in Matters of Social Security (the Directive).
Article 4 of the Directive provides that there shall be no discrimination whatsoever on ground of sex either directly, or indirectly by reference in particular to marital or family status.
Article 7(a) provides that the Directive (which has direct effect) was to be without prejudice to the right of Member States to exclude from its scope the determination of pensionable age for the purpose of granting old age and retirement pensions.
The United Kingdom has exercised that right.
Under United Kingdom law, a woman born before 6 April 1950 is eligible for the statement retirement pension at the age of 60, and a man born before 6 December 1953 is eligible at the age of 65.
For people born after those dates, the ages will converge over a period of time.
At the time relevant to this appeal, the acquired gender of a transgender person was not recognised for the purpose of determining their qualifying pension age, if they were married.
So far as MB was concerned, she was registered at birth as a man but has lived as a woman since 1991 and underwent gender reassignment surgery in 1995.
She has not applied for a full gender recognition certificate because she and her wife are married and wish to remain so, a situation at that time precluded by the conditions for obtaining a full gender recognition certificate [13].
On 31 May 2008, MB turned 60.
In July of that year, she applied for a state retirement pension, backdated to her 60th birthday.
That application was rejected on 2 September 2008 because, in the absence of a gender recognition certificate, MB could not be treated as a woman for the purposes of pension eligibility and would instead become eligible at 65, as if she were a man.
The First tier Tribunal, Upper Tribunal and Court of Appeal all agreed with that approach [14].
The appellant challenged the compatibility of that approach with the Directive.
The Supreme Court refers the question to the Court of Justice of the European Union.
Lord Sumption gives the reasons for the referral, with which the rest of the Panel agree.
The question referred is whether the Directive precludes the imposition in national law of a requirement that, in addition to satisfying the physical, social and psychological criteria for recognising a change of gender, a person who has changed gender must also be unmarried in order to qualify for a state retirement pension [18].
Before 2005, the position under UK law was that a person was treated for all legal purposes as having the gender determined by their biological characteristics at birth.
In 2002, the European Court of Human Rights deemed that to be incompatible with Article 8 of the European Convention on Human Rights (the right to private and family life) and, in so far as it prevented a transgender person from marrying a person of the same gender, incompatible with Article 12 (the right to marry and found a family) [4].
The Gender Recognition Act 2004 (which came into force on 4 April 2005) amended the situation such that a persons acquired gender would be legally recognised if they satisfied certain criteria.
If a full certificate of gender recognition was issued to a person, their entitlement to a state retirement pension would be decided according to the rules that apply to the acquired gender [7].
If, however, a person was married, because same sex marriages were not at that time recognised, they received only an interim gender recognition certificate which did not change their legally recognised gender but, first, entitled them to have their marriage annulled after which a full gender recognition certificate would follow [8 9].
Once the Civil Partnership Act 2004 came into force in December 2005 a married person who changed their gender could have their marriage annulled and subsequently enter a civil partnership with their former spouse [10].
In 2014, that situation was changed by the entry into force of the Marriage (Same Sex Couples) Act 2013.
The Gender Recognition Act 2004 was amended so that a full gender recognition certificate could, from then on, be issued to a married applicant with the consent of the applicants spouse [11].
MB has argued that the CJEU has recognised that article 4(1) of the Directive prohibits discrimination between persons of a particular birth gender and people who have acquired that gender and, although it is for member states to determine the conditions by which someone may acquire a gender, that only applies to physical or psychological characteristics and not to marital status [15(1) (2)].
The imposition of a marital status criterion on a person who satisfies the states physical and psychological criteria must therefore be unlawful, and cannot appropriately affect eligibility for state retirement pension [15(3) (4)].
MB therefore argues that the Gender Recognition Act 2004 discriminates against her directly on the grounds of sex, and indirectly because the great majority of people who have undergone gender reassignment have been reassigned from male to female [15(5)].
The Secretary of State argues that the UK procedure by which, for a persons acquired gender to be recognised, a gender recognition certificate must be obtained, is lawful [16(1) (3)].
There is no reason that the conditions for the acquisition of a gender should be limited to satisfaction of physical and psychological criteria.
Conditions may properly reflect social factors such as the status of marriage, which may include a definition of marriage as between a man and a woman [16(4) (5)].
No question of indirect discrimination arises [16(6)].
The Supreme Court is divided on the correct answer to the question and, since there is no CJEU authority directly in point, it refers the question for their guidance [17].
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There are two appeals before the court: Rubin v Eurofinance SA (Rubin) and New Cap Reinsurance Corpn Ltd v Grant (New Cap).
These appeals raise an important and novel issue in international insolvency law.
The issue is whether, and if so, in what circumstances, an order or judgment of a foreign court (on these appeals the United States Bankruptcy Court for the Southern District of New York, and the New South Wales Supreme Court) in proceedings to adjust or set aside prior transactions, eg preferences or transactions at an undervalue (avoidance proceedings), will be recognised and enforced in England.
The appeals also raise the question whether enforcement may be effected through the international assistance provisions of the UNCITRAL Model Law (implemented by the Cross Border Insolvency Regulations 2006 (SI 2006/1030) (CBIR)), which applies generally, or the assistance provisions of section 426 of the Insolvency Act 1986, which applies to a limited number of countries, including Australia.
In Rubin a judgment of the US Federal Bankruptcy Court for the Southern District of New York (the US Bankruptcy Court) in default of appearance for about US$10m under State and Federal law in respect of fraudulent conveyances and transfers was enforced in England at common law.
In New Cap (in which the Court of Appeal was bound by the prior decision in Rubin) a default judgment of the New South Wales Supreme Court, Equity Division, for about US$8m in respect of unfair preferences under Australian law was enforced under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (the 1933 Act), and, alternatively, pursuant to powers under section 426 of the Insolvency Act 1986.
In each of the appeals it was accepted or found that the party against whom they were given was neither present (nor, for the purposes of the 1933 Act, resident) in the foreign country nor submitted to its jurisdiction (which are the relevant conditions for enforceability at common law and under the 1933 Act), but that those conditions did not apply to judgments or orders in foreign insolvency proceedings.
In addition to the arguments on these two appeals, the court has had the great benefit of written submissions on behalf of parties to proceedings pending in Gibraltar.
Those proceedings are to enforce default judgments entered by the US Bankruptcy Court for some $247m in respect of alleged preferential payments to companies in the British Virgin Islands and Cayman Islands arising out of the notorious Ponzi scheme operated by Mr Bernard Madoff.
It has been necessary to emphasise that the judgments in all three matters were in default of appearance, because if the judgment debtors had appeared and defended the proceedings in the foreign courts, the issues on these appeals would not have arisen.
The reason is that the judgments would have been enforceable on the basis of the defendants submission to the jurisdiction of the foreign court.
Enforcement would have been at common law, or, in the New Cap case either under the common law, or under the 1933 Act which substantially reproduces the common law principles there is a subsidiary issue on this appeal as to whether the 1933 Act applies to judgments in insolvency proceedings, dealt with in section IX below.
Under the common law a court of a foreign country has jurisdiction to give a judgment in personam where (among other cases) the judgment debtor was present in the foreign country when the proceedings were instituted, or submitted to the jurisdiction of the foreign court by voluntarily appearing in the proceedings.
In the case of the 1933 Act the foreign court is deemed to have jurisdiction where the judgment debtor submitted to the jurisdiction by voluntarily appearing in the proceedings otherwise than for the purpose (inter alia) of contesting the jurisdiction; or where the judgment debtor was resident at the time when the proceedings were instituted, or being a body corporate had an office or place of business there: section 4(2)(a)(i),(iv).
The Dicey Rule
The general principle has been referred to on these appeals, by reference to the common law rule set out in Dicey, Morris & Collins, Conflict of Laws (14th edition, 2006), as Diceys Rule 36.
This was only by way of shorthand, because the rules in the 1933 Act are not quite identical, and in any event has been purely for convenience, because the Rule has no standing beyond the case law at common law which it seeks to re state.
What was Rule 36 now appears (incorporating some changes which are not material on this appeal) as Rule 43 in the new 15th edition, and I shall refer to it as the Dicey Rule.
So far as relevant, Rule 43 (Dicey, Morris and Collins, Conflict of Laws, 15th ed, 2012, para 14R 054) states: a court of a foreign country outside the United Kingdom has jurisdiction to give a judgment in personam capable of enforcement or recognition as against the person against whom it was given in the following cases: First CaseIf the person against whom the judgment was given was, at the time the proceedings were instituted, present in the foreign country.
Second CaseIf the person against whom the judgment was given was claimant, or counterclaimed, in the proceedings in the foreign court.
Third CaseIf the person against whom the judgment was given submitted to the jurisdiction of that court by voluntarily appearing in the proceedings.
Fourth CaseIf the person against whom the judgment was given had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of that country.
The first edition of Dicey in 1896 stated (Rule 80) that the foreign court would have jurisdiction if the defendant was resident [or present?] in the foreign country so as to have the benefit, and be under the protection, of the laws thereof.
By the 6th edition in 1949 the formula was repeated by Professor Wortley (Rule 68) but without the doubt about presence as a basis of jurisdiction.
In the 8th edition in 1958 Dr (later Professor) Clive Parry removed the phrase (then Rule 189) about the benefit and protection of the foreign countrys laws.
The Rule, subsequently edited by Dr Morris and then by Professor Kahn Freund, remained in that form until the decision in Adams v Cape Industries plc [1990] Ch 433 (CA), which established that presence in the foreign jurisdiction, as opposed to residence, was a sufficient basis for the recognition of foreign judgments.
Then, edited by myself and later by Professor Briggs, the Rule took substantially its present form in the 12th edition in 1993.
The theoretical basis for the enforcement of foreign judgments at common law is that they are enforced on the basis of a principle that where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be maintained: Williams v Jones (1845) 13 M & W 628, 633 per Parke B; Godard v Gray (1870) LR 6 QB 139, 147, per Blackburn J; Adams v Cape Industries plc [1990] Ch 433, 513; Owens Bank Ltd v Bracco [1992] 2 AC 443, 484, per Lord Bridge of Harwich.
As Blackburn J said in Godard v Gray, this was based on the mode of pleading an action on a foreign judgment in debt, and not merely as evidence of the obligation to pay the underlying liability: LR 6 QB 139, 150.
But this is a purely theoretical and historical basis for the enforcement of foreign judgments at common law.
It does not apply to enforcement under statute, and makes no practical difference to the analysis, nor, in my judgment, to the issues on these appeals.
Consequently, if the judgments in issue on the appeals are regarded as judgments in personam within the Dicey Rule, then they will only be enforced in England at common law if the judgment debtors were present (or, if the 1933 Act applies, resident) in the foreign country when the proceedings were commenced, or if they submitted to its jurisdiction.
It is common ground that the judgment debtors were not present or resident, respectively, in the United States or in Australia, although there is an issue as to whether the New Cap defendants submitted to the jurisdiction of the Australian court, which is dealt with in section VIII below.
Insolvency proceedings and the international dimension
There are some general remarks to be made.
First, from as early as the mid 18th century the English courts have recognised the effect of foreign personal bankruptcies declared under the law of the domicile: Solomons v Ross (1764) 1 H Bl 131n, where Dutch merchants were declared bankrupt in Amsterdam, and the Dutch curator was held entitled to recover an English debt in priority to an English creditor of the merchants who had attached the debt after the bankruptcy: see Nadelmann, Conflict of Laws: International and Interstate (1972), p 273; Blom Cooper, Bankruptcy in Private International Law (1954), pp 107 108.
In Galbraith v Grimshaw [1910] AC 508 Lord Dunedin said that there should be only one universal process of the distribution of a bankrupts property and that, where such a process was pending elsewhere, the English courts should not allow steps to be taken in its jurisdiction which would interfere with that process (p 513): Now so far as the general principle is concerned it is quite consistent with the comity of nations that it should be a rule of international law that if the court finds that there is already pending a process of universal distribution of a bankrupts effects it should not allow steps to be taken in its territory which would interfere with that process of universal distribution.
Second, in the case of corporations the English courts have exercised a winding up jurisdiction which is wider than that which at common law they have accorded to foreign courts.
The court exercises jurisdiction to wind up a foreign company if there is a sufficient connection between the company and England, there are persons who would benefit from the making of a winding up order, and there are persons interested in the distribution of assets of the company who are persons over whom the court can exercise jurisdiction: see Dicey, 15th ed, para 30R 036.
But as regards foreign liquidations, the general rule is that the English court recognises at common law only the authority of a liquidator appointed under the law of the place of incorporation (Dicey, 15th ed, para 30R 100).
That is in contrast to the modern approach in the primary international and regional instruments, the EC Insolvency Regulation on Insolvency Proceedings (Council Regulation (EC) No 1346/2000) (the EC Insolvency Regulation) and the Model Law, which is that the jurisdiction with international competence is that of the country of the centre of main interests of the debtor (an expression not without its own difficulties).
It is ultimately derived from the civil law concept of a traders domicile, and was adopted in substance in the draft EEC Convention of 1980 as a definition of the debtors centre of administration: see Report by M Lemontey on the draft EEC Bankruptcy Convention, Bulletin of the European Communities, Supp 2/82, p 58; American Law Institute, Transnational Insolvency: Global Principles for Co operation in International Insolvency Cases (2012), Principle 13, pp 83 et seq.
Third, it is not only in recent times that there have been large insolvency proceedings with significant cross border implications.
Even before then there were the Russian Bank cases in the 1930s (arising out of the nationalisation and dissolution of the banks by the Soviet Government) and the Barcelona Traction case in the 1940s and 1950s (see In re Barcelona Traction, Light and Power Co Ltd (second phase) (Belgium v Spain) [1970] ICJ Rep 69), but there is no doubt that today international co operation in cross border insolvencies has become a pressing need.
It is only necessary to recall the bankruptcies or liquidations of Bank of Credit and Commerce International, Maxwell Communications, or Lehman Brothers, each with international businesses, assets in many countries, and potentially competing creditors in different countries with different laws.
There is not only a need to balance all these interests but also to provide swift and effective remedies to combat the use of cross border transfers of assets to evade and to defraud creditors.
Fourth, there is no international unanimity or significant harmonisation on the details of insolvency law, because to a large extent insolvency law reflects national public policy, for example as regards priorities or as regards the conditions for the application of avoidance provisions: the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852, para 19, per Lord Hoffmann.
Fifth, there has been a trend, but only a trend, to what is called universalism, that is, the administration of multinational insolvencies by a leading court applying a single bankruptcy law: Westbrook, A Global Solution to Multinational Default (2000) 98 Mich L Rev 2276, 2277.
What has emerged is what is called by specialists modified universalism.
The meaning of the expression universalism has undergone a change since the time it was first used in the 19th century, and it later came to be contrasted with the doctrine of unity.
In 1834 Story referred to the theory that assignments under bankrupt or insolvent laws were, and ought to be, of universal operation to transfer movable property, in whatever country it might be situate, and concluded that there was great wisdom in adopting the rule that an assignment in bankruptcy should operate as a complete and valid transfer of all his movable property abroad, as well as at home, and for a country to prefer an attaching domestic creditor to a foreign assignee or to foreign creditors could hardly be deemed consistent with the general comity of nations [T]he true rule is, to follow out the lead of the general principle that makes the law of the owners domicil conclusive upon the disposition of his personal property, citing Solomons v Ross as supporting that doctrine: Story, Commentaries on the Conflict of Laws, 1st ed (1834), pp 340 341, para 406.
Professor Cheshire, in his first edition (Cheshire, Private International Law, 1935, pp 375 376), said that although English law neglects the doctrine of unity it recognizes the doctrine of universality.
What he meant was that English law was committed to separate independent bankruptcies in countries where the assets were situate, rather than one bankruptcy in the country of the domicile (the doctrine of unity), but also accepted the title of the foreign trustee to English movables provided that no bankruptcy proceedings had begun within England (universality).
He cited Solomons v Ross for this proposition: The English Courts have consistently applied the doctrine of universality, according to which they hold that all movable property, no matter where it may be situated at the time of the assignment by the foreign law, passes to the trustee.
In In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008]
1 WLR 852, para 30, Lord Hoffmann said: The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross border insolvency law since the 18th century.
That principle requires that English courts should, so far as is consistent with justice and UK public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution. and in Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508, para 16 he said, speaking for the Privy Council: The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application.
There should be a single bankruptcy in which all creditors are entitled and required to prove.
No one should have an advantage because he happens to live in a jurisdiction where more of the assets or fewer of the creditors
are situated
The US Bankruptcy Court accepted in Re Maxwell Communication Corp, 170 BR 800 (Bankr SDNY 1994) that the United States courts have adopted modified universalism as the approach to international insolvency: the United States in ancillary bankruptcy cases has embraced an approach to international insolvency which is a modified form of universalism accepting the central premise of universalism, that is, that assets should be collected and distributed on a worldwide basis, but reserving to local courts discretion to evaluate the fairness of home country procedures and to protect the interests of local creditors.
International co operation and assistance
Jurisdiction in international bankruptcy has been the subject of multilateral international instruments at least since the Montevideo Treaty on International Commercial Law of 1889, Title X, although bilateral treaties go back much further, and the subject of international recognition and co operation in insolvency was the subject of early discussion by the International Law Association (1879), the Institut de droit international (1888 1912) and the Hague Conference on Private International Law (1904): Nadelmann, op. cit. pp 299 et seq.
In more modern times, the European Convention on Certain International Aspects of Bankruptcy (the Istanbul Convention) was concluded under the auspices of the Council of Europe in 1990, but never came into force.
The European Community/Union initiative took 40 years to come to fruition.
In 1960 the European Community embarked on a project for a Bankruptcy Convention, which resulted in a draft Convention in 1980, to which there was significant opposition.
But the project was renewed in 1989, and this led to the tabling of a draft Convention in 1995, which provided that it would only come into force when signed by all 15 of the then member states.
The United Kingdom, however, alone of the states, did not sign the Convention (for political reasons), and it never came into force.
In 1999 the project was re launched as a Council Regulation, which resulted in the EC Insolvency Regulation in 2000.
The United Nations Commission on International Trade Law (UNCITRAL) adopted a Model Law on cross border insolvency in 1997.
The Model Law was adopted following initiatives in the 1980s by the International Bar Association and later by INSOL International (the International Association of Restructuring, Insolvency and Bankruptcy Professionals).
In 1993 UNCITRAL adopted a resolution to investigate the feasibility of harmonised rules of cross border insolvencies.
In 1994 an expert committee was assembled consisting of members of INSOL and representatives of the UNCITRAL Secretariat, and following a series of reports and drafts, UNCITRAL adopted the Model Law in May 1997.
The Model Law provides for a wide range of assistance to foreign courts and office holders.
It has been implemented by 19 countries and territories, including the United States and Great Britain (although by some states only on the basis of reciprocity).
It was not enacted into law in Great Britain until 2006, by the CBIR.
Apart from the EC Insolvency Regulation, none of these instruments deals expressly with the enforcement of judgments in insolvency proceedings.
The question whether the Model Law does so by implication will be considered below in section IV.
Consequently, there are four main methods under English law for assisting insolvency proceedings in other jurisdictions, two of which are part of regionally or internationally agreed schemes.
First, section 426 of the Insolvency Act 1986 provides a statutory power to assist corporate as well as personal insolvency proceedings in countries specified in the Act or designated for that purpose by the Secretary of State.
All the countries to which it currently applies are common law countries or countries sharing a common legal tradition with England.
They include Australia: the Co operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986 (SI 1986/2123).
Second, the EC Insolvency Regulation applies to insolvency proceedings in respect of debtors with their centres of main interests (COMI) within the European Union (excluding Denmark).
The EC Insolvency Regulation has no role in the present appeal because none of the debtors has its centre of main interests in the European Union.
Third, the CBIR came into force on 4 April 2006, implementing the Model Law.
The CBIR supplement the common law, but do not supersede it.
Article 7 of the Model Law provides: Nothing in this Law limits the power of a court or British insolvency officeholder to provide additional assistance to a foreign representative under other laws of Great Britain.
Article 23 of the Model Law allows avoidance claims to be made by foreign representatives under the Insolvency Act 1986, and the CBIR apply to preferences after they came into force on 4 April 2006.
The UNCITRAL Guide to Enactment (to which resort may be had for the purposes of interpretation of the CBIR) also emphasises that the Model Law enables enacting states to make available to foreign insolvency proceedings the type of relief which would be available in the case of a domestic insolvency (UNCITRAL Legislative Guide on Insolvency Law (2005), Annex III, Ch IV, p 311, para 20(b)): The Model Law presents to enacting states the possibility of aligning the relief resulting from recognition of a foreign proceeding with the relief available in a comparable proceeding in the national law.
Fourth, at common law the court has power to recognise and grant assistance to foreign insolvency proceedings.
The common law principle is that assistance may be given to foreign officeholders in insolvencies with an international element.
The underlying principle has been stated in different ways: recognition carries with it the active assistance of the court: In re African Farms Ltd [1906] TS 373, 377; This court will do its utmost to co operate with the United States Bankruptcy Court and avoid any action which might disturb the orderly administration of [the company] in Texas under ch 11: Banque Indosuez SA v Ferromet Resources Inc [1993] BCLC 112, 117.
In Credit Suisse Fides Trust v Cuoghi [1998] QB 818, 827, Millett LJ said: In other areas of law, such as cross border insolvency, commercial necessity has encouraged national courts to provide assistance to each other without waiting for such co operation to be sanctioned by international convention It is becoming widely accepted that comity between the courts of different countries requires mutual respect for the territorial integrity of each others jurisdiction, but that this should not inhibit a court in one jurisdiction from rendering whatever assistance it properly can to a court in another in respect of assets located or persons resident within the territory of the former.
The common law assistance cases have been concerned with such matters as the vesting of English assets in a foreign officeholder, or the staying of local proceedings, or orders for examination in support of the foreign proceedings, or orders for the remittal of assets to a foreign liquidation, and have involved cases in which the foreign court was a court of competent jurisdiction in the sense that the bankrupt was domiciled in the foreign country or, if a company, was incorporated there.
An early case of recognition was Solomons v Ross 1 H B1 131n, where, as I have said, the bankruptcy was in Holland, and the bankrupts were Dutch merchants declared bankrupt in Amsterdam, and the Dutch curator was held entitled to recover an English debt: see also Bergerem v Marsh (1921) B&CR 195 (English member of Belgian firm submitted to Belgian bankruptcy proceedings: movable property in England vested in Belgian trustee).
One group of cases involved local proceedings which were stayed or orders which were discharged because of foreign insolvency proceedings.
Thus in Banque Indosuez SA v Ferromet Resources Inc [1993] BCLC 112 an English injunction against a Texas corporation in Chapter 11 proceedings was discharged; cf In re African Farms Ltd [1906] TS 373 (execution in Transvaal by creditor in proceedings against English company in liquidation in England stayed by Transvaal court), applied in Turners & Growers Exporters Ltd v The Ship Cornelis Verolme [1997] 2 NZLR 110 (Belgian shipowner in Belgian bankruptcy: ship released from arrest); Modern Terminals (Berth 5) Ltd v States Steamship Co [1979] HKLR 512 (stay in Hong Kong of execution against Nevada corporation in Chapter 11 proceedings in United States federal court in California), followed in CCIC Finance Ltd v Guangdong International Trust & Investment Corpn [2005] 2 HKC 589 (stay of Hong Kong proceedings against Chinese state owned enterprise in Mainland insolvency).
Cases of judicial assistance in the traditional sense include In re Impex Services Worldwide Ltd [2004] BPIR 564, where a Manx order for examination and production of documents was made in aid of the provisional liquidation in England of an English company.
Cases involving remittal of assets from England to a foreign office holder include In re Bank of Credit and Commerce International SA (No 10) [1997] Ch 213 (Luxembourg liquidation of Luxembourg company); and In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852 (the view of Lord Hoffmann and Lord Walker) (Australian liquidation of Australian insurance company); and In re SwissAir Schweizerische Luftverkehr Aktiengesellschaft [2009] EWHC 2099 (Ch), [2010] BCC 667 (Swiss liquidation of Swiss company).
III The Cambridge Gas and HIH decisions
The opinion of Lord Hoffmann, speaking for the Privy Council, in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508 (Cambridge Gas) and his speech in the House of Lords in In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852 (HIH) have played such a major role in the decisions of the Court of Appeal and in the arguments of the parties on these appeals that it is appropriate to put them in context at this point.
Cambridge Gas
The broad facts of Cambridge Gas were these.
In 1997 a shipping business was initiated by a Swiss businessman, Mr Giovanni Mahler.
The investors borrowed $300m on the New York bond market and the business bought five gas transport vessels.
The venture was a failure, and ended with a Chapter 11 proceeding in the US Bankruptcy Court in New York.
The question for the Privy Council on appeal from the Isle of Man was whether an order of the New York court was entitled to implementation in the Isle of Man.
The corporate structure of the business was that the investors owned, directly or indirectly, a Bahamian company called Vela Energy Holdings Ltd (Vela).
Vela owned (through an intermediate Bahamian holding company) Cambridge Gas, a Cayman Islands company.
Cambridge Gas owned directly or indirectly about 70% of the shares of Navigator Holdings plc (Navigator), an Isle of Man company.
Navigator owned all the shares of an Isle of Man company which in turn owned companies which each owned one ship.
In 2003 Navigator petitioned the US Bankruptcy Court for relief under Chapter 11 of the US Bankruptcy Code, which allows insolvent companies, under supervision of the court and under cover of a moratorium, to negotiate a plan of reorganisation with their creditors.
The petition was initiated by the investor interests, who proposed a plan to sell the ships nominally by auction but in fact to the previous investors, but the bondholders did not accept this and proposed their own plan under which the assets of Navigator would be vested in the creditors and the equity interests of the previous investors would be extinguished.
The judge rejected the investors plan and approved the creditors plan.
The mechanism which the plan used to vest the assets in the creditors was to vest the shares in Navigator in their representatives, ie, the creditors committee.
That would enable them to control the shipping companies and implement the plan.
The plan provided that upon entry of the confirmation order title to all the common stock of Navigator would vest in the creditors committee to enable it to implement the plan.
The order of the New York court confirming the plan recorded the intention of the court to send a letter of request to the Manx court asking for assistance in giving effect to the plan and confirmation order and such a letter was sent.
The committee of creditors then petitioned the Manx court for an order vesting the shares in their representatives.
At this point it is necessary to emphasise two features of the case.
The first feature is that Navigator was an Isle of Man company and 70% of its common stock was owned directly or indirectly by Cambridge Gas.
Under the normal principles of the conflict of laws the shares would have been situate in the Isle of Man: Dicey, 15th ed, para 22 045.
That is why Lord Hoffmann said, at para 6, that the New York court was aware that the order vesting title to the common stock of Navigator in the creditors committee could not automatically have effect under the law of the Isle of Man; and also why he accepted (paras 12 13) that if the judgment were a judgment in rem it could not affect title to shares in the Isle of Man.
The second feature which it is necessary to emphasise is that Cambridge Gas was a Cayman Islands company which (as held by the Manx courts) had not submitted to the jurisdiction of the US Bankruptcy Court.
Lord Hoffmann said, at para 8, that the position that Cambridge Gas had not submitted to the jurisdiction of the US Bankruptcy Court bore little relation to economic reality since the New York proceedings had been conducted on the basis that the contest was between rival plans put forward by the shareholders and the creditors; Vela, the parent company of Cambridge Gas, participated in the Chapter 11 proceedings; and they had been instituted by Navigator.
Consequently the claim by Cambridge Gas that it had not submitted was highly technical, but there was no appeal from the decisions of the Manx courts that it had not submitted.
But Lord Hoffmann also accepted that if the order of the US Bankruptcy Court were to be regarded as a judgment in personam it would not be entitled to recognition or enforcement in the Isle of Man because the New York court had no personal jurisdiction over Cambridge [Gas]: para 10.
Nevertheless the Privy Council held that the plan could be carried into effect in the Isle of Man.
The reasoning was as follows: first, if the judgment had to be classified as in personam or in rem the appeal would have to be allowed, but bankruptcy proceedings did not fall into either category: [13] Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person.
When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so.
The judgment itself is treated as the source of the right. [14] The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established. [15] [B]ankruptcy, whether personal or corporate, is a collective proceeding to enforce rights and not to establish them.
Of course, as Brightman LJ pointed out in In re Lines Bros Ltd [1983] Ch 1, 20, it may incidentally be necessary in the course of bankruptcy proceedings to establish rights which are challenged: proofs of debt may be rejected; or there may be a dispute over whether or not a particular item of property belonged to the debtor and is available for distribution.
There are procedures by which these questions may be tried summarily within the bankruptcy proceedings or directed to be determined by ordinary action.
But these again are incidental procedural matters and not central to the purpose of the proceedings.
Second, the principle of universality underlay the common law principles of judicial assistance in international insolvency, and those principles were sufficient to confer jurisdiction on the Manx court to assist, by doing whatever it could have done in the case of a domestic insolvency: paras 21 22.
Third, exactly the same result could have been achieved by a scheme under the Isle of Man Companies Act 1931.
Fourth, it was no objection to implementation of the plan in the Isle of Man that the shares in Navigator belonged to a person (Cambridge Gas) which was not a party to the bankruptcy proceedings for these reasons, at para 26: [A] share is the measure of the shareholders interest in the company: a bundle of rights against the company and the other shareholders.
As against the outside world, that bundle of rights is an item of property a chose in action.
But as between the shareholder and the company itself, the shareholders rights may be varied or extinguished by the mechanisms provided by the articles of association or the Companies Act.
One of those mechanisms is the scheme of arrangement under section 152 [of the Isle of Man Companies Act 1931].
As a shareholder Cambridge is bound by the transactions into which the company has entered, including a plan under Chapter 11 or a scheme under section 152.
At this point it is necessary to point out that the opinion in Cambridge Gas does not articulate any reason for holding that, in the eyes of the Manx court, the US Bankruptcy Court had international jurisdiction in either of two relevant senses.
The first sense is the jurisdiction of the US Bankruptcy Court in relation to the Chapter 11 proceedings themselves.
The entity which was in Chapter 11 was Navigator.
The English courts exercise a wider jurisdiction in bankruptcy and (especially) in winding up than they recognise in foreign courts.
At common law, the foreign court which is recognised as having jurisdiction in personal bankruptcy is the court of the bankrupts domicile or the court to which the bankrupt submitted (Dicey, 15th ed, para 31R 059) and the foreign court with corresponding jurisdiction over corporations is the court of the place of incorporation (Dicey, 15th ed, para 30R 100).
Under United States law the US Bankruptcy Court has jurisdiction over a debtor, and such a debtor must reside or have a domicile or place of business, or property in the United States.
From the standpoint of English law, the US Bankruptcy Court had international jurisdiction because although Navigator was not incorporated in the United States, it had submitted to the jurisdiction by initiating the proceedings.
The second sense in which international jurisdiction is relevant is the jurisdiction over the third party, Cambridge Gas, and its shares in Navigator.
Cambridge Gas was not incorporated in the United States, and it was held by the Isle of Man courts that it had not submitted to the jurisdiction of the US Bankruptcy Court (and this was, as I have said, accepted with evident reluctance by the Privy Council).
The property which was the subject of the order of the US Bankruptcy Court was shares in an Isle of Man company.
Consequently the property dealt with by the US Bankruptcy Court was situate, by Manx rules of the conflict of laws, in the Isle of Man, and the shareholder relationship was governed by Manx law.
Cambridge Gas was the subject of brief comment a few months later by the Privy Council in Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85.
The decision in that case was simply that a Kenyan judgment deciding that A was bound to sell shares in a Manx company to B was entitled to recognition in the Isle of Man.
It resulted in an order in personam against a person subject to the jurisdiction of the Kenyan court, and was not a judgment in rem against property in the Isle of Man and outside the jurisdiction of the Kenyan court, because the fact that a judicial determination determines or relates to the existence of property rights between parties does not in itself mean that it is in rem.
Lord Mance, speaking for the Board, said, at para 23: In Cambridge Gas the Board touched on the concepts of in personam and in rem proceedings, but held that the bankruptcy order with which it was concerned fell into neither category.
Its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established.
The decision in HIH does not deal with foreign judgments.
HIH concerned four Australian insurance companies which were being wound up in Australia and in respect of which provisional liquidators had been appointed in England.
The question was whether the English court had power to direct remission of assets collected in England to Australia, notwithstanding that there were differences between the English and Australian statutory regimes for distribution which meant that some creditors would benefit from remission whilst some creditors would be worse off.
The House of Lords unanimously directed that remission should take place, but the reasons differed.
The reasoning of the majority (Lord Scott of Foscote and Lord Neuberger of Abbotsbury, with Lord Phillips of Worth Matravers agreeing)) was based exclusively on the statutory power to assist foreign insolvency proceedings under section 426 of the Insolvency Act 1986, but Lord Hoffmann (with whom Lord Walker agreed) also considered that such a power existed at common law.
Lord Hoffmann characterised the principle of universality as a principle of English private international law that, where possible, there should be a unitary insolvency proceeding in the courts of the insolvents domicile which receives worldwide recognition and which should apply universally to all the bankrupts assets, at para 6: Despite the absence of statutory provision, some degree of international co operation in corporate insolvency had been achieved by judicial practice.
This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal.
There should be a unitary bankruptcy proceeding in the court of the bankrupt's domicile which receives worldwide recognition and it should apply universally to all the bankrupt's assets.
Other parts of Lord Hoffmanns speech have already been quoted above, and it is only necessary for present purposes to recall that he said that (a) the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme (at para 19) and (b) that the purpose of the principle of universality was to ensure that the debtors assets were distributed under one scheme of distribution, and that the principle required that English courts should co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution: para 30.
Subsequent treatment of Cambridge Gas
The decision in Cambridge Gas was not applied by the Supreme Court of Ireland in In re Flightlease (Ireland) Ltd [2012] IESC 12 (to which I shall revert) and has been subject to academic criticism.
Professor Briggs has expressed the view ((2006) 77 BYIL 575, 581) that the decision in [Cambridge Gas] is wrong, for it requires a Manx court to give effect to a confiscation order made by a foreign court of property belonging to a person who was not subject to the personal jurisdiction of the foreign court.
That a Manx court could have done so itself is nothing to the point.
I shall return to the question whether it was correctly decided.
IV The cases before the court and the issues
Eurofinance SA is a company incorporated in the British Virgin Islands.
It was established by Adrian Roman, the second appellant on the Rubin appeal.
Eurofinance SA settled The Consumers Trust (TCT) under a deed of trust made in 2002 under English law, with trustees resident in England, of whom two were accountants and two were solicitors.
TCT was established to carry on a sales promotion scheme in the USA and Canada.
The class of beneficiaries was made up of persons who had successfully participated in the scheme by claiming validly in certain sales promotions owned and operated by Eurofinance SA.
The trustees were to hold the capital and income of TCT for the beneficiaries and subject thereto for Eurofinance SA as beneficiary in default.
The promotion, known as the Cashable Voucher Programme, was entered into with participating merchants in the United States and Canada who, when they sold products or services to their customers, offered those customers a cashable voucher comprising a rebate of up to 100% of the purchase price for the product or service.
Under the terms of the voucher the rebate was to be paid to customers in three years time provided that certain conditions were followed by the customer involving the completion by the customer of both memory and comprehension tests.
The participating merchants paid TCT 15% of the face value of each cashable voucher issued by the merchant during a week.
TCT retained 40% of the payments received (ie 6% of the face value of each cashable voucher).
About one half of the 60% balance received from merchants was paid to Eurofinance SA (and so effectively to Adrian Roman) and the remainder was paid to others involved in the operation of the programme, such as solicitors, accountants and US lawyers.
From about 2002 Adrian Romans sons, Nicholas Roman and Justin Roman, each began to receive about 2%.
The trustees maintained bank accounts in the USA and Canada where the payments they had received from merchants were kept.
Since the trustees only retained 6% of the face value of the issued vouchers, the success of the scheme necessarily involved the consumers either forgetting to redeem the vouchers or being unsuccessful in navigating the process required to be followed in order to obtain payment.
When the scheme folded in 2005 the trustees held nearly US$10m in bank accounts in the United States and Canada.
By about 2005 TCTs business ceased after the Attorney General of Missouri brought proceedings under Missouris consumer protection legislation which resulted in a settlement involving a payment by the trustees of US$1,650,000 and US$200,000 in costs.
When it became clear that further proceedings were likely to be brought by Attorneys General in other states, that the number of consumer claims would increase, and that TCT would not have sufficient funds to meet all the valid claims of its beneficiaries, in November 2005 Adrian Roman caused Eurofinance to apply for the appointment by the High Court of the respondents on the Rubin appeal, David Rubin and Henry Lan, as receivers of TCT for the purposes of causing TCT then to obtain protection under Chapter 11 of Title 11 of the United States Code (Chapter 11).
The English court was told that Chapter 11 reorganisation proceedings would result in an automatic stay of proceedings against TCT, would enable the receivers to reject unprofitable or burdensome executory contracts, and might result in the recovery as preferential payments of sums paid to consumers and to the Missouri Attorney General.
In November 2005 the respondents were appointed as receivers by order of Lewison J, and in the following month, the respondents and the trustees then caused TCT to present a voluntary petition to the US Bankruptcy Court for relief under Chapter 11.
TCT was placed into Chapter 11 proceedings in New York as virtually all of its 60,000 creditors were located in the United States or Canada as were its assets.
As a matter of United States bankruptcy law, TCT could be the subject matter of a petition for relief under Chapter 11 as a debtor.
This is because a trust such as TCT is treated under Chapter 11 as a separate legal entity under the classification of a business trust.
A joint plan of liquidation for TCT was prepared, and in September 2007 Lewison J ordered that the respondents (as receivers) be at liberty to seek approval of the plan from the US Bankruptcy Court.
Under the terms of the plan the respondents were appointed legal representatives of TCT and given the power to commence, prosecute and resolve all causes of action against potential defendants including the appellants.
The US Bankruptcy Court approved the plan in October 2007, and appointed the respondents as foreign representatives of the debtor to make application to the Chancery Division in London for recognition of the Chapter 11 proceedings as a foreign main proceeding under the CBIR; and to seek aid, assistance and co operation from the High Court in connection with the Chapter 11 proceedings, and, in particular to seek the High Courts assistance and co operation in the prosecution of litigation which might be commenced in the US Bankruptcy Court including the enforcement of judgments of this court that may be obtained against persons and entities residing or owning property in Great Britain
In December 2007 proceedings were commenced in the US Bankruptcy
Court by the issue of a complaint against a number of defendants including the appellants.
These claims fall within the category of adversary proceedings under the US bankruptcy legislation, and I will use this term to refer to them.
The adversary proceedings comprised a number of claims including causes of action arising under the US Bankruptcy Code, which related to funds received by TCT from merchants which were paid out to the defendants (including the appellants), or to amounts transferred to the defendants within one year prior to the commencement of the TCT bankruptcy case including the appellants.
The defendants were the appellants and other parties involved with the programme.
The appellants were served personally with the complaint commencing the adversary proceedings but did not defend, or participate, in the adversary proceedings, although it appears from a judgment of the US Bankruptcy Court that Eurofinance SA had filed a notice of appearance in the main Chapter 11 proceedings (Order of 22 July 2008, paras 42 43).
On 22 July 2008 default and summary judgment was entered against the appellants in the adversary proceedings by the US Bankruptcy Court.
The US Bankruptcy Court entered a judgment against the appellants on the ten counts of the complaint.
In November 2008 the respondents applied as foreign representatives to the Chancery Division for, inter alia, (a) an order that the Chapter 11 proceedings be recognised as a foreign main proceeding (b) an order that the respondents be recognised as foreign representatives within the meaning of article 2(j) of the Model Law in relation to those proceedings; and (c) an order that the US Bankruptcy Courts judgment be enforced as a judgment of the English court in accordance with CPR Pts 70 and 73.
Nicholas Strauss QC, sitting as a deputy judge of the Chancery Division, recognised the Chapter 11 proceedings (including the adversary proceedings) as foreign main proceedings, and the respondents as foreign representatives, but refused to enforce the judgments in the adversary proceedings because (a) at common law the English court will not enforce a judgment in personam contrary to the normal jurisdictional rules for foreign judgments; and (b) there was nothing in CBIR, articles 21(e) (realisation of assets) and 25 (judicial co operation), which justified the enforcement of judgments in insolvency proceedings.
At first instance the respondents sought to enforce the entirety of the US Bankruptcy Courts judgment, but before the Court of Appeal they sought an order for the enforcement of those parts of the judgment which were based on state or federal avoidance laws, including fraudulent conveyance under State Fraudulent Conveyance Laws, and under federal law, namely fraudulent transfers under section 548(a) of 11 USC; liability of transferees of avoided transfers under section 550; fraudulent transfers under section 548(b) and liability of transferees of avoided transfers under section 550.
The Court of Appeal (Ward and Wilson LJJ and Henderson J) allowed an appeal, and held that the judgment was enforceable: [2010] EWCA Civ 895, [2011] Ch 133.
New Cap
In the New Cap appeal the appellants are members of Lloyds Syndicate Number 991 (the Syndicate) for the 1997 and 1998 years of account.
The respondents are a reinsurance company (New Cap) and its liquidator, a partner in Ernst & Young in Sydney.
New Cap is an Australian company, which was licensed as an insurance company in Australia under the Australian Corporations Act 2001 (Cth) (the Australian Act).
New Cap did not conduct insurance business in any country other than Australia, and the majority of New Cap's business was generated through reinsurance brokers conducting business in Australia and the balance was generated from overseas insurance brokers.
New Cap reinsured the Syndicate in relation to losses occurring on risks attaching during the 1997 and 1998 years of account under reinsurance contracts which were subject to English law, and contained London arbitration clauses and also (oddly) English jurisdiction clauses.
The reinsurance contracts were placed with New Cap by the Syndicates Australian broker, which was the sub broker for the Syndicates London broker.
Each reinsurance contract contained a commutation clause.
The Syndicate and New Cap entered into a commutation agreement to commute the reinsurances with effect from 11 December 1998.
Under the commutation agreement, New Cap agreed to make a lump sum payment to the Syndicate by 31 December 1998 in consideration for its release from liability under the reinsurance contracts.
The payments were calculated on the basis of a 7.5% discount and a deduction from premium.
New Cap made payment pursuant to the commutation agreements in two instalments of US$2,000,000 and US$3,980,600 in January 1999.
The commutation payments were made from a bank account held by New Cap at the Sydney branch of the Commonwealth Bank of Australia to a bank account in London.
The second respondent was appointed the administrator of New Cap by a resolution of its directors in April 1999.
In September 1999 the creditors of New Cap resolved that New Cap be wound up and the second respondent (the liquidator) was appointed its liquidator.
Under the Australian legislation, the winding up is deemed to have commenced on the day on which the administration began.
In April 2002 the liquidator caused proceedings to be commenced against the Syndicate in the Supreme Court of New South Wales alleging that because New Cap was insolvent when the commutation payments were made in January 1999, and because those payments were made within the period of six months ending on the date when the administrator was appointed, they constituted unfair preferences and were thus voidable transactions under Part 5.7B of the Australian Act.
The Syndicate (which does not accept that the payments were preferences) refused to accept service of the Australian proceedings.
The liquidator obtained leave from the Australian court to serve the Australian proceedings on the Syndicates English solicitors in London.
The Syndicate did not enter an appearance to the proceedings, but corresponded with the liquidators solicitors, including commenting on an Independent Expert's Report to be used by the respondents as evidence of New Caps insolvency in all of the avoidance proceedings including the proceedings against the Syndicate.
The Australian court (White J in a judgment in September 2008, and Barrett J in a judgment in July 2009) recognised that there had been no submission by the Syndicate to the jurisdiction of the Australian court in that it did not enter an appearance, but White J held that the Australian court had jurisdiction over the Syndicate because a cause of action available under the Australian Act for the recovery of a preferential payment to an overseas party made when the company is insolvent was a cause of action which arose in New South Wales for the purposes of the New South Wales provisions for service out of the jurisdiction.
Barrett J gave a reasoned judgment in July 2009 holding the Syndicate liable.
After the respondents had been given leave to re open their case so that the orders made by the Australian court would more accurately reflect the differences between those appellants who were members of the Syndicate for the 1997 year of account and those appellants who were members for the 1998 year of account, the Australian court entered final judgment against the Syndicate in its absence on 11 September 2009.
The Australian judgment declared that the commutation payments were voidable transactions within the meaning of part 5.7B of the Australian Act and ordered the Syndicate to repay the amount of the commutation payments to the liquidator together with interest.
On the liquidators application the Australian court issued, in October 2009, a letter of request to the High Court in England and Wales requesting that the court act in aid of and assist the Australian court and exercise jurisdiction under section 426 of the Insolvency Act 1986 by: (1) ordering the Syndicate to pay the sums specified in the Australian judgment; alternatively (2) allowing the liquidator to commence fresh proceedings under the Australian Act in the English Court; (3) granting such further and other relief as the High Court may consider just; and (4) making such further or other orders as may, in the opinion of the High Court, be necessary or appropriate to give effect to the foregoing orders.
On 30 July 2010, the Court of Appeal handed down judgment in Rubin.
As a result, the respondents' alternative application for permission to commence fresh proceedings against the Syndicate under the Australian Act in England pursuant to section 426 of the Insolvency Act 1986 was adjourned generally, and the respondents were granted permission to seek relief at common law as an alternative to relief under section 426.
In New Cap Lewison J and the Court of Appeal were bound by the decision of the Court of Appeal in Rubin.
Lewison J held: (a) the judgment was not enforceable under the Foreign Judgments (Reciprocal Enforcement) Act 1933 because, although it applied to Australian judgments, it did not apply to orders made in insolvency proceedings; but (b) the judgment was enforceable under the assistance provision of section 426 of the Insolvency Act 1986 and also at common law: [2011] EWHC 677 (Ch).
The Court of Appeal (Mummery, Lloyd and Macfarlane LJJ) affirmed Lewison Js judgment on these grounds: (a) the 1933 Act applied, and registration would not be set aside for lack of jurisdiction in the foreign court, because of the Rubin decision; (b) section 426 could also be used and was not excluded by section 6 of the 1933 Act; (c) but section 6 would preclude an action at common law; (d) it was not necessary to decide whether the courts power of assistance at common law was exercisable where the statutory power was available: [2011] EWCA Civ 971, [2012] 2 WLR 1095.
Picard v Vizcaya Partners Ltd
This court gave permission for intervention by a written submission on behalf of Mr Irving Picard (the trustee), the trustee for the liquidation in the United States under the Securities Investor Protection Act of 1970 (SIPA) of Bernard L Madoff Investment Securities LLC (Madoff), which was Bernard Madoffs broking company.
The trustee is seeking to enforce at common law in Gibraltar judgments of the US Bankruptcy Court against Vizcaya Partners Ltd (Vizcaya), a BVI company, for $180m, and against Asphalia Fund Ltd (Asphalia), a Cayman Islands company, for $67m, representing alleged preferential payments.
He is also seeking to enforce a US Bankruptcy Court default judgment in excess of $1 billion in the Cayman Islands in Picard v Harley International (Cayman) Ltd. The Gibraltar and Cayman Islands proceedings have been adjourned to await the outcome of the present appeals.
In Picard v Vizcaya Partners Ltd proceedings have been brought in Gibraltar to enforce the default judgments against Vizcaya and Asphalia because $73m is held there on behalf of Vizcaya which the trustee maintains is available to satisfy the judgments.
Vizcaya and Asphalia have also, with the permission of the court, intervened by written submission.
There is no agreed statement of facts relating to this aspect of the case, and nothing which is said here about the facts should be taken as representing or reflecting any finding.
According to Vizcaya and Asphalia the position is as follows.
Between 2002 and 2007, a bank in Europe, acting as a custodian trustee for Vizcaya, sent $327m to Madoff for investment in securities.
Unknown to the bank, or to Vizcaya, or its shareholder Asphalia, Madoff had been engaged in a Ponzi scheme for some 30 years, and their money was never invested in securities.
In 2008, at the time of the credit crunch and the banking crisis, the custodian trustee withdrew $180m (leaving $147m with Madoff) and $67m of the $180m was paid to Asphalia.
In late 2008, the Madoff fraud came to light, and the trustee was appointed.
The trustee targeted investors who had withdrawn investments from Madoff in the two years before its collapse in December 2008 as a source for recovery of customer property for the benefit of other investors who had not withdrawn their investments.
The trustee commenced adversary proceedings in the US Bankruptcy Court alleging preference and fraudulent conveyance against Vizcaya and Asphalia under SIPA and under the Bankruptcy Code, the effect of which, they say, is that (a) as the trustee argues, a person who, on the basis that he has received customer money has been required to repay a preference, does not necessarily become a customer and thereby entitled to share with other customers in the bankruptcy; and (b) the trustee may avoid a payment made by the bankrupt to a creditor 90 days before the commencement of the bankruptcy, irrespective of the intention with which the payment is made or received.
The trustee obtained judgments in default, and Vizcaya and Asphalia say that they took no part in the New York proceedings because they had no connection with New York, and in particular (a) Asphalia was not a customer of Madoff but a shareholder of Vizcaya; (b) arguably Vizcaya was not a customer since it had appointed the bank to act as custodian trustee and it was the bank which entered into contracts with Madoff.
The issues
The principal issue on these appeals is whether the rules at common law or under the 1933 Act regulating those foreign courts which are to be regarded as being competent for the purposes of enforcement of judgments apply to judgments in avoidance proceedings in insolvency, and, if not, what rules do apply (section V below).
The other issues are whether, in the Rubin appeal, enforcement may be effected through the assistance provisions of the Cross Border Insolvency Regulations 2006 (section VI) or, in the New Cap appeal, section 426 of the Insolvency Act 1986 (section VII); whether the judgments are enforceable as a result of the submission by the judgment debtors to the jurisdiction of the foreign courts (section VIII); and, in the New Cap appeal, if the judgment is enforceable, whether enforcement is at common law or under the 1933 Act (section IX).
V The first issue: recognition and enforcement of foreign judgments in insolvency proceedings
Reasoning of the Court of Appeal in Rubin and the issue on the appeal
The Court of Appeal in the Rubin appeal decided that a foreign insolvency judgment could be enforced in England and Wales at common law against a defendant not subject to the jurisdiction of the foreign court under the traditional rule as formulated in the Dicey Rule.
As I have already said, on the Rubin appeal in the Court of Appeal the receivers sought only to enforce those parts of the judgment which in effect related to the avoidance causes of action.
The Court of Appeal held that the judgment (as narrowed) was enforceable at common law.
The reasoning was as follows: (a) the judgment was final and conclusive, and for definite sums of money, and on the face of the orders was a judgment in personam; (b) it was common ground that the judgment debtors were not resident (this was a slip for present since the action was at common law and not under the 1933 Act) when the proceedings were instituted, and did not submit to the jurisdiction, and so at first blush had an impregnable defence; (c) Cambridge Gas decided that the bankruptcy order with which it was concerned was neither in personam nor in rem, and its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established: Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85, para 23; (d) bankruptcy was a collective proceeding to enforce rights and not to establish them: Cambridge Gas [2006] UKPC 26, [2007] 1 AC 508, para 15; (e) the issue was whether avoidance proceedings which could only be brought by the representative of the bankrupt were to be characterised as part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them; (f) the adversary proceedings were part and parcel of the Chapter 11 proceedings; (g) the ordinary rules for enforcing foreign judgments in personam did not apply to bankruptcy proceedings; (h) avoidance mechanisms were integral to and central to the collective nature of bankruptcy and were not merely incidental procedural matters; (i) the process of collection of assets will include the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: HIH [2008] UKHL 21, [2008] 1 WLR 852, para 19; (j) the judgment of the US Bankruptcy Court was a judgment in, and for the purposes of, the collective enforcement regime of the insolvency proceedings, and was governed by the sui generis private international law rules relating to insolvency; (k) that was a desirable development of the common law founded on the principles of modified universalism, and did not require the court to enforce anything that it could not do, mutatis mutandis, in a domestic context; (l) there was a principle of private international law that bankruptcy should be unitary and universal, and there should be a unitary insolvency proceeding in the court of the bankrupts domicile which receives worldwide recognition and should apply universally to all the bankrupts assets; (m) there was a further principle that recognition carried with it the active assistance of the court which included assistance by doing whatever the English court could do in the case of a domestic insolvency; (n) there was no unfairness to the appellants in upholding the judgment because they were fully aware of the proceedings, and after taking advice chose not to participate: [2011] Ch 133, paras 38, 41, 43, 45, 48, 50, 61 62, 64.
It was unnecessary to decide whether the judgment was enforceable under the CBIR: para 63.
In short, Ward LJ accepted that the judgment was an in personam judgment, but he decided that the Dicey Rule did not apply to foreign judgments in avoidance proceedings because they were central to the collective enforcement regime in insolvency and were governed by special rules.
The essential questions on this aspect of the appeals are these.
Is the judgment in each case to be regarded as a judgment in personam within the scope of the traditional rules embodied in the Dicey Rule, or is it to be characterised as an insolvency order which is part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them? Is that a distinction which has a role to play? Is there a distinction between claims which are central to the purpose of the proceedings and claims which are incidental procedural matters? As a matter of policy, should the court, in the interests of universality of insolvency proceedings, devise a rule for the recognition and enforcement of judgments in foreign insolvency proceedings which is more expansive, and more favourable to liquidators, trustees in bankruptcy, receivers and other officeholders, than the traditional common law rule embodied in the Dicey Rule, or should it be left to legislation preceded by any necessary consultation?
Ward LJs conclusion derives from a careful synthesis of dicta in Lord Hoffmanns brilliantly expressed opinion in Cambridge Gas and his equally brilliant speech in HIH, each of which has on these appeals been subjected to an exceptionally detailed analysis.
For reasons which will be developed, I do not agree with the conclusions which Ward LJ draws.
But I begin with two matters on which I accept the respondents analysis.
The first is that avoidance proceedings have characteristics which distinguish them from ordinary claims such as claims in contract or tort.
The second is that, if it were necessary to draw a distinction between insolvency orders and other orders, it would not be difficult to formulate criteria for the distinction, along similar lines to that drawn by the European Court in relation to the Brussels Convention, the Brussels I Regulation (Council Regulation (EC) 44/2001) and the EC Insolvency Regulation.
Nature of avoidance proceedings
In order to achieve a proper and fair distribution of assets between creditors, it will often be necessary to adjust prior transactions and to recover previous dispositions of property so as to constitute the estate which is available for distribution.
The principle of equality among creditors which underlies the pari passu principle may require the adjustment of concluded transactions which but for the winding up of the company would have remained binding on the company, and the return to the company of payments made or property transferred under the transactions or the reversal of their effect.
Systems of insolvency law use avoidance proceedings as mechanisms for adjusting prior transactions by the debtor and for recovering property disposed of by the debtor prior to the insolvency.
Thus under the Insolvency Act 1986 an administrator, or liquidator, or trustee in bankruptcy may, where there has been a transaction at an undervalue, or amounting to an unlawful preference, apply for an order restoring the position to what it would have been had the transaction not taken place: sections 238 et seq and 339 et seq.
Other systems of law have similar mechanisms, but they will differ in matters such as the period during which such transactions are at risk of reversal and the role of good faith of the parties to the transaction.
The underlying policy is to protect the general body of creditors against a diminution of the assets by a transaction which confers an unfair or improper advantage on the other party, and it is therefore an essential aspect of the process of liquidation that antecedent transactions whose consequences have been detrimental to the collective interest of the creditors should be amenable to adjustment or avoidance: Fletcher, Law of Insolvency, 4th ed (2009), para 26 002; Goode, Principles of Corporate Insolvency Law, 4th ed (2011), para 13 03.
Thus the UNCITRAL Legislative Guide on Insolvency Law (2005) says: 150.
Many insolvency laws include provisions that apply retroactively from a particular date (such as the date of application for, or commencement of, insolvency proceedings) for a specified period of time (often referred to as the suspect period) and are designed to overturn those past transactions to which the insolvent debtor was a party or which involved the debtor's assets where they have certain effects. 151.
It is a generally accepted principle of insolvency law that collective action is more efficient in maximizing the assets available to creditors than a system that leaves creditors free to pursue their individual remedies and that it requires all like creditors to receive the same treatment.
Provisions dealing with avoidance powers are designed to support these collective goals, ensuring that creditors receive a fair allocation of an insolvent debtors assets consistent with established priorities and preserving the integrity of the insolvency estate.
In In re Condor Insurance Ltd, 601 F 3d 319, 326 (5th Cir 2010), the Court
of Appeals for the Fifth Circuit said that: Avoidance laws have the purpose and effect of re ordering the distribution of a debtors assets in favor of the collective priorities established by the distribution statute [and] must be treated as an integral part of the entire bankruptcy system.
In different phases of the Australian proceedings in New Cap Barrett J made similar points.
He said that in an action for unfair preference under the Australian legislation the liquidator might obtain an order for the payment of money, but the action did not contemplate recovery in the sense applicable to damages and debts; and the proceedings sought to remedy or counter the effects of that depletion caused by the payment by New Cap: New Cap Reinsurance Corpn v Renaissance Reinsurance Ltd [2002] NSWSC 856, paras 23, 27.
The order does not vindicate property rights which the company itself would have had prior to liquidation, but statutory rights which the liquidator has under the statutory scheme in consequence of winding up.
The purpose of the order for the payment of money to a company in liquidation is not to compensate the company, but to adjust the rights of creditors among themselves in such a way as to eliminate the effects of favourable treatment afforded to one or more creditors, to the exclusion of others, in the period immediately before an insolvent administration commences: New Cap Reinsurance Corpn v Grant [2009] NSWSC 662, 257 ALR 740, paras 20 21.
Difference between insolvency claims and others
I also accept that, if there were to be a separate rule for the recognition and enforcement of insolvency orders, it would not normally be difficult to distinguish between judgments in insolvency proceedings which are peculiarly the subject of insolvency law such as avoidance proceedings, and other judgments of the kind which are covered by the Dicey Rule.
In the context of the Brussels Convention, the Brussels I Regulation and the EC Insolvency Regulation, the European Court has developed a distinction between claims which derive directly from the bankruptcy or winding up, and which are closely connected with them, on the one hand, and those which do not, on the other hand, and the distinction has been applied by the English court.
In my judgment, the distinction is a workable one which could be adapted to other contexts should it be useful or necessary to do so.
Claims which were regarded as bankruptcy claims have been held to include a claim under French law by a liquidator against a director to make good a deficiency in the assets of a company (Gourdain v Nadler (Case 133/78) [1979] ECR 733); or a claim under German law to set aside a transaction detrimental to creditors (Seagon v Deko Marty NV (Case C 339/07) [2009] 1 WLR 2168).
Claims outside the category of bankruptcy claims have been held to include an action brought by a seller based on a reservation of title against a purchaser who was insolvent (German Graphics Graphische Maschinen GmbH v van der Schee (Case C 292/08) [2009] ECR I 8421) or a claim by a liquidator as to beneficial ownership of an asset (Byers v Yacht Bull Corp [2010] EWHC 133 (Ch), [2010] BCC 368).
In Oakley v Ultra Vehicle Design Ltd [2005] EWHC 872 (Ch), [2006] BCC 57, Lloyd LJ (sitting as an additional judge of the Chancery Division) said, at para 42): it has been held that a claim by a liquidator to recover pre liquidation debts, although made in the course of the winding up and so, in a sense, relating to it, does not derive directly from it and is therefore not excluded from the Brussels Convention (and therefore now not from the [Brussels I] Regulation) by article 1.2(b): see In re Hayward decd [1997] Ch 45, and UBS AG v Omni Holding AG [2000] 1 WLR 916.
By contrast, proceedings by a liquidator against a director or a third party to set aside a transaction as having been effected at an undervalue or on the basis of wrongful or fraudulent trading would be claims deriving directly from the winding up and therefore excluded from the Brussels Convention and now from the [Brussels I] Regulation.
In personam or sui generis?
I have already quoted the passage in Cambridge Gas in which Lord Hoffmann distinguished between judgments in rem and in personam, on the one hand, and judgments in bankruptcy proceedings, on the other, but it is necessary to repeat it at this point.
He said: 13.
Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person.
When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so.
The judgment itself is treated as the source of the right. 14.
The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established.
There is no doubt that the order of the US Bankruptcy Court in Cambridge Gas did not fall into the category of an in personam order.
Even though the question whether a foreign judgment is in personam or in rem is sometimes a difficult one (Dicey, 15th ed, para 14 109), that was not a personal order against its shareholders, including Cambridge Gas.
The order vested the shares in Navigator in the creditors committee.
It did not declare existing property rights.
Indeed the whole purpose of what was the functional equivalent of a scheme of arrangement was to alter property rights.
But it is not easy to see why it was not an in rem order in relation to property in the Isle of Man in the sense of deciding the status of a thing and purporting to bind the world: see Jowitts Dictionary of English Law, 3rd ed (2010) (ed Greenberg), p 1249.
The judgments in the Rubin and New Cap appeals were based on avoidance legislation which, with some differences of substance, performs the same function as the equivalent provisions in the Insolvency Act 1986 and its predecessors.
But Ward LJ in Rubin accepted that the judgment was in personam and the Rubin respondents have not sought to argue that it was not an in personam judgment.
What they say is that, even if it is in personam, it is within a sui generis category of insolvency orders or judgments subject to special rules.
There can be no doubt that the avoidance orders in the present appeals are in personam.
In In re Paramount Airways Ltd [1993] Ch. 223, 238, Nicholls LJ said that the remedies under section 238 of the Insolvency Act 1986, (transactions at an undervalue) were primarily of an in personam character, and that accords with the nature of the orders in these appeals.
The form of judgment of the US Bankruptcy Court in the Rubin case was that plaintiffs have judgment against the defendants in the sums awarded, and the orders of the New South Wales Supreme Court in the New Cap case included orders that the defendants pay to the first plaintiff the sums due under section 588FF(1) of the Australian Corporations Act.
The question of principle and policy
Since the judgments are in personam the principles in the Dicey Rule are applicable unless the court holds that there is, or should be, a separate rule for judgments in personam in insolvency proceedings, at any rate where those judgments are not designed to establish the existence of rights, but are central to the purpose of the insolvency proceedings or part of the mechanism of collective execution.
Prior to Cambridge Gas and the present cases, there had been no suggestion that there might be a different rule for judgments in personam in insolvency proceedings and other proceedings.
There are no cases in England which are helpful.
The normal rules for enforcement of foreign judgments were applied to a claim by a liquidator for moneys due to the company (Gavin Gibson & Co Ltd v Gibson [1913] 3 KB 379) and to a claim on a debt ascertained in bankruptcy under German law (Berliner Industriebank Aktiengesellschaft v Jost [1971] 2 QB 463).
A judgment of the US Bankruptcy Court in Chapter 11 proceedings for repayment of a preferential transfer was enforced in Ontario on the basis of the judgment debtors submission to the New York court, without any suggestion that the normal rules did not apply: Gourmet Resources International Inc v Paramount Capital Corpn (1991) 3 OR (3d) 286, [1993] ILPr 583, app dismissed (1993) 14 OR (3d) 319 (Ont CA).
The principles in the Dicey Rule have never received the express approval of the House of Lords or the UK Supreme Court and the leading decisions remain Adams v Cape Industries plc [1990] Ch 433 and the older Court of Appeal authorities which it re states or re interprets.
But there can be no doubt that the references by the House of Lords in the context of foreign judgments to the foreign court of competent jurisdiction are implicit references to the common law rule: eg In re Henderson, Nouvion v Freeman (1890) 15 App Cas 1, 8; Owens Bank Ltd v Bracco [1992] 2 AC 443, 484.
The Rubin respondents question whether the rules remain sound in the modern world.
It is true that the common law rule was rejected in Canada, at first in the context of the inter provincial recognition of judgments.
The Supreme Court of Canada held that the English rules developed in the 19th century for the recognition and enforcement of judgments of foreign countries could not be transposed to the enforcement of judgments from sister provinces in a single country with a common market and a single citizenship.
Instead a judgment given against a person outside the jurisdiction should be recognised and enforced if the subject matter of the action had a real and substantial connection with the province in which the judgment was given: Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, para 45.
This approach was applied, by a majority, to foreign country judgments in Beals v Saldanha [2003] 3 SCR 416 (applied to the recognition of an English order convening meetings in a scheme of arrangement in Re Cavell Insurance Co (2006) 269 DLR (4th) 679 (Ont CA)).
There is no support in England for such an approach except in the field of family law.
In Indyka v Indyka [1969] 1 AC 33 it was held that a foreign decree of divorce would be recognised at common law if there was a real and substantial connection between the petitioner (or the respondent) and the country where the divorce was obtained.
This rule (now superseded by the Family Law Act 1986) was in part devised to avoid limping marriages, ie cases where the parties were regarded as divorced in one country but regarded as married in another country.
It has never been adopted outside the family law sphere in the context of foreign judgments.
The Supreme Court of Ireland in In re Flightlease (Ireland) Ltd [2012] IESC 12 declined to follow Cambridge Gas (and also the decision of the Court of Appeal in Rubin) and also held that the Dicey Rule should not be rejected in favour of a real and substantial connection test.
In Flightlease the airline Swissair was in a form of debt restructuring proceeding in Switzerland, where it was incorporated.
Flightlease is an Irish company in the same group as Swissair.
An application was before the Swiss courts under the Swiss federal statute on debt enforcement and bankruptcy seeking the return of money paid by Swissair to Flightlease.
The proceedings had reached the stage of judgment, but the liquidators of Flightlease were concerned to know whether a Swiss judgment would be enforceable in Ireland so that they could decide whether to appear in the Swiss proceedings.
The Irish Supreme Court held that the judgment would not be enforceable if Flightlease did not appear in the Swiss proceedings for these reasons: (1) the effect of the Swiss order would be to establish a liability on Flightlease to repay moneys and would therefore result in a judgment in personam; (2) it would be preferable for any change in the rules relating to the enforcement of foreign judgments to take place in the context of international consensus by way of treaty or convention given effect by legislation.
In particular, the Irish Supreme Court said that it would not adopt the approach in Cambridge Gas because it had resulted from legislative changes in the United Kingdom (this appears to have been based on a misapprehension), and should not be adopted in Ireland in the absence of consensus among common law jurisdictions.
But there is no suggestion on this appeal that the principles embodied in the Dicey Rule should be abandoned.
Instead the Rubin respondents suggest that the principles should not apply to foreign insolvency orders.
The respondents accept that the Dicey Rule applies to claims which may be of considerable significance by an officeholder in a foreign insolvency, such as a claim for breach of contract, or a tort claim, or a claim to recover debts.
It is clear that such claims may affect the size of the insolvent estate just as much, and often more, than avoidance claims.
Like claims to recover money due to the insolvent estate such as restitutionary claims not involving avoidance, avoidance claims may establish a liability to pay or repay money to the bankrupt estate (as in the present cases).
There is no difference of principle.
The question, therefore, is one of policy.
Should there be a more liberal rule for avoidance judgments in the interests of the universality of bankruptcy and similar procedures? In my judgment the answer is in the negative for the following reasons.
First, although I accept that it is possible to distinguish between avoidance claims and normal claims, for example in contract or tort, it is difficult to see in the present context a difference of principle between a foreign judgment against a debtor on a substantial debt due to a company in liquidation and a foreign judgment against a creditor for repayment of a preferential payment.
The respondents suggest that a person who sells goods to a foreign company accepts the risk of the insolvency legislation of the place of incorporation.
Quite apart from the fact that the suggestion is wholly unrealistic, why should the seller/creditor be in a worse position than a buyer/debtor?
The second reason is that if there is to be a different rule for foreign judgments in such proceedings as avoidance proceedings, the court will have to ascertain (or, more accurately, develop) two jurisdictional rules.
There are two aspects of jurisdiction which would have to be satisfied if a foreign insolvency judgment or order is to be outside the scope of the Dicey Rule: the first is the requisite nexus between the insolvency and the foreign court, and the second is the requisite nexus between the judgment debtor and the foreign court.
In Cambridge Gas Navigator was an Isle of Man company, and the jurisdiction of the United States Bankruptcy Court depends on whether the debtor resides or has a domicile or place of business, or property, in the United States.
The shares in Navigator owned by Cambridge Gas (a Cayman Islands company) were, on ordinary principles of the conflict of laws, situated in the Isle of Man, and the shareholder relationship between Navigator and Cambridge Gas was governed by Manx law.
The Privy Council, as noted above, did not articulate any rule for the jurisdiction of the US Bankruptcy Court over Navigator (although it had plainly submitted to its jurisdiction) or over Cambridge Gas (which, the Manx courts had held and the Privy Council accepted, had not submitted) or over Cambridge Gas Manx assets.
Nor did the Court of Appeal in Rubin articulate the reasons why the English court recognised the jurisdiction of the US Bankruptcy Court over TCT, or over the appellants.
The receivers appear to have proceeded originally on the basis that the United States Bankruptcy Court had jurisdiction under United States bankruptcy law because of TCTs residence and principal place of business in New York (petition, 5 December 2005), but the US Bankruptcy Court, in deciding to appoint the receivers as foreign representatives also noted that TCTs business operations were conducted primarily in the United States, the majority of its creditors, substantially all of its assets, and its centre of main interests, were all in the United States.
The basis of jurisdiction of the US Bankruptcy Court under United States law over the individual defendants in Rubin was that they were subject both to the general jurisdiction of the court (ie connection of the defendant with the jurisdiction) and also to the specific jurisdiction of the court (ie connection of the cause of action with the jurisdiction) because they specifically sought out the United States as a place to do business and specifically sought out United States merchants and consumers with whom to do business.
Accordingly, the exercise of jurisdiction satisfied the due process requirements of the Fifth Amendment.
The basis of jurisdiction in New Cap over New Cap itself was of course that it was incorporated in Australia.
The basis of jurisdiction over the Syndicate under New South Wales law was that the cause of action against the Syndicate arose in New South Wales.
The respondents do not put forward any principled suggestion for rules which will deal with the two aspects of jurisdiction.
They accept, as regards the jurisdictional link between the foreign country and the insolvent estate, that English law has traditionally recognised insolvency proceedings taking place in an individual bankrupts place of domicile, or, in the case of corporations, the place of incorporation, but (because the connection which the trustees of the TCT, or the TCT itself, had with the United States was that the trusts main business was there) they rely on what Lord Hoffmann said in HIH [2008] UKHL 21, [2008] 1 WLR 852, para 31: I have spoken in a rather old fashioned way of the companys domicile because that is the term used in the old cases, but I do not claim it is necessarily the best one.
Usually it means the place where the company is incorporated but that may be some offshore island with which the company's business has no real connection.
The Council Regulation on insolvency proceedings (Council Regulation (EC) No 1346/2000 of 29 May 2000) uses the concept of the centre of a debtor's main interests as a test, with a presumption that it is the place where the registered office is situated: see article 3.1.
That may be more appropriate.
They propose that each of these issues be resolved, not by a black letter rule like the common law rule for enforcement of judgments, but instead by an appeal to what was said in oral argument to be the discretion of the English court to assist the foreign court.
On the second aspect, the jurisdictional link between the foreign country and the judgment debtor, they accept that it is necessary for there to be an appropriate connection between the foreign insolvency proceeding and the insolvency order in respect of which recognition and enforcement is sought.
They propose that, in the exercise of the discretion, the court should adopt an approach similar to that taken by the English court in deciding whether to apply provisions of the Insolvency Act 1986, such as section 238 (transactions at an undervalue), to persons abroad, relying on In re Paramount Airways Ltd [1993] Ch 223.
That case decided that there is no implied territorial limitation to the exercise of jurisdiction over any person.
The Court of Appeal rejected the argument that the section applied only to British subjects and to persons present in England at the time of the impugned transaction.
In particular the physical absence or presence of the party at the time of the transaction bore no necessary relationship to the appropriateness of the remedy.
Nor was the test of sufficient connection with England satisfactory because it would hardly be distinguishable from the ambit of the sections being unlimited territorially: p 237.
Instead, the approach was to be found in the discretion of the court, first to grant permission to serve the proceedings out of the jurisdiction, and secondly, to make an order under the section.
On both aspects the court would take into account whether the defendant was sufficiently connected with England for it to be just and proper to make the order against him despite the foreign element.
The Rubin respondents say that In re Paramount Airways Ltd is instructive because, if the facts of the present case were reversed such that TCT had carried on the scheme in England and had been placed into insolvency proceedings here and the appellants were resident in New York, then it can be expected that the English court would have considered that England was the correct forum in which to bring section 238 proceedings to recover payments made to the appellants and would have given permission to serve out of the jurisdiction accordingly.
They go on to say that it is implicit in this that the English court would have expected the New York court then to recognise and enforce any judgment of the English court even if the appellants had remained in New York and had not contested the proceedings; and that by the same token that the court seeks and expects the recognition and enforcement abroad of its own insolvency orders, the court should recognise and enforce in England insolvency orders made in insolvency proceedings in other jurisdictions.
There is no basis for this line of reasoning.
There is no necessary connection between the exercise of jurisdiction by the English court and its recognition of the jurisdiction of foreign courts, or its expectation of the recognition of its judgments abroad.
It has frequently been said that the jurisdiction exercised under what used to be RSC Ord 11, r. 1 (and is now CPR Practice Direction 6B, para 3.1) is an exorbitant one, in that it was a wider jurisdiction than was recognised in English law as being possessed by courts of foreign countries in the absence of a treaty providing for recognition: see The Siskina (Owners of cargo lately laden on board) v Distos Cia Naviera SA [1979] AC 210, 254 per Lord Diplock; Amin Rasheed Shipping Corpn v Kuwait Insurance Co [1984] AC 50, 65 per Lord Diplock; Spiliada Maritime Corpn v Cansulex Ltd [1987] AC 460, 481 per Lord Goff of Chieveley.
Outside the sphere of matrimonial proceedings (see Travers v Holley [1953] P 246, disapproved on this aspect in Indyka v Indyka [1969] 1 AC 33) reciprocity has not played a part in the recognition and enforcement of foreign judgments at common law.
The English court does not concede jurisdiction in personam to a foreign court merely because the English court would, in corresponding circumstances, have power to order service out of the jurisdiction: In re Trepca Mines Ltd [1960] 1 WLR 1273.
In my judgment, the dicta in Cambridge Gas and HIH do not justify the result which the Court of Appeal reached.
This would not be an incremental development of existing principles, but a radical departure from substantially settled law.
There is a reason for the limited scope of the Dicey Rule and that is that there is no expectation of reciprocity on the part of foreign countries.
Typically today the introduction of new rules for enforcement of judgments depends on a degree of reciprocity.
The EC Insolvency Regulation and the Model Law were the product of lengthy negotiation and consultation.
A change in the settled law of the recognition and enforcement of judgments, and in particular the formulation of a rule for the identification of those courts which are to be regarded as courts of competent jurisdiction (such as the country where the insolvent entity has its centre of interests and the country with which the judgment debtor has a sufficient or substantial connection), has all the hallmarks of legislation, and is a matter for the legislature and not for judicial innovation.
The law relating to the enforcement of foreign judgments and the law relating to international insolvency are not areas of law which have in recent times been left to be developed by judge made law.
As Lord Bridge of Harwich put it in relation to a proposed change in the common law rule relating to fraud as a defence to the enforcement of a foreign judgment, if the law is now in need of reform, it is for the legislature, not the judiciary, to effect it: Owens Bank Ltd v Bracco [1992] 2 AC 443, 489.
Furthermore, the introduction of judge made law extending the recognition and enforcement of foreign judgments would be only to the detriment of United Kingdom businesses without any corresponding benefit.
I accept the appellants point that if recognition and enforcement were simply left to the discretion of the court, based on a factor like sufficient connection, a person in England who might have connections with a foreign territory which were only arguably sufficient would have to actively defend foreign proceedings which could result in an in personam judgment against him, only because the proceedings are incidental to bankruptcy proceedings in the courts of that territory.
Although I say nothing about the facts of the Madoff case, it might suggest that foreigners who have bona fide dealings with the United States might have to face the dilemma of the expense of defending enormous claims in the United States or not defending them and being at risk of having a default judgment enforced abroad.
Nor is there likely to be any serious injustice if this court declines to sanction a departure from the traditional rule.
It would not be appropriate to express a view on whether the officeholders in the present cases would have, or would have had, a direct remedy in England, because there might be, or might have been, issues as to the governing law, or issues as to time limits or as to good faith.
Subject to those reservations, several of the ways in which the claims were put (especially those parts of the judgment which were not the subject of these proceedings) in the United States proceedings in Rubin could have founded proceedings by trustees in England for the benefit of the creditors (as beneficiaries of the express trust).
In addition there are several other avenues available to officeholders.
Avoidance claims by a liquidator of an Australian company may be the subject of a request by the Australian court pursuant to section 426(4) of the Insolvency Act 1986, applying Australian law under section 426(5).
In appropriate cases, article 23 of the Model Law will allow avoidance claims to be made by foreign representatives under the Insolvency Act 1986.
In the cases where the insolvent estate has its centre of main interests in the European Union, judgments will be enforceable under Article 25 of the EC Insolvency Regulation.
It follows that, in my judgment, Cambridge Gas was wrongly decided.
The Privy Council accepted (in view of the conclusion that there had been no submission to the jurisdiction of the court in New York) that Cambridge Gas was not subject to the personal jurisdiction of the US Bankruptcy Court.
The property in question, namely the shares in Navigator, was situate in the Isle of Man, and therefore also not subject to the in rem jurisdiction of the US Bankruptcy Court.
There was therefore no basis for the recognition of the order of the US Bankruptcy Court in the Isle of Man.
Regulations
In the Rubin appeal it was argued by the respondents that the judgment should also be enforced through the CBIR, implementing the UNCITRAL Model Law.
The order made by the deputy judge recognised the Chapter 11 proceeding including the Adversary Proceedings, because bringing adversary proceedings against debtors of the bankrupt is clearly part of collecting the bankrupts assets with a view to distributing them to creditors and the adversary proceedings are part and parcel of the Chapter 11 insolvency proceedings: [2010] 1 All ER (Comm) 81, paras 46, 47.
The Court of Appeal was of the same view: [2011] Ch 133, para 61(2) (3).
The appellants no longer maintain that the adversary proceedings should not be recognised under the Model Law.
Issue 2: Rubin: Enforcement under the Cross Border Insolvency
The issue which still arises in relation to the Model Law as implemented by the CBIR is whether the court has power to grant relief recognising and enforcing the relevant parts of the judgment.
Article 21 provides that: 1.
Upon recognition of a foreign proceeding, whether main or non main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including (a) staying the commencement or continuation of individual actions or individual proceedings concerning the debtor's assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph l(a) of article 20; (b) staying execution against the debtor's assets to the extent it has not been stayed under paragraph l(b) of article 20; suspending the right to transfer, encumber or otherwise (c) dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1(c) of article 20; (d) providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor's assets, affairs, rights, obligations or liabilities; (e) entrusting the administration or realisation of all or part of the debtor's assets located in Great Britain to the foreign representative or another person designated by the court; (f) extending relief granted under paragraph 1 of article 19; and (g) granting any additional relief that may be available to a British insolvency officeholder under the law of Great Britain, including any relief provided under paragraph 43 of Schedule B1 to the Insolvency Act 1986.
The reference to relief under paragragh 43 of Schedule B1 to the Insolvency Act 1986 is a reference to a moratorium on claims in an administration.
The Guide to Enactment states, at paras 154, 156: [154] The types of relief listed in article 21, paragraph 1, are typical or most frequent in insolvency proceedings; however, the list is not exhaustive and the court is not restricted unnecessarily in its ability to grant any type of relief that is available under the law of the enacting state and needed in the circumstances of the case. [156] It is in the nature of discretionary relief that the court may tailor it to the case at hand.
This idea is reinforced by article 22, paragraph 2, according to which the court may subject the relief granted to conditions that it considers appropriate.
Article 25 provides (under the heading Co operation and direct communication between a court of Great Britain and foreign courts or foreign representatives) that: 1. the court may co operate to the maximum extent possible with foreign courts or foreign representatives, either directly or through a British insolvency officeholder. 2.
The court is entitled to communicate directly with, or to request information or assistance directly from, foreign courts or foreign representatives.
Article 27 provides that the co operation referred to in article 25 may be implemented by any appropriate means, including (a) appointment of a person to act at the direction of the court; (b) communication of information by any means considered appropriate by the court; (c) coordination of the administration and supervision of the debtor's assets and affairs; (d) approval or implementation by courts of agreements concerning the coordination of proceedings; (e) coordination of concurrent proceedings regarding the same debtor.
The respondents say that (a) the power under article 21 is to grant any type of relief that is available under the law of the relevant state, and that the fact that recognition and enforcement of foreign judgments is not specifically mentioned in article 21 as one of the forms of relief available, does not mean that such relief cannot be granted; (b) the recognition and enforcement of the judgments of a foreign court is the paradigm means of co operation with that court; and (c) the examples of co operation in article 27 are merely examples and are not exhaustive.
But the CBIR (and the Model Law) say nothing about the enforcement of foreign judgments against third parties.
As Lord Mance pointed out in argument, recognition and enforcement are fundamental in international cases.
Recognition and enforcement of judgments in civil and commercial matters (but not in insolvency matters) have been the subject of intense international negotiations at the Hague Conference on Private International Law, which ultimately failed because of inability to agree on recognised international bases of jurisdiction.
It would be surprising if the Model Law was intended to deal with judgments in insolvency matters by implication.
Articles 21, 25 and 27 are concerned with procedural matters.
No doubt they should be given a purposive interpretation and should be widely construed in the light of the objects of the Model Law, but there is nothing to suggest that they apply to the recognition and enforcement of foreign judgments against third parties.
The respondents rely on United States decisions but the only case involving enforcement of a foreign judgment in fact supports the appellants argument.
The Model Law has been implemented into United States law through Chapter 15 of Title 11 of the United States Code, which has in sections 1521, 1525 and 1527 provisions which are, with modifications not relevant for present purposes, equivalent to articles 21, 25 and 27 of the CBIR.
In Re Metcalfe & Mansfield Alternative Investments 421 BR 685 (Bankr SDNY 2010) the US Bankruptcy Court ordered that orders made by a Canadian court in relation to a plan of compromise and arrangement under the (Canadian) Companies Creditors Arrangement Act 1985 be enforced.
That decision does not assist the respondents because the US Bankruptcy Court applied the normal rules in non bankruptcy cases for enforcement of foreign judgments in the United States: pp 698 700.
In my judgment the Model Law is not designed to provide for the reciprocal enforcement of judgments.
VII Issue 3: New Cap: Enforcement through assistance under section 426 of
the Insolvency Act 1986
In view of my conclusion in the next section (section VIII) that the Syndicate submitted to the jurisdiction of the Australian court, the issues on section 426(4) and (5) of the Insolvency Act 1986, and their relationship with section 6 of the Foreign Judgments (Reciprocal Enforcement) Act 1933 do not arise, but since the matter was fully argued I will express a view on the applicability of section 426(4) to a case such as this.
Section 426(4) (5) of the Insolvency Act 1986 provides: (4) The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory. (5) For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom, or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matter specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction.
In exercising its discretion under this subsection, a court shall have regard in particular to the rules of private international law.
The reference to the application of rules of private international law in section 426(5) is difficult and obscure: see Dicey, 15th ed, para 30 119; my discussion in In re Television Trade Rentals [2002] EWHC 211 (Ch), [2002] BCC 807, para 17, and the cases there cited; and Al Sabah v Grupo Torras SA [2005] UKPC 1, [2005] 2 AC 333, para 47.
But nothing turns on it on these appeals.
The question is whether section 426(4) of the 1986 Act provides a procedure by which a judgment of a court having jurisdiction in relation to insolvency law in a relevant country or territory may be enforced in the United Kingdom.
As I have said, Australia is a relevant country.
A further question arises if section 426(4) applies to the enforcement of foreign judgments and that is whether section 426 is ousted by section 6 of the Foreign Judgments (Reciprocal Enforcement) Act 1933, which provides: No proceedings for the recovery of a sum payable under a foreign judgment, being a judgment to which this Part of the Act applies, other than proceedings by way of registration of the judgment, shall be entertained by any court in the United Kingdom.
Both Lewison J and the Court of Appeal [2012] 2 WLR 1095 held that section 426(4) was available as a tool for the enforcement of the judgment.
Section 426(4) has been given a broad interpretation: see Hughes v Hannover Rckversicherungs Aktiengesellschaft [1997] 1 BCLC 497 (CA); England v Smith [2001] Ch 419 (CA); HIH [2008] UKHL 21, [2008] 1 WLR 852.
It has been held that the fact that a letter of request has been made is a weighty factor, and public policy and comity favour the giving of assistance: Hughes v Hannover, at pp 517 518; England v Smith, at p 433.
Thus in England v Smith the Australian court overseeing the liquidation of the Bond Corporation made an order for the examination of a London partner in Arthur Andersen.
It issued a letter of request asking the English court to assist it by making its own order for the examination.
The Court of Appeal decided that the order should be made.
But, despite the respondents argument to the contrary, England v Smith was not a case of the enforcement of the Australian order, but rather the making of the courts own order in aid of the Australian liquidation.
In my judgment, subsections 426(4) and (5) of the 1986 Act are not concerned with enforcement of judgments.
Section 426(1) (2), by contrast, deals with enforcement of orders in one part of the United Kingdom in another part, and refer expressly to the enforcement of such orders (shall be enforced in section 426(1)).
Section 426(4) deals with assistance not only for foreign designated countries such as Australia but also to intra United Kingdom assistance.
If section 426(4) applied to intra United Kingdom enforcement of orders, then section 426(1) would be largely redundant, going beyond what the Court of Appeal [2012] 2 WLR 1095, para 57 described as a degree of overlap.
Sections 426(1) and (4) have their origin in sections 121 and 123 of the Bankruptcy Act 1914.
Section 121 of the 1914 Act provided that orders of bankruptcy courts in one part of the United Kingdom were to be enforced in other parts.
Section 122 provided that the courts exercising bankruptcy and insolvency jurisdiction in the United Kingdom and every British court elsewhere were to act in aid of, and be auxiliary to, each other; and, upon a request by the non English court, could exercise the jurisdiction of either court.
The Insolvency Law and Practice Report of the Review Committee (1982) (Cmnd 8558) (the Cork Report) said (paras 1909 1913) that section 122 was the vital section in this context, and recommended that the section should be extended to winding up.
But, despite the respondents arguments, I do not discern any recommendation which would suggest that section 426(4) applies to the enforcement of foreign judgments.
Consequently the applicability of section 6 of the 1933 Act does not arise for decision, except in a context which makes little practical difference, and to which I will revert.
VIII Submission
If the Dicey Rule applies the judgments in issue will be enforceable in England if the judgment debtors submitted to the jurisdiction of the foreign court.
New Cap
The Australian court granted leave to serve these proceedings out of the jurisdiction on the Syndicate: section IV, above.
The Syndicate did not enter an appearance, but its solicitors commented in writing on evidence presented to the Australian court about New Caps insolvency and their comments were placed before the Australian judge.
More relevant is the fact that from August 1999 the Syndicate submitted proofs of debt (in relation to unsettled claims and outstanding premiums for the 1997, 1998, and 1999 years of account, and not to the reinsurance contracts which are the subject of these proceedings) and attended and participated in creditors meetings.
In particular at an adjourned meeting of creditors on 16 September 2009 the Syndicate had given a proxy for that meeting to the chairman, and submitted a proof of debt and proxy form for that meeting.
The Syndicate voted at a meeting of creditors in favour of a scheme of arrangement.
The liquidator has admitted claims by the Syndicate for the sterling equivalent of more than 650,000, although the liquidator is retaining the dividend in partial settlement of the costs incurred in these proceedings.
The general rule in the ordinary case in England is that the party alleged to have submitted to the jurisdiction of the English court must have taken some step which is only necessary or only useful if an objection to jurisdiction has been actually waived, or if the objection has never been entertained at all: Williams & Glyns Bank plc v Astro Dinamico Compania Naviera SA [1984] 1 WLR 438, 444 (HL) approving Rein v Stein (1892) 66 LT 469, 471 (Cave J).
The same general rule has been adopted to determine whether there has been a submission to the jurisdiction of a foreign court for the purposes of the rule that a foreign judgment will be enforced on the basis that the judgment debtor has submitted to the jurisdiction of the foreign court: Adams v Cape Industries [1990] Ch 433, 459 (Scott J); Akai Pty Ltd v Peoples Insurance Co Ltd [1998] 1 Lloyds Rep 90, 96 97 (Thomas J); see also Desert Sun Loan Corpn v Hill [1996] 2 All ER 847, 856 (CA); Akande v Balfour Beatty Construction Ltd [1998] ILPr 110; Starlight International Inc v Bruce [2002] EWHC 374 (Ch), [2002] ILPr 617, para 14 (cases of foreign judgments); Industrial Maritime Carriers (Bahamas) Inc v Sinoca International Inc (The Eastern Trader) [1996] 2 Lloyds Rep 585, 601 (a case involving the question whether the party seeking an anti suit injunction in support of an English arbitration clause had waived the agreement by submitting to the jurisdiction of the foreign court).
The characterisation of whether there has been a submission for the purposes of the enforcement of foreign judgments in England depends on English law.
The court will not simply consider whether the steps taken abroad would have amounted to a submission in English proceedings.
The international context requires a broader approach.
Nor does it follow from the fact that the foreign court would have regarded steps taken in the foreign proceedings as a submission that the English court will so regard them.
Conversely, it does not necessarily follow that because the foreign court would not regard the steps as a submission that they will not be so regarded by the English court as a submission for the purposes of the enforcement of a judgment of the foreign court.
The question whether there has been a submission is to be inferred from all the facts.
It is in that context that Scott J said at first instance in Adams v Cape Industries plc [1990] 1 Ch 433, 461 (a case in which the submission issue was not before the Court of Appeal): If the steps would not have been regarded by the domestic law of the foreign court as a submission to the jurisdiction, they ought not to be so regarded here, notwithstanding that if they had been steps taken in an English court they might have constituted a submission.
The implication of procedural steps taken in foreign proceedings must be assessed in the context of the foreign proceedings.
I agree with the way it was put by Thomas J in Akai Pty Ltd v Peoples Insurance Company Ltd [1998] 1 Lloyds Rep 90, 97: The court must consider the matter objectively; it must have regard to the general framework of its own procedural rules, but also to the domestic law of the court where the steps were taken.
This is because the significance of those steps can only be understood by reference to that law.
If a step taken by a person in a foreign jurisdiction, such as making a counterclaim, might well be regarded by English law as amounting to a submission to the jurisdiction, but would not be regarded by that foreign court as a submission to its jurisdiction, an English court will take into account the position under foreign law.
The Syndicate did not take any steps in the avoidance proceedings as such which would be regarded either by the Australian court or by the English court as a submission.
Were the steps taken by the Syndicate in the liquidation a submission for the purposes of the rules relating to foreign judgments?
In English law there is no doubt that orders may be made against a foreign creditor who proves in an English liquidation or bankruptcy on the footing that by proving the foreign creditor submits to the jurisdiction of the English court.
In Ex p Robertson, In re Morton (1875) LR 20 Eq 733 trustees were appointed over the property of bankrupt potato merchants in a liquidation by arrangement.
A Scots merchant received payment of 120 after the liquidation petition was presented, and proved for a balance of 247 and received a dividend of what is now 20p in the pound.
The trustees served a notice of motion, seeking repayment of the 120 paid out of the insolvent estate, out of the jurisdiction.
The respondent objected to the jurisdiction of the English court on the ground that he was a domiciled Scotsman.
On appeal from the county court, Sir James Bacon CJ held that the court had jurisdiction.
He said, at pp 737 738: what is the consequence of creditors coming in under a liquidation or bankruptcy? They come in under what is as much a compact as if each of them had signed and sealed and sworn to the terms of it that the bankrupt's estate shall be duly administered among the creditors.
That being so, the administration of the estate is cast upon the court, and the court has jurisdiction to decide all questions of whatever kind, whether of law, fact, or whatever else the court may think necessary in order to effect complete distribution of the bankrupt's estate. [C]an there be any doubt that the Appellant in this case has agreed that, as far as he is concerned, the law of bankruptcy shall take effect as to him, and under this jurisdiction, to which he is not only subjected, but under which he has become an active party, and of which he has taken the benefit . [The Appellant] is as much bound to perform the conditions of the compact, and to submit to the jurisdiction of the court, as if he had never been out of the limits of England.
The Syndicate objected to the jurisdiction of the Australian court.
Barrett J in his judgment of 14 July 2009 accepted that it had made it clear that it was not submitting to its jurisdiction, and he also accepted that as a result the judgment of the Australian court would not be enforceable in England.
His judgment is concerned exclusively with the preference claims, and he did not deal with the question of submission by reference to the Syndicates participation in the liquidation by way of proof and receipt of dividends.
He decided that the court had jurisdiction because the New South Wales rules justified service out of the jurisdiction on the basis that the cause of action arose in New South Wales.
I would therefore accept the liquidators submission that, having chosen to submit to New Cap's Australian insolvency proceeding, the Syndicate should be taken to have submitted to the jurisdiction of the Australian court responsible for the supervision of that proceeding.
It should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding.
The position is different in the Rubin appeal.
It would certainly have been arguable that Eurofinance SA had submitted to the jurisdiction of the United States District Court, for these reasons: first, it was Eurofinance SA which applied for the appointment by the High Court of Mr Rubin and Mr Lan as receivers of TCT specifically for the purpose of causing TCT then to obtain protection under Chapter 11; second, it was Eurofinance SA which represented to the English court that officeholders appointed by the United States court would be able to pursue claims against third parties; third, the judgment of the US Bankruptcy Court states that the court had personal jurisdiction over Eurofinance SA not only because it did business in the United States but also (as I have mentioned above) because it had filed a notice of appearance in the Chapter 11 proceedings (Order 22 of July 2008, paras 42 43).
But the Rubin appellants did not appear in the adversary proceedings, and it was not argued in these proceedings that Eurofinance SA (or Mr Adrian Roman, who caused Eurofinance SA to make the application) had submitted to the jurisdiction of the US Bankruptcy Court in any other way and it is not necessary therefore to explore the matter further.
IX New Cap: enforcement at common law or under the 1933 Act
In view of my conclusion that the Australian judgment in New Cap is enforceable by reason of the Syndicates submission, a purely technical point arises on the method of enforcement.
The point is whether the enforcement is to be under the 1933 Act or at common law.
If insolvency proceedings are excluded from the 1933 Act, then enforcement would be at common law.
If they are not excluded, then (as I have said) section 6 has the effect of excluding an action at common law on the judgment and making registration under the 1933 Act the only method of enforcement of judgments within Part I of the Act.
Section 11(2) of the 1933 Act provides that the expression action in personam shall not be deemed to include (inter alia) proceedings in connection with bankruptcy and winding up of companies.
But the effect of section 4(2)(c) is that in the case of a judgment given in an action other than an action in personam or an action in rem, the foreign court shall be deemed to have jurisdiction if its jurisdiction is recognised by the English court, ie at common law.
Accordingly, the question whether insolvency proceedings are wholly excluded from the operation of the 1933 Act still arises.
There is no other provision in the 1933 Act which throws any light on the point.
The main object of the 1933 Act was to facilitate the enforcement of commercial judgments abroad by making reciprocity easier.
The only reference to insolvency proceedings in the Report of the Foreign Judgments (Reciprocal Enforcement) Committee (1932) (Cmnd 4213), (the Greer Report), which recommended the legislation, is the statement (para 4): It is not necessary for our present purposes to consider the effect in England of foreign judgments in bankruptcy proceedings.
The Report annexed draft Conventions which had been drawn up in consultation with experts from Belgium, France and Germany.
The draft Conventions with Belgium (article 4(3), (4)) and Germany (article 4(4)) provided that the jurisdictional rules in the Convention did not apply to judgments in bankruptcy proceedings or proceedings relating to the winding up of companies or other bodies corporate, but that the jurisdiction of the original court would be recognised where such recognition was in accordance with the rules of private international law observed by the court applied to.
That provision paralleled what became sections 4(2)(c) and 11(2) of the 1933 Act.
The draft Convention with France did not apply to judgments in bankruptcy proceedings etc (article 2(3)), but provided that nothing was deemed to preclude the recognition and enforcement of judgments to which the Convention did not apply: article 2(4).
The Conventions concluded with countries to which the 1933 Act applied adopted similar techniques.
It is unnecessary to set them out in detail.
But there is no reason to suppose that bankruptcy proceedings were not regarded as being civil and commercial matters.
Thus the 1961 Convention with the Federal Republic of Germany of 1961 (the Reciprocal Enforcement of Foreign Judgments (Germany) Order) (SI 1961/1199) provided in article I(6) that the expression judgments in civil and commercial matters did not include judgments for fines or penalties, and had a separate provision in article II(2) that the Convention did not apply to judgments in bankruptcy proceedings or proceedings relating to the winding up of companies or other bodies corporate (although, in accordance with the usual technique, it did not rule out recognition and enforcement: Art II(3)).
Other Conventions simply excluded bankruptcy proceedings from the specific jurisdictional provisions of the Convention, like the draft Conventions annexed to the Greer Report: article 4(5) of the Reciprocal Enforcement of Foreign Judgments (Austria) Order 1962 (SI 1962/1339), article 4(3) of the Reciprocal Enforcement of Foreign Judgments (Norway) Order 1962 (SI 1962/636), and article IV(3) of the Reciprocal Enforcement of Foreign Judgments (Italy) Order 1963 (SI 1973/1894).
The Reciprocal Enforcement of Judgments (Australia) Order 1994 (SI 1994/1901) extended the 1933 Act to Australia, implementing the UK Australia Agreement for the reciprocal enforcement of judgments in civil and commercial matters.
The Agreement is expressed in article I(c)(i) to apply to judgments in civil and commercial matters.
The Order applies Part I of the Act to judgments in respect of a civil or commercial matter (article 4(a)).
There is no reason to conclude that the phrase civil and commercial matters does not include insolvency proceedings, and the history of the 1933 Act and the Conventions shows that it does.
The fact that insolvency was expressly excluded from the operation of the Brussels Convention, the original and revised Lugano Conventions and the Brussels I Regulation in fact suggests that otherwise they would have been within their scope.
The respondents relied on a passage in the ruling of the European Court of Justice in Gourdain v Nadler (Case 133/78) [1979] ECR 733, paras 3 4, as suggesting that the exclusion of bankruptcy in article 1 of the Brussels Convention was an example of a matter excluded from the concept of civil and commercial matters.
But it is clear from the context (and from the opinion of Advocate General Reischl) that the court was simply saying that because the expression civil and commercial matters in Article 1 had to be given an autonomous meaning, so also was the case with the expression bankruptcy.
That the exclusion of bankruptcy proceedings does not affect their character as civil or commercial matters is confirmed by the recent ruling in F Tex SIA v Lietuvos Anglijos UAB Jadecloud Vilma (Case C 213/10) 19 April 2012, where the court said that the Brussels I Regulation was intended to apply to all civil and commercial matters apart from certain well defined matters and as a result actions directly deriving from insolvency proceedings and closely connected with them were excluded: para 29.
It follows that the 1933 Act applies to the Australian judgment and that enforcement should be by way of registration under the 1933 Act.
X Disposition
I would therefore allow the appeal in Rubin, but dismiss the appeal in New Cap on the ground that the Syndicate submitted to the jurisdiction of the Australian court.
LORD MANCE
I agree with Lord Collins reasoning and conclusions in his judgment on these appeals, essentially for the reasons he gives, though without subscribing to his incidental observation (para 132) that the Privy Council decision in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508 was necessarily wrongly decided.
This was not argued before the Supreme Court, and I would wish to reserve my opinion upon it.
Cambridge Gas is, on any view, distinguishable.
The common law question central to these appeals is whether the Supreme Court should endorse or introduce a special rule of recognition and enforcement, one falling outside the scope of the Dicey Rule which Lord Collins has identified (Rule 36 in the 14th and Rule 43 in the 15th edition) and applicable to judgments in foreign insolvency proceedings setting aside voidable pre insolvency transactions.
For the principal reasons which Lord Collins gives in paras 95 to 131, I agree that we should not do so.
Since much weight was placed by the respondents and the Court of Appeal upon the Boards reasoning and decision in Cambridge Gas, I add some observations to indicate why, as the present appellants submitted, it concerned circumstances and proceeded upon factual assumptions and a legal analysis which have no parallel in the present case.
Cambridge Gas has attracted both Irish judicial dissent and English academic criticism, to which Lord Collins refers in paras 53 and 111 112.
Giving the judgment of the Board in Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85, I said that the purpose of the bankruptcy order with which the Board was concerned in Cambridge Gas was simply to establish a mechanism of collective execution against the property of the debtor [Navigator] by creditors whose rights were admitted or established (para 23).
This analysis, admittedly, involved treating the vesting in creditors of shares in Navigator as no different in substance from the vesting in creditors of Navigators shares in its ship owning subsidiaries.
But it is clear from paras 8 and 9 and again 24 to 26 of the Boards advice in Cambridge Gas that the Board saw no difference.
It did not regard Cambridge Gas as having any interest of value to advance or protect in the shares still held nominally in its name.
Their vesting in Navigators creditors was no more than a mechanism for disposing of Navigators assets, which did not affect or concern Cambridge Gas.
The Board was therefore, in its view (and rightly or wrongly), concerned with distribution of the insolvent companys assets in a narrow and traditional sense.
Amplifying this, the Board approached the situation in Cambridge Gas as follows.
The New York court had jurisdiction over Navigators assets, since Navigator had submitted to the New York proceedings.
Cambridge Gass shares in Navigator (located in the Isle of Man, Navigators place of incorporation) were completely and utterly worthless: [2007] 1 AC 508, para 9.
The transfer to Navigators creditors of Cambridge Gass shares in Navigator had the like effect to a transfer of Navigators assets, since Navigator was an insolvent company, in which the shareholders ha[d] no interest of any value (para 26).
Cambridge Gass shares in Navigator were vulnerable in the Isle of Man, under section 152 of the Companies Act 1931, to a similar scheme of arrangement to that which the New York Court intended by its Chapter 11 order.
More generally, as I noted in Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391, paras 236 to 238, in insolvency shareholders interests yield to those of creditors.
It was in this limited context that the Board concluded that the New York and Manx courts orders could be regarded as doing no more than facilitating or enabling collective execution against Navigators property.
The Court of Appeal believed on the contrary that the answer to the present cases lay in the Boards general statements in Cambridge Gas at paras 19 to 21 regarding the nature of insolvency proceedings.
It is true that proceedings to avoid pre insolvency transactions can be related to the process of collection of assets.
That is, their general purpose and effect is to ensure a fair allocation of assets between all who are and were within some specified pre insolvency period creditors.
A dictum of Lord Hoffmann in In re HIH Casualty and General Insurance Ltd [2008] UKHL 21, [2008] 1 WLR 852, para 19, quoted by Lord Collins in paras 15 and 52, is to that effect, though again uttered in a different context to the present.
However, the Board did not see these considerations as answering or eliminating all questions regarding the existence of jurisdiction or at least its exercise in Cambridge Gas.
On the contrary, it went on to examine in close detail in paras 22 to 26 the limits of the assistance that a court could properly give.
In rejecting the argument that the interference with the shareholding held in Cambridge Gass name was beyond the Manx courts jurisdiction (para 26), the only reason it gave related to the nature of shares in an insolvent company.
This meant, according to its advice, that Cambridge Gas had no interest of any value to protect and that registration of the shares in Navigators creditors name was no more than a mechanism for giving creditors access to Navigators assets.
On this basis, the decision in Cambridge Gas is, as Professor Adrian Briggs noted in a penetrating case note in The British Year Book of International Law (2006) p575 581, less remarkable (although, as Professor Briggs also notes, it perhaps still poses problems of reconciliation with the Houses decision in Socit Eram Shipping Co Ltd v Hong Kong & Shanghai Banking Corp Ltd [2003] UKHL 30, [2004] AC 260).
But, because the actual decision in Cambridge Gas was so narrowly focused on the nature of a shareholders rights in an insolvent company and was not directly challenged, I prefer to leave open its correctness.
Whatever view may be taken as to the validity of the Boards reasoning in Cambridge Gas, it is clear that it does not cover or control the present appeal.
The present cases are not concerned with shares, with situations in which shares are, or are treated by the court as, no more than a key to the insolvent companys assets or even with situations in which it is clear that those objecting to recognition and enforcement of the foreign courts orders have no interests to protect.
There are, on the contrary, substantial issues as to whether there were fraudulent preferences giving rise to in personam liability in large amounts.
The persons allegedly benefitting by fraudulent preferences did not appear in the relevant foreign insolvency proceedings in which judgment was given against them.
They were (leaving aside any question of submission) outside the international jurisdiction of the relevant foreign courts.
Lord Clarke takes a different view from Lord Collins, but does not define either the circumstances in which a foreign court should, under English private international law rules, be recognised as having jurisdiction to entertain bankruptcy proceedings or, if one were (wrongly in my view) to treat the whole area as one of discretion, the factors which might make it either unjust or contrary to public policy to recognise an avoidance order made in such foreign proceedings (see paras 193, 200 and 201 of Lord Clarkes judgment).
The scope of the jurisdiction to entertain bankruptcy proceedings which English private international law will recognise a foreign court as having is described in Dicey (in para 31 064 in the 14th and 15th editions) as a vexed and controversial question.
But it would include situations in which the bankrupt or insolvent company had simply submitted to the foreign bankruptcy jurisdiction.
On Lord Clarkes analysis, in such a case (of which Rubin v Eurofinance is an example), it would be irrelevant that the debtor under the avoidance order had not submitted, and was not on any other basis subject, to the foreign jurisdiction.
It would be enough that the judgment debtor had had the chance of appearing and defending before the foreign court.
For the reasons given by Lord Collins, I do not accept that this is the common law.
In the light of the above, the Court of Appeal was, in my view, in error in seeing the solution to the present appeals as lying in the advice given by the Board in Cambridge Gas.
Even on an assumption that the actual decision in Cambridge Gas can be supported, it cannot and should not be treated as supporting the respondents case that fraudulent preference claims and avoidance orders in insolvency proceedings generally escape the common law rules requiring personal or in rem jurisdiction.
LORD CLARKE
I would like to pay tribute to the learning in Lord Collins comprehensive judgment.
However, left to myself, I would dismiss the appeal in the Rubin case.
Since I am in a minority of one, little is to be gained by my writing a long dissent.
I will therefore try to explain my reasons shortly.
In doing so, I adopt the terminology and abbreviations used by Lord Collins.
I agree with Lord Collins and Lord Mance that the decision of the Privy Council in Cambridge Gas Transportation Corpn v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 is distinguishable.
The facts there were quite different from those here.
However, in so far as it is suggested that Cambridge Gas was wrongly decided, I do not agree.
Moreover, I do not think that it would be appropriate so to hold because it was not submitted to be wrong in the course of the argument.
To my mind the approach which should be adopted is presaged in the speech of Lord Hoffmann in In re HIH Casualty and General Insurance Ltd [2008] 1 WLR 852 and in his judgment in Cambridge Gas.
As I see it, the issue is simply whether an avoidance order made by a foreign bankruptcy court made in the course of the bankruptcy proceedings, whether personal or corporate, which the court has jurisdiction to entertain, is unenforceable if it can fairly be said to be an order made either in personam or in rem.
I would answer that question in the negative.
Put another way, the question is whether the English court has jurisdiction under English rules of private international law to enforce an avoidance order made in foreign bankruptcy proceedings in circumstances where, under those rules, the foreign court has jurisdiction to entertain the bankruptcy proceedings themselves.
I would answer that question in the affirmative.
It is not, as I understand it, suggested here that the US court did not have jurisdiction to entertain the bankruptcy proceedings themselves.
The relevant paragraphs of Lord Hoffmanns judgment in Cambridge Gas are in these terms (as quoted by Lord Collins at para 43 above): 13.
Judgments in rem and in personam are judicial determinations of the existence of rights: in the one case, rights over property and in the other, rights against a person.
When a judgment in rem or in personam is recognised by a foreign court, it is accepted as establishing the right which it purports to have determined, without further inquiry into the grounds upon which it did so.
The judgment itself is treated as the source of the right. 14.
The purpose of bankruptcy proceedings, on the other hand, is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established. 15 [B]ankruptcy, whether personal or corporate, is a collective proceeding to enforce rights and not to establish them.
Of course, as Brightman LJ pointed out in In re Lines Bros Ltd [1983] Ch 1, 20, it may incidentally be necessary in the course of bankruptcy proceedings to establish rights which are challenged: proofs of debt may be rejected; or there may be a dispute over whether or not a particular item of property belonged to the debtor and is available for distribution.
There are procedures by which these questions may be tried summarily within the bankruptcy proceedings or directed to be determined by ordinary action.
But these again are incidental procedural matters and not central to the purpose of the proceedings.
The critical paragraph is para 15, which seems to me to make it clear that it is possible to have an order which is both in personam or in rem and an order of the kind referred to by Lord Hoffmann in para 14.
Thus it may be incidentally necessary to establish substantive rights in the course of the bankruptcy proceedings as part of a collective proceeding to enforce rights.
In such a case the order will be doing two things.
It will be both establishing the right and enforcing it.
This can be seen from the examples given in para 15.
Proofs of debt may be rejected, which is a process which may involve determining, for example, the substantive rights of the creditor against the debtor.
Or it may be necessary to determine whether or not a particular item of property belongs to the debtor and is available for distribution.
As para 15 contemplates, such procedures may be tried either summarily within the bankruptcy proceedings or by ordinary action.
In either such case Lord Hoffmann describes them as incidental procedures which are not central to the purpose of the bankruptcy proceedings.
As I see it, in such a case, an avoidance order may be both an order in personam or in rem and an order in the bankruptcy proceedings.
I agree with Lord Collins at para 103 that it is not easy to see why the order of the US Bankruptcy Court in Cambridge Gas was not an order in rem.
However, that does not to my mind show that Cambridge Gas was wrongly decided but demonstrates that it is possible to have an in rem order which is made as incidental to bankruptcy proceedings but which is enforceable at common law, provided that the bankruptcy court has jurisdiction in the bankruptcy.
The approach is explained by Lord Hoffmann in HIH at para 30 and in Cambridge Gas at para 16, both of which are quoted by Lord Collins at para 19 above.
In HIH he said: The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross border insolvency law since the 18th century.
That principle requires that English courts should, so far as is consistent with justice and UK public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution.
In Cambridge Gas he said: The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application.
There should be a single bankruptcy in which all creditors are entitled and required to prove.
No one should have an advantage because he happens to live in a jurisdiction where more of the assets or fewer of the creditors are situated.
At paras 94 to 98 above Lord Collins discusses the nature of avoidance proceedings.
I entirely agree with his analysis.
Avoidance provisions requiring the adjustment of prior transactions and the recovery of previous dispositions of property so as to constitute the estate available for distribution are necessary in order to maintain the principle of equality among creditors.
At para 15 Lord Collins notes that Lord Hoffmann said at para 19 of HIH that the process of collection of assets will include, for example, the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme.
In short, avoidance proceedings, and therefore avoidance orders, are central to the bankruptcy proceedings.
As Lord Collins puts it at para 98, avoidance proceedings are peculiarly the subject of insolvency law.
I accept that to permit the enforcement of an avoidance order in circumstances of this kind would be a development of the common law.
However, it seems to me that it would be a principled development.
It would in essence be an application of the principle identified by Lord Hoffmann in the passage quoted above from para 30 of HIH that the principle of modified universalism requires that English courts should, so far as is consistent with justice and United Kingdom public policy, co operate with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution.
The position of the judgment debtor in such a case would be protected by the principle that the English court would only enforce a judgment in a case like this where to do so was consistent with justice and United Kingdom public policy.
All would depend upon the facts of the particular case.
In the case of Rubin, there would be no injustice in enforcing the judgment against the appellants.
Lord Mance notes at para 189 that I do not define either the circumstances in which a foreign court should be recognised as having jurisdiction to entertain bankruptcy proceedings or the factors which would make it unjust or contrary to public policy to recognise an avoidance order made in such foreign proceedings.
As I see it, these are matters which would be worked out on a case by case basis in (as Lord Hoffmann put it in HIH at para 30) co operating with the courts in the country of the principal liquidation to ensure that all the companys assets are distributed to its creditors under a single system of distribution.
It would not be irrelevant that the debtor under the avoidance order had not submitted.
All would depend upon the particular circumstances of the case, including the reasons why the debtor had not submitted.
In essence, on the critical question, I prefer the reasoning of the Court of Appeal, which is contained in the judgment of Ward LJ, with whom Wilson LJ and Henderson J agreed.
Lord Collins has concisely summarised their reasoning in paras 88 to 90, substantially as follows: (a) the judgment was final and conclusive, and for definite sums of money, and on the face of the orders was a judgment in personam; (b) it was common ground that the judgment debtors were not present when the proceedings were instituted, and did not submit to the jurisdiction, and so at first blush had an impregnable defence; (c) Cambridge Gas decided that the bankruptcy order with which it was concerned was neither in personam nor in rem, and its purpose was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established: Pattni v Ali [2007] 2 AC 85, para 23; (d) bankruptcy was a collective proceeding to enforce rights and not to establish them: Cambridge Gas [2007] 1 AC 508, para 15; (e) the issue was whether avoidance proceedings which could only be brought by the representative of the bankrupt were to be characterised as part of the bankruptcy proceedings, ie part of the collective proceeding to enforce rights and not to establish them; (f) the adversary proceedings were part and parcel of the Chapter 11 proceedings; (g) the ordinary rules for enforcing foreign judgments in personam did not apply to bankruptcy proceedings; (h) avoidance mechanisms were integral to and central to the collective nature of bankruptcy and were not merely incidental procedural matters; (i) the process of collection of assets will include the use of powers to set aside voidable dispositions, which may differ very considerably from those in the English statutory scheme: HIH [2008] 1 WLR 852, para 19; (j) the judgment of the US Bankruptcy Court was a judgment in, and for the purposes of, the collective enforcement regime of the insolvency proceedings, and was governed by the sui generis private international law rules relating to insolvency; (k) that was a desirable development of the common law founded on the principles of modified universalism, and did not require the court to enforce anything that it could not do, mutatis mutandis, in a domestic context; (l) there was a principle of private international law that bankruptcy should be unitary and universal, and there should be a unitary insolvency proceeding in the court of the bankrupts domicile which receives worldwide recognition and should apply universally to all the bankrupts assets; (m) there was a further principle that recognition carried with it the active assistance of the court which included assistance by doing whatever the English court could do in the case of a domestic insolvency; (n) there was no unfairness to the appellants in upholding the judgment because they were fully aware of the proceedings, and after taking advice chose not to participate: see [2011] Ch 133, paras 38, 41, 43, 45, 48, 50, 61 62 and 64.
That seems to me to be a correct summary of the views of the Court of Appeal.
I agree with those views subject to this comment on point (c).
I am not sure that in Cambridge Gas the Privy Council decided that the bankruptcy order with which it was concerned was neither in personam nor in rem.
It held that the purpose of the order was simply to establish a mechanism of collective execution against the property of the debtor by creditors whose rights were admitted or established.
As discussed above, it may well have appreciated that it was also an order in rem.
However that may be, I agree with Lord Collins at para 90 that, in short, the Court of Appeal accepted that the judgment sought to be enforced in the instant cases was an in personam judgment, but decided that the Dicey Rule did not apply to foreign judgments in avoidance proceedings because they were central to the collective enforcement regime in insolvency and were governed by special rules.
I agree with the reasoning of the Court of Appeal.
Put another way, the Dicey Rule should in my opinion be modified to include a fifth case in which a foreign court has jurisdiction to give a judgment in personam capable of enforcement or recognition as against the person against whom it is given.
That fifth case would be if the judgment was given in avoidance proceedings as part of foreign bankruptcy proceedings which the foreign court had jurisdiction to entertain.
I recognise that there are other ways of achieving such a result, as for example by an equivalent provision to the EC Insolvency Regulation: per Lord Collins at paras 99 101.
I also recognise that it would be possible to adopt a more radical approach not limited to avoidance proceedings.
However, so limited, I respectfully disagree with the view expressed by Lord Collins at para 128 that this development would not be an incremental development of existing principles but a radical departure from substantially settled law.
For the reasons given in para 198, it would in essence be an application of the principle of modified universalism.
It seems to me that in these days of global commerce, the step taken by the Court of Appeal was but a small step forward.
Judgment debtors are protected by the principle that no order would be made if it were contrary to justice or United Kingdom public policy.
Moreover, on the facts here, I can see no basis upon which the order made by the Court of Appeal would be either unjust or contrary to public policy.
Finally, I do not think that that conclusion is undermined by any absence of reciprocity.
For these reasons, I would dismiss the appeal in the Rubin case on the common law point.
On all other issues I agree with the judgment of Lord Collins.
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The two appeals concern whether, and if so, in what circumstances, an order or judgment of a foreign court in proceedings to set aside prior transactions, such as preferences or transactions at an undervalue (avoidance proceedings), will be recognised and enforced in England and Wales.
The appeals also raise the question of whether enforcement may be effected through the international assistance provision of the UNCITRAL Model Law implemented by the Cross Border Insolvency Regulations 2006, which apply generally, or the assistance provisions of s.426 of the Insolvency Act 1986 (the Insolvency Act), which applies to a limited number of countries, including Australia.
In Rubin a judgment of the US Federal Bankruptcy Court for the Southern District of New York in default of appearance for around US$10m in respect of fraudulent conveyances and transfer was enforced in England at common law.
In New Cap, bound by the prior decision in Rubin, a default judgment of the New South Wales Supreme Court for about US$8m in respect of unfair preferences under Australian law was enforced under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (1933 Act) and, alternatively, pursuant to the Insolvency Act.
In both appeals the parties against whom the judgments were made were neither present in the foreign country nor had they submitted to the jurisdiction.
Since both judgments were in personam, the essential issue was whether the existing principles were applicable or whether the Court should adopt separate rules for judgments in personam in avoidance proceedings, where the judgments were central to the purposes of the insolvency proceedings or part of the mechanism of collective execution.
The Supreme Court by a majority of 4:1 (Lord Clarke dissenting) allowed the appeal in Rubin holding that there should not be special rules for avoidance judgments but dismissed the appeal in New Cap on the ground that the Syndicate submitted to the jurisdiction of the Australian Court.
Lord Collins gave the leading judgement.
Broadly, under both the common law and the 1933 Act, a foreign court has jurisdiction to give a judgment in personam capable of recognition and enforcement against the person whom the judgment was given if the person (i) was present in the foreign court when proceedings were instituted; (ii) was a claimant, or counterclaimed, in the foreign proceedings; (iii) submitted to the jurisdiction of the foreign
court by voluntarily appearing in the proceedings; or (iv) agreed to submit to the jurisdiction of the foreign court before the commencement of the proceedings.
As a matter of policy, the Court did not agree that, in the interests of the universality of bankruptcy and similar procedures, there should be a more liberal rule for judgments given in foreign insolvency proceedings for the avoidance of transactions. [115] A different rule for avoidance proceedings would mean courts would have to develop two aspects of jurisdiction: a requisite nexus between the insolvency and the foreign court and a requisite nexus between the judgment debtor and the foreign court. [117] Such a change would not be an incremental development of existing principles but a radical departure from substantially settled law, and more suitable for the legislature than judicial innovation.
The restricted scope of the existing rules reflects the fact that there is no expectation of reciprocity on the part of foreign countries. [128 29] Expanding the principal would also be detrimental to United Kingdom businesses without any corresponding benefit. [130] Nor would any serious injustice result from adhering to the traditional rule.
There were several other avenues open to officeholders.
Rubin, for example, could have been founded on proceedings by trustees in England for the benefit of creditors under an express trust, and avoidance claims by the liquidator of an Australian company may be the subject of a request by the Australian court under the Insolvency Act. [131] Lord Collins (with the agreement of Lord Walker and Lord Sumption) held that the earlier Privy Council decision in Cambridge Gas Transportation Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2007] 1 AC 508 was wrongly decided as there was no basis for the recognition of the US Bankruptcy order in the Isle of Mann in that case. [132] Whilst agreeing it was distinguishable, Lord Mance reserved judgment on whether it was wrongly decided. [178] As for enforcement under the Cross Border Insolvency Regulations 2006, there was nothing expressly or by implication in the UNICTRAL Model Law that applied to the recognition or enforcement of foreign judgments against third parties. [142 44] In relation to New Cap, Lord Collins concluded that the Syndicate had submitted to the jurisdiction of Australia having chosen to prove in New Caps Australian insolvency proceedings.
It should not be allowed to benefit from the insolvency proceeding in this way without the burden of complying with orders made in that proceeding. [156 167] In these circumstances, the 1933 Act would apply to the Australian judgment and enforcement should be by way of registration under the 1933 Act rather than by the common law.
In view of the conclusion that the Syndicate submitted to the Australian jurisdiction, the issue of enforcement under the Insolvency Act did not arise.
However, Lord Collins expressed the opinion that the relevant subsections of the Insolvency Act were not concerned with enforcement of judgements having examined their construction and the statutory history. [152 154] Lord Clarke dissented on the Rubin appeal.
He relied on the principle that avoidance orders made by a foreign courts in bankruptcy proceedings (personal or corporate), which the court has jurisdiction to entertain, were enforceable if it could fairly be said to have been made in personam or in rem. [193] It was possible to have a rem order incidental to bankruptcy proceedings but which is enforceable at common law, provided that the bankruptcy court has jurisdiction in the bankruptcy [195 6].
Avoidance orders are central to bankruptcy proceedings.
To allow for their enforcement was in keeping with the principle of modified universalism requiring English courts, so far as is consistent with justice and UK public policy, to co operate with the courts in the country of the principal liquidation to ensure a companys assets are distributed to the creditors under a single system of distribution [199].
This would be worked out on a case by case basis depending on the facts of the particular case. [200 1]
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In the language of the criminal law a person who assists or encourages another to commit a crime is known as an accessory or secondary party.
The actual perpetrator is known as a principal, even if his role may be subordinate to that of others.
It is a fundamental principle of the criminal law that the accessory is guilty of the same offence as the principal.
The reason is not difficult to see.
He shares the physical act because even if it was not his hand which struck the blow, ransacked the house, smuggled the drugs or forged the cheque, he has encouraged or assisted those physical acts.
Similarly he shares the culpability precisely because he encouraged or assisted the offence.
No one doubts that if the principal and the accessory are together engaged on, for example, an armed robbery of a bank, the accessory who keeps guard outside is as guilty of the robbery as the principal who enters with a shotgun and extracts the money from the staff by threat of violence.
Nor does anyone doubt that the same principle can apply where, as sometimes happens, the accessory is nowhere near the scene of the crime.
The accessory who funded the bank robbery or provided the gun for the purpose is as guilty as those who are at the scene.
Sometimes it may be impossible for the prosecution to prove whether a defendant was a principal or an accessory, but that does not matter so long as it can prove that he participated in the crime either as one or as the other.
These basic principles are long established and uncontroversial.
In the last 20 years a new term has entered the lexicon of criminal lawyers: parasitic accessory liability.
The expression was coined by Professor Sir John Smith in a lecture later published in the Law Quarterly Review (Criminal liability of accessories: law and law reform [1997] 113 LQR 453).
He used the expression to describe a doctrine which had been laid down by the Privy Council in Chan Wing Siu v The Queen [1985] AC 168 and developed in later cases, including most importantly the decision of the House of Lords in R v Powell and R v English [1999] 1 AC 1.
In Chan Wing Siu it was held that if two people set out to commit an offence (crime A), and in the course of that joint enterprise one of them (D1) commits another offence (crime B), the second person (D2) is guilty as an accessory to crime B if he had foreseen the possibility that D1 might act as he did.
D2s foresight of that possibility plus his continuation in the enterprise to commit crime A were held sufficient in law to bring crime B within the scope of the conduct for which he is criminally liable, whether or not he intended it.
The appellants Jogee and Ruddock were each convicted of murder after directions to the jury in which the trial judges sought to apply the principle deriving from Chan Wing Siu.
In these appeals the court has been asked to review the doctrine of parasitic accessory liability and to hold that the court took a wrong turn in Chan Wing Siu and the cases which have followed it.
It is argued by the appellants that the doctrine is based on a flawed reading of earlier authorities and questionable policy arguments.
The respondents dispute those propositions and argue that even if the court were now persuaded that the courts took a wrong turn, it should be a matter for legislatures to decide whether to make any change, since the law as laid down in Chan Wing Siu has been in place in England and Wales and in other common law jurisdictions including Jamaica for 30 years.
The two appeals, Jogee in the Supreme Court and Ruddock in the Judicial Committee of the Privy Council, were heard together.
History
The Accessories and Abettors Act 1861, section 8 (as amended), provides that: Whosoever shall aid, abet, counsel or procure the commission of any indictable offence shall be liable to be tried, indicted and punished as a principal offender.
For summary offences the corresponding provision is in section 44 of the Magistrates Courts Act 1980.
In its original form section 8 of the 1861 Act referred to any misdemeanour rather than any indictable offence.
It was amended by the Criminal Law Act 1977 on the abolition of the previous distinction between felonies and misdemeanours.
Prior to the abolition of that distinction, the substantive law about who could be convicted of an offence as a secondary party was the same for felonies and misdemeanours, but for historical reasons the terminology was different.
The purpose of section 8 was to simplify the procedure for the prosecution of secondary parties.
It did not alter the substance of the law governing secondary liability.
Its language was consistent with a line of earlier statutes.
Foster commented in his Crown Law, re published 3rd ed (1809), pp 130 131, that the precise language used in those statutes was not always identical but was to the same effect.
The effect of the language of section 8 was accurately summarised by the Law Commission in its report on Participating in Crime (2007) (Law Com 305), paragraph 2.21: Disregarding procuring, it is generally accepted that these specified modes of involvement cover two types of conduct on the part of D, namely the provision of assistance and the provision of encouragement.
Although the distinction is not always made in the authorities, accessory liability requires proof of a conduct element accompanied by the necessary mental element.
Each element can be stated in terms which sound beguilingly simple, but may not always be easy to apply.
The requisite conduct element is that D2 has encouraged or assisted the commission of the offence by D1.
Subject to the question whether a different rule applies to cases of parasitic accessory liability, the mental element in assisting or encouraging is an intention to assist or encourage the commission of the crime and this requires knowledge of any existing facts necessary for it to be criminal: National Coal Board v Gamble [1959] 1 QB 11, applied for example in Attorney General v Able [1984] QB 795, Gillick v West Norfolk and Wisbech Area Health Authority [1986] AC 112 and Director of Public Prosecutions for Northern Ireland v Maxwell [1978] 1 WLR 1350 per Lord Lowry at 1374G 1375E, approved in the House of Lords at 1356A; 1358F; 1359E; 1362H and echoed also at 1361D.
If the crime requires a particular intent, D2 must intend to assist or encourage D1 to act with such intent.
D2s intention to assist D1 to commit the offence, and to act with whatever mental element is required of D1, will often be co extensive on the facts with an intention by D2 that that offence be committed.
Where that is so, it will be seen that many of the cases discuss D2s mental element simply in terms of intention to commit the offence.
But there can be cases where D2 gives intentional assistance or encouragement to D1 to commit an offence and to act with the mental element required of him, but without D2 having a positive intent that the particular offence will be committed.
That may be so, for example, where at the time that encouragement is given it remains uncertain what D1 might do; an arms supplier might be such a case.
With regard to the conduct element, the act of assistance or encouragement may be infinitely varied.
Two recurrent situations need mention.
Firstly, association between D2 and D1 may or may not involve assistance or encouragement.
Secondly, the same is true of the presence of D2 at the scene when D1 perpetrates the crime.
Both association and presence are likely to be very relevant evidence on the question whether assistance or encouragement was provided.
Numbers often matter.
Most people are bolder when supported or fortified by others than they are when alone.
And something done by a group is often a good deal more effective than the same thing done by an individual alone.
A great many crimes, especially of actual or threatened violence, are, whether planned or spontaneous, in fact encouraged or assisted by supporters present with the principal lending force to what he does.
Nevertheless, neither association nor presence is necessarily proof of assistance or encouragement; it depends on the facts: see R v Coney (1882) 8 QBD 534, 540, 558.
Once encouragement or assistance is proved to have been given, the prosecution does not have to go so far as to prove that it had a positive effect on D1s conduct or on the outcome: R v Calhaem [1985] QB 808.
In many cases that would be impossible to prove.
There might, for example, have been many supporters encouraging D1 so that the encouragement of a single one of them could not be shown to have made a difference.
The encouragement might have been given but ignored, yet the counselled offence committed.
Conversely, there may be cases where anything said or done by D2 has faded to the point of mere background, or has been spent of all possible force by some overwhelming intervening occurrence by the time the offence was committed.
Ultimately it is a question of fact and degree whether D2s conduct was so distanced in time, place or circumstances from the conduct of D1 that it would not be realistic to regard D1s offence as encouraged or assisted by it.
An early example is the case of Hyde (1672), described in Hales Pleas of the Crown (1682), vol 1, p 537, and in Fosters Crown Law, p 354.
This was Fosters description and explanation: A, B and C ride out together with intention to rob on the highway.
C taketh an opportunity to quit the company, turneth into another road, and never joineth A and B afterwards.
They upon the same day commit a robbery.
C will not be considered an accomplice in this fact.
Possibly he repented of the engagement, at least he did not pursue it; nor was there at the time the fact was committed any engagement or reasonable expectation of mutual defence and support so far as to affect him.
In other words, on the particular facts A and B were not regarded as having committed the robbery with Cs encouragement or assistance.
Any original encouragement was regarded as having been spent and there was no other assistance. (It appears from Hales account that C parted from A and B at Hounslow and that the later robbery took place three miles away.)
With regard to the mental element, the intention to assist or encourage will often be specific to a particular offence.
But in other cases it may not be.
D2 may intentionally assist or encourage D1 to commit one of a range of offences, such as an act of terrorism which might take various forms.
If so, D2 does not have to know (or intend) in advance the specific form which the crime will take.
It is enough that the offence committed by D1 is within the range of possible offences which D2 intentionally assisted or encouraged him to commit (Maxwell).
In Maxwell the defendant was a member of a terrorist organisation, the Ulster Volunteer Force (UVF).
Under UVF instructions he took part in what he knew was a planned military mission, by guiding a car containing three or four other men on a cross country journey to a country inn on a winter evening.
He knew that they were intending to carry out some form of violent attack on the inn, whether by shooting, bombing or some incendiary device, and he intentionally acted in order to help them to carry out the mission.
He did not know the precise form of attack that they were intending to carry out (which was in fact an explosion), but it was held to be enough that he knew that they were intending to carry out a violent attack on the inn and that he intended to assist them to do so.
The decision in Maxwell did not derogate from the principle identified in para 9 that an intention to assist or encourage the commission of an offence requires knowledge by D2 of any facts necessary to give the principals conduct or intended conduct its criminal character.
In Johnson v Youden [1950] 1 KB 544 a builder committed an offence by selling a house for 250 more than the maximum permitted under a statutory regulation.
The 250 was paid to him in advance by the purchaser.
The builder then instructed a firm of solicitors to act for him in the sale.
Two of the partners in the firm had no knowledge of the earlier payment, but they were convicted by the magistrates of aiding and abetting the builders offence.
Their convictions were quashed by the Divisional Court because they had no knowledge of the facts which gave the transaction its criminal character.
They therefore lacked the mens rea to be guilty as accessories.
Secondary liability does not require the existence of an agreement between the principal and the secondary party to commit the offence.
If a person sees an offence being committed, or is aware that it is going to be committed, and deliberately assists its commission, he will be guilty as an accessory.
But where two or more parties agree on an illegal course of conduct (or where one party encourages another to do something illegal), the question has often arisen as to the secondary partys liability where the principal has allegedly gone beyond the scope of what was agreed or encouraged.
For Foster it was an objective question, firstly, what in substance was agreed or encouraged, and secondly, what was likely to happen in the ordinary course of events.
As to first question, Foster wrote at p 369 (in a passage much cited in later authorities): Much hath been said by writers who have gone before me, upon cases where a person supposed to commit a felony at the instigation of another hath gone beyond the terms of such instigation, or hath, in the execution, varied from them.
If the principal totally and substantially varieth, if being solicited to commit a felony of one kind he wilfully and knowingly committeth a felony of another, he will stand single in that offence, and the person soliciting will not be involved in his guilt.
For on his part it was no more than a fruitless ineffectual temptation.
The fact cannot with any propriety be said to have been committed under the influence of that temptation.
But if the principal in substance complieth with the temptation, varying only in circumstance of time and place, or in the manner of execution, in these cases the person soliciting to the offence will, if absent, be an accessary before the fact, if present a principal. (Emphasis added.
At the time when Foster wrote, the word fact was used when we would use the word act.) So where the principal goeth beyond the terms of the solicitation, if in the event the felony committed was a probable consequence of what was ordered or advised, the person giving such orders or advice will be an accessary to that felony [Foster proceeded to give three examples.
One is enough for present purposes.] A adviseth B to rob C, he doth rob him, and in so doing, either upon resistance made, or to conceal the fact, or upon any other motive operating at the time of the robbery, killeth him.
A is accessary to this murder.
As to the second question, Foster continued at p 370: These cases are all governed by one and the same principle.
The advice, solicitation, or orders in substance were pursued, and were extremely flagitious on the part of A.
The events, although possibly falling out beyond his original intention, were in the ordinary course of things the probable consequences of what B did under the influence, and at the instigation of A.
And therefore, in the justice of the law, he is answerable for them. (Fosters emphasis)
Fosters original edition was published in 1762, the year before his death, and so he was writing about the law in the mid 18th century. (The edition quoted was a re publication.) Cases in the 19th century show that there was a significant change of approach.
It was no longer sufficient for the prosecution to prove that the principals conduct was a probable consequence, in the ordinary course of things, of the criminal enterprise instigated or agreed to by the secondary party.
The prosecution had to prove that it was part of their common purpose, should the occasion arise.
In R v Collison (1831) 4 Car & P 565 two men went out by night with carts to steal apples.
They were detected by the landowners watchman.
One of the thieves attacked him with a bludgeon which he was carrying and caused the man severe injury.
On the trial of the second thief for assault and wounding with intent to murder, Garrow B ruled at p 566: To make the prisoner a principal, the Jury must be satisfied that, when he and his companion went out with a common illegal purpose of committing the felony of stealing apples, they also entertained the common guilty purpose of resisting to death, or with extreme violence, any persons who might endeavour to apprehend them; but if they had only the common purpose of stealing apples, and the violence of the prisoners companion was merely the result of the situation in which he found himself, and proceeded from the impulse of the moment, without any previous concert, the prisoner will be entitled to an acquittal.
This ruling highlighted the importance of identifying the common purpose.
If it was only to steal apples, the defendant was not guilty of the greater offence with which he was charged.
He was guilty of that offence only if the common purpose included using severe violence to resist arrest, should the occasion arise.
Other authorities were consistent with the direction in Collison: see R v Macklin (1838) 2 Lewin 225, R v Luck (1862) 3 F & F 483, and R v Turner (1864) 4 F & F 339, 341 (on a charge of murder there must be evidence not only of a common design to commit a felony, but a common design quoad the homicidal act itself, per Channell B).
The position in England and Wales was at one time complicated by the doctrine of constructive murder known as felony murder.
Under this doctrine a person was guilty of murder if he used violence in furtherance of a felony which resulted in death, whether or not he intended to cause death or serious harm.
The doctrine did not apply to misdemeanours, which included poaching.
Pollock CB explained the law as it affected accessories in R v Skeet (1866) 4 F & F 931, 936 937 (a case in which poachers were stopped by a gamekeeper, who was shot by one of them): the doctrine of constructive homicide does not apply where the only evidence is that the parties were engaged in an unlawful purpose: not being felonious.
It only applies in cases where the common purpose is felonious, as in cases of burglary: where all the parties are aware that deadly weapons are taken with a view to inflict death or commit felonious violence, if resistance is offered.
That doctrine arose from the desire on the part of old lawyers to render all parties who are jointly engaged in the commission of a felony responsible for deadly violence committed in the course of its execution.
But that doctrine has been much limited in later times, and only applies in cases of felony, where there is no (sic) evidence of a felonious design to carry out the unlawful purpose at all hazards, and whatever may be the consequences.
The possession of a gun would not be any evidence of this, for a gun is used in poaching.
And poaching itself is only an unlawful act and a mere misdemeanour.
The inclusion of the word no in this passage appears to be an error, because it is contrary to the general sense of the passage and to the case reporters commentary at p 934 on the judgment: It is the common design or intention to kill in the prosecution of the unlawful object, whether it be misdemeanour or felony, which involves the others in the guilt of homicide.
For, even if the common purpose is felonious, if only the actual perpetrator of the act had the intention to kill in the prosecution of the purpose, the others, who did not concur in the act, are not guilty of the offence of homicide.
It will be seen that the expression common design is here treated as synonymous with shared intention. (It would have been more strictly accurate to add or cause grievous bodily harm after the word kill.)
R v Spraggett [1960] Crim LR 840 is a more modern example of the principle that where violence is used in furtherance of a criminal venture, a co adventurer will be liable only if he shared an intention to use violence to resist interference or arrest.
Three men were involved in the burglary of a sub post office.
Two of them went into the building while the third waited outside.
During the burglary the owner of the shop came on the scene and was knocked down.
The appellant was convicted of burglary and assault with intent to rob.
The judge directed the jury that if the defendants jointly decided to break into premises, each was liable for any incidental violence.
The appellants conviction was quashed.
Lord Parker CJ said that the summing up treated it as a presumption of law that where a person was found to be acting in concert with others to commit a burglary, it should be presumed that he was also acting in concert with others to use violence in the course of the crime, whereas the jury had to be satisfied on the evidence that there was such a preconceived intention to use violence. (The commentary in the Criminal Law Review noted that under the trial judges direction, a burglar who had no intention to do anything to anyone might find himself guilty of murder.)
The evidential relevance of the carrying of a weapon on a criminal venture has been a common theme in the case law.
Its evidential strength depends on the circumstances.
As Pollock CB observed in Skeet, a poachers possession of a gun did not of itself then point to more than an intent to use it to kill game.
In other circumstances it might provide powerful evidence of an intent to use it to overcome resistance or avoid arrest.
See Professor Glanville Williams Criminal Law, The General Part, 2nd ed (1961), p 397: The knowledge on the part of one criminal that his companion is carrying a weapon is strong evidence of a common intent to use violence, but is not conclusive.
In a line of cases the courts recognised that even where there was a joint intent to use weapons to overcome resistance or avoid arrest, the participants might not share an intent to cause death or really serious harm.
If the principal had that intent and caused the death of another he would be guilty of murder.
Another party who lacked that intent, but who took part in an attack which resulted in an unlawful death, would be not guilty of murder but would be guilty of manslaughter, unless the act which caused the death was so removed from what they had agreed as not to be regarded as a consequence of it: R v Smith (Wesley) [1963] 1 WLR 1200, R v Betty (1964) 48 Cr App R 6, R v Anderson and R v Morris [1966] 2 QB 110 and R v Reid (1976) 62 Cr App R 109.
In Wesley Smith (see pp 1205 1206) the trial judge directed the jury: Manslaughter is unlawful killing without an intent to kill or do grievous bodily harm.
Anybody who is party to an attack which results in an unlawful killing which results in death is a party to the killing. a person who takes part in or intentionally encourages conduct which results in a criminal offence will not necessarily share the exact guilt of the one who actually strikes the blow.
His foresight of the consequences will not necessarily be the same as that of the man who strikes the blow, the principal assailant, so that each may have a different form of guilty mind, and that may distinguish their respective criminal liability.
Several persons, therefore, present at the death of a man may be guilty of different degrees of crime one of murder, others of unlawful killing, which is manslaughter.
Only he who intended that unlawful and grievous bodily harm should be done is guilty of murder.
He who intended only that the victim should be unlawfully hit and hurt will be guilty of manslaughter if death results. (Emphasis added.)
Smith was convicted of manslaughter.
Because he appealed against that conviction, it fell to a Court of Criminal Appeal of five judges to consider the direction as a whole, including the passage relating to murder.
They praised the judge for his clear summing up, which they described as legally unassailable.
They added that it was possible to hypothesise a case where what was done was wholly beyond the defendants contemplation, but that could not be said in that case, where the death resulted from use of a knife which the appellant knew that the principal offender was carrying. (We will consider later in more detail the relevance of objective foreseeability in relation to manslaughter.)
In Betty Lord Parker CJ quoted the passage from the summing up in Wesley Smith emphasised above and noted that the court of five judges had approved it.
In Anderson and Morris, a fatal stabbing resulted in the conviction of Anderson for murder and Morris for manslaughter.
The evidence of Morriss role, if any, in the attack was unclear.
The judge directed the jury that if there was a common design to attack the victim, but without any intent by Morris to kill or cause grievous bodily harm, and if Anderson, acting outside the common design, produced a knife about which Morris had no knowledge and used it to kill the victim, Morris was liable to be convicted of manslaughter.
The defendants appeal was heard by a Court of Criminal Appeal of five judges, presided over by Lord Parker CJ.
Mr Geoffrey Lane, QC for Morris submitted that the authorities from about 1830 onwards established the principle that (see p 118): where two persons embark on a joint enterprise, each is liable for the acts done in pursuance of that joint enterprise, that that includes liability for unusual consequences if they arise from the execution of the agreed joint enterprise but (and this is the crux of the matter) that, if one of the adventurers goes beyond what has been tacitly agreed as part of the common enterprise, his co adventurer is not liable for the consequences of that unauthorised act. (Emphasis added)
It was submitted that the judge had therefore misdirected the jury in saying that Morris could be liable if Anderson had acted outside the common design.
Accepting counsels proposition as set out above and allowing Morris appeal, Lord Parker said at p 120: It seems to this court that to say that adventurers are guilty of manslaughter when one of them has departed completely from the concerted action of the common design and has suddenly formed an intent to kill and has used a weapon and acted in a way which no party to that common design could suspect is something which would revolt the conscience of people today Considered as a matter of causation there may well be an overwhelming supervening event which is of such a character that it will relegate into history matters which would otherwise be looked on as causative factors.
The court in that case did not call into question what had been said in Wesley Smith, and Lord Parker noted that it had been approved by the court in Betty.
The court was not therefore resiling from the general statement that where a person takes part in an unlawful attack which results in death, he will be guilty either of murder or of manslaughter according to whether he had the mens rea for murder.
But the court recognised that there could be cases where the actual cause of death was not simply an escalation of a fight but an overwhelming supervening event.
That there had been such an event in Anderson and Morris may have been a charitable view on the facts, but the principle was endorsed by the court in Reid (of which the former Mr Geoffrey Lane QC was a member).
Reid and two others were tried for the murder of a colonel who was the commander of an army training camp.
The three men were alleged to be supporters of the IRA.
They went to the colonels house in the early hours of the morning and rang the doorbell.
The door was opened by the colonel, and one of the other defendants immediately shot him dead.
The other two men were convicted of murder and Reid was convicted of manslaughter.
All three were also convicted of joint possession of a revolver, knife and imitation gun.
Reids defence was that he was not an IRA supporter and that he went with the others as an interested but innocent spectator with no intention of causing any harm.
The jury must have rejected that defence, but must also have accepted it as possible that he did not intend the victim to suffer death or serious harm.
Reid appealed against his conviction for manslaughter on the ground that there was no evidence for finding that he intended to cause some harm but not serious harm, and reliance was placed on Anderson and Morris.
The appeal was dismissed in a reserved judgment of a strong Court of Appeal (Lawton and Geoffrey Lane LJJ and Robert Goff J).
Lawton LJ distinguished Anderson and Morris on the basis that the court in that case on its facts had regarded the act which caused death as an overwhelmingly supervening event.
Dealing with Reid, he said at p 112: The intent with which the appellant was in joint possession of the weapons with the others has to be inferred from the circumstances.
He did not share the murderous intent.
The first problem for us is whether this court would be entitled to infer from the fact of joint possession an intent to do some harm to Colonel Stevenson If men carrying offensive indeed deadly weapons go to a mans house in the early hours of the morning for no discernible lawful purpose, they must, in our judgment, intend to do him harm of some kind, and the very least kind of harm is of causing fright by threats to use them.
The second problem is whether, on the evidence in this case, Colonel Stevensons death resulted from the unlawful and dangerous act of being in joint possession of offensive weapons.
The appellant did not intend either death or serious injury.
On the jurys findings OConaill must have gone beyond anything he may have intended .
When two or more men go out together in joint possession of offensive weapons such as revolvers and knives and the circumstances are such as to justify an inference that the very least they intend to do with them is to use them to cause fear in another, there is, in our judgment, always a likelihood that, in the excitement and tensions of the occasion, one of them will use his weapon in some way which will cause death or serious injury.
If such injury was not intended by the others, they must be acquitted of murder; but having started out on an enterprise which envisaged some degree of violence, albeit nothing more than causing fright, they will be guilty of manslaughter. (Emphasis added.)
Chan Wing Siu [1985] AC 168
The three appellants went, each armed with a knife, to a flat used by a prostitute, where her husband was habitually present.
The prosecutions case was that they planned to rob the husband.
In written statements they admitted going to the flat to get money from him, which they said that he owed to one of them.
The husband was stabbed to death and his wife was slashed across the head.
The appellants were all convicted of murder and wounding with intent to cause grievous bodily harm.
Complaint was made of the trial judges direction to the jury that an accused was guilty on each count if proved to have had in contemplation that a knife might be used by one of his co adventurers with intent to inflict serious bodily injury.
It was conceded by the appellants that if the contingency in which knives were used (such as resistance to a robbery) was foreseen by an accused, it was not necessary that he should have regarded the occurrence of that contingency as more probable than not; but it was submitted that it was necessary to prove that he foresaw a more than 50% likelihood that one or other of his co accused would act with intent to cause death or really serious harm.
This submission was unsurprisingly rejected.
It is also unsurprising that the appeals were dismissed.
There was an overwhelming case for inferring that the appellants foresaw the likelihood of resistance and that their plan included the possible use of knives to cause serious harm.
However, the Privy Council upheld the convictions on a different basis.
Sir Robin Cooke, delivering the judgment of the Board, said at p 175: In the typical case [of aiding and abetting] the same or the same type of offence is actually intended by all the parties acting in concert.
In view of the terms of the directions to the jury here, the Crown does not seek to support the present convictions on that ground.
The case must depend rather on the wider principle whereby a secondary party is criminally liable for acts by the primary offender of a type which the former foresees but does not necessarily intend.
That there is such a principle is not in doubt.
It turns on contemplation or, putting the same idea in other words, authorisation, which may be express but is more usually implied.
It meets the case of a crime foreseen as a possible incident of the common unlawful enterprise.
The criminal liability lies in participating in the venture with that foresight.
Sir Robin Cooke cited Anderson and Morris.
He noted that the Court of Criminal Appeal had reviewed a line of relevant authorities from 1830, but no reference was made to any of them.
He referred to Anderson and Morris only for the case of one adventurer going beyond what had been agreed.
He said that in England it appeared not hitherto to have been found necessary to analyse the test which the jury had to apply more elaborately than in the formulation by Mr Geoffrey Lane QC which the Court of Criminal Appeal had accepted.
He drew on the judgments of the High Court of Australia in Johns v The Queen [1980] HCA 3; (1980) 143 CLR 108 and Miller v The Queen (1980) 55 ALJR 23.
The only other English case to which he referred was Davies v Director of Public Prosecutions [1954] AC 378.
In Davies v Director of Public Prosecutions [1954] AC 378 a fight between two groups of youths resulted in a fatal stabbing.
The appellant was convicted of murder.
One of the prosecution witnesses was a youth named Lawson.
He gave evidence of an oral admission by the appellant after the event.
One of the grounds of appeal was that the judge ought to have given the jury a warning that Lawson could be regarded as an accomplice, and therefore was someone whose evidence required to be treated with special caution.
Lawson admitted being involved in the fight at some stage, but he denied all knowledge of a knife and there was no evidence that he was present when it was produced.
He was initially charged with murder, but no evidence was offered against him.
The House of Lords rejected the argument that an accomplice warning was required.
Lord Simonds LC said at p 401: I can see no reason why, if half a dozen boys fight another crowd, and one of them produces a knife and stabs one of the opponents to death, all the rest of his group should be treated as accomplices in the use of the knife and the infliction of mortal injury by that means, unless there is evidence that the rest intended or concerted or at least contemplated an attack with a knife by one of their number, as opposed to a common assault.
If all that was designed or envisaged was in fact a common assault, and there was no evidence that Lawson, a party to that common assault, knew that any of his companions had a knife, then Lawson was not an accomplice in the crime consisting in its felonious use.
This was not a ruling that, as a matter of law, knowledge by Lawson that one of his companions had a knife would make him an accessory to murder.
Nor was Lord Simonds addressing the question of when contemplation of an attack with a knife would do so.
He was speaking in the context of considering the need for an accomplice warning.
The question was whether there was evidence on which the person concerned could be regarded as an accomplice.
Evidence that he knew that one of his companions was armed with a knife would plainly have been evidence from which it would be open to a jury to infer a common intent to use it (see para 26 above).
There is a major difference between saying that in the absence of evidence of knowledge of the knife there was no cause to give an accomplice warning, and saying that knowledge of the knife and the possibility of its use would of itself constitute the mens rea needed for guilt of murder as an accessory.
In Johns v The Queen the appellant was convicted of murder and assault with intent to rob.
His role was to drive the principal offender, W, to a rendezvous with a third man, D.
The appellant was to wait at the rendezvous while the other two men robbed a known receiver of stolen jewellery.
Afterwards the appellant was to take possession of the proceeds and hide them in return for a share.
The appellant knew that W was carrying a pistol, and W told him that he would not stand for any nonsense if he met any obstacle during the robbery.
In the event the victim resisted and W shot him dead.
The judge directed the jury that the appellant and D would be guilty if the act constituting the offence committed was within the contemplation of the parties as an act done in the course of the venture on which they had embarked.
It was argued on the appellants behalf that while this was an appropriate direction in the case of D, who was present and therefore a principal in the second degree, it was a misdirection in the case of the appellant, who was an accessory before the fact.
It was submitted that in his case it was necessary for the jury to conclude that it was a likely or probable consequence of the way in which the crime was to be committed that the gun would be discharged so as to kill the deceased.
The High Court unanimously rejected the argument that any distinction was to be drawn between the liability of a principal in the second degree and an accessory before the fact.
The majority judgment was given by Mason, Murphy and Wilson JJ.
They said (at p 125) that there was no reason as a matter of legal principle why such a distinction should be drawn.
They also said (at p 131): 26.
The narrow test of criminality proposed by the applicant is plainly unacceptable for the reason that it stakes everything on the probability or improbability of the act, admittedly contemplated, occurring.
Suppose a plan made by A, the principal offender, and B, the accessory before the fact, to rob premises, according to which A is to carry out the robbery.
It is agreed that A is to carry a revolver and use it to overcome resistance in the unlikely event that the premises are attended, previous surveillance having established that the premises are invariably unattended at the time when the robbery is to be carried out.
As it happens, a security officer is in attendance when A enters the premises and is shot by A. It would make nonsense to say that B is not guilty merely because it was an unlikely or improbable contingency that the premises would be attended at the time of the robbery, when we know that B assented to the shooting in the event that occurred. 27.
In the present case there was ample evidence from which the jury could infer that the applicant gave his assent to a criminal enterprise which involved the use, that is the discharge, of a loaded gun, in the event that [the victim] resisted or sought to summon assistance.
We need not recapitulate the evidence to which we have already referred.
The jury could therefore conclude that the common purpose involved resorting to violence of this kind, should the occasion arise, and that the violence contemplated amounted to grievous bodily harm or homicide.
This was an orthodox approach in line with the authorities going back to Collison (1831) 4 Car & P 565.
In Miller v The Queen the defendant regularly drove the principal offender, W, on outings to pick up girls.
He would drive to a deserted spot and walk away while W satisfied his sexual desires.
Sometimes the sex was consensual and the girl would be returned unharmed, but on seven occasions W murdered the girl and the defendant helped him to dispose of her body.
The defendant was convicted of murder on all but the first occasion.
The judge directed the jury that the defendant would be guilty of murder if he and W acted in concert to pick up a girl and it was within his contemplation that the particular girl might be murdered.
The defendant argued that this was a misdirection.
The court held that the direction should reasonably have been understood as referring to a plan between the parties which included the possible murder of the girls, and as such the direction was unobjectionable.
It is worth noting, as did the High Court, that this was not a case of a plan to carry out crime A, in which one party carried out crime B.
There was nothing illegal about the venture of picking up girls for consensual sex.
It became illegal if and when the common purpose came to include murder as an eventuality.
(at p 177): In Chan Wing Siu Sir Robin Cooke touched briefly on public policy saying What public policy requires was rightly identified in the submissions for the Crown.
Where a man lends himself to a criminal enterprise knowing that potentially murderous weapons are to be carried, and in the event they in fact are used by his partner with an intent sufficient for murder, he should not escape the consequences by reliance on a nuance of prior assessment, only too likely to have been optimistic.
It is not necessary to refer to all the cases which have followed Chan Wing
Siu but some call for mention.
R v Slack [1989] QB 775, R v Wakely [1990] Crim LR 119 and R v Hyde [1991] 1
QB 134
Reserved judgments of the Court of Appeal, expressed to follow Chan Wing Siu, were given in these cases by Lord Lane CJ.
In Slack he said, at p 781, that for a person to be guilty of murder as an accessory it had to be proved that he lent himself to a criminal enterprise involving the infliction of serious injury or death or that he had an express or tacit understanding with the principal that such harm or death should, if necessary, be inflicted.
In Wakely he added that mere foresight of a real possibility of violence being used was not, academically speaking, sufficient to constitute the mental element of murder.
Professor Smith in a commentary on Wakely in the Criminal Law Review at pp 120 121 suggested that the Court of Appeal had failed properly to follow Chan Wing Siu.
He identified the question raised by Slack and Wakely as being whether it was sufficient to prove that a party to a joint enterprise knew that another party might use the violence that was used, or whether it was necessary to prove that it was understood between them expressly or tacitly that, if necessary, such violence would be used.
The problem arose from the elision by Sir Robin Cooke in Chan Wing Siu at p 175, of contemplation and authorisation which may be express but is more usually implied.
Professor Smith commented that contemplation is not the same thing as authorisation, because one may contemplate that something will be done by another without authorising him to do it, but that the general effect of Chan Wing Siu was that contemplation or foresight was enough.
In Hyde Lord Lane said that in Slack and Wakely the court had been endeavouring to follow Chan Wing Siu, but on reconsideration he accepted Professor Smiths criticism.
Contrary to Wakely, foresight of the possibility that B might kill or intentionally inflict serious injury would amount to a sufficient mental element for B to be guilty of murder.
Hui Chi Ming v The Queen [1992] 1 AC 34
and expressly endorsed the following statement in the judgment in Hyde: If B realises (without agreeing to such conduct being used) that A may kill or intentionally inflict serious injury, but nevertheless continues to participate with A in the venture, that will amount to a sufficient mental element for B to be guilty of murder if A, with the requisite intent, kills in the course of the venture.
In Hui Chi Ming the Privy Council, at p 50, affirmed the correctness of Hyde
R v Powell and R v English [1999] 1 AC 1
The House of Lords at p 27 held in answer to a question certified by the Court of Appeal that (subject to a qualification in the case of English) it is sufficient to found a conviction for murder for a secondary party to have realised that in the course of the joint enterprise the primary party might kill with intent to do so or with intent to cause grievous bodily harm.
The leading judgment was given by Lord Hutton, with whom the other judges agreed.
It was argued by the appellants that this was inconsistent with the mens rea requirement for murder laid down in R v Moloney [1985] AC 905 and R v Hancock [1986] AC 455, but those cases were distinguished on the basis that they applied only to the principal offender.
Lord Hutton, at p 18, considered that there was a strong line of authority, beginning with Wesley Smith, that participation in a joint criminal enterprise, with foresight or contemplation of an act as a possible incident of that enterprise, is sufficient to impose criminal liability for that act carried out by another participant in the enterprise.
He held, at p 19, that in that case the Court of Appeal had recognised that the secondary party will be guilty of unlawful killing committed by the primary party with a knife if he contemplates that the primary party may use such a weapon.
He added that the judgment in Anderson and Morris was not intended to depart from that principle.
Lord Hutton recognised that as a matter of strict analysis there is a difference between a party to a common enterprise contemplating that in the course of it another party may use a gun or knife and a party tacitly agreeing to the use of such a weapon, but he said that it was clear from a number of decisions in addition to Wesley Smith that a party embarking on a joint criminal enterprise was liable for any act which he contemplated might be carried out by another party even if he had not tacitly agreed to that act.
Lord Hutton recognised that as a matter of logic there was force in the argument that it was anomalous that foreseeability of death or really serious harm was not sufficient mens rea for the principal to be guilty of murder, but was sufficient in a secondary party.
But he said that there were weighty and important practical considerations related to public policy which prevailed over considerations of strict logic.
He saw considerable force in the argument that a party who takes part in a criminal enterprise (for example, a bank robbery), with foresight that a deadly weapon may be used, should not escape liability for murder because he, unlike the principal party, is not suddenly confronted by the security officer so that he has to decide whether to use the gun or knife or have the enterprise thwarted and face arrest.
In a concurring judgment, Lord Steyn recognised at p 13, that foresight and intention are not synonymous, but he held that foresight is a necessary and sufficient ground of the liability of accessories.
He too recognised that there was at first sight substance in the argument that it was anomalous that a lesser form of culpability was required in the case of a secondary party involved in a criminal enterprise, viz foresight of the possible commission of the greater offence, than in the case of the primary offender, who will be guilty of murder only if he intended to kill or cause really serious injury.
But he held at p 14, that the answer to the supposed anomaly was to be found in practical and policy considerations: If the law required proof of the specific intention on the part of a secondary party, the utility of the accessory principle would be gravely undermined.
It is just that a secondary party who foresees that the primary offender might kill with the intent sufficient for murder, and assists and encourages the primary offender in the criminal enterprise on this basis, should be guilty of murder.
The criminal justice system exists to control crime.
A prime function of that system must be to deal justly but effectively with those who join with others in criminal enterprises.
Experience has shown that joint criminal enterprises only too readily escalate into the commission of greater offences.
In order to deal with this important social problem the accessory principle is needed and cannot be abolished or relaxed.
Lord Mustill agreed with the decision, but with evident unease.
He said that throughout the modern history of the law on secondary liability, in the type of case under consideration, the responsibility of the secondary party, D2, had been founded on participation in a joint enterprise of which the commission of the crime by the principal offender, D1, formed a part.
If D2 foresaw D1s act, this would always, as a matter of common sense, be relevant to the jurys decision on whether it formed part of a course of action to which D2 and D1 agreed, albeit often on the basis that the action would be taken if particular circumstances should arise.
In cases where D2 could not rationally be treated as party to an express or tacit agreement to commit the greater offence, but continued to participate, he would have favoured some lesser form of culpability; but that could not be fitted in to the existing concept of a joint venture.
For his part he would not have favoured the abandonment of a doctrine which had for years worked adequately in practice and its replacement by something which he conceived to be new.
But since the other four members of the panel saw the matter differently, and for the sake of clarity in the law, he was willing to concur in their reasoning.
English, who was aged 15, and another young man, W, took part in attacking a police sergeant with wooden posts.
In the course of the attack W drew a knife and stabbed him to death.
Both youths were convicted of murder.
It was a reasonable possibility on the evidence that English did not know that W was carrying a knife.
The judge directed the jury that English would nevertheless be guilty of murder if he foresaw a substantial risk that W might cause serious injury to the sergeant with a wooden post.
It was submitted on behalf of English, and the House of Lords agreed, that the use of a knife was fundamentally different to the use of a wooden post.
The summing up was therefore defective and his conviction was quashed.
Lord Hutton added at p 30: if the weapon used by the primary party is different to, but as dangerous as, the weapon which the secondary party contemplated he might use, the secondary party should not escape liability for murder because of the difference in the weapon, for example, if he foresaw that the primary party might use a gun to kill and the latter used a knife to kill, or vice versa.
In later cases which proceeded on the assumption that the law was as stated in Chan Wing Siu, courts have endeavoured to clarify the test of what is to be regarded as fundamentally different for this purpose; such cases include R v Rahman [2008] UKHL 45; [2009] 1 AC 129 and R v Mendez [2011] QB 876.
The need to address a concept of fundamental departure assumed great importance because guilt was based, under the Chan Wing Siu and Powell and English rule, on foresight of what D1 might do.
Australia
Chan Wing Siu was followed by the High Court of Australia in McAuliffe v The Queen (1995) 183 CLR 108, which was in turn followed by the High Court in Gillard v The Queen (2003) 219 CLR 1 and Clayton v The Queen (2006) 231 ALR 500.
In Clayton the majority adopted the theory (at para 20) that what is there described as extended common purpose liability differs as a matter of jurisprudential foundation from secondary liability as aider or abettor, the first being grounded in common embarkation on crime A and the second in contribution to anothers crime.
There was a dissenting judgment by Kirby J, who pointed, among other considerations, to the disparity between the mental element required of an aider or abettor and that required by the rule of extended common purpose (para 102).
Analysis
The court has had the benefit of a far deeper and more extensive review of the topic of so called joint enterprise liability than on past occasions.
From our review of the authorities, there is no doubt that the Privy Council laid down a new principle in Chan Wing Siu when it held that if two people set out to commit an offence (crime A), and in the course of it one of them commits another offence (crime B), the second person is guilty as an accessory to crime B if he foresaw it as a possibility, but did not necessarily intend it.
We have referred (at paras 31 33 and 39 45) to the authorities on which the Privy Council placed reliance in laying down that principle: Davies v Director of Public Prosecutions, R v Anderson and R v Morris, Johns v The Queen and Miller v The Queen.
What Lord Simonds said in Davies was in a very different context and does not provide support for the Chan Wing Siu principle for the reasons which we have explained.
In Anderson and Morris the Court of Appeal affirmed Wesley Smith including the rule that if an adventurer departed completely from what had been tacitly agreed as part of an agreed joint enterprise his co adventurer would not be liable for the consequences of that unauthorised act.
In such a situation, the effect of the overwhelming supervening event is that any assistance is spent.
The issue was whether that applied to Morris.
The court did not otherwise address the question of what is necessary to establish joint responsibility, and specifically whether what is required is intention to assist or mere foresight of what D1 might do.
Still less did it address the meaning of contemplation (foresight) and authorisation.
It provided no foundation for the rule in Chan Wing Siu.
The Privy Council judgment, moreover, elided foresight with authorisation, when it said that the principle turns on contemplation or, putting the same idea in other words, authorisation, which may be express but is more usually implied.
But as Professor Smith observed, contemplation and authorisation are not the same at all.
Nor can authorisation of crime B automatically be inferred from continued participation in crime A with foresight of crime B. As Lord Brown accurately pointed out in R v Rahman at para 63, the rule in Chan Wing Siu makes guilty those who foresee crime B but never intended it or wanted it to happen.
There can be no doubt that if D2 continues to participate in crime A with foresight that D1 may commit crime B, that is evidence, and sometimes powerful evidence, of an intent to assist D1 in crime B.
But it is evidence of such intent (or, if one likes, of authorisation), not conclusive of it.
In Johns v The Queen the ratio decidendi of the majority was that there was ample evidence from which the jury could infer that the defendant gave his assent to a criminal enterprise which involved the discharge of a firearm, should the occasion arise.
This was an entirely orthodox approach.
So too was the decision in Miller v The Queen, where the High Court held that the judges direction to the jury would reasonably have been understood as saying that the defendant would be guilty of murder if he acted in concert with the principal offender in a plan which included the possible murder of the victims.
As already noted, that case did not involve a plan to carry out crime A, in the course of which crime B was committed.
In Powell and English Lord Hutton placed considerable reliance on Wesley Smith, which had been cited in Chan Wing Siu but was not mentioned in the judgment.
Lord Hutton said that he considered that in Wesley Smith the Court of Appeal recognised that the secondary party will be guilty of unlawful killing committed by the primary party with a knife if he contemplates that the primary party may use such a weapon (p 19).
But the unlawful killing to which the Court of Appeal was referring was manslaughter, not murder, and it is very important to understand its reasoning.
The defendant in Wesley Smith was one of a group of four men who became involved in a row in a public house.
He and one other went outside and threw bricks at the building.
One of the two who remained inside stabbed the barman with a knife which Smith knew he carried.
Smith was acquitted of murder but convicted of manslaughter.
The question in Wesley Smith was whether his conviction for manslaughter was unsafe in the light of his acquittal of murder.
The starting point was that anyone who takes part in an unlawful and violent attack on another person which results in death is guilty (at least) of manslaughter.
There might conceivably have been an intervening act by another person of such a character as to break any connection between the defendants conduct and the victims death (as, for example, in Anderson and Morris); but the fact that it must have been within Smiths contemplation that the principal might act in the way that he did was fatal to the argument that he was not guilty even of manslaughter. (See para 96 below).
Although Lord Hutton quoted part of the judges summing up in Wesley Smith he ended his quotation with the first part of the passage set out at para 28 above. (Anybody who is party to an attack which results in an unlawful killing is a party to the killing.) He did not go on to refer to the critical passage which followed, including the statement: Only he who intended that unlawful and grievous bodily harm should be done is guilty of murder.
He who intended only that the victim should be unlawfully hit and hurt will be guilty of manslaughter if death results.
Moreover, as we have explained at para 29, the Court of Appeal had explicitly praised the summing up as a correct statement of the law.
Far from supporting the Chan Wing Siu principle, Wesley Smith was an authority contrary to it.
Wesley Smith was not the only authority inconsistent with the Chan Wing Siu principle.
We have referred to other authorities from Collison to Reid, which were not cited in Chan Wing Siu.
Reid was cited in Powell and English, but it was not mentioned in any of the judgments, although it was a reserved judgment of a strong Court of Appeal which reiterated that a secondary party could not be convicted of murder unless he had the mens rea for murder.
In Chan Wing Siu Sir Robin Cooke referred, at p 176, to the modern emphasis on subjective tests of criminal guilt.
There has indeed been a progressive move away from the historic tendency of the common law to presume as a matter of law that the natural and probable consequences of a mans act were intended, culminating in England and Wales in its statutory removal by section 8 of the Criminal Justice Act 1967.
Since then in England and Wales the foreseeability of the consequences has been a matter of evidence from which intention may be, but need not necessarily be, inferred; whether the evidential approach differs in Jamaica is a topic not addressed in argument before us.
But in any event the proper subjective counterpart to Fosters objective test (whether the events, although possibly falling out beyond his original intention, were in the ordinary course of things the probable consequence of what B did under the influence, and at the instigation of A) would have been intention, as was held to be necessary in Wesley Smith and Reid.
Foresight may be good evidence of intention but it is not synonymous with it, as Lord Steyn acknowledged in Powell and English at p 13.
It was, of course, within the jurisdiction of the courts in Chan Wing Siu and Powell and English to change the common law in a way which made it more severe, but to alter general principles which have stood for a long time, especially in a way which has particular impact on a subject as difficult and serious as homicide, requires caution; and all the more so when the change involved widening the scope of secondary liability by the introduction of new doctrine (since termed parasitic accessory liability).
In Chan Wing Siu the Privy Council addressed the policy argument for the principle which it laid down in two sentences (see para 46 above).
The statement at p 177 Where a man lends himself to a criminal enterprise knowing that potentially murderous weapons are to be carried, and in the event they in fact are used by his partner with an intent sufficient for murder, he should not escape the consequences may be thought to oversimplify the question of what is the enterprise to which he has intentionally lent himself, but it also implies that he would escape all criminal liability but for the Chan Wing Siu principle.
On the facts postulated, if the law remained as set out in Wesley Smith and Reid he would be guilty of homicide in the form of manslaughter, which carries a potential sentence of life imprisonment.
The dangers of escalation of violence where people go out in possession of weapons to commit crime are indisputable, but they were specifically referred to by the court in Reid, when explaining why it was right that such conduct should result in conviction for manslaughter if death resulted, albeit that the initial intention may have been nothing more than causing fright.
There was no consideration in Chan Wing Siu, or in Powell and English, of the fundamental policy question whether and why it was necessary and appropriate to reclassify such conduct as murder rather than manslaughter.
Such a discussion would have involved, among other things, questions about fair labelling and fair discrimination in sentencing.
In Powell and English Lord Hutton referred to the need to give effective protection to the public against criminals operating in gangs (at p 25), but the same comments apply.
There does not appear to have been any objective evidence that the law prior to Chan Wing Siu failed to provide the public with adequate protection.
A further policy reason suggested by Lord Hutton for setting a lower mens rea requirement for the secondary party than for the principal was that the secondary party has time to think before taking part in a criminal enterprise like a bank robbery, whereas the principal may have to decide on the spur of the moment whether to use his weapon.
But the principal has had an earlier choice whether to go armed or not.
As for the secondary party, he may have leisure to think before going out to rob a bank, but the same is not true in many other cases (for example, of young people who become suddenly embroiled in a fight in a bar and may make a quick decision whether or not to help their friends).
We respectfully differ from the view of the Australian High Court, supported though it is by some distinguished academic opinion, that there is any occasion for a separate form of secondary liability such as was formulated in Chan Wing Siu.
As there formulated, and as argued by the Crown in these cases, the suggested foundation is the contribution made by D2 to crime B by continued participation in crime A with foresight of the possibility of crime B. We prefer the view expressed by the Court of Appeal in Mendez, at para 17, and by textbook writers including Smith and Hogans Criminal Law, 14th ed (2015), p 260 that there is no reason why ordinary principles of secondary liability should not be of general application.
The rule in Chan Wing Siu is often described as joint enterprise liability.
However, the expression joint enterprise is not a legal term of article As the Court of Appeal observed in R v A [2011] QB 841, para 9, it is used in practice in a variety of situations to include both principals and accessories.
As applied to the rule in Chan Wing Siu, it unfortunately occasions some public misunderstanding.
It is understood (erroneously) by some to be a form of guilt by association or of guilt by simple presence without more.
It is important to emphasise that guilt of crime by mere association has no proper part in the common law.
As we have explained, secondary liability does not require the existence of an agreement between D1 and D2.
Where, however, it exists, such agreement is by its nature a form of encouragement and in most cases will also involve acts of assistance.
The long established principle that where parties agree to carry out a criminal venture, each is liable for acts to which they have expressly or impliedly given their assent is an example of the intention to assist which is inherent in the making of the agreement.
Similarly, where people come together without agreement, often spontaneously, to commit an offence together, the giving of intentional support by words or deeds, including by supportive presence, is sufficient to attract secondary liability on ordinary principles.
We repeat that secondary liability includes cases of agreement between principal and secondary party, but it is not limited to them.
It will be apparent from what we have said that we do not consider that the Chan Wing Siu principle can be supported, except on the basis that it has been decided and followed at the highest level.
In plain terms, our analysis leads us to the conclusion that the introduction of the principle was based on an incomplete, and in some respects erroneous, reading of the previous case law, coupled with generalised and questionable policy arguments.
We recognise the significance of reversing a statement of principle which has been made and followed by the Privy Council and the House of Lords on a number of occasions.
We consider that it is right to do so for several reasons.
Firstly, we have had the benefit of a much fuller analysis than on previous occasions when the topic has been considered.
In Chan Wing Siu only two English cases were referred to in the judgment Anderson and Morris and Davies.
More were referred to in the judgments in Powell and English, but they did not include (among others) Collison, Skeet, Spraggett or notably Reid.
Secondly, it cannot be said that the law is now well established and working satisfactorily.
It remains highly controversial and a continuing source of difficulty for trial judges.
It has also led to large numbers of appeals.
Thirdly, secondary liability is an important part of the common law, and if a wrong turn has been taken, it should be corrected.
Fourthly, in the common law foresight of what might happen is ordinarily no more than evidence from which a jury can infer the presence of a requisite intention.
It may be strong evidence, but its adoption as a test for the mental element for murder in the case of a secondary party is a serious and anomalous departure from the basic rule, which results in over extension of the law of murder and reduction of the law of manslaughter.
Murder already has a relatively low mens rea threshold, because it includes an intention to cause serious injury, without intent to kill or to cause risk to life.
The Chan Wing Siu principle extends liability for murder to a secondary party on the basis of a still lesser degree of culpability, namely foresight only of the possibility that the principal may commit murder but without there being any need for intention to assist him to do so.
It savours, as Professor Smith suggested, of constructive crime.
Fifthly, the rule brings the striking anomaly of requiring a lower mental threshold for guilt in the case of the accessory than in the case of the principal.
As to the argument that even if the court is satisfied that the law took a wrong turn, any correction should now be left to Parliament, the doctrine of secondary liability is a common law doctrine (put into statutory form in section 8 of the 1861 Act) and, if it has been unduly widened by the courts, it is proper for the courts to correct the error.
It is worth attention that the Westminster Parliament has legislated over inchoate criminal liability in the Serious Crime Act 2007.
Section 44 provides: (1) A person commits an offence if (a) he does an act capable of encouraging or assisting the commission of an offence; and (b) he intends to encourage or assist its commission. (2) But he is not to be taken to have intended to encourage or assist the commission of an offence merely because such encouragement or assistance was a foreseeable consequence of his act.
Section 45 creates a parallel offence if a person does such an act believing that the offence will be committed and that his act will encourage or assist his commission, but both sections are subject to a statutory defence if the defendant acted reasonably in the circumstances as he believed them to be.
It is a noteworthy feature of the present law in England and Wales that Parliament has provided that foresight is not sufficient mens rea for the offence of intentionally encouraging or assisting another to commit an offence; whilst at present under Chan Wing Siu if that other person goes on to commit the offence, such foresight is sufficient mens rea for the secondary party to be regarded as guilty of the full offence at common law.
The correction of the error in Chan Wing Siu brings the common law back into recognition of the difference between foresight and intent, consistently with Parliaments approach in section 44(2) of the 2007 Act and more generally in section 8 of the Criminal Justice Act 1967 (referred to at para 73 above).
It would not be satisfactory for this court simply to disapprove the Chan Wing Siu principle.
Those who are concerned with criminal justice, including members of the public, are entitled to expect from this court a clear statement of the relevant principles.
We consider that the proper course for this court is to re state, as nearly and clearly as we may, the principles which had been established over many years before the law took a wrong turn.
The error was to equate foresight with intent to assist, as a matter of law; the correct approach is to treat it as evidence of intent.
The long standing pre Chan Wing Siu practice of inferring intent to assist from a common criminal purpose which includes the further crime, if the occasion for it were to arise, was always a legitimate one; what was illegitimate was to treat foresight as an inevitable yardstick of common purpose.
We address below the potential impact on past convictions.
Restatement of the principles
We have summarised the essential principles applicable to all cases in paras 8 to 12 and 14 to 16.
In some cases the prosecution may not be able to prove whether a defendant was principal or accessory, but it is sufficient to be able to prove that he participated in the crime in one way or another.
In cases of alleged secondary participation there are likely to be two issues.
The first is whether the defendant was in fact a participant, that is, whether he assisted or encouraged the commission of the crime.
Such participation may take many forms.
It may include providing support by contributing to the force of numbers in a hostile confrontation.
The second issue is likely to be whether the accessory intended to encourage or assist D1 to commit the crime, acting with whatever mental element the offence requires of D1 (as stated in para 10 above).
If the crime requires a particular intent, D2 must intend (it may be conditionally) to assist D1 to act with such intent.
To take a homely example, if D2 encourages D1 to take anothers bicycle without permission of the owner and return it after use, but D1 takes it and keeps it, D1 will be guilty of theft but D2 of the lesser offence of unauthorised taking, since he will not have encouraged D1 to act with intent permanently to deprive.
In cases of concerted physical attack there may often be no practical distinction to draw between an intention by D2 to assist D1 to act with the intention of causing grievous bodily harm at least and D2 having the intention himself that such harm be caused.
In such cases it may be simpler, and will generally be perfectly safe, to direct the jury (as suggested in Wesley Smith and Reid) that the Crown must prove that D2 intended that the victim should suffer grievous bodily harm at least.
However, as a matter of law, it is enough that D2 intended to assist D1 to act with the requisite intent.
That may well be the situation if the assistance or encouragement is rendered some time before the crime is committed and at a time when it is not clear what D1 may or may not decide to do.
Another example might be where D2 supplies a weapon to D1, who has no lawful purpose in having it, intending to help D1 by giving him the means to commit a crime (or one of a range of crimes), but having no further interest in what he does, or indeed whether he uses it at all.
them of the difference between intention and desire.
In cases of secondary liability arising out of a prior joint criminal venture, it will also often be necessary to draw the jurys attention to the fact that the intention to assist, and indeed the intention that the crime should be committed, may be conditional.
The bank robbers who attack the bank when one or more of them is It will therefore in some cases be important when directing juries to remind armed no doubt hope that it will not be necessary to use the guns, but it may be a perfectly proper inference that all were intending that if they met resistance the weapons should be used with the intent to do grievous bodily harm at least.
The group of young men which faces down a rival group may hope that the rivals will slink quietly away, but it may well be a perfectly proper inference that all were intending that if resistance were to be met, grievous bodily harm at least should be done.
Juries frequently have to decide questions of intent (including conditional intent) by a process of inference from the facts and circumstances proved.
The same applies when the question is whether D2, who joined with others in a venture to commit crime A, shared a common purpose or common intent (the two are the same) which included, if things came to it, the commission of crime B, the offence or type of offence with which he is charged, and which was physically committed by D1.
A time honoured way of inviting a jury to consider such a question is to ask the jury whether they are sure that D1s act was within the scope of the joint venture, that is, whether D2 expressly or tacitly agreed to a plan which included D1 going as far as he did, and committing crime B, if the occasion arose.
If the jury is satisfied that there was an agreed common purpose to commit crime A, and if it is satisfied also that D2 must have foreseen that, in the course of committing crime A, D1 might well commit crime B, it may in appropriate cases be justified in drawing the conclusion that D2 had the necessary conditional intent that crime B should be committed, if the occasion arose; or in other words that it was within the scope of the plan to which D2 gave his assent and intentional support.
But that will be a question of fact for the jury in all the circumstances.
In cases where there is a more or less spontaneous outbreak of multi handed violence, the evidence may be too nebulous for the jury to find that there was some form of agreement, express or tacit.
But, as we have said, liability as an aider or abettor does not necessarily depend on there being some form of agreement between the defendants; it depends on proof of intentional assistance or encouragement, conditional or otherwise.
If D2 joins with a group which he realises is out to cause serious injury, the jury may well infer that he intended to encourage or assist the deliberate infliction of serious bodily injury and/or intended that that should happen if necessary.
In that case, if D1 acts with intent to cause serious bodily injury and death results, D1 and D2 will each be guilty of murder.
If a person is a party to a violent attack on another, without an intent to assist in the causing of death or really serious harm, but the violence escalates and results in death, he will be not guilty of murder but guilty of manslaughter.
So also if he participates by encouragement or assistance in any other unlawful act which all sober and reasonable people would realise carried the risk of some harm (not necessarily serious) to another, and death in fact results: R v Church [1965] 1 QB 59, approved in Director of Public Prosecutions v Newbury [1977] AC 500 and very recently re affirmed in R v F (J) & E (N) [2015] EWCA Crim 351; [2015] 2 Cr App R 5.
The test is objective.
As the Court of Appeal held in Reid, if a person goes out with armed companions to cause harm to another, any reasonable person would recognise that there is not only a risk of harm, but a risk of the violence escalating to the point at which serious harm or death may result.
Cases in which D2 intends some harm falling short of grievous bodily harm are a fortiori, but manslaughter is not limited to these.
The qualification to this (recognised in Wesley Smith, Anderson and Morris and Reid) is that it is possible for death to be caused by some overwhelming supervening act by the perpetrator which nobody in the defendants shoes could have contemplated might happen and is of such a character as to relegate his acts to history; in that case the defendant will bear no criminal responsibility for the death.
This type of case apart, there will normally be no occasion to consider the concept of fundamental departure as derived from English.
What matters is whether D2 encouraged or assisted the crime, whether it be murder or some other offence.
He need not encourage or assist a particular way of committing it, although he may sometimes do so.
In particular, his intention to assist in a crime of violence is not determined only by whether he knows what kind of weapon D1 has in his possession.
The tendency which has developed in the application of the rule in Chan Wing Siu to focus on what D2 knew of what weapon D1 was carrying can and should give way to an examination of whether D2 intended to assist in the crime charged.
If that crime is murder, then the question is whether he intended to assist the intentional infliction of grievous bodily harm at least, which question will often, as set out above, be answered by asking simply whether he himself intended grievous bodily harm at least.
Very often he may intend to assist in violence using whatever weapon may come to hand.
In other cases he may think that D1 has an iron bar whereas he turns out to have a knife, but the difference may not at all affect his intention to assist, if necessary, in the causing of grievous bodily harm at least.
Knowledge or ignorance that weapons generally, or a particular weapon, is carried by D1 will be evidence going to what the intention of D2 was, and may be irresistible evidence one way or the other, but it is evidence and no more.
Where the offence charged does not require mens rea, the only mens rea required of the secondary party is that he intended to encourage or assist the perpetrator to do the prohibited act, with knowledge of any facts and circumstances necessary for it to be a prohibited act: National Coal Board v Gamble.
Past convictions
The effect of putting the law right is not to render invalid all convictions which were arrived at over many years by faithfully applying the law as laid down in Chan Wing Siu and in Powell and English.
The error identified, of equating foresight with intent to assist rather than treating the first as evidence of the second, is important as a matter of legal principle, but it does not follow that it will have been important on the facts to the outcome of the trial or to the safety of the conviction.
Moreover, where a conviction has been arrived at by faithfully applying the law as it stood at the time, it can be set aside only by seeking exceptional leave to appeal to the Court of Appeal out of time.
That court has power to grant such leave, and may do so if substantial injustice be demonstrated, but it will not do so simply because the law applied has now been declared to have been mistaken.
This principle has been consistently applied for many years.
Nor is refusal of leave limited to cases where the defendant could, if the true position in law had been appreciated, have been charged with a different offence.
An example is Ramsden [1972] Crim LR 547, where a defendant who had been convicted of dangerous driving, before Gosney (1971) 55 Cr App R 502 had held that fault was a necessary ingredient of the offence, was refused leave to appeal out of time after that latter decision had been published.
The court observed that alarming consequences would flow from permitting the general re opening of old cases on the ground that a decision of a court of authority had removed a widely held misconception as to the prior state of the law on which the conviction which it was sought to appeal had been based.
No doubt otherwise everyone convicted of dangerous driving over a period of several years could have advanced the same application.
Likewise in Mitchell (1977) 65 Cr App R 185, 189, Geoffrey Lane LJ re stated the principle thus: It should be clearly understood, and this court wants to make it even more abundantly clear, that the fact that there has been an apparent change in the law or, to put it more precisely, that previous misconceptions about the meaning of a statute have been put right, does not afford a proper ground for allowing an extension of time in which to appeal against conviction.
For more recent statements of the same rule see Hawkins [1997] 1 Cr App R 234 (Lord Bingham CJ) and Cottrell and Fletcher [2007] EWCA Crim 2016; [2007] 1 WLR 3262 (Sir Igor Judge P) together with the cases reviewed in R v R [2006] EWCA Crim 1974; [2007] 1 Cr App R 150.
As Cottrell and Fletcher decides, the same principles must govern the decision of the Criminal Cases Review Commission if it is asked to consider referring a conviction to the Court of Appeal: see in particular para 58.
On 28 March 2012 Jogee and a co defendant, Hirsi, were each convicted at Nottingham Crown Court of the murder of a man named Fyfe.
His appeal to the Court of Appeal Criminal Division was dismissed.
The cause of death was a stab wound inflicted by Hirsi.
The stabbing took place shortly before 2.30 am on 10 June 2011 at the home of a woman called Naomi Reid in Leicester.
Jogee and Hirsi spent the evening of 9 June 2011 together at various places, taking drink and drugs.
They became increasingly intoxicated and their behaviour became increasingly aggressive.
Shortly before midnight they arrived at Miss Reids house.
The prosecutions case about what happened after that was based on her evidence.
According to her account, Jogee was angry about a recent encounter with another man.
He picked up a large knife from a kitchen block and waved it about, saying that they should go and shank him.
Miss Reid wanted them to leave.
She was in a relationship with the deceased and told them that she was expecting him home shortly.
They replied that they were not scared of him and would sort him out.
They left after Jogee received a call from someone wanting to buy cocaine, but said that they would be back.
Hirsi later returned alone to Miss Reids house and was there when the deceased arrived.
Miss Reid phoned Jogee and told him to take Hirsi away.
Jogee arrived, and he and Hirsi left.
After they had gone, Miss Reid sent Jogee a text telling him not to bring Hirsi to her house again.
Within minutes the two men returned.
Hirsi entered the house, shouting.
The deceased came downstairs and there was an angry exchange.
The deceased went upstairs to put on his jeans.
While that was happening, Hirsi took the knife from the kitchen.
According to Miss Reid, the deceased came down and tried to get Hirsi and Jogee to leave.
The deceased was in the hallway.
Hirsi was inside the front door, armed with the knife.
Jogee was outside, striking a car with a bottle and shouting encouragement to Hirsi to do something to the deceased.
At some stage Jogee came to the doorway, with the bottle raised, and leaned forward past Hirsi towards the deceased, saying that he wanted to smash it over the deceaseds head, but he was too far away.
The deceased told them to go, but both men said that they were not going anywhere.
Miss Reid threatened to call the police.
Hirsi pointed the knife at her chest and grabbed her by the throat.
Miss Reid backed away and went to the kitchen, but she saw Hirsi make a stabbing motion towards the deceaseds chest and both men ran off.
The deceased had been stabbed by Hirsi and died of his wounds.
At the close of the prosecutions case a submission was made that the appellant had no case to answer.
The judge, Dobbs J, rejected the submission.
She held that, set against the background of the behaviour of the defendants during the evening, it was open to jury to find that the appellant realised that Hirsi might use a knife, intending to cause at least serious bodily harm, and that by his conduct he encouraged Hirsi to act with the requisite intent.
Neither defendant gave evidence.
The judge directed the jury that the appellant was guilty of murder if he participated in the attack on the deceased, by encouraging Hirsi, and realised when doing so that Hirsi might use the kitchen knife to stab the deceased with intent to cause him really serious harm.
This was an orthodox direction in accordance with the Chan Wing Siu principle.
Mr John McGuinness QC on behalf of the prosecution properly accepted that the appellants conviction could not stand if we were to conclude, as we do, that the Chan Wing Siu principle was wrong.
Ms Felicity Gerry QC submitted on behalf of the appellant that he could not properly have been convicted either of murder or of manslaughter.
We regard that submission as hopeless.
The jurys verdict means that it was sure, at the very least, that the appellant knew that Hirsi had the knife and appreciated that he might use it to cause really serious harm.
In returning to the house, after 2.00 am, in the circumstances which we have summarised, the appellant and Hirsi were clearly intent on some form of violent confrontation.
The appellant was brandishing a bottle, striking the car and shouting encouragement to his co defendant at the scene.
There was a case fit to go to the jury that he had the mens rea for murder.
At a minimum, he was party to a violent adventure carrying the plain objective risk of some harm to a person and which resulted in death; he was therefore guilty of manslaughter at least.
The choice of disposal is whether to quash the appellants conviction for murder and order a re trial or whether to quash his conviction for murder and substitute a conviction for manslaughter.
We invite the parties written submissions on that question.
Ruddock
On 26 January 2010 Ruddock was convicted at Montego Bay Circuit Court of the murder of Pete Robinson.
A co defendant, Hudson, pleaded guilty to murder at the beginning of the trial.
Ruddocks appeal to the Court of Appeal of Jamaica was dismissed.
The prosecutions case was that the murder was committed in the course of robbing the deceased of his Toyota station wagon.
The deceased was a taxi driver.
His body was found on the morning of 1 July 2007 on a beach in the fishing village of White House.
His hands and feet were tied with cloth and his throat had been cut.
On 4 July 2007 the deceaseds son saw the Toyota being driven in the town of Maggotty.
He immediately reported it to the police.
Soon afterwards two police officers came across the vehicle parked in Maggotty.
Hudson was in the drivers seat, a woman was in the front passenger seat and Ruddock was in the back seat.
They were told that the police had information that the vehicle had been stolen and the owner murdered, and they were taken to Maggotty police station.
The prosecutions case against Ruddock was based on what he was alleged to have told the police.
The investigating officer, DC Spence, gave evidence that he interviewed Ruddock under caution on 5 July 2007.
He said that Ruddock stated that he was not the one who cut the deceaseds throat, that this was done by Hudson with a ratchet knife, but that he had tied the deceaseds hands and feet.
The officer then recorded a statement from him, which was not adduced in evidence.
After taking Ruddocks statement, DC Spence interviewed a woman whose picture appeared on Hudsons mobile phone.
He was asked by prosecuting counsel what the woman said, but at this point the judge rightly intervened to warn the prosecution against hearsay evidence.
DC Spence told the jury that he then went back to see Ruddock and, despite the judges warning, he continued: I told him that the female had explain (sic) to me that, told me all what they have done to her and the deceased, Pete Robinson, while they were on the beach at White House in St James.
DC Spence said that he subsequently arrested Ruddock, and that under caution he repeated that he had tied up the deceaseds hands and feet and that Hudson used a ratchet knife to cut his throat.
Ruddock allegedly added that they then drove away in the car with the female, which the jury is likely to have understood to mean the female about whom DC Spence had been speaking.
The female was not called as a witness.
Ruddock did not give evidence, but he made an unsworn statement from the dock to the effect that he had not been present at the murder and had no knowledge of it.
He gave an explanation for being in the car when he was picked up by the police.
He said that he told the police that he knew nothing about the murder, but that they beat him and offered him a bribe to build a case against Hudson.
The judge directed the jury that the prosecution had to prove that each defendant shared a common intention to commit the offence, and that common intention included a situation in which the defendant, whose case you are considering, knew that there was a real possibility that the other defendant might have a particular intention and with that knowledge, nevertheless, went on to take part in it.
The judge reminded the jury that it was the prosecutions case that the two defendants intended to rob the deceased of his car, and that in so doing they tied him up and cut his throat.
He invited the jury to consider the evidence of the state in which the deceaseds body was found (bound hands and feet and throat cut) and he posed the question for their consideration whether this was the work of one man or more than one.
The judge also reminded the jury of DC Spences evidence of what he told Ruddock about what the female had said regarding what they did to her at White House on the beach and what they did to Mr Robinson.
He commented that the jury would have to look at that, together with the fact that there seemed to have been no reply from Ruddock.
There are three problems about the summing up.
The first is the direction based on the Chan Wing Siu principle.
Secondly, that the judge failed to tell the jury that if they were sure that Ruddock was a party to carrying out the robbery, it did not automatically follow that he was also party to the murder of the deceased.
That question required separate and further consideration.
Ruddocks alleged statements to the police were, or were at least capable of being understood as, a denial that he was responsible for the deceaseds murder.
He admitted to tying up the deceased, but that was consistent with a simple intent to rob.
The fact that the defence advanced by Ruddock at trial was a total denial of involvement in the incident did not remove the judges obligation to point out to the jury that there was evidence in Ruddocks words to the police which was intended to exculpate himself from the murder.
Thirdly, and less significantly, the judges treatment in his summing up of what DC Spence said to Ruddock about the female in the photograph was unsatisfactory.
It was potentially prejudicial.
The judge should have told the jury that they had not heard from the woman, and that they should ignore altogether any reference to what she had said.
Mr Howard Stevens QC properly accepted on behalf of the prosecution that if the Board concluded that the Chan Wing Siu principle is wrong, the appeal must be allowed on that ground.
It is therefore unnecessary to consider further the consequences of the other defects on the safety of the conviction.
The Board invites the parties written submissions as to the advice which it should humbly tender to Her Majesty regarding the disposal of the appeal.
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The legal issue in these cases concerned the mental element of intent which must be proved when a defendant is accused of being a secondary party to a crime.
The question of law was whether the common law took a wrong turning in two cases, Chan Wing Siu v The Queen [1985 1 AC 168 and Regina v Powell and English [1999] 1 AC 1.
The appellant Jogee was convicted at Nottingham Crown Court of the murder of Paul Fyfe.
Mr Fyfe was the boyfriend of Naomi Reid and he was stabbed to death in the hallway of her home in the early hours of 10 June 2011 by the appellants co defendant, Mohammed Hirsi.
Hirsi was convicted of murder.1 The appellant and Hirsi spent the previous evening at various places, taking drink and drugs.
They became increasingly intoxicated and increasingly aggressive.
Shortly before midnight they arrived at Ms Reids house.
She told them to leave and that she was expecting Mr Fyfe to return.
They said that they were not scared of him and would sort him out.
They left but Hirsi returned and was there when Mr Fyfe arrived.
Ms Reid called the appellant and told him to fetch Hirsi, which he did, but soon afterwards Hirsi and the appellant came back to her house.
Hirsi entered the house and there was an angry confrontation between him and Mr Fyfe.
The appellant was outside with a bottle and shouting to Hirsi to do something to Mr Fyfe and at one stage the appellant came to the door and threatened to smash the bottle over Mr Fyfes head.
The fatal stabbing was done by Hirsi with a knife which he took from the kitchen.
The judge directed the jury that the appellant was guilty of murder if he took part in the attack on Mr Fyfe and realised that it was possible that Hirsi might use the knife with intent to cause serious harm.
The appellant Ruddock was convicted in the Circuit Court at Montego Bay, Jamaica, of the murder of Peter Robinson.
The appellants co defendant, Hudson, pleaded guilty to the murder.
Mr Robinson was a taxi driver and the prosecutions case was that the murder was committed in the course of robbing him of his station wagon.
The police evidence was that the appellant made a statement under caution which amounted to an admission that he was involved in committing the robbery and that he was present when Hudson killed the victim by cutting his throat but a denial that the appellant was responsible for the killing.
The judge directed the jury that Ruddock was guilty of murder if he took part in the robbery and knew that there was a possibility that Hudson might intend to kill the victim. 1 Hirsi pleaded guilty to murder. amended to Hirsi was convicted of murder. on 3rd March 2016 [see judgment para 101]
In each case the direction to the jury derived from Chan Wing Siu and Reg v Powell and English which were binding on the trial judges.
The unanimous conclusion of the court is that Chan Wing Siu and Powell and English did take a wrong turning and these appeals should therefore be allowed.
The correct rule is that foresight is simply evidence (albeit sometimes strong evidence) of intent to assist or encourage, which is the proper mental element for establishing secondary liability.
The court has been concerned with a part of the law of secondary liability for crime.
It concerns the person who did not himself forge the document, fire the gun or stab the victim (the person who did is called the principal), but who is said to have encouraged or assisted the principal to do so.
There is no question that persons who are indeed together responsible for a crime are all guilty of it, whether as principals or secondary parties.
Sometimes it is not possible to determine exactly whose hand performed the vital act, but this does not matter providing that it is proved the each defendant either did it himself of intentionally assisted or encouraged it.
These cases do not affect that basic rule at all.
Within this part of the criminal law, the court has been concerned with a narrower sub part.
This concerns secondary parties who have been engaged with one or more others in a criminal venture to commit crime A, but in doing so the principal commits a second crime, crime B.
In many of the reported cases crime B is murder committed in the course of some other criminal venture, but the rule of law is not confined to cases of homicide, or indeed to cases of violence.
The question is: what is the mental element which the law requires of the secondary party? This narrower area of secondary responsibility has sometimes been labelled joint enterprise, but this is to misuse that expression.
To speak of a joint enterprise is simply to say that two or more people were engaged in a crime together.
That, however, does not identify what mental element must be shown in the secondary party.
The particular narrower area of secondary responsibility here in question where crime B is committed during the course of crime A has been, in the past, more precisely been labelled parasitic accessory liability.
The two cases of Chan Wing Siu and Reg v Powell and English held that in the kind of situation described, the mental element required of the secondary party (D2) is simply that he foresaw the possibility that D1 might commit crime B.
If D2 did foresee this, the cases treated his continued participation in crime A not simply as evidence that he intended to assist crime B, but as automatic authorisation of it.
So D2 was guilty under this rule, even if he did not intend to assist crime B at all.
This set a lower test for D2 than for D1, who will be guilty of crime B only if he has the necessary mental element for that crime, usually intent.
And it is in contrast to the usual rule for secondary parties, which is that the mental element is an intention to assist or encourage the principal to commit the crime.
The conclusion of this court is that once the two questioned decisions are fully analysed, it is plain that they did take a wrong turning in their reasoning, even if the outcome might well have been the same if the error had not been made.
The prior cases which were relied on were only part of the history and important cases were not discussed.
The decisions departed from the well established rule that the mental element required of a secondary party is an intention to assist or encourage the principal to commit the crime.
They also advanced arguments based on the need that co adventurers in crimes which result in fatality should not escape conviction, without considering whether the secondary parties would generally be guilty of manslaughter in any event.
The law in this field has always been a matter of the common law rather than of statute, and so it is right for the courts, which have created it, to investigate whether a wrong turning was taken.
The court holds, in a unanimous judgment, that the law must be set back on the correct footing which stood before Chan Wing Siu.
The mental element for secondary liability is intention to assist or encourage the crime.
Sometimes the encouragement or assistance is given to a specific crime, and sometimes to a range of crimes, one of which is committed; either will suffice.
Sometimes the encouragement or assistance involves an agreement between the parties, but in other cases it takes the form of more or less spontaneous joining in a criminal enterprise; again, either will suffice.
Intention to assist is not the same as desiring the crime to be committed.
On the contrary, the intention to assist may sometimes be conditional, in the sense that the secondary party hopes that the further crime will not be necessary, but if he nevertheless gives his intentional assistance on the basis that it may be committed if the necessity for it arises, he will be guilty.
In many cases, the intention to assist will be co terminous with the intention (perhaps conditional) that crime B be committed, but there may be some where it exists without that latter intention.
It will remain relevant to enquire in most cases whether the principal and secondary party shared a common criminal purpose, for often this will demonstrate the secondary partys intention to assist.
The error was to treat foresight of crime B as automatic authorisation of it, whereas the correct rule is that foresight is simply evidence (albeit sometimes strong evidence) of intent to assist or encourage.
It is a question for the jury in every case whether the intention to assist or encourage is shown.
This brings the mental element of the secondary party back into broad parity with what is required of the principal.
The correction is also consistent with the provision made by Parliament in a closely related field, when it created (by the Serious Crime Act 2007) new offences of intentionally encouraging or assisting the commission of a crime, and provided that a person is not to be taken to have had that intention merely because of foreseeability.
The court makes clear what the present cases do not decide.
First, they do not affect the law that a person who joins in a crime which any reasonable person would realise involves a risk of harm, and death results, is guilty at least of manslaughter.
Manslaughter cases can vary in their gravity, but may be very serious and the maximum sentence is life imprisonment.
Secondly, they do not affect the rule that a person who intentionally encourages or assists the commission of a crime is as guilty as the person who physically commits it.
Thirdly, they do not alter the fact that it is open to a jury to infer intentional encouragement or assistance, for example, from weight of numbers in a combined attack, whether more or less spontaneous or planned, or from knowledge that weapons are being carried.
It is a commonplace for juries to have to decide what inferences they can properly draw about intention from an accused persons behaviour and what he knew.
This necessary correction to the wrong turning taken by the law does not mean that every person convicted in the past as a secondary party, where the law as stated in Chan Wing Siu was applied, will have suffered an unsafe conviction.
A correction to the law does not have this effect.
The outcome may in many cases have been the same.
Those whose convictions are outside the time limit for appealing would require the exceptional leave of the Court of Appeal, Criminal Division, to challenge them out of time.
It is for that court to enquire whether substantial injustice would occur in any particular case, but it is not the law that that is shown simply because the rules which then prevailed have now been declared to have contained a flaw.
The same rules apply where the Criminal Cases Review Commission is asked to consider referring a case to the Court of Appeal.
In these two cases, the convictions for murder must be set aside because the law was wrongly understood and the appeals were brought in time.
In Jogee it was argued on his behalf that he ought not to have been convicted of either murder or manslaughter and that his conviction should simply be quashed.
That argument was quite unrealistic.
On the evidence and the jurys verdict he was unquestionably guilty at least of manslaughter, and there was evidence on which the jury could have found him guilty of murder on a proper direction.
The court will ask for written submissions from both parties whether there should be a re trial for murder or whether the conviction for murder should be replaced by a conviction for manslaughter.
In the case of Ruddock there were other, unrelated, misdirections.
The Board asks for written submissions from both sides, now that the correct position in law has been identified, as to what should be the appropriate disposal.
This summary is provided to assist in understanding the Courts decision.
It does not form part of the reasons for the decision.
The full judgment of the Court is the only authoritative document.
Judgments are public documents and are available at: http://supremecourt.uk/decided cases/index.html
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Section 28 of the Housing Act 1988 (the 1988 Act) identifies a measure of damages payable by a landlord to a residential occupier of premises whom he has unlawfully evicted from them.
Construction of the section is not straightforward.
On 25 September 2012 His Honour Judge Blunsdon, sitting in the Lambeth County Court, determined a claim for damages brought by Mr Loveridge against the London Borough of Lambeth (Lambeth).
Mr Loveridge had been a residential occupier of premises let to him by Lambeth.
The judge found that it had unlawfully evicted him from them.
By reference to the construction of it which he favoured, the judge awarded Mr Loveridge damages of 90,500 under section 28 as well as of 9,000 otherwise than under the section.
Lambeth appealed to the Court of Appeal against the judges award of damages under section 28.
On 10 May 2013, by a judgment delivered by Briggs LJ with which Arden LJ and Sir Stanley Burnton agreed, [2013] EWCA Civ 494, [2013] 1 WLR 3390, the court favoured a different construction of the section, which led it to order that Lambeths appeal be allowed, that the judges award under section 28 be set aside in its entirety but that the award of damages otherwise than under the section be increased to 16,400.
Against these orders Mr Loveridge now appeals.
In November 2002 Lambeth granted to Mr Loveridge a weekly tenancy of a flat at 19 Moresby Walk, London SW8.
The tenancy was secure within the meaning of section 79 of the Housing Act 1985.
The flat was on the ground floor and was self contained with one bedroom.
It was one of two flats in a purpose built two storey building and at all material times the flat upstairs, namely 20 Moresby Walk, was also subject to a secure tenancy.
On 9 July 2009 Mr Loveridge went to Ghana, from where he did not return until 5 December 2009.
He was in breach of a term of the tenancy agreement which required him to notify Lambeth of any absence from the flat for more than eight weeks.
But he continued to pay the rent.
On 22 September 2009, believing that he had died, Lambeth effected forcible entry to the flat; took possession of it by changing the locks; and left a notice to quit, expressed to expire on 26 October 2009.
At around that expiry date it also cleared out his belongings and disposed of them.
Two days after his return to England, but when he was unable to prevent it, Lambeth let the flat to somebody else.
The judge rejected Lambeths contention that prior to 22 September 2009 Mr Loveridge had ceased to occupy the flat as his principal home and that his tenancy had therefore ceased to be secure.
It was on that basis that the judge held Lambeths eviction of him to have been unlawful.
It was agreed that his damages in respect of its trespass to his goods amounted to 9000; and so it was in respect of their trespass that the judge added 9,000 to his award of 90,500. 3.
The parties further agreed that, at common law, the damages for any unlawful eviction of Mr Loveridge from the flat during the subsistence of a secure tenancy amounted to 7,400.
Mr Loveridge contended, however, that he was entitled to a higher sum by way of damages under sections 27 and 28 of the 1988 Act and he conceded that, if so, he was precluded by section 27(5) from also receiving damages at common law in respect of the eviction. 4.
The main purpose behind the 1988 Act was set out in a White Paper, Cm 214, entitled Housing: The Governments Proposals and presented to Parliament in September 1987.
That purpose, set out in Chapter 3, was to stimulate the availability of rented accommodation in the private sector by making lettings more attractive to private landlords.
This was to be achieved by provisions which extended the ambit of two types of tenancy which had been introduced by sections 56 and 52 of the Housing Act 1980.
The first was the assured tenancy in which, when letting certain types of property, the landlord had been entitled to extract a market rent rather than a lower, fair, rent, albeit that his entitlement to recover possession at the end of the term had been restricted.
The second was the protected shorthold tenancy in which, albeit at risk of a reduction of the contractual rent to a fair rent, the landlord had been entitled to recover possession at the end of the term.
The 1988 Act duly extended the circumstances in which an assured tenancy could be granted; and it amended the description of a protected shorthold tenancy to an assured shorthold tenancy and changed its nature so as to enable the landlord to charge a market, rather than a fair, rent as well as to remain unshackled by any significant security of tenure on the part of the tenant at the end of the contractual term. 5.
But the government, when introducing the bill which became the 1988 Act, and Parliament, when enacting it, both realised that it created a danger.
It was that some unscrupulous landlords, tempted by the prospect of entering into new tenancies on terms much more favourable to themselves (or of selling their properties with vacant possession in what in 1988 was a spiralling real property market), would seek to drive out such of their existing tenants as, under the Rent Act 1977, enjoyed protection in respect both of rent and of security of tenure.
So, in the White Paper, the government wrote: 3.17 It is important that existing tenants whose Rent Act rights will be preserved should be protected against the minority of landlords who may be prepared to harass them in order to obtain vacant possession and to relet at higher rents.
The Government therefore proposes to increase the existing statutory protection by creating a new offence where the landlord harasses the tenant .
The Government also proposes to strengthen the civil law to enable tenants who have been evicted illegally or forced out by harassment to claim greater compensation.
This would be an important additional deterrent to harassment. 6.
The facility for the unlawfully evicted tenant to claim enlarged compensation was duly provided in sections 27 and 28 of the 1988 Act, which are in Chapter IV of Part 1 of it.
The chapter is entitled Protection from Eviction.
Section 27 is entitled Damages for unlawful eviction.
Subsection (1) provides: 7.
This section applies if, at any time after 9th June 1988, a landlord (in this section referred to as the landlord in default) unlawfully deprives the residential occupier of any premises of his occupation of the whole or part of the premises. 8. 9.
Section 27(2) provides that the section also applies if, in summary, the residential occupier yields occupation as a result of acts of harassment on the part of a landlord who knew that they were likely to have that result.
Section 27(3), (4) and (5) provides: (3) Subject to the following provisions of this section, where this section applies, the landlord in default shall, by virtue of this section, be liable to pay to the former residential occupier, in respect of his loss of the right to occupy the premises in question as his residence, damages assessed on the basis set out in section 28 below. (4) Any liability arising by virtue of subsection (3) above (a) shall be in the nature of a liability in tort; and (b) subject to subsection (5) below, shall be in addition to any liability arising apart from this section (whether in tort, contract or otherwise). (5) Nothing in this section affects the right of a residential occupier to enforce any liability which arises apart from this section in respect of his loss of the right to occupy premises as his residence; but damages shall not be awarded both in respect of such a liability and in respect of a liability arising by virtue of this section on account of the same loss. 10.
Section 27(6) provides that the landlord is not liable to pay damages under subsection (3) if in certain circumstances the occupier is reinstated in the premises. 11.
Section 27(7) gives the court power to reduce damages under subsection (3) if, in summary, the occupiers conduct prior to the eviction makes it reasonable to do so or if the landlord had offered to reinstate him.
The trial judge declined Lambeths invitation to him to exercise this power.
Although in a second ground of appeal Lambeth challenged his ruling in this respect, and although the Court of Appeal noted that in the light of its conclusion on the first ground the second ground did not need to be determined, Lambeth no longer pursues it even in the event that Mr Loveridges appeal to this court were to succeed. 12.
Section 27(8) provides the landlord with a defence to liability for damages under subsection (3) if, in summary, he proves that, when he deprived the occupier of occupation, he believed, and had reasonable cause to believe, that the occupier had ceased to reside in them.
Lambeth raised this defence before the trial judge but he rejected it and Lambeth did not appeal against his ruling in this respect. 13.
Section 27(9) provides definitions which apply both to that section and, by virtue of section 28(4), also to section 28.
Two of the definitions are material. (a) The first, at (a), is the definition of residential occupier, which is to have the meaning set out in section 1 of the Protection from Eviction Act 1977, namely a person occupying premises as a residence, whether (as in the case of Mr Loveridge) under a contract or by virtue of any enactment or rule of law giving him the right to remain there. (b) The second, at (b), is the definition of a residential occupiers right to occupy, which is to include any restriction on the right of another person to recover possession of the premises in question. 14.
Section 28 is entitled The measure of damages.
Its relevant provisions are as follows and, since the issue surrounding its construction primarily relates to the terms of subsections (1)(a) and (3)(a), I will set them in bold: (1) The basis for the assessment of damages referred to in section 27(3) above is the difference in value, determined as at the time immediately before the residential occupier ceased to occupy the premises in question as his residence, between (a) the value of the interest of the landlord in default determined on the assumption that the residential occupier continues to have the same right to occupy the premises as before that time; and (b) the value of that interest determined on the assumption that the residential occupier has ceased to have that right.
In relation to any premises, any reference in this section to the interest of the landlord in default is a reference to his interest in the building in which the premises in question are comprised (whether or not that building contains any other premises) together with its curtilage.
For the purposes of the valuations referred to in subsection (1) above, it shall be assumed (a) that the landlord in default is selling his interest on the open market to a willing buyer; (b) . (2) (3) Although section 27(3) describes the damages payable to the tenant under section 28 as being in respect of his loss of the right to occupy, it is clear that they are designed to yield to him not the amount of his loss but, exceptionally, the amount of the gain which the landlord would otherwise have achieved by reason of the eviction. 15.
It is clear that the principal target of sections 27 and 28 of the 1988 Act was the unscrupulous private landlord saddled with a tenancy protected, in terms both of rent and of security, by the Rent Act 1977 and therefore created prior to 15 January 1989, after which, as a result of section 34 of the 1988 Act, such a tenancy could not generally be created.
Local authority landlords rarely perpetrate unlawful evictions of their tenants.
When they do so, it is usually, as here, as a result of honest misjudgement and scarcely ever (although it was found to have occurred in AA v London Borough of Southwark [2014] EWHC 500 (QB)) as a result of any deliberate intention to act unlawfully.
A local authority will not be motivated to seek to deploy its housing stock for gain.
Nevertheless the words of section 27 are wide enough to cover an unlawful eviction on the part of a local authority; and when, as in the case of tenancies from the Crown, Parliament wished to exclude the operation of section 27 (and thus of section 28), it expressly so provided: section 44(2)(a).
So it is agreed that the sections apply to an unlawful eviction of a tenant by a local authority. 16.
Section 28(1) of the 1988 Act requires the court to make two valuations, namely (a) and (b), as at the time immediately prior to the unlawful eviction.
Both valuations are of the landlords interest, which, by virtue of subsection (2), means his interest in the building in which the demised premises are comprised even if it contains other premises.
In the present case it was therefore agreed that the valuations were to relate to Lambeths interest in the whole two storey building at Moresby Walk, including the upstairs flat. 17.
The two valuations are to be determined on different assumptions.
Valuation (a) is to be based on the assumption that the tenant continues to have the same right to occupy the premises as he had prior to his eviction.
Indeed, in the light of the definition in section 27(9)(b) of the Act, the assumption that he continues to have the same right to occupy includes an assumption that he continues to enjoy the benefit of the same restrictions on the landlords right to recover possession as he enjoyed prior to the eviction.
Valuation (b), by contrast, is to be based on the assumption that the tenant ceased to have that right, including that he ceased to enjoy that benefit. 18.
The valuation exercises mandated by section 28(1)(a) and (b) of the 1988 Act would have been straightforward but for the further assumption which is mandated by section 28(3)(a).
This provides that, for the purposes of both valuations, it shall be assumed that the landlord is selling his interest on the open market to a willing buyer.
The interface between section 28(3)(a) and section 28(1)(a) is at the heart of the appeal. 19.
Of course the notion that Lambeth would put the building at 19 and 20 Moresby Walk on the open market for sale is fanciful in the extreme.
It could not dispose of the building without the consent of the Secretary of State: section 32(2) of the Housing Act 1985, as inserted by section 6(2) of and Schedule 1 to the Housing and Planning Act 1986.
And, in the event of its proposed disposal to a private sector landlord, Lambeth would be required to consult the tenants and the Secretary of State could not give his consent if a majority of them had objected to it: paragraphs 2, 3 and 5 of Schedule 3A to the 1985 Act.
It is agreed, however, that these formidable obstacles to sale are irrelevant.
For the mandatory assumption is that Lambeth is indeed selling its interest on the open market.
As Lord Donaldson of Lymington, Master of the Rolls, said in Tagro v Cafane [1991] 1 WLR 378, 387: the whole concept of the landlord selling his interest on the open market to a willing buyer assumes that he can sell it on the open market to a willing buyer 20. 21.
It is further agreed that the least absurd hypothesis would indeed be of a sale to an ordinary private landlord rather than, say, to another local authority or to a private registered provider of social housing.
The ordinary private landlord would be interested in purchasing the building for a simple reason: that, in his hands, the two sets of premises there could both generate market rents.
Upon sale to him the secure tenancies held by the two tenants immediately prior thereto would cease to exist because the landlord condition of a secure tenancy would no longer be satisfied: sections 79 and 80 of the Housing Act 1985.
Instead section 1(1) of the 1988 Act would convert the tenancies to being assured and would therefore confer on the landlord the power to bring the rents up to market level pursuant to sections 13 and 14 of that Act.
It now becomes possible to explain the dispute between the parties about the nature of the valuations mandated by section 28 of the 1988 Act. 22.
Mr Jenner was the chartered surveyor and valuer whom both parties initially instructed to provide valuations. (a) In respect of valuation (a), his instructions, once refined, were to value the building as at 22 September 2009 on the assumption that both flats were subject to secure tenancies.
By reference to a capitalisation of the rents payable under the tenancies, Mr Jenners valuation (a) was in the sum of 123,000. (b) In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat was subject to a secure tenancy.
By reference to the market value of properties comparable to the downstairs flat and to a capitalisation of the rent payable for the upstairs flat, Mr Jenners valuation (b) was in the sum of 213,500. (c) So the difference between Mr Jenners valuations (a) and (b) was 90,500, being the sum which the trial judge awarded to Mr Loveridge by way of damages under section 28. 23.
Mr Robson was the chartered surveyor and valuer whom, with the courts permission, Lambeth instructed to provide valuations notwithstanding its prior joint instruction of Mr Jenner.
It asked him to provide them on three different assumptions, of which it is only to the third that I need to refer, namely a sale on 22 September 2009 to an ordinary private landlord. (a) (b) In respect of valuation (a), his instructions were therefore to value the building as at 22 September 2009 on the assumption that both flats had then become subject to assured tenancies.
By reference to market comparables, Mr Robsons valuation (a) was in the sum of 304,000.
In respect of valuation (b), his instructions were to value the building as at 22 September 2009 on the assumption that the owner had vacant possession of the downstairs flat but that the upstairs flat had then become subject to an assured tenancy.
By reference to market comparables, Mr Robsons valuation (b) was again in the sum of 304,000.
For his opinion, not challenged by Mr Jenner, was that in 2009 there was no difference between the value of 19 Moresby Walk if bought with vacant possession and if bought subject to an assured tenancy. (c) So the difference between Mr Robsons valuations (a) and (b) was nil, being the sum which the Court of Appeal considered to be Mr Loveridges entitlement under section 28. 24.
The issue is, therefore, whether the valuations of both flats (for valuation (a)) and of the upstairs flat (for valuation (b)) should be conducted on the assumption that they are subject to secure tenancies or to assured tenancies. 25.
Lambeths case is primarily constructed upon section 28(3)(a) of the 1988 Act, which requires the assumption of a sale by the landlord on the open market.
It contends that a market valuation of property must take into account a change in the use which a purchaser might make of the property and for which he may therefore make allowance in his offer.
In this respect it cites the judgment of the Judicial Committee of the Privy Council in Raja Vyricherla Narayana Gajapathiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302, in which it was held that the market value of land subject to compulsory purchase should include such extra value as might be paid for the facility to collect fresh water which was generated by a spring on the land but which was presently going to waste.
Lord Romer, at p 313, described it as self evident that the land was to be valued by reference not merely to the use to which it was being put but to the uses to which it was reasonably capable of being put. 26.
With respect, Lord Romers proposition remains self evident.
But the exercise mandated by section 28 of the 1988 Act is more complicated than an identification of market value.
The assumption of a sale on the open market is for the purposes of the valuations referred to in subsection (1), in which other assumptions are mandated, namely (a) that the tenant continues to have the same right to occupy the premises as he had immediately prior to the eviction and, alternatively, (b) that he has ceased to have that right. 27.
What was the right which Mr Loveridge had to occupy the downstairs flat immediately prior to the eviction? It was the right of a secure tenant.
Lambeth correctly argues that the consequence of a notional sale to a private landlord would be to convert the status of Mr Loveridges tenancy (and indeed that of the tenancy upstairs) from secured to assured.
But in my view the notional exercise mandated by subsection 3(a) of section 28 does not extend to making the consequential adjustments to the nature of Mr Loveridges right (or indeed that of the tenant upstairs) consequent upon sale.
For that is barred by the words of subsection 1(a).
Within this highly artificial exercise, regard to the effect of one assumption is halted by the terms of another. 28.
The decision of the Court of Appeal in Osei Bonsu v Wandsworth LBC [1999] 1 WLR 1011 relates to another rare example of an unlawful eviction of a secure tenant by a local authority.
As here, it was as a result of the local authoritys honest misjudgement.
Under section 28 of the 1988 Act the trial judge awarded the tenant damages of 30,000.
The court upheld Wandsworths argument that the award should have been reduced by two thirds pursuant to section 27(7).
But Wandsworth also sought to challenge the figure of 30,000, which, as it had earlier agreed, represented the difference between the value of the house subject to a secure tenancy and its value with vacant possession.
The court held that it was too late for Wandsworth to resile from the agreement.
But it noted both Wandsworths proposed contention, which, but for the lateness, it regarded as strong, and the tenants proposed rebuttal of it, which it regarded as weak.
Wandsworths proposed contention was that the tenants secure tenancy was held only jointly with his estranged wife and that therefore Wandsworth, which was in the process of rehousing her, had only to persuade her to serve it with a valid notice to quit for the tenancy to come to an end.
There was therefore a feature of his tenure prior to the eviction which was unrelated to the notional sale and yet which made it extremely fragile.
The tenants proposed rebuttal was that the hypothesis was of a sale by Wandsworth and that no purchaser would be likely to enjoy the same power of persuasion over the wife as Wandsworth enjoyed.
In a judgment with which the other members of the court agreed, Simon Brown LJ said at p 1022: The clear answer to this argument, I am satisfied, lies in [Wandsworths] submission that what is being valued is the interest of the landlord not the abstract interest of a notional willing buyer.
Although the concept of a willing buyer helps to fix the respective valuations, one postulates the landlords continuing ownership in fact.
Although it may take time to understand his last sentence, Simon Brown LJ there expressed the view, with which I respectfully agree, that the likely effect of a sale upon the subsistence or otherwise of the secure tenancy should not be brought into the valuation exercise mandated by section 28.
Briggs LJ in his judgment under appeal.
He said in para 28: Mr Loveridges rights of occupation had, from the very grant of his secure tenancy, been vulnerable to being downgraded on a sale by his local authority landlord to a private landlord.
It was a vulnerability inherent in the nature of his rights.
The Lord Justice rightly put aside the extreme unreality of any such proposed sale.
But he endorsed a valuation under section 28(1)(a) which was based upon a notional downgrading of the right which Mr Loveridge had prior to the eviction, namely the right of a secure tenant, so as to become the right only of an assured tenant.
In my view his endorsement was wrong: for, as His Honour Judge Blunsdon had concluded in a judgment of enviable clarity, section 28(1)(a) requires the basis of the valuation to be that Mr Loveridge continues following the eviction to have the same right to occupy as he had prior to the eviction.
I therefore propose that the appeal should be allowed and the judges order restored. 30.
Parliament might wish to revisit the application of section 27, and therefore of section 28, of the 1988 Act to unlawful evictions on the part of local authorities.
No doubt all reasonable means of dissuading them from making unlawful evictions, whether by misjudgement or otherwise, should be in place.
But the facts are that Lambeth did not realise a capital gain, and never aspired to realise a capital gain, as a result of its eviction of Mr Loveridge; and that its intention was always to re let the flat and that, once it did so, even its notional gain was eliminated.
In such circumstances it seems wrong that, by reference to a calculation of its notional gain, the law should require payment to Mr Loveridge out of public funds in an amount which is 12 times greater than that of his loss. 29.
Nobody could have put Lambeths argument more persuasively than did
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Section 28 of the Housing Act 1988 The Housing Act 1988 (the 1988 Act) was brought in with a view to stimulating the availability of rented accommodation in the private sector; it allowed landlords to let new tenancies on terms more advantageous to themselves [4].
Parliament included safeguards to deter unscrupulous landlords from evicting existing tenants with protected tenancies [15].
Section 27 of the 1988 Act provides the right to claim damages for unlawful eviction [6].
Section 28 sets out the method by which such damages are calculated, being the difference in value between two alternative calculations of the landlords interest in the building at the time immediately prior to the unlawful eviction: (1) The basis for the assessment of damages [for unlawful eviction] is the difference in value, determined as at the time immediately before the residential occupier ceased to occupy the premises in question as his residence, between (a) the value of the interest of the landlord in default determined on the assumption that the residential occupier continues to have the same right to occupy the premises as before that time; and (b) the value of that interest determined on the assumption that the residential occupier has ceased to have that right. (2) In relation to any premises, any reference in this section to the interest of the landlord in default is a reference to his interest in the building in which the premises in question are comprised (whether or not that building contains any other premises) together with its curtilage. (3) For the purposes of the valuations referred to in subsection (1) above, it shall be assumed (a) that the landlord in default is selling his interest on the open market to a willing buyer Mr Loveridges flat at 19 Moresby Walk From November 2002 Mr Loveridge lived in the downstairs flat at 19 Moresby Walk, a two storey house.
Both his flat and the upstairs flat were owned by the London Borough of Lambeth (Lambeth) and let under secure tenancies conferring certain statutory protections.
From July to December 2009 Mr Loveridge made a trip to Ghana.
While he was away, Lambeth changed the locks on his flat and cleared his possessions, mistakenly believing that he had died.
Two days after he returned to the UK, his flat was rented to somebody else [2].
Mr Loveridge sued Lambeth for damages.
The parties approaches to damages under section 28 Mr Loveridge and Lambeth each instructed a surveyor to value Lambeths interest in 19 Moresby Walk for the purposes of subsections 28(1)(a) and (b).
Mr Loveridges surveyor calculated valuation (a) on the basis that 19 Moresby Walk was sold with both the upstairs and downstairs flats subject to secure tenancies.
He calculated valuation (b) on the basis that 19 Moresby Walk was sold with vacant possession of the downstairs flat but with the upstairs flat subject to a secure tenancy.
The difference in value was 90,500 [22].
Lambeth adopted a different approach.
It relied on subsection 28(3)(a), which requires both valuations (a) and (b) to be calculated on the assumption that the property is sold on the open market to a willing buyer [18].
If 19 Moresby Walk had in fact been sold on the open market, say to a private landlord, the secure tenancies (which do not apply to private landlords) would have been converted into assured tenancies, thus allowing the new landlord to bring the rents up to market level [20].
Lambeths surveyor therefore conducted valuation (a) on the basis that both flats were subject to assured tenancies.
He concluded that valuation (b) produced the same figure as valuation (a) because the downstairs flat with vacant possession would be worth the same as if it were subject to an assured tenancy [23].
The procedural history At the hearing in the Lambeth County Court, the judge found that Mr Loveridge had been unlawfully evicted.
He preferred Mr Loveridges approach to the section 28 valuation exercise.
On 25 September 2012 he awarded Mr Loveridge90,500 under section 28 and 9,000 at common law in respect of the trespass to his goods [2].
Lambeth appealed against the quantum of damages.
The Court of Appeal accepted Lambeths argument and 10 May 2013 set aside the section 28 award [1].
It ordered Lambeth to pay 7,400 in damages at common law for unlawfully evicting Mr Loveridge, and, as before, 9,000 for trespass to goods.
The Supreme Court unanimously allows the appeal and restores HHJ Blunsdons order for damages.
Lord Wilson (with whom Lord Neuberger, Lord Sumption, Lord Carnwath and Lord Toulson agree) gives the judgment.
The words of section 27 of the 1988 Act are wide enough to cover local authority landlords as well as public landlords, even though local authority landlords rarely perpetrate unlawful evictions of their tenants [15].
Section 28(1) requires the court to make two valuations, namely (a) and (b), of the landlords interest [16].
Valuation (a) is based on the assumption that the tenant continues to have the same right to occupy the premises, and the landlord continues to be subject to the same restrictions on recovering possession, as before the eviction occurred.
Valuation (b) is based on the assumption that the tenants right to occupy and the restrictions on recovering possession have ceased [17].
The issue in this case was whether the valuation of both the upstairs and downstairs flats at 19 Moresby Walk (for valuation (a)) and of the upstairs flat (for valuation (b)) should be conducted on the assumption that they were subject to secure tenancies or to assured tenancies [24].
The assumption of a sale on the open market (subsection 28(3)(a)) is for the purposes of the valuations at subsection 28(1), in which other assumptions are mandated, namely (a) that the tenant continues to have the same right to occupy the premises as he had immediately prior to the eviction and, alternatively, (b) that he has ceased to have that right [26].
Prior to eviction, Mr Loveridges right to occupy the downstairs flat was that of a secure tenant.
The notional exercise required by subsection 28(3)(a) does not extend to making adjustments to the nature of the tenants rights that are consequent upon sale.
Such adjustments are barred by subsection 28(1)(a) which stipulates that the same right continues [27].
The likely effect upon a secure tenancy of a sale to a private landlord should not therefore be taken into account [28].
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This case, in which a professional gambler sues a casino for winnings at Punto Banco Baccarat, raises questions about (1) the meaning of the concept of cheating at gambling, (2) the relevance to it of dishonesty, and (3) the proper test for dishonesty if such is an essential element of cheating.
The facts
Over two days in August 2012 Mr Ivey, the claimant in this case, deployed a highly specialist technique called edge sorting which had the effect of greatly improving his chances of winning.
He had the help of another professional gambler, Cheung Yin Sun (Ms Sun).
First they set up the conditions which enabled him to win.
Then, later that evening and the following day, over the course of some hours, he won approximately 7.7m.
The casino declined to pay, taking the view that what he had done amounted to cheating.
His case is that it was not cheating, but deployment of a perfectly legitimate advantage.
What happened is not in dispute.
It was set out with admirable clarity by Mitting J and very little is necessary by way of addition or subtraction.
What follows in this section is almost entirely in his words.
Punto Banco is a variant of Baccarat.
It is not normally, to any extent, a game of skill.
Six or eight decks or, in English nomenclature, packs of 52 cards are dealt from a shoe, face down by a croupier.
Because the cards are delivered one by one from the shoe, she has only to extract them; no deviation is permitted in their sequence.
She places them face down in two positions on the table in front of her, marked player, the Punto in the name, and Banker, Banco.
Those descriptions label the positions marked on the table; there need be no person as player and ordinarily there is not.
She slides the cards from the shoe, face down, one card to player, one to banker; a second to player and a second to banker.
In prescribed circumstances she must deal one further card, either to player or to banker or to both, but this possibility is irrelevant to what occurred.
The basic object of the game is to achieve, on one of the two positions, a combination of two or three cards which, when added together, is nearer to 9 in total than the combination on the other position.
Aces to 9 count at face value, 10 to King inclusive count as nothing.
Any pair or trio of cards adding up to more than 10 requires 10 to be deducted before arriving at the counting total.
Thus 4 plus 5 equals 9, but 6 plus 5 (which equals 11) counts as only 1.
Punters (of whom there need only be one) play the house.
They bet before any card is dealt and can bet on either the player or banker position.
The cards are revealed by the croupier after a full hand (or coup), usually of four cards, two to each position, has been dealt.
Winning bets are paid at evens on player, and at 19 to 20 on banker.
It is possible to bet on a tie.
In the event of a tie, all bets on player or banker are annulled; in other words, the punter keeps his stake and the only bet paid out on is the tie at odds set by the casino of either eight to one or, at Crockfords, nine to one.
It is possible to place other types of bet, but this case does not concern them and they need not be described.
The different odds mean that the casino, or house, enjoys a small advantage, taken over all the play.
That is standard and well known to all; casinos publish the percentage house edge which they operate.
In Punto Banco at Crockfords it was 1.24% if player wins and 1.06% if banker wins.
A pack of 52 playing cards is manufactured so as to present a uniform appearance on the back and a unique appearance on the face.
The backs of some cards are, however, not exactly uniform.
The backs of many packs of cards for social use have an obvious top and bottom: for example the manufacturers name may be printed once only, or the pattern may have an obviously right way up and an upside down.
In casino games in which the orientation of the back of the card may matter, cards are used which are in principle indistinguishable whichever way round they are when presented in a shoe.
Cards with no pattern and no margin at the edge present no problem; they are indistinguishable.
However, many cards used in casinos are patterned.
If the pattern is precisely symmetrical the effect is the same as if the card is plain; the back of one card is indistinguishable from any other.
But if the pattern is not precisely symmetrical it may be possible to distinguish between cards by examining the backs.
Edge sorting becomes possible when the manufacturing process causes tiny differences to appear on the edges of the cards so that, for example, the edge of one long side is marginally different from the edge of the other.
Some cards printed by Angel Co Ltd for the Genting Group (which owns Crockfords) have this characteristic, apparently within the narrow tolerances specified for manufacture.
The pattern is not precisely symmetrical on the back of the cards.
The machine which cuts the card leaves very slightly more of the pattern, a white circle broken by two curved lines, visible on one long edge than on the other.
The difference is sub millimetric, but the pattern is, to that very limited extent, closer to one long edge of the card than it is to the other.
Before a card is dealt from a shoe, it sits face down at the bottom of the shoe, displaying one of its two long edges.
It is possible for a sharp eyed person sitting close to the shoe to see which long edge it is.
Being able thus to see which long edge is displayed is by itself of no help to the gambler.
All the cards have the same tiny difference between their right and left long edges, so knowing which edge is displayed tells the gambler nothing about the value of the next card in the shoe.
The information becomes significant only if things can be so arranged that the cards which the gambler is most interested in are all presented with long edge type A facing the table, whilst all the less interesting cards present long edge type B. Then the gambler knows which kind of card is next out of the shoe.
In Punto Banco cards with a face value of 7, 8 and 9 are high value cards.
If one such card is dealt to player or to banker, it will give that position a better chance of winning than the other.
Thus a punter who knows that when the first card dealt (always to the player position) is a 7, 8 or 9, he will know that it is more likely than not that player will win.
If he knows that the card is not a 7, 8 or 9, he will know that it is more likely than not that banker will win.
Such knowledge, it is agreed, will give the punter a long term edge of about 6.5% over the house if played perfectly accurately.
What is therefore necessary for edge sorting to work is for the cards in the shoe to be sorted so that all the 7s, 8s and 9s display edge type A, whilst the rest display edge type B. That means rotating the high value cards so that they display edge type A.
If the punter were to touch the cards, the invariable practice at most casinos, including at Crockfords, would be that those cards would not be used again.
The only person who touches the cards is the croupier.
So what had to happen was to get the cards sorted (ie differentially rotated) by type A and type B by the croupier and then to get them re used in the next shoe, now distinctively sorted.
For edge sorting to work at Crockfords it is therefore essential that the croupier is persuaded to rotate the relevant cards without her realising why she is being asked to do so.
Casinos routinely play on quirky and superstitious behaviour by punters.
It is in the casinos interests that punters should believe, erroneously, that a lucky charm or practice will improve their chance of winning and so modify or defeat the house edge.
Consequently a wide variety of requests by punters, particularly those willing to wager large sums on games which they must, if they play long enough, lose in the long run, are accommodated by casinos without demur or surprise.
All of the games of Punto Banco played by the claimant and Ms Sun on 20 and 21 August 2012 were captured on CCTV, mostly with contemporaneous audio recording as well.
The moment at which they persuaded the croupier, Kathy Yau, to rotate the cards was at 9 pm on 20 August.
The video shows it and the words spoken have been transcribed.
Before then, the claimant and Ms Sun had played part of four shoes, the first two plain backed, and the second two Angel cards but with no asymmetry on the back.
The claimant is a high stakes gambler.
He began, by his standards, modestly: bets placed on those four shoes ranged from 4,000 to 75,000 per coup.
He was losing.
At 8.56 pm he requested a new shoe of cards.
A new shoe was produced.
The cards were blue Angel cards with the rounded pattern described on the back.
At 8.57 the claimant asked Jeremy Hillier, the senior croupier overseeing the game: If I win, can I say I want the same cards again? to which Mr Hillier replied he could, because [he was] not bending them.
The claimant had in fact avoided touching the cards from either the first or second shoe onwards.
The croupier, Kathy Yau, then put the cards face down in blocks on the table to make the cut, as is conventional.
She cut the cards so as to exclude about one deck from play.
The claimant asked about the cut: Why so big? Ms Sun said: They dont cut the seven cards, a reference to the traditional cut of 7 cards from the end.
Ms Yau asked if he wanted her to cut 7 cards, to which he replied yes, he wanted to play 90 hands, slightly more than the maximum likely to be possible with an eight deck shoe with a seven card cut.
She complied, after checking with the supervisor on duty in the room.
That had the effect of maximising the number of coups which would be possible with those packs, and of exposing the maximum number of cards to the sorting (rotation) process.
Ms Yau then dealt the first coup.
After the bet was made, and all the cards then dealt, the next stage was for the croupier to turn the cards face up to reveal whether Player or Banker had won.
Ms Sun then asked Ms Yau in Cantonese to do it, in other words to turn the cards over so that the face showed, slowly.
Ms Yau said yes.
Ms Sun then asked her again in Cantonese to turn the cards in a particular and differential way as they were being exposed and before they were put on the pile of used cards.
If I say it is good, you turn it this way, good, yes? Um, no good. (A slightly different sounding um).
Ms Yau did not immediately understand what was required.
She asked, so you want me to leave it? To which Ms Sun replied, change, yeah, yeah, change luck.
Ms Yau: what do you mean? Ms Sun gestured how to turn it.
Turn it this way.
Ms Yau: what, just open it? Yeah.
Ms Sun: um, signifying good in Cantonese.
The claimant then chipped in, yeah, change the luck, thats good.
Anything to change the luck, it is okay with me.
Ms Sun reiterated her request in Cantonese, If I say it is not good, you turn it this way.
If it is good, turn it this way, okay? To which Ms Yau said okay.
When she turned over the cards of the second coup, Ms Sun said of four of them, good, and of one, not good, in Cantonese.
Ms Yau did as requested.
What she was being asked to do, and did, was to turn the cards which Ms Sun called as good end to end, and the not good cards side to side.
In consequence, the long edge of the not good card was oriented in a different way from the long edge of the good cards.
The judge found that she had been wholly ignorant of the significance of what she was doing, card by card, at the call of Ms Sun.
This procedure was followed for each of the next 79 coups dealt from this shoe.
The maximum amount staked by the claimant on the coups towards the end of the shoe reached 100,000.
Self evidently, at no time during the play of this shoe did he derive any advantage from the rotation of the cards requested by Ms Sun because that rotation occurred at the end, not at the beginning, of each coup.
This was all preparation.
At 10.03 pm, when the shoe was exhausted, the claimant said that he had won with that deck (ie shoe), and that he would keep it.
The senior croupier, who had brought in a new collection of cards, was told by the claimant he did not want them, as he had won 40,000 with that deck; that was agreed to.
The original cards were reused.
The defendant has not been able to calculate retrospectively whether that assertion of winnings to that point was true.
Before the shoe was reused it had to be reshuffled.
The claimant had earlier asked Ms Yaus predecessor as croupier for a shuffling machine to shuffle the cards.
The cards were reshuffled by a machine.
For a punter using the edge sorting technique this ensured that the shuffle would be effected without rotating any of the cards unless the croupier did so before they were put into the machine.
Ms Yau did not do so.
Manual shuffling would have carried a much higher risk of re rotation as it was done.
Play with the reshuffled shoe recommenced at 10.12 pm and continued until Ms Yau went for a half hour break at 10.31 pm.
The claimant did not play during her break but resumed when she returned until 3.57 am on 21 August.
Ms Yau was the croupier throughout.
The claimants stake increased to 95,000 and then to 149,000 per coup.
He won approximately 2m.
The accuracy of his bets on player increased sharply.
In the first two shoes in which Angel cards were used, those without an asymmetric pattern on the back, he placed respectively 11 bets and then 1 bet on player and a 7, 8 or 9 only occurred once in that 12 times.
On the shoe in which the edge sorting was done in the manner described, he placed 23 bets on player of which eight were 7s, 8s or 9s.
On the succeeding shoes, those at least that were completed on that night, shoes four to eight, the record was as follows.
Shoe four, 23 accurate bets out of 27; shoe five, 22 accurate bets out of 25; shoe six, 20 accurate bets out of 26; shoe 7, 23 accurate bets out of 30; shoe 8, 17 accurate bets out of 19.
A similar but slightly less pronounced pattern occurred on the following day.
At the end of play on the early morning of the 21st the claimant asked if he could keep the same shoe, which he referred to as a deck, if he returned on the following day.
He was told he could.
Ms Yau returned to duty at 2 pm on 21 August.
The claimant resumed play with the same cards at 3 pm and played until 6.41 pm.
His average stake was never less than 149,000.
For the last three shoes it was 150,000, the maximum that he was allowed to bet each time.
In the middle of play of the last shoe, the senior croupier told the claimant that the shoe would be replaced when it was exhausted.
When it was, the claimant and Ms Sun left.
By then he had won just over 7.7m.
Crockfords practice after a large win such as this is to conduct an ex post facto investigation to work out how it occurred.
After quite lengthy review of the CCTV footage and examination of the cards, the investigators succeeded in spotting what had been done.
Nobody at Crockfords had heard of edge sorting before.
Nine days after the play, on 30 August, the claimant spoke to Mr Pearce, Managing Director of the London casinos of Genting UK, who told him that Crockfords would not be paying his winnings because the game had been compromised.
The claimant said he had not touched the cards, but did not state that which at the trial he freely admitted, that he had used edge sorting.
Arrangements were made to refund his deposited stake, 1m, on 31 August.
The judge found that Mr Ivey gave factually frank and truthful evidence of what he had done.
The finding was that he was a professional gambler who described himself as an advantage player, that is one who, by a variety of techniques, sets out to reverse the house edge and to play at odds which favour him.
The judge found that he does so by means that are, in his opinion, lawful.
He is jealous of his reputation and is adamant that what he does is not cheating.
He described what he did, with Ms Sun, as legitimate gamesmanship.
The judge accepted that he was genuinely convinced that what he did was not cheating.
But the question which matters is not whether Mr Ivey thought of it as cheating but whether in fact and in law it was.
The judge concluded that it was, and so did the majority of the Court of Appeal.
Were they right or wrong?
Gaming and the law
Gaming has been the subject of statutory rules since at least the time of the Restoration.
They have addressed, inter alia, both (1) unfair play and (2) the recoverability of winnings by civil action.
Very recently, the Gambling Act 2005 has comprehensively revised the statutory framework for gaming.
In outline, it makes it lawful but subject to detailed licensing.
The Gaming Act of 1664 (16 Car 2 c7) addressed what it identified as the social ill of excessive gambling, when conducted not for innocent and moderate recreation but as a means of trade or making a living.
Even in times of relative debauchery, the Act castigated the effect of such gaming on the youth of the day, whether of the nobility and gentry or otherwise.
By section 3 it made irrecoverable at law any winnings over the then enormous sum of 100.
And by section 2 it imposed a forfeit of three times the winnings on anyone who won by (in effect) wrongful means.
The forfeit was recoverable by civil action at the suit either of the loser or, if he did not sue, by anyone else.
Half the forfeit went to the loser, and half to the Crown.
The misbehaviours which gave rise to such forfeit were defined as any fraud, shift, cousenage, circumvention, deceit or unlawful device, or ill practice whatsoever, and the activities covered included not only cards and dice, but also tennis and foot races, as well as horse racing, skittles, bowls and many other games.
The forfeit was incurred not only by winnings by wagering, but also by prize winning, if the ill practice was demonstrated.
By the time of Queen Anne, the attitude to gambling had hardened.
The Gaming Act 1710 (9 Ann c 14) repeated in section 5 the list of misbehaviour attracting a forfeit (now five times the winnings), and such was now recognised as a criminal offence attracting corporal punishment.
The same Act, by section 2, enabled anyone who lost more than 10 at games, however fair, to recover it by civil action, together with a forfeit of three times the loss, half for the loser and half for the poor of the parish.
By section 1 it made void any security given for payment of gaming debts.
The Gaming Act 1845 (8 & 9 Vict c 109) abolished the forfeits, but (by section 18) made general the rule that gaming or wagering contracts were unenforceable in law.
Section 17 dealt with malpractice.
It referred to fraud or unlawful device or ill practice and made winning by such means a criminal offence, by way of deeming it to be the recognised offence of obtaining by false pretences with intent to cheat or defraud (see section 53 Larceny Act 1827, 7 & 8 Geo 4 c 29).
Section 17 was headed cheating at play to be punished as obtaining money by false pretences.
This history is of limited importance, given the enactment of an entirely new regime by the Gambling Act 2005, but it does demonstrate that the law concerned itself from very early times with malpractice at gaming, and that by 1845 a general expression used for it was cheating.
It is also of note that the malpractice thus dealt with was not confined to deception or fraud, but extended to ill practice.
Given the origins of that expression in the 1664 Act, relating to foot races, tennis and the like, as well as to gambling, it is not possible to treat ill practice as having been limited by the principle of ejusdem generis to deception or fraud.
The Gambling Act 2005 reversed, by sections 334 and 335, the rule that gaming contracts are unenforceable.
The new Gambling Commission is, however, given by section 336 a new power to declare void a bet taken by a licensee if satisfied that the bet was substantially unfair.
Amongst the factors (not exhaustively defined) which are to be considered when deciding whether a bet was substantially unfair is included the circumstance that either party to the bet either did believe or ought to have believed that an offence of cheating had been or was likely to have been committed in connection with it, although that is by no means the only consideration.
Supply of insufficient information and the belief of either party that the underlying contest is conducted in contravention of industry rules are two of the other specified relevant circumstances.
The offence contrary to section 17 of the 1845 Act is replaced by a new offence of cheating at gambling created by section 42.
Section 42 is in the following terms: 42.
Cheating (1) A person commits an offence if he cheats at gambling, or (a) (b) does anything for the purpose of enabling or assisting another person to cheat at gambling. (2) For the purposes of subsection (1) it is immaterial whether a person who cheats improves his chances of winning (a) anything, or (b) wins anything. (3) Without prejudice to the generality of subsection (1) cheating at gambling may, in particular, consist of actual or attempted deception or interference in connection with the process by which gambling is (a) conducted, or (b) or process to which gambling relates. a real or virtual game, race or other event By subsection (4) this offence carries a penalty of up to two years imprisonment on indictment, or 51 weeks on summary conviction.
Cheating
It has been common ground throughout this litigation that the (now in principle enforceable) contract for betting into which these parties entered is subject to an implied term that neither of them will cheat.
It follows that, if what Mr Ivey did was cheating, he is in breach of this implied term and cannot as a result recover his winnings.
As well as advancing this defence, the casino pleaded that what he did amounted to the offence under section 42, and that in consequence he could not recover the proceeds of his criminal offence.
Mitting J held that the implied term had been broken, and that it was therefore unnecessary to decide whether or not the statutory offence had been committed.
The majority of the Court of Appeal dismissed Mr Iveys appeal.
The reasoning of Arden and Tomlinson LJJ was not identical, but both upheld the judges conclusion that what had been done amounted to cheating.
Sharp LJ would have allowed the appeal, taking the view that there could not be cheating unless the statutory offence had been committed and that a necessary ingredient of it was dishonesty as defined in R v Ghosh [1982] QB 1053.
The core submission of Mr Spearman QC for Mr Ivey runs as follows: the test of what is cheating must be the same for the implied term as (a) for section 42; (b) cheating necessarily involves dishonesty; (c) the judge found that Mr Ivey was truthful when he said that he did not consider what he did to be cheating; therefore dishonesty and in particular the second leg of the test established by R v Ghosh had not been demonstrated; (d) it follows that what was done was not cheating, and Mr Ivey ought to have recovered the 7.7m.
The concept of cheating long pre dates section 42 of the Gambling Act 2005.
It clearly embraces the kind of malpractice described in the statutes of 1664, 1710 and 1845.
Section 42 thus adopted a longstanding concept.
However, there is no reason to doubt that cheating carries the same meaning when considering an implied term not to cheat and when applying section 42 of the Act.
There will be a difference in standard of proof as between civil and criminal proceedings, but that does not affect the meaning of cheating.
Section 42 expressly does not exhaustively define cheating, and the elaboration in section 42(3) is explanatory rather than definitive.
The section leaves open what is and what is not cheating, as is inevitable given the extraordinary range of activities to which the concept may apply.
Plainly, what is cheating in one form of game may be legitimate competition in another.
For his second and crucial proposition Mr Spearman relied, as a matter of authority, substantially on R v Scott [1975] AC 819.
Viscount Dilhorne, with whom the other law lords agreed, referred in the course of his speech to the ancient common law offence of cheating.
He cited, at p 840, Easts Pleas of the Crown (1803) vol II, pp 816ff for that authors opinion that that offence consisted in: the fraudulent obtaining [of] the property of another by any deceitful and illegal practice or token (short of felony) which affects or may affect the public.
It is not, however, every species of fraud or dishonesty in transactions between individuals which is the subject matter of a criminal charge at common law; it must be such as affects the public calculated to defraud numbers, to deceive the people in general.
Says Mr Spearman, this demonstrates that fraud, and thus dishonesty, was an essential element of the common law offence of cheating.
The same, he contends, must follow for cheating at gambling.
Mr Scott and his co defendants were in the business of film piracy.
They bribed employees of commercial cinemas, such as projectionists, to abstract the reels of film overnight so that infringing copies could be made and in due course distributed commercially for profit.
The charge was not cheating at common law but conspiracy to defraud.
The substantial issue before the House of Lords was whether conspiracy to defraud required as an essential element that there had been deception, which had not been any part of the strategy employed by the defendants.
The answer was that deception was one very common form of defrauding, but not the only one.
Whilst no exhaustive definition of defrauding was attempted, the House held that defrauding also included depriving another, by dishonest means, of something which is his or to which he would or might be entitled but for the fraud.
In so holding, the House followed its own decision in Welham v Director of Public Prosecutions [1961] AC 103, where it had emphasised that the essence of defrauding was the effect on the victim.
To the extent that defrauding someone may take the form of depriving him of something which is his, or to which he might otherwise be entitled, it is plain, and wholly unsurprising, that a criminal offence of defrauding must contain in addition an element which demonstrates that the means adopted are illegitimate and wrong.
Otherwise much perfectly proper business competition would be at risk of being labelled fraud, since such competition frequently involves strategies to divert business from A to B. Hence it is entirely unsurprising that conspiracy to defraud was held to require in addition the proof of dishonest means.
Dishonesty, in this context, supplies the essential element of illegitimacy and wrongfulness.
As the citation from East shows, the ancient common law offence of cheating consisted of a particular subset of fraudulently depriving another of property, where the fraud affected the public as a whole.
This offence was abolished by section 32(1) of the Theft Act 1968, except insofar as it consisted of cheating the Revenue.
There is no discussion of this abolition in the Eighth Report of the Criminal Law Revision Committee on Theft and Related Offences (1966) (Cmnd 2977), which preceded the Act and recommended most of the terms of the statute including section 32(1), but it is clear that the Committee took the view that whatever was previously covered by other forms of common law cheating would be caught by its newly recommended offences, particularly that of obtaining property by deception under what became section 15 of the Act.
The Theft Act 1968 used the expression cheat only in one place, in relation to the offence of going equipped created by section 25.
There, in section 25(1) and (5), it was used in a restrictive sense limited to the offences contrary to section 15. (The references to cheat have since been removed from that section.)
The common law offence of cheating was referred to in Scott only because a supplementary argument for the defendants was that section 32(1) had impliedly abolished also the offence of conspiracy to defraud, which argument unsurprisingly failed.
There is no occasion to investigate the accuracy of Easts opinion on the scope of the common law offence of cheating.
It may well be that it necessarily involved dishonesty, although that expression was not in general use in criminal statutes until the Theft Act 1968 adopted it in preference to fraudulently.
But to say that dishonesty was a necessary element in an offence of which the gist was obtaining the property of others who may well be strangers, and where the offence would otherwise be likely to be impossibly wide, is of no help in construing the meaning of cheating in the quite separate context of gambling.
Still less is there any reason to suppose that the framers of the Gambling Act adopted in 2005 an analogy with a common law offence which had largely been abolished nearly 40 years earlier, and when cheat had been used in a different sense in the Theft Act 1968.
Whilst it makes perfect sense to interpret the concept of cheating in section 42 of the Gambling Act in the light of the meaning given to cheating over many years, it makes none to interpret cheating, as used over those many years, by reference to an expression dishonesty introduced into the criminal law for different purposes long afterwards in 1968.
In gambling, there is an existing close relationship between the parties, governed by rules and conventions applicable to whichever game is undertaken, and which are crucial to what is cheating and what is not.
Cheating at gambling need not result in obtaining the property of the other party, as section 42(2) explicitly says.
Most importantly, whilst the additional element of dishonesty was necessary to the common law offence of cheating, and no doubt still is to the surviving offences of cheating the Revenue and conspiracy to defraud, in order to mark out the illegitimate and wrongful from the legitimate, the expression cheating in the context of games and gambling carries its own inherent stamp of wrongfulness.
Authority apart, Mr Spearman contended that as a matter of ordinary English, cheating necessarily imports dishonesty.
This argument is most neatly encapsulated by inversion: honest cheating is indeed, as has been sensibly recognised by those who have addressed the phrase in this litigation, an improbable concept.
But that is because to speak of honest cheating would be to suggest that some cheating is right, rather than wrong.
That would indeed be contrary to the natural meaning of the word cheating.
It does not, however, follow, either (1) that all cheating would ordinarily attract the description dishonest or (2) that anything is added to the legal concept of cheating by an additional legal element of dishonesty.
Although the great majority of cheating will involve something which the ordinary person (or juror) would describe as dishonest, this is not invariably so.
When, as it often will, the cheating involves deception of the other party, it will usually be easy to describe what was done as dishonest.
It is, however, perfectly clear that in ordinary language cheating need not involve deception, and section 42(3) recognises this.
Section 42(3) does not exhaustively define cheating, but it puts beyond doubt that both deception and interference with the game may amount to it.
The runner who trips up one of his opponents is unquestionably cheating, but it is doubtful that such misbehaviour would ordinarily attract the epithet dishonest.
The stable lad who starves the favourite of water for a day and then gives him two buckets of water to drink just before the race, so that he is much slower than normal, is also cheating, but there is no deception unless one manufactures an altogether artificial representation to the world at large that the horse has been prepared to run at his fastest, and by themselves it is by no means clear that these actions would be termed dishonesty.
Similar questions could no doubt be asked about the taking of performance enhancing drugs, about the overt application of a magnet to a fruit machine, deliberate time wasting in many forms of game, or about upsetting the card table to force a re deal when loss seems unavoidable, never mind sneaking a look at ones opponents cards.
Conversely, there may be situations in which there is deception of the other player but what is done does not amount to cheating.
The so called three card trick, much practised upon travellers on Victorian and Edwardian trains especially to and from racecourses, commonly involved a deception of the target traveller by a group of associates pretending to be unconnected to one another.
The idea was to lure the target into playing the game.
But once he was ensnared, the game was often played genuinely; the target lost not because of any cheating but because the shuffler of the cards had sufficient speed of hand to deceive the eye: see for example R v Governor of Brixton Prison, Ex p Sjoland and Metzler [1912] 3 KB 568.
No doubt other exponents of the three card trick had less genuine methods, such as a fourth (concealed) card, which would indeed be cheating.
Sometimes the game admits of a level of legitimate deception.
The unorthodox lead or discard at bridge is designed to give the opponent a misleading impression of ones hand, but it is part of the game and not cheating.
Pretending to be stupid at the poker table, so that ones opponent does not take one seriously, and takes risks which he otherwise might not, may or may not be another example.
These far from sophisticated examples demonstrate the inevitable truth that there will be room for debate at the fringes as to what does and does not constitute cheating.
To label an activity advantage play, as Mr Ivey and others did, is of no help at all.
It asks, rather than answers, the question whether it is legitimate or cheating.
It would be very unwise to attempt a definition of cheating.
No doubt its essentials normally involve a deliberate (and not an accidental) act designed to gain an advantage in the play which is objectively improper, given the nature, parameters and rules (formal or informal) of the game under examination.
The question in the present case, however, does not depend on the near impossible task of formulating a definition of cheating, but on whether cheating necessarily requires dishonesty as one of its legal elements.
Where it applies as an element of a criminal charge, dishonesty is by no means a defined concept.
On the contrary, like the elephant, it is characterised more by recognition when encountered than by definition.
Dishonesty is not a matter of law, but a jury question of fact and standards.
Except to the limited extent that section 2 of the Theft Act 1968 requires otherwise, judges do not, and must not, attempt to define it: R v Feely [1973] QB 530.
In this it differs strikingly from the expression fraudulently, which it largely replaced, for the judge did define whether a state of mind, once ascertained as a matter of fact, was or was not fraudulent: R v Williams [1953] 1 QB 660.
Accordingly, dishonesty cannot be regarded as a concept which would bring to the assessment of behaviour a clarity or certainty which would be lacking if the jury were left to say whether the behaviour under examination amounted to cheating or did not.
The issue whether what was done amounts to cheating, given the nature and rules of the game concerned, is likewise itself a jury question.
The judge in the present case applied himself to the question whether there was cheating in exactly this jury manner.
He directed himself that it is ultimately for the court to decide whether conduct amounted to cheating and that the standard is objective.
In so directing himself he was right.
There is no occasion to add to the value judgment whether conduct was cheating a similar, but perhaps not identical, value judgment whether it was dishonest.
Some might say that all cheating is by definition dishonest.
In that event, the addition of a legal element of dishonesty would add nothing.
Others might say that some forms of cheating, such as deliberate interference with the game without deception, are wrong and cheating, but not dishonest.
In that event, the addition of the legal element of dishonesty would subtract from the essentials of cheating, and legitimise the illegitimate.
Either way, the addition would unnecessarily complicate the question whether what is proved amounts to cheating.
The judges conclusion, that Mr Iveys actions amounted to cheating, is unassailable.
It is an essential element of Punto Banco that the game is one of pure chance, with cards delivered entirely at random and unknowable by the punters or the house.
What Mr Ivey did was to stage a carefully planned and executed sting.
The key factor was the arranging of the several packs of cards in the shoe, differentially sorted so that this particular punter did know whether the next card was a high value or low value one.
If he had surreptitiously gained access to the shoe and re arranged the cards physically himself, no one would begin to doubt that he was cheating.
He accomplished exactly the same result through the unwitting but directed actions of the croupier, tricking her into thinking that what she did was irrelevant.
As soon as the decision to change the cards was announced, thus restoring the game to the matter of chance which it is supposed to be, he first covered his tracks by asking for cards to be rotated at random, and then abandoned play.
It may be that it would not be cheating if a player spotted that some cards had a detectably different back from others, and took advantage of that observation, but Mr Ivey did much more than observe; he took positive steps to fix the deck.
That, in a game which depends on random delivery of unknown cards, is inevitably cheating.
That it was clever and skilful, and must have involved remarkably sharp eyes, cannot alter that truth.
Although the judge did not think it necessary to make a finding on the topic, and it is unnecessary to the resolution of this appeal, it would also seem that the facts which he found amounted in any event to a deception of the croupier.
Certainly, the judge found (para 40) that pretending to be superstitious did not by itself cross the line from legitimate play to cheating, comparing it to the skilled poker player who pretends to be a fool.
He also found, contrary to one of Crockfords submissions, that what occurred did not amount to such deception as altogether to negate the existence of any contract for the game.
But that was not a finding that there was no deception at all, and on the facts found there clearly was deception of the croupier into doing something which appeared innocuous or irrelevant, but was in fact highly significant and enabled Mr Ivey to win when he should not have done.
If, therefore, there were indeed (and contrary to the conclusion reached above) a necessary legal element of dishonesty in cheating, such a deception would be prima facie dishonest, unless it is prevented from being so by necessity to satisfy the second leg of the test in R v Ghosh.
Dishonesty
Dishonesty has been adopted since the Theft Act 1968 in the definition of some, but not all, acquisitive criminal offences.
Forgery, for example, is defined without reference to dishonesty, but rather by the yardstick of the intention of the forger that his false document should be accepted as genuine and acted upon to the prejudice of someone else (Forgery and Counterfeiting Act 1981, section 1), whilst the Fraud Act 2006 retains dishonesty as an element of several forms of fraud (see sections 2, 3, 4 and 11).
As recorded at para 48 above, dishonesty is itself primarily a jury concept, characterised by recognition rather than by definition.
Most of the Theft Act 1968 offences required dishonesty without any elaboration of its meaning: section 15 (dishonestly obtaining property by deception) was a prime example and the Fraud Act 2006, which replaces this and other Theft Act offences, adopts the same form.
There are in section 2 of the Theft Act 1968 limited rules relating to when appropriation is not to be regarded as dishonest (claim of right, belief in consent of owner, belief that owner cannot be found) and a specific provision that it may be dishonest despite a willingness to pay for the goods, but these were designed to reflect existing rules of law, they apply only to appropriation, and they do not alter the underlying principle that dishonesty is not defined.
This reflects the view of the Criminal Law Revision Committee that dishonesty was a matter to be left to a jury; it said at para 39 that Dishonesty is something which laymen can easily recognise when they see it.
That is not to suggest that there is not room for debate at the fringes whether particular conduct is dishonest or not, but the perils of advance definition would no doubt have been greater than those associated with leaving the matter to the jury.
Over the succeeding half century, whilst there have undoubtedly (and inevitably) been examples of uncertainty or debate in identifying whether some conduct is dishonest or not, juries appear generally to have coped well with applying an uncomplicated lay objective standard of honesty to activities as disparate as sophisticated banking practices (for example R v Hayes [2015] EWCA Crim 1944) and the removal of golf balls at night from the bottom of a lake on a private golf course (R v Rostron [2003] EWCA Crim 2206).
A significant refinement to the test for dishonesty was introduced by R v Ghosh [1982] QB 1053.
Since then, in criminal cases, the judge has been required to direct the jury, if the point arises, to apply a two stage test.
Firstly, it must ask whether in its judgment the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people.
If the answer is no, that disposes of the case in favour of the defendant.
But if the answer is yes, it must ask, secondly, whether the defendant must have realised that ordinary honest people would so regard his behaviour, and he is to be convicted only if the answer to that second question is yes.
The occasion for this ruling owed nothing to the facts of Ghosh.
The defendant locum surgeon had claimed payment for operations which either he had not performed, or which had been carried out under the National Health scheme so that no fees were due.
The court summarily dismissed his appeal on the basis that no jury could have concluded, by any test, otherwise than that he was dishonest.
The occasion for the analysis of dishonesty in Ghosh was a tangle of what were perceived to be inconsistent decisions, some of which were said to apply a subjective test, and others of which were said to apply an objective one.
Those terms are not always as plain to jurors as they have become to lawyers, but it is convenient to adopt them here when examining the reasoning in Ghosh.
That case arrived, as has been seen, at a compromise rule which is partly objective and partly subjective.
Thirty years on, however, it can be seen that there are a number of serious problems about the second leg of the rule adopted in Ghosh. (1) It has the unintended effect that the more warped the defendants standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour. (2) It was based on the premise that it was necessary in order to give proper effect to the principle that dishonesty, and especially criminal responsibility for it, must depend on the actual state of mind of the defendant, whereas the rule is not necessary to preserve this principle.
It sets a test which jurors and others often find puzzling and difficult It represented a significant departure from the pre Theft Act 1968 law, (3) to apply. (4) It has led to an unprincipled divergence between the test for dishonesty in criminal proceedings and the test of the same concept when it arises in the context of a civil action. (5) when there is no indication that such a change had been intended. (6) Moreover, it was not compelled by authority.
Although the pre Ghosh cases were in a state of some entanglement, the better view is that the preponderance of authority favoured the simpler rule that, once the defendants state of knowledge and belief has been established, whether that state of mind was dishonest or not is to be determined by the application of the standards of the ordinary honest person, represented in a criminal case by the collective judgment of jurors or magistrates.
The principal objection to the second leg of the Ghosh test is that the less the defendants standards conform to what society in general expects, the less likely he is to be held criminally responsible for his behaviour.
It is true that Ghosh attempted to reconcile what it regarded as the dichotomy between a subjective and an objective approach by a mixed test.
The court addressed the present objection in this way, at p 1064: There remains the objection that to adopt a subjective test is to abandon all standards but that of the accused himself, and to bring about a state of affairs in which Robin Hood would be no robber: R v Greenstein [1975] 1 WLR 1353.
This objection misunderstands the nature of the subjective test.
It is no defence for a man to say I knew that what I was doing is generally regarded as dishonest; but I do not regard it as dishonest myself.
Therefore I am not guilty.
What he is however entitled to say is I did not know that anybody would regard what I was doing as dishonest.
He may not be believed; just as he may not be believed if he sets up a claim of right under section 2(1) of the Theft Act 1968, or asserts that he believed in the truth of a misrepresentation under section 15 of the Act of 1968.
But if he is believed, or raises a real doubt about the matter, the jury cannot be sure that he was dishonest.
And a little later the court added that upon the test which it was setting: In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it.
It will be obvious that the defendant himself knew that he was acting dishonestly.
It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.
For example, Robin Hood or those ardent anti vivisectionists who remove animals from vivisection laboratories are acting dishonestly, even though they may consider themselves to be morally justified in doing what they do, because they know that ordinary people would consider these actions to be dishonest.
Even if this were correct, it would still mean that the defendant who thinks that stealing from a bookmaker is not dishonest (as in R v Gilks [1972] 1 WLR 1341 see para 73 below) is entitled to be acquitted.
It is no answer to say that he will be convicted if he realised that ordinary honest people would think that stealing from a bookmaker is dishonest, for by definition he does not realise this.
Moreover, the courts proposition was not correct, because it is not in the least unusual for the accused not to share the standards which ordinary honest people set for society as a whole.
The acquisitive offender may, it is true, be the cheerful character who frankly acknowledges that he is a crook, but very often he is not, but, rather, justifies his behaviour to himself.
Just as convincing himself is frequently the stock in trade of the confidence trickster, so the capacity of all of us to persuade ourselves that what we do is excusable knows few bounds.
It cannot by any means be assumed that the appropriators of animals from laboratories, to whom the court referred in Ghosh, know that ordinary people would consider their actions to be dishonest; it is just as likely that they are so convinced, however perversely, of the justification for what they do that they persuade themselves that no one could call it dishonest.
There is no reason why the law should excuse those who make a mistake about what contemporary standards of honesty are, whether in the context of insurance claims, high finance, market manipulation or tax evasion.
The law does not, in principle, excuse those whose standards are criminal by the benchmarks set by society, nor ought it to do so.
On the contrary, it is an important, even crucial, function of the criminal law to determine what is criminal and what is not; its purpose is to set the standards of behaviour which are acceptable.
As it was put in Smiths Law of Theft 9th ed (2007), para 2.296: the second limb allows the accused to escape liability where he has made a mistake of fact as to the contemporary standards of honesty.
But why should that be an excuse?
It is plain that in Ghosh the court concluded that its compromise second leg test was necessary in order to preserve the principle that criminal responsibility for dishonesty must depend on the actual state of mind of the defendant.
It asked the question whether dishonestly, where that word appears in the Theft Act, was intended to characterise a course of conduct or to describe a state of mind.
The court gave the following example, at p 1063, which was clearly central to its reasoning: Take for example a man who comes from a country where public transport is free.
On his first day here he travels on a bus.
He gets off without paying.
He never had any intention of paying.
His mind is clearly honest; but his conduct, judged objectively by what he has done, is dishonest.
It seems to us that in using the word dishonestly in the Theft Act 1968, Parliament cannot have intended to catch dishonest conduct in that sense, that is to say conduct to which no moral obloquy could possibly attach.
But the man in this example would inevitably escape conviction by the application of the (objective) first leg of the Ghosh test.
That is because, in order to determine the honesty or otherwise of a persons conduct, one must ask what he knew or believed about the facts affecting the area of activity in which he was engaging.
In order to decide whether this visitor was dishonest by the standards of ordinary people, it would be necessary to establish his own actual state of knowledge of how public transport works.
Because he genuinely believes that public transport is free, there is nothing objectively dishonest about his not paying on the bus.
The same would be true of a child who did not know the rules, or of a person who had innocently misread the bus pass sent to him and did not realise that it did not operate until after 10.00 in the morning.
The answer to the courts question is that dishonestly, where it appears, is indeed intended to characterise what the defendant did, but in characterising it one must first ascertain his actual state of mind as to the facts in which he did it.
It was not correct to postulate that the conventional objective test of dishonesty involves judging only the actions and not the state of knowledge or belief as to the facts in which they were performed.
What is objectively judged is the standard of behaviour, given any known actual state of mind of the actor as to the facts.
Although there have been relatively few appeals based upon Ghosh, that is because judges have dutifully given the two leg direction where there has been any occasion for it.
But the existence of the second leg has frequently led to trials being conducted on the basis that even if the defendants actions, in his actual state of knowledge or belief about the relevant facts, would be characterised by most people as dishonest, the defendant himself thought that what he was doing was not wrong, and it was for that reason honest.
Juries are then required first to ask the so called objective question, that is to say to apply their own standards of honesty, but then to depart from them in order to ask what the defendant himself thought.
The idea that something which is dishonest by ordinary standards can become honest just because the defendant thinks it is may often not be an easy one for jurors to grasp.
Dishonesty is by no means confined to the criminal law.
Civil actions may also frequently raise the question whether an action was honest or dishonest.
The liability of an accessory to a breach of trust is, for example, not strict, as the liability of the trustee is, but (absent an exoneration clause) is fault based.
Negligence is not sufficient.
Nothing less than dishonest assistance will suffice.
Successive cases at the highest level have decided that the test of dishonesty is objective.
After some hesitation in Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164, the law is settled on the objective test set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378: see Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 WLR 1476, Abou Rahmah v Abacha [2006] EWCA Civ 1492; [2007] Bus LR 220; [2007] 1 Lloyds Rep 115 and Starglade Properties Ltd v Nash [2010] EWCA Civ 1314; [2011] Lloyds Rep FC 102.
The test now clearly established was explained thus in Barlow Clowes by Lord Hoffmann, at pp 1479 1480, who had been a party also to Twinsectra: Although a dishonest state of mind is a subjective mental state, the standard by which the law determines whether it is dishonest is objective.
If by ordinary standards a defendants mental state would be characterised as dishonest, it is irrelevant that the defendant judges by different standards.
The Court of Appeal held this to be a correct state of the law and their Lordships agree.
Although the House of Lords and Privy Council were careful in these cases to confine their decisions to civil cases, there can be no logical or principled basis for the meaning of dishonesty (as distinct from the standards of proof by which it must be established) to differ according to whether it arises in a civil action or a criminal prosecution.
Dishonesty is a simple, if occasionally imprecise, English word.
It would be an affront to the law if its meaning differed according to the kind of proceedings in which it arose.
It is easy enough to envisage cases where precisely the same behaviour, by the same person, falls to be examined in both kinds of proceeding.
In Starglade Properties Leveson LJ drew attention to the difference of test as between civil cases and criminal cases, and rightly held that it demanded consideration when the opportunity arose.
Such an opportunity is unlikely to occur in a criminal case whilst Ghosh remains binding on trial judges throughout the country.
Although in R v Cornelius [2012] EWCA Crim 500 the opportunity might have arisen before the Court of Appeal, Criminal Division, it did not do so because there had been in that case no false representation of which the honesty needed to be examined; moreover, there is some doubt about the freedom of that court to depart from Ghosh in the absence of a decision from this court.
Prior to the Theft Act 1968, the expression dishonestly had not appeared in the legal definition of acquisitive offences.
The mental element was usually marked by the expression fraudulently.
There is no doubt that that latter expression involved an objective evaluation of the defendants conduct, given his actual state of knowledge and belief as to the facts.
The Criminal Law Revision Committee, in its eighth report, advised the substitution of the word dishonestly, on the grounds that fraudulently had become technical and its meaning had departed somewhat from the ordinary understanding of lay people.
It recommended that dishonestly would be more easily understood by lay fact finders and the public generally.
At para 39 the Committee advised that: Dishonestly seems to us a better word than fraudulently.
The question Was this dishonest? is easier for a jury to answer than the question Was this fraudulent?.
Dishonesty is something which laymen can easily recognize when they see it, whereas fraud may seem to involve technicalities which have to be explained by a lawyer.
It was in accordance with this substitution that in Feely a five judge Court of Appeal, Criminal Division, held that the question whether a defendant had behaved dishonestly was to be left to the jury and should not, as had been the case with fraudulently, be the subject of judicial ruling.
But there is no hint in the Committees report of any contemplation that whether a man was or was not dishonest should henceforth depend on his own view of his behaviour.
On the contrary, the report clearly assumed that the prior objective approach would continue, save that the question would be a jury matter rather than one of law.
Prior to Ghosh the post Theft Act authorities on the meaning of dishonesty were in something of a tangle.
The court in that case seems to have thought, however, that there were more or less equal strands of authority supporting the subjective and the objective approach.
It identified R v Feely [1973] QB 530 and R v Greenstein [1975] 1 WLR 1353 as tending to support an objective approach, and R v Landy [1981] 1 WLR 355, R v Waterfall [1970] 1 QB 148, R v Royle [1971] 1 WLR 1764 and R v Gilks [1972] 1 WLR 1341 as tending to favour a subjective one.
It treated R v McIvor [1982] 1 WLR 409 as an unsustainable attempt to reconcile the two lines.
This apparently binary dichotomy is not entirely borne out on analysis.
Chronologically the first two cases, Waterfall and Royle, decided in July 1969 and November 1971, did not concern the characterisation of behaviour as dishonest.
Rather, they held that where a false representation is alleged, it must be shown that the defendant knew that it was false, or at least was reckless in making it without caring whether or not it was true.
Until there is a false representation, deliberately or recklessly made, the jury does not get to whether it was dishonest or not.
Plainly, the defendants actual state of mind as to the truth of the representation is a matter for subjective determination.
If he genuinely believes that what he said was true, he is entitled to be acquitted, unless of course there is some other behaviour independent of the false representation which can be said to be dishonest.
It does not at all follow that, when once an absence of belief in the truth of his representation is established, dishonesty is likewise an entirely subjective matter, nor that it is so in cases which do not depend on allegations of false representation(s).
This important distinction was subsequently identified in both Landy and in Ghosh itself, but the court in the latter case regarded it as unsatisfactory that the jury should have to apply successive tests, firstly of the defendants actual knowledge or belief, and, only if he deliberately made a false representation, secondly of the character of his conduct, given his actual state of mind.
Waterfall and Royle were treated as examples of a subjective test of dishonesty, although they are not.
There should in fact be no difficulty in the jury making this distinction, as cases such as Greenstein (below) show.
It has to be done in every case where there was a false representation but there is a question whether there is any possible moral obloquy attaching to it.
And it falls to be done, easily enough, in non representation cases such as that of the bus travelling foreign visitor.
A not dissimilar two stage test is routinely applied by juries where self defence is in issue.
The first stage is to ask what the facts were, as the defendant subjectively believed them to be.
The second stage is, assuming such facts, to judge whether the response of the defendant was objectively reasonable.
See R v Gladstone Williams [1987] 3 All ER 411 and section 76 of the Criminal Justice and Immigration Act 2008.
In December 1972 a five judge Court of Appeal decided Feely.
Like some others, the case concerned a defendant employee who had helped himself to money from the till knowing that such a thing was forbidden, but contended by way of defence that he had intended to repay it, and that his employers owed him money anyway.
The decision of the court was that it is for the jury, not the judge, to say whether the conduct established was dishonest or not.
The court said plainly that employees who take money from the till without permission are usually thieves, but that if the circumstances were such that no possible moral obloquy could attach to what was done, they might not be.
It gave as an example the defendant who took the money only because he had no change in his pocket to pay a taxi which had just delivered his wife to the shop, and who meant to and did replace it within minutes.
Because the question whether that kind of analysis applied in that case had not been left open by the direction to the jury, the appeal against conviction was allowed.
It is therefore inherent in that case that what the jury has to do is to apply its own (objective) standards to whether the conduct was dishonest.
Greenstein, decided in July 1975, concerned a large scale operation of a method of the discouraged but not illegal practice of stagging new issue shares by applying for vastly more than the defendants could pay for, in the hope that a smaller affordable number would be allocated, but more than would have been allotted if the application had been confined to what they could afford.
The charges, of obtaining property by deception, depended on the representation made when a cheque is issued, that it is good for the money on due presentation.
The defendants, who applied in multiple aliases, did not have the money to meet the cheques they signed for the full number of shares applied for, which were required by the issuers, but they hoped that the return cheques which could be expected to be sent after partial allocation would feed their accounts in time to enable their original cheques to be met.
The court upheld the judges two part direction.
First, he told the jury that when it came to asking whether the defendants genuinely believed that their cheques would be met on due presentation (as many were and several were not) the answer should depend on their actual state of belief.
Secondly, he told them that when the question was whether the defendants had acted honestly overall (that is if there was a false representation), they must apply their own standards.
It was, the judge had said, no good applying the standards of anyone accused of dishonesty, for in that event everyone would automatically be acquitted.
That case accordingly supports the principle that the test of dishonesty (but not of belief in a representation) is objective.
Feely was applied.
Feely was also applied in Boggeln v Williams [1978] 1 WLR 873, decided in January 1978.
The defendant had been acquitted of dishonestly abstracting electricity by re connecting his supply after the Board had cut him off for late payment.
The acquittal was by the Crown Court on appeal and specific findings of fact were accordingly available.
They were that he knew how to by pass the meter, but had not done so, that he gave notice to the Board of what he was doing, that he genuinely believed that he would be able to pay when the time came, that that belief was not shown to be unreasonable and that in the judgment of the Crown Court he had not acted dishonestly.
The Divisional Court applied Feely in holding that the decision upon honesty was for the fact finding tribunal and that there was material entitling it to find as it did.
That case did not address the nature of the test of dishonesty beyond saying that the defendants view of his conduct was, on those findings, crucial.
The reality is that the Crown Court did not think the conduct dishonest, given what the defendant did and intended.
In Ghosh, this case was rightly treated as inconclusive upon the perceived binary dichotomy.
R v Landy, decided in January 1981, was a case of complex fraudulent trading via a bank, which re affirmed that dishonesty was a necessary element of conspiracy to defraud.
It also, and more crucially, insisted on an indictment for conspiracy to defraud giving proper particulars of the conduct complained of, the absence of which had, in that case, led to a confused and diffuse summing up which did not properly identify the issues for the jury.
The case was important for laying the early ground for modern case management of fraud trials.
In the course of its judgment, given by Lawton LJ, the court said this, at p 365: There is always a danger that a jury may think that proof of an irregularity followed by loss is proof of dishonesty.
The dishonesty to be proved must be in the minds and intentions of the defendants.
It is to their states of mind that the jury must direct their attention.
What the reasonable man or the jurors themselves would have believed or intended in the circumstances in which the defendants found themselves is not what the jury have to decide, but what a reasonable man or they themselves would have believed or intended in similar circumstances may help them to decide what in fact individual defendants believed or intended.
An assertion by a defendant that throughout a transaction he acted honestly does not have to be accepted but has to be weighed like any other piece of evidence.
If that was the defendants state of mind, or may have been, he is entitled to be acquitted.
But if the jury, applying their own notions of what is honest and what is not, conclude that he could not have believed that he was acting honestly, then the element of dishonesty will have been established.
What a jury must not do is to say to themselves: If we had been in his place we would have known we were acting dishonestly so he must have known he was.
What they can say is: We are sure he was acting dishonestly because we can see no reason why a man of his intelligence and experience would not have appreciated, as right minded people would have done, that what he was doing was dishonest.
This passage was treated in Ghosh as supportive of a subjective test of dishonesty.
However, its context was an alleged banking fraud consisting of dealing with money of lenders and depositors in ways which were likely to, and did, lead them to lose their money.
The ways included reckless and unsecured speculation, preferential payments to connected companies, the preparation of false accounts, the lodging of false Bank of England returns, and the creation of false discount bills when there was no underlying commercial transaction.
The critical fact is that the defence was that the defendants did not know enough of what was going on to be responsible, and/or that they trusted others to manage the bank.
Since that was the issue, it is plain that the actual state of mind of the defendants was indeed the critical question for the jury, and that the jury had to approach it in the way explained by Lawton LJ.
The issue in the case was not principally whether a state of knowledge, if once established, meant that the defendants conduct fell to be characterised as dishonest.
Indeed, a defendant who knew about the means allegedly adopted would be hard pressed to suggest that he thought them honest.
The position became more complicated in McIvor, decided in November 1981.
This was, like Feely, a case of unauthorised taking from the till by an employee.
The defendant had asked to borrow money and, having been refused, helped himself nevertheless.
He asserted by way of defence that he had always intended to put the money back, as indeed he had done ten days later.
The judge had told the jury that it must apply the standards of ordinary honest people to whether what the defendant had done was dishonest, and that what he himself thought about that issue was neither here nor there.
The appeal came before a Court of Appeal presided over by Lawton LJ, who had delivered the judgments in both Feely and Landy.
The court held that the passage cited above in Landy applied only to the offence of conspiracy to defraud and not to the offence of theft (or, therefore, to the other Theft Act offences in which dishonesty was an essential element).
For the latter, the objective lay standard of honesty was to be applied.
In Ghosh the court treated this decision as suggesting a subjective test for conspiracy to defraud and an objective one for other offences, and understandably held that such a distinction could not be sustained in logic or fairness.
It is, however, at least possible, if not likely, that all that Lawton LJ was saying in McIvor was that the passage in Landy referred to the issue of the defendants actual state of knowledge of what was happening, and to his actual belief in the truthfulness of any representation which he had made, rather than to the issue of whether an established state of mind is or is not dishonest.
With hindsight it can be seen that the court perceived clearly that if a wholly subjective test of when an established actual state of knowledge or belief is and is not dishonest were to be applied, the consequences would be that any defendant whose subjective standards were sufficiently warped would be entitled to be acquitted.
It might be noted that in McIvor the court held that the judges remarks about what the defendant himself thought being neither here nor there might have been taken by the jury as requiring them to disregard what he had said about his actual state of knowledge or belief.
There had thus been a misdirection, but just as in Ghosh the court held that the only possible conclusion was that the defendant had been dishonest.
There was in fact only one pre Ghosh case which frankly raised the relevance of the defendants own view as to the honesty of what he had done.
R v Gilks had been decided as long ago as June 1972.
The defendant had been handed, by mistake, as much as 100 too much by a bookmaker.
He realised the mistake but kept the money anyway.
Asked to account for doing so, he offered the view that whereas it would clearly be wrong to keep such an overpayment if made by the grocer, bookmakers were fair game.
He was convicted notwithstanding the judges direction that the jury should put itself in his shoes and ask itself whether he had thought he was acting honestly or dishonestly.
Amongst other grounds of appeal which the Court of Appeal rejected, he contended that the judge ought to have made it yet clearer that even if he did not believe he had any claim of right in law to keep the money, he would still not be guilty unless he did not have the belief he asserted that bookmakers were fair game.
The Court of Appeal rejected that contention also, saying that the judges direction was a proper and sufficient one.
Thus the case can be said to have endorsed the (subjective) direction as to dishonesty given by the judge.
It did so, of course, only to the extent that it rejected the defendants argument that the judges direction was wrongly adverse to him.
The question whether the direction was too favourable to him did not arise and was not addressed.
Gilks preceded Feely, Greenstein, Landy, Boggeln v Williams and McIvor but was not cited to any of those later courts, which therefore did not analyse what if anything it had decided.
It might, however, be thought that the facts of Gilks are a powerful demonstration of the perils of the second leg of the Ghosh test, for it means that if the likes of Mr Gilks are once truthful about their idiosyncratic view of bookmakers, they are bound to be acquitted.
These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given.
The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes: see para 62 above.
When dishonesty is in question the fact finding tribunal must first ascertain (subjectively) the actual state of the individuals knowledge or belief as to the facts.
The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held.
When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact finder by applying the (objective) standards of ordinary decent people.
There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.
Therefore in the present case, if, contrary to the conclusions arrived at above, there were in cheating at gambling an additional legal element of dishonesty, it would be satisfied by the application of the test as set out above.
The judge did not get to the question of dishonesty and did not need to do so.
But it is a fallacy to suggest that his finding that Mr Ivey was truthful when he said that he did not regard what he did as cheating amounted to a finding that his behaviour was honest.
It was not.
It was a finding that he was, in that respect, truthful.
Truthfulness is indeed one characteristic of honesty, and untruthfulness is often a powerful indicator of dishonesty, but a dishonest person may sometimes be truthful about his dishonest opinions, as indeed was the defendant in Gilks.
For the same reasons which show that Mr Iveys conduct was, contrary to his own opinion, cheating, the better view would be, if the question arose, that his conduct was, contrary to his own opinion, also dishonest.
For these several reasons, this appeal must be dismissed.
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This appeal arises out of a case where a professional gambler, Mr Ivey, sues a casino, Crockfords, to recover his winnings at Punto Banco.
Mr Ivey claims for his winnings in circumstances where Crockfords refused to pay out because it believed Mr Ivey cheated.
The appeal raises questions about the meaning of the concept of cheating at gambling and the relevance of dishonesty to that concept.
Punto Banco is a variant of Baccarat and is not normally a game of skill.
The different odds applied to certain bets mean that the casino enjoys a small advantage, taken over all the play.
In Punto Banco at Crockfords it was 1.24% if the player wins and 1.06% if the banker wins.
Edge sorting is possible when the manufacturing process of playing cards causes tiny differences to appear on the edges of the cards so that, for example, the edge of one long side is marginally different from the edge of the other.
It is possible for a sharp eyed person sitting close to a card shoe (the holder that dispenses the playing cards) to see which long edge it is.
This information becomes useful only if things can be arranged so that the cards which the gambler is most interested in are all presented with one long edge facing the table, whilst all the less interesting cards present the other long edge.
Then the gambler knows which kind of card is next out of the shoe.
Using edge sorting to identify high value cards in Punto Banco will give the player a long term edge of about 6.5% over the house if played perfectly accurately.
On 20 and 21 August 2012, Mr Ivey and his associate, Ms Sun, played Punto Banco at Crockfords.
Mr Ivey openly admits to the use of edge sorting during this game.
Mr Ivey asked the senior croupier that the same shoe of cards be re used if he indicated to him that he won.
Ms Sun (affecting superstition) asked the croupier to turn the cards in a particular manner if she indicated they were good or not good.
The croupier had no idea of the significance of what she was being asked to do.
In consequence, the long edge of the not good cards were oriented in a different way from the long edge of the good cards.
This procedure was followed for each game of Punto Banco until the shoe was finished.
Mr Ivey then indicated that he had won with that shoe and so the cards were reshuffled.
The use of a machine shuffler ensured that the cards were shuffled without rotating any of the cards.
Mr Ivey could now identify high value cards and his betting accuracy increased sharply.
Mr Iveys total winnings over the two days was 7.7m.
Nine days after play, Crockfords told Mr Ivey they would not pay his winnings because the game had been compromised.
The High Court held that Mr Iveys use of edge sorting was cheating.
The Court of Appeal upheld this finding.
The Supreme Court unanimously dismisses the appeal.
Lord Hughes gives the judgment, with which Lord Neuberger, Lady Hale, Lord Kerr and Lord Thomas agree.
It was common ground that the parties contract for betting contained an implied term that neither of them will cheat. [35] It would be unwise to attempt a definition of cheating.
Its essentials normally involve a deliberate act designed to gain an advantage in the play which is objectively improper given the parameters and rules of the game in question.
What amounts to cheating is a jury question.
Dishonesty is not a concept that would bring clarity or certainty to a jurys assessment of whether certain behaviour is or is not cheating. [47 48] It is an essential element of Punto Banco that it is a game of pure chance.
Mr Ivey staged a carefully planned and executed sting.
If he had secretly gained access to the shoe of cards and personally re arranged them that would be considered cheating.
He accomplished the same results by directing the actions of the croupier and tricking her into thinking that what she did was irrelevant.
Mr Iveys actions were positive steps to fix the deck and therefore constituted cheating. [50] Dishonesty is included in the definition of some but not all acquisitive criminal offences. [52] R v Ghosh [1982] EWCA Crim 2 introduced a two stage test for dishonesty for a jury to apply, with a subjective second leg.
Firstly, the jury must ask whether in its judgment the conduct complained of was dishonest by the lay objective standards of ordinary reasonable and honest people.
If the answer is no, that disposes of the case in favour of the defendant.
But if the answer is yes, it must ask, secondly, whether the defendant must have realised that ordinary honest people would so regard his behaviour as dishonest, and he is to be convicted only if the answer to that second question is yes.
However, the second leg of the rule adopted in Ghosh has serious problems.
The principal objection is that the less a defendants standards conform to societys expectations, the less likely they are to be held criminally responsible for their behaviour.
The law should not excuse those who make a mistake about contemporary standards of honesty, a purpose of the criminal law is to set acceptable standards of behaviour. [54, 57 59] In civil actions the law has settled on an objective test of dishonesty.
There can be no logical or principled basis for the meaning of dishonesty to differ according to whether it arises in a civil action or a criminal prosecution. [62 63] The second leg of the test propounded in Ghosh does not correctly represent the law and directions based upon it ought no longer to be given.
The test of dishonesty is that used in civil actions.
The fact finding tribunal must ascertain (subjectively) the actual state of the individuals knowledge or belief as to the facts and then determine whether his conduct was honest or dishonest by the (objective) standards of ordinary decent people.
There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest. [74] If cheating at gambling required an additional legal element of dishonesty, it would be satisfied in this case. [75]
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On 21 March 2016, this court gave a father permission to appeal against the decision of the Court of Appeal that a custody order which he had obtained in Romania should not be enforced in this country under the Brussels II (Revised) Regulation (BIIR), because it had been given without the child having been given an opportunity to be heard, in violation of fundamental principles of procedure in this country.
In the view of the panel giving permission to appeal, the judgment of the Court of Appeal raised an arguable point of law of general public importance, as to the precise extent to which it is a fundamental principle of the procedure relating to all cases about children in the courts of England and Wales that the child should be given an opportunity to be heard.
This is a question of importance in all childrens cases, not just those where the court here is asked to enforce a judgment given in another member state of the European Union.
However, it has now become clear that under BIIR this court has no jurisdiction to entertain such an appeal.
This point was not raised by the respondent mother in her notice of objection to the application for permission to appeal.
No doubt, had she done so, the court would have listed it for oral argument before deciding whether or not to give permission.
In the event, once it was raised, we were able to arrange a hearing at short notice, in advance of the date set for the substantive appeal.
As a point of jurisdiction, it could not be ignored, however inconveniently late in the day it was raised.
We are grateful to the parties for the speed with which they have prepared their written and oral arguments and, in particular, to the Ministry of Justice, whom we asked to intervene in order to give us an account of the relevant history.
The history of the case
The circumstances in which this question arises are deeply unfortunate, not least because of the delays there have been, not only in Romania but also in this country, but they are largely irrelevant to the question of law which we have to decide.
The child in question, DD, was born in Romania on 8 November 2006 and so is now aged nine and a half.
His parents are both Romanian but met while working in this country.
They returned briefly to Romania, where they got married and the child was born, but by January 2007 both parents had returned to live in this country with the child.
They separated in November 2007.
DD has continued to live here with his mother, his main carer, ever since.
The father returned to live in Romania in 2009, but has kept a second home here and for most of the intervening years (with a long gap from November 2012 until March 2014) has shared the care of DD with the mother.
He has a significant relationship with his son.
Although DD is undoubtedly habitually resident in this country, the parties chose to litigate about his future in Romania.
The father issued divorce and custody proceedings there in November 2007.
The couple were divorced in April 2008.
The father was awarded custody of DD, but the mother successfully appealed.
At the retrial, the father was again awarded custody, but first the mother and then the father successfully appealed.
At a further retrial in a different court, in December 2011, the court awarded joint parental authority to both parents, while finding that DDs domicile and residence were at the mothers address in England.
Both parties appealed, but their appeals were dismissed in March 2013, on the basis that joint custody is the norm and sole custody the exception.
Nevertheless, the child should remain living with his mother in England, as it was not in his best interests to change his living arrangements.
The father launched a further appeal, to the Bucharest Court of Appeal.
Its final decision, in November 2013, was that the child should live with the father, on the basis that he could provide the best moral and material conditions.
In February 2014, the father applied for the recognition and enforcement of this order by the English court.
The result was the re establishment of contact between father and son and a High Court ordered arrangement that the parents share his care in this country while the fathers application proceeded.
On 1 May 2014, Peter Jackson J ordered that DD be made a party to the enforcement proceedings: see the summary of the history in In re D (Recognition and Enforcement of Romanian Order) [2014] EWHC 2756 (Fam), [2015] 1 FLR 1272.
He quotes, in para 33, the reasons given in his earlier judgment.
This was not so as to make inquiries as to his welfare, which would be inappropriate in enforcement proceedings, but because Ds rights as an individual child are engaged in his fathers application and whatever has happened in this case he bears no responsibility for it (para 15).
His interest was not being represented (para 16) and the facts were egregious (para 10) neither the judge, nor counsel, nor the Childrens Guardian had experienced a case in which enforcement is being sought with regard to a child who has attained the age of seven and has never lived in the country from which the relevant order emanates (para 11).
The registration of an order under BIIR is essentially administrative, although it requires a judicial act: see In re S (Foreign Contact Order) [2009] EWCA Civ 993, [2010] 1 FLR 982, para 12.
Judicial consideration of any dispute occurs at the first appeal stage.
This came before Peter Jackson J who determined it in July 2014 (reference above).
Article 23 lays down seven grounds for non recognition.
The judge rejected the mothers case on article 23(a), that recognition was manifestly contrary to the public policy of the member state in which recognition is sought taking into account the best interests of the child.
This ground is to be narrowly construed and the Bucharest decision was not so extreme as to require recognition to be withheld on this ground (para 74).
However, he did refuse recognition under article 23(b), which provides that a judgment shall not be recognised if it was given, except in case of urgency, without the child having been given an opportunity to be heard, in violation of fundamental principles of procedure of the member state in which recognition is sought.
The Bucharest Court of Appeals conclusion about DDs wishes and feelings, namely that he constantly craves for [the fathers] permanent presence, had not arisen from any direct or indirect enquiry involving the child himself (para 83).
It had a report from a Cafcass officer in earlier enforcement proceedings when DD was two years old.
It had a report from a social worker when he was five and a half, in response to the fathers concerns about the mothers care.
At the first tier appeal in February 2013, the father had asked the court to hear the child, but the mother had opposed this (interestingly, given her current stance), and the court had deemed it not useful given the age of the minor.
Peter Jackson J disagreed: The childs entitlement to a voice is a fundamental procedural principle in our system.
If he is old enough, it will be his voice and his words.
An adult voice will convey the younger childs point of view.
Younger children are less able to articulate their wishes, but their feelings may be more vivid than those of older children and of adults, whose views we canvass without a second thought. (para 96)
A report from a court social worker, containing the childs perspective, would be fundamental to the decision of any English court, faced with a striking application of this kind (peremptory change of lifelong carer, country and language) (para 103).
He therefore allowed the mothers appeal on this ground.
He also allowed her appeal on the grounds contained in article 23(c) (lack of service) and (d) (not giving the mother an opportunity of being heard).
The Court of Appeal dismissed the mothers cross appeal on article 23(a), allowed the fathers appeal on article 23(c) and (d), but dismissed the fathers appeal on article 23(b): [2016] EWCA Civ 12, [2016] 1 WLR 2469.
The question of whether and how the childs voice was to be heard in the proceedings was a separate question from the weight to be given to his wishes and feelings: the rule of law in England and Wales includes the right of the child to participate in the process that is about him or her.
That is the fundamental principle that is reflected in our legislation, our rules and practice directions and jurisprudence.
At its most basic level it involves asking at an early stage in family proceedings whether and how that child is going to be given the opportunity to be heard.
The qualification in section 1(3)(a) [of the Children Act 1989] like that in article 12(1) [of the United Nations Convention on the Rights of the Child 1989] relates to the weight to be put upon a childs wishes and feelings, not their participation. (para 44)
This court is not concerned with whether the decisions reached by the trial judge and Court of Appeal in this particular case were right or wrong.
They may very well have been right.
Nor is it concerned with the extent to which the childs right to be heard is a fundamental principle of the procedure in the courts of England and Wales in cases relating to the future of children.
That is a very large question and views may differ as to precisely what the effect is of the Court of Appeals judgment.
This court is solely concerned with whether we have any jurisdiction to entertain an appeal against the decision of the Court of Appeal that the Romanian order should not be registered and enforced in this country.
The jurisdiction question
The jurisdiction of the Supreme Court of the United Kingdom is governed by section 40 of the Constitutional Reform Act 2005.
So far as material, this provides: (2) An appeal lies to the Court from any order or judgment of the Court of Appeal in England and Wales in civil proceedings. (6) An appeal under subsection (2) lies only with the permission of the Court of Appeal or the Supreme Court; but this is subject to provision under any other enactment restricting such an appeal.
The question, therefore, is whether the provisions of BIIR constitute an enactment restricting such an appeal from the Court of Appeal or otherwise override the provisions of the 2005 Act.
This encompasses two questions: first, what is the meaning and effect of the provisions of BIIR in European Union law; and second, what is their effect upon the provisions of an Act of the United Kingdom Parliament?
The Brussels II Revised Regulation
By article 28 of BIIR, a judgment on parental responsibility which is enforceable in the member state where it was given shall be enforced in another member state when it has been declared enforceable there. (In the United Kingdom, this means the part of the United Kingdom where it has been registered.) By article 29, the application for such a declaration shall be submitted to the court appearing in the list notified by each member state to the Commission pursuant to article 68.
The High Court of Justice Principal Registry of the Family Division has been notified for this purpose.
Rule 31.4 of the Family Procedure Rules 2010 provides that applications should be made to a district judge (as had previously been indicated should be the case by Thorpe LJ in In re S, above, at para 16).
By article 31, the court applied to must give its decision without delay and neither the person against whom enforcement is sought nor the child is entitled to make any submissions about it.
Although the application may be refused for one of the reasons set out in articles 22, 23 and 24, under no circumstances may a judgment be reviewed as to its substance (article 31.3).
In essence, therefore, this is intended to be a speedy ex parte (and essentially administrative) process.
The first opportunity for inter partes debate comes with the first appeal under article 33.
Under article 33.1, either party may appeal the decision on the application for a declaration.
Once again it is to be lodged with the court notified under article 68 (article 33.2).
The High Court of Justice Principal Registry of the Family Division has again been notified for this purpose, but rule 31.15(1) of the Family Procedure Rules provides that the appeal must be made to a judge of the High Court (again as advised by Thorpe LJ in In re S).
The appeal must be lodged within one month of service of the declaration, or two months if the person against whom enforcement is sought is habitually resident in a member state other than that where the declaration was given (article 33.5).
Once again, the need for speed is emphasised.
Then comes article 34, the provision which is crucial to this case: The judgment given on appeal may be contested only by the proceedings referred to in the list notified by each member state to the Commission pursuant to article 68.
Article 68 provides that member states shall notify to the Commission the lists of courts and redress procedures referred to (relevantly) in articles 29, 33 and 34 and any amendments thereto.
The Commission is to keep the information up to date and to make it publicly available.
The reference to the United Kingdom in its consolidated list of notifications reads as follows: The appeals provided for in article 34 may be brought only: in the United Kingdom, by a single further appeal on a point of law: (a) in England and Wales, to the Court of Appeal.
On the face of it, therefore, the position under BIIR is quite clear.
There is to be a largely formal first stage when (no doubt usually) the judgment is declared enforceable; there is to be a first appeal when the enforceability decision can be contested; and the decision on that appeal can only be contested by the notified proceedings.
It follows that if there were no notification under articles 34 and 68, as is the case with Cyprus and Malta, there would be no appeal possible under article 34.
The UKs notification expressly limits the proceedings to a single further appeal on a point of law which must be made, in England and Wales, to the Court of Appeal.
No mention is made of a further appeal to the Supreme Court of the United Kingdom.
This too accords with the understanding of Thorpe LJ in In re section
The United Kingdom notification may be contrasted with the notification given by Ireland under articles 33 and 71 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).
Article 33 provides that the decision given on appeal may be contested only by the procedure notified by the member state concerned to the Commission in accordance with article 71.
Article 71 requires member states to communicate to the Commission the redress procedures referred to in article 33.
Irelands notification says this: An appeal on a point of law to the Court of Appeal (it should be noted, however, that in accordance with the provisions of the Irish Constitution, the Supreme Court shall have appellate jurisdiction from a decision of the High Court if it is satisfied that there are exceptional circumstances warranting a direct appeal to it.
The Supreme Court shall also have appellate jurisdiction from a decision of the Court of Appeal if it is satisfied that certain conditions laid down in the Constitution are satisfied.
It would appear, therefore, that at least one member state considers it possible to provide for two tiers of appeal from the first appeal.
It is not for this court to say whether that is consistent with either article 34 of BIIR or article 33 of the Maintenance Regulation.
Whether or not the United Kingdom could have provided for a further appeal to the Supreme Court, which some might think necessary if only to resolve inconsistent decisions in different parts of the United Kingdom concerning a Regulation which applies throughout, the fact remains that it did not do so.
Furthermore, the approach adopted by the United Kingdom in all previous European instruments concerned with the free movement of judgments and judicial cooperation within the European Union has been to provide for only one tier of further appeal.
The first of these was the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the 1968 Convention), concluded by the original six member states of the European Economic Community in 1968, later amended to include the United Kingdom.
The courts and methods of appeal are specified in article 37 of the Convention itself, in England and Wales the first appeal going to the High Court (or in the case of a maintenance judgment, to the magistrates court), and that decision being contested only by a single further appeal on a point of law.
As the official Explanatory Report comments, the object of the Convention was to ensure that the judgment given on the appeal may be contested only by an appeal in cassation and not by any other form of appeal or review (OJ 1979 C 59, pp 1, 51 52).
This was because An excessive number of avenues of appeal might be used by the losing party purely as delaying tactics, and this would constitute an obstacle to the free movement of judgments which is the object of the Convention.
Of course, this rationale only really applies to attempts by the person against whom enforcement is sought, such as the mother in this case, to resist enforcement, but what is sauce for the goose must also be sauce for the gander.
The 1968 Convention (along with its 1971 Protocol and the 1978 Convention on the accession of Denmark, Ireland and the United Kingdom to them both) was given effect in United Kingdom law by the Civil Jurisdiction and Judgments Act 1982.
Interestingly, section 6(1) specifies that the single further appeal on a point of law lies in England and Wales either to the Court of Appeal or to the Supreme Court (formerly to the House of Lords) under the leap frog procedure provided for in the Administration of Justice Act 1969.
Council Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation) was designed to replace the 1968 Convention with directly applicable Community legislation.
The approach to avenues of challenge was the same, save that instead of containing each countrys permitted avenues in the text of the relevant articles, these referred to lists contained in Annexes to the Regulation.
Thus article 43.2 provided that the first appeal should be lodged with the court indicated in Annex III, which for England and Wales was the High Court of Justice (except for maintenance judgments); and article 44 provided that the judgment given on appeal might be contested only by the appeal referred to in Annex IV, which was once again a single further appeal on a point of law.
The Civil Jurisdiction and Judgments Order 2001 (SI 2001/3929) specified, once again, that in England and Wales this would lie either to the Court of Appeal or on a leap frog appeal to the House of Lords (article 4).
In 1998, the Council approved a Convention extending the scope of the Brussels regime to matrimonial matters.
This took the same approach to the methods of challenging enforcement applications as had the 1968 Convention.
The 1998 Convention never became applicable but was the source of the 2000 Council Regulation (EC) 1347/2000 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental responsibility for children of both spouses (the Brussels II Regulation), which was the immediate predecessor to the BIIR Regulation.
This adopted the same method as the Brussels I Regulation was to adopt some seven months later.
Article 26.2 provided that the first appeal should be lodged with the court listed in Annex II, which for England and Wales was the High Court of Justice.
Article 27 provided that the judgment given on appeal might be contested only by the proceedings listed in Annex III, which for the UK was by a single further appeal on a point of law.
However, the European Communities (Matrimonial Jurisdiction and Judgments) Regulations 2001 (SI 2001/310), unlike the 2001 Order relating to the Brussels I Regulation, did not specify what was meant by a single further appeal on a point of law, nor did the new Chapter 5 of the Family Proceedings Rules 1991, introduced by article 29 of the Family Proceedings (Amendment) Rules 2001 (SI 2001/821) to cater for the Brussels II Regulation.
However, BIIR, which replaced the Brussels II Regulation, adopts a slightly different technique.
Instead of describing the appeal processes in the text, or in Annexes, it provides for each member state to communicate the avenues of first appeal and further contestation to the Commission thus enabling member states to change the processes without the need to revise the Regulation.
Unlike both the Brussels II and the Brussels I Regulations, BIIR does not contain either in its main text or in Annexes a reference to a single further appeal on a point of law.
There is no express limit in article 34 to the number of proceedings whereby the judgment on the first appeal may be contested (although article 35 refers to the appeal under article 34 rather than an appeal).
This more flexible approach is also taken in the 2009 Maintenance Regulation (which removed maintenance obligations from the scope of the Brussels I Regulation).
While article 33 provides that the decision given on first appeal may be contested only by the procedure notified in accordance with article 71, article 71 requires member states to communicate the redress procedures referred to in article 33.
For what it is worth, the recast version of the Brussels I Regulation, Regulation (EU) 1215/2012 of the European Parliament and of the Council, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, also adopts this more flexible technique.
Article 50 provides that the judgment given on the first appeal can only be contested by an appeal where the courts with which any further appeal is to be lodged have been communicated to the Commission under article 75(c), which also refers to courts.
The United Kingdom has retained the previous reference (for England and Wales) to an appeal either to the Court of Appeal or under the leap frog procedure to the Supreme Court.
The purpose of all these instruments is that, save in very narrowly defined circumstances, member states should recognise and enforce one anothers judgments.
The recitals to BIIR are typical: The European Community has set the objective of creating an area of freedom, security and justice, in which the free movement of persons is ensured (Recital 1).
The recognition and enforcement of judgments given in a member state should be based on the principle of mutual trust and the grounds for non recognition should be kept to the minimum required (Recital 21).
From the very outset, in 1968, member states were anxious that there should not be too many avenues and methods of challenging enforcement decisions, hence the restriction to cassation type further appeals.
It may well be, as Mr Richard Harrison QC has argued very ably on behalf of the father, that the strict approach taken in the earlier instruments has had to give way to the more flexible approach taken more recently.
It may well be that it would be open to the United Kingdom to do as Ireland has done and notify the possibility, not only of leap frog appeals from the High Court to the Supreme Court, but also of appeals from the Courts of Appeal in each part of the United Kingdom to the Supreme Court.
The fact remains that it has not done so.
It is also true to say that the policy of the United Kingdom has not been entirely consistent.
In relation to civil and commercial judgments, the 1968 Convention, the Brussels I Regulation and the recast Brussels I Regulation provide for the possibility of either an appeal to the Court of Appeal or a leap frog appeal to the House of Lords or Supreme Court (thus, it would appear, giving the Supreme Court jurisdiction where the Court of Appeal has gone wrong in law in an earlier case, but not if it does so in the current case).
It has not been possible to discover why a different approach, excluding the House of Lords or Supreme Court altogether, was taken in relation to family matters in the Brussels II Regulation and BIIR.
It is known that the President of the Family Division, the Solicitors Family Law Association, The Law Society, the Family Law Bar Association, Reunite, Pact, and the Child Abduction Unit in the Office of the Official Solicitor were consulted on the Commissions revised draft text of BIIR and that the Lord Chancellors Department continued to consult the President of the Family Division, Thorpe LJ (Chairman of the Presidents International Committee), senior practitioners and Reunite during the negotiations.
But it is not known precisely how and why the decision was taken to adopt the new approach in article 34 or how and why the United Kingdom government chose to make the notification which it did.
The Minutes of the International Family Law Committee of the Family Justice Council held on 8 November 2004, at which the proposed BIIR was discussed, do not record any discussion of these matters.
But it is not surprising that the notification was to the same effect as Annex III to the Brussels II Regulation, nor is it unlikely that limiting the scope for multiple appeals was seen as an important consideration.
The fact remains that the United Kingdom did make the notification in question.
The question, therefore, is whether BIIR, combined with that notification, is effective to restrict what would otherwise be the jurisdiction of the Supreme Court under section 40 of the 2005 Act.
The effect of BIIR in United Kingdom law
Mr Harrison faces the serious difficulty that article 34 clearly states that the decision on appeal may only be contested by the notified proceedings.
On the face of it, therefore, as Mr Hugh Mercer QC submits on behalf of the Ministry of Justice, if there were no relevant notification, there would be no possibility of further challenge (as is apparently the case with Cyprus and Malta).
Mr Harrison seeks to avoid this problem in two ways.
First, he argues that the notification, being an act of the executive without any Parliamentary scrutiny or approval, cannot be an enactment for the purpose of section 40(6).
He is of course quite correct that the executive has no power to amend or qualify primary or delegated legislation unless Parliament has given it the power to do so.
An example is the power given by the United Nations Act 1946 to make Orders in Council without Parliamentary scrutiny where necessary to comply with the United Kingdoms obligations under the United Nations Charter.
Express language would be required for such a power to permit the executive to abrogate fundamental rights such as the right of access to a court: see A v HM Treasury (JUSTICE intervening) [2010] UKSC 2; [2010] 2 AC 534.
In fact, such delegated legislative powers are far more frequently exercised by statutory instrument which has to be laid before, and in some cases positively approved by, Parliament.
It is also correct that the power to amend primary legislation and otherwise to legislate for the purpose of complying with the United Kingdoms obligations in European Union law, conferred by section 2(2) of the European Communities Act 1972, has to be exercised by Order in Council or by orders, rules, regulations or schemes.
The notification was none of these things.
By itself, therefore, it could not be effective to amend or qualify section 40(2) of the Constitutional Reform Act 2005.
However, we are concerned, not with the notification alone, but with the combined effect of article 34 of BIIR and the notification.
It is trite law that European Regulations are directly applicable in all member states without the need for further legislative implementation there: Treaty on the Functioning of the European Union, article 288.
It was, of course, necessary for the United Kingdom to legislate to make this treaty provision the law in the United Kingdom.
This it did by section 2(1) of the European Communities Act 1972: (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;
Furthermore, by section 2(4): (4) any enactment passed or to be passed shall be construed and have effect subject to the foregoing provisions
of this section
Thus, Parliament has decreed that its own legislation is to have effect subject to the requirements of directly applicable European Union law.
This includes section 40(2) of the 2005 Act.
Mr Harrison is therefore driven to argue that articles 34 and 68 of BIIR are not, in fact, directly applicable.
This is because they require measures of application to be adopted by member states in order to be implemented.
He relies, in particular, on the cases of Azienda Agricola Monte Arcosu Srl v Regione Autonoma Della Sardegna and Others (Case C 403/98) [2001] ECR I 103; [2002] 2 CMLR 14 and OBB Personenverkehr AG v Schienen Control Kommission (Case C 509/11) [2014] 1 CMLR 51.
His best example is the OBB case, which concerned a Regulation (1371/2007) providing for rail passengers to be compensated for delay.
Under article 30, each member state was to designate a body responsible for enforcing the Regulation.
But the Regulation did not define the specific measures which that body had to be able to adopt to secure compliance.
The relevant body in Austria, the Kommission, required the railway company, OBB, to alter the terms and conditions of its tickets so as to comply with the compensation requirements of article 17 of the Regulation.
But under Austrian law the Kommission did not have the power to do so.
The Court held that article 30 by itself did not give it the power to impose terms on the railway company. (I note that it would be a completely separate question whether the passenger could rely on the direct effect of the Regulation in order to claim the compensation which it prescribed.)
The Azienda case concerned Regulation No 797/85, which provided for certain payments to farmers practising farming as [their] main occupation.
Member states were required to define what that meant, both for natural and non natural persons.
The relevant Italian law defined it for individuals and certain other entities, such as farming co operatives, but did not provide for limited companies at all.
The Court held that, as the Regulation required a definition before it could be operated, a limited company conducting farming operations could not make claims under the Regulation.
The principle was stated thus: 26.
In this respect, although, by virtue of the very nature of regulations and of their function in the system of sources of Community law, the provisions of those regulations generally have immediate effect in the national legal systems without its being necessary for the national authorities to adopt measures of application, some of their provisions may nonetheless necessitate, for their implementation, the adoption of measures of application by the member states.
Thus, says Mr Harrison, as articles 34 and 68 of BIIR required further measures of implementation in the form of notifications by the member states, they cannot be directly applicable.
The simple answer to this argument is that articles 34 and 68 are not comparable with the articles under consideration in these two cases.
Article 34 does not depend for its implementation upon the member states choice of avenue of appeal.
If the member state fails to notify any such avenue of appeal, then none will exist.
But in any event, the member state in question did make a relevant notification.
There is nothing in these cases to suggest that, if the required measures of implementation are adopted in a member state, the Regulation is not directly applicable there (and indeed effective to create individual rights).
The farmers who were covered by the Italian definition would no doubt have been able to claim their rights under the Regulation.
Mr Harrisons final argument is that the notification cannot be effective if it does not give an accurate picture of the appellate rights under United Kingdom law.
Article 68 requires member states to supply information as to the position in their country; it does not permit them to change the position as it would otherwise be.
However, so to interpret article 68 would run counter to the purpose of the provisions relating to routes of challenge which date back to the 1968 Convention and continue through all the European instruments discussed earlier.
This is to limit the avenues and methods of appeal so as to avoid delays and manoeuvrings which will defeat the object of effective enforcement of one anothers orders.
This object may have become slightly diluted in the more recent instruments, but the Regulation clearly contemplates the possibility that Member States will make notifications which cut down the routes of appeal which would otherwise be available.
Conclusion
I am therefore satisfied that the Supreme Court of the United Kingdom has no jurisdiction to entertain an appeal in this case.
The appeal which has been lodged should therefore be struck out.
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These proceedings concern a child, called DD in the judgment, who was born in 2006 in Romania, to Romanian parents who met while working in England.
The family returned to England after the birth.
The parents separated in 2007 and DD has lived in England since then in the care of his mother.
The father returned to Romania in 2009 but has maintained a significant relationship with his son.
He commenced divorce and custody proceedings in Romania in 2007 which, after long delays, culminated in a decision of the Bucharest Court of Appeal in November 2013 that DD should live with his father.
The father applied for the recognition and enforcement of this custody order by the English court in February 2014.
These proceedings are governed by the Brussels II (Revised) Regulation (BIIR).
DD was made a party.
In July 2014 a High Court judge refused the fathers application, applying article 23(b) BIIR which provides that a judgment should not be recognised if it was given, except in a case of urgency, without the child having been given an opportunity to be heard, in violation of fundamental principles of procedure of the member state in which recognition was sought.
The Romanian court had not made direct or indirect enquiry of DD regarding his wishes and feelings.
The Court of Appeal upheld the judges order.
The father sought to pursue a further appeal to the Supreme Court.
The Supreme Court considered as a preliminary issue whether it had jurisdiction to hear an appeal against an order for the enforcement of a custody order in proceedings governed by BIIR.
The Supreme Court unanimously rules that it does not have jurisdiction to hear the fathers appeal, which must therefore be struck out.
Lady Hale gives the only substantive judgment.
Under s 40 of the Constitutional Reform Act 2005, appeals to the Supreme Court are subject to provision under any other enactment restricting such an appeal.
The question therefore is whether the provisions of BIIR constitute such an enactment or otherwise override the jurisdiction granted to the Supreme Court by s 40 [12].
The application to register a judgment governed by BIIR is intended to be a speedy and essentially administrative process.
Either party may appeal the decision under article 33, which is subject to the provision in article 34 that the judgment given on such an appeal may be contested only by the proceedings referred to in the list notified by each member state to the Commission pursuant to article 68.
The UK has provided in its list of notifications under article 68 that appeals in England and Wales
under article 34 may be brought only by a single further appeal on a point of law to the Court of Appeal [16].
It has been the practice of the UK in several previous European instruments concerned with the free movement of judgments and judicial cooperation to provide for only one tier of further appeal.
The purpose of this restriction is to further the intention of these instruments that member states should recognise and enforce each others judgments without too many avenues for challenge [26].
The provisions of BIIR and the notification under article 68 are directly applicable in the UK.
Article 34 does not depend for its implementation upon the member states choice of avenue of appeal and in any event the UK did make a notification [37].
It is not necessary for the notification to reflect all appellate rights under UK law: to further the objective of BIIR, article 68 permits member states to make notifications which cut down the routes of appeal which would otherwise be available [38].
It follows that the Supreme Court has no jurisdiction to entertain an appeal in this case and the appeal is struck out.
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This is an interim judgment dealing with certain threshold issues on this appeal.
It is final as to the issues covered, but interim in the sense that other issues will have to be decided before the appeal can be finally determined.
The court regrets the delay in reaching a final disposal of this protracted and deeply troubling case.
However, as will be explained, it has become apparent that some critical and difficult issues had not been clearly identified in the agreed statement of facts and issues, nor adequately covered by the written or oral submissions.
In fairness to the parties, and to enable it to reach a fully informed conclusion, the court sees no alternative to inviting further submissions on the matters to be identified at the end of this judgment.
It hopes that by giving its decision on the issues covered by this judgment, it will clear the way for more focussed discussion of the remaining points, and in particular on the interaction of international and domestic law in the context of the present judicial review proceedings against the Secretary of State.
The Main Issue
The respondents are six refugees from various countries in North Africa and the Middle East.
In October 1998, they boarded a ship in the Lebanon which was bound for Italy but which foundered off the coast of Cyprus.
On 8 October, 75 passengers including the respondents were airlifted to safety by RAF helicopters and brought to Akrotiri in south Cyprus.
It will be necessary to give a fuller account of the status of Akrotiri below, but for present purposes it is enough to say that Akrotiri in the south of the island, and Dhekelia on the eastern side of the island, are Sovereign Base Areas (SBAs) retained under United Kingdom sovereignty for the purpose of accommodating military bases, when the former colony of Cyprus was granted independence in 1960.
The respondents have lived in highly unsatisfactory conditions in disused service accommodation in Richmond village in the Dhekelia (or eastern) SBA since shortly after their arrival in 1998.
The question at issue in this appeal is whether the respondents are entitled, or should be permitted, to be resettled in the United Kingdom.
It is clear, and not seriously disputed, that the respondents have no right to entry into the United Kingdom under the Immigration Rules.
The Secretary of State has a discretion to admit them outside the Rules, but his policy is not to exercise this discretion in favour of persons such as the respondents who have no existing connection with the United Kingdom.
The basis of the respondents case is that in the circumstances of the present case they are entitled to entry into the United Kingdom by virtue of their status as refugees protected by the United Nations Convention Relating to the Status of Refugees (1951), as modified by the Protocol Relating to the Status of Refugees (1967), or that in the exceptional circumstances of the case the Secretary of State should exercise his discretion to admit them.
The Refugee Convention
As originally drawn, the Refugee Convention applied only to persons who became refugees as a result of events occurring before 1951, ie for the most part those displaced by the persecutions of the Axis powers and by military operations during and in the aftermath of the Second World War.
The effect of the 1967 Protocol was to apply the principal provisions of the 1951 Convention to all refugees, irrespective of when the events occurred which caused them to leave their home countries.
The United Kingdom was an original signatory of the Refugee Convention and ratified it on 11 March 1954.
It acceded to the Protocol on 4 September 1968.
The Convention (as amended) confers a number of rights on persons who qualify as refugees in any territory of refuge in which they find themselves.
These rights include the right to engage in remunerated work, the right to public services such as housing, public education and social security, generally on the same basis as other aliens lawfully present there, and the right not to be expelled save on grounds of national security or public order.
It is not disputed that the respondents are refugees for these purposes.
Between July 1999 and March 2000, all of them were declared by the Chief Control Officer of the SBAs to be entitled to refugee status under the 1951 Convention and the 1967 Protocol.
Neither party suggested that the Convention has been incorporated generally into the law of the United Kingdom, and plainly it has not been.
The position was stated by Lord Bingham of Cornhill (with whom Lord Carswell agreed) in R v Asfaw (United Nations High Comr for Refugees intervening) [2008] AC 1061, para 29: The appellant sought to address this disparity by submitting that the Convention had been incorporated into our domestic law.
Reliance was placed on observations of Lord Keith of Kinkel in R v Secretary of State for the Home Department, Ex p Sivakumaran [1988] AC 958, 990G; Lord Steyn in R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees Intervening) [2005] 2 AC 1, paras 40 42; section 2 of the Asylum and Immigration Appeals Act 1993; and rule 328 of Statement of Changes in Immigration Rules (1994) (HC 395).
It is plain from these authorities that the British regime for handling applications for asylum has been closely assimilated to the Convention model.
But it is also plain (as I think) that the Convention as a whole has never been formally incorporated or given effect in domestic law Lord Hope of Craighead expressed the same view at para 69.
Lord Rodger of Earlsferry and Lord Mance dissented, but not on this point.
It follows that the Convention as such confers no rights and imposes no duties as a matter of the domestic law of the United Kingdom.
The Convention is however given limited statutory effect in the domestic law of the United Kingdom for certain specific purposes, of which only one is relevant to the present appeal.
Section 2 of the Asylum and Immigration Appeals Act 1993 provides that nothing in the immigration rules shall lay down any practice which would be contrary to the [Refugee] Convention.
It is therefore common ground that any decision regarding the entry of the respondents into the United Kingdom must be consistent with the Convention.
Furthermore, as Foskett J recognised in the High Court ([2016] 1 WLR 4613, para 322ff), a failure by the Secretary of State correctly to apply the Convention may have consequences in domestic public law, as under the so called Launder principle (following R v Secretary of State for the Home Department, Ex p Launder [1997] 1 WLR 839, para 325 per Lord Hope; see also R (Corner House Research) v Director of the Serious Fraud Office [2009] 1 AC 756).
Cyprus and the Sovereign Base Areas
Britain occupied Cyprus between 1878 and 1960.
As with Britains other Mediterranean colonies, Gibraltar and Malta, the value of Cyprus to Britain was always strategic and military, not economic.
The island sits across the main sea routes to the Suez Canal and the Levant.
It had been governed for three centuries as part of the Ottoman Empire.
After the defeat of Turkey in the Russo Turkish war of 1877 8, Britain entered into a military alliance with Turkey under which she undertook to defend Turkey by force of arms against any future Russian attack.
In return, Turkey, while retaining sovereignty over the island, ceded it to be occupied and administered by Britain in order to enable England to make necessary provision for executing her engagement: article 1 of the Cyprus Convention, 4 June 1878.
Under an Order in Council dated 1 October 1878, administration of the island was vested in a High Commissioner, whose functions were to be exercised ex officio by the Commander in Chief of the British forces stationed there.
These arrangements subsisted until 1914, when Turkey entered the First World War on the German side, and the Anglo Turkish Convention lapsed.
Cyprus was thereupon annexed to the British Empire by Order in Council: Cyprus (Annexation) Order 1914 SR&O 1914/1629.
The annexation was recognised by Turkey after the war by the treaty of Lausanne (1923).
The island played a modest part in British military operations in the middle east in both world wars, but its strategic significance has increased since then.
The SBAs are currently the only significant British strategic assets in the eastern Mediterranean.
The Refugee Convention contains a colonial clause in the following terms: Article 40 TERRITORIAL APPLICATION CLAUSE 1.
Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible.
Such a declaration shall take effect when the Convention enters into force for the State concerned. 2.
At any time thereafter any such extension shall be made by notification addressed to the Secretary General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later. 3.
With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories.
On 24 October 1956 the United Kingdom notified the Secretary General under article 40(2) that, subject to certain reservations, the Convention would be extended to 16 territories for whose international relations it was responsible, including Cyprus.
It is common ground that the effect was to apply the Convention, as a matter of international law, to the whole island, including those parts of it which later became the SBAs.
Cyprus became independent in 1960 as part of an international settlement between the United Kingdom, Turkey and Greece.
Under these arrangements, it became an independent republic, but there were excluded from its territory the two SBAs, together comprising 98 square miles (about 3% of the surface of the island), which were retained under United Kingdom sovereignty.
The SBAs comprise a number of important military facilities including, in the western SBA, a major RAF base at Akrotiri, and in the eastern SBA an army base at Dhekelia and a signals station at Ayios Nicolaos.
But their geographical area extends well beyond the bases themselves and they support a substantial civilian population.
The population of the SBAs currently comprises a transient population of British military personnel and civilian staff employed on defence related work, who have access to health, educational, recreational and other facilities provided by the Ministry of Defence; and about 10,000 permanent residents, almost all of them Cypriot nationals, who occupy the land outside the bases themselves, pay taxes to the Republic of Cyprus, vote in its elections and are entitled to services from the Republic in the same way as if they resided in its territory.
Legally, these changes were achieved by a number of instruments: i) Section 1 of the Cyprus Act, enacted on 29 July 1960, provided that on a date to be appointed by Order in Council, there should be established in the Island of Cyprus an independent sovereign republic.
Section 2 provided that its territory should comprise the entirety of the Island of Cyprus with the exception of [the Sovereign Base Areas] defined by designated maps with exact boundaries to be fixed by a Boundary Commission.
An Order in Council subsequently fixed the appointed day as 16 August 1960: Republic of Cyprus Order (SI 1960/1368). ii) On 16 August 1960, a treaty was signed between the United Kingdom, Greece, Turkey and the new Republic of Cyprus.
Article 1 of the treaty recognised the territory of the Republic as comprising the island with the exception of the SBAs. iii) On the same date, there was an exchange of notes between the United Kingdom and the Republic of Cyprus, which is annexed to the treaty and known as Appendix O.
The British note transmitted a declaration by the United Kingdom government concerning the administration of the SBAs, and stated the United Kingdoms determination to create a continuous and lasting system of administration in the Sovereign Base Areas founded on close co operation between the authorities of those areas and the authorities of the Republic of Cyprus.
Article 1 of the declaration declared that the main object to be achieved was the effective use of the SBAs as military bases, full co operation with the Republic of Cyprus and protection of the interests of those residing or working in the SBAs.
By article 2, the United Kingdom government declared its intention to observe certain limits on the non military use of the SBAs.
In particular, its intention was: (I) Not to develop the Sovereign Base Areas for other than military purposes. (II) Not to set up and administer colonies. (VI) Not to allow new settlement of people in the Sovereign Base Areas other than for temporary purposes.
The Cypriot note took due note of the above.
On the same date (16 August 1960), the Sovereign Base Areas of Akrotiri and Dhekelia Order in Council 1960 (SI 1960/1369) came into force.
It made arrangements for the administration of the SBAs by an Administrator, who was to be a serving officer of HM Forces and is in practice the Commander of British Forces Cyprus.
The Administrator was to have extensive executive and legislative powers.
Subject to any repeal or modification by the Administrator, article 5 provided that any existing law should continue to have effect in the SBAs.
For this purpose, an existing law meant any law enacted by any authority established for the Island of Cyprus, any Instrument made under such a law, and any rule of law, which is in force in the Sovereign Base Areas or any part thereof immediately before the date of commencement of this Order.
Refugees in Cyprus
In 1963 the Republic of Cyprus notified the Secretary General that it had succeeded to the Convention.
In 1968 it acceded to the Protocol.
No notification has ever been made by the United Kingdom specifically in relation to the SBAs.
The Secretary of States position in these proceedings has been that the Convention does not apply in the SBAs.
But the declared policy of the United Kingdom is that even in those dependent territories where the Refugee Convention does not apply, as in Hong Kong before 1997, it will nevertheless apply the spirit of the Convention to genuine refugees.
The result is a practical, although not (it is said) a legal consistency of approach between the Republic of Cyprus and the administration of the SBAs.
Refugees became a significant issue in Cyprus and the SBAs as a result of disturbances in the Middle East in the 1990s.
They began to appear in substantial numbers in the Republic and in more limited numbers in the SBAs.
It appears to be common ground, but is in any event clear, that the facilities currently available within the SBAs do not enable refugees to be supported there.
There are few if any prospects of employment, no educational, health or other publicly provided facilities to which refugees have access, and limited and unsatisfactory housing provision.
As a result, the arrival of the respondents and other shipwrecked passengers in the SBAs in October 1998, followed by further arrivals in 2000 and 2001, gave rise to argument between the SBA Administration and the authorities in the Republic of Cyprus about which of them was to be responsible for the refugees and asylum seekers among them.
These arguments were apparently resolved, at least for future arrivals, when, on 20 February 2003 the United Kingdom and the Republic entered into a Memorandum of Understanding relating to illegal migrants and asylum seekers in the SBAs.
The Memorandum recited the following: In view of the full co operation between the Governments of the Republic of Cyprus and the United Kingdom envisaged in the Exchange of Notes between the Government of the United Kingdom and the Government of the Republic of Cyprus concerning the administration of the Sovereign Base Areas, dated 16 August 1960, and the attached Declaration by the Government of the United Kingdom; Emphasising the importance of the international obligations of the Governments of the United Kingdom and the Republic of Cyprus with regard to asylum seekers, including the prohibition on indirect refoulement; Bearing in mind humanitarian considerations, such as those reflected in the 1951 Convention relating to the Status of Refugees, and the need for the Republic of Cyprus and the United Kingdom to work together with a view to devising practical ways and means of respecting the rights and satisfying the needs of asylum seekers and illegal migrants in the Sovereign Base Areas; In light of the fact that the Government of the United Kingdom has committed itself not to develop the Sovereign Base Areas for other than military purposes and, in particular, not to allow new settlement of people in the Sovereign Base Areas other than for temporary purposes.
The agreement which followed provided, in summary, for the full range of governmental services to be provided to refugees by the Republic, but at the expense of the United Kingdom.
The relevant provisions are as follows: 1.
For the purpose of this Memorandum of Understanding an asylum seeker is any person seeking international protection under the 1951 Convention relating to the Status of Refugees and the 1967 Protocol, or the European Convention on Human Rights or the United Nations Convention Against Torture 1984. 8.
Asylum seekers arriving directly in the Sovereign Base Areas may move freely throughout the island of Cyprus and have the right to opt to stay outside the Sovereign Base Areas, subject to any requirements imposed upon aliens by the relevant laws of the Republic.
The government of the Republic of Cyprus reserves the right to refuse entry to, or return, an asylum seeker for reasons of national security or on grounds of public policy. 9.
Subject to paragraph 13, the Government of the Republic of Cyprus will grant the following benefits to asylum seekers arriving directly in the Sovereign Base Areas: (a) Free medical care in case they lack the necessary means; (b) Welfare benefits equivalent to those given to the citizens of the Republic of Cyprus; (c) The right to apply for a work permit in accordance with the relevant laws of the Republic of Cyprus; (d) Access to education. 10.
Subject to paragraph 13, during their stay on the island of Cyprus persons recognised as refugees or granted any other the through form of international protection under the procedures determined in this Memorandum, will be treated so far as the authorities of the Republic of Cyprus are concerned, as if such persons had been recognised as refugees or granted another form of international protection by the Republic of Cyprus. 12.
The United Kingdom, [SBA] Administration, will endeavour to resettle persons recognised as refugees in countries willing to accept those persons, not later than one year after the decision granting the relevant status has been taken.
The joint consultative body established in paragraph 16 of this Memorandum will regularly review the progress made with this programme. 13.
The United Kingdom will indemnify the Republic of Cyprus for the net costs incurred in giving effect to paragraphs 7, 8, 9 and 10 excluding costs in respect of those who first entered the island of Cyprus other than directly by the Sovereign Base Areas.
This Memorandum of Understanding may be terminated at any time by the mutual written consent of both Participants or by either Participant giving not less than three (3) months prior notice in writing to the other Participant.
Any dispute about this Memorandum will be resolved by consultations between the Participants. interpretation of the 18.
Under paragraph 20 of the Memorandum, paras 7 10, 13 and 14 were to come into effect on the date of the accession of Cyprus to the European Union, in the event 1 May 2004.
The authorities of the Republic of Cyprus took the position that the Memorandum did not apply to refugees such as the respondents who had already arrived in the SBAs before that date.
The Secretary of States case, however, is that it was agreed between the Cypriot authorities and the SBA Administration in 2005 that it would deal with refugees recognised as such by the SBA Administration in accordance with the Memorandum of Understanding, irrespective of the date of their arrival in the SBAs.
This agreement has never been recorded in writing, but evidence of it is given by Ms Lisa Young, the then Policy Secretary of the SBA Administrator, and there is documentary and other material supporting its existence and the effect claimed for it.
We shall consider this further later in this judgment. 19.
Shortly after the Memorandum of Understanding of 2003 was agreed, the Administrator of the SBAs enacted the Refugees Ordinance 2003.
The Ordinance has been radically amended since it was first enacted, without, however, altering its essential tenor.
Section 4 and Part 4 of the Ordinance gave effect within the SBAs to rights substantially corresponding to those conferred on refugees by the Convention, including in particular rights to public relief and assistance, social security, free education and the right to engage in paid employment: see section 23.
Section 23(2) provided: The rights given to a refugee or asylum seeker under this Ordinance shall be treated as having been properly accorded to him whether they are accorded to him by the relevant authorities of the Areas or the Republican authorities and whether they are to be enjoyed in the Areas or in the Republic.
In September 2011 in judicial review proceedings between certain refugees in the SBAs (including some of the respondents) and the SBA Administrator and the Secretary of State for Defence, the Senior Judges Court, which serves as the Court of Appeal for the SBAs, held that the Refugees Ordinance did not apply to those who were recognised as refugees before it was made: Bashir v Administrator of the Sovereign Base Areas of Akrotiri and Dhekelia and Secretary of State for Defence Appeal No 1 of 2011, 13 September 2011.
The correctness of that view has not been challenged in these proceedings.
Appeal lies from the Senior Judges Court to the Privy Council, but there was no appeal from this decision.
The factual background relating to the respondents
Foskett Js judgment contains an extensive narrative of the facts, which provides a valuable starting point for analysis.
It must, however, be borne in mind that the issues between the parties have broadened in the course of the proceedings, partly because not all of the legal problems raised by the appeals were appreciated at the time of the trial, and partly because of the much broader basis on which the Secretary of State sought to justify her refusal to admit the respondents to the United Kingdom in her second decision of July 2017.
As a result, Foskett Js findings may not constitute a complete statement of the facts relevant to the issues that now separate the parties.
It is unnecessary for present purposes to do more than refer to some of the main points in the history. (Where relevant we give paragraph references to the HC judgment.)
From 1998 2002
We have already mentioned the circumstances in which the respondents and their families arrived in the SBAs in October 1998.
Their accommodation since 2000 is described in the agreed statement of facts in the following terms: Since May 2000 the respondents have been housed in disused military accommodation in Richmond Village in the Dhekelia SBA.
That accommodation, which was due to be demolished in 1999, is no longer regarded as truly habitable and there is an urgent need for a move of location to take place (HC 74).
There are health concerns raised by the fact that asbestos in potentially harmful quantities and form (HC 146) has been discovered in all of the accommodation.
It is common ground, as Irwin LJ said in the Court of Appeal (para 84) that their present conditions are quite unacceptable.
The dispute is as to the extent to which, if at all, the SBA Administration or the UK government bears responsibility for that state of affairs.
Between July 1999 and March 2000, each of the respondents was declared to be entitled to refugee status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees, by orders made by the Chief Control Officer of the SBAs.
The judge described in detail the extensive exchanges between the SBA Administration and officials in London as to how they should be dealt with, given the recognised impossibility of meeting the Convention obligations within the SBAs, and the unwillingness of the Republic at that time to assist in any way.
At official level, there was a view that resettlement in the UK might be necessary.
The judge quoted a letter from a Ministry of Defence official to the Home Office dated 22 December 1999 (HC 76): We have exhausted all the options that we thought were open to us.
The refugees are the responsibility of the UK Government, but we have no means of discharging that responsibility while they remain in the Sovereign Base Areas.
We frankly see no realistic alternative to their resettlement in the UK (Judges emphasis) The judge added (HC 77): 77.
That same letter referred to the fact that the RoC was unprepared to accept responsibility for the those who might be assessed as refugees, that the UNHCR was not prepared to help with resettlement because its view was that it was solely the responsibility of the UK and that attempts to engage with the Canadian and US resettlement schemes had been rejected also.
However, suggestions that they should be allowed to come to the UK met an unsympathetic response from Ministers.
Thus, the judge noted (HC 86) a memorandum to the Minister for Europe dated 28 June 2001, which recorded that relocating them to the UK was not attractive to the Home Office and MoD Ministers have already objected to this approach, but noted that re settlement in a third country was unlikely to be realistic and that [the] Cyprus government will not take them on.
The preferred option proposed to the Minister was relocation to the UK, but the Minister responded in a hand written note: I will not support relocation to the UK.
This is not on politically (HC 86).
To similar effect, in February 2002 a request from the SBA Authority (SBAA) seeking formal guidance, attracted a handwritten note, apparently by an MOD official: no answer is at hand.
Yes they should be let into the UK, but ministers have said no. (HC 94 95)
Concern about the situation of refugees in the SBAs was expressed by the UNHCR in a letter to the Permanent Representatives of Cyprus and the UK dated 13 June 2001 (HC 90).
The then view of the Foreign and Commonwealth Office of the legal merits appears from an internal note (HC 91) prepared for a meeting of the Permanent Representatives and the UNHCR in November 2001, suggesting the line to adopt: Ministers decided in early 1999 that asylum seekers arriving in the SBAs should be treated in accordance with the UN Convention on Refugees, even though the Convention does not apply in the SBAs But strong reasons for the UK not allowing either the refugees or those that failed RSD permission to settle in the UK.
Doing so would increase the attractiveness of the SBAs as a destination for asylum seekers and it would be politically untenable given continuing public concern at the number of asylum seekers entering the UK.
The involvement of the Republic 2002 2013
Faced with the political objections to resettlement in the UK, the governments strategy in 2002, agreed apparently at Cabinet level, seems to have been to use the desire of Cyprus to become a member of the EU as leverage to secure an acceptable agreement on the treatment of all the refugees and other asylum seekers, existing and future (HC 99 101).
Early drafts included provision for those already granted refugee status in the SBAs.
However, the Republic was adamant that existing asylum seekers in the SBAs should be dealt with separately from future arrivals.
Accordingly, the final form of the agreement was prospective, applying only to future arrivals.
As already discussed, the 2003 Memorandum, concluded on 20 February 2003, was implemented in the SBAs by the Refugees Ordinance 2003, and took effect on 1 May 2004, the date of accession of Cyprus to the EU.
So far as appears from the judgment, there is no record of any further consideration at UK government level at that time of those existing refugees excluded from the Memorandum.
The only formal statement of the governments position in this period, in the papers before this court (though not mentioned by the judge), is in a letter from the FCO to the UNHCR dated 23 May 2005 [MS 1509].
It confirmed their view that the Convention did not in law apply to the SBA, and that it was inappropriate to extend the Convention to the SBAs because of their nature and size, and the prohibition on new settlements in the 1960 Treaty of Establishment.
The letter referred to the 2003 Memorandum as providing detailed arrangements to ensure appropriate assistance by the Republic for refugees arriving directly into the SBAs.
There was no reference to those already in the SBAs as refugees, such as the respondents.
The next event of substance seems to have been in autumn 2004, when there began discussions between SBA officials and the Migration Department of the Republic (HC114 119).
A meeting was held on 27 September 2004, followed by a letter from Mr Stainton, Administrative Secretary of the SBAA, dated 17 November 2004.
This recorded that the Republic would assume responsibility for the 66 individuals who had entered the SBAs directly, and that the SBAA had also agreed to pay the costs as identified at the September meeting.
There was no reply to that letter, but there was a further meeting between the SBAA and Republic officials on 28 January 2005, at which there was discussion of arrangements in relation to welfare payments, medical matters, education, housing, work and residence, and a fixed date for the transfer of responsibility.
There is no written record of the actual agreement or understanding, nor of its precise content or even of its date.
However, from about September 2005, it was treated by the local administration as a basis for stronger action to encourage the remaining refugees to transfer to the Republic.
The judge referred to the closure of the school in September 2005 with the destruction of the playground, and the withdrawal of medical facilities, as confirmed in a memorandum from the then Fiscal Officer, Mr Pitts, dated 23 September 2005 (HC 123).
Mr Pitts described the agreement as being: for all residents of Richmond Village to be transferred to the administration of the RoC and for each person to be provided with the opportunity to have their individual claim considered.
The judge accepted that documentation issued thereafter, to some at least of the refugees, indicated recognition by the Republic authorities that they had obligations towards the claimants which hitherto had been denied (HC 131).
The judge also described the efforts to draw the agreement to the attention of the refugees, and their immediate response, as recorded in the evidence of Mr Bashir (HC 120 121).
He spoke of a meeting on 28 January 2005 at Richmond Village with the UNHCR and the SBAA Fiscal Officer Mr Jim Smart.
Mr Smart told them of a new agreement which would change (their) situation and that (they) could be recognised as refugees in the Republic of Cyprus if (they) made an application to the Cypriot authorities.
In response to questions why they had to make new applications when they had already been recognized as refugees, they were told of assurances that the Republic would recognise us and give us rights; but that they would need to reside in the Republic for a further seven years to be able to apply for citizenship, and that the years spent living in the SBAs would not count.
The residents response was that they did not want to apply to the Republic and they would not move there, for a number of reasons: First of all, we were aware that the Cypriot Government had denied responsibility for us in 1998: The minister at the time made a public statement that we were the responsibility of the SBA and the UK.
Secondly, for all the years we had lived in the SBA most of us at one time or another had been subjected to ill treatment from the Cypriot police and the Cypriot immigration authorities.
Thirdly many of us were, and still are, afraid that we would be deported back to our countries of origin if we agreed to become the responsibility of the Republic of Cyprus.
Fourthly, we had already been living in limbo since our arrival on the SBAs and we were not the responsibility of the Republic of Cyprus, we were and are the responsibility of the UK who should have done more to assist us.
We would observe that the reasonableness or otherwise of that response has been at the heart of the dispute ever since.
Sadly, it evidences the existence of something of a stand off between the SBA authorities and the refugees which has in some measure continued until today regarded by the authorities as due to obstinate non cooperation by the refugees, and by them as legitimate insistence on the discharge of the duties for which the UK, not the Republic, was responsible.
However, as the judge recorded (HC 128), notwithstanding this resistance, a number of the claimants did seek paperwork promised under the agreement.
In fact, it appears that all but one did this.
The Republic registered them as refugees for the purposes of their domestic legislation, thereby recognising their entitlement to the support provided for by the Refugee Convention.
The evidence of Mr Gondelle is that the SBAA made payments to the Republic on this basis under paragraph 13 of the Memorandum.
Mr Bashir himself says that the Republic gave him and most of the refugee families Cypriot documentation, including an alien registration certificate, a temporary residence permit, a medical card for him and his family, a travel document and a work permit.
Further, as their witness statements show, the respondents have made extensive use of the facilities provided by the Republic under the MoU. The lead claimant, Mr Bashir, is a good example.
He declines to move from the SBA to the RoC, but he met his current wife while working in the RoC; they were married in the RoC and their children were born there and go to school there.
The absence of any written record of the agreement was later confirmed by Mr Stainton, the SBA Administrator.
The judge (HC 138) referred to a note by him in October 2006 of a meeting earlier that month, attended by representatives of the Republic Asylum Service and the UNHCR, at which the Asylum Service had confirmed their intention to honour their commitments under the Memorandum and more importantly that they will apply it retrospectively to those who arrived in Cyprus via Akrotiri in 1998 .
This was seen by him as important because there is no written agreement that they will other than an exchange of letters agreeing the sum of money the SBAA will pay for each applicant and family member. (HC 138)
Mr Stainton also recorded that he intended to cease welfare payments for those who had not registered with the RoC from 31 January 2007, followed by eviction proceedings from the village.
This intention was carried into effect and led to a demonstration which went on for some weeks until (in Mr Bashirs words, quoted by the judge) around March 2007 the SBAA backed down [and] stated that they were not going to evict us or cut our weekly payments.
They also agreed to issue us new travel documents (HC 140).
The subsequent progress of the informal agreement was described by the judge as chequered (HC 373).
Mr Gondelle, who became the SBAA Administrative Secretary in August 2008, said in evidence to the SBA courts that there were records of payments made to the Republic in respect of families recognised as refugees, but that to the best of his knowledge, the Republic had not yet given full practical effect to the agreement, and that its implementation in practice [had] not been straightforward.
By the time of his involvement in 2008, it was uncertain whether the RoC [was] still willing in principle to abide by the Agreement (HC 142).
The judge went further, finding in the evidence a clear indication from the RoC in 2008 that it was not prepared to adhere to the informal understanding that the 2003 Memorandum would be applied to the refugees, although the respondents were not aware of this at the time (HC 144 145).
The next event of significance came in February 2009, following the discovery of asbestos in some of the properties in Richmond Village.
Mr Gondelle prepared a minute with a view to inviting Ministerial approval to permit all existing residents in Richmond Village to move to the UK (HC 147 148).
The minute indicated that Home Office officials were supportive, and attached a letter to the relevant Minister.
As the judge observed (HC 151), the minute made reference to the 2003 Memorandum, but none to the 2005 agreement; instead it noted that the Republic was reluctant to provide assistance of any nature to the SBA because it considered that the British military should end their presence in the SBAs and return the land to the RoC.
The recommendation was not accepted.
At a meeting of the relevant Ministers in June 2009, the joint view was that bringing them to the UK was not a desirable option.
Instead authorisation was given for a carrot and stick approach, which involved the SBA paying for rented accommodation in the Republic for an initial period while simultaneously evicting the refugees from their current housing, and discontinuing welfare payments.
In an email dated 16 December 2009 Mr Gondelle noted that the Home Office, while recognising the complexities of the situation and that entry to the UK might ultimately be necessary, was unwilling to authorise a significant departure from its current policy without first exploring the alternatives.
The SBA Administration remained convinced that entry to the UK will ultimately prove to be the only solution (HC 152 154).
Attempts to implement the new carrot and stick approach were impeded by judicial review proceedings in the SBA courts, commenced in April 2010 (HC 160).
The Senior Judges Appeal Court, in a judgment given on 13 September 2011, held that the Convention did not apply to the SBA.
As already noted, there was no appeal to the Privy Council.
In the course of those proceedings the respondents solicitor had written to the Republics Ministry for Foreign Affairs asking about the agreement to resettle the refugees, on which the SBA authorities were relying.
The reply dated 18 June 2010 stated (as translated from the Greek): there is no written agreement with the United Kingdom as regards case of your customers.
The Republic of Cyprus had merely accepted to implement commensurately the relevant Memorandum of Understanding between the Republic of Cyprus and the United Kingdom in certain cases which concern persons that had arrived in Cyprus before the date of its entry into force.
The judge observed that this appeared to be the only document emanating from the [Republic] in which the existence of the 2005 understanding is mentioned (HC 161 162).
However, in the course of his evidence put before the Senior Judges Appeal Court, Mr Gondelle confirmed that since 2008 he and his staff had had many meetings with the Republics Asylum Service and Ministry of Foreign Affairs, during which it had indicated its willingness to cooperate, even though the effect appears to have not always reached other departments, that during his last meeting with the Director of the Republics Civil Registry and Migration Department, in late 2009, she had confirmed arrangements were in place to ensure that recognised refugees would receive welfare benefits from the Republic and that it was only after these assurances that SBA benefits had been withdrawn.
Although free transport and the assistance of SBAA officials was offered to the respondents in March 2010 to take up such benefits, this offer was rejected by all of them.
The UK governments understanding of the position as at the end of 2011 appears from a letter quoted by the judge from the UK Border Agency to the UNHCR dated 8 November 2011 (HC 163).
Having explained the background it stated: The Republic of Cyprus (RoC) has agreed to accept and resettle the refugee families, but due to their distrust of the RoC, the refugee families have refused to move from their current accommodation in Richmond Village (former Service family accommodation) on the SBA.
A Memorandum of Understanding (MoU) was signed with the RoC in 2003 to prevent this situation occurring again.
Under this MoU the RoC handles all asylum seekers that enter the SBA.
This has worked well.
But the original applicants remain the responsibility of the SBAA.
In 2007 [sic], an informal agreement was reached between the SBAA and the RoC, under which the RoC agreed to honour any decisions made by the SBAA in respect of the families and take responsibility for them.
The UK Border Agency again provided assistance and sent caseworkers to the base to interview 25 of the individuals.
Unfortunately, the families failed to co operate and the interviews never took place
Events leading to the present proceedings
In the proceedings before the Senior Judges Appeal Court, the respondents complaint that the Republic would not honour any commitment to make payments was found to have no evidential foundation [paras 63 69, MS 859 62].
Since those proceedings, there is however evidence of a further consolidation of the respondents attitudes regarding any cooperative arrangements with the Republic pending the outcome of the present proceedings.
Ms Charalambidou, the respondents legal representative in Cyprus, expressed this very clearly on their behalf in a letter of 31 December 2012: l would finally like to inform you that the refugee families continue to consider themselves as the responsibility of the SBAA and the United Kingdom and therefore they have informed me that they do not intend under any circumstances to be considered as the responsibility of the Republic of Cyprus.
On 30 September 2013, following a meeting at the UNHCR offices in Nicosia, Ms Charalambidou, and the local representative of the United Nations High Commissioner for Refugees wrote jointly to the Administrator of the SBAs about the respondents predicament.
They observed that although resettlement in the Republic had at one stage been seen as a desirable and practical option, the respondents did not consider this to be an option, based on their own experiences and for reasons that need not be discussed.
The UNHCR representative added that in any event the Republic was no longer willing to take them because of the after effects of the financial crisis of 2008 and the number of refugees that it had already accepted.
Both signatories expressed the view that resettlement in the United Kingdom was the only conceivable option.
That letter was passed by the SBA Administrator to the Home Office, but there was a delay of more than a year in replying.
The judge discussed the evidence about the drafting of the reply (HC 351 354) including an internal response of a Home Office official, apologising that the chasing email from the SBA had slipped under [his] radar: the UK has no legal obligation to accept the applicants, refugees or not, and there are no close family ties or previous residence in the UK or any compelling humanitarian reasons in their favour.
All in all, there would be no appetite to accept this particular group, whose non cooperation and behaviour would make any country reluctant to take them.
The judge commented (HC 354) that this response suggest[ed] a closed mind on the part of the Home Office to the question of admission of the refugees to the UK and to anything said in support of it by the UNHCR.
The formal reply eventually came in a letter dated 25 November 2014 in a letter from Mr Rob Jones, the Home Office Head of Asylum and Family Policy.
The operative part of Mr Jones letter read As was explained in a letter of 8 November 2011 to the London representative of the UNHCR (copy enclosed), Home Office Ministers and officials have consistently made it clear that there could be no question of the families on the SBA being admitted to the UK.
The families have at no time been given any encouragement to believe that they could be.
It would be contrary to UK policy to accept the transfer of refugees who have no close connection to the UK and it would also be inconsistent with our policy on asylum applicants who arrive in British Overseas Territories or Crown Dependencies.
Although their presence on the Base has been tolerated by the SBA, their stay gives the families no claim to admission to the UK.
The UKs policy on the admission of refugees is in accordance with the 1951 Refugee Convention and the UK accepts no responsibility for the consideration of applications for asylum or transfer of refugee status other than those made on UK territory, namely the mainland territory of the UK and excluding the UKs Overseas Territories, Crown Dependencies, or Sovereign Bases such as the ones in the Republic of Cyprus.
Our position, therefore, is that none of the refugee families on the SBA will be considered for admission to the UK.
They have no family or residential ties with the UK and there are no reasons for treating them exceptionally.
The families have the right to reside in the Republic of Cyprus and have strong ties with the Republic.
We do not believe that their preference for the UK should be allowed to override what is demonstrably a durable and suitable solution for their long term residence.
The present proceedings were brought by way of application for judicial review of the decision of the Secretary of State said to have been communicated in that letter.
The High Court
The respondents application came before Foskett J in March 2016.
He gave judgment on 28 April 2016.
He held that as a matter of international law, the Refugee Convention did not apply to the SBAs because they were indeed a new international entity created in 1960.
He went on to deal with the United Kingdoms declared policy of observing the spirit of the Convention.
He recorded it as common ground (because it was accepted in internal documents passing between the SBA Administration and government departments in London) that the United Kingdom could not in practice provide the respondents with their full Convention rights within the SBAs with the facilities currently available there.
Although he made no formal finding of his own to this effect, it is clear from his analysis of the evidence that he agreed.
It followed that a level of support consistent with the spirit of the Convention could be achieved only (i) by effective resettlement of the respondents in the Republic of Cyprus, either by their moving there or by their remaining resident in the SBAs but relying on facilities provided by the Republic by arrangement with the SBAs; or (ii) by resettlement of the respondents in the United Kingdom.
The Judge held that it would be consistent with the spirit of the Convention for the United Kingdom to support the respondents by making arrangements with the Republic of Cyprus to do so.
He therefore considered that option (i) would be lawful if it could be achieved.
He made no finding as to whether in fact it could be achieved.
But he held that Mr Joness letter had failed to address the view expressed by the UNHCR local representative in UNHCRs letter dated 30 September 2013 that, even if relocation to the Republic of Cyprus may have been seen as the most desirable or practical option in the past, this is not the case anymore because of the financial crisis prevalent in the Republic; and that accordingly, consideration was not given as at the time of the decision letter in November 2014 to the strengths and/or weaknesses of the informal agreement reached in 2005.
The decision letter had thus failed to consider a crucial factor in deciding whether to admit the claimants to the UK within the general discretion available to the Secretary of State (HC 397).
He therefore quashed the Secretary of States decision.
He left it to the Secretary of State to consider, when taking a fresh decision, whether support through the Republic of Cyprus was a practical proposition.
The Court of Appeal
The Secretary of States appeal was heard by Jackson, Briggs and Irwin LJJ in January 2017.
In its unanimous judgment delivered on 25 May 2017, the Court held, overruling the judge, that the SBAs were not a new entity and that the Refugee Convention continued to apply to them by virtue of the United Kingdoms notification of 1956.
In those circumstances, the question was no longer what was implied by the United Kingdoms policy of observing the spirit of the Convention.
The Court of Appeal did not deal with the question whether the terms of the Convention required the United Kingdom to resettle the respondents in its metropolitan territory, nor with the question whether it was open to the United Kingdom in point of law to support the respondents through arrangements made with the Republic of Cyprus.
Instead, they quashed the existing decision and directed that it be remade by 6 July 2017 on the footing that the Convention applied directly.
Irwin LJ, delivering the only substantive judgment, said (para 79): In my judgment the outcome of that decision must take into account the history but cannot be determined by this court merely by re analysing the historic evidence.
The decision must be taken in relation to the current facts He also identified some obvious factors which he thought absolutely critical to the decision.
They included his view that the obligations of a State with responsibility for refugees could not be exported but remained with the Secretary of State (para 80); that the suggestion of counsel for the Secretary of State that they could be permitted to remain where they were was likely to be inconsistent with article 34 of the Convention, given the possibility of their assimilation into the UK or other British Overseas Territories (para 81); and that, while the arrangement with the Republic did not amount to constructive expulsion within article 32, a repeat of that approach, absent agreement to resettlement in the Republic, would be very likely to represent a repeated failure to meet the obligations which I conclude fall upon the UK (para 83).
He added: 84.
Prominent amongst the relevant factors must be the enormous delay which has affected these claimants and their families.
There can be no justification for any future decision which leaves these claimants position unresolved for any further length of time.
As the judge made clear, their present conditions are quite unacceptable.
That appears to be common
ground
It followed from the way that the case was put in the courts below and from the somewhat different bases on which Foskett J and the Court of Appeal quashed the Secretary of States decision that neither of them needed to decide whether or not it was in practice feasible to support the respondents through the facilities provided by the Republic of Cyprus under the Memorandum of Understanding.
Foskett J in terms left that matter to be determined in a new decision, in which the Secretary of State would be required to address the misgivings of the UNHCR local representative on that score.
The Court of Appeal implicitly did the same, while pointing to a number of factors which she should take into account.
Further exchanges
On 16 June 2017, after the decision of the Court of Appeal, the United Nations High Commissioner for Refugees wrote to the Secretary of State asking her to reconsider her decision not to admit the respondents to the United Kingdom.
In his letter, the High Commissioner raised doubts about the practical feasibility of supporting them through facilities provided by the Republic of Cyprus, after 19 years and in the absence of any formal agreement or assurances regarding their future in the Republic.
He concluded: These refugees find themselves in a state of legal limbo with seriously compromised or no access to welfare, health care, education, and employment.
Recently, welfare benefits have been reduced, and these refugees have been unable to renew their medical cards in the Republic of Cyprus, which are required to access health care.
They also have not been able to access either tertiary education or employment in the Republic of Cyprus.
Of serious concern, these refugees and their families are living in sub standard housing, which needs to be demolished due to the presence of asbestos.
Meanwhile, the Court of Appeal having refused to stay its decision, the Secretary of State was obliged to make a fresh decision in compliance with its order by 6 July 2017.
It is unnecessary to set it out in detail at this stage.
She declined to allow the respondents entry into the United Kingdom.
Her reasons were substantially the same as those given on 25 November 2014, except that the fresh decision, unlike the original one, directly addressed the options open to the respondents other than resettlement in the United Kingdom.
It is apparent that she did not accept the version of events put forward by the UN High Commissioner.
She considered that on the footing that the Refugee Convention applied in the SBAs the United Kingdom could comply with its obligations by arranging for the respondents to be supported by the Republic of Cyprus.
The reason, she said, why that had not happened was that the respondents had declined to engage with the authorities in the Republic while there was any prospect that the present proceedings might result in their admission to the United Kingdom.
While accepting that the 2003 Memorandum itself only applied to persons arriving in the SBAs on or after 1 May 2004, she stated again that in 2005 the Republic of Cyprus agreed to apply it to those who arrived in 1998.
She addressed the concerns of the UNHCR local representative in the following terms: As you are aware, in 2003, the UK and the Republic of Cyprus signed a Memorandum of Understanding under which the Republic agreed to treat persons who arrived directly in the SBAs, and were recognised as refugees under the procedures contained in that Memorandum, as if they had been recognised as refugees by the Republic.
Whilst the Memorandum itself only applies to persons arriving in the SBAs on or after 1 May 2004, in 2005 the Republic of Cyprus agreed to apply it to those who arrived in 1998.
I have carefully considered the UNHCR letter of 30 September 2013, in which the UNHCR raised concerns because of the financial crisis in Cyprus at that time and claimed that the Republic of Cyprus had stated they could not take any more refugees.
As was explained on the Secretary of States behalf in the Court of Appeal, the reference appeared to be to a speech by the Interior Minister, but he had actually said that the Republic could not sustain any more asylum seekers, though would still honour all international conventions and agreements on human rights.
In any event, whilst I acknowledge there was a period in 2008 when it appeared that the Republic no longer stood by what it had agreed in 2005, the officials have since confirmed many times, both during the period between 2008 and 2013, and after the UNHCR letter of September 2013 that the Republic is committed to its 2005 agreement and stands by its decision in 2005 (documents in letters to you) to recognise you as refugees and grant you the rights to which you are entitled as a refugee in the Republic.
The Sovereign Base Areas Administration (SBAA) is actively engaged, in cooperation with the Republics Asylum Service and its Labour Office, in efforts to assist you to access the help which this agreement clearly makes available to you.
I have also carefully considered the UNHCR letter of 16 June 2017 in which concerns were raised about the impact on your health given the need to find a durable solution.
However, I note that there is a durable solution available to you but you have been unwillingto engage with the Republic or take up the offer to obtain support from the Republic of Cyprus until the final outcome of the litigation.
This was acknowledged by Chrystalla Katsapaou of UNHCR Cyprus at a recent meeting with the SBAA.
I do not accept that you or your family members are subject to compromised or no access to welfare, health care, education or employment.
This is simply not true.
You are able to use the health services of the Republic and I am aware that the children already attend schools in the Larnaca district.
You are entitled to register with the Labour Office and to claim welfare benefits as if you were nationals of the Republic.
You would have to cooperate with the registration process of course, but that would be the same in any country to which you were resettled and I do not accept that your failure to cooperate should lead to a grant of entry clearance to the UK.
Depending on the composition of each family, you can expect between 600 Euros and 1,100 Euros per family per month more than the ex gratia payments which were previously provided to you by the SBAA.
I consider that there is adequate support available should you decide to take advantage of this.
There is also work available that you could choose to take advantage of.
The Labour Office in Larnaca will help you find work if you register with them.
I am aware that the Labour Office offered to help you register and provide more information about the Republics system but you refused to do so.
In addition, the Minister of the Interior has recently indicated that the Republic would look positively at applications you choose to make for naturalisation as Cypriot citizens. the SBAA, In the circumstances set out above, and as a result of ongoing discussions between the Foreign and Commonwealth Office and the Republic of Cyprus in order to try to support you, I have concluded that there remains a durable long term solution available for you to stay in the SBAs should you choose to do so, and look to the Republics government for public services and provision, as Cypriot nationals living in the SBAs do.
Alternatively, there is an option for you to resettle in the Republic of Cyprus.
In either case you could apply for Cypriot citizenship.
I have also considered whether to grant entry clearance on compassionate grounds, in spite of the absence of any legal obligation to admit you to the UK, either under the Immigration Rules or by virtue of the Refugee Convention.
In all the circumstances, I am not willing to do so.
I take the view that the solution which has been on offer for many years is one which it is reasonable to expect you to take up.
On 7 July 2017 the Secretary of State directly responded to the UNHCRs letter of 16 June 2017 in similar terms to her fresh decision of 6 July.
The UNHCR replied to the Secretary of State on 26 October 2017 to clarify and share additional information about its June observations.
Additional comments were provided on the Memorandum of Understanding and the precariousness of its application to the SBA refugees and difficulties faced by the SBA refugees regarding access to welfare assistance, access to the labour market, access to health care, access to education, access to long term residence and access to citizenship in the Republic of Cyprus.
At the hearing Mr Eadie indicated that the Secretary of State was preparing a response to the UNHCRs most recent letter.
The court received that response on 26 July 2018 from the Government Legal Department in the form of a letter dated 8 January 2018 without further comment from the parties on its contents.
Accordingly, the present position is that the decision of 25 November 2014, which is the subject of the respondents application for judicial review, no longer exists.
It has been quashed by the courts below and superseded by the fresh decision which the Secretary of State has now made in accordance with the order of the Court of Appeal.
The Secretary of States current decision has not been quashed and is technically not before this court.
The subject matter of the Secretary of States two decisions is, however, the same and they raise issues which partly overlap.
The issues in the appeal
As noted at the beginning of this judgment, the issues as they have emerged were not clearly identified in the agreed statement or in the pre hearing exchanges.
No purpose would be served at this stage by examining the reasons for that failure.
It would be highly unsatisfactory, as we approach the twentieth anniversary of the respondents arrival in the SBAs, to remit these issues to the High Court or leave them to be determined on a further application for judicial review of the Secretary of States decision of 6 July 2017.
In these circumstances, we think that the least unsatisfactory approach is for us to identify the issues which now appear essential to the resolution of this appeal, to give judgment now on the issues which we are in a position to decide at this stage, and to make proposals for the early resolution of the remainder.
In summary the following questions appear now to require decision: i) Does the Refugee Convention (as extended by the 1967 Protocol) apply to the SBAs? ii) Does the Convention by its terms entitle the respondents to be resettled in the United Kingdom? iii) Was the Memorandum of Understanding of 2003 a valid performance of the Convention obligations for those within its scope? In particular: a) Was the United Kingdom in principle entitled to fulfil its obligations under the Convention by arranging for support to be provided by the Republic of Cyprus? b) If so, were the terms of the Memorandum of Understanding (including the 2003 Refugee Ordinance) a proper basis on which to do so? If the answer to (iii) is yes: a) Was the United Kingdom entitled in 2005 to make the same arrangements in respect of the respondents without their consent, given their lawful and accepted presence as refugees in the SBAs since 2000? iv) b) If so, was the 2005 agreement with the Republic a legally effective means of doing so, having regard to its informality and the absence of incorporation into SBA law? c) Has the support of the Republic for the respondents in accordance with the 2005 agreement been available in practice, and can it be assured in the future? v) If the 2005 agreement, for whatever reason, was not a legally effective means of discharging the United Kingdoms obligations to the respondents under the Convention, or if such support has not been available in practice, what are the consequences, in terms of rights or remedies potentially available in these proceedings, and how should the court give effect to them in its order?
Questions (i) and (ii), which are questions of international law, have been fully argued, and will be addressed in this judgment.
We will also address issue (iii) in so far as it is relevant to the respondents case.
We will then give a brief provisional view of the matters likely to require consideration under the other heads.
We appreciate that Mr (now Sir) James Eadie QC submitted that at any rate points (b) and (c) under issue (iv) fell outside any issues argued below or for which leave to cross appeal to this Court has been obtained.
Any objection of this nature will remain open for consideration, though we would wish to determine any issues which can fairly be determined. (i) Does the Refugee Convention (as extended by the 1967 Protocol) apply to the SBAs?
The respective positions of the parties in summary are as follows.
The respondents say that the Convention applies by virtue of the United Kingdoms declaration of 1956 under article 40(2).
The Secretary of State says that the SBAs are new entities in international law, created in 1960, in relation to which no such declaration has been made.
He accepts that the respondents have been treated as refugees protected by the Convention but contends that this was not a legal entitlement but an ex gratia concession made in accordance with the United Kingdoms policy relating to dependent territories where the Convention does not apply.
Given that until 1960 the Convention unquestionably applied to the territory now comprised in the SBAs, the question is whether the political separation of that territory from the rest of the island brought an end to its application there.
This is necessarily a question of international law.
But while international law may identify the relevant categories and the principles that apply to them, the question whether a particular territory falls within a relevant category will depend on the facts, and these may include its domestic constitutional law.
The only mode of termination expressly provided for in the Convention is denunciation, which is governed by article 44.
The Convention has not of course been denounced by the United Kingdom, either generally or with respect to the SBAs.
But as between contracting states, there are a number of other circumstances in which treaty obligations may come to an end, so far as they relate to particular territory.
In particular, they may come to an end as a result of a sufficiently radical change in the international status of that territory.
There is a substantial body of state practice bearing on this question, which is summarised in standard works such as Oppenheims International Law, 9th ed (1992), ed Sir Robert Jennings QC and Sir Arthur Watts, i, paras 62 64 and McNair, The Law of Treaties (1961), pp 600 606, 629 638.
The ordinary principle is that obligations in international law are owed by international persons, primarily states.
As subjects of international law, international persons enjoy rights, duties and powers established in international law and more generally a capacity to act on the international plane.
Treaty obligations apply to the international entities which enter into them.
Where they have territorial application, they apply to the states responsible internationally for the territory in question.
It follows that treaty obligations will cease to apply to a territory where it secedes from the state which entered into the treaty, or where a formerly dependent territory becomes independent of the parent state which entered into the treaty.
There is some support in state practice for the application of a broader rule to treaty obligations of a non political and especially of a humanitarian character.
The broader rule would attach treaty obligations to territories rather than to the international persons responsible for them.
The International Law Commission of the United Nations, in presenting draft articles on state succession to the General Assembly in 1974 (Document A/9610/Rev.1), expressed the opinion that some legal incidents may attach to an antecedent treaty on the ground that it establishes a legal nexus between the territory and the treaty such that a successor state will be bound by it: Yearbook (1974), vol ii(1), p 167, para (49).
However, it is clear from the commentary that the circumstances in which the question arises are too varied and state practice on the point is insufficiently uniform and too obviously influenced by pragmatic considerations to give rise to a rule of customary international law: ibid, pp 196 199, 202 207, paras 1 9, 21 48.
This is, as the editors of Brownlies Principles of Public International Law, 8th ed (2012), at p 424, note an area of uncertainty and controversy.
In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, the House of Lords had to answer the question whether the European Convention on Human Rights applied in the British Indian Ocean Territory (BIOT) by virtue of the extension of the Convention to the then colonies of Mauritius and the Seychelles in 1953 under a similar colonial clause.
The BIOT comprised outlying groups of islands formerly part of those colonies, which had been separated from them for defence purposes in 1965 and constituted as a distinct colony by the British Indian Ocean Territory Order 1965 (SI 1965/1920).
Section 3 of the Order provided that the islands, shall together form a separate colony which shall be known as the British Indian Ocean Territory.
Mauritius and the Seychelles subsequently became independent in 1968.
Lord Hoffmann, with the agreement of the rest of the Appellate Committee, dealt with the question at para 64 as follows: In 1953 the United Kingdom made a declaration under article 56 of the European Convention on Human Rights extending the application of the Convention to Mauritius as one of the territories for whose international relations it is responsible.
That declaration lapsed when Mauritius became independent.
No such declaration has ever been made in respect of BIOT.
It is true that the territory of BIOT was, until the creation of the colony in 1965, part of Mauritius.
But a declaration, as appears from the words for whose international relations it is responsible applies to a political entity and not to the land which is from time to time comprised in its territory.
BIOT has since 1965 been a new political entity to which the Convention has never been extended.
We have been invited to overrule this decision.
It is said to be inconsistent with ordinary principles of international law whereby (i) international obligations are owed in respect of specific territory, and (ii) a states international responsibility is unaffected by changes to the governance or constitutional status of some part of its territory.
It will be apparent from what we have already said that we do not accept this criticism.
As to proposition (i), it is a truism that a states international responsibilities are generally owed in respect of particular territory.
But it does not follow that the responsibility attaches to the territory as such, rather than the international person responsible for it.
Otherwise, where a state assumes treaty obligations in respect of its entire territory, the severance of part of that territory could never result in those obligations ceasing to apply to it.
Yet it is accepted that that is not the position.
As to proposition (ii), it is correct that a state cannot rely on its domestic law as authorising or excusing a breach of its international obligations: see Treatment of Polish Nationals and Other Persons of Polish Origin or Speech in the Danzig Territory (1932) PCIJ, Series A/B No 44, p 4, at p 24.
The proposition is stated as follows in article 3 of the International Law Commissions Articles of Responsibility of States for Internationally Wrongful Acts (2001): The characterisation of an act of State as internationally wrongful is governed by international law.
Such characterisation is not affected by the characterisation of the same act as lawful by internal law.
This, however, assumes that the state in question is subject to the relevant international obligation.
Where that obligation is derived from a treaty, the prior question is whether the treaty applies to the particular State in respect of the particular territory.
That will necessarily depend on the current constitutional relationship between the state and the territory in question.
Thus the international responsibility of the United Kingdom in respect of British Dominions has always depended on the constitutional relationship between them as it stood from time to time, which is a matter for their domestic law.
The Statute of Westminster 1931, which confirmed the status of the Dominions as independent sovereign states, was an Act of the United Kingdom Parliament.
It would have been absurd to suggest that international law would for that reason have declined to take cognizance of it, or would have treated it as an ineffective attempt by the United Kingdom to avoid the international obligations which it previously had for the Dominions acts.
The decisive point is in our view a different one.
The decision in Bancoult (No 2) was about the constitutional and international status of the BIOT, which is materially different from that of the SBAs.
The Cyprus Act 1960 did not alter the status of the SBAs, but merely excluded them from the transfer of territory to the new Republic of Cyprus.
The Sovereign Base Areas of Akrotiri and Dhekelia Order in Council 1960 has no equivalent of section 3 of the British Indian Ocean Territory Order 1965.
Indeed, it says nothing at all about the status of the SBAs, but only about the organisation of their internal administration.
These differences reflect the very different nature of the changes of which the orders were part.
The BIOT was a territory reconstituted from parts of two other colonies to make a third colony.
It had a different international status (ie vis vis third countries) from Mauritius and the Seychelles, and the United Kingdom had different international responsibilities in relation to it, notably in regard to the United States.
In the case of the SBAs, the only change which occurred in 1960 was that whereas they had previously been part of the UK dependent territory of Cyprus, they were thereafter the whole of it.
The mere fact the United Kingdom lost 97% of the island of Cyprus did not alter the status of the 3% that it retained.
The status of the SBAs vis vis the rest of the world did not change, except in relation to the rest of Cyprus, and that was because of a change in the status of the rest of Cyprus and not because of a change in the status of the SBAs.
With one exception, we find it difficult to attach much importance to the various instances cited by the respondents in which the United Kingdom has treated the creation of new colonial entities as leaving unaffected the application of treaties which previously applied to them.
These instances include the separation of the Cayman Islands and the Turks and Caicos Islands from Jamaica in 1958 and the dissolution into its component territories of the Federation of Rhodesia and Nyasaland in 1963.
They do not constitute a sufficient body of state practice to give rise to a rule of customary international law.
At the most they show that the United Kingdom has not been consistent on this question.
The exception is the treatment by the United Kingdom of treaties of mutual legal assistance which had been extended to Cyprus under colonial clauses before 1960.
The United Kingdom has taken the position in its dealings with other countries party to these treaties that (in the words of a Foreign Office memorandum) treaties which had applied to the colony of Cyprus continued automatically to apply to the two pieces of territory now known as the Sovereign Base Areas.
This has been tacitly accepted by all of them except, briefly, the Lebanon.
The Lebanon was told that creation of an independent Republic of Cyprus effected no change in the international status of these areas (see HC 237).
These exchanges do not suggest a rule of customary international law, any more than the other instances do.
But they are, we think, relevant as a statement of the international status of the SBAs by the state responsible for their international relations, which is ultimately in a position to determine what their international status is to be.
The position taken by the Foreign Office accords precisely with the law as we conceive it to be as a matter of analysis.
We conclude that the Refugee Convention continues to apply to the SBAs by virtue of the declaration of 1956, in the same way as it applied to the whole colony of Cyprus before 1960.
Article VII(4) of the 1967 Protocol provides that where a state made a declaration under article 40(1) or (2) of the Convention extending its application to a territory for whose international relations it was responsible, and then acceded to the Protocol, the declaration should apply to the Protocol also, unless that state notified the Secretary General to the contrary.
In other words, no further declaration was required to extend the Protocol to dependent territories where the original Convention applied.
The United Kingdom acceded to the Protocol without any reservation relating to the SBAs.
It follows, since the Convention continued to apply to the SBAs after 1960, that the Protocol applies there also.
That makes it inappropriate to assess the United Kingdoms treatment of the respondents by reference to the spirit of the Convention.
The United Kingdom is, as a matter of international law, bound by the Convention and the Protocol as such. (ii) Does the Convention by its terms entitle the respondents to be resettled in the United Kingdom?
The respondents say that they have a direct right to entry into the United Kingdom under the terms of the Convention, by virtue of their status as refugees in a territory under the United Kingdoms sovereignty.
Specific reference is made to articles 26, 32 and 34.
This is a question of great general importance.
It may be restated as follows.
Is it the effect of the Convention that, once a refugee reaches a dependent territory of a state (such as an SBA) to which the Convention applies, the refugee is entitled without more to move freely to what article 19(2) of the Convention calls the metropolitan territory of that State or to any other dependent territory of the same state to which the Convention has been extended?
The territorial application of a treaty is a question of international, not domestic law.
It depends, like most aspects of the law of treaties, on the intention of the contracting states.
Article 29 of the Vienna Convention on the Law of Treaties (1969) provides that: unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.
Multilateral treaties, however, commonly provide for a different intention.
As Sir Humphrey Waldock, Special Rapporteur, demonstrated in his Third Report on the Law of Treaties to the International Law Commission (1964) (A/CN.4/167), at pp 12 15, this is reflected in the practice, which can be dated back to the 1880s, of inserting clauses excluding the application of treaties to parts of the territory of a contracting state, or making their application there subject to conditions, such as local consent or subsequent notification: see, more generally, Fawcett, Treaty Relations of British Overseas Territories (1949) 26 BYIL 86, 94 99.
The practice originated in the need of imperial powers, and notably the United Kingdom, to consult the governments of dependent territories on whom it had conferred a measure of autonomy, before assuming international obligations affecting them.
But it has also been adopted by federal states, in cases where the federal government has exclusive responsibility for international relations but part or all of the subject matter of the treaty is within the exclusive legislative competence of its component territories.
These particular concerns are commonly dealt with by colonial clauses and federal clauses.
In principle, however, states are at liberty to enter into treaties on terms as to their territorial application for any reason that they see fit.
The widespread use of colonial clauses reflects the principle that for certain purposes, including the application of treaties, dependent territories of a state are treated as having a status in international law distinct from that of the parent states metropolitan territory.
More generally, it reflects one of the basic principles of international law declared in the United Nations Declaration on Principles of International Law concerning Friendly Relations and Co operation among States in accordance with the Charter of the United Nations (General Assembly Resolution 2625 (XXV)) (1970), that: the territory of a colony or other Non Self Governing Territory has, under the Charter, a status separate and distinct from the territory of the State administering it; and such separate and distinct status under the Charter shall exist until the people of the colony or Non Self Governing Territory have exercised their right of self determination in accordance with the Charter, and particularly its purposes and principles.
It is true that the purpose of colonial clauses is to accommodate the limited autonomy accorded by some imperial powers to the more advanced dependent territories.
It is also true that the purpose of this particular part of the United Nations Declaration is to accommodate the principle of self determination and the trusteeship obligations of colonial powers.
These purposes may be said to have limited if any relevance to uninhabited territories or to sui generis cases such as the SBAs, which are military facilities rather than settlements, and whose indigenous inhabitants are citizens of the Republic with all the rights attaching to that status.
But while the problems associated with colonial autonomy and trusteeship may have been the occasion for recognising an international status for dependent territories, distinct from that of the metropolitan territory, the principle itself cannot be confined to such cases.
It would in any event be practically impossible to do so given the fine questions of degree which would arise if it were necessary to introduce a sub distinction between different dependent territories depending on the extent of their internal autonomy or the number or status of their indigenous inhabitants.
Like many multilateral treaties, the Refugee Convention was so framed as to apply only to a States home country or metropolitan territory unless extended under article 40 to other territories for whose international relations the signatory state was responsible.
In contrast with the position in some other contexts (see eg R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61; [2009] AC 453, para 40, and R (Keyu) v Secretary of State for Foreign and Commonwealth Affairs [2015] UKSC 69; [2016] AC 1355, para 186), the metropolitan and overseas territories of the United Kingdom for whose international relations it has responsibility are not in this context assimilated or treated as one undivided entity.
Under article 40, any Contracting State is able to extend the Convention to all or any of the other territories for the international relations of which it is responsible, or to do so on terms specific to each territory.
This is what happened when on 24 October 1956 the United Kingdom notified the Secretary General of the United Nations of its extension of the Convention to some 16 territories, including Cyprus.
The notification was made subject to reservations, differing between some overseas territories and others, disapplying or varying particular terms of the Convention.
By way of example, the right to engage in wage earning employment after completing three years residence in the country under article 17.2(a) was varied to four years in the case of 14 of the territories, but not in respect of Zanzibar and St Helena; the provisions of article 25.1 and 2 (relating to certain administrative assistance) were not accepted; and the provisions of articles 24.1(b), 24.2 and 25.3 (covering inter alia the provision of social security and certain administrative documentation) were made applicable only so far as the [local] law allows.
In all these respects, the colonial clause gave effect to the individuality of each overseas territory, including by taking account of the views of any local administration.
Article 40 suggests that for the purposes of the Refugee Convention the metropolitan territory and its dependent territories are to be treated as separate units.
The different terms on which the Convention may extend to different territories could not be given effect, if all territories fell to be regarded as one.
The Convention terminology varies between articles.
Article 2 refers, for example, to a refugees duties to the country in which he finds himself, with the concomitant obligation to conform to its laws and regulations.
The country in which he finds himself means whatever territory the refugee reaches.
Article 4 provides that The Contracting States shall accord to refugees within their territories treatment at least as favourable as that accorded to their nationals with respect to freedom to practice their religion .
The plural is used here because the article is dealing with all Contracting States territories.
Where there are differences in the freedom to practise religion in different territories for the international relations of which a single State is responsible, the article will only work if applied on a territory by territory basis.
A similar point applies to other articles requiring a State to accord to refugees in their territory the most favourable treatment accorded to nationals of a foreign country in the same circumstances or not less favourable [treatment] than that accorded to aliens generally in the same circumstances or the same treatment as nationals: see eg articles 15 and 17 to 24.
Each territory for the international relations of which the State is responsible must in this context be treated separately.
Article 26 is to be read in the same light.
Headed Freedom of Movement, it reads: Each Contracting State shall accord to refugees lawfully in its territory the right to choose their place of residence [and] to move freely within its territory, subject to any regulations applicable to aliens generally in the same circumstances.
The French text confirms that the word and, inserted in brackets, should be read into the English version.
Article 26 is directed to movement by a refugee within whichever territory they may be, whether it be the metropolitan territory, if that is where they are, or any overseas dependent territory, if they are there.
The qualification relating to aliens in the same circumstances refers naturally to the possibility of restraints on movements internally, again within either the metropolitan territory or the overseas territory as the case may be.
It cannot have been directed to conferring on a refugee a right to move between all or any of a States metropolitan and overseas territories, subject only to such constraints as might affect an alien.
On this point, Foskett J (para 303) was in our opinion clearly correct.
In the Court of Appeal, Irwin LJ (para 82) appears in contrast to have considered that article 26 applied without limitation across all of any States territories; and further that the limitation by reference to aliens could simply be avoided (or in effect eliminated) on the basis that a refugees circumstances differ from those of an alien.
On both points, he was in our opinion mistaken.
The term in the same circumstances is used in the Convention to indicate that a refugee should notionally be assimilated with a person who is not a refugee but seeks to enjoy the same right, except in the case of requirements which by their nature a refugee is incapable of fulfilling: article 6.
Article 19 is instructive.
It reads: LIBERAL PROFESSIONS 1.
Each Contracting State shall accord to refugees lawfully staying in their territory who hold diplomas recognized by the competent authorities of that State, and who are desirous of practicing a liberal profession, treatment as favourable as possible and, in any event, not less favourable than that accorded to aliens generally in the same circumstances. 2.
The Contracting States shall use their best endeavours consistently with their laws and constitutions to secure the settlement of such refugees in the territories, other than the metropolitan territory, for whose international relations they are responsible.
Article 19(1) addresses the position of liberal professionals in the territory in which they are (which would in the circumstances in which the Convention was drafted commonly be a metropolitan European territory) while article 19(2) gives them the exceptional privilege of an undertaking that the relevant State will use its best endeavours to secure their settlement in another territory for whose international relations that State is responsible.
Such a privilege makes no sense if everyone (not just liberal professionals) had the right to move anywhere in any of the territories for whose international relations a State was responsible and to which it had extended the Convention.
Each such territory is, on the contrary, to be seen as a separate unit.
It is noteworthy that the privilege is only to have the State use [its] best endeavours.
Anything further would risk impinging on the local interests which constitute one reason for the separate treatment in article 40 of overseas territories for whose international relations a State is responsible.
As already noted, the respondents also refer to and rely on articles 32 and 34, which provide EXPULSION 1.
The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order Article 32 Article 34 NATURALIZATION The Contracting States shall as far as possible facilitate the assimilation and naturalization of refugees.
They shall in particular make every effort to expedite naturalization proceedings and to reduce as far as possible the charges and costs of such proceedings.
Article 32 gives a remedy against forced removal from the relevant territory (in this case the SBA), but says nothing about the right to move elsewhere.
Although it may be relevant to other issues, it cannot be relied on in itself as providing a right to resettle in the UK.
The same applies to article 34.
It makes no specific reference to any territory, and there is room for argument as to how it should be interpreted in the particular circumstances of the SBAs (see, for example, A Grahl Madsen, Commentary on the Refugee Convention 1951 (1963, published 1997), Comment No 2 on article 34, on which Mr Husain relies).
What however is clear is that article 34 does not seek to override the distinct treatment in the Convention of metropolitan and overseas territories.
It provides no basis for submitting that a refugee is entitled to look to the State so far as possible to assimilate and naturalise himself or herself in whichever of those territories he or she may wish to settle in, irrespective of where he or she actually is or of the prevailing circumstances there.
In our view, the Court of Appeal was clearly wrong if it intended, at para 81, to treat article 34 as giving any refugee in any territory anywhere, for whose international relations a State is responsible and to which the Convention has been extended, a right to have that State as far as possible facilitate his or her assimilation and naturalisation in any other of such territories.
We conclude that the Convention does not by its terms entitle the respondents to be resettled in the United Kingdom.
A States duties under the Convention to a refugee reaching a particular territory for whose international relations the State is responsible are in principle and in normal circumstances limited to providing and securing the refugees Convention rights in the context of that territory. (iii) Was the Memorandum of Understanding of 2003 a valid performance of the Convention obligations for those within its scope? In particular: (a) Was the United Kingdom in principle entitled to fulfil its obligations to refugees in the SBAs by arranging for support to be provided by the Republic of Cyprus? (b) If so, were the terms of the Memorandum of Understanding (including the 2003 Refugee Ordinance) a proper basis on which to do so?
These issues do not arise directly for decision, since the 2003 Memorandum does not in terms apply to the respondents, and its validity as applied to those within its scope has not as far as we are aware been questioned hitherto.
In any event, for the purposes of the domestic law of the SBAs, the 2003 Ordinance provides in terms that the rights under the Convention are to be treated as having been properly accorded, whether in the SBAs or the Republic: regulation 23(2).
The validity of that regulation has not been questioned in these proceedings and would be a matter for the courts of the SBAs, not of the UK.
The almost uniquely close practical links between the SBAs and the Republic are apparent from the complex treaty and regulatory framework which we have already summarised in paras 10 to 13 above.
In summary, the international status of the SBAs and their relations with the Republic of Cyprus are governed by the Treaty concerning the Establishment of the Republic of Cyprus signed on 16 August 1960 between the United Kingdom, Greece, Turkey and Cyprus, as well as associated exchanges of notes.
Annexes A and B to the Treaty of Establishment contain a broad range of mutual obligations, underlining the umbilical cooperation between the United Kingdom in respect of the SBAs and the Republic if the SBAs were to be viable.
To take some examples, in addition to sovereignty over the SBAs, the United Kingdom was to have the use of and complete control over a number of Sites elsewhere in the Republic (Annex B, Part II, sections 1 and 2) and to police these Sites, but on the basis that persons arrested there would be handed over to the Republic save in cases where the United Kingdom had exclusive jurisdiction (Annex B, Part II, section 2, para 3).
The Republic undertook to take necessary measures to ensure the security of the Sites, but on the basis that the United Kingdom authorities could take precautionary measures in the immediate and actual vicinity, in the event of an immediate threat, while the United Kingdom enjoyed a general right to take reasonable steps to prevent injury or damage to, or interference with, United Kingdom personnel, their dependents and United Kingdom property (Annex B, Part II, section 2, paras 4 and 5).
Under Annex B, Part II, section 3, the authorities of the Republic undertook to arrange for, inter alia, such reasonable control over activities in the vicinity of United Kingdom installations and equipment in the Island of Cyprus as considered necessary by the United Kingdom to ensure their efficient operation and security (para 1); the authorities of the Republic undertook to search nearby villages where the United Kingdom authorities suspected that there might be apparatus likely to interfere with nearby installations in the Dhekelia SBA (para 2); and United Kingdom police and armed forces members were, if absolutely necessary, entitled to take into custody persons obstructing or attempting to obstruct the use or exercise of the facilities and rights accorded to the United Kingdom under the Treaty, or damaging, removing or attempting to damage United Kingdom property (para 3).
The Annexes continue in a similar vein, with further mutual arrangements and obligations.
The practical implications of the interdependence of the SBAs and the Republic of Cyprus are explained by Lisa Young, Policy Secretary of the SBA Administration, in her witness statement dated 15 January 2016: 10.
In reality, the odd shaped boundaries of the SBAs and the existence of [Republic of Cyprus] enclaves in the [Eastern] SBA [Dhekelia] make little difference to the everyday life of people living in the SBAs.
Although all people in the SBAs are subject to SBA law, the SBA courts and the jurisdiction of the SBA civil administration and SBA police, to many intents and purposes, Cypriots living in the SBAs live as if they were in the Republic.
The declarations made on 18 August 1960 provide that the laws of the SBAs are as far as possible the same as the laws of the Republic and in practice this is largely the case.
The SBAs have open borders and a customs union with the RoC. Residents move freely between the RoC and the SBAs, as provided in Appendix O. [T]he border is marked with inconspicuous pillars 11.
RoC nationals and residents living in the SBAs can vote in the Republic.
Under functions delegated in the 1960 arrangements, the RoC provides and pays for the utilities and social services (ie welfare, schools and health care, usually in the Republic) for RoC nationals living in the SBAs 13.
Since 1960 the SBAs have operated and cooperated with the RoC under the principle of delegation, ie that the powers and duties are delegated by SBAs to officers of the RoC to carry out in the SBAs or in relation to the SBAs under the SBA law which is equivalent to the RoC law.
The current legislation is the Delegation of Functions to the Republic Ordinance 2007. 14.
The SBAA is a very small administration and the SBAs have limited resources because of their limited military purpose.
The SBAs do not have the resources or authority to provide the normal civilian government and services of a modern welfare state to residents in the SBAs.
The SBA does not provide any social services in the SBAs.
Nor does the SBA provide any utilities to the general public living in the SBAs.
Instead the relevant local RoC authorities provide public utilities (electricity, water, and civilian telecommunications services) to the Cypriot population living in the SBAs and MoD bases, and the MoD and/or SBAA make financial and practical contributions to RoC road construction.
Most infrastructure is linked through the Republic.
The SBAs have no international port of entry for members of the public.
The public must use ports and airports in the RoC 15.
Officials from the SBAA are in regular contact with their counterpart RoC officials at local government level.
At the higher level, engagement with the RoC is normally through officials in the Ministry of Foreign Affairs, facilitated by the
British High Commission in Nicosia
It is correct that the Convention refers in many places to the appropriate standard of treatment of refugees in a States territory and the provision of facilities to refugees there.
These references are commonly qualified by reference to the rights of or treatment afforded to nationals or aliens in a comparable position in the same territory.
But nothing in the Convention, in our opinion, is expressly directed to a situation like that which exists on the island of Cyprus, and nothing in it is expressly inconsistent with the nature of the arrangements which the United Kingdom has made with the Republic of Cyprus.
The Refugee Convention falls for interpretation in accordance with the principles laid down in the Vienna Convention on the law of treaties concluded on 23 May 1969 (the VCLT).
Under article 31(1) of the VCLT: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
Both international courts and tribunals will, in an appropriate case, interpret an international treaty not [as] static but as open to adapt to emerging norms of international law: Case concerning the Gabkovo Nagymaros Project [1997] ICJ Rep 7, para 112.
They will endeavour to place a factual situation as it has developed since the inception of a treaty within the context of the preserved and developing treaty relationship, in order to achieve its object and purpose in so far as that is feasible: ibid, para 133.
The former citation was picked up in the award dated 24 May 2005 of a distinguished Arbitral Tribunal chaired by Dame Rosalyn Higgins in the Arbitration regarding the Iron Rhine (Ijzeren Rijn) Railway between the Kingdom of Belgium and the Kingdom of the Netherlands (2005) RIAA, vol XXVII, p 35.
The tribunal used it in support of the proposition that an evolutive interpretation, which would ensure an application of the treaty that would be effective in terms of its object and purpose, will be preferred to a strict application of the intertemporal rule: para 80.
It also referred to the principle of effectiveness in support of a dynamic and evolutive approach to a treaty: para 84.
In view of the above, and subject to issues about the precise interpretation of certain articles, the court finds it hard to see any objection in principle to some or even most or all of the supporting facilities required for refugees being provided by co operative and effective arrangements with the Republic.
The more difficult issues are as to its application to those already accepted as lawful refugees (as discussed under the next group of issues).
However, it was part of the respondents case before this court that the 2003 Memorandum was not itself fit for purpose, even in respect of those within its scope, so that the Secretary of State could not rely on its purported extension to the respondents.
Since the court has reached a clear and unanimous view on that issue, it may help to narrow the remaining areas of dispute if we give our reasons at this stage.
Mr Husain QC, who appeared for the respondents, submits that the 2003 Memorandum of Understanding is in terms unfit for its purpose even on the assumption that it is applied to the respondents, and that the provision of support to refugees in accordance with its terms would be a breach of the Refugee Convention.
Mr Husains first point is that the Memorandum was not signed on behalf of the SBA Administration but on behalf of the Government of the United Kingdom, and that it contains undertakings by and in favour of the United Kingdom in respect of refugees in the SBAs.
We see that as entirely natural and appropriate.
The United Kingdom is responsible in international law for the international relations of the SBAs and for ensuring their compliance with the Refugee Convention.
The Memorandum starts unsurprisingly by noting that the United Kingdom through the [SBA] Administration has the responsibility for illegal migrants and asylum seekers that enter the island of Cyprus by the [SBAs].
Mr Husain next refers to paragraph 10 of the Memorandum, which provides that during their stay on the island of Cyprus persons recognised as refugees under the procedures determined in the Memorandum, will be treated so far as the authorities of the Republic of Cyprus are concerned, as if such persons had been recognised as refugees by the Republic of Cyprus .
Mr Husain described this as very problematic and as constituting an obvious breach of the Convention, in that it relegated the respondents to the standard of treatment set by the Republic.
However, the respondents have not suggested that the standard of treatment of refugees applied by the SBAs would be any higher than that applied by the Republic if the Memorandum had never been signed.
Mr Husain next points to paragraph 12 of the Memorandum, which requires the United Kingdom to endeavour to resettle refugees within a year in a country willing to accept them, as indicating that it was not its intention or effect to achieve any durable long term settlement as refugees in the Republic.
A similar point is taken in the most recent letter by the United Nations High Commissioner for Refugees, who reads paragraph 12 as limiting the United Kingdoms obligations to refugees to a year.
That in our view misreads paragraph 12 and ignores paragraph 10.
To suggest that an inter state undertaking to endeavour to resettle refugees within one year accords them rights which only extend for one year is simply wrong.
Next, Mr Husain points to paragraph 19, which he submits gives the respondents no remedy for breach of the MoU.
However, the Memorandum is an international agreement, which would not in itself be expected to provide any rights justiciable in the domestic law of either Cyprus or the SBAs.
Such rights as there are in the domestic law of the SBAs are provided by the 2003 Ordinance. (We have no evidence of the status of the Memorandum in the domestic law of the Republic.)
Finally, Mr Husain refers to paragraph 18, which he submits makes the Memorandum terminable even as regards refugees accepted as such under its terms.
We consider it implausible that paragraph 18 would be interpreted as having this effect on the status of persons already accepted under paragraph 8 prior to any termination and so entitled, subject only to paragraph 13, to the treatment prescribed by paragraphs 8, 9 and 10.
In any event, the United Kingdoms obligations to ensure compliance with the Refugee Convention would continue notwithstanding any such termination, and the United Kingdom would, in one way or another, have to ensure such compliance in that remote event.
For these reasons, we reject the respondents submission that the 2003 Memorandum was not a proper basis for the provision of the support for refugees required by the Convention.
Issues for future determination
We turn to the issues on which we have found it necessary to ask for further submissions. (iv) Assuming the 2003 Memorandum was valid for those within its scope: (a) Was the United Kingdom entitled in 2005 to make similar arrangements for the provision by the Republic of facilities in respect of the respondents living in the SBAs without their consent, given their lawful and accepted presence as refugees in the SBAs?
This question was not in terms identified by the agreed statement of facts and issues.
However it emerged as an important part of the respondents response to the Secretary of States contention that it was permissible under the Convention to provide the respondents with facilities under arrangements made by the United Kingdom with the Republic of Cyprus.
The point was put most clearly by Mr Husain QC in his written submissions (para 153): The first, and fundamental, objection to this response is that it is not open to a Contracting State to resettle lawfully present refugees in the territory of another Contracting State without their consent.
There is no provision in the Refugee Convention that allows this.
On the contrary, article 32 prevents a State from requiring a refugee to move to another State absent the refugees consent.
Article 32 provides that, The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order.
The Secretary of States case is thus that the United Kingdoms obligations under the Refugee Convention in respect of the respondents living in the SBAs can and should be fulfilled on the island by cooperation between the United Kingdom and the Republic of Cyprus.
This, it is submitted, follows from the international arrangements whereby the SBAs were retained under United Kingdom sovereignty and from the realities on the ground.
The respondents case, by comparison, is that the fulfilment of such obligations in this way is inconsistent with the terms of the Refugee Convention.
The respondents argument that the provision of support through the Republic of Cyprus amounts to an expulsion was rejected by both Foskett J (paras 341 342) and the Court of Appeal (para 83).
The Secretary of State now accepts that the respondents cannot, consistently with article 32 of the Convention, be required to live in the Republic of Cyprus, or anywhere else outside the SBAs against their will.
There appears at one stage to have been an attempt by the SBA Administration to drive the respondents from the accommodation that they currently occupy with a view to making them leave for the Republic, but the attempt was abandoned and the Secretary of State has made it clear that the respondents are entitled to remain.
It remains open to question whether that is sufficient if their only option there is and has been to remain in accommodation which is admittedly seriously deficient.
However Mr Husains point is more fundamental.
He refers to comments of Professor Hathaway in The Rights of Refugees under International Law (2005), pp 965 966 on the limited window of opportunity for any resettlement other than by consent.
In the passage in question, Professor Hathaway discusses mandatory resettlement schemes, such as the so called Pacific Solution operated by the Australian government.
He comments that such schemes can be operated without infringing the Convention only if the non consensual diversion into a resettlement scheme occurs before the refugee concerned is lawfully in a state party and hence entitled to the more elaborate protections against expulsion found in article 32.
The window of opportunity, he says, is quite short: It ends once lawful presence (not lawful stay) is established, at which point the strict limitations on expulsion set by article 32 apply so as to make enforced resettlement unviable in most cases. (pp 965 966) That view appears consistent with the UNHCR Resettlement Handbook on which the Secretary of State relies, which indicates that resettlement can only be achieved by partnership, adding that of course, refugees are themselves partners in the process (Handbook pp 4 5 [MS5046]).
Although this issue was raised in the written submissions it was not addressed in any detail in oral submissions.
It appears potentially relevant to the legality of the approach adopted by the UK in 2005 and thereafter.
There appear to the court to be potential issues as to what may constitute, first, expulsion, second, resettlement without consent and, third, transfer of responsibility; as to whether the Secretary of States proposed treatment of the respondents amounts to any of these; and as to whether the Secretary of States proposed treatment is in any event consistent with the Convention, having regard to the unique relationship between the SBAs and the Republic of Cyprus, but bearing in mind that the respondents do not consent to the proposed treatment.
The quality of the accommodation presently available to the respondents is also an issue, and the court would invite submissions from both sides as to the significance of that in the context of the issues in this case, and as to any proposals which there may be to address it.
The court accordingly now invites submissions on all these points, and in particular as to whether and how the Refugee Convention is capable of operating in the context of the SBAs, and whether it was and is in the circumstances open to the United Kingdom to satisfy its Convention obligations by arranging for facilities to be available through co operation with the Republic for refugees such as the respondents who do not give their consent that the United Kingdom satisfy its Convention obligations in this way. (iv)(b) If such transfer of responsibility was permissible, was the 2005 agreement with the Republic a legally effective means of doing so, having regard to its informality and the absence of incorporation into SBA law?
As indicated above, the court does not accept Mr Husains primary case that the 2003 Memorandum was not fit for purpose even for those within its scope.
However, he raised a logically separate point as to the informality and tenuous nature of any agreement to extend it to the respondents (Case paras 191ff).
Again this point was not developed in any detail in oral submissions.
The court notes in particular the formal and detailed nature of the 2003 Memorandum, which was also incorporated into SBA law by the Refugee Ordinance so creating enforceable rights and obligations under SBA law; and the lack of any equivalent legal formality in respect of the respondents.
It invites submissions on the significance of this difference for the legal effectiveness of the 2005 agreement, and its consequences in the present proceedings. (iv)(c) Has the support of the Republic in accordance with the 2005 agreement been available in practice, and can it be assured in the future?
Although this issue was not identified in the agreed statement of facts and issues, it was the subject of detailed and strongly conflicting factual submissions on both sides, and addressed also in the UNHCR correspondence.
There was a disagreement as to whether it was an issue properly before the court, or, if not, how if at all it should be resolved, and in what forum.
The court invites further submissions on this point. (v) If the 2005 agreement, for whatever reason, was not a legally effective means of discharging the United Kingdoms obligations to the respondents under the Convention, or if such support has not been available in practice, what are the consequences, in terms of rights or remedies potentially available in these proceedings, and how should the court give effect to them in its order?
The Refugee Convention creates obligations in international law.
The Convention is not part of the domestic law of the UK except to the limited extent noted earlier in this judgment.
The written and oral submissions of the parties were largely directed to alleged breaches of obligations under the Convention.
Mr Husains argument proceeded on what he took to be the uncontested assumption that any decision regarding the entry of the respondents to the United Kingdom must be consistent with the Refugee Convention (Case para 11, relying on Asylum and Immigration Appeals Act 1993 section 2, and R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees intervening) [2005] 2 AC 1, para 41 per Lord Steyn).
However, as noted at the beginning of this judgment, the court considers that the interaction of the Convention and domestic public law is a matter of some importance and difficulty, both in this case and more generally.
In particular it seems necessary to consider the possible distinction between the direct application of section 2 of the 1993 Act, and the application of general public law principles (including the Launder principle: para 7 above).
The court invites further submissions on those matters, and on the remedies potentially available in the present judicial review proceedings, including the matters which can be properly taken into account in the exercise of its discretion.
Concluding comments
It may of course be that, with the benefit of this interim judgment, the parties will be able reach agreement without further argument on the position of the respondents, or at least on some of the above questions.
So far as they remain in dispute, we propose that the appeal should be relisted as soon as practically possible for the hearing of argument on the further issues identified above.
The Court would hope that further evidence will not, at least at this stage, be required.
However, if there are matters which one or other party contends cannot fairly be determined by this Court without further evidence, they should, before finalising their written cases for any further hearing, identify to each other any further evidence that they might wish to adduce on such issues, setting it out in draft supported by affidavit.
The parties should in this connection be prepared to address the contents of the United Nations High Commissioners letter of 16 June 2017, the Secretary of States decision of 6 July 2017 and the letters of 7 July 2017 and 18 January 2018.
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Until 1960 Cyprus was a colony of the UK.
In 1960, pursuant to the Cyprus Act, the Treaty concerning the Establishment of the Republic of Cyprus between the UK, Turkey Greece and Cyprus and an exchange of notes between the UK and Cyprus, Cyprus became an independent Republic.
The territory of the new republic was composed of the island of Cyprus with the exception of two areas Akrotiri and Dhekelia which were retained under UK sovereignty as Sovereign Base Areas (SBAs) for the purposes of accommodating military bases.
Article 40(1) of the United Nations Convention Relating to the Status of Refugees (1951) (the Convention) as modified by the Protocol Relating to the Status of Refugees (1967) (the Protocol) states that: any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible.
On 24 October 1956, prior to Cypriot independence, the UK notified the UN Secretary General that, subject to certain reservations, the Convention would be extended to Cyprus.
Post independence, Cyprus notified the Secretary General in 1963 that it had acceded to the Convention and in 1968 to the Protocol.
No notification has ever been made by the UK specifically in relation to the SBAs post Cypriot independence.
The Respondents are six refugees.
In October 1998 they boarded a ship in Lebanon which was bound for Italy but which foundered off the coast of Cyprus.
On 8 October 75 passengers including the respondents were airlifted to safety by RAF helicopters and brought to Akrotiri in south western Cyprus.
In due course they were accepted as lawful refugees under the Convention by the SBA Administration, and permitted to remain.
The SBA Administration sought to persuade the UK government to allow them to resettle in the UK but this was not acceptable to Ministers.
Ever since then they have lived in disused and highly unsatisfactory service accommodation in the SBA, while continuing to press for their admission to the UK, on the basis that this is the only practicable way for the UK to discharge its obligations to them under the Refugee Convention.
The arrival of the Respondents in the SBAs followed by further arrivals in 2000 and 2001 gave rise to arguments between the SBAs and Cyprus about which of them was to be responsible for the refugees and asylum seekers among them.
These arguments were resolved for future arrivals on 20 February 2003 when the UK and Cyprus entered into a Memorandum of Understanding relating to illegal migrants and asylum seekers (the 2003 Memorandum).
The agreement provided, in summary, for the full range of governmental services to be provided to refugees by Cyprus but at the expense of the UK.
Shortly after the 2003 Memorandum, the SBA Administrator enacted the Refugee Ordinance 2003 which gave effect within the SBAs to rights substantially corresponding to those conferred by the Convention.
The 2003 Memorandum did not apply to refugees such as the Respondents who had arrived in the SBAs prior to the date of its conclusion.
The Appellants case is that in 2005 the Cypriot authorities agreed with the SBA Administration that they would deal with refugees recognised as such by the SBA Administration in accordance with the 2003 Memorandum irrespective of the date of their arrival in the SBAs.
This agreement, however, has never been reduced to writing.
The Respondents were unwilling for responsibility for them under the Convention to be transferred to the Republic, and did not accept that this could lawfully be done without their consent.
They continued to press for admission to the UK, latterly with the support of the UN High Commissioner for Refugees (UNHCR).
The unhappy course of the ensuing dispute is summarised in the judgment.
It came to a head when in 2013, the Respondents formally asked to be admitted to the UK.
In a decision dated 25 November 2014, the Secretary of State refused entry.
The Respondents challenged that decision on the basis that it was inconsistent with the Convention.
The High Court held that the Convention did not extend to the SBAs as a matter of international law, but quashed the Secretary of States decision on the basis that she had failed to take into account concerns raised by the UNHCR.
The Court of Appeal overturned that decision, declared that the Convention did extend to the SBAs and directed the Secretary of State to make a fresh decision on whether to admit the Respondents to the UK, having regard to the UKs obligations under the Convention.
On 6 July 2017, the Secretary of State made a fresh decision refusing to admit the Respondents on the basis that she considered that they could resettle in the Cyprus or, alternatively that the UK could comply with its obligations by arranging for the Respondents to be supported by Cyprus as agreed in 2005.
The broad question at issue in the appeal is whether the Respondents are entitled or should be permitted to be resettled in the UK on the basis of the Convention or that in the exceptional circumstances of the case the Secretary of State should exercise his discretion to admit them.
The specific issues identified by the Court as essential to the resolution of the appeal are as follows [60]: (i) Does the Convention (as extended by the 1967 Protocol) apply to the SBAs? (ii) Does the Convention by its terms entitle the Respondents to be resettled in the UK? (iii) Was the Memorandum of Understanding of 2003 a valid performance of the Convention obligations for those within its scope? In particular: a. Was the UK in principle entitled to fulfil its obligations under the Convention by arranging for support to be provided by Cyprus? b.
If so, were the terms of the Memorandum of Understanding (including the 2003 Refugee Ordinance) a proper basis on which to do so? a.
Was the UK entitled in 2005 to make the same arrangements in respect of the Respondents without their consent given their lawful and accepted presence as refugees in the SBAs since 2000 (it being accepted that the Respondents are entitled to continue to live in the SBAs [107])? b.
If so, was the 2005 agreement with Cyprus a legally effective means of doing so, having regard to its informality and the absence of incorporation into SBA law? c.
Has the support of Cyprus for the Respondents in accordance with the 2005 agreement been available in practice, and can it be assured in the future? (v) If the 2005 agreement, for whatever reason, was not a legally effective means of discharging the UKs obligations to the Respondents under the Convention, or if such support has not been available in practice, what are the consequences, in terms of rights or remedies potentially available in these proceedings, and how should the court give effect to them in its order? (iv) If the answer to (iii) is yes:
The Supreme Court gives an interim judgment.
It is final as to the issues covered (issues (i) (iii)), but interim in the sense that other issues will have to be decided (issues (iv) (v)) before the appeal can be finally determined.
Certain critical and difficult issues had not been clearly identified in the agreed statement of facts and issues, nor adequately covered by the written or oral submissions.
In fairness to the parties and in order to reach a fully informed conclusion, the court sees no alternative but to invite further submissions on the matters identified in the interim judgment.
Issue (i) Until 1960 the Convention unquestionably applied to the territory now comprised in the SBAs [63].
Treaty obligations cease to apply to a territory where it secedes from the state which entered into the treaty, or where a formerly dependent territory becomes independent of the parent state which entered into the treaty [64].
The Cyprus Act 1960 did not alter the status of the SBAs but merely excluded them from the transfer of territory to the new Republic of Cyprus when it became independent [69].
As a matter of international law the Convention continues to apply to the SBAs by virtue of the declaration in 1956, in the same way it applied to the colony of Cyprus before 1960.
Article VII(4) of the Protocol provides that where a state made a declaration under Article 40(1) or (2) of the Convention extending its application to a territory for whose international relations it was responsible, and then acceded to the Protocol, the declaration should apply to the Protocol also, unless that state notified the Secretary General to the contrary.
No further declaration was required to extend the Protocol to dependent territories where the original Convention applied.
The UK acceded to the Protocol without any reservation relating to the SBAs.
Since the Convention continued to apply to the SBAs after 1960, the Protocol applies there also [71].
Issue (ii) The Convention does not entitle the Respondents to be resettled in the UK metropolitan territory.
A states duties under the Convention to a refugee reaching a particular territory for whose international relations the state is responsible are in principle and in normal circumstances limited to providing and securing the refugees Convention rights in that context [89].
The widespread use of colonial clauses in international treaties reflects the principle that for certain purposes, including the application of treaties, dependent territories of a state are treated as having a status in international law distinct from that of the parent states metropolitan territory [76].
Like many multilateral treaties, the Convention was framed to apply only to a states home country or metropolitan territory unless extended to other territories under Article 40 [78].
Article 40 suggests that for the purposes of the Convention the metropolitan territory and its dependent territories are to be treated as separate units [80].
Similarly, other articles of the Convention indicate that the metropolitan territory is to be treated as distinct such as Articles 15, 17 to 24, 26, 19, 32 and 34 [81 88].
Issue (iii) The Respondents submission that the 2003 Memorandum was not a proper basis for the provision of the support for refugees required by the Convention is rejected [103].
There are uniquely close practical links between the SBAs and Cyprus [91 93].
The Convention does refer to the appropriate treatment of refugees in a States territory and the provision of facilities to refugees there.
But nothing in the Convention is expressly directed to a situation like that which exists in Cyprus and nothing in it is expressly inconsistent with the nature of the arrangements which the UK has made with Cyprus [94].
International courts and tribunals will interpret a treaty in line with Article 31(1) of the Vienna Convention on the Law of Treaties.
They will endeavour to place the factual situation as it has developed since the inception of the treaty within the context of the preserved and developing treaty relationship in order to achieve its object and purpose in so far as that is feasible [95].
Subject to issues about the precise interpretation of certain articles, the court does not find objection in principle to some, most or all of the supporting facilities required for refugees being provided by co operative and effective arrangements with the Republic.
The more difficult issues are as to its application to those already accepted as lawful refugees [96].
Issues (iv) and (v) have been left for future determination and further submissions.
The parties may be able to reach agreement without further argument on those issues [104 114].
So far as they remain in dispute the appeal should be relisted for further submissions as soon as practicable [115].
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On 29 November 2010 the Immigration Rules were amended so as to require a foreign spouse or partner of a British citizen or a person settled in this country to pass a test of competence in the English language before coming to live here (the Rule).
Clearly, for a variety of reasons, some people would find this much harder to do than others.
These included many people from India, Pakistan, and Bangladesh, three of the four countries from which the greatest numbers of foreign spouses and partners are drawn (the fourth is the USA).
Hence the proposed Rule caused particular concern among those communities in this country where marriage to partners from those countries is most common.
They saw it as a discriminatory measure which aimed to limit spousal migration from those and similar countries.
These proceedings were launched in November 2010, before the Rule came into force, in order to challenge the validity of the rule itself.
The appellants argue that the Rule is an unjustifiable interference with the right to respect for private and family life, protected by article 8 of the European Convention on Human Rights (ECHR); or that it is unjustifiably discriminatory in securing the enjoyment of that right, contrary to article 14 of the ECHR; or that it is irrational and therefore unlawful on common law principles.
They have set themselves a difficult task.
It may well be possible to show that the application of the Rule in an individual case is incompatible with the Convention rights of a British partner, as happened in the case of a different marriage rule in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2011] UKSC 45, [2012] 1 AC 621.
It is much harder to show that the Rule itself is inevitably unlawful, whether under the Human Rights Act 1998 or at common law, although this was possible in the case of yet another marriage rule, in R (Baiai) v Secretary of State for the Home Department (Joint Council for the Welfare of Immigrants intervening) (Nos 1 and 2) [2008] UKHL 53, [2009] AC 287.
It is not surprising, therefore, that Beatson J concluded that the fact that it might be possible to argue that the operation of the Rule was a disproportionate infringement of an individuals article 8 rights did not render the Rule itself disproportionate: [2011] EWHC 3370 (Admin), [2012] 2 All ER 653 (sub nom R (Chapti) v Secretary of State for the Home Department (Liberty intervening)), para 115.
By a majority, the Court of Appeal reached the same conclusion: [2013] EWCA Civ 322, [2014] 1 WLR 208.
A further difficulty is that things have not stood still since the proceedings were launched in November 2010, since Beatson J reached his decision in December 2011, and since the Court of Appeal reached their decision in April 2013.
The Rule itself has stayed much the same, but it has been restated in a new Appendix FM to the Immigration Rules which seeks to deal compendiously with family relationships.
More importantly, the guidance to those operating it on the ground has developed as time has gone on.
And perhaps most important of all, the facts relating to the accessibility of the required tests were difficult to ascertain and are also subject to change.
The discussion of the evidence and arguments, on the one hand by Dr Helena Wray and her colleagues for the appellants, and on the other hand by Mrs Helen Sayeed for the Secretary of State, has to be applied to the situation as it now is rather than as it was in 2011.
The development of the Rule
The Rule may be set against a background of immigration controls which have traditionally differentiated between so called primary migration, of breadwinners coming here for economic reasons, and secondary migration, of spouses, partners and other family members coming to join the breadwinners here.
All are expected not to place an undue burden upon the state and its resources.
Controls relating to the former look to the work or business from which the migrant intends to support himself; controls relating to the latter look to whether the family has the resources to support itself.
A second background feature is that control over the entry of nationals from the European Economic Area and their families is governed by European Union law.
The Rule is not concerned with them, even though English will not be the first language for the great majority.
Spouses, partners and intending partners are first given limited leave to enter for a probationary period.
Until 2012, this was two years, but it has now been raised to at least the five years which is required of other migrants.
At the end of this period, they can apply for indefinite leave to remain (ILR).
In 2005, applicants for British citizenship were for the first time required to demonstrate sufficient knowledge of the English language and about life in the United Kingdom (KOLL).
In 2007, this post entry requirement was extended to applicants for ILR, including spouses and partners.
This can be satisfied by taking the Life in the UK test (LUK), which requires a considerable level of competence in the English language.
An alternative for non native English speakers was to take a course in English for Speakers of Other Languages (ESOL), taught with specified citizenship materials.
Since October 2013, however, all applicants for ILR have been required to meet the same specific English language requirement and pass the LUK test.
Such data as we have suggest that the number of spouses and partners failing the settlement test was never high and declined sharply after the first year of its introduction (Equality Impact Assessment, 2010).
This is based on the numbers who had to apply for further limited leave to remain because they had failed the test, which are very small when compared with the numbers granted ILR after entering through the family route.
The data indicated that a higher proportion of spouses or partners took the ESOL rather than the LUK route to satisfying the requirement.
The Secretary of State suggests that this could mean that even after two years in the UK they had not acquired sufficient English to enable them to pass the LUK test.
However, migrants coming from non English speaking countries are advised to take an ESOL course before attempting a settlement test.
So this figure could simply reflect the fact that a higher proportion of spouses and partners come from non English speaking countries.
Having taken an ESOL course with the required citizenship materials, there would be no point in their taking the LUK test instead.
In 2007, the Government first floated the idea of requiring a pre entry test for foreign spouses and partners, in Securing the UK Border: Our vision and strategy for the future (March 2007).
In the chapter on Wider, tougher checks abroad, under the heading Targeting areas of abuse, this made suggestions about Marriage to partners from overseas protection for the vulnerable and the skills to integrate (para 3.22).
Alongside suggestions aimed at deterring or preventing forced marriages was a proposal to examine the case for introducing a new requirement to pass some form of English test before arrival.
This was soon followed by a consultation paper, Marriage Visas: Pre Entry English Requirement for Spouses (December, 2007), published alongside a separate consultation paper, Marriage to Partners from Overseas, which dealt with proposals to combat forced marriages (the subject of this courts decision in Aguilar Quila).
The key objectives of introducing a pre entry English requirement for spouses were said to be (para 1.11): To assist the spouses integration into British society at an early stage; To improve employment chances for those who have access to the labour market; To raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement.
In July 2008, the Government published Marriage Visas: The Way Forward, which dealt with the mainly negative response to both consultation papers.
Opponents cited the difficulties of accessing English language lessons overseas, the interference with the right to respect for family life and individual human rights, and the view that English was best learned in the United Kingdom (paras 2.14 2.16).
Nevertheless, the Government had decided upon the medium term goal of introducing an English test for spouses before they arrived here.
The three stated objectives remained the same (paras 1.4, 2.2); although respondents who favoured the proposal also suggested that it would reduce the cost of translation services in the UK and bring potential benefits to spouses of improved employment opportunities, freeing them from being tied to home and family (para 2.17).
But the Government decided that it would move towards this goal over a period of time (para 2.3): This is simply because there is not currently sufficient access to English language classes overseas, especially in rural areas, and to introduce the requirement in a dogmatic way immediately would simply keep British citizens apart from their loved ones, breaking up families.
In the meantime, as part of the visa application process, foreign spouses would be required to enter into an agreement to learn English, showing before arrival how they planned to so do and after arrival how they were doing so.
A year later, however, it was decided to implement the new policy in the summer of 2011.
An Equality Impact Assessment, published in July 2009, explained that the cross Whitehall group working on the policy felt that announcing an implementation date would generate a supply of sufficient English tuition to meet demand, but it would take between 18 to 24 months to develop sufficient capacity (p 12).
An Impact Assessment (of the proposed pre entry language requirements for economic as well as spousal migrants), also published in July 2009, explained that it had been decided that spouses would only have to demonstrate that they could speak (not necessarily read or write) English to level A1 of the Common European Framework of Reference for Languages (the CEFR).
This was considered to require 40 to 50 hours tuition for most learners.
Level A1 requires that the user: Can understand and use familiar everyday expressions and very basic phrases aimed at the satisfaction of needs of a concrete type.
Can introduce him/herself and others and can ask and answer questions about personal details such as where he/she lives, people he/she knows and things he/she has.
Can interact in a simply way provided the other person talks slowly and clearly and is prepared to help.
After the coalition Government took office in May 2010, however, the timetable was advanced.
On 9 June, the Home Secretary announced that the pre entry test requirement would come into effect in the autumn: this will help promote the economic well being of the UK, for example by encouraging integration and protecting public services.
It will also assist in removing cultural barriers, broaden opportunities for migrants and help to ensure that they are equipped to play a full part in British life.
On 26 July, the Minister of State for Immigration announced that the requirement would come into effect on 29 November.
He confirmed that spouses and partners would have to show English language ability in speaking and listening at level A1 of the CEFR, by passing an acceptable test with an approved test provider.
The Rule applies to non European spouses, civil partners, unmarried opposite and same sex partners, fianc(e)s and proposed civil partners (collectively spouses and partners) wishing to live here with a British citizen or a non European national settled in the UK.
This was originally done by amendment to paragraphs 281, 284, 290, 293, 295A and 295D of the Immigration Rules: Statement of Changes to Immigration Rules, 1 October 2010 (Cm 7944).
In 2011 the Rule was extended to spouses and partners of refugees and people granted humanitarian protection in the UK, covered by paras 319L and 319O: 16 March 2011 (HC 863).
However, applications for leave to enter or remain made on or after 9 July 2012 are now governed by Appendix FM to the Immigration Rules.
Since 1 December 2013, the English language requirement has also been imposed upon specified partners of members of the Armed Forces, under the Appendix Armed Forces.
It is therefore convenient to recite the Rule as contained in Appendix FM rather than the earlier version considered in the courts below.
Appendix FM provides that applicants for entry clearance or limited leave to remain as a partner must satisfy the English language requirement as follows (paras E ECP 4.1 and E LTRP 4.1): The applicant must provide specified evidence that they (a) are a national of a majority English speaking country listed in paragraph GEN 1.6; (b) have passed an English language test in speaking and listening at a minimum of level A1 of the Common European Framework of Reference for Languages with a provider approved by the Secretary of State; (c) have an academic qualification recognised by UK NARIC [the National Recognition Information Centre] to be equivalent to the standard of a Bachelors or Masters degree or PhD in the UK, which was taught in English; or (d) are exempt from the English language requirement under para E ECP 4.2.
The majority English speaking countries listed in paragraph GEN 1.6 are Antigua and Barbuda; Australia; the Bahamas; Barbados; Belize; Canada; Dominica; Grenada; Guyana; Jamaica; New Zealand; St Kitts and Nevis; St Lucia; St Vincent and the Grenadines; Trinidad and Tobago; and the United States of America.
The exemptions in paras E ECP 4.2 and E LTRP 4.2 apply if at the date of application (a) the applicant is aged 65 or over; (b) the applicant has a disability (physical or mental condition) which prevents the applicant from meeting the requirement; or (c) there are exceptional circumstances which prevent the applicant from being able to meet the requirement prior [to entry to the UK].
The words in square brackets in (c) do not apply, for obvious reasons, to partners who are applying for limited leave to remain here as a partner.
These requirements are in essence the same as those imposed by the amendment to para 281 (for spouses) and the other relevant paragraphs of the Rules, save that these made an exception where there are exceptional compassionate circumstances that would prevent the applicant from meeting the requirement (para 281(1)(a)(ii)(c)).
Compassionate has now been dropped.
The courts below did not consider the guidance given to entry clearance staff as to how the Rule should be operated.
The internal guidance on the English language requirement (SET 17 updated 15 February 2011) stated as follows (para SET 17.9): Discretion should be exercised only in cases where there are the most exceptional, compelling and compassionate circumstances specifically relating to the ability of the applicant to meet the language requirement, circumstances should be assessed on a case by case basis.
The expectation is that use of the exceptional compassionate circumstances exemption will be rare.
Financial reasons will not be acceptable. (emphasis supplied) However, at that stage, if the applicant partner was a long term resident of a country with no test centre, he or she was automatically exempted under this criterion.
This exemption was withdrawn as from 24 July 2014.
The current guidance on the consideration of exceptional circumstances, in the Immigration Directorate Instruction, English Language Requirement Family Members under Part 8, Appendix FM and Appendix Armed Forces, April 2015, para 7.1, contains the following passages: Each application for an exemption on the basis of exceptional circumstances will be considered on its merits on a case by case basis.
Evidence of the nature and impact of the exceptional circumstances must be clearly provided, eg of previous efforts to access learning materials or to travel overseas to take an approved test and the obstacles to doing so.
This must include evidence provided by an independent source (eg an appropriately qualified medical practitioner) or capable of being verified by the decision maker.
Examples of situations in which, subject to the necessary supporting evidence, the decision maker might conclude that there were exceptional circumstances, might include where the applicant Is a long term resident of a country in international or internal armed conflict, or where there is or has been a humanitarian disaster, including in light of the infrastructure affected.
Has been hospitalised for several months immediately prior to the date of application.
Is the full time carer of a disabled child also applying to come to the UK.
Is a long term resident of a country with no approved A1 test provision and it is not practicable or reasonable for the applicant to travel to another country to take a test Lack of or limited literacy or education will not be accepted as exceptional circumstances. (emphasis supplied)
Further guidance is given on countries with no approved A1 test provision in para 7.2: From 24 July 2014, applicants who are resident in a country with no approved A1 English language test are expected to travel to another country to take such a test.
Only where they can demonstrate in their visa application that it is not practicable or reasonable for them to do so will they be exempt from the requirement prior to entry to the UK.
Reasons why it is not practicable or reasonable for an applicant to take an approved A1 test in another country will normally require more than inconvenience or reluctance to travel overseas.
Subject to supporting evidence, such reasons might exist where for example: Exit visa requirements or restrictions make it very difficult for the applicant to travel overseas.
The applicant faces insuperable problems in meeting immigration requirements to visit a country with an approved test centre.
The applicant faces unreasonable additional travel or accommodation costs to visit a country with an approved test centre.
Some applicants as a partner . already incur travel and accommodation costs to attend an approved test centre in their own country or to give their biometrics at a Visa Application Centre.
In addition, all applicants for a settlement visa as a partner are required to meet a financial requirement and it is reasonable to expect that they (or their sponsor ) will generally be able to afford incurred in making reasonable costs application.
Other exceptional circumstances prevent the applicant taking an approved A1 test in another country.
For completeness, it is necessary also to note the circumstances in which entry clearance may be given even though the application does not meet the requirements of the Immigration Rules.
The Immigration Directorate Instruction Family Migration, Appendix FM section 1.0a, Family Life (as a Partner or Parent): 5 year Routes (August 2015) deals with Exceptional Circumstances or Compassionate Factors in section 14.
Entry clearance officers must in every case go on to consider whether there may be either exceptional circumstances which would make the refusal of entry clearance a breach of article 8 because [it] would result in unjustifiably harsh consequences for the applicant or their family or compassionate factors that is compelling compassionate reasons which might mean that refusal would result in unjustifiably harsh consequences even if it did not constitute a breach of article 8.
Entry clearance officers cannot themselves grant entry clearance outside the Rules, but if they consider the case might meet the very high threshold they must refer it to the Referred Casework Unit in London.
The threshold is very high because the Home Office considers that the appropriate balance between individual rights and the public interest has been clearly spelled out in the Rules (now underpinned by section 19 of the Immigration Act 2014).
Under the heading How to consider exceptional circumstances, the Instructions state: Exceptional does not mean unusual or unique.
Whilst all cases are to some extent unique, those unique factors do not generally render them exceptional.
For example, a case is not exceptional just because the criteria set out in the Immigration Rules have been missed by a small margin.
Instead exceptional means circumstances in which refusal would result in unjustifiably harsh consequences for the individual or their family such that refusal would not be proportionate under article 8.
The fact that refusal may, for example, result in the continued separation of family members does not of itself constitute exceptional circumstances where the family have chosen to separate themselves.
Cases that raise exceptional circumstances to warrant a grant of entry clearance outside the Rules are likely to be rare.
In determining whether there are exceptional circumstances, the decision maker must consider all relevant factors raised by the applicant and weigh them against the public interest under article 8.
Examples of relevant factors include: The best interests of any child in the UK affected by the decision.
The nature of the family relationships involved, such as the length of the applicants marriage and how frequently they have contact with their children if they do not live with them .
The likely impact on the applicant, their partner and/or child if the application is refused.
Whether there are any factors which might increase the public interest in refusal, for example, the fact that they do not speak English (emphasis supplied) Cumulative factors should be considered.
Cumulative factors weighing in favour of the applicant should be balanced against cumulative factors weighing in the public interest in deciding whether refusal would be unjustifiably harsh for the applicant or their family.
The tests
The research conducted on behalf of the appellants in 2011 showed that it was then by no means easy to find out which tests were offered and in which places.
One problem was that tests at the very basic A1 level, and limited to speaking and listening, were not always available, whereas there might be tests at a higher level or including reading and writing skills.
All the websites giving the relevant information were in English.
These may, of course, have been teething troubles, given that the proceedings were launched before the Rule had come into force.
The most recent information from the Secretary of State was that, as from 6 April 2015, the approved A1 test for partners overseas will be the International English Language Testing System (IELTS) Skills for Life test offered by the IELTS consortium (the University of Cambridge English Language Assessment, the British Council and IDP Education Ltd).
The British Council website provides some useful information.
It explains that the IELTS Life Skills test is a new test for people who need to prove their speaking and listening skills at A1 or B1 level on the CEFR.
A secure English language test (SELT) can be taken at around 100 test centres around the world.
There is a link to the United Kingdom Visa Information website which gives their locations.
The test involves a face to face conversation lasting 16 to 18 minutes with the examiner and another candidate.
It cannot be taken on line or over the telephone.
There are now listening test samples on the IELTS website.
These cases
This case has proceeded on the basis of assumed facts (the Secretary of State not being in a position to agree them all) in order to test the lawfulness or otherwise of the pre entry language requirement, as set out in the Rules and Guidance quoted above.
There are two appellants, both women who are British citizens married to foreigners.
Their husbands have not applied for entry clearance because they believe themselves unable to satisfy the pre entry language requirement and accordingly the not inconsiderable fee for making an application would be wasted.
Saiqa Bibi is a British Citizen who was born in Coventry and lives with her family in the West Midlands.
In April 2009, she married Mohammed Jehangir, a citizen of Pakistan.
They have one child, a son born in 2010, who lives with his mother.
The couple keep in touch with one another by telephone and occasional visits to Pakistan.
They would like to live here together as a family.
Mr Jehangir was educated to matriculation level in Pakistan but in Urdu.
He neither speaks nor writes any English.
There is no English tuition of the level required available locally to where he lives and to obtain it he would have to make a round trip of some four hours, to Mirpur or Islamabad.
This is not practicable on a daily basis, so he would have to relocate for several months to Rawalpindi, which is not affordable.
Mrs Saffana Ali is also a British citizen.
She spent approximately two and a half years, from 2006 to 2008, visiting the Yemen, where she met and formed a relationship with her husband Mr Ali.
When she returned to this country in 2008 they kept in touch over the telephone and decided to get married.
She returned to the Yemen in May 2010 and they married there in July 2010.
Mr Ali does not speak any English.
He has not had any formal education and is illiterate and unfamiliar with the Roman alphabet.
There is no test centre in the Yemen.
Because her husband is unable to come and live with her here, Mrs Ali has remained with him in the Yemen, but she would like them to be able to live together here, where she has lived since a child and has family and friends.
Article 8
Everyone has the right to respect for his private and family life, his home and his correspondence: article 8(1), ECHR.
In Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, 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 even if a family life has not yet been fully established.
Not only that, 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 (para 62).
Hence, as this court held in Aguilar Quila, married couples have a right to live together.
However, in Abdulaziz, the European Court also held that article 8 did not impose 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 (para 68).
That statement was repeated by the Grand Chamber in the most recent case of Jeunesse v The Netherlands (2015) 60 EHRR 789 (para 107), which draws together the applicable principles.
The jurisprudence of the court draws a distinction between cases where migrants who have been lawfully settled in a country for a long time face deportation or expulsion and cases where an alien is seeking admission to a host country.
The former entails the possible breach of the negative obligation in article 8(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 .
The latter entails the possible failure of the state to comply with a positive obligation to permit the enjoyment of family life in that country.
It concerns not only family life but also immigration (paras 104, 105).
Nevertheless, although the criteria developed in the first context cannot be transposed automatically into the second, the applicable principles are, nonetheless, 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 (para 106).
In cases involving family life and immigration, factors to be taken into account are the extent to which family life would effectively be ruptured, the extent of the ties in the Contracting State, whether there are insurmountable obstacles in the way of the family living in the country of origin of the alien concerned and whether there are factors of immigration control (for example, a history of breaches of immigration law) or considerations of public order weighing in favour of exclusion (para 107).
If family life was created when the people involved were aware that the persistence of family life within the host state would be precarious, it is likely only to be in exceptional circumstances that the removal of the non national family member will constitute a violation of article 8 (para 108).
However, where children are involved, their best interests must be taken into account: Whilst alone they cannot be decisive, such interests certainly must be afforded significant weight (para 109).
In Jeunesse, the Grand Chamber found that, although the applicant had married and had three children while her immigration status in the Netherlands was precarious, there were exceptional circumstances such that a fair balance had not been struck between the competing interests involved: the husband and three children were all citizens of the Netherlands with the right to enjoy family life there; the applicant had lost her Dutch nationality when Suriname became independent and not through her own choice; she had been living in the Netherlands for 16 years and had no criminal record; although there were no insurmountable obstacles to the whole family settling in Suriname, they would experience a degree of hardship if forced to do so; and the Dutch authorities had paid insufficient attention to the problems the children would face in either having their whole lives disrupted by a move to Suriname or being separated from their primary carer.
In the circumstances, it was questionable whether general immigration policy considerations of themselves can be regarded as sufficient justification for refusing the applicant residence in the Netherlands (para 121).
Although Strasbourg analyses these cases in terms of a fair balance, in this country we have, at least since the decisions in Huang v Secretary of State for the Home Department [2007] UKHL 11, [2007] 2 AC 167 and Aguilar Quila, spelled out the principles in conventional proportionality terms.
As Lord Wilson put it in Aguilar Quila, para 45, following Lord Bingham in Huang, para 19, four questions generally arise: (a) is the legislative objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; and (d) do they strike a fair balance between the rights of the individual and the interests of the community?
(a) Legitimate aim
It is important to appreciate that, although the context of this case is immigration, the Government has never suggested that the aim of the Rule is to limit immigration by spouses and other partners of people settled here.
It does not operate, and is not intended to operate, as a cap on the number of partners admitted.
It has long been taken for granted that the wives of British citizens have the right to join their husbands here traditionally, wives were expected to assume their husbands nationality and domicile on marriage, and indeed there may still be countries in the world where women lose their nationality of origin on marrying a foreigner.
British immigration law originally reflected this right, but was obliged, following the Abdulaziz case, to afford it also to the husbands of British citizen wives.
The same right was later extended to unmarried couples who had been living together in a relationship akin to marriage for some time and then to civil partners and same sex couples living together in a relationship akin to civil partnership.
All of this reflects the importance attached to family relationships in modern international human rights law.
The Universal Declaration of Human Rights of 1948 proclaimed that The family is the natural and fundamental group unit of society and is entitled to protection by society and the state (article 16.3).
The International Covenant on Civil and Political Rights of 1966 translated this into a binding obligation in exactly the same words (article 23).
Both of these documents proclaimed that the rights they provided must be respected without discrimination on grounds such as race and sex (article 2 in each case).
The Human Rights Committee, in General Comment No 19 (1990), explained that different States might have different concepts of the family, but whatever their concept, it must be afforded the protection required.
The International Covenant on Economic and Social Rights goes even further, in providing that The widest possible protection and assistance should be accorded to the family, which is the natural and fundamental group unit of society (article 10.1).
Appendix FM to the Immigration Rules does impose some limits on the right of partners to come here.
For example, they must fulfil certain suitability requirements, mainly relating to the lack of criminal convictions; the couple must both be at least 18 and their relationship must be genuine and subsisting; and they must be able to support and house themselves from their own resources.
In general, these are aimed at the protection of society from harmful behaviour, the prevention of abuse, and the protection of public funds.
It is accepted that partners who come here will make use of those public services, such as education and the National Health Service, which are available to all.
So what, then, are the aims of the English language requirement? As originally stated, they were three: (i) to assist the partners integration into British society at an early stage; (ii) to improve their employment chances, given that they have access to the labour market as soon as they arrive; (iii) to raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement.
Following the consultation, three further aims emerged: (iv) to save translation costs; (v) to benefit any children the couple might have; and (vi) to reduce the vulnerability of newly arrived spouses, especially women.
In article 8 terms, these probably fall under the rubric of the interests of the economic well being of the country or, just conceivably, the protection of the rights and freedoms of others.
Some may think, however, that they are not as important as the prevention of disorder or crime, which is the main aim of the suitability requirements, or the protection of the public purse, which is the main aim of the financial requirements.
The appellants have filed extensive evidence in support of their arguments in response to the rather less extensive evidence filed on behalf of the government.
Some of that evidence and argument is summarised and commented upon below.
As to (ii), it is true that partners are permitted to join the labour market as soon as they arrive, and if they choose to do so, basic English language skills will no doubt help them to get a job outside their own community.
It may well be that most husbands coming to join their wives here do intend to join the labour market, but the same may not be true of most wives.
There is evidence that language skills are associated with higher earnings (but this may not be the only reason for persistent wage differentials between different cultural groups).
But, valid though the aim is for those who do intend immediately to join the labour market, partners are not required or even expected to do so that is not the reason why they are admitted.
As to (iii), the basic pre entry level might be some help in preparing for the settlement test, but in the opinion of Dr Geoffrey Jordan, the language expert who contributed to Dr Wrays report for the appellants, the pre entry test is of almost no value in getting the learner off to a flying start.
It will pale into insignificance compared with the opportunities of learning the language over the (now) five years that the partner will have to be here before taking the settlement test.
The need to pass the test before being allowed to stay here indefinitely should be sufficient incentive even for those who, perhaps for cultural reasons, might otherwise not be inclined or encouraged to do so.
Of course, this would not be an incentive for those who are prepared to remain here without ILR and rely on their article 8 rights to resist removal.
As to (iv), this was not among the original aims, and no one has been able to put any sort of financial value upon it.
There are, as Mrs Helen Sayeed, for the Government, says, plenty of data suggesting there is significant reliance on translation support services (WS No 2, para 10).
However, given the substantial burden of translation caused by the people who are already here, no one has shown what, if any, extra burden is occasioned by allowing partners to come here without any pre entry language requirement or how much help that requirement is in reducing the need for translation when communication really matters.
As to (v), there is some evidence that children whose first language is not English do less well at school, but a pre entry language requirement will not ensure that English is spoken at home.
Children already here have ample opportunities for learning the language outside the home; children coming here with the foreign partner (which, as Mrs Sayeed says, is less likely because many of those seeking marriage visas are newly married) will have similar opportunities; children are usually much quicker at picking up another language than are adults and are often a valuable source of learning for their parents, rather than the other way around.
More important, for children such as Saiqa Bibis son, the choice is not between having a parent here with or without basic English language skills but between having a parent here and not having a parent here at all; separation is likely to be far more damaging to the child than living with a parent who has yet to acquire any English.
As to (vi), the Government does not assert that this is a key rationale, although if it has any impact it would likely be a positive one given the migrants better position to seek help/advice (Helen Sayeed, WS 2, para 16).
Pragna Patel, of Southall Black Sisters, the best known organisation working with migrant women suffering domestic abuse, does not see a pre entry test as being of significant benefit to them: language is the least of the problems they face in obtaining access to advice and services.
Nevertheless, it is likely that even basic language skills will be of some benefit to vulnerable women who come here as spouses.
All the stated aims are, in reality, aspects of the first, which is to assist the partners integration into British society at an early stage.
This is undoubtedly an important aim.
In 2006, the Secretary of State for Communities and Local Government established an independent Commission on Integration and Cohesion.
Their Report, Our Shared Future, was published in 2007.
According to the Commission, cohesion is principally the process that must happen in all communities to ensure different groups of people get on well together; while integration is principally the process that ensures new residents and existing residents adapt to one another (para 3.2).
Research done for the Commission by Ipsos MORI, Public Attitudes towards Cohesion and Integration, 15 June 2007, found that interaction with people from different backgrounds was seen as fundamental to fostering a better sense of community and cohesion.
Inability to speak English was seen as the biggest barrier to being English.
The Commission saw a shared language as being fundamental to integration and cohesion for settled communities, new communities, and future generations of migrants (para 5.35).
Improving the availability of ESOL classes and reducing the amount of automatic translation of official information into other languages were among their key recommendations.
It is not difficult to see the benefits to integration of even a basic level of English language skills.
It must be beneficial for a newly arrived partner to be able to go into a shop and buy groceries and other necessities, to say hello to the neighbours, to navigate public transport, to inter act at a simple level with bureaucrats and health care professionals.
Integration is a two way process.
It must be beneficial for others to see that the people living in our midst and intending to stay here are able and willing to join in and play a part in everyday social interactions, rather than keeping themselves separate and apart.
All of this is, to use the term used by Maurice Kay LJ, benign.
The question for us, however, is how important a pre entry test is in achieving these benign aims.
What value does it add to the post entry settlement test? There has been some suggestion that foreign spouses were not achieving the same standard as other applicants for ILR.
This was because more of them were choosing the ESOL route than the LUK route to demonstrate the required knowledge of language and life in the UK.
But, as already explained, taking an ESOL course is recommended for those whose first language is not English.
Given that most foreign partners come from countries where the first language is not English, it is scarcely surprising that they should take such a course and, having taken it, choose this route to qualify.
Now that all candidates are to be expected to take the same tests, no doubt most will still take an ESOL course in order to gain the required skills.
More importantly, the expert evidence filed on behalf of the appellants suggests that the very basic level of language required by the pre entry tests will not be of much help to them.
The best and quickest way to learn the language is by practice and immersion while here rather than in a foreign classroom.
As the appellants language expert, Dr Geoffrey Jordan, put it Learning a second language is not like learning Geography or Law: it is more akin to learning to swim, drive or use a computer.
To be a competent user of English as a second language requires that declarative knowledge (I know about this) becomes procedural knowledge (I can do this), and it is thus, essentially, a question of practice.
It is also worth bearing in mind, as Dr Katherine Charsley explained in her evidence for the appellants, that there are several dimensions to integration economic, social, cultural and civic and that there are many processes of integration as well as language.
It is also a two way process.
She suggests that migrant side attempts to integrate may mean little or even have negative effects if the response of the host population is not inclusive.
Further, she cites the Commissions suggestion that perceptions of inequality may undermine integration.
Measures that are perceived as discriminatory and exclusionary are likely to be counter productive to integration by producing ill feeling, and undermining equality of opportunity and participation.
The evidence therefore leads to the conclusion that the Rule does have a legitimate aim (or a series of aims all linked to the promotion of integration and with it the larger aim of community cohesion) and that the aim is sufficiently important to justify interfering with the fundamental right to respect for the family life of British citizens or persons settled here who wish to be joined here by partners from overseas.
Nevertheless, the aim is not as important as the other aims to which the pre entry qualifications of foreign partners are addressed and the aim of a pre entry language requirement is not as important as the aim of ensuring that all migrants learn English once they are here.
(b) A rational connection
In this case it is not difficult to see a rational connection between the measure and the aim it seeks to achieve.
I would not base this, as Beatson J did, on the suggestion that spouses and other partners are a key target group whose language skills after entry are not as good as those of other migrants.
That is debateable.
But a pre entry language requirement is also imposed upon economic migrants.
While it may be doubted that requiring a very basic level of spoken English before entry makes a great contribution to the overall aim of promoting integration, it cannot be said that it makes no contribution towards it at all.
(c) A less intrusive means
Sir David Keene dissented in the Court of Appeal.
He concluded that the pre entry test had not been shown by any substantial empirical evidence to be no more than is necessary to achieve the legitimate aim (para 59).
The post entry test was achieving its object.
The numbers of spousal migrants who had to seek further limited leave to remain because they had failed the test fell from 3,245 in 2007 (when it was first introduced), to 995 in 2008, to 470 in 2009.
This was in any event a tiny proportion of the spousal migrants who achieved settlement in 2009.
Of course, it is possible that some spousal migrants, having been granted entry clearance or leave to remain, never apply for ILR and so manage to avoid having to show that they know anything about the life and language of the UK.
It is not currently possible to know how many people with expired visas have left the country and accordingly how many have not.
It is known that there is a large number of over stayers but it seems inherently unlikely that many of these are spousal migrants.
In the opinion of Dr Helena Wray, they have a regular path to settlement; they live amongst the settled community, often working or bringing up a family, so that it would be hard for them to go to ground; and they have the possibility of further limited leave to remain while taking or retaking the test.
Thus the aim of integration through shared language skills is principally achieved through the post entry ILR language requirement, which involves virtually no interference with the right to respect for family life.
Nevertheless, the longer a spousal migrant is here without acquiring the required language skills, the harder it will be to oblige them to leave.
There is therefore some benefit to integration and cohesion in requiring a very basic level of language at the outset.
In reality, this point merely serves to reinforce the point made earlier, that the aim of the pre entry test is benign but comparatively modest.
The real question is whether a fair balance has been struck. (d) A fair balance?
We do not have reliable figures on the impact which the pre entry requirement has had on the numbers of applications by partners for entry clearance.
Indeed, this is one of the complaints made by the appellants the figures are in the hands of the Secretary of State and she should have been making a systematic study of the effect of the new Rule.
The global figures do suggest that there was an upsurge in applications in 2010 before the Rule came into force and a dramatic falling off in 2011.
Numbers were up in 2012 but had still not recovered to their 2009 level.
The refusal rate was also far higher in the first half of 2012 than it had been in 2009 (the second half of 2012 will also have been affected by the increase in the household income requirements).
The lack of systematic information makes it difficult to work out the extent of the interference with the article 8 right at a global level, although it seems clear that there has been some effect.
However, it is not so difficult to work out the extent of the interference at an individual level.
There will be some applicant partners who already have some command of English; there will be others who can arrange access to appropriate tuition without much difficulty; and among these there will be some who will not find it difficult to attend a test centre.
For them the language requirement will not present such an obstacle that it can be termed an unjustified interference with their partners article 8 rights.
There will, however, be many applicants who do not already have some command of the English language.
Many of these will find it hard to arrange access to appropriate tuition.
Dr Jordans evidence is that success in learning English as a second language in a foreign country is affected by factors such as age, education, economic and social position, cultural values, motivation, and quality of instruction.
He points out that most people living in under developed countries are at a severe disadvantage due to their lack of contact with English, their low educational level and lack of study skills, their lack of intrinsic motivation, their lack of economic resources, their sometimes very different cultural values and their inability to avail themselves of any worthwhile English language instruction.
In his opinion, the grammar based methods of teaching English which are still prevalent in many parts of the world, including the Indian sub continent, are not well suited to acquiring the oral communication skills required by the test.
It was the lack of suitable tuition which led the Government originally to delay the introduction of the new requirement (see para 8 above).
But the Government has since taken the view that their only responsibility is for the test.
But the accessibility of such tuition is relevant to the question of fair balance.
For example, people living in remote rural areas may experience serious difficulties in gaining access to suitable tuition, which may only be obtainable at unreasonable cost.
There may also be some for whom getting to a test centre for the required 16 to 18 minutes face to face conversation will be impossible or prohibitively expensive.
The interference with the article 8 rights of the British partners of the people who face these obstacles is substantial.
They are faced with indefinite separation, either from their chosen partner in life, or from their own country, their family, friends and employment here.
It is worth recalling that the interference in Aguilar Quila, which was termed colossal, was merely temporary, whereas the interference here may be permanent.
The problem lies not so much in the Rule itself, but in the present Guidance, which offers little hope, either through the exceptional circumstances exception to the English language requirement (see paras 17, 18 above), or through the even fainter possibility of entry clearance outside the Rules (see para 20 above).
Only a tiny number achieve leave to enter through these routes.
This is not surprising given the way in which the Guidance is drafted.
The impracticability of acquiring the necessary tuition and practice or of accessing a test centre is not enough.
Financial impediments are not enough.
Furthermore, all applications for an exception to be made will be considered on a case by case basis.
This means that the considerable expense of making an application has to be risked, even though, on the current Guidance, the chances of success are remote.
It is not enough to say (see para 7.2 of the Guidance at para 18 above) that partners are expected to be self sufficient without recourse to public funds when they come to this country and can therefore be expected to find the resources to meet this requirement.
It is one thing to expect that people coming here will not be dependent upon public funds for their support.
It is quite another thing to make it a condition of coming here that the applicant or sponsor expend what for him or her may be unaffordable sums in achieving and demonstrating a very basic level of English.
Given the comparatively modest benefits of the pre entry requirement, when set against the very substantial practical problems which some will face in meeting it, the only conclusion is that there are likely to be a significant number of cases in which the present practice does not strike a fair balance as required by article 8.
This does not mean that the Rule itself has to be struck down.
There will be some cases in which the interference is not too great.
The appropriate solution would be to recast the Guidance, to cater for those cases where it is simply impracticable for a person to learn English, or to take the test, in the country of origin, whether because the facilities are non existent or inaccessible because of the distance and expense involved.
The guidance should be sufficiently precise, so that anyone for whom it is genuinely impracticable to meet the requirement can predictably be granted an exemption.
As was originally proposed, those granted an exemption could be required to undertake, as a condition of entry, to demonstrate the required language skills within a comparatively short period after entry to the UK.
Article 14
The appellants also complain that the requirement discriminates against some people in the enjoyment of their article 8 rights on grounds of nationality and may also be discriminatory on grounds of race or ethnicity.
On its face, it is directly discriminatory on grounds of nationality.
Nationals of the listed countries (see para 13 above) are exempt.
I would not, therefore, agree with Beatson J that it is not directly discriminatory because nationals of Anglo phone countries are not similarly situated to nationals of other countries.
I agree with Ms Karon Monaghan QC, for Liberty, that it is not possible to use the protected characteristic as a basis for holding that their situations are relevantly different.
They are all in the same situation of wanting to come to this country to join their partners who are settled here.
However, direct discrimination, even on grounds of nationality, is capable of justification under article 14.
In the context of immigration, nationality is not a particularly suspect classification.
The appellants complain that the exemptions are irrational.
Canadians, for example, are exempt, even though there are many Franco phone Canadians for whom English is not the first language and some for whom it is not even a second language.
Nigerians, on the other hand, are not exempt even though English is the medium of instruction in all Nigerian secondary and most Nigerian primary schools.
The Anglo phone Caribbean countries are exempt, even though their success rate in the LUK test for ILR is only average.
However, in the context of a language requirement, being a national of an Anglo phone country is a reasonable proxy for a sufficient familiarity with the English language to be able to begin to integrate with the local community immediately on arrival.
This is a context in which a bright line rule makes sense.
If the discrimination were not held justifiable, it would not follow that the English language requirement should be abolished.
As with any discriminatory rule of this sort, the choice of cure can either be to level up or to level down.
The Government could choose either to abolish the requirement altogether or to apply it to everyone, including partners from the exempt countries.
The discrimination argument therefore adds nothing to the article 8 argument, which for the reasons already explained, may lead to the conclusion that Convention rights have been violated in a significant number of cases.
Conclusion
I would not strike down the Rule or declare it invalid.
It will not be an unjustified interference with article 8 rights in all cases.
It is capable of being operated in a manner which is compatible with the convention rights.
Hence the appellants must be denied the remedy they seek.
However, the operation of the Rule, in the light of the present Guidance, is likely to be incompatible with the convention rights of a significant number of sponsors.
There may well be some benefit, therefore, both to individuals and to those administering the Rule, in declaring that its application will be incompatible with the Convention rights of a UK citizen or person settled here, in cases where it is impracticable without incurring unreasonable expense for his or her partner to gain access to the necessary tuition or to take the test.
But this was not the remedy sought by the appellants and we have received no submissions on it.
I would therefore invite such submissions before finally deciding the outcome of this appeal.
LORD HODGE: (with whom Lord Hughes agrees)
I agree with Lady Hale (a) that there is no basis for striking down rule E ECP 4.1 in Appendix FM to the Immigration Rules and (b) that the guidance, because of the narrowness of the exceptional circumstances for which it allows, may result in a significant number of cases in which peoples article 8 rights will be breached.
To avoid that unfortunate outcome, the Government may need to take further steps toward providing opportunities for spouses and partners to meet the requirement or may need to amend its guidance.
But I am not persuaded that the court should issue the declaration that she proposes and the range of her criticism of the guidance exceeds my concerns.
I therefore set out my views briefly.
In para 33 of her judgment Lady Hale summarises the six reasons which the Government have advanced for the introduction of a pre entry English language requirement.
They are: (i) to assist the partners integration into United Kingdom society at an early stage; (ii) to improve their employment chances as they have access to the labour market as soon as they arrive; (iii) to raise awareness of the importance of language and to prepare for the tests they will need to pass for settlement in this country; (iv) to save translation costs; (v) to benefit any children the couple may have; and (vi) to reduce the vulnerability of newly arrived spouses, especially women.
The appellants led evidence which sought to call into question the extent to which the proposed English language test could achieve those benign aims.
Because the IELTS English language test is at a basic A1 level, the appellants argued with some force that its contribution to several of the listed aims may be modest.
That may well be so.
But like the majority of the Court of Appeal (Maurice Kay LJ (at para 30) and Toulson LJ (at para 52)) I consider that this courts role does not extend to overruling the predictive judgment of the executive branch of government on an issue of social policy at a stage when empirical evidence of the consequences of the policy is unobtainable.
In my view the law gives the executive branch a wide margin of appreciation in its assessment of the consequences of its social policy in this sphere.
In each of the appeals a female UK citizen has gone overseas and found a spouse from within a community with which she has a connection.
Often it may be a male UK citizen who seeks to find a spouse or partner from within his community overseas, and in such cases the sixth purpose listed above may be an important good: the benefit which flows from language competence is not only improved access to advice in event of mistreatment but, more generally, the ability to lead ones life with a degree of independence and autonomy.
In any event, it appears to me that the core aim of the policy is the first listed purpose, namely to assist the early integration of the incoming partner into UK society.
Aims (ii) (employment), (iii) (raising awareness of integration) and (vi) (reducing vulnerability) are closely connected with this core aim.
Together, they are not to be undervalued.
It is in the general interest of all in this country that those who join its community become real participants in it, and are seen to do so.
I would also not underestimate the value of establishing a minimum language familiarity before entry, since that will help to instil the need for integration.
The monitoring of language proficiency subsequently can be difficult; it may be scarcely practicable, as well as harsh, to contemplate removal in the event of failure to achieve it, particularly once a family of children is established.
But the debate about the efficacy of the policy to achieve those other aims is water swirling around the rock of the policy of promoting integration and thereby social cohesion within our society.
The pre entry test is the first stage of the process of integration.
Further, as Lady Hale has shown (para 26), the Strasbourg court has in several cases pointed out that there is no general obligation on a state to facilitate or allow a couple who are married to live within it.
This court has made similar observations: ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 19 per Lady Hale; R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, para 42 per Lord Wilson.
Mixed nationality couples have no right to set up home in whichever country they choose.
International instruments which seek to protect family life need to be read against that background.
Nonetheless, the article 12 ECHR right to marry is a strong right (R (Baiai) v Home Secretary [2009] 1 AC 287, para 13 per Lord Bingham), and article 8 ECHR confers a right to respect for the resulting family, which is the fundamental social unit.
That protection involves, as Lord Wilson stated in Aguilar Quila (above) at para 42, a fact specific investigation whether the states obstruction of a married couples choice to reside in it is justified under para 2 of article 8.
It may well be that, as Lady Hale says (para 34 above), the principal article 8(2) purpose which is relevant is the interests of the economic well being of the country.
But the value of social and cultural cohesion, and the reduction of isolation and mistrust, bear also on the rights and freedoms of others already living here.
Of the four questions which Lord Wilson posed in Aguilar Quila at para 45, which Lady Hale sets out at para 29 of her judgment, I agree with her conclusions (a) that the legislative objective of integration and social cohesion is sufficiently important to justify limiting a fundamental right, (b) that the measures are rationally connected to that objective and (c) that they are no more than are necessary to accomplish it.
The problem which the operation of the policy faces is the fourth question do [the measures] strike a fair balance between the rights of the individual and the interests of the community?.
For the reasons which I discuss below, I think that there may be a number of cases in which the operation of the Rule in terms of the current guidance will not strike a fair balance.
But there may also be many cases in which it will.
The court would not entitled to strike down the Rule unless satisfied that it was incapable of being operated in a proportionate way and so was inherently unjustified in all or nearly all cases: R (MM (Lebanon)) v Secretary of State for the Home Department [2015] 1 WLR 1073, paras 133 and 134 per Aikens LJ.
As a result, the appellants fail to show that the rule itself is an unjustifiable interference with article 8 rights.
The principal problem which the operation of the rule is likely to confront relates to the availability and accessibility of English language tuition and testing overseas.
Beatson J focussed on this matter in the seventh question which he posed for himself in para 81 of his judgment in this case in which he asked: What teaching and testing facilities are available in the countries from which there are significant numbers of applicants, how accessible are those facilities (in terms of geography and cost), and are such tests as are available appropriate for the standard required? In his discussion of the answer to this question (at paras 104 to 109 of his judgment) he recognised that the operation of the policy might give rise to questions of disproportionate interference in individual cases, depending on (a) whether the Home Secretary granted further exemptions to countries where there was no test centre and (b) how her officials dealt with particular cases.
At paras 17 to 20 of her judgment Lady Hale sets out the current guidance given to officials on how they should consider exceptional circumstances under E ECP 4.2(c) in Appendix FM of the Immigration Rules.
From the emphasis which she has supplied to certain passages in that guidance, it is clear that she takes issue with (a) the exclusion from exceptional circumstances of the lack of or limited literacy or education, and (b) the assertion that it is reasonable to expect the applicants or their sponsor to be able to afford reasonable costs incurred in making their application.
I would not impugn either of those requirements in themselves.
It is not, at least yet, demonstrated that limited literacy or education makes it unreasonable to expect an applicant to learn rudimentary English, or that the methods of teaching are not adjusted to such limitations, although it is likely to be true that classroom or traditionally grammatical methods are not.
To my mind the principal problem which the evidence adduced by the appellants suggests is that within certain states, with which many UK citizens have a close connection, there are areas, including rural areas, from which it may not be reasonably practicable for the incoming spouse or partner to obtain the needed tuition without incurring inordinate cost, for example by having to travel long distances repeatedly or to reside for a prolonged period in an urban centre in order to complete the relevant language course.
Dr Geoffrey Jordan suggested in Dr Helena Wrays second report that preparation for the A1 test could involve 90 hours of tuition (para 40).
In principle, it is not unreasonable to expect some level of expenditure by the spouse/partner who aspires to live in this country or by the presently resident sponsoring party; the potential financial benefits of life in the UK are significant.
But in a particular case the potential cost may be shown to be inordinate, undermining the fair balance which article 8 requires.
Dr Jordan also stated that some testing centres offered the A1 speaking and listening test but required English reading skills in order to take it and others offered the test only when it was combined with tests involving reading skills.
If that is still the case and it creates a significantly higher hurdle than the A1 test which the UK Government requires, that also might affect the fair balance in an individual case.
It is impossible at the moment to predict what level of provision of testing centres will be made, or what identification of sources of tuition.
Travel to a major city is likely to be an inevitable part of obtaining entry clearance or of eventual travel to the UK in any event.
But the central issue is the accessibility of both tuition providers and approved testing centres which offer the stipulated test without additional language requirements.
This will no doubt call for examination on the facts of specific cases.
In my view in order to ensure a fair balance the Government should consider amending the guidance to allow officials to consider whether it is reasonably practicable for the incoming spouse to obtain the needed tuition and sit the test without incurring inordinate costs.
I agree with Lady Hales approach to the article 14 case in para 58 of her judgment and I agree with the Court of Appeal (para 47) and Beatson J (para 145) that the common law challenge fails.
I have concerns about making any declaration of incompatibility as (i) circumstances on the ground in the countries in which incoming spouses or partners reside are likely to be changing over time, (ii) I see little benefit in a generally worded declaration which gives no guidance on what makes it unreasonable to expect the incoming partner to comply with the Rule, and (iii) I am not persuaded that it is appropriate to extend declarations of incompatibility to circumstances outside the scope of section 4 of the Human Rights Act 1998.
But I am content with Lady Hales proposal that we should invite submissions from the parties before reaching a concluded view on this suggestion and making our final determination.
LORD NEUBERGER:
I have had the benefit of reading in draft the judgments of Lady Hale and Lord Hodge.
I agree that these two appeals should be dismissed because rule E ECP 4.1 in Appendix FM to the Immigration Rules (the Rule), set out in paras 12 13 above, is lawful.
However, I also agree with them that the guidance (the Guidance) contained in para SET 17.9 (updated 15 February 2011) as expanded in the Immigration Directorate Instruction, set out in paras 16 20 above, seems to be bound to result in article 8 rights being infringed on a number of occasions.
The Rule imposes what may be called a pre entry English requirement for spousal migrants ie it requires a foreign spouse or partner of a British citizen or person settled in the United Kingdom to produce a test certificate of knowledge of the English language to a prescribed standard prior to entering the United Kingdom, as Maurice Kay LJ described it below [2014] 1 WLR 208, para 1.
As he went on to explain, [p]reviously such persons were only required to demonstrate such knowledge two years after entering the United Kingdom, and only then could they obtain indefinite leave to remain (ILR).
In these proceedings, the appellants contend that the Rule infringes article 8 and that it therefore should be struck down.
There is no doubt that it interferes with article 8 rights, and it therefore has to satisfy the familiar four tests, or Requirements, which are set out by Lady Hale in para 29 above namely, legitimate aim, rational connection, less intrusive means and proportionality.
The aims of, or reasons for, the Rule are set out in summary form by Lady Hale at para 33 and by Lord Hodge at para 62.
Opinions may no doubt differ as to the relative or absolute importance of each of these six aims, although I agree with Lady Hale and Lord Hodge in thinking that the first, assisting integration into British society at an early stage, is plainly the most important.
However, improving employment prospects, benefitting children, and reducing vulnerability (especially of women) all seem to me to be very worthwhile aims, one or more of which could, in some individual cases, turn out to be more significant than the first aim.
Accordingly, there can be no doubt but that these aims are plainly legitimate; indeed, they are the sort of aims which one would expect a government to have.
The first Requirement, however, is not merely that the aims are legitimate, but that they justify interfering with, or limiting, a Convention right.
In this case, the Rule interferes with the article 8 rights of men and women in this country whose partners abroad may be impeded in their attempts to join them in the United Kingdom.
Although article 8.1 is very wide in its reach, article 8.2 of course makes it clear that it is not an absolute right, and it does not impose a duty on a state to facilitate, or even to allow, a married couple to live together.
The limits on article 8.1 rights in this connection were helpfully summarised by Lady Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 19.
Particularly bearing that factor in mind, it seems to me that, at any rate if taken at face value, the six aims represent a set of reasons which easily serve to enable the Rule to satisfy the first Requirement, as they are sufficiently important to justify the interference with article 8 rights in question.
However, the evidence adduced on behalf of the appellants may be said to call into question whether the first Requirement is satisfied.
I shall consider that evidence when dealing with the fourth Requirement, proportionality.
However, for the purposes of the first Requirement, I am very dubious whether the evidence can, even on a quick reading, assist the appellants.
The evidence does not suggest that implementation of the Rule will achieve its purpose in only a negligible number of cases; indeed, it would be surprising if any expert was prepared to say that in the light of the available information.
Once it is accepted, as I think it must be, that the Rule is likely to achieve its purpose in a significant number of cases, I believe it must follow that the first Requirement is satisfied.
As to the second Requirement, it is not in my judgment realistically possible to argue against the proposition that there is a rational connection between the six aims and the Rule.
So far as the third Requirement is concerned, it was contended by the appellants that the Rule had not been shown to be the least intrusive way of achieving the six aims, or, to put it another way, it had not been established as being no more than necessary to achieve the six aims.
In this connection, it is worth bearing in mind that the approach of a court to the third Requirement should not be absolutist.
Indeed, it has been authoritatively said that the question it involves may be better framed as was the limitation of the protected right one that it was reasonable for the legislature to impose to achieve the legitimate aim, bearing in mind any alternative methods of achieving that aim per Lord Reed in Bank Mellat v HM Treasury (No 2) [2014] 1 AC 700, 791, para 75, citing Dickson CJ in R v Edwards Books and Art Ltd [1986] 2 SCR 713, 781 782.
The appellants case, which was accepted by Sir David Keene in his dissenting judgment in the Court of Appeal, [2014] 1 WLR 208, paras 55 59, was based on the pre existing system.
He considered that the evidence showed that that system, which involved relatively little interference with article 8 rights, was working satisfactorily, and therefore there was no need for the far more intrusive Rule.
The figures provided by the Home Department, which Sir David cited in support of this view, showed that the numbers of spouses who failed the English test under the pre existing system were 3,245 in 2007, 995 in 2008, and 470 in 2009.
I am not convinced that these figures assist the contention that the third Requirement is not satisfied.
However, at least in relation to this appeal, that is an arid point which it is unnecessary to decide, because they clearly are relevant to the fourth Requirement (which Sir David also relied on in paras 55 59 of his judgment).
At any rate, subject to that concern, it appears to me that the third Requirement is clearly satisfied.
If there is to be a Regulation ensuring that would be spousal migrants (applicants) attain a specified level of English before coming to the UK, no less an intrusive alternative to the Rule has been suggested.
That then leaves the final Requirement, proportionality.
In addition to the evidence of figures provided by the Home Department and summarised at the end of para 86 above, the appellants rely on other evidence to which I have already alluded.
As Lady Hale explains in paras 43, 44 and 47 of her judgment, the appellants have collated detailed expert assessments, including facts and opinions, from Dr Jordan, Dr Wray and Dr Charsley.
In their view, there is real reason to doubt the likely efficacy of the Rule in achieving each of the six aims.
They also explain that there will be a number of cases where application of the Rule in accordance with the Guidance is very likely to render it impossibly hard, in practical terms, for a person to attain the necessary proficiency in English or to take the test to prove that he or she has done so.
This evidence does give rise to some concern, but I do not consider that it justifies the conclusion that the Rule infringes article 8.
So far as the numbers of spousal migrants who fail the post entry test are concerned, it is fair to say that the figures set out at the end of para 86 are relatively small.
However, those figures do not take into account the possibility that, once in the UK, some spousal migrants may never apply for ILR, and therefore have not been taken into account.
Further, the Home Departments 2009 Equality Impact Assessment identified foreign spouses as the largest group who do not pass the English test after two years.
It is therefore apparent that a significant proportion of spousal migrants who entered the UK each year did not learn English to the requisite standard during the two years following their arrival, but it is not possible to identify the precise proportion.
That means that, each year, there was a significant, but unspecified, number of spousal migrants who (i) remained in the UK not speaking English, (ii) were deported after having lived here for more than two years, or (iii) learned English later.
Both the available evidence and common sense lend support for the notion that category (ii) and, albeit more speculatively, category (iii), includes many fewer people than category (i).
Even spousal migrants who, under the pre existing system, learned English after arriving were, at least on the Departments not unreasonable assessment, in a weaker position than they would be under the Rule, because the effect of the Rule is that spousal migrants learn English before arriving here and are therefore able to hit the ground running.
As for the experts, they were not saying that the implementation of the Rule could do nothing to achieve the stated aims: they are sceptical whether it will do so to any significant extent, and they are concerned that it may, in some respects, be counter productive.
They also consider that there will be many people for whom the possibility of learning English, or taking the relevant test, in their home country would be impossible or near impossible.
The likelihood of, and the extent to which, the six aims will be achieved by implementing the Rule is, in the end, a matter of judgment, on which it is virtually inevitable that reasonable people who have carefully considered the matter, whether or not with any particular expertise, will differ.
Similarly, it is very hard to assess how many people would be put in difficulties by having to comply with the Rule, and how great or insurmountable those difficulties might be.
There is no reliable, objective, quantitative evidence available on any of those issues.
Accordingly, it is unsurprising, that the appellants are able to rely on opinion evidence, which is based on experience and judgment.
Given that it is not inherently improbable and that it comes from properly qualified and experienced experts, this evidence is worthy of respect.
However, any court should be very slow indeed before relying on such evidence as the sole or main justification for invalidating government policy, particularly when the policy concerns a sensitive social issue, and the main aim of the policy is fairly described as benign, as Lady Hale says in para 41 above.
As to the concerns about hardship or impossibility, when considering individual cases a great deal may depend on how the Rule is operated.
However, the instant claims have been launched and argued on the basis of challenging the Rule in limine, and not how it is operated, let alone how it would have been applied in these two cases.
It is true that it appears quite possible that the effect of implementing the Rule may not be particularly substantial.
However, the court should accord to the executive a wide measure of discretion when deciding on the likely value of a policy such as that embodied in the Rule.
Furthermore, the Home Department carried out two substantial Impact Assessments and two substantial Equality Impact Assessments before deciding to introduce the Rule, albeit that those assessments were not directed to the issue raised in these two cases, namely the impact on article 8 rights of people in this country.
As Toulson LJ said in para 51 in the Court of Appeal, there is an inevitable degree of crystal ball gazing, when it comes to an experimental scheme such as that embodied in the Rule.
In such a case, one must be wary of complaining about the lack of a quantitative or precise assessment of the extent of the likely benefits, and it is fair to add that no such complaint has been advanced.
Where, as here, such an assessment is not a practical possibility, to insist on one would have two possible consequences, each of which would be unfortunate.
First, it could lead to the abandonment of experimental policies, however well thought out they may be and however successfully they may have turned out.
Alternatively, it could encourage artificial or bogus cost benefit and other quantitative analyses, which are already by no means unknown, and which devalue properly based quantitative analyses.
I also agree that the challenge to the Rule based on article 14 also fails for the
I agree therefore that (a) the Rule has a legitimate purpose, namely the six aims referred to above, which is sufficiently important to justify interfering with the lives of persons in the UK who wish to be united here with partners who are currently abroad, (b) there is plainly a rational connection between the Rule and its aims, (c) the provisions of the Rule are no more than is necessary to accomplish its aims, and (d) bearing in mind the wide measure of discretion which should be accorded to the executive in a case such as this and the research that was done in anticipation, the Rule strikes a fair balance between the rights of individuals and the interests of the community.
reasons given by Lady Hale.
Accordingly, for the reasons more fully given by Lady Hale and Lord Hodge (whose judgments have nuanced differences in their approaches, but whose essential reasoning appears to be the same), and in agreement with the conclusion reached by Maurice Kay and Toulson LJJ, I would dismiss these appeals.
However, I have concerns about the Guidance.
It does appear virtually certain that there will be a significant number of cases where application of the Guidance will lead to infringement of article 8 rights.
By way of example, it may be impossible, in any practical sense, for a potential applicant to obtain access to a tuition and/or to a test centre.
In particular, it appears that, in some countries, a person in a remote rural home either would have to travel repeatedly to and from a tuition centre many hundreds of miles away, or would have to find the money to rent a place to live near the tuition centre.
Depending on the circumstances of the potential applicant, this may well render reliance on the Rule disproportionate.
And, as Lady Hale points out, reliance on the absolute exclusion in the Guidance of [l]ack of or limited literacy or education from the category of exceptional circumstances, and the broad statement that it is reasonable to expect that [applicants] (or their sponsor ) will generally be able to afford reasonable costs incurred in making their application could easily lead to inappropriate outcomes in individual cases.
Accordingly, I share Lady Hales concerns expressed in para 53, and it is also right to say that I also agree with what Lord Hodge says in para 73.
In those circumstances, I see considerable attraction in granting declaratory relief to reflect the concerns we have about the application of the Guidance.
This is an important and sensitive topic, and it could be unfortunate if there was no formal record of this courts concern about the application of the Guidance.
That is particularly true given the public expenditure which has been devoted to these proceedings, coupled with the fact that a declaration may avoid the expenditure of further costs on subsequent proceedings involving a challenge to the Guidance.
And a formal declaration now would avoid any further delay involved in establishing the correct approach to be adopted to applicants.
However, it would be wrong to contemplate making, or even to speculate about the possible terms of, a declaration without first giving the parties the opportunity of making written submissions on the appropriateness of such a course and the terms of any potential declaration.
While I am sympathetic to the notion of granting a declaration, it is only fair to add that it would be an unusual course to take (given that it has only been the Rule which was under attack in these proceedings), and to acknowledge that the Secretary of State may well persuade us that, if it was drafted so as to reflect our views at this stage, any declaration would be too unspecific to be helpful or would be otherwise inappropriate.
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The appellants in these cases challenged the validity of an amendment to the Immigration Rules in 2010 requiring a foreign spouse or partner of a British citizen or person settled in the United Kingdom to pass a test of competence in the English language before coming to live here (rule E ECP 4.1 and E LTRP 4.1 in Appendix FM) (the Rule).
They argued that the Rule itself is an unjustifiable interference with the right to respect for private and family life protected by article 8 of the European Convention on Human Rights (ECHR) and/or is unjustifiably discriminatory in securing the enjoyment that right contrary to article 14, or unlawful by reason of its irrationality.
The Governments objectives in introducing the pre entry English requirement for spouses and partners were (a) to assist the spouse or partners integration into British society at an early stage, (b) to improve employment chances for those who have access to the labour market, (c) to raise awareness of the importance of language and to prepare for the tests that the spouses or partners would later have to pass to settle indefinitely in the UK, (d) to save translation costs, (e) to benefit any children the couple might have and (f) to reduce the vulnerability of newly arrived spouses, especially women.
The Rule requires spouses and partners to show the ability to speak English at a basic level by passing a test with an approved test provider unless exceptional circumstances are shown.
Guidance accompanying the Rule makes it clear that exceptional circumstances will rarely arise and do not include financial reasons or lack of literacy.
The appellants are UK citizens who have been married to foreigners since 2009 and 2010 respectively.
Their husbands are unable to satisfy the pre entry language requirement, in Saiqa Bibis case because he would have to relocate to Rawalpindi in Pakistan for several months, which is not affordable, and in Mrs Alis case because there is no test centre in the Yemen where they have had to live.
The High Court held that the Rule itself was not unlawful.
The Court of Appeal by a majority upheld the High Courts decision.
The Supreme Court unanimously dismisses the appeal in respect of the finding that the Rule itself does not infringe article 8, but it invites further submissions from the parties on whether a declaration should be made that the operation of the Guidance in its present form is incompatible with article 8 rights where compliance with the requirement is impracticable.
Three justices give substantive judgments: Lady Hale (with whom Lord Wilson agrees), Lord Hodge (with whom Lord Hughes agrees) and Lord Neuberger.
The right to respect for family life guaranteed by the ECHR includes the right of married couples to live together, but article 8 does not impose a general obligation on the part of a 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 [25 26].
However, interference with the right must still be proportionate, striking a fair balance between the interests of the individuals and the community as a whole [29]: The six objectives of the Rule are intended to protect the interests of the economic well being of the country or perhaps the protection of the rights and freedoms of others.
Assisting the spouse or partners integration into British society at an early stage is undoubtedly an important and benign aim for which even a basic level of English language skills would be of some benefit.
Evidence filed by the appellants casts doubt on the value of the test in getting the learner off to a flying start compared with the opportunities to learn after arrival, but the aim is legitimate and sufficiently important to justify interference with the article 8 right [30 45] There is a rational connection between the Rule and the aim it seeks to achieve.
It will make a contribution to the overall aim of promoting integration [46] The Rule is no more than necessary to achieve this contribution [47 48] The impact of the pre entry language requirement has not been systematically studied by the Secretary of State but it is obvious that at an individual level access to appropriate tuition and a test centre may prove such an obstacle that it amounts to an unjustified interference with their partners article 8 rights [50].
However, the problem lies not in the Rule itself but in the restrictive interpretation of exceptional circumstances in the Guidance which means there are likely to be a significant number of cases in which the present practice does not strike the fair balance required by article 8 [53 55].
The discrimination claim adds nothing to the claim under article 8: the exemption for nationals of Anglophone countries makes sense and direct discrimination on grounds of nationality could be justified under article 14 [56 59].
Accordingly, the Rule itself is not disproportionate.
Lady Hale suggests that the appropriate solution to avoid infringements in individual cases would be to recast the Guidance to grant exemptions in cases where compliance with the requirement is simply impracticable, and one remedy might be for the court to declare that the present application of the Guidance is incompatible with the rights of individuals in such circumstances.
Since this was not a remedy sought by the appellants the Court should invite further submissions before finally deciding the outcome of the appeal [55, 60].
Lord Hodge agrees that there is no basis for striking down the Rule and that the Guidance may result in a significant number of cases in which the article 8 rights of individuals will be breached, where, for example the cost is inordinate.
He is not persuaded that a declaration relating to the Guidance is appropriate but is content to reach a concluded view after further submissions [61 76].
Lord Neuberger agrees that the Guidance seems bound to result in the infringement of article 8 rights in individual cases but that the Rule itself is not disproportionate, bearing in mind the wide measure of discretion which should be accorded to the executive in a case such as this and the research that was done in anticipation [98].
He is sympathetic to the proposed declaration relating to the Guidance but agrees that it would be wrong to make it without considering further submissions [104].
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This appeal concerns the permitted uses of a retail store in Streatham in the area of the London Borough of Lambeth (the Council).
Planning permission was originally granted by the Secretary of State in 1985, but the use was limited by condition to sale of DIY goods and other specified categories, not including food sales.
Following implementation, the permitted categories were extended by later consents (under section 73 of the Town and Country Planning Act 1990), the most recent being in 2014 (the 2014 permission), which is in issue in this case.
The second respondent sought a certificate from the Council determining that the lawful use of the store extended to sales of unlimited categories of goods including food.
A certificate to that effect was refused by the Council, but granted by a planning inspector on appeal, and upheld by the lower courts.
The Council, as local planning authority, appeals to this court.
The planning history in more detail
The original permission, granted by the Secretary of State on 17 September 1985 (the 1985 permission), was subject to a number of conditions, including: 6.
The retail unit hereby permitted shall be used for the retailing of goods for DIY home and garden improvements and car maintenance, building materials and builders merchants goods and for no other purpose (including any other purpose in Class I of the Schedule to the Town and Country Planning (Use Classes) Order 1972 or in any provision equivalent to that Class in any statutory instrument revoking and re enacting that Order).
The exclusion of use for other purposes, including those within Use Class 1, had the effect of excluding (inter alia) food sales.
The following reason was given in the decision letter (para 16): Because the traffic generation and car parking requirements of certain types of large retail stores are substantially greater than those of the DIY unit proposed and could be excessive at this site, it is necessary to restrict the right to change to other
types of retail unit
On 30 June 2010, the Council granted a further planning permission (the 2010 permission) expressed to be for Variation of Condition 6 of the 1985 permission to allow for the sale of a wider range of goods as specified, not including food sales, and again excluding other uses within the relevant use class (now Class A1).
Although it is common ground that this permission was granted under section 73, there was no specific reference to that section in the document, which referred simply to the 1990 Act.
This permission included, as a separate condition 1, the same enumeration of permitted uses and exclusions as in the terms of the grant, and the following reason was given for the condition: In order to ensure that the level of traffic generation is such as to minimise danger, obstruction and inconvenience to users of the highway and of the accesses.
There were in addition two new conditions which had not been in the 1985 permission: 2.
Details of refuse and recycling storage to serve the development shall be submitted to and approved in writing by the Local Planning Authority prior to first commencement of any of the additional retail uses hereby permitted.
The refuse and recycling storage facilities shall be provided in accordance with the approved details prior to commencement of the development and shall thereafter be retained as such for the duration of the permitted use. 3.
A strategy for the Management of Deliveries and Servicing shall be submitted to and approved in writing by the Local Planning Authority prior to first commencement of any of the additional retail uses hereby permitted.
Deliveries and servicing shall thereafter be carried out solely in accordance with the approved details.
Reasons were given for each condition.
The permission now in issue was granted on 7 November 2014. (The application is not before us.) In this case the grant referred in terms to section 73.
It is necessary to set out the operative parts in full: DECISION NOTICE DETERMINATION OF APPLICATION UNDER SECTION 73 TOWN AND COUNTRY PLANNING ACT 1990 The London Borough of Lambeth hereby approves the following application for the variation of condition as set out below under the above mentioned Act Development At: Homebase Ltd 100 Woodgate Drive, London SW16 5YP For: Variation of condition 1 (Retail Use) of Planning Permission Ref: 10/01143/FUL (Variation of Condition 6 (Permitted retail goods) of planning permission Ref 83/01916 Granted on 30.06.2010.
Original Wording: The retail use hereby permitted shall be used for the retailing of DIY home and garden improvements and car maintenance, building materials and builders merchants goods, carpets and floor coverings, furniture, furnishings, electrical goods, automobile products, camping equipment, cycles, pet and pet products, office supplies and for no other purpose (including the retail sale of food and drink or any other purpose in Class A1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987 (as amended) or in any provision equivalent to that Class in any statutory instrument revoking and re enacting that Order).
Proposed Wording: The retail unit hereby permitted shall be used for the sale and display of non food goods only and, notwithstanding the provisions of the Town and Country Planning (General Permitted Development) Order 1995 (or any Order revoking and re enacting that Order with or without modification), for no other goods. [I should note in passing that the reference in the revised form of condition to the General Development Order, rather than the Use Classes Order, appears to be a mistake, as Mr Lockhart Mummery QC for the third respondent suggested.
Neither he nor any of the parties saw it as significant to the issues in the appeal.] Approved Plans Summary of the Reasons for Granting Planning Permission: In deciding to grant planning permission, the Council has had regard to the relevant policies of the development plan and all other relevant material considerations.
Having weighed the merits of the proposals in the context of these issues, it is considered that planning permission should be granted subject to the conditions listed below.
Conditions 1.
The development to which this permission relates must be begun not later than the expiration of three years beginning from the date of this decision notice.
Reason: To comply with the provisions of section 91(1)(a) of the Town and Country Planning Act 2.
Prior to the variation her[e]by approved being implemented a parking layout plan at scale of 1:50 indicating the location of the reserved staff car parking shall be submitted to and approved in writing by the Local Planning Authority.
The use shall thereafter be carried out solely in accordance with the approved staff car parking details.
Reason: To ensure that the approved variation does not have a detrimental impact on the continuous safe an[d] smooth operation of the adjacent highway 3.
Within 12 months of implementation of the development hereby approved details of a traffic survey on the site and surrounding highway network shall be undertaken within one month of implementation of the approved development date and the results submitted to the local planning authority.
If the traffic generation of the site, as measured by the survey, is higher than that predicted in the Transport Assessment submitted with the original planning application the applicant shall, within three months, submit revised traffic modelling of the Woodgate Drive/Streatham Vale/Greyhound Lane junction for analysis.
If the junction modelling shows that junction capacity is worse than originally predicted within the Transport Assessment, appropriate mitigation measures shall be agreed with the council, if required, and implemented within three months of the date of agreement.
Reason: to ensure that the proposed development does not lead to an unacceptable traffic impact on the adjoining highway network There was no specific reference to conditions 2 and 3 of the 2010 permission.
On 10 June 2015, the second respondent applied to the Council for a certificate of lawfulness of proposed use or development (under section 192 of the 1990 Act) for unrestricted use of the store.
This was refused by the Council on 12 August 2015, but the appeal was allowed by the inspector by a decision letter dated 6 December 2016.
The letter gave a certificate of lawfulness for use described as The use of the premises for purposes within Use Class Al of the Town and Country Planning (Use Classes) Order 1987 (as amended) without restriction on the goods that may be sold.
The reason given was: No condition was imposed on [the 2014 permission] to restrict the nature of the retail use to specific uses falling within Use Class A1
The statutory framework
It is unnecessary to set out the familiar provisions of the 1990 Act relating to the definition of development, and to the granting of planning permission.
It is to be noted however that the extension of the categories of goods to be sold within the store did not in itself amount to development (within the meaning of 1990 Act section 55) requiring planning permission.
The erection of the building and the commencement of sales under the 1985 permission no doubt involved both operational development and a material change of use.
Thereafter a change to sale of other categories (at least those within the relevant class under the current Use Class Order) would not involve any breach of planning control unless restricted by an appropriate condition.
Section 73 of the Act, on which the Council relied in granting the 2010 and 2014 permissions, is headed Determination of applications to develop land without compliance with conditions previously attached.
It provides: (1) This section applies to applications for planning permission for the development of land without complying with conditions subject to which a previous planning permission was granted. (2) On such an application the local planning authority shall consider only the question of the conditions subject to which planning permission should be granted, and (a) if they decide that planning permission should be granted subject to conditions differing from those subject to which the previous permission was granted, or that it should be granted unconditionally, they shall grant planning permission accordingly, and (b) if they decide that planning permission should be granted subject to the same conditions as those subject to which the previous permission was granted, they shall refuse the application.
The background to this section (formerly section 31A of the Town and Country Planning Act 1971) was described by Sullivan J in Pye v Secretary of State for the Environment, Transport and the Regions [1998] 3 PLR 72: Prior to the enactment of (what is now) section 73, an applicant aggrieved by the imposition of the conditions had the right to appeal against the original planning permission, but such a course enabled the Local Planning Authority in making representations to the Secretary of State, and the Secretary of State when determining the appeal as though the application had been made to him in the first instance, to go back on the original decision to grant planning permission.
So the applicant might find that he had lost his planning permission altogether, even though his appeal had been confined to a complaint about a condition or conditions.
It was this problem which section 31A, now section 73, was intended to address .
While section 73 applications are commonly referred to as applications to amend the conditions attached to a planning permission, a decision under section 73(2) leaves the original planning permission intact and un amended.
That is so whether the decision is to grant planning permission unconditionally or subject to different conditions under paragraph (a), or to refuse the application under paragraph (b), because planning permission should be granted subject to the same conditions.
In the former case, the applicant may choose whether to implement the original planning permission or the new planning permission; in the latter case, he is still free to implement the original planning permission.
Thus, it is not possible to go back on the original planning permission under section 73.
It remains as a base line, whether the application under section 73 is approved or refused, in contrast to the position that previously obtained.
The original planning permission comprises not merely the description of the development in the operative part of the planning permission . but also the conditions subject to which the development was permitted to be carried out .
This passage was approved by the Court of Appeal in Powergen United Kingdom plc v Leicester City Council [2000] JPL 1037, para 28, per Schiemann LJ.
Sullivan Js comment that such applications are commonly referred to as applications to amend the conditions was echoed by Schiemann LJ, who noted, at para 1, that such an application is commonly referred to as an application to modify conditions imposed on a planning permission.
This usage is also consistent with the wording used in the statute under which section 31A was originally introduced.
It was one of various minor and consequential amendments introduced by section 49 and Schedule 11 of the Housing and Planning Act 1986, described as (d) applications to vary or revoke conditions attached to planning permission.
It is clear, however, that this usage, even if sanctioned by statute, is legally inaccurate.
A permission under section 73 can only take effect as an independent permission to carry out the same development as previously permitted, but subject to the new or amended conditions.
This was explained in the contemporary circular 19/86, para 13, to which Sullivan J referred.
It described the new section as enabling an applicant, in respect of an extant planning permission granted subject to conditions, to apply for relief from all or any of those conditions.
It added: If the authority do decide that some variation of conditions is acceptable, a new alternative permission will be created.
It is then open to the applicant to choose whether to implement the new permission or the one originally granted.
Although the section refers to development in the future, it is not in issue that a section 73 application can be made and permission granted retrospectively, that is in relation to development already carried out.
This question arose indirectly in the courts below, in the context of a dispute about the validity of the time limit condition (condition 1), which required the development to which this permission relates to be begun within three years.
The Court of Appeal upheld the inspectors decision that this condition was invalid, in circumstances where the relevant development had been carried out many years before.
Lewison LJ said: I cannot see that the decision notice granted planning permission for any prospective development.
The mere widening of the classes of goods that were permitted to be sold by retail does not amount to development at all.
Conformably with the definition of development in section 55 the only development to which the application could have related was the original erection of the store and the commencement of its use as a DIY store.
It was that development that was permitted subject to the conditions that the application was designed to modify; and it was the planning permission permitting that development to which the decision notice referred. (para 79)
I agree with that analysis, which is not I understand in dispute before this court.
However, it leaves open the question as to the effect of the new permission on conditions which have already taken effect following implementation of the earlier permission.
The section does not assist directly.
It envisages two situations: either (a) the grant of a new permission unconditionally or subject to revised conditions, or (b) refusal of permission, leaving the existing permission in place with its conditions unchanged.
It does not say what is to happen if the authority wishes to change some conditions but leave others in place.
As will be seen (para 20 below), the Court of Appeal cited government guidance indicating that to assist with clarity planning decisions under section 73 should also repeat the relevant conditions from the original planning permission.
However, as I read this, it was given as advice, rather than as a statement about the legal position.
Although the current status of the 2010 conditions is not directly in issue in the appeal, it is of some background relevance and has attracted conflicting submissions.
I shall return to this aspect later in the judgment.
For completeness, before leaving this discussion of section 73, I should note that circular 19/86 (referred to above) described its predecessor as complementing section 32 of the Town and Country Planning Act 1971 (later, section 63 of the 1990 Act), which at the time made specific provision for retrospective permissions (Permission to retain buildings or works or continue use of land).
That section has since been repealed and partially replaced by section 73A of the 1990 Act (see Planning and Compensation Act 1991, Schedule 7).
Whatever the precise significance of this change, it is not suggested that it has any relevance to the issues in this appeal and neither side has sought to rely on section 73A.
Principles of interpretation
We have received extensive submissions and citations from recent judgments of this court on the correct approach to interpretation.
Most relevant in that context is Trump International Golf Club Ltd v Scottish Ministers [2015] UKSC 74; [2016] 1 WLR 85.
An issue in that case related to the interpretation of a condition in a statutory authorisation for an offshore wind farm, requiring the developer to submit a detailed design statement for approval by Ministers.
One question was whether the condition should be read as subject to an implied term that the development would be constructed in accordance with the design so approved.
In the leading judgment Lord Hodge (at paras 33 37) spoke of the modern tendency in the law to break down divisions in the interpretation of different kinds of document, private or public, and to look for more general rules.
He summarised the correct approach to the interpretation of such a condition: 34.
When the court is concerned with the interpretation of words in a condition in a public document such as a section 36 consent, it asks itself what a reasonable reader would understand the words to mean when reading the condition in the context of the other conditions and of the consent as a whole.
This is an objective exercise in which the court will have regard to the natural and ordinary meaning of the relevant words, the overall purpose of the consent, any other conditions which cast light on the purpose of the relevant words, and common sense.
He rejected a submission that implication had no place in this context: 32. [Counsel] submits that the court should follow the approach which Sullivan J adopted to planning conditions in Sevenoaks District Council v First Secretary of State [2005] 1 P & CR 186 and hold that there is no room for implying into condition 14 a further obligation that the developer must construct the development in accordance with the design statement.
In agreement with Lord Carnwath JSC, I am not persuaded that there is a complete bar on implying terms into the conditions in planning permissions 35.
While the court will, understandably, exercise great restraint in implying terms into public documents which have criminal sanctions, I see no principled reason for excluding implication altogether.
In the instant case, had it been necessary to do so, he would, at para 37, have readily drawn the inference that the conditions of the consent read as a whole required the developer to conform to the design statement in the construction of the windfarm.
In my own concurring judgment, having reviewed certain judgments in the lower courts which had sought to lay down lists of principles for the interpretation of planning conditions, I commented: I see dangers in an approach which may lead to the impression that there is a special set of rules applying to planning conditions, as compared to other legal documents, or that the process is one of great complexity. (para 53) Later in the same judgment, I added: Any such document of course must be interpreted in its particular legal and factual context.
One aspect of that context is that a planning permission is a public document which may be relied on by parties unrelated to those originally involved It must also be borne in mind that planning conditions may be used to support criminal proceedings.
Those are good reasons for a relatively cautious approach, for example in the well established rules limiting the categories of documents which may be used in interpreting a planning permission But such considerations arise from the legal framework within which planning permissions are granted.
They do not require the adoption of a completely different approach to their interpretation. (para 66)
In summary, whatever the legal character of the document in question, the starting point and usually the end point is to find the natural and ordinary meaning of the words there used, viewed in their particular context (statutory or otherwise) and in the light of common sense.
The Court of Appeals reasoning
It is unnecessary to review in any detail the reasoning of the inspector or the High Court, since the issues, and the competing arguments, are fully discussed in the judgment of the Court of Appeal.
Having set out the planning history and the terms of section 73, Lewison LJ (paras 19 22) identified what he saw as the problem.
While he acknowledged that it was clear what Lambeth meant to do in a very broad sense, he said: But that is not the question.
The question is: what did Lambeth in fact do? The application was an application for the variation of a condition attached to the 2010 permission the technical trap, into which it is said that Lambeth fell, is that approval of an application under section 73 requires the grant of a fresh planning permission, rather than merely a variation of an existing one It follows from this that the decision notice must be read as a free standing grant of planning permission.
However, it failed to repeat any of the conditions imposed on the previous planning permissions and, more importantly, failed to express the new description of the use as a condition, rather than as a limited description of the permitted use He noted the advice given in the relevant Planning Policy Guidance note (PPG): It should be noted that the original planning permission will continue to exist whatever the outcome of the application under section 73.
To assist with clarity, decision notices for the grant of planning permission under section 73 should also repeat the relevant conditions from the original planning permission, unless they have already been discharged.
This advice, he thought, was reflective of the words of section 73(2)(a) which requires a local planning authority, if it decides that different conditions should be imposed, to grant planning permission accordingly: that is to say in accordance with the conditions upon which it has decided that planning permission should be granted.
Later in the judgment he addressed the submissions before the court.
He noted that Mr Reed QC for the Council put his argument in two ways: first by implication of a condition and second as a matter of interpretation.
He thought it more logical to reverse the order, while accepting that the exercise was an iterative process, and observing that the objective was not to determine what the parties meant to do in the broad sense, but what a reasonable reader would understand by the language they in fact used. (para 38)
Having referred to the findings of the judge in the court below, he summarised Mr Reeds submission on the interpretation of the decision notice: 45.
In the light of those findings Mr Reed argues that the decision notice described itself as doing no more than approving a variation of condition in two previous planning permissions.
For technical reasons, however, a variation of a condition under section 73 takes effect as the grant of a fresh planning permission.
In order to give effect to Lambeths intention and also to that of the applicant for the variation of the condition, the limited description of the use must therefore be read as if it were itself a condition.
In the critical paragraphs of the judgment, he gave his view of how the
reasonable reader would have approached the matter: 52.
The reasonable reader of the decision notice must be notionally equipped with some knowledge of planning law and practice.
The distinction between a limited description of a permitted use and a condition is a well known distinction.
The reasonable reader would also know that the Governments own guidance stated that any conditions applicable to planning permission granted under section 73 must be explicitly stated.
He would know the general structure of a planning permission which will set out a summary of the application, describe the development permitted by the permission and, in a separate part of the permission, will set out any conditions imposed on the grant of planning permission with reasons for those conditions.
He would notice that there were some conditions attached to the grant which were explicitly stated in the decision notice, and that the decision notice stated that Lambeth had decided that planning permission should be granted subject to the conditions listed below.
If he had looked back over the planning history he would also have seen the 2010 approval of a variation to the condition, which did specify the permitted range of goods in the form of a condition.
That had not been repeated in the decision notice.
He would also have noticed that the decision notice in 2010 had imposed two conditions (relating to refuse and recycling on the one hand, and management of deliveries on the other) which had also not been repeated in the decision notice.
If he had considered the 2013 refusal he would have seen that Lambeth was not satisfied at that time that the applicant had demonstrated that increased traffic would not lead to adverse impacts.
But he would have seen that the decision notice of 2014 referred to a traffic assessment which Lambeth had considered.
He would also have noticed that condition 3 required a traffic survey and the implementation of mitigation measures if junction capacity was worse than predicted.
He might reasonably have concluded that Lambeth had been sufficiently satisfied on this second application to grant conditional permission, with the safety net of condition 3. 53.
Accordingly, sympathetic though I am to Lambeths position, this submission seems to me to go well beyond interpretation.
It is not a question of rearranging words that appear on the face of the instrument (as in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101).
It is a question of adding a whole condition, which has a completely different legal effect to the words that Lambeth in fact used.
As a further point he noted the statutory requirement for the notice to state the reasons for any condition imposed.
He said: To impose a condition without giving reasons for it would be a breach of statutory duty.
It is one of the principles of contractual interpretation that one should prefer a lawful interpretation to an unlawful one.
There is nothing in the decision notice which could amount to a clear, precise and full reason for treating the description of the use as a condition.
Although Mr Reed suggested that the first reason given for the 2013 refusal could stand as the reason, I consider that to be untenable.
The requirement to give reasons is applicable to the notice.
It may be that the notice might extend to another document incorporated by reference; but that is not this case.
Although the decision notice does cross refer both to the original planning permission and also to previous approved variations, it does not mention the refusal at all.
There would be no reason for a reasonable reader of the decision notice to suppose that a reason for an unexpressed condition was contained in a document which was simply part of the background. (para 59)
Lewison LJ went on to deal with the alternative formulation, based on implication of a condition in the same form as the proposed wording, holding that it failed to meet the stringent tests laid down by the authorities (paras 63 75).
In particular he accepted a submission by Mr Lockhart Mummery that the judgments in Trump (like the decision on which they relied: Crisp from the Fens Ltd v Rutland County Council (1949 1951) 1 P & CR 48) decided no more than that implication might be made into an extant condition that was incomplete; they did not contemplate the implication of a wholly new condition (para 72).
In this court Mr Reed QC for the Council repeated and developed his arguments in the Court of Appeal.
In line with the decision of the High Court in Im Your Man Ltd v Secretary of State for the Environment [1998] 4 PLR 107, he did not seek to argue that the proposed wording could be treated as an enforceable limitation.
He accepted the need to establish that the permission was subject to a legally effective condition in that form.
In summary he put his case in three ways: (a) as a matter of the correct interpretation of the permission; (b) by correction of an obvious error (by analogy with the contractual principles applied in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101); (c) by the implication of a condition in the terms of the proposed wording (applying the principles in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988).
The respondents generally adopted the reasoning of the Court of Appeal.
Mr Kolinsky QC for the Secretary of State emphasised the need for clarity and certainty in a public document.
For the third respondent (as freehold owner of the site), Mr Lockhart Mummery reminded us that planning is a creature of statute, in which common law principles have a limited role; and also of the need for clear and specific words to exclude rights granted by provisions such as the Use Classes Order.
Commentary
With respect to the careful reasoning of the courts below, I consider that an ordinary reading of the decision notice compels a different view.
I find it unnecessary to examine in detail the more ambitious alternatives proposed by Mr Reed.
However, I observe in passing (in agreement with Mr Lockhart Mummerys submission as to the limited scope of the judgments in Trump) that it is difficult to envisage circumstances in which it would be appropriate to use implication for the purpose of supplying a wholly new condition, as opposed to interpretation of an existing condition.
On the issue of interpretation, Lewison LJ was of course right to say that the 2014 permission needs to be seen through the eyes of the reasonable reader.
However, such a reader should be assumed to start by taking the document at face value, before being driven to the somewhat elaborate process of legal and contextual analysis hypothesised in Lewison LJs para 52.
In essence Mr Reeds submission, in the simple form recorded by Lewison LJ at para 45 (para 22 above) was in my view correct.
It is not necessarily assisted by the varying formulations and citations discussed in his submissions to this court.
There is a risk of over complication.
Taken at face value the wording of the operative part of the grant seems to me clear and unambiguous.
The Council hereby approves an application for the variation of condition as set out below .
There then follow precise and accurate descriptions of the relevant development, of the condition to be varied, and of the permission under which it was imposed.
They are followed by statements first of the Original wording, and then of the Proposed wording; the latter stating in terms that the store is to be used for the sale of non food goods only and for no other goods.
Proposed wording in this context must be read as a description of the form of condition proposed in the application and hereby approved.
In other words, the obvious, and indeed to my mind the only natural, interpretation of those parts of the document is that the Council was approving what was applied for: that is, the variation of one condition from the original wording to the proposed wording, in effect substituting one for the other.
There is certainly nothing to indicate an intention to discharge the condition altogether, or in particular to remove the restriction on sale of other than non food goods.
The suggested difficulties of interpretation do not arise from any ambiguity in the terms of the grant itself.
Nor do they raise any question about the extent to which it is permissible to take account of extraneous material.
It is unnecessary to look beyond the terms of the document.
In these respects the case differs from many of the authorities to which reference has been made in submissions.
The arguments against this simple view turn, not on any lack of clarity in the grant itself, but on supposed inconsistencies, firstly with its statutory context, and secondly with the treatment of other conditions in the remainder of the document.
In respect of the statutory context, the objection is that this reading is inconsistent with the scope of the power under which the grant was made.
Section 73, referred to in terms in the permission, does not give the authority power simply to vary a condition in the previous permission.
That purpose could only be achieved by the grant of a new permission, subject in terms to a condition in the revised form.
Accordingly, it is said, it was not enough simply to approve the proposed wording, without its terms being incorporated into the form of condition as required by section 73(2)(a).
One problem with this argument is that it goes too far for the respondents case.
If section 73 gave no power to grant a permission in the form described, the logical consequence would be that there was no valid grant at all, not that there was a valid grant free from the proposed condition.
The validity of the grant might perhaps have been subject to a timely challenge by an interested third party or even the Council itself.
That not having been done, there is no issue now as to the validity of the grant as such.
All parties are agreed that there was a valid permission for something.
That being the common position before the court, the document must be taken as it is.
It may be that insufficient attention was paid in the submissions below to the background of section 73, as discussed earlier in this judgment.
Once it is understood that it has been normal and accepted usage to describe section 73 as conferring power to vary or amend a condition, the reasonable reader would in my view be unlikely to see any difficulty in giving effect to that usage in the manner authorised by the section that is, as the grant of a new permission subject to the condition as varied.
If the document had stopped at that point, I do not think such a reader could have been left in any real doubt about its intended meaning and effect.
The lack of a specific reason for the condition, to which Lewison LJ attached weight, is of little practical significance, given that this was the relaxation of a previous condition for which the reason was well known, rather than the imposition of a new restriction.
In any event the absence of a reason would not affect the validity of the condition (see Brayhead (Ascot) Ltd v Berkshire County Council [1964] 2 QB 303).
Turning to the second part of the notice, it is true that there are some internal inconsistencies.
Its heading suggests that it is simply stating the reasons for the permission granted in the first part, rather than imposing a separate set of conditions.
Further, the wording of the conditions themselves betrays some ambivalence about what has been approved.
In some places it is referred to as the development to which this permission relates, or the proposed development, in others as the variation hereby approved or the approved variation. (As I have already noted, the time limit condition was held by the courts below to be wholly invalid.)
However, reading the document as a whole, and taking the first part in the sense suggested above, the second part can be given a sensible meaning without undue distortion.
It is explanatory of and supplementary to the first part.
The permitted development incorporating the amended condition is regarded as acceptable, in accordance with the development plan, but only subject to the conditions set out.
They are in other words additional conditions.
They are designed to regulate the expanded use as permitted by the revised condition, dealing in particular with staff parking, and monitoring of the additional traffic impact.
The other 2010 conditions
As I have said, we are not directly concerned in this appeal with the status of the other conditions in the 2010 permission, so far as still potentially relevant, notably conditions 2 and 3 relating respectively to treatment of waste and management of deliveries.
However, some comment may be desirable, since the issue was subject to conflicting submissions before the Court of Appeal and in this court.
At first sight it would seem surprising if the council, when relaxing the restrictions on sales, had not intended to maintain such requirements.
No reason was given for releasing them, and it does not appear to have been requested in the application.
For the Council, Mr Reeds position seems to have shifted during the course of the appeal below.
Lewison LJ (paras 46 47) recorded his initial submission that conditions 2 and 3 should be treated as incorporated into the new permission; the reasonable reader of the decision notice could not be taken to understand that Lambeth was abandoning them.
However, this argument was not pursued in his oral submissions (judgment paras 48, 51), and he seems implicitly to have accepted that they would cease to be effective.
In this court this issue was not dealt with in any detail in the written submissions.
Questioned in argument, Mr Lockhart Mummery QC for the third respondent submitted that conditions 2 and 3, not having been repeated in the new permission, must be taken as having lapsed altogether.
In reply Mr Reed for the Council took a rather different position to that initially taken in the Court of Appeal.
His submission as I understood it was that the 2010 conditions, so far as still relevant, were not as such incorporated into the new permission; but they continued to have effect under the 2010 permission, so far as not inconsistent with anything in the new grant.
Although we have not heard full argument, my provisional view is that Mr Reeds current submission is correct.
It will always be a matter of construction whether a later permission on the same piece of land is compatible with the continued effect of the earlier permissions (see the principles discussed in Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] AC 132, 144).
In this case, following implementation of the 2010 permission, the conditions would in principle remain binding unless and until discharged by performance or further grant.
Conditions 2 and 3 were expressed to remain operative during continuation of the use so permitted.
The 2014 permission did not in terms authorise non compliance with those conditions, nor, it seems, did it contain anything inconsistent with their continued operation.
Accordingly, they would remain valid and binding not because they were incorporated by implication in the new permission, but because there was nothing in the new permission to affect their continued operation.
This approach to the interpretation of the decision notice seems to me consistent with the decision of Sullivan J in a case relied on by Mr Reed before the Court of Appeal: Reid v Secretary of State for Transport [2002] EWHC 2174 (Admin).
Permission for a transport depot had been granted subject to 12 conditions.
The landowner applied for development described as retention of the use of the land without compliance with condition 2 (improvements to public highway) .
The local authority responded with a notice referring to the terms of the application, and expressed in these terms notice of its decision to APPROVE Planning Permission for the application set out above subject to the following conditions: Conditions None.
Sullivan J held that the grant did not mean that the other conditions were no longer effective.
He said: 58.
There is an apparent conflict between the description of the proposed development, which refers not to an existing use but to the retention of a permitted use without compliance with one condition in the 1992 planning permission, and the words Conditions: None.
One is left wondering what is to happen to the remaining conditions on the 1992 planning permission.
Once it is accepted that both the application and the 1992 planning permission referred to in the application for permission may properly be considered for the purpose of construing the meaning of the 2002 permission, then the words Conditions: None mean, in that context, no additional conditions beyond those which had been imposed upon the 1992 permission.
Lewison LJ saw this as a case turning on the particular wording of permission, which was held to have the effect that the conditions attached to the previous planning permission continued to apply to the new one.
He saw it as of no assistance in the present case, particularly given Mr Reeds abandonment before the Court of Appeal of the argument that the conditions attached to the 2010 permission could be carried forward into the new permission (para 51).
As I read the judgment, however, Sullivan J did not intend to say that the other 11 conditions were by implication to be treated as included in the new permission, or that the old permission was superseded.
Rather the new permission, confined as it was to the retention of the use without complying with condition 2, and involving no inconsistency with the old permission and the remaining conditions, had no effect on their continuing effect as conditions subject to which the development had been carried out.
The words Conditions: None was indicating that there were to be no additional conditions beyond those already having effect under the earlier permission.
By contrast, in the present case, the specific conditions in the 2014 permission were intended to be additional both to the varied condition, and to the others remaining in effect under the 2010 permission.
Sullivan J added the following comment: 59.
I accept unreservedly that the drafting of the 2002 planning permission could have been much clearer.
The inspectors observations as to good practice should be heeded by all local planning authorities.
When issuing a fresh planning permission under section 73, it is highly desirable that all the conditions to which the new planning permission will be subject should be restated in the new permission and not left to a process of cross referencing.
Good practice was not followed in the present case.
The present case illustrates the wisdom of that advice, which is also reflected in the PPG.
Nothing in the present judgment is intended to detract from that advice, nor from the importance of ensuring that applications and grants under section 73 are couched in terms which properly reflect the nature of the statutory power.
Conclusions
For these reasons I would allow the appeal.
The precise wording of the order should be agreed between the parties, or subject to further submissions.
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This appeal concerns the permitted uses of a retail store in Streatham in the London Borough of Lambeth.
Planning permission was granted by the Secretary of State in 1985, but the use was limited by condition to sale of DIY goods and other specified categories, not including food.
The permitted categories were extended by later consents (under section 73 of the Town and Country Planning Act 1990 (the 1990 Act)).
The most recent was in 2014, which is in issue in this case.
In that permission, the proposed new wording for the permission included: The conditions in the 2014 permission did not refer to the restriction on the sale of food goods, or to conditions in the previous permission from 2010.
The second respondent (Aberdeen Asset Management) sought a certificate from the appellant Council determining that the lawful use of the store extended to sales of unlimited categories of goods including food.
A certificate to that effect was refused by the Council, but granted by a planning inspector on appeal, on the basis that no condition was imposed on the 2014 permission to restrict the nature of the retail use to specific uses.
This was upheld by the lower courts.
The Council, as the local planning authority, appeals to this court.
The Supreme Court unanimously allows the appeal.
The certificate should be amended to exclude uses within the scope of the Proposed wording in the decision notice.
Lord Carnwath gives the lead judgment.
Section 73 of the 1990 Act envisages two situations: either (a) the grant of a new permission unconditionally or subject to revised conditions, or (b) refusal of permission, leaving the existing permission in place with its conditions unchanged.
It does not say what is to happen if the authority wishes to change some conditions but leave others in place.
Government guidance indicating that to assist with clarity planning decisions under section 73 should also repeat the relevant conditions
from the original planning permission was given as advice, rather than as a statement about the legal position [13].
Whatever the legal character of the document in question, the starting point for interpretation is to find the natural and ordinary meaning of the words there used, viewed in their particular context and in the light of common sense [19].
The 2014 permission needs to be seen through the eyes of a reasonable reader, who is assumed to start by taking the document at face value [28].
The wording of the operative part of the grant are clear and unambiguous.
The Council approves an application for the variation of condition as set out below, which is followed by precise and accurate descriptions of the relevant development, of the condition to be varied, and of the permission under which it was imposed.
That is followed by statements of the Original wording, then of the Proposed wording, the latter stating in terms that the store is to be used for the sale of non food goods only.
The obvious and only natural interpretation of those parts of the document is that the Council was approving what was applied for: the variation of one condition from the original wording to the proposed wording, in effect substituting one for the other.
There is nothing to indicate an intention to discharge the condition altogether, or to remove the restriction on the sale of food goods [29].
If section 73 gave no power to grant a permission in the form described, the logical consequence would be that there was no valid grant at all, not that there was a valid grant free from the proposed condition.
There is no issue now as to the validity of the grant as such, and all parties agree there was a valid permission for something.
That being the common position, the document must be taken as it is [32].
It has been normal and accepted usage to describe section 73 as conferring power to vary or amend a condition, so the reasonable reader would not see any difficulty in giving effect to the 2014 permission in the manner authorised by the section i.e. as the grant of a new permission subject to the condition as varied.
The absence of a reason for the condition does not affect its validity [33].
There are some internal inconsistencies in the second part of the notice, but reading the document as a whole, the second part can be given a sensible meaning without undue distortion.
It is explanatory of and supplementary to the first part.
The permitted development incorporating the amended condition is acceptable but only subject to the other conditions set out.
In other words, they are additional conditions [34 35].
This appeal is not concerned with the status of the conditions in the 2010 permission, but the courts provisional view is that the 2010 conditions were not incorporated into the new permission, but continued to have effect under the 2010 permission, so far as they are consistent with anything in the new grant.
The conditions remain valid and binding because there was nothing in the new permission to affect their continued operation [37 38].
Nothing in the present judgment is intended to detract from the advice, contained in the decision by Sullivan J in R (Reid) v Secretary of State for Transport [2002] EWHC 2174 (Admin), at paragraph 59, that it is highly desirable that all the conditions to which the new planning permission will be subject should be restated in the new permission and not left to a process of cross referencing [42].
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Vicarious liability in tort requires, first, a relationship between the defendant and the wrongdoer, and secondly, a connection between that relationship and the wrongdoers act or default, such as to make it just that the defendant should be held legally responsible to the claimant for the consequences of the wrongdoers conduct.
In this case the wrongdoer was employed by the defendant, and so there is no issue about the first requirement.
The issue in the appeal is whether there was sufficient connection between the wrongdoers employment and his conduct towards the claimant to make the defendant legally responsible.
By contrast, the case of Cox v Ministry of Justice [2016] UKSC 10, which was heard by the same division of the court at the same time, is concerned with the first requirement.
The judgments are separate because the claims and issues are separate, but they are intended to be complementary to each other in their legal analysis.
In preparing this judgment I have had the benefit of Lord Reeds judgment in Cox, and I agree fully with his reasoning and conclusion.
The question in this appeal concerns an employers vicarious liability in tort for an assault carried out by an employee.
It is a subject which has troubled the courts on numerous occasions and the case law is not entirely consistent.
In addressing the issues which it raises, it will be necessary to examine how the law in this area has developed, what stage it has reached and whether it is in need of significant change.
In this case the victim was a customer.
I will call him the claimant although he sadly died from an illness unrelated to his claim before his appeal was heard by this court.
The respondent company is a well known operator of a chain of supermarkets.
It has premises in Small Heath, Birmingham, which include a petrol station.
The petrol station has a kiosk with the usual display of goods and a counter where customers pay for their purchases.
One of the companys employees was Mr Amjid Khan.
His job was to see that the petrol pumps and the kiosk were kept in good running order and to serve customers.
The claimant was of Somali origin.
On the morning of 15 March 2008 he was on his way to take part with other members of his community in an event in London.
While he was at the petrol station he decided to inquire whether it would be possible to print some documents from a USB stick which he was carrying.
The trial judge, Mr Recorder Khangure QC, accepted in full the claimants account of what followed.
The claimant went into the kiosk and explained to the staff what he wanted.
There were two or three staff present.
Mr Khan, who was behind the counter, replied by saying We dont do such shit.
The claimant protested at being spoken to in that manner.
Using foul, racist and threatening language, Mr Khan ordered the claimant to leave.
The claimant walked out of the kiosk and returned to his car by the air pump.
He was followed by Mr Khan.
The claimant got into his car and switched on the engine, but before he could drive off Mr Khan opened the front passenger door and told him in threatening words never to come back.
The claimant told Mr Khan to get out of the car and shut the passenger door.
Instead, Mr Khan punched the claimant on his left temple, causing him pain and shock.
The claimant switched off the engine and got out in order to walk round and close the passenger door.
At this point Mr Khan again punched him in the head, knocked him to the floor and subjected him to a serious attack, involving punches and kicks, while the claimant lay curled up on the petrol station forecourt, trying to protect his head from the blows.
In carrying out the attack Mr Khan ignored instructions from his supervisor, who came on the scene at some stage and tried to stop Mr Khan from behaving as he did.
The judge concluded that the reasons for Mr Khans behaviour were a matter of speculation.
The claimant himself had said and done nothing which could be considered abusive or aggressive.
The trial judges decision
In a detailed and impressive judgment, the judge reviewed the principal authorities.
He expressed great sympathy for the claimant but concluded that the company was not vicariously liable for Mr Khans unprovoked assault.
His principal reason was that although Mr Khans job involved some interaction with customers and members of the public who attended the kiosk, it involved nothing more than serving and helping them.
There was not a sufficiently close connection between what he was employed to do and his tortious conduct for his employer to be held vicariously liable, applying the close connection test laid down in Lister v Hesley Hall Ltd [2001] UKHL 22; [2001] 1 AC 215 and followed in later cases including Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366.
A further reason given by the judge was that Mr Khan made a positive decision to come out from behind the counter and follow the claimant out of the kiosk in contravention of instructions given to him.
The Court of Appeals decision
The Court of Appeal (Arden, Treacy and Christopher Clarke LJJ) upheld the judges decision that the claim against the company failed the close connection test.
The main points made in the judgments were that Mr Khans duties were circumscribed.
He was not given duties involving a clear possibility of confrontation or placed in a situation where an outbreak of violence was likely.
The fact that his employment involved interaction with customers was not enough to make his employers liable for his use of violence towards the claimant.
Christopher Clarke LJ added that if the question had been simply whether it would be fair and just for the company to be required to compensate the claimant for his injuries from the assault, there would be strong grounds for saying that it should.
The assault arose out of an interchange which began when the claimant asked to be supplied with a service which he thought the company could provide.
Mr Khan, whose job it was to deal with such a request, followed up his refusal with an apparently motiveless attack on the customer, who was in no way at fault.
The customer was entitled to expect a polite response.
Instead he was struck on the head and kicked when on the ground.
In those circumstances it could be said that the employer could fairly be expected to bear the cost of compensation, rather than that the victim should be left without any civil remedy except against an assailant who was unlikely to be able to pay full compensation.
However, he concluded that this was not the legal test, and that the fact that Mr Khans job involved interaction with the public did not provide the degree of connection between his employment and the assault which was necessary for the employer to be held vicariously liable.
Christopher Clarke LJ said that he was attracted for a time by the proposition that the assault could be looked at as a perverse execution of Mr Khans duty to engage with customers, but he considered that such an approach parted company with reality.
Grounds of appeal
In this court the claimants primary argument was that the time has come for a new test of vicarious liability.
In place of the close connection test the courts should apply a broader test of representative capacity.
In the case of a tort committed by an employee, the decisive question should be whether a reasonable observer would consider the employee to be acting in the capacity of a representative of the employer at the time of committing the tort.
A company should be liable for the acts of its human embodiment.
In the present case, Mr Khan was the companys employed representative in dealing with a customer.
What mattered was not just the closeness of the connection between his duties to his employer and his tortious conduct, but the setting which the employer had created.
The employer created the setting by putting the employee into contact and close physical proximity with the claimant.
Alternatively, it was argued that the claimant should in any event have succeeded because he was a lawful visitor to the premises and Mr Khan was acting within the field of activities assigned to him in dealing with the claimant.
Origins and development of vicarious liability
The development of the doctrine of vicarious liability can be traced to a number of factors; in part to legal theories, of which there have been several; in part to changes in the structure and size of economic and other (eg charitable) enterprises; and in part to changes in social attitudes and the courts sense of justice and fairness, particularly when faced with new problems such as cases of sexual abuse of children by people in a position of authority.
According to Holdsworths A History of English Law (1908) (vol 3, pp 383 387) in medieval times the general principle was that a master was only liable at civil law for misdeeds of his servants if done by his command and consent.
It would be against all reason, said counsel in the reign of Henry IV, to impute blame or default to a man, when he has none in him, for the carelessness of his servants cannot be said to be his act (YB 2 Hy IV Pasch pl 5).
But there were some exceptions, which today would be classed as instances of non delegable duty.
Liability for damage by fire was an example.
The law imposed on house holders a duty to keep their fires from damaging their neighbours.
If a fire was caused by a servant or guest, and it damaged a neighbours house, the owner was liable.
He could escape liability only by showing that the fire originated from the act of a stranger (YB 2 Hy IV Pasch pl 6).
The 17th century was a century of expansion of commerce and industry, and vicarious liability began to be broadened.
Holt CJ was particularly influential in this development.
In Boson v Sandford (1691) 2 Salk 440 a shipper of goods sued the ship owner for damage caused by the negligence of the master.
Eyre J held that there was no difference between a land carrier and a water carrier, and therefore the owners were under a special liability as carriers for the acts of their servants; but Holt CJ rested his judgment on the broad principle that whoever employs another is answerable for him, and undertakes for his care to all that make use of him. (The action failed on a technical pleading point.)
In Tuberville v Stamp (1698) 1 Ld Raym 264, Skinner 681, SC Comb 459, the plaintiff complained that the defendants servant lit a fire on heath land which destroyed the heath growing on the plaintiffs land.
The majority of the judges held that the plaintiff had a cause of action under the medieval rule about liability for fire; but Holt CJ doubted whether that rule applied to fires other than in houses, and he based liability (according to the report in Comb.) on the broader ground that if my servant doth anything prejudicial to another, it shall bind me, when it may be presumed that he acts by my authority, being about my business.
Holt CJ did not confine this principle to cases of negligence.
In Hern v Nichols (1700) 1 Salk 289, the plaintiff brought an action on the case for deceit, alleging that he bought several parcels of silk under a fraudulent representation by the defendants factor that it was another kind of silk.
The factor was operating overseas and there was no evidence of deceit on the part of the defendant personally.
Holt CJ held that the defendant was nevertheless liable for seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in a deceiver should be a loser, than a stranger.
Holt CJ gave the same explanation for the development of the principle in Sir Robert Waylands Case (1706) 3 Salk 234, the master at his peril ought to take care what servant he employs; and it is more reasonable that he should suffer for the cheats of his servant than strangers and tradesmen.
Holt CJ also held that for the master to be liable the servants act had to be within the area of the authority given to him: Middleton v Fowler (1699) 1 Salk 282.
Holdsworth noted that the first case in which the modern principle can begin to be seen was the admiralty case of Boson v Sandford, and he considered it not unlikely that necessities arising from the demands of the commercial world, and the influence of Roman law on the admiralty courts, led to the introduction of ideas which then permeated to the common law courts (vol 8, p 476).
He also observed that this was only one of the influences and that a number of reasons were put forward to explain the basis of vicarious liability.
These he summarised as follows (at p 477): It was sometimes put on the ground that the master by implication undertakes to answer for his servants tort which is clearly not true.
Sometimes it was put on the ground that the servant had an implied authority so to act which again is clearly not true.
Sometimes it was grounded on the fiction that the wrong of the servant is the wrong of the master, from which the conclusion was drawn that the master must be liable because no man shall be allowed to make any advantage of his own wrong; and sometimes on the ground that the master who chooses a careless servant is liable for making a careless choice.
Blackstone gives all these reasons for this principle.
In addition, he deals with the totally different case where a master has actually authorised the commission of a tort; and cites most of the mediaeval cases of vicarious liability with the special reasons for each of them.
It is not surprising that he should take refuge in the maxim qui facit per alium facit per se or that others should have used in a similar way the maxim respondeat superior.
His treatment of the matter illustrates the confusion of the authorities; and it is noteworthy that he does not allude to the true reason for the rule the reason of public policy which Holt CJ, gave in Hern v Nichols and in Waylands Case.
In Barwick v English Joint Stock Bank (1867) 2 LR Exch 259, 265, Willes J described it as settled since Lord Holts time that a principal is answerable for the act of an agent in the course of his business, but it was argued in that case (despite the decision in Hern v Nichols) that a principal was not liable for a fraudulent act of his agent.
Willes J rejected that argument, holding that no sensible distinction can be drawn between the case of fraud and the case of any other wrong.
He cited authorities in which the doctrine had been applied, for example, in cases of direct trespass to goods and false imprisonment, and he observed (at p 266): In all these cases it may be said, as it was said here, that the master has not authorized the act.
It is true, he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in.
His judgment gave rise to difficulties of a different kind because it included the following statement (at p 265): The general rule is, that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the masters benefit, though no express command or privity of the master be proved. (Emphasis added.)
The words in italics were used in later cases to support the argument that in order to establish vicarious liability it was necessary to show that the employees misdeed was committed for the employers benefit.
This argument was rejected by the House of Lords in the landmark case of Lloyd v Grace, Smith & Co [1912] AC 716.
A solicitors clerk, who was entrusted by the defendant firm with managing its conveyancing department, defrauded the plaintiff, who had come to the firm for advice about two properties left to her by her late husband.
He advised her to sell and procured her signature on documents conveying the properties to himself, which he disposed of for his own benefit.
It was held that the firm was liable for his fraud.
Lord Macnaghten, who gave the leading judgment (with which Lord Loreburn LC and Lord Atkinson agreed) and Lord Halsbury both referred with approval to the general principle enunciated by Lord Holt (pp 726 727 and 732).
Lord Macnaghten, at pp 735 736, also endorsed Lord Blackburns interpretation of Barwicks case in Houldsworth v City of Glasgow Bank (1880) 5 App Cas 317, 339, namely that the substantial point decided in that case was that an innocent principal was civilly responsible for the fraud of his authorised agent, acting within his authority, to the same extent as if it was his own fraud.
Lord Macnaghten recognised the difficulty of trying to give a precise meaning to the expression within his authority.
He referred at pp 732 734 to the discussion of the subject by Sir Montague Smith in Mackay v Commercial Bank of New Brunswick (1874) LR 5 PC 394, 410, who observed that since it may be generally assumed that, in mercantile transactions, principals do not authorise their agents to act fraudulently, frauds are beyond the agents authority in the narrowest sense of which the expression admits; but that so narrow a sense would be opposed to justice and so a wider construction had been put on the words, and that it was difficult to define how far it went.
Lord Macnaghten (at p 736) agreed that what is meant by the expressions acting within his authority, acting in the course of his employment and acting within the scope of his agency (as applied to an agent) is not easy to define, but he said that whichever expression is used, it must be construed liberally.
Lord Macnaghten noted that it was within the scope of the clerks employment to advise clients regarding the best way to sell property and the execution of any necessary documents.
He concluded that the clerk was therefore acting within the scope of his employment.
Lord Macnaghten also made the broader point that it would be unjust if the firm were not held liable.
The clerk was its accredited representative: p 738.
It was right that the loss from his fraud should be suffered by the person who placed him in that position rather than the client who dealt with him as the firms representative.
Although taking properties from the plaintiff was far removed from what the wrongdoer was employed to do, the justice of the decision is obvious.
The wrongdoer was trusted both by his firm and by its client.
They were each innocent, but one of them had to bear the loss, and it was right that it should be the employer on the principle stated by Lord Holt in Hern v Nichols.
The firm employed the wrongdoer and placed him in a position to deal with the claimant; he abused that position and took advantage of her.
It was fairer that the firm should suffer for the cheating by their employee than the client who was cheated.
In 1907 Salmond published the first edition of his text book on the Law of Torts.
He defined a wrongful act by a servant in the course of his employment as either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master, with the amplification that a master is liable for acts which he has not authorised if they are so connected with acts which he has authorised, that they may rightly be regarded as modes although improper modes of doing them (pp 83 84).
Salmonds formula, repeated in later editions, was cited and applied in many cases, sometimes by stretching it artificially; but even with stretching, it was not universally satisfactory.
The difficulties in its application were particularly evident in cases of injury to persons or property caused by an employees deliberate act of misconduct.
In Petterson v Royal Oak Hotel Ltd [1948] NZLR 136 a barman refused to serve a drunken customer with more alcohol.
As the customer was on his way out of the premises, he threw a glass at the barman which broke in pieces at his feet.
The barman picked up a piece of the broken glass and threw it back at the departing customer, but missed him and injured the eye of another customer, who sued for damages.
The trial judge found that the barman threw the piece of glass not in order to expedite the departure of the troublesome customer, but as an expression of his personal resentment at the glass being thrown at him.
He found for the claimant and his judgment was upheld by the Court of Appeal.
The Salmond formula was cited in argument.
The Court of Appeal held that the barmans act was an improper mode of doing his job of keeping order in the bar and avoiding altercations, although at the time the customer was leaving.
The justice of the result is obvious.
The claimant was struck in the eye by a piece of glass thrown by the barman who was on duty, and there would be something wrong with the law if he was not entitled to compensation from the company which employed the barman.
A barman needs to be capable of acting with restraint under provocation, for the safety of other customers, and if the proprietor engaged someone who was incapable of doing so and who injured an innocent customer, it would be wrong for the customer to be left with his only remedy against the barman.
But to rationalise the result by describing the barmans loss of temper and act of retaliation as a mode, but improper mode, of keeping order and avoiding altercation is an unnatural use of words.
Deatons Pty Ltd v Flew (1949) 79 CLR 370 had similarities to Petterson but was decided differently.
According to the jurys verdict, the claimant was the victim of an unprovoked attack by a barmaid on duty in a hotel when he asked her for the manager.
She threw a glass of beer over him and then threw the glass in his face, causing him the loss of sight in one eye.
The High Court of Australia held that there was no basis for finding that the barmaid was acting in the course of her employment.
They rejected the argument that her conduct was incidental to her employment in that it was a method, though an improper method, of responding to an inquiry from a customer.
They also rejected the argument, which had succeeded in Petterson, that her conduct was an improper mode of keeping order.
Dixon J gave two reasons: first, that she did not throw the glass in the course of keeping discipline, and secondly, that she was not in charge of the bar, but was working under the supervision of another woman.
I agree that it was tortuous and artificial to describe the barmaids conduct as a mode of performing what she was employed to do, but that does not make the result just.
In a broader sense it occurred in the course of her employment.
She was employed by the hotel proprietor to serve customers.
She was approached in that capacity by a customer, and ordinary members of the public would surely expect the company who employed her to serve customers to have some responsibility for her conduct towards them.
And it surely cannot be right that the measure of the companys responsibility should depend on whether she was the head barmaid or an assistant.
The customer would have no knowledge what were the exact limits of her responsibilities.
In Warren v Henlys Ltd [1948] 2 All ER 935 a customer at a petrol station had an angry confrontation with the petrol station attendant, who wrongly suspected him of trying to make off without payment.
The customer became enraged at the manner in which he was spoken to by the attendant.
After paying for the petrol, the customer saw a passing police car and drove off after it.
He complained to the police officer about the attendants conduct and persuaded the officer to return with him to the petrol station.
The officer listened to both men and indicated that he did not think that it was a police matter, whereupon the customer said that he would report the attendant to his employer.
The officer was on the point of leaving, when the attendant punched the customer in the face, knocking him to the ground.
Hilbery J held that the assault was not committed in the course of the attendants employment, applying the Salmond formula.
By the time that the assault happened the customers business with the petrol station had ended, the petrol had been paid for and the customer had left the premises.
When he returned with the police officer it was for the purpose of making a personal complaint about the attendant.
The attendant reacted violently to being told that the customer was going to report him to his employer, but there was no basis for holding the employer vicariously liable for that behaviour.
The judge was right to dismiss the customers claim against the petrol company.
At the time of the incident the relationship between the plaintiff and the attendant had changed from that of customer and representative of the petrol company to that of a person making a complaint to the police and the subject of the complaint.
In Lister v Hesley Hall Ltd [2002] 1 AC 215 Lord Millett commented, at para 80, that the better view may have been that the employer was not liable because it was no part of the duties of the pump attendant to keep order, but there is no suggestion in the report of the case that there was any other employee in practical charge of the forecourt and cash desk area.
If the attendant had punched the customer because he believed, rightly or wrongly, that the customer was leaving without payment, I would regard such conduct as occurring within the course of his employment.
In Keppel Bus Co Ltd v Ahmad [1974] 1 WLR 1082 the plaintiff was travelling in a bus when the conductor treated an elderly lady passenger in a high handed and rude fashion.
The plaintiff remonstrated with him.
An altercation followed in which each tried to hit the other.
They were separated by the passengers, but the conductor struck the plaintiff in the eye with his ticket punch, causing loss of sight in the eye.
The trial judge and the Singapore Court of Appeal held that the bus company was vicariously liable, but the Privy Council decided otherwise.
The Board applied the Salmond formula.
It held that the conductors conduct could not be described as a wrong mode of performing the work which he was expressly or impliedly authorised to do.
He could not be described as maintaining order in the bus; if anyone was keeping order in the bus, it was the passengers.
The Board rejected the argument that his job could be described as managing the bus and that his conduct arose out of his power and duty to do so.
The case illustrates again the awkwardness of the Salmond formula when applied to such situations.
Looked at more broadly, the bus company selected the conductor for employment and put him in charge of the passenger area of the bus.
He abused the position of authority which his employment gave him.
Because he was throwing his weight around as the conductor, the plaintiff objected.
Because the conductor objected to what he appeared to regard as interference with the exercise of his authority, he struck the plaintiff in the face. (The trial judge summarised it by saying that He was in effect telling the plaintiff by his act not to interfere with him in his due performance of his duties: p 1084.) In such circumstances it was just that the passenger should be able to look to the company for compensation.
In two noteworthy cases the court took a broader approach to the question of scope of employment.
Their significance is enhanced by the fact that they were cited with approval in Lister.
796, 802, Lord Cullen said: In Central Motors (Glasgow) Ltd v Cessnock Garage and Motor Co 1925 SC The question is not to be answered merely by applying the test whether the act in itself is one which the servant was authorised or ordered or forbidden to do.
The employer has to shoulder responsibility on a wider basis; and he may, and often does, become responsible to third parties for acts which he has expressly or impliedly forbidden the servant to do.
It remains necessary to the masters responsibility that the servants act be one done within the sphere of his service or the scope of his employment, but it may have this character although it consists in doing something which is the very opposite of what the servant has been intended or ordered to do, and which he does for his own private ends.
An honest master does not employ or authorise his servant to commit crimes of dishonesty towards third parties; but nevertheless he may incur liability for a crime of dishonesty committed by the servant if it was committed by him within the field of activities which the employment assigned to him, and that although the crime was committed by the servant solely in pursuance of his own private advantage.
The expression within the field of activities assigned to the employee is helpful.
It conjures a wider range of conduct than acts done in furtherance of his employment.
In Rose v Plenty [1976] 1 WLR 141 a milk roundsman paid a 13 year old boy to help him collect and deliver milk bottles, in disregard of his employers rule prohibiting children from being carried on milk floats.
The boy was injured when he fell off a milk float as a result of the employees negligent driving.
The trial judge dismissed the boys claim against the employer on the ground that the employee was acting outside the scope of his employment and that the boy was a trespasser on the float, but his decision was reversed by a majority of the Court of Appeal.
Lord Denning, MR dealt with the matter briefly, holding that in taking the boy on the milk float the employee was still acting within the sphere of his employment.
Scarman LJ considered the point at greater length, at pp 147 148: In words which have frequently been quoted both in the courts and in the universities, Salmond on Torts, 16th ed (1973), p 462, refers to the basis of vicarious liability for accidental damage as being one of public policy.
That view is supported by quotations (dated no doubt, but still full of life) of a dictum of Lord Brougham and of another, 100 years or more earlier, of Sir John Holt.
That it is socially convenient and rough justice to make an employer liable for the torts of his servant in the cases to which the principle applies, was recognised in Limpus v London General Omnibus Co, 1 H & C 526; see the judgment of Willes J at p 539.
I think it important to realise that the principle of vicarious liability is one of public policy.
It is not a principle which derives from a critical or refined consideration of other concepts in the common law, for example, the concept of trespass or indeed the concept of agency.
No doubt in particular cases it may be relevant to consider whether a particular plaintiff was or was not a trespasser.
Similarly, when, as I shall indicate, it is important that one should determine the course of employment of the servant, the law of agency may have some marginal relevance.
But basically, as I understand it, the employer is made vicariously liable for the tort of his employee not because the plaintiff is an invitee, nor because of the authority possessed by the servant, but because it is a case in which the employer, having put matters into motion, should be liable if the motion which he has originated leads to damage to another.
What is the approach which the cases identify as the correct approach in order to determine this question of public policy? First, one looks to see whether the servant has committed a tort upon the plaintiff The next question is whether the employer should shoulder the liability for compensating the person injured by the tort [I]t does appear to me to be clear, since the decision of Limpus v London General Omnibus Co, 1 H & C 526, that that question has to be answered by directing attention to what the servant was employed to do when he committed the tort that has caused damage to the plaintiff.
The servant was, of course, employed at the time of the accident to do a whole number of operations.
He was certainly not employed to give the boy a lift, and if one confines ones analysis of the facts to the incident of injury to the plaintiff, then no doubt one would say that carrying the boy on the float giving him a lift was not in the course of the servants employment.
But in Ilkiw v Samuels [1963] 1 WLR 991 Diplock LJ indicated that the proper approach to the nature of the servants employment is a broad one.
He says, at p 1004: As each of these nouns implies he is referring to the nouns used to describe course of employment, sphere, scope and so forth the matter must be looked at broadly, not dissecting the servants task into its component activities such as driving, loading, sheeting and the like by asking: what was the job on which he was engaged for his employer? and answering that question as a jury would.
Lister v Hesley Hall Ltd
In Lister the House of Lords was faced with the problem of the application of the doctrine of vicarious liability to the warden of a school boarding house who sexually abused the children in his care.
The Salmond formula was stretched to breaking point.
Even on its most elastic interpretation, the sexual abuse of the children could not be described as a mode, albeit an improper mode, of caring for them.
Drawing on Scarman LJs approach, Lord Steyn (with whom Lords Hutton and Hobhouse agreed) spoke of the pitfalls of terminology and said that it was not necessary to ask whether the acts of sexual abuse were modes of doing authorised acts.
He posed the broad question whether the wardens torts was so closely connected with his employment that it would be just to hold the employers liable.
He concluded that the employers were vicariously liable because they undertook the care of the children through the warden and he abused them.
There was therefore a close connection between his employment and his tortious acts.
To similar effect, Lord Clyde said that the warden had a general duty to look after the children, and the fact that he abused them did not sever the connection with his employment; his acts had to be seen in the context that he was entrusted with responsibility for their care, and it was right that his employers should be liable for the way in which he behaved towards them as warden of the house.
In adopting the approach which he did, Lord Steyn referred to the judgment of McLachlin J in Bazley v Curry (1999) 174 DLR (4th) 45.
McLachlin J summarised the public policy justification for imposing vicarious liability, at para 31, in a similar fashion to Holt and Scarman LJ: The employer puts in the community an enterprise which carries with it certain risks.
When those risks materialize and cause injury to a member of the public despite the employers reasonable efforts, it is fair that the person or organisation that creates the enterprise and hence the risk should bear the loss.
Compare Scarman LJs statement that the employer, having put matters into motion, should be liable if the motion which he has originated leads to damage to another.
This thinking has been prominent in cases since Lister as the social underpinning of the doctrine of vicarious liability, but the court is not required in each case to conduct a retrospective assessment of the degree to which the employee would have been considered to present a risk.
As Immanuel Kant wrote, Out of the crooked timber of humanity, no straight thing was ever made.
The risk of an employee misusing his position is one of lifes unavoidable facts.
In Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366, the House of Lords applied the Lister approach to vicarious liability in a case of commercial fraud.
Lord Nicholls (with whom Lords Slynn and Hutton agreed) said: 22. [I]t is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions.
It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong.
To this end, the law has given the concept of ordinary course of employment an extended scope.
If, then, authority is not the touchstone, what is? . 23.
Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful act may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firms business or the employees employment (Original emphasis) 25.
This close connection test focuses attention in the right direction.
But it affords no guidance on the type or degree of connection which will normally be regarded as sufficiently close to prompt the legal conclusion that the risk of the wrongful act occurring, and any loss flowing from the wrongful act, should fall on the firm or employer rather than the third party who was wronged. 26.
This lack of precision is inevitable, given the infinite range of circumstances where the issue arises.
The crucial feature or features, either producing or negativing vicarious liability, vary widely from one case or type of case to the next.
Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard to the assistance provided by previous court decisions.
The close connection test adumbrated in Lister and Dubai Aluminium has been followed in a line of later cases including several at the highest level: Bernard v Attorney General of Jamaica [2004] UKPC 47; [2005] IRLR 398, Brown v Robinson [2004] UKPC 56, Majrowski v Guys and St Thomass NHS Trust [2006] UKHL 34; [2007] 1 AC 224 and Various Claimants v Catholic Child Welfare Society [2012] UKHL 56; [2013] 2 AC 1 (the Christian Brothers case).
In the Christian Brothers case Lord Phillips of Worth Matravers said at para 74 that it is not easy to deduce from Lister the precise criteria that will give rise to vicarious liability for sexual abuse (or, he might have added, other abuse), and that the test of close connection tells one nothing about the nature of the connection.
However, in Lister the court was mindful of the risk of over concentration on a particular form of terminology, and there is a similar risk in attempting to over refine, or lay down a list of criteria for determining, what precisely amounts to a sufficiently close connection to make it just for the employer to be held vicariously liable.
Simplification of the essence is more desirable.
The present law
In the simplest terms, the court has to consider two matters.
The first question is what functions or field of activities have been entrusted by the employer to the employee, or, in everyday language, what was the nature of his job.
As has been emphasised in several cases, this question must be addressed broadly; see in particular the passage in Diplock LJs judgment in Ilkiw v Samuels [1963] 1 WLR 991, 1004 included in the citation from Rose v Plenty at para 38 above, and cited also in Lister by Lord Steyn at para 20, Lord Clyde at para 42, Lord Hobhouse at para 58 and Lord Millett at para 77.
Secondly, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt.
To try to measure the closeness of connection, as it were, on a scale of 1 to 10, would be a forlorn exercise and, what is more, it would miss the point.
The cases in which the necessary connection has been found for Holts principle to be applied are cases in which the employee used or misused the position entrusted to him in a way which injured the third party.
Lloyd v Grace, Smith & Co, Peterson and Lister were all cases in which the employee misused his position in a way which injured the claimant, and that is the reason why it was just that the employer who selected him and put him in that position should be held responsible.
By contrast, in Warren v Henlys Ltd any misbehaviour by the petrol pump attendant, qua petrol pump attendant, was past history by the time that he assaulted the claimant.
The claimant had in the meantime left the scene, and the context in which the assault occurred was that he had returned with the police officer to pursue a complaint against the attendant.
Contrary to the primary submission advanced on the claimants behalf, I am not persuaded that there is anything wrong with the Lister approach as such.
It has been affirmed many times and I do not see that the law would now be improved by a change of vocabulary.
Indeed, the more the argument developed, the less clear it became whether the claimant was advocating a different approach as a matter of substance and, if so, what the difference of substance was.
The present case
In the present case it was Mr Khans job to attend to customers and to respond to their inquiries.
His conduct in answering the claimants request in a foul mouthed way and ordering him to leave was inexcusable but within the field of activities assigned to him.
What happened thereafter was an unbroken sequence of events.
It was argued by the respondent and accepted by the judge that there ceased to be any significant connection between Mr Khans employment and his behaviour towards the claimant when he came out from behind the counter and followed the claimant onto the forecourt.
I disagree for two reasons.
First, I do not consider that it is right to regard him as having metaphorically taken off his uniform the moment he stepped from behind the counter.
He was following up on what he had said to the claimant.
It was a seamless episode.
Secondly, when Mr Khan followed the claimant back to his car and opened the front passenger door, he again told the claimant in threatening words that he was never to come back to the petrol station.
This was not something personal between them; it was an order to keep away from his employers premises, which he reinforced by violence.
In giving such an order he was purporting to act about his employers business.
It was a gross abuse of his position, but it was in connection with the business in which he was employed to serve customers.
His employers entrusted him with that position and it is just that as between them and the claimant, they should be held responsible for their employees abuse of it.
Mr Khans motive is irrelevant.
It looks obvious that he was motivated by personal racism rather than a desire to benefit his employers business, but that is neither here nor there.
LORD DYSON:
As Lord Toulson has explained, the test for holding an employer vicariously liable for the tort of his employee has troubled the courts for many years.
The close connection test (whether the employees tort is so closely connected with his employment that it would be just to hold the employer liable) was first articulated in this jurisdiction by the House of Lords in Lister v Hesley Hall Ltd [2002] 1 AC 215.
It has been subsequently followed in many cases, including several at the highest level: see para 42 above.
As Lord Nicholls said in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366, para 26, the test is imprecise, but that is inevitable given the infinite range of circumstances where the issue of vicarious liability arises.
The court, he said, has to make an evaluative judgment in each case, having regard to all the circumstances and to the assistance provided by previous court decisions on the facts of other cases.
I would allow the appeal.
The appellant in his application for permission to appeal in the present case argued that this court should reformulate the close connection test.
In his written case, he submitted that it should be refined or replaced altogether in order to reflect modern views of justice; to advance the doctrines underlying policy considerations [underlying vicarious liability]; and to set clearer and less arbitrary boundaries.
Accordingly, he submitted that the test for vicarious liability should be whether the employee (described as an authorised representative of the employer) commits the tort in circumstances where the reasonable observer would consider the employee to be acting in that representative capacity.
The close connection test has now been repeatedly applied by our courts for some 13 years.
In my view, it should only be abrogated or refined if a demonstrably better test can be devised.
Far from being demonstrably better, the proposed new test is hopelessly vague.
What does representative capacity mean in this context? And by what criteria is the court to determine the circumstances in which the reasonable observer would consider the employee to be acting in a representative capacity? I do not see how this test is more precise than the close connection test or how it better reflects modern views of justice.
The attraction of the close connection test is that it is firmly rooted in justice.
It asks whether the employees tort is so closely connected with his employment as to make it just to hold the employer liable.
It is true that the test is imprecise.
But this is an area of the law in which, as Lord Nicholls said, imprecision is inevitable.
To search for certainty and precision in vicarious liability is to undertake a quest for a chimaera.
Many aspects of the law of torts are inherently imprecise.
For example, the imprecise concepts of fairness, justice and reasonableness are central to the law of negligence.
The test for the existence of a duty of care is whether it is fair, just and reasonable to impose such a duty.
The test for remoteness of loss is one of reasonable foreseeability.
Questions such as whether to impose a duty of care and whether loss is recoverable are not always easy to answer because they are imprecise.
But these tests are now well established in our law.
To adopt the words of Lord Nicholls, the court has to make an evaluative judgment in each case having regard to all the circumstances and having regard to the assistance provided by previous decisions on the facts of other cases.
In Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1 Lord Phillips said at para 19 the law of vicarious liability is on the move.
It is true that there have been developments in the law as to the type of relationship that has to exist between an individual and a defendant for vicarious liability to be imposed on the defendant in respect of a tort committed by that individual.
These developments have been a response to changes in the legal relationships between enterprises and members of their workforces and the increasing complexity and sophistication of the organisation of enterprises in the modern world.
A good example is provided by the facts of the Catholic Child Welfare Society case itself.
But there is no need for the law governing the circumstances in which an employer should be held vicariously liable for a tort committed by his employee to be on the move.
There have been no changes in societal conditions which require such a development.
The changes in the case law relating to the definition of the circumstances in which an employer is vicariously liable for the tort of his employee have not been made in response to changing social conditions.
Rather they have been prompted by the aim of producing a fairer and more workable test.
Unsurprisingly, this basic aim has remained constant.
The Salmond test defined a wrongful act by a servant in the course of his employment as either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master: Salmond, Law of Torts, 1st ed (1907), p 83; and Salmond & Heuston on the Law of Torts, 21st ed (1996), p 443.
As Lord Steyn said in Lister at para 20, this was simply a practical test serving as a dividing line between cases where it is or is not just to impose vicarious liability (emphasis added).
The importance of Lister (and the Canadian case of Bazley v Curry (1999) 174 DLR (4th) 45 whose reasoning it adopted) is that it recognised the difficulty created by the second limb of the Salmond test.
This was not effective for determining the circumstances in which it was just to hold an employer vicariously liable for committing an act not authorised by the employer.
The close connection test was introduced in order to remedy this shortcoming.
This improvement was achieved by the simple expedient of explicitly incorporating the concept of justice into the close connection test.
The new test was, therefore, by definition more effective than the Salmond test for determining the circumstances in which it is just to hold an employer vicariously liable for the unauthorised acts of his employee.
It is difficult to see how the close connection test might be further refined.
It is sufficient to say that no satisfactory refinement of the test has been suggested in the present case.
As regards the facts of the present case, I agree with the analysis of Lord Toulson and the reasons he gives at paras 47 and 48 for holding that the defendants are liable for the assault committed by Mr Khan.
For these reasons as well as those given by Lord Toulson, I would allow this appeal.
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On 15 March 2008 the Claimant entered the Respondents premises in Small Heath, Birmingham which include a petrol station and a kiosk where customers pay for their purchases.
Having parked his car he entered the kiosk to ask whether he could print some documents from a USB stick.
Mr Amjid Khan was behind the kiosk desk, employed by the Respondent to see that petrol pumps and the kiosk were kept in good order and to serve customers.
Mr Khan refused the Claimants request in a rude manner, at which the Claimant protested.
Mr Khan responded in foul, racist and threatening language and ordered the Claimant to leave.
The Claimant returned to his car followed by Mr Khan.
Before the Claimant could drive off, Mr Khan opened the passenger door, told the Claimant in threatening words never to return and punched him on the left temple.
The Claimant got out and walked round to close the passenger door when Mr Khan subjected him to a serious attack.
The Claimant had not done anything which could be considered aggressive or abusive.
The Claimant brought proceedings against the Respondent on the basis that it was vicariously liable for the actions of its employee Mr Khan.
The trial judge dismissed the claim because he considered that there was an insufficiently close connection between what Mr Khan was employed to do and his tortious conduct in attacking the Claimant for the Respondent to be liable.
The Court of Appeal upheld the judges decision.
The Claimant appealed, challenging whether the close connection test was the appropriate standard to apply and also arguing that his claim should have succeeded in any event.
The Supreme Court unanimously allows the Claimants appeal and holds the Respondent vicariously liable for the actions of its employee, Mr Khan, in attacking the Claimant.
Lord Toulson gives the lead judgment.
The close connection test has been followed at the highest level [42] and there is nothing wrong with it as such [46].
In the present case, the court has to consider two matters.
First, the court must ask what function or field of activities has been entrusted by the employer to the employee (i.e. what was the nature of his job).
This is to be viewed broadly [44].
Second, the court must decide whether there was a sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable [45].
Applying that test here, it was Mr Khans job to attend to customers and respond to their inquiries.
His conduct in responding to the Claimants request with abuse was inexcusable, but interacting with customers was within the field of activities assigned to him by his employer.
What happened thereafter was an unbroken sequence of events.
The connection between the field of activities assigned to Mr Khan and his employment did not cease at the moment when he came out from behind the counter and followed the Claimant onto the forecourt.
There are two reasons to draw this conclusion.
First, it is not correct to regard Mr Khan as having metaphorically taken off his uniform the moment he stepped out from behind the counter he was following up on what he said to the Claimant.
Secondly, when Mr Khan followed the Claimant to his car and told him not to come back to the petrol station, that was not something personal between them, but an order to keep away from his employers premises.
In giving the order he was purporting to act about his employers business [47].
Mr Khans motive in the attack is irrelevant.
It does not matter whether he was motivated by personal racism rather than a desire to benefit his employers business [48].
Lord Dyson agrees with the reasons given by Lord Toulson [57] and emphasises that the close connection test is the correct test to apply [53].
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This appeal is about the application of the annual leave provisions of the Working Time Regulations 1998 (SI 1998/1833) (the WTR) to offshore workers in the oil and gas industry.
Employers differ in the way they organise their employees working time.
The familiar pattern of working from 9am to 5pm five days each week throughout the 52 weeks of the year, with a few weeks taken from that commitment for annual holidays, is by no means uniform.
For some, the nature of the job requires them to work for longer hours during each working day and to be given more days off during the working week to compensate.
For others such as teachers and others who work in the education sector, the working pattern has to take account of the fact that the organisation for which they work is open for some periods of the year and is closed for others.
The appellants in this case work offshore, so their working pattern is divided into time spent working offshore and time spent onshore when, by and large, they are not working.
The only unifying factors in what is, after all, an infinite variety are that the way in which a workers time is organised is a function of the nature of the job itself, and that in the interests of health and safety workers must be given some time off to rest.
The WTR contain the provisions that currently provide for rest periods in domestic law.
They were designed to implement Council Directive 93/104/EC.
The 1993 Directive was repealed by Council Directive 2003/88/EC concerning certain aspects of the organisation of working time (the WTD).
It consolidated the 1993 Directive and a subsequent amending Directive and took effect as from 2 August 2004.
Among the aspects of the organisation of working time that are the subject of rules in the WTD are minimum rest periods.
They are set out in chapter 2.
As it is concerned with laying down what are described as minimum requirements, the provisions which it contains adopt for the most part a one size fits all approach.
There is scope for derogation in particular cases, and there are special rules for mobile workers, those engaged in offshore work and workers on board seagoing fishing vessels.
But there is no attempt, either in the WTD or the WTR, to identify particular patterns of working and legislate for them individually.
It is for the judiciary, in the event of a dispute, to work out how its requirements
are to be applied in particular cases
The problem in this case is how the statutory right to paid annual leave under the WTR is to be applied to offshore workers in the oil and gas industry.
Typically they work a two weeks offshore and two weeks onshore (known as field break) shift pattern.
Some work three weeks offshore and three weeks onshore, and some work two weeks offshore and three weeks onshore.
But nothing turns on these differences.
The central issue is whether the period spent onshore should count towards the workers entitlement under regulation 13 of the WTR to what, when the appellants made their claims, was to four weeks paid annual leave.
That entitlement has now been increased by an amendment to the WTR to 5.6 weeks, by adding 1.6 weeks to take account of Bank Holidays: regulation 13A, inserted by regulation 2(1)(2) of the Working Time (Amendment) Regulations 2007 (SI 2007/2079).
But nothing turns on that point either in this case.
The appellants say that annual leave, properly construed, means release from what would otherwise have been an obligation to work, and that the employers cannot discharge their obligation to provide them with annual leave by insisting that they take this during periods of field break.
Their periods of field break, they say, is their time.
It is not their employers time, and they insist that it is the employers time out of which the annual leave should be taken.
The respondents say that the time spent onshore is in itself a rest period, as it is not working time.
And they point out that it is substantially more than the minimum of four weeks annual leave to which the appellants are entitled under the WTR.
Their case is that the requirements of the WTR are more than satisfied already, and there is no need for the appellants to take annual leave out of the periods spent offshore.
As the appellants point out, the issue that this dispute raises is important not just for the parties themselves.
It has significant implications for other parts of the labour market.
We cannot resolve all the problems that may possibly arise in this case.
But the answer to the dispute has to take account of the fact that the WTD, and the WTR which give effect to it, have been designed to apply to the labour market generally.
Annual leave the statutory entitlement
It will be necessary to examine the WTD and the WTR in more detail later.
For the time being it is sufficient to note that article 7 of the WTD provides that member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks.
This is to be in accordance with conditions laid down by national legislation and/or practice.
Regulation 13(1) of the WTR gives effect to this requirement.
It provides that a worker is entitled to four weeks annual leave in each leave year.
Regulation 15 contains provisions about how the days when this is to be taken are to be worked out between the worker and the employer, if this has not already been agreed, by a system of notices and counter notices.
The facts
The appellants cases are seven sample cases which have been selected from a much larger number of similar complaints that were lodged with the employment tribunal.
They were all employed to work in various capacities on offshore installations located in the United Kingdom Continental Shelf.
There were differences in the way their contracts were expressed as they were working for different employers, but it was agreed that nothing turns on these details.
With the exception of Mr Craig, the appellants were contracted to work to a pattern of two weeks offshore with a period of field break for two weeks onshore.
Mr Craig was contracted to work three weeks offshore followed by three weeks onshore.
Whilst offshore the appellants generally worked, and still work, a 12 hour shift each day during which rest breaks are taken.
This was followed by 12 hours off duty living offshore on the installation.
They did not have any days off while they were offshore.
Part of the time during which the appellants were on field break was occupied in travelling to and from the installation and Aberdeen airport by helicopter, and to and from home once they were onshore.
During the periods of field break the appellants attended occasional events that could only be undertaken onshore, such as training courses, appraisals, grievance and disciplinary hearings, medical assessments and offshore survival courses.
But it is agreed that these occasional activities are of no significance for present purposes.
For the most part the appellants were free from work related obligations during the entire period of their field breaks.
They could spend their time as they chose.
The appellants issued proceedings in the employment tribunal at Aberdeen in which they contended that the relevant provisions of the WTR required the respondents to permit them to take four weeks paid annual leave from periods when they would otherwise be required to work on the offshore installation.
The respondents maintained that the paid annual leave entitlement was discharged by two weeks onshore within the shift pattern.
In a long and careful judgment, which covered various other issues with which we are not concerned and was sent to the parties on 21 February 2008, the employment tribunal held that leave in regulation 13 of the WTR involved a release from what would otherwise have been an obligation to work, or at least to be available for work or otherwise in some way on call: para 300.
So the field breaks were not to be regarded as annual leave for the purposes of the regulation, although they might provide periods of compensatory rest for the purposes of regulation 24 to the extent required: para 310 (xxviii).
In a review judgment dated 1 December 2008 the tribunal confirmed that, in its view, a worker is entitled to exercise his or her right to paid annual leave under regulation 13 at such times as he or she would otherwise be obliged to work or be available to work.
In the case of a worker whose pattern of work was to work for two weeks followed by two weeks break from work, the entitlement to paid annual leave amounted to two weeks to be taken from time when he or she would otherwise be working.
It had already explained in para 308 of its judgment the calculation on which this conclusion was based and which is not now in dispute.
The number of days worked during each period of 28 days was 14 days, which amounted to an average of three and a half days a week.
This produced an annual leave entitlement of 14 days.
The number of hours worked each day made no difference.
The tribunals finding that the respondents had refused to permit the appellants to exercise their right to paid annual leave because this could not be taken out of field break was set aside by the Employment Appeal Tribunal (Lady Smith, Mr M Sibbald and Mr R Thomson, Mr Thomson dissenting) in a judgment issued on 6 March 2009: [2009] IRLR 519.
Lady Smith said in para 130 of the judgment that the time conceded to be available during field breaks, after allowing for compensatory rest to take account of the fact that the appellants worked offshore without a weekly rest period, was more than sufficient to cover the entitlement to annual leave.
It was time when they were free of all and any work obligations and not subject to the possibility of being called on to work.
It was to be regarded as a rest period.
It did not matter that, because of the working patterns in the industry, the appellants would not otherwise be working during these periods.
The appellants appealed to the Inner House of the Court of Session.
Their case was heard by an Extra Division (Lord Eassie, Lady Paton and Lord Emslie), which refused the appeal and remitted various outstanding issues to the Employment Appeal Tribunal to proceed accords: 2011 SC 175.
The opinion of the court was delivered by Lord Eassie.
He said that the court found force in the analysis advanced by the respondents that the structure of chapter 2 of the WTD involved different cycles of working time, and that what article 7 of the WTD required was that there be provided to the worker within the year at least four remunerated weeks of the yearly cycle in which he was free from working commitments: paras 33 34.
There was nothing in the WTD to suggest that employers might not arrange matters so that annual leave was taken during the school holidays or such similar industrial equivalent: para 36.
In para 37 he acknowledged that the appellants were required to work for about 26 weeks every year.
But that requirement did not constitute an infringement of the cap, or limit, on the number of working weeks in the year set by article 7 as 48 weeks.
That the 26 weeks onshore were termed as field break was not a matter upon which anything turned.
He summarised the courts decision in para 51: on the core question of whether the annual provision by the employers of 26 weeks of field break fails to satisfy the entitlement of the employees under regulation 13 of the WTR, the answer which we give is in the negative.
For all the reasons which we have given we consider that the working pattern of field break applicable in these appeals satisfies the requirements of the WTR, interpreted in the light of the WTD.
Relevant provisions of the WTD
The Treaty base for the WTD is identified in recital 2 of the preamble.
It refers to article 137 of the Treaty establishing the European Community, which provides that the Community is to support and complement the activities of the member states with a view to improving the working environment to protect workers health and safety.
As Lady Smith pointed out in the EATs judgment [2009] IRLR 519, para 9, the source for the WTD can be traced back to the Community Charter of the Fundamental Social Rights of Workers, adopted at Strasbourg on 9 December 1989.
Adopting words used in paras 8 and 19 of the Charter, recitals 4 and 5 of the preamble to the WTD then state: 4.
The improvement of workers safety, hygiene and health at work is an objective which should not be subordinated to purely economic considerations. 5.
All workers should have adequate rest periods.
The concept of rest must be expressed in units of time, ie in days, hours and/or fractions thereof.
Community workers must be granted minimum daily, weekly and annual periods of rest and adequate breaks.
It is also necessary in this context to place a maximum limit on weekly working hours.
The purpose and scope of the Directive are identified in article 1, which states that it lays down minimum safety and health requirements for the organisation of working time and that it applies to minimum periods of daily rest, weekly rest and annual leave, to breaks and maximum weekly working time.
Article 2 provides the following definitions of the expressions working time and rest period: 1. working time means 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; 2. rest period means any period which is not working time.
There then follows Chapter 2, which is headed minimum rest periods other aspects of the organisation of working time.
The way working time is to be organised is then set out in articles 3 to 7.
Article 3, which is headed Daily rest, states that the member states shall take the measures necessary to ensure that every worker is entitled to a minimum daily rest period of 11 consecutive hours per 24 hour period.
Article 4, which is headed Breaks, states that member states shall take the measures necessary to ensure that, where the working day is longer than six hours, every worker is entitled to a rest break, the details of which shall be laid down in collective agreements or agreements between the two sides of industry or, failing that, by national legislation.
Article 5, which is headed Weekly rest period, states that member states shall take the measures necessary to ensure that, per each seven day period, every worker is entitled to a minimum uninterrupted period of 24 hours plus the 11 hours daily rest referred to in article 3.
Article 6, which is headed Maximum weekly working time, states that member states shall take the measures necessary to ensure that, in keeping with the need to protect the safety and health of workers, the average working time of each seven day period, including overtime, does not exceed 48 hours.
Pausing there, one can see that the time that is available within the working week is to be organised in such a way as to ensure (i) that every worker whose working day is longer than six hours is entitled during the day to a rest break, (ii) that every worker is entitled to a minimum period which is not working time of 11 consecutive hours of daily rest during each 24 hour period and (iii) that every worker is entitled during each seven day period to a minimum uninterrupted rest period of 24 hours as well as 11 consecutive hours of daily rest in each 24 hour period.
Each period must therefore be measured separately from each other.
They cannot intrude upon each other or overlap.
Article 17 provides in paragraph 3(a) that derogations may be made from, among others, articles 3, 4 and 5 in the case of activities where the workers place of work and his place of residence are distant from one another, including offshore work, or where the workers different places of work are distant from one another.
In that event, paragraph 2 of article 17 requires that the workers concerned are afforded equivalent periods of compensatory rest or, if in exceptional cases for objective reasons this is not possible, that they are afforded appropriate protection.
It was agreed that in the appellants' case the first two days of each period of their field break is accounted for as compensatory rest, to make up for the fact that they work a 12 hour shift each day during their two weeks offshore.
Article 7 is headed Annual leave.
As article 17 makes clear, it cannot be derogated from.
It is in these terms: 1.
Member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 2.
The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.
The words consecutive and uninterrupted which qualify the periods of daily rest in article 3 and weekly rest in article 5 do not appear here.
So article 7 does not require that the weeks of annual leave must be taken consecutively or that those weeks cannot be interrupted.
The units of time referred to in recital 5 of the preamble (days, hours and/or fractions thereof) do not include weeks.
But the text of articles 5 and 6 shows that the word weekly, which appears in the heading to those articles, refers to a seven day period.
Article 21 of the WTD, which deals with workers on board seagoing fishing vessels, also refers to a seven day period, as does article 22.
In this context the reference in article 7 to four weeks, rather than to 28 days, would seem prima facie to mean four uninterrupted seven day periods, but the conditions of the granting of such leave are left to national legislation and/or practice.
As a period of leave is not a period which is working time, as defined in article 2, it must be taken to be what that article defines as a rest period.
It is an annual period of rest: see recital 5.
There is one other point.
Mr Linden QC for the appellants said that the right to paid annual leave had a qualitative dimension.
It was not just a matter of calculating, as a matter of arithmetic, how much time the worker was to have in a given year.
The word leave was not defined in the WTD, but it was more than just rest.
Reducing the matter to a simple arithmetical exercise would defeat the safety and health purpose of the annual leave provision and ignore the point that the compulsory rest periods are the minimum periods that are required.
His submission, as I understood it, was that the field breaks did not have the quality that would enable any periods within them to be enjoyed as periods of annual leave.
He used it to support his basic point that, as these periods onshore were not part of the appellants working time, they could not count towards their annual leave entitlement.
I do not think that a qualitative requirement, as an additional test of whether a given period can be accounted as rest within the cycles of time that are identified, is to be found in the wording of the WTD.
It is true that the safety and health of workers lies at the heart of the rules that it lays down.
But there is no indication anywhere that it was concerned about the quality of the minimum periods of rest, other than to make it clear in the definition of rest period that it means a period which is not working time.
The periods that it has identified must be taken in themselves to meet the objects stated in the preamble.
The plain indication of its wording is that the exercise that must be carried out is indeed simply one of counting up the relevant hours, days or seven day periods and ensuring that the worker is not required to work during those periods.
For example, conditions offshore vary from installation to installation and from time to time.
The quality of the rest that can be enjoyed will vary.
It may be disturbed by the noise and vibration that are part and parcel of offshore operations.
But so long as the worker is given not less than 11 consecutive hours each day which is not working time, the requirements of article 3 will have been satisfied.
Relevant provisions of the WTR
The purpose of the WTR was to implement the provisions of the WTD.
Its provisions must be interpreted, so far as possible, in conformity with the wording and purposes of the Directive: Litster v Forth Dry Dock and Engineering Co Ltd 1989 SC (HL) 96, 101, 105; [1990] 1 AC 546, 554, 559 per Lord Keith of Kinkel and Lord Oliver of Aylmerton; Marleasing SA v La Comercial Internacional de Alimentacin SA (Case C 106/89) [1990] ECR I 4135, para 9.
So they are of secondary importance in this case.
They are nevertheless relevant, as they set out the domestic rules that must be complied with in conformity with the obligations set out in the WTD.
Regulation 2(1) sets out the meaning that is to be given to various words and phrases, among which are the following: rest period, in relation to a worker, means a period which is not working time, other than a rest break or leave to which the worker is entitled under these Regulations. working time, in relation to a worker, means (a) any period during which he is working, at his employers disposal and carrying out his activity or duties, (b) any period during which he is receiving relevant training, and (c) any additional period which is to be treated as working time for the purpose of these Regulations under a relevant agreement.
Regulation 2(2) provides that in the absence of a definition in the Regulations, words and expressions used in particular provisions which are also used in corresponding provisions of the WTD have the same meaning as they have in those corresponding provisions.
The word leave is not defined in the WTR, but it is not defined in the WTD either.
It is left to take its meaning from the context.
Like the expression rest break, it is a period which is not working time.
This accords with the fact that a period which is not working time is defined by article 2 of the WTD as a rest period: see para 14, above.
The rules about daily rest, weekly rest periods and rest breaks are set out in regulations 10, 11 and 12 in terms which, without reproducing exactly the language of the WTD, reflect its requirements.
They also contain some additions.
For example, regulation 11, which deals with the weekly rest period, allows the employer to provide the worker with either two uninterrupted rest periods each of not less than 24 hours within each 14 day period or one uninterrupted rest period of not less than 48 hours in each such 14 day period in place of the entitlement to an uninterrupted rest period of 24 hours in each seven day period during which he works for the employer.
Regulation 13, as amended, which sets out the entitlement to annual leave, contains the following provisions: (1) Subject to paragraph (5) [which is not relevant for present purposes], a worker is entitled to four weeks annual leave in each leave year. (9) Leave to which a worker is entitled under this regulation may be taken in instalments, but (a) it may only be taken in the leave year in respect of which it is due, and (b) it may not be replaced by a payment in lieu except where the workers employment is terminated.
Regulation 15 makes provision for the dates on which annual leave may be taken under regulation 13.
This is where the conditions for the granting of such leave, referred to in article 7 of the WTD, are to be found.
The basic rules are set out in paragraph (1).
They are that a worker may take leave to which he is entitled on such days as he may elect by giving notice to his employer in accordance with paragraph (3), but that this is subject to any requirement imposed on him by his employer under paragraph (2).
Paragraph (2) provides: A workers employer may require the worker (a) to take leave to which the worker is entitled ; or (b) not to take such leave, on particular days, by giving notice to the worker in accordance with paragraph (3).
Paragraph (3) states that a notice under paragraph (1) or (2) may relate to all or any part of the leave to which a worker is entitled in any leave year, must specify the days on which leave is or is not to be taken and, where the leave on a particular day is to be in respect of only a part of a day, its duration.
It contains provisions about the date before which notice is to be given to the employer or the worker, as the case may be.
Regulation 21 takes advantage of the provisions about derogation in article 17 of the WTD.
It provides that regulations 10, 11 and 12 do not apply in relation to a worker, among others, whose activities are such that his place of work and place of residence are distant from one another.
Regulation 24 provides that where the application of any provision of the Regulations is excluded by regulation 21 and a worker is accordingly required by his employer to work during a period which would otherwise be a rest period or rest break, his employer shall wherever possible allow him to take an equivalent period of compensatory rest.
This accords with what is to be found in article 17 of the WTD: see para 17, above.
The appellants case
Mr Lindens case was based on the proposition that leave could not be taken out of the periods when the appellants were on field break because they were not required by their contracts to work during those periods.
These weeks were, as it was put, theirs already.
It was inherent in the concept of leave that the worker was being released from the obligation to work.
As they were not required to work during their field breaks, there were no periods within them for which they required to be given leave in order to remain onshore.
This gave meaning to the concept of leave, and it was how the bargain between the parties should be interpreted.
It was more than just rest.
It was the workers right to say to his employer that, although his employer required him to work during a given period, he wanted to take his annual leave and to be released from the obligation to work during that period so that he could do so.
He submitted that the importance of the purpose for which the right to leave was given was illustrated by Merino Gomez v Continental Industrias del Caucho SA (Case C 342/01) [2005] ICR 1040.
The problem that arose in that case was a conflict between the Community law right to maternity leave on the one hand and the statutory right to annual leave under the Spanish implementation of article 7 of the WTD on the other.
The ECJ held that the entitlement to paid annual leave was not to be regarded as having been met where the worker had been absent on maternity leave, as the purposes of these two entitlements was different.
In paras 29, 30 and 32 the court said (omitting its references to previous case law): 29.
The entitlement of every worker to paid annual leave must be regarded as a particularly important principle of Community social law from which there can be no derogations and whose implementation by the competent national authorities must be confined within the limits expressly laid down by Directive 93/104 [the then current working time Directive].
It is significant in that connection that that Directive also embodies the rule that a worker must normally be entitled to actual rest, with a view to ensuring effective protection of his health and safety, since it is only where the employment relationship is terminated that article 7(2) permits an allowance to be paid in lieu of paid annual leave. 32.
The purpose of the entitlement to annual leave is different from that of the entitlement to maternity leave.
Maternity leave is intended, first, to protect a womans biological condition during and after pregnancy and, secondly, to protect the special relationship between a woman and her child over the period which follows pregnancy and childbirth. 30.
Mr Linden referred also to Stringer v Revenue and Customs Comrs (Joined Cases C 520/06 and C 350/06) [2009] ICR 932, in which the issue was whether workers continued to accrue an entitlement to paid annual leave whilst absent on long term sickness and were entitled to take it during periods of absence on sick leave.
He submitted that the judgment identified the qualitative nature of paid annual leave, which was different from sick leave.
After recalling what had been said about annual leave in Gomez, paras 29 and 30, the Grand Chamber said this in para 25 of its judgment: It is common ground that the purpose of the entitlement to paid annual leave is to enable the worker to rest and to enjoy a period of relaxation and leisure.
The purpose of the entitlement to sick leave is different.
It is given to the worker so that he can recover from being ill.
But it did not add anything to its previous jurisprudence on this matter.
There was no indication here or in Gomez that the quality of any periods of time that were set aside for rest affected the question whether, in terms of their duration or the time that was selected, they were sufficient for the purposes of the WTD.
In Pereda v Madrid Movilidad SA (Case C 277/08) [2009] ECR 1 8405, recalling what had been said about this in Gomez and Stringer, the ECJ again said that the purpose of the entitlement to annual leave was to enable the worker to rest and enjoy a period of relaxation and leisure: see paras 18 21.
Mr Linden drew attention to the fact that the claimant in that case was under a 52 week contract that required him to work all the year round.
He said that this was to be contrasted with the facts of this case, where the contract to work was what he described as a 26 week contract and there was no obligation to work for the other 26 weeks.
But there was no suggestion in the Pereda case that the scheduled leave period did not count towards the statutory minimum annual leave entitlement because it was a period when the workers would not otherwise be working.
It is to be noted too that the court said in para 22 that the scheduling of leave according to the rules and procedures of national law could take account of the various interests involved, including the overriding reasons relating to the interests of the undertaking.
In the appellants case, it is the overriding interests of the employers that has led to the working pattern being organised in a way that requires their workers to work throughout the 14 days when they are offshore and to have their periods of rest and relaxation, other than breaks and the daily rest, during their field break onshore.
Reference was also made to Sumsion v BBC (Scotland) [2007] IRLR 678, which the employment tribunal attempted to distinguish from the present case.
The BBC sought to discharge its obligation to Mr Sumsion by requiring him to take every Saturday off as a leave day to make up his annual leave under regulation 13 of the WTR.
His contract referred to the fact that his services would be required for up to six turns of duty per week, and that he was to be entitled to six days leave to be taken on any sixth non scheduled days in a week.
The employment tribunal held in Sumsion that the BBC was not in breach of the WTR by requiring him to take his leave on Saturdays, and its decision was upheld by the EAT.
In this case the employment tribunal said that the period of leave which Mr Sumsion was given was one when there was an obligation to work, whereas in the case of the field break out of which the respondents said leave should be taken there was no such obligation and never had been: para 289.
I would not draw that distinction.
It seems to me that the arrangements in both cases were essentially the same.
It was known from the outset that the periods during which the employer was insisting leave should be taken were periods when the workers would not be required to work.
That said, the facts of that case were, as Lord Eassie pointed out in para 50 of his opinion, somewhat special.
It was a short term contract under which it could be said, as the EAT in that case concluded, that the employee had elected for his Saturdays to be taken as leave days under regulation 15 with the result that it was open to his employers to request him to do so.
The case was also decided in the light of the decision of the Court of Appeal in Inland Revenue Commissioners v Ainsworth [2005] EWCA Civ 441, [2005] ICR 1149 before that decision was in effect set aside by the ECJs ruling in that case: see Stringer v Revenue and Customs Comrs [2009] ICR 932.
And the device of requiring the worker to take his leave on Saturdays (the Saturday problem) does not arise in the case of the offshore workers.
For all these reasons I do not think that the EATs decision in Sumsion offers any assistance to the solution of the problem that is before us in this case.
It is worth noting however that in para 26 of its judgment in that case the EAT recognised that there might be cases in which, if the whole facts and circumstances were examined, it could be demonstrated that the employer, in nominating Saturday as a leave day, was not affording any real leave at all.
Discussion
I do not think that is right to describe the contract in this case, as Mr Linden sought to do, as a 26 week contract.
The fact is that the appellants were under contract with their employers for the whole of each year.
Their working pattern was organised in such a way that working time was limited to the 26 weeks when they were offshore.
But their contractual relationship with their employers continued irrespective of where they were at any given time.
They had continuity of employment throughout the year.
The fact that their pattern of working was a repeating shift pattern was a product of that contractual relationship.
The critical question is how that repeating shift pattern falls to be viewed for the purposes of the WTD.
How is it to be determined whether the rules that it lays down for what recital 5 of the preamble refers to as daily, weekly and annual periods of rest are satisfied?
As I have already explained (see para 21, above), I do not think that the quality of the periods that are set aside during each cycle determines whether the minimum requirements have been satisfied.
I accept that the purpose of the entitlement to annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure, as the ECJ has repeatedly made clear.
But the WTD has met that purpose by laying down the minimum periods of rest that must be given in each cycle.
As the ECJ said in Gomez [2005] ICR 1040, para 30, the fact that rest means actual rest is demonstrated by the rule that it is only where the employment relationship is terminated that article 7(2) permits an allowance to be paid in lieu of paid annual leave.
But the ECJ has not said that a pre ordained rest period, when the worker is free from all obligations to the employer, can never constitute annual leave within the meaning of that article.
I would hold therefore that rest period simply means any period which is not working time: see article 2.
Any period includes every such period irrespective of where the worker is at that time and what he is doing, so long as it is a period when he is not working.
I think it is plain that any period when the appellants are on field break onshore will fall into that category.
The employment tribunal recognised in para 286 of its judgment that there was an element of circularity in the appellants argument: ie, is it that a particular period cannot be said to be leave because it is a period when there is no obligation to work, or is it that there is only no obligation to work because the period in question has already been designated as leave? It referred to the case of teachers in non term time and tradesmen in the trades fortnight as examples of the latter where the period when annual leave could be taken had already been designated.
But it did not try to resolve this apparent anomaly, as it did not see these cases as giving rise in practice to any difficulty.
The solution which it favoured, contrary to what happened in practice in those cases, seemed to it to be founded on the common sense proposition that the workers entitlement to each of the measures provided for by the WTR required to be real, in the sense that they genuinely provided a break from what would otherwise be an obligation to work or to be available to work.
But the facts of this case do not support the idea that the field break is not a genuine break or otherwise unreal.
Nor has there been any suggestion that the pattern of working has had, or is liable to have, an adverse effect on the appellants health or safety.
For these reasons I would hold that the respondents are entitled to insist that the appellants must take their paid annual leave during periods when they are onshore on field break.
In my opinion this is permitted by regulation 13 of the WTR, read in conformity with article 7 of the WTD.
Other problem cases
Attention was drawn in the course of the argument to two other problem cases which it was said might give rise to difficulty.
The first was the case of teachers, already mentioned by the employment tribunal, who are required to take their annual leave during non term time.
Various other cases fall into this category, such as professional footballers, staff who work in the devolved legislatures such as the Scottish Parliament and in the Parliament at Westminster and people who work full time during the season in the tourist industry.
They are people who are left, for the most part, with no option but to take their paid annual leave during periods when they are not required to work.
But the problem in their case disappears if, as I would hold, there is no objection to their being required to take their annual leave during those periods.
The other problem was referred to as the Saturday problem, which is illustrated by the case of Sumsion.
It was said to arise from the ability of employers under regulation 15 of the WTR to designate days within the week when the worker would not otherwise be working as annual leave.
Carried to its extreme this could result in workers who worked a five day week, Sundays being treated as the weekly rest period, being required to take their annual leave each Saturday.
This would exhaust the possibility of there ever being whole weeks in the year when annual leave could be taken.
A literal reading of the employers rights under regulation 15(2) suggests that this course might be open to him.
It would obviously be an abuse of the system as the EAT indicated in Sumsion v BBC (Scotland) [2007] IRLR 678, para 26.
But the suggestion was that it was an abuse which could not be prevented.
This raises a different problem from that which arises in the case of the offshore workers.
The question is not whether a worker can be required to take annual leave during a period when he would not otherwise have been working but whether the worker can be forced to take his entitlement to annual leave in periods which are shorter than one week.
But it is not a problem that has to be answered in this case.
There seems to me to be much to be said for the view that, when article 7 of the WTD is read together with the purposes identified in the preamble and in the light of what the ECJ said in Gomez [2005] ICR 1040, para 30, the entitlement is to periods of annual leave measured in weeks, not days.
The worker can opt to take all or part of it in days, if he chooses to do so.
But the employer cannot force him to do so.
But I do not need to reach a concluded view on this point, and I have not done so.
Reference
Mr Linden submitted that the meaning that was to be given to the expression annual leave in article 7 of the WTD was not so obvious as to leave no room for reasonable doubt and that, if the court was not persuaded that the appeal should be allowed, the issue should be referred to the CJEU for a preliminary ruling under article 267 of the Treaty on the Functioning of the European Union.
Various other issues were listed in his written case as requiring a reference.
I am not persuaded that a reference is necessary in this case on any of the questions that have been listed.
We must be mindful of our responsibility as a court against whose decisions there is no judicial remedy under national law.
But the ruling in Srl CILFIT v Ministry of Health (Case 283/81) [1982] ECR 3415 permits us to decline to make a reference if a decision on the point is not necessary to enable the court to give judgment or the answer to the question is acte clair.
I do not think that the meaning to be given to article 7, for the purposes of this judgment, is open to any reasonable doubt.
The wording and structure of the WTD plainly favours the respondents argument, and I can find nothing in any of the judgments of the ECJ to which we were referred that casts doubt on the meaning which I think should be given to it.
I would refuse the request for a reference.
Conclusion
I would dismiss the appeal.
I would affirm the interlocutor of the Extra Division of the Court of Session.
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The Appellants are all employed to work in various capacities on offshore oil and gas installations.
The Respondents are their employers.
With the exception of one, all were contracted to work to a pattern of two weeks offshore followed by two weeks onshore (called a field break).
Whilst offshore the Appellants generally worked a 12 hour shift each day during which rest breaks were taken.
This was followed by 12 hours off duty living offshore on the installation.
They did not have any days off while they were offshore.
For the most part the Appellants were free from work related obligations during the entire period of their field breaks.
The Working Time Regulations 1998 (the WTR) set out in domestic law the provisions of the Working Time Directive 2003 (the WTD), which lays down minimum health and safety requirements for the organisation of working time, with minimum rest periods consisting of daily rest, weekly rest and annual leave (Articles 3 to 7 WTD).
Article 7 of the WTD and Regulation 13 of the WTR provide that the worker is entitled to paid annual leave of at least four weeks (at the time the Appellants made their claims).
Regulation 15 of the WTR provides that a worker may take leave to which he is entitled on such days as he chooses by giving notice to his employer, but that the employer may require him to take leave on particular days.
The issue in this case is whether the period spent onshore should count towards the workers entitlement to four weeks paid annual leave.
The Appellants issued proceedings contending that annual leave, properly construed, means release from what would otherwise have been an obligation to work, and therefore the WTR required the Respondents to permit them to take annual leave from periods when they would otherwise be required to work on the offshore installation.
The Respondents maintained that the time onshore is itself a rest period, as it is not working time, so the paid annual leave entitlement was discharged by two weeks onshore within the shift pattern.
The Employment Tribunal held that leave in Regulation 13 of the WTR involved a release from what would otherwise have been an obligation to work.
That decision was set aside by the Employment Appeal Tribunal, which held that the time available during field breaks, after allowing for compensatory rest to take account of the fact that the Appellants worked offshore without a weekly rest period, was more than sufficient to cover the entitlement to annual leave.
The Inner House of the Court of Session refused the Appellants appeal, holding that what the WTD required was that there be provided to the worker within the year at least four remunerated weeks in which he was free from working commitments.
There was nothing in the WTD to suggest that employers might not arrange matters so that annual leave was taken during the school holidays or such similar industrial equivalent.
The Supreme Court unanimously refuses the request for a reference to the Court of Justice of the European Union, dismisses the appeal, and affirms the interlocutor of the Extra Division of the Court of Session.
The judgment is given by Lord Hope.
Under the WTD, every worker must be entitled to a rest break, a daily rest, and a weekly rest period.
Each period must be measured separately from each other.
They cannot intrude upon each other or overlap [16].
Where necessary because of special working patterns, workers must be afforded equivalent periods of compensatory rest.
In the Appellants case, it was agreed that the first two days of each period of their field break is accounted for as compensatory rest, to make up for the fact that they work a 12 hour shift every day during their two weeks offshore [17].
With regard to the annual leave entitlement, Article 7 of the WTD does not require that those four weeks must be taken consecutively or that those weeks cannot be interrupted [18].
But as a period of leave is not a period which is defined in Article 2 as working time, it must be taken to be what that article defines as a rest period.
It is an annual period of rest [19].
The WTD does not imply any qualitative requirement to test whether a given period can be accounted as rest.
The exercise that must be carried out is simply one of counting up the relevant hours, days or seven day periods and ensuring that the worker is not required to work during those periods.
There is no indication anywhere that the WTD was concerned about the quality of the minimum periods of rest, other than to make it clear in the definition of rest period that it means a period which is not working time[21].
The contract in question is a contract for the whole of the year, in which the employees were required to work for 26 weeks [34].
The purpose of the entitlement to annual leave is to enable the worker to rest and enjoy a period of relaxation and leisure.
The ECJ has not said that a pre ordained rest period, when the worker is free from all obligations to the employer, can never constitute annual leave.
On the contrary, the term rest period simply means any period which is not working time, and any period means every such period irrespective of where the worker is at that time and what he is doing, so long as it is a period when he is not working.
It is plain that any period when the Appellants are on field break onshore will fall into that category [36].
The Respondents are therefore entitled to insist that the Appellants must take their paid annual leave during periods other than their 26 working weeks when they are onshore on field break.
This is permitted by Regulation 13 of the WTR, read in conformity with Article 7 of the WTD [38].
A reference to the CJEU is not necessary in this case.
The meaning to be given to article 7, for the purposes of this judgment, is not open to any doubt [43].
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This appeal is the lead case in a number of appeals concerned with the interpretation of the phrase in section 6(1) of the Social Security Contributions and Benefits Act 1992, [w]here in any tax week earnings are paid to or for the benefit of an earner.
It focuses on the meaning of the word earnings in that phrase.
The context is the payment of an employers contribution to a Funded Unapproved Retirement Benefits Scheme.
Until 2006 such schemes were commonly used to top up sums available through tax approved pension schemes.
The facts
On 11 April 2002 the appellant company (FML) established by trust deed a retirement benefit scheme to provide relevant benefits (as defined in section 612 of the Income and Corporation Taxes Act 1988) to its employees and directors.
The trust provided that, upon a members retirement from service, the trustees were to apply the accumulated fund in providing the member with a pension for life or such other relevant benefits as they might agree with him.
On the members death the trustees were to realise the accumulated fund and apply the net proceeds to or for the benefit of a defined discretionary class of beneficiary.
On the same day Mr McHugh, a shareholder and director of FML, asked to become a member of the scheme.
He informed the trustees that he wished them to exercise their discretion in favour of his wife in the event of his death.
FML made an initial cash contribution to the scheme of 1,000 and transferred to it Treasury Stock with the nominal value of 162,000, both for Mr McHughs benefit.
He has been the only member of the scheme.
He has received no relevant benefits from the scheme.
When the transfers were made to the scheme Mr McHugh was 54 years old.
He had no vested interest in the assets of the scheme because the retirement age under the scheme was defined as meaning: the date between the 50th birthday and the 85th birthday notified to a Member by the Employer as the date on which the Members benefits will become payable.
Such date may be varied from time to time by agreement in writing between the Employer and the Member.
FML specified Mr McHughs retirement age to be his 60th birthday.
But, as HMRC pointed out, he controlled FML and was in a position to bring forward his retirement date for the purposes of the trust deed.
The Issue
The principal issue which we address is whether the transfer of the cash and Treasury Stock to the scheme was a payment of earnings to or for the benefit of Mr McHugh within the meaning of section 6 of the 1992 Act.
It was agreed that the payment was for his benefit.
But was it earnings for the purposes of that section?
The prior proceedings
FML appealed against HMRCs decision that it was liable to pay Class 1 National Insurance Contributions on the value of the transfer.
The Upper Tribunal (Tax and Chancery Chamber) (Floyd J and Judge Avery Jones) heard the appeal at first instance.
It delivered a judgment on 21 February 2011 allowing the appeal.
HMRC appealed to the Court of Appeal (Arden LJ, Rimer LJ and Ryder J).
By a judgment dated 30 May 2012 the Court of Appeal by a majority (Arden LJ and Ryder J) allowed the appeal and restored the decision of HMRC.
Before this court Mr Bramwell presented FMLs appeal on a much narrower front than the case which had been debated before the Court of Appeal.
Until his oral submissions to us, FMLs case had been that earnings in NIC legislation covered the same ground as emoluments in income tax legislation.
FML abandoned that position and focused principally on the contingent nature of Mr McHughs interest in the transferred assets.
In short, Mr Bramwell accepted that earnings had a wider meaning than emoluments in income tax legislation.
His submission was that the payment of earnings under section 6 of the 1992 Act did not extend to the employers transfer to a trust of funds or assets in which the earner had at the time of the transfer only a contingent interest.
We, and Mr Jones for HMRC, therefore had to address a different argument from that advanced before the Court of Appeal.
Counsel for both parties argued their cases very ably.
Discussion
The legislative history that lies behind our present system of national insurance shows that Mr Bramwells change of position was correct: National Insurance Contributions (NICs) have been levied on a basis which is different from the emoluments on which income tax has been raised.
Mr David Lloyd George, when Chancellor of the Exchequer in 1911, introduced the first compulsory system of insurance against illness and unemployment in the United Kingdom: the National Insurance Act 1911.
The Act fixed contributions rates by reference to the level of an employed persons remuneration (section 4 and Second Schedule).
Lord Beveridge carried out a substantial review of the by then expanded system of national insurance and reported in 1942.
The Beveridge Report (Cmnd 6404) was implemented by the National Insurance Act 1946, which established the National Insurance Fund, into which workers, employers and the state were to contribute.
Employers and employed persons were required to make weekly contributions into the National Insurance Fund to pay benefits to the earners and their dependants.
Contributions were paid in respect of earnings.
In section 78 of the 1946 Act earnings were interpreted to include any remuneration or profit derived from a gainful occupation.
The current provision for NICs is contained in the 1992 Act and subordinate legislation.
Sections 6 to 9 of that Act provide, in relation to an earner employed under a contract of service, that where in any tax week earnings are paid to or for his benefit, the employed earner shall pay a primary Class 1 contribution and his employer will pay a secondary Class 1 contribution (both subject to specified thresholds).
Section 3 of the 1992 Act provides that earnings includes any remuneration or profit derived from an employment.
In my view it is significant that Parliament in the1946 Act, chose to use the word earnings rather than emoluments, which had been a term used in income tax legislation with a definition which had remained substantially unchanged since the Income Tax Act 1842.
The latter word had been the subject of judicial interpretation.
In particular, in Tennant v Smith [1892] AC 150, the case of the Montrose bank manager whose employer gave him free accommodation in a bank house which he was required to occupy, the House of Lords held that the Inland Revenue could not charge income tax on the value of the accommodation because the employee could not convert the benefit into money.
The House of Lords held that emoluments were confined to actual money payments and to benefits in kind which were capable of being turned into money by the recipient.
See also Lord Reids explanation of the case in Heaton v Bell [1970] AC 728, 744 745.
By contrast, from the outset, the word earnings in NICs legislation has included benefits in kind which the recipient could not convert into money there and then.
Part I of the First Schedule to the 1946 Act, which set out the contribution rates of employed persons, had a rate for earners earning remuneration of under 30 shillings per week and a higher rate for those earning remuneration above that sum.
Like the 1911 Act (section 4 and Second Schedule) it treated remuneration, which, as I have said, formed part of the definition of earnings in section 78, as including the provision of board and lodging by providing: For the purpose of this and Part II of this Schedule [which set out employers rates] a person shall be deemed to be earning remuneration at a weekly rate of thirty shillings or less if, but only if, his remuneration does not include the provision of board and lodging by the employer and the rate of the remuneration does not exceed thirty shillings a week, and to be earning remuneration at a weekly rate exceeding thirty shillings in any other case.
Since then, primary and subordinate legislation pertaining to NICs has made express provision for benefits in kind to be disregarded when Parliament has not wanted such earnings to be taken into account in the calculation of NICs.
In the National Insurance Act 1959, which introduced a graduated pension scheme on top of flat rate benefits, benefits in kind which the recipient could not convert into moneys worth were excluded from the calculation of graduated contributions by the device (in section 2(1)) of deeming remuneration to include only emoluments assessable to income tax under Schedule E.
That arrangement was preserved in the National Insurance Act 1965 (section 4(2)).
But in 1975 the basic scheme and graduated scheme were replaced by a new scheme which provided for graduated contributions related to the level of earnings between a lower earnings limit and an upper earnings limit.
The link between graduated contributions and emoluments for income tax purposes was abolished.
Since then, subordinate legislation has provided for the disregard of, among others, any payment in kind or by way of provision of board or lodging (the Social Security (Contributions) Regulations: SI 1973/1264, regulation 17(1)(d); SI 1975/492, regulation 17(1)(d); SI 1979/591, regulation 19(1)(d); and now SI 2001/1004, para 1 of Part II of Schedule 3 see para 13 below).
In 1985 the upper earnings limit was removed in relation to employer contributions, and since 6 April 2003 employees have been subject to an additional surcharge on earnings above the upper earnings limit (currently 2%).
Under the 1992 Act and current subordinate legislation, the Social Security (Contributions) Regulations 2001 (SI 2001/1004) as amended, a similar arrangement of using earnings as the basis of calculating liability to NICs and disregarding payments in kind has been maintained.
Thus in Schedule 3 to the 2001 Regulations (Part II para 1) it is provided: A payment in kind, or by way of the provision of services, board and lodging or other facilities is to be disregarded in the calculation of earnings.
It is not appropriate to interpret an Act of Parliament by reference to subordinate legislation which was made years after the primary legislation (Deposit Protection Board v Barclays Bank plc [1994] 2 AC 367, 397 per Lord Browne Wilkinson; see also Hanlon v The Law Society [1981] AC 124, 193 194 per Lord Lowry).
But that is not my purpose.
I refer to the 2001 Regulations simply to demonstrate that the scheme of NICs legislation by which earnings includes non convertible benefits in kind unless they are disregarded, either expressly or by necessary implication, has existed at least since 1946.
As FML accepts the proposition that earnings in NICs legislation is not to be equated with emoluments in income tax legislation, most of the arguments which engaged the Upper Tribunal and the Court of Appeal fall away.
Instead, the debate has focused on whether FML had paid earnings to or for the benefit of Mr McHugh when it made the transfer to the trust at a time when Mr McHughs interest in the assets of the trust was only a contingent one which might have been defeated by his death before his specified retirement age.
As I have said, both parties agreed that the transfer to the trust had been for the benefit of Mr McHugh.
The question was: was the transfer the payment of earnings?
On this narrow issue, HMRCs stance before this court was remarkable.
Because of the assumptions on which the subordinate legislation had been framed, Mr Jones had to submit that earnings are paid to an earner both when assets are transferred to a pension scheme to be held on a trust and also when payments are made from the trust fund.
HMRC looked to the payment and not to what the earner received.
HMRC argued that the payment into the trust fund was earnings because it was a sum paid as the quid pro quo for past or future services.
It was part of Mr McHughs remuneration.
The sum went to a trust fund which was solely for the benefit of Mr McHugh and his wife.
Mr McHugh, it was submitted, was immediately better off because he had the hope of receiving the trust fund in the future, and his family would benefit if he did not survive until his retirement age.
Payments to him out of the trust fund would as a matter of principle also be earnings when made because they also were payments to him in respect of his employment.
On this approach, double counting was avoided only by Part VI of Schedule 3 to the 2001 Regulations which disregards, among others, payments by way of pension (para 1) and payments by way of relevant benefits pursuant to an unapproved retirement benefits scheme (para 4).
There are three reasons why I think that HMRCs argument is wrong.
The first and principal reason is that the ordinary man on the underground would consider it to be counter intuitive that a person would earn remuneration both when his employer paid money into a trust to create a fund for his benefit and again when at a later date that trust fund was paid out to him.
The argument would in principle apply also when a company gave an employee a bonus, which was put into a trust or in an escrow fund and was payable at a future date only if the company performed to a specified level by then: he would earn the bonus twice.
I am reluctant to attribute such a view to Parliament absent clear words or necessary implication, of which there are neither.
If one gives words their ordinary meaning, it is clear that a retired earner receives earnings in respect of his employment in the form of deferred remuneration when he receives his pension.
So too does an earner when he receives his deferred bonus.
In each case I would characterise the payment from the trust or escrow fund as deferred earnings.
It follows that the payment into the trust or escrow fund would not be earnings.
Secondly, it is only by looking exclusively to what was paid and ignoring what the earner received that HMRCs view can be sustained.
But such an interpretation of section 6(1) of the 1992 Act denudes the word earnings of any meaning, so that the phrase earnings are paid would amount to payments are made in respect of any one employment.
Earnings in this context are remuneration derived from the employment.
The use of the word earnings points the reader towards what the employee obtains from his employment.
Looking to what the earner receives avoids the counter intuitive result.
The third and subordinate reason relates to the method of computation.
HMRC, by treating the payment into the trust as earnings, fail to take into account the existence of the contingency.
If Mr McHugh had died before his retirement date, the trustees would have realised the accumulated fund and paid the proceeds to a member of the defined discretionary class of beneficiary probably his wife.
One must ask: what did Mr McHugh receive through the transfer? It was not the cash and Treasury Stock.
The trustees received the assets transferred to them on the trusts of the fund and not unconditionally for Mr McHugh.
The transfer gave him only the entitlement to a future pension or relevant benefits once a condition his reaching retirement age had been purified.
It does not matter that Mr McHugh could not immediately convert his entitlement into money because, as I have said, non convertible benefits in kind are in principle earnings in the NICs legislation.
But the hypothetical value to be attributed to Mr McHughs entitlement would not be the value, at the date of the transfer, of the assets paid into the fund.
Rather it would be the value of his contingent right to the trust fund such as it would be at his retirement date.
That calculation would not be a simple exercise.
The valuer would have to allow for both the contingency of the earners pre deceasing the specified retirement date and the uncertainty of the trustees performance in managing the fund until that date.
That would not be the same as the value of the cash and assets in the week in which the transfer was made.
HMRCs approach, by treating the payment into the trust fund as Mr McHughs earnings, fails to address what it was that he received when the transfer was made.
In my view therefore the transfer to the trust was not the payment of earnings to or for the benefit of Mr McHugh within the meaning of section 6(1) of the 1992 Act.
Having reached this view on the issue which the parties presented in this appeal, I comment briefly on some of the cases to which counsel referred.
This case was presented as a test case on the issue of principle.
No argument was advanced as to whether a payment into a pension or bonus fund might properly be analysed as a payment out of the earners salary as in Smyth v Stretton (1904) 5 TC 36.
Mr Jones stated that HMRC might take that point in an appropriate case.
Edwards v Roberts (1935) 19 TC 618 assists in this case not because it is correct to equate earnings in NICs legislation with emoluments in income tax legislation but because of its application of the general law in relation to a contingent interest and its focus on what an employee receives.
In that case an employee received a salary and also, if he remained in employment for more than five years, a right to receive at the end of a subsequent financial year part of the capital of a trust fund into which his employer paid a proportion of its annual profits.
Lord Hanworth MR stated (p 638): [U]nder these circumstances there could not be said to have accrued to this employee a vested interest in these successive sums placed to his credit, but only that he had a chance of being paid a sum at the end of six years if all went well.
I would therefore allow the appeal and reinstate the judgment of the Upper
HMRC submitted and the majority of the Court of Appeal accepted that Collins J had been in error in Tullett & Tokyo Forex International Ltd v Secretary of State for Social Security [2000] EWHC (Admin) 350; [2000] All ER (D) 739 because he held that NICs were payable on what the employee receives.
For the reasons set out above, I disagree with HMRCs submission.
Conclusion
Tribunal.
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This appeal is the lead case in a number of appeals concerned with liability to pay National Insurance Contributions (NICs) and, in particular, with the interpretation of the phrase in section 6(1) of the Social Security Contributions and Benefits Act 1992, [w]here in any tax week earnings are paid to or for the benefit of an earner.
The case focuses on the meaning of the word earnings in that phrase, and whether it covers a payment by the appellant, FML, of an employers contribution to a Funded Unapproved Retirement Benefits Scheme [1].
The scheme was set up by FML by trust deed on 11 April 2002 to provide certain benefits to its employees and directors.
The trust provided that upon a members retirement from service the trustees were to apply the accumulated fund in providing the member with a pension for life or such other relevant benefits as might be agreed.
On the members death the trustees were to realise the accumulated fund and apply the net proceeds to or for the benefit of a defined discretionary class of beneficiary.
On the same day, Mr McHugh, a shareholder and director of FML, asked to become a member of the scheme.
He informed the trustees that he wished them to exercise their discretion in favour of his wife in the event of his death.
FML made an initial cash contribution to the scheme of 1,000 and transferred to it Treasury Stock with the nominal value of 162,000, both for Mr McHughs benefit.
He has been the only member of the scheme and has received no relevant benefits from it, as defined in section 612 of the Income and Corporation Taxes Act 1988 [2].
He was 54 years old when the transfers were made, and FML specified his retirement age to be his 60th birthday.
However as he controlled FML this date could be brought forward for the purposes of the scheme [3].
The question was whether the transfers were payments of earnings to or for the benefit of Mr McHugh within the meaning of section 6 of the 1992 Act.
It was agreed that the payment was for his benefit, but was it earnings? HMRC decided that it was, and that FML was therefore liable to pay Class 1 NICs on the value of the transfer.
FMLs appeal to the Upper Tribunal was successful, but the Court of Appeal reinstated HMRCs decision [4 5].
FML appealed to the Supreme Court.
Departing from its position before the Court of Appeal, FML accepted that earnings had a wider meaning than emoluments in income tax legislation.
It submitted that the payment of earnings under section 6 did not extend to the employers transfer to a trust of funds or assets in which the earner had at the time of the transfer only a contingent interest [6].
In a judgment delivered by Lord Hodge, the Supreme Court unanimously allows the appeal.
Lord Hodge examines the legislative history behind the UKs system of national insurance, which shows that NICs have indeed been levied on a basis that is different from the emoluments on which income tax has been raised [7 13].
He considers it significant that Parliament, in the National Insurance Act 1946, chose to use the word earnings rather than emoluments.
The latter word has been interpreted by the courts as referring to actual money payments and benefits in kind capable of being turned into money by the recipient [10].
Lord Hodge refers to primary legislation in 1911 and 1946 and also subordinate legislation for the purpose of demonstrating that the scheme of NICs legislation by which earnings includes non convertible benefits in kind (unless they are disregarded) has existed since 1946 [11 13].
As a result of the assumptions on which the subordinate legislation had been framed, HMRC had to argue that earnings are paid to an earner both when assets are transferred to a pension scheme to be held on a trust and also when payments are made from the trust fund.
HMRC looked to the payment and not to what the earner received.
The sum paid into the trust was part of Mr McHughs remuneration, going into a trust fund for the sole benefit of Mr McHugh and his wife.
Payments out to him from the trust would also, it was submitted, be earnings as they were also payments to him in respect of his employment.
Double counting would be avoided only as a result of specific disregards in the subordinate legislation [15].
Lord Hodge considers that remarkable position to be wrong for three reasons: First, the ordinary man on the underground would consider it counter intuitive that a person would earn remuneration both when his employer paid money into a trust to create a fund for his benefit and again when at a later date the trust fund was paid out to him.
If one gives words their ordinary meaning, it is clear that a retired earner receives earnings in respect of his employment in the form of deferred remuneration when he receives his pension.
The payment from the trust is deferred earnings; the payment into it is not earnings [16].
Secondly, HMRCs view could only be sustained by looking exclusively at what was paid and ignoring what the earner received.
Such an interpretation denudes the word earnings of any meaning, so the phrase earnings are paid would amount to payments are made [17].
The third reason relates to the method of computation.
By treating the payment into the trust as earnings, HMRC fail to take into account the existence of the contingency.
The transfer gave Mr McHugh not cash and treasury stock, but only the entitlement to a future pension or relevant benefits once the condition of reaching retirement age had been purified.
The hypothetical value to his entitlement would not be the value at the date of the transfer of the assets paid into the fund, but the value of Mr McHughs contingent right to the trust fund such as it would be at his retirement age.
That would not be a simple exercise, and HMRCs approach fails to address what it was that Mr McHugh received when the transfer was made [18].
Lord Hodge concludes that the transfer to the trust was not the payment of earnings for section 6(1) purposes [19].
The court allows FMLs appeal and reinstates the judgment of the Upper Tribunal [22].
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This is the judgment of the Court, to which all members have contributed.
The principal questions in this appeal are (a) whether article 8 of the European Convention on Human Rights (the Convention) requires a court, which is being asked to make an order for possession under section 143D(2) of the Housing Act 1996 (the 1996 Act) against a person occupying premises under a demoted tenancy, to have the power to consider whether the order would be necessary in a democratic society and (b) if so, whether section 143D(2) is compatible with article 8 of the Convention (article 8).
In the result, the Court answers both questions in the affirmative, the first at paras 22 54, the second at paras 65 107 below.
The appeal concerns a tenancy granted by a local authority, but observations relating to local authority landlords in this judgment apply equally to other social landlords to the extent that they are public authorities under the Human Rights Act 1998 (HRA).
On the other hand, we should emphasise at the outset that nothing in this judgment is intended to bear on cases where the person seeking the order for possession is a private landowner.
We briefly explain why at para 50 below.
The background to the appeal: secure and demoted tenancies
Most residential occupiers of houses and flats owned by local authorities are secure tenants under Part IV of the Housing Act 1985 (the 1985 Act).
By virtue of section 84 of the 1985 Act, a secure tenant cannot be evicted unless the landlord establishes to the satisfaction of the court (a) that one of the grounds specified in schedule 2 to the 1985 Act (e g, non payment of rent or nuisance to neighbours) exists, and (b), except in some specified categories of case where suitable alternative accommodation is available, that it is reasonable to make an order for possession against the tenant.
Even where the landlord establishes that these two requirements are satisfied, the court has a wide discretion under section 85 of the 1985 Act as to what order to make.
It may refuse to make any order, it may adjourn the proceedings, it may make an outright possession order which takes effect on a specific day, or it may make a suspended possession order which will not take effect so long as, for instance, the tenant pays the rent or creates no nuisance.
The secure tenancy regime was originally introduced by the Housing Act 1980 (the 1980 Act), but its provisions were consolidated in by Part IV of the 1985 Act.
Certain types of tenancy are excluded from this regime, and they are set out in schedule 1 to the 1985 Act.
Subsequently, amendments were made to the regime, most relevantly for present purposes by the 1996 Act and the Anti social Behaviour Act 2003 (the 2003 Act).
The 2003 Act inserted a new section 82A into the 1985 Act (section 82A).
This section gives the court the power to make a demotion order in respect of a secure tenancy.
A demotion order results in a tenancy ceasing to be a secure tenancy and becoming, instead, a demoted tenancy.
Section 82A(4) states that such an order may only be made if (a) the tenant (or someone living with him) has engaged, or has threatened to engage, in (i) housing related anti social conduct (as defined in section 153A of the 1996 Act) or (ii) conduct which consists of or involves using the premises for unlawful purposes (as explained in section 153B of the 1996 Act), and (b) it is reasonable to make the order.
Section 82A makes it clear that the demoted tenancy is a new tenancy.
The terms of the previous tenancy as to rent are carried across into the new tenancy, but the demotion results in much reduced rights of security of tenure for the tenant.
Somewhat confusingly, the provisions dealing with the operation of the demoted tenancy regime were inserted as Chapter 1A of Part V of the 1996 Act.
Subsection (1) of section 143B of that Act (section 143B) explains that, if a tenancy is demoted, the demotion will last for a year, unless the landlord brings possession proceedings within that year.
If such proceedings are brought within the year and are not determined before the years end, the demoted tenancy continues until the proceedings are determined.
If such proceedings are brought within the year and an order for possession is made, the tenancy ends.
If no such proceedings are brought, or they are brought and they fail, then, at the end of the year, the demoted tenancy will become a secure tenancy.
Subsection (1) of section 143D of the 1996 Act (section 143D) states that a landlord can only bring a demoted tenancy to an end by obtaining an order for possession from the court.
Since it is central to the present appeal, section 143D(2) must be quoted in full: The court must make an order for possession unless it thinks that the procedure under sections 143E and 143F has not been followed.
The effect of section 143E of the 1996 Act (section 143E) is that, before issuing possession proceedings against a demoted tenant, a local authority landlord must serve a notice (a Notice) informing him of (a) the fact that it has decided to seek possession, (b) the reasons why, (c) the date after which the proceedings will be issued, (d) the tenants right to request a review of the landlords decision (a Review), and (e) where to get legal advice.
Section 143F of the 1996 Act (section 143F) entitles the tenant, within fourteen days of the Notice, to request a Review, in which case the local authority landlord is obliged to carry out a Review which complies with regulations made by the Secretary of State under section 143F(3) and (4), and then to inform the tenant of the outcome.
Such regulations have been made in the Demoted Tenancies (Review of Decisions) (England) Regulations 2004 (SI 2004/1679).
Section 143N of the 1996 Act states that the County Court has jurisdiction to determine questions arising, and to entertain proceedings brought, under, inter alia, sections 143B 143F, even if the only relief sought is a declaration.
The procedures of the demoted tenancy regime are closely based on those of a regime first introduced by Chapter 1 of Part V of the 1996 Act.
It enabled a local authority to grant a tenancy under which a new tenant had a one year probationary period before becoming a secure tenant.
During that first year the tenancy is an introductory tenancy.
The procedure governing the landlords right to claim possession during that probationary period is contained in sections 127, 128, and 129 of the 1996 Act, whose provisions are, mutatis mutandis, virtually identical to sections 143D, 143E, and 143F respectively.
The procedural background to the appeal
In November 1978 Manchester City Council (the Council) granted Cleveland Pinnock a tenancy of a house at 65 Meldon Road, Longsight (the property), where he has lived ever since with his partner, Christine Walker, and, from time to time, with all or some of their five children.
In March 2005 the Council applied to the Manchester County Court for an order for possession of the property, or in the alternative a demotion order in respect of Mr Pinnocks secure tenancy.
Each of these claims was based on the contention that all of Mr Pinnocks children and Ms Walker (but not Mr Pinnock) had been guilty of serious anti social behaviour, in breach of the covenants in Mr Pinnocks tenancy.
The proceedings came before Recorder Scott Donovan, who heard considerable evidence and argument over a total of six days.
In part, the length of the proceedings was due to the Council amending its case in relation to the relief it was seeking.
The Recorder gave a full judgment on 8 June 2007.
He concluded that a large number of serious allegations against Ms Walker and Mr Pinnocks children were well founded.
He nevertheless decided that it would be truly draconian to make an order for possession, bearing in mind the length of the tenancy and Mr Pinnocks blameless life looked at from his own lack of direct involvement in criminal activity.
However, he went on to say that [a]pplying the criteria of reasonableness, I am satisfied that a demotion of tenancy order is the most appropriate order and that compliance with the order is entirely within Mr Pinnocks and Christine Walkers own hands.
The demotion order therefore took effect from 8 June 2007.
On 6 June 2008, the day before the order would effectively have lapsed, the Council served a Notice under section 143E, which indicated that possession would be sought.
The Notice had the effect pursuant to section 143B of prolonging the demoted tenancy, and of initiating the procedure envisaged in sections 143D, 143E and 143F.
The Notice sought to justify the projected possession proceedings on the ground of further alleged incidents of anti social behaviour in the vicinity of the property involving two of Mr Pinnocks sons.
Mr Pinnock exercised his right to seek a Review, which duly took place before a panel appointed by the Council (the Panel).
In its decision of 3 July 2008, the Panel effectively upheld the Notice.
The Council then issued a claim for possession which came before His Honour Judge Holman in the Manchester County Court.
After a two day hearing, the Judge gave a full judgment on 22 December 2008.
The upshot of his decision was that he made an outright order for possession of the property.
Mr Pinnock appealed to the Court of Appeal, who dismissed his appeal: [2009] EWCA Civ 852.
Mr Pinnock now appeals to this Court.
The issues which arise on this appeal
That simple description of the present proceedings rather masks the important and difficult issues to which they give rise.
Those issues are apparent from the clear and careful judgments of Judge Holman, in the County Court, and of Stanley Burnton LJ (with whom Mummery and Lloyd LJJ agreed) in the Court of Appeal.
Mr Pinnock wished to challenge the factual basis on which the Council had decided to seek possession and the Panel had decided to uphold the decision.
He also contended that the making of an order for possession would violate his article 8 Convention rights.
Judge Holman concluded that his role in this case was, as he put it, at para 60, limited to conducting a conventional judicial review of the Councils decision to bring the possession proceedings, and that his remit did not extend to resolv[ing] factual disputes.
In particular, he could not entertain any argument based on article 8.
Having accepted that he could review the Councils decision to bring and maintain the possession claim on normal judicial review principles, the Judge concluded that the Councils decision to prosecute the claim was rational.
He accordingly made an outright order for possession.
Stanley Burnton LJ agreed in the result, but, while largely agreeing with Judge Holmans analysis, he thought that the County Courts role was even more limited.
He said this, [2009] EWCA Civ 852, at para 50: Section 143D of the 1996 Act restricts the county court to considering whether the procedure under sections 143E and 143F has been followed.
If the court concludes the procedure has not been followed, it will not make an order for possession.
If it has been followed, it must make the order.
I emphasise the word procedure.
The courts review is limited to matters of procedure, and the county court cannot review the substance or rationality of the landlords decision, or whether or not it is consistent with the tenants or other occupiers Convention rights.
Stanley Burnton LJ nonetheless went on, helpfully, to consider whether he would have agreed with the Judges conclusion that the Councils decision to maintain a claim for possession was rational.
He concluded that it was; indeed he thought that the Judge had taken rather a restrictive view of the relevant evidence which the Council could have taken into account.
This appeal gives rise to four main issues, of increasing specificity.
The first is whether the jurisprudence of the European Court of Human Rights (EurCtHR) requires that, before making an order for possession of property which consists of a persons home pursuant to a claim made by a local authority (or other public authority), a domestic court should be able to consider the proportionality of evicting that person from his home under article 8, and, in the process of doing so, to resolve any relevant factual disputes between the parties.
We deal with that question in paras 22 54 below and answer it in the affirmative.
The second issue (paras 55 64 below) is what this conclusion means in practice in relation to claims for possession, and related claims, in relation to residential property.
The third issue (paras 65 107 below) is whether the demoted tenancy regime in the 1985, 1996 and 2003 Acts can properly be interpreted so as to comply with the requirements of article 8, or whether at least some aspects of that regime are incompatible with the occupiers article 8 Convention rights.
The fourth issue (paras 108 132 below), which requires a fuller consideration of the facts of this case, is how the appeal should be disposed of in the light of the answers on the first three issues.
First issue: what does the Convention require of the courts?
The nature of the issue
So far as relevant, article 8 of the Convention provides: 1.
Everyone has the right to respect for his home . 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 the economic well being of the country, for the prevention of disorder or crime, or for the protection of the rights of others.
It is also appropriate to refer to article 6, which, so far as relevant, provides: In the determination of his civil rights and obligations everyone is entitled to a fair hearing by an independent and impartial tribunal established by law.
The argument on behalf of Mr Pinnock is as follows. (a) At any rate where the person seeking possession is a public authority, a court invited to make an order for possession of a persons home must be satisfied that article 8 is complied with. (b) Accordingly, in the present proceedings, Judge Holman had to satisfy himself that the order for possession which he was being invited to make complied with article 8. (c) Article 8, when read together with article 6, required the Judge, as the relevant independent tribunal, to be satisfied that the order for possession (i) would be in accordance with the law, and (ii) would be necessary in a democratic society i e, that it would be proportionate. (d) The order for possession was in accordance with the law since it was made pursuant to the provisions relating to demoted tenancies in the 1985 and 1996 Acts, which are in principle unobjectionable under article 8. (e) However, Mr Pinnock was not given the opportunity to raise with the court the question whether the order for possession was, in all the circumstances of this case, proportionate.
Therefore article 8 was violated. (f) Further, in order to determine proportionality, the court should have had power to resolve for itself any issues of fact between the Council and Mr Pinnock, and to form its own view of proportionality, rather than adopting the traditional judicial review approach taken by the Judge. (g) Either the legislation should be interpreted to have the effect contended for in points (e) and (f), or this court should make a declaration of incompatibility.
The issues identified in the argument for Mr Pinnock are by no means novel.
It is therefore necessary for the Court to look briefly at the decisions of the House of Lords which deal with them and then, in a little more detail, at the relevant decisions of the EurCtHR.
The House of Lords Cases
In three relatively recent cases the House of Lords held that it was not open to a residential occupier, against whom possession was being sought by a local authority, to raise a proportionality argument under article 8.
In other words, the House rejected points (e) and (f) in the outline of the argument for Mr Pinnock in para 23 above.
Point (g) therefore did not arise.
For this reason, the Court of Appeal and Judge Holman were bound to come to the conclusions which we have summarised in paras 19 and 20 above.
The three decisions of the House of Lords are Harrow London Borough Council v Qazi [2003] UKHL 43; [2004] 1 AC 983, Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465, and Doherty v Birmingham City Council [2008] UKHL 57; [2009] 1 AC 367.
In each of them the defendants were residential occupiers of properties owned by a local authority, but, for one reason or another, they were not secure tenants, and, having had any right to continue to occupy the respective properties brought to an end in accordance with domestic law, they were trespassers.
So, in accordance with domestic law, the defendants could raise no defence to the local authoritys claim for possession.
In each case, however, the defendants contended that they should be able to rely on the argument that, even though they were trespassers with no defence to a claim for possession under domestic law, they had the right to have the proportionality of the loss of their home taken into account by virtue of their article 8 Convention rights.
No disrespect is intended to the impressive and careful reasoning in those three decisions when we say that, for present purposes, it is unnecessary to consider them in any detail.
In Harrow v Qazi [2004] 1 AC 983 and in Kay v Lambeth [2006] 2 AC 465, albeit in each case by a bare majority, the House decided that, a defence which does not challenge the law under which the possession order is sought as being incompatible with article 8 but is based only on the occupiers personal circumstances should be struck out: Kay v Lambeth [2006] 2 AC 465, 516 517, para 110, per Lord Hope of Craighead, with whom Lord Scott of Foscote, Baroness Hale of Richmond and Lord Brown of Eaton under Heywood agreed.
This observation applied to claims against trespassers, just as much as to claims against current or former tenants or licensees.
At the end of the same paragraph Lord Hope explained that, following Wandsworth London Borough Council v Winder [1985] AC 461, in principle, it would be open to a defendant to challenge the decision of a local authority to recover possession as an improper exercise of its powers at common law on the traditional judicial review ground that it was a decision that no reasonable person would consider justifiable.
In Doherty v Birmingham [2009] 1 AC 367 the law as stated in para 110 of Kay was substantially reaffirmed.
On the article 8 point Lord Mance, however, dissented, at para 132, and Lord Walker of Gestingthorpe displayed less than whole hearted enthusiasm, at paras 107 108.
The law on the judicial review point was affirmed by Lord Hope, Lord Walker, and Lord Mance, at paras 56, 123 and 157 respectively.
Nevertheless, in the light of the developments in the Strasbourg jurisprudence which we describe below, the House developed the law by acknowledging that the traditional approach to judicial review would have to be expanded, particularly to permit the court to make its own assessment of the relevant facts: [2009] 1 AC 367, especially at p 416, para 68, per Lord Scott, and at p 443, para 138, per Lord Mance.
In both Harrow v Qazi [2004] 1 AC 983 and Kay v Lambeth [2006] 2 AC 465, Lord Bingham of Cornhill (dissenting along with Lord Steyn in the former case, and with Lord Nicholls of Birkenhead and Lord Walker in the latter) accepted that it should be open, as a matter of principle, to a residential occupier, against whom a local authority is seeking possession, to raise an article 8 proportionality argument based on the facts of the particular case.
However, in Qazi, [2004] 1 AC 983, at para 25, Lord Bingham said that, if this was right, the occasions on which a court would be justified in declining to make a possession order would be very highly exceptional.
He effectively repeated this view in Kay v Lambeth [2006] 2 AC 465, 491 492, para 29, where he suggested that only in rare and exceptional cases would an article 8 proportionality challenge not be futile.
The Strasbourg Jurisprudence
Mr Pinnock contends that, exceptionally, it is appropriate for this nine judge court to depart from the majority view in these cases because there is now a consistent series of decisions of the EurCtHR which unambiguously supports the minority view in the earlier House of Lords decisions, and there is no good reason not to follow that series of decisions.
We must therefore examine them.
In Connors v United Kingdom (App no 66746/01), 27 May 2004 (2004) 40 EHRR 189, gypsies had initially been permitted to locate their caravan on a piece of land owned by a local authority, but their right of occupation was brought to an end because the local authority considered that they were committing a nuisance.
The local authority then successfully brought summary proceedings for possession, on the ground that they were trespassers and had no right to remain in occupation of the land.
Before the First Section of the EurCtHR the gypsies successfully contended that the proceedings violated their rights under article 8.
Although the local authoritys decision to evict the gypsies was susceptible to judicial review, the EurCtHR considered, 40 EHRR 189, para 92, that this procedure was insufficient to satisfy the requirements of article 8 because the local authority was not required to establish any substantive justification for evicting [the gypsies], and on this point judicial review could not provide any opportunity for an examination of the facts in dispute between the parties.
verbatim in subsequent decisions, the EurCtHR said: In a passage, 40 EHRR 189, paras 81 83, which has often been quoted 81.
An interference will be considered necessary in a democratic society for a legitimate aim if it answers a pressing social need and, in particular, if it is proportionate to the legitimate aim pursued.
While it is for the national authorities to make the initial assessment of necessity, the final evaluation as to whether the reasons cited for the interference are relevant and sufficient remains subject to review by the Court for conformity with the requirements of the Convention. 82.
In this regard, a margin of appreciation must, inevitably, be left to the national authorities .
This margin will vary according to the nature of the Convention right in issue, its importance for the individual and the nature of the activities restricted, as well as the nature of the aim pursued by the restrictions .
Where general social and economic policy considerations have arisen in the context of article 8 itself, the scope of the margin of appreciation depends on the context of the case, with particular significance attaching to the extent of the intrusion into the personal sphere of the applicant. 83.
The procedural safeguards available to the individual will be especially material in determining whether the respondent State has, when fixing the regulatory framework, remained within its margin of appreciation.
In particular, the Court must examine whether the decision making process leading to measures of interference was fair and such as to afford due respect to the interests safeguarded to the individual by article 8.
In Blei v Croatia (App no 59532/00), 29 July 2004 (2004) 41 EHRR 185, the First Section of the EurCtHR held that there had been no violation of the applicants article 8 rights in circumstances where her protected tenancy of her home had been terminated by the Croatian court on the ground that she had ceased to occupy it for 10 months during 1991 1992.
Her case was that it had been her home since 1953, and that her absence had been attributable to armed conflict in Dalmatia, but it was held that it had been her personal decision to leave.
The EurCtHR said, at 41 EHRR 185, para 65: State intervention in socio economic matters such as housing is often necessary in securing social justice and public benefit.
In this area, the margin of appreciation available to the State in implementing social and economic policies is necessarily a wide one.
The domestic authorities judgment as to what is necessary to achieve the objectives of those policies should be respected unless that judgment is manifestly without reasonable foundation.
Although this principle was originally set forth in the context of complaints under article 1 of Protocol No 1 the State enjoys an equally wide margin of appreciation as regards respect for the home in circumstances such as those prevailing in the present case, in the context of article 8.
Thus, the Court will accept the judgment of the domestic authorities as to what is necessary in a democratic society unless that judgment is manifestly without reasonable foundation, that is, unless the measure employed is manifestly disproportionate to the legitimate aim pursued.
The case then went to the Grand Chamber, which held that, ratione temporis, the court had had no jurisdiction to hear it.
The Grand Chamber said nothing, however, to cast doubt on what the First Section had said in the passage which we have quoted: [2006] ECHR 207.
In McCann v United Kingdom (App no 19009/04), 13 May 2008 (2008) 47 EHRR 913 the County Court made an order for possession against a man who occupied his home as a joint tenant with his estranged wife, on the ground that the tenancy had been determined by a notice to quit which she had served at the request of the local authority landlord and without reference to her husband.
The EurCtHR (Fourth Section) rejected the contention that the reasoning in Connors v UK 40 EHRR 189, paras 81 83, was confined only to cases involving the eviction of gypsies or cases where the applicant sought to challenge the law itself rather than its application in his particular case: 47 EHRR 913, para 50.
The court continued: The loss of ones home is the most extreme form of interference with the right for respect for the home.
Any person at risk of an interference of this magnitude should in principle be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under [article 8], notwithstanding that, under domestic law, his right of occupation has come to an end.
At para 54, the EurCtHR considered and rejected the contention that the grant of the right to the occupier to raise an issue under article 8 would have serious consequences for the functioning of the system or for the domestic law of landlord and tenant, citing and confirming the view of Lord Bingham in Kay v Lambeth [2006] 2 AC 465, 491 492, para 29, to the effect that only in very exceptional cases could an applicant succeed in raising an arguable case which would require a court to examine the issue.
The court also said that in the great majority of cases, an order for possession could continue to be made in summary proceedings.
In osi v Croatia (App no 28261/06), 15 January 2009 the Croatian state had obtained an order evicting the applicant from her home, which she had ceased to have any right to occupy as a matter of domestic law.
After quoting and considering Connors v UK 40 EHRR 189, paras 81 83, the EurCtHR (First Section) pointed out, at para 21, that the national courts had based their decision exclusively on the [domestic] applicable laws and had thus confined themselves to finding that occupation by the appellant was without legal basis [and] made no further analysis as to the proportionality of the measure to be applied against the applicant.
The court immediately went on to say that the Convention required that the eviction order was proportionate to the legitimate aim pursued, and that no legal provision of domestic law should be interpreted and applied in a manner incompatible with Croatias obligations under the Convention.
In paras 22 and 23, the EurCtHR concluded that article 8 had been violated since the applicant [had not been] afforded [the] possibility of having the proportionality and reasonableness of the measure [viz, an order of court evicting her from her home] determined by an independent tribunal in the light of the relevant principles under article 8 .
In Zehentner v Austria (App no 20082/02), 16 July 2009 the EurCtHR (First Section) had to consider the effect of article 8 in the context of an order evicting the applicant from her home following a judicial sale, after the making of the Austrian equivalent of a charging order.
The procedural circumstances were rather unusual, but the court held, at para 54, that the judicial sale and the applicants eviction are to be seen as a whole.
Importantly, for present purposes, at paras 52 59, the court reaffirmed the approach in Connors v UK 40 EHRR 189 and McCann v UK 47 EHRR 913.
In particular, the court also stated, at para 59, that a person at risk of eviction from their home should be able to have the proportionality of the measure determined by an independent tribunal in the light of the relevant principles under article 8.
In Pauli v Croatia (App no 3572/06), 22 October 2009 the EurCtHR (First Section) cited McCann v UK 47 EHRR 913 and reiterated, at para 43, that any person at risk of an interference with his right to home should in principle be able to have the proportionality and reasonableness of the measure determined by an independent tribunal notwithstanding that, under domestic law, he or she has no right to occupy a flat.
The court went on to explain that this right does not arise automatically, but only if the issue is raised with the court by the person concerned.
Finally, there is Kay v United Kingdom (App no 37341/06), 21 September 2010 in which the EurCtHR (Fourth Section) gave its judgment after the conclusion of the oral argument in this case.
We then received written submissions on the decision from the parties.
In that case the application was made to the Strasbourg court by the unsuccessful appellants in Kay v Lambeth [2006] 2 AC 465.
They had no security of tenure in their homes and their defences to claims for possession brought by the local authority based on the contention that it was disproportionate to deprive them of their homes in the light of article 8 had been struck out.
After carefully considering the various views expressed in the House of Lords in Kay v Lambeth [2006] 2 AC 465 and Doherty v Birmingham [2009] 1 AC 367, and the relevant decisions of the Court of Appeal, the EurCtHR stated, at paras 65 68, that the principles laid down in Connors v UK 40 EHRR 189 and McCann v UK 47 EHRR 913 applied.
The EurCtHR then stated, at para 73: The Court welcomes the increasing tendency of the domestic courts to develop and expand conventional judicial review grounds in the light of article 8.
A number of their Lordships in Doherty alluded to the possibility for challenges on conventional judicial review grounds in cases such as the applicants' to encompass more than just traditional Wednesbury grounds (see Lord Hope at para 55; Lord Scott at paras 70 and 84 to 85; and Lord Mance at paras 133 to 135 of the House of Lords judgment).
However, notwithstanding these developments, the Court considers that at the time that the applicants cases were considered by the domestic courts, there was an important distinction between the majority and minority approaches in the House of Lords, as demonstrated by the opinions in Kay itself.
In McCann, the Court agreed with the minority approach [in Kay v Lambeth [2006] 2 AC 465] although it noted that, in the great majority of cases, an order for possession could continue to be made in summary proceedings and that it would be only in very exceptional cases that an applicant would succeed in raising an arguable case which would require a court to examine the issue.
Accordingly, in the next paragraph of its judgment, the EurCtHR concluded: In conclusion, the Kay applicants challenge to the decision to strike out their article 8 defences failed because it was not possible at that time to challenge the decision of a local authority to seek a possession order on the basis of the alleged disproportionality of that decision in light of personal circumstances.
Accordingly, for the reasons given in McCann, the Court concludes that the decision by the County Court to strike out the applicant's article 8 defences meant that the procedural safeguards required by article 8 for the assessment of the proportionality of the interference were not observed.
As a result, the applicants were dispossessed of their homes without any possibility to have the proportionality of the measure determined by an independent tribunal.
It follows that there has been a violation of article 8 of the Convention in the instant case.
The EurCtHR was therefore saying that, in so far as the law had subsequently been developed in Doherty v Birmingham [2009] 1 AC 367, this development could not be relied on by the United Kingdom in Kay v UK (App no 37341/06).
Conclusion on the first issue
From these cases, it is clear that the following propositions are now well established in the jurisprudence of the EurCtHR: (a) Any person at risk of being dispossessed of his home at the suit of a local authority should in principle have the right to raise the question of the proportionality of the measure, and to have it determined by an independent tribunal in the light of article 8, even if his right of occupation under domestic law has come to an end: McCann v UK 47 EHRR 913, para 50; osi v Croatia (App no 28261/06), para 22; Zehentner v Austria (App no 20082/02), para 59; Pauli v Croatia (App no 3572/06), para 43, and Kay v UK (App no 37341/06), paras 73 4. (b) A judicial procedure which is limited to addressing the proportionality of the measure through the medium of traditional judicial review (i e, one which does not permit the court to make its own assessment of the facts in an appropriate case) is inadequate as it is not appropriate for resolving sensitive factual issues: Connors v UK 40 EHRR 189, para 92; McCann v UK 47 EHRR 913, para 53; Kay v UK (App no 37341/06), paras 72 73. (c) Where the measure includes proceedings involving more than one stage, it is the proceedings as a whole which must be considered in order to see if article 8 has been complied with: Zehentner v Austria (App no 20082/02), para 54. (d) If the court concludes that it would be disproportionate to evict a person from his home notwithstanding the fact that he has no domestic right to remain there, it would be unlawful to evict him so long as the conclusion obtains for example, for a specified period, or until a specified event occurs, or a particular condition is satisfied.
Although it cannot be described as a point of principle, it seems that the EurCtHR has also franked the view that it will only be in exceptional cases that article 8 proportionality would even arguably give a right to continued possession where the applicant has no right under domestic law to remain: McCann v UK 47 EHRR 913, para 54; Kay v UK (App no 37341/06), para 73.
We have referred in a little detail to the EurCtHR jurisprudence.
This is because it is important for the Court to emphasise what is now the unambiguous and consistent approach of the EurCtHR, when we have to consider whether it is appropriate for this Court to depart from the three decisions of the House of Lords.
As we have already explained, the House of Lords decisions have to be seen against the backdrop of the evolving Strasbourg jurisprudence.
So, for instance, the first of the House of Lords decisions, Harrow v Qazi [2004] 1 AC 983, came before any of the EurCtHR judgments.
Kay v Lambeth [2006] 2 AC 465 was decided after Connors v UK 40 EHRR 189.
But, viewed without the benefit of subsequent EurCtHR jurisprudence, the reasoning in Connors could have been interpreted as applying only to gypsies.
Indeed one point made on the applicants behalf was that gypsies occupying sites owned by local authorities were not given any rights of security of tenure, unlike occupiers of flats or houses owned by local authorities, who were secure tenants.
Although McCann v UK 47 EHRR 913 had been decided by the time of Doherty v Birmingham [2009] 1 AC 367, it would have been inappropriate for a five judge court, at least in the particular circumstances, to depart substantially from the decision of the seven judge court in Kay.
Importantly, the judgments in osi v Croatia (App no 28261/06), Zehentner v Austria (App no 20082/02), Pauli v Croatia (App no 3572/06) and Kay v UK (App no 37341/06) were all given after the last of the three House of Lords decisions.
This Court is not bound to follow every decision of the EurCtHR.
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 EurCtHR which is of value to the development of Convention law (see e g R v Horncastle [2009] UKSC 14; [2010] 2 WLR 47).
Of course, we should usually follow a clear and constant line of decisions by the EurCtHR: R (Ullah) v Special Adjudicator [2004] UKHL 26; [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 [2009] 1 AC 367, para 126, section 2 of the HRA requires our courts to take into account EurCtHR 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 the present case there is no question of the jurisprudence of the EurCtHR failing to take into account some principle or cutting across our domestic substantive or procedural law in some fundamental way.
That is clear from the minority opinions in Harrow v Qazi [2004] 1 AC 983 and Kay v Lambeth [2006] 2 AC 465, and also from the fact that our domestic law was already moving in the direction of the European jurisprudence in Doherty v Birmingham [2009] 1 AC 367.
Even before the decision in Kay v UK (App no 37341/06), we would, in any event, have been of the opinion that this Court should now accept and apply the minority view of the House of Lords in those cases.
In the light of Kay, that is clearly the right conclusion.
Therefore, if our law is to be compatible with article 8, where a court is asked to make an order for possession of a persons home at the suit of a local authority, the court must have the power to assess the proportionality of making the order, and, in making that assessment, to resolve any relevant dispute of fact.
We emphasise that this conclusion relates to possession proceedings brought by local authorities.
As we pointed out at para 4 above, nothing which we say is intended to bear on cases where the person seeking the order for possession is a private landowner.
Conflicting views have been expressed both domestically and in Strasbourg on that situation.
In Harrow v Qazi [2004] 1 AC 983 the views of Lord Bingham and Lord Steyn, at paras 23 and 26, can be contrasted with the view of Lord Hope, at para 52.
In Belchikova v Russia (App no 2408/06, 25 March 2010), the application was held to be inadmissible, but the EurCtHR (First Section) seems to have considered that article 8 was relevant, even when the person seeking possession was a private sector landowner.
Presumably, this was on the basis that the court making the order was itself a public authority.
But it is not clear whether the point was in contention.
In the rather older admissibility decision of Di Palma v United Kingdom (App no 11949/86) (1986) 10 EHRR 149, 155 156, the Commission seems to have taken a different view, but the point was only very briefly discussed.
No doubt, in such cases article 1 of the First Protocol to the Convention will have a part to play, but it is preferable for this Court to express no view on the issue until it arises and has to be determined.
Exceptionality
It is necessary to address the proposition that it will only be in very highly exceptional cases that it will be appropriate for the court to consider a proportionality argument.
Such a proposition undoubtedly derives support from the views expressed by Lord Bingham, and has been referred to with apparent approval by the EurCtHR in more than one case.
Nevertheless, it seems to us to be both unsafe and unhelpful to invoke exceptionality as a guide.
It is unhelpful because, as Lady Hale pointed out in argument, exceptionality is an outcome and not a guide.
It is unsafe because, as Lord Walker observed in Doherty v Birmingham [2009] 1 AC 367, para 122, there may be more cases than the EurCtHR or Lord Bingham supposed where article 8 could reasonably be invoked by a residential tenant.
We would prefer to express the position slightly differently.
The question is always whether the eviction is a proportionate means of achieving a legitimate aim.
Where a person has no right in domestic law to remain in occupation of his home, the proportionality of making an order for possession at the suit of the local authority will be supported not merely by the fact that it would serve to vindicate the authoritys ownership rights.
It will also, at least normally, be supported by the fact that it would enable the authority to comply with its duties in relation to the distribution and management of its housing stock, including, for example, the fair allocation of its housing, the redevelopment of the site, the refurbishing of sub standard accommodation, the need to move people who are in accommodation that now exceeds their needs, and the need to move vulnerable people into sheltered or warden assisted housing.
Furthermore, in many cases (such as this appeal) other cogent reasons, such as the need to remove a source of nuisance to neighbours, may support the proportionality of dispossessing the occupiers.
In this connection, it is right to refer to a point raised by the Secretary of State.
He submitted that a local authoritys aim in wanting possession should be a given, which does not have to be explained or justified in court, so that the court will only be concerned with the occupiers personal circumstances.
In our view, there is indeed force in the point, which finds support in Lord Binghams comment in Kay v Lambeth [2006] 2 AC 465, 491, para 29, that to require the local authority routinely, from the outset, to plead and prove that the possession order sought is justified would, in the overwhelming majority of cases, be burdensome and futile.
In other words, the fact that the authority is entitled to possession and should, in the absence of cogent evidence to the contrary, be assumed to be acting in accordance with its duties, will be a strong factor in support of the proportionality of making an order for possession.
But, in a particular case, the authority may have what it believes to be particularly strong or unusual reasons for wanting possession for example, that the property is the only occupied part of a site intended for immediate development for community housing.
The authority could rely on that factor, but would have to plead it and adduce evidence to support it.
Unencumbered property rights, even where they are enjoyed by a public body such as a local authority, are of real weight when it comes to proportionality.
So, too, is the right indeed the obligation of a local authority to decide who should occupy its residential property.
As Lord Bingham said in Harrow v Qazi [2004] 1 AC 983, 997, para 25: [T]he administration of public housing under various statutory schemes is entrusted to local housing authorities.
It is not for the court to second guess allocation decisions.
The Strasbourg authorities have adopted a very pragmatic and realistic approach to the issue of justification.
Therefore, in virtually every case where a residential occupier has no contractual or statutory protection, and the local authority is entitled to possession as a matter of domestic law, there will be a very strong case for saying that making an order for possession would be proportionate.
However, in some cases there may be factors which would tell the other way.
Second issue: the application of this conclusion in general
The conclusion that, before making an order for possession, the court must be able to decide not only that the order would be justified under domestic law, but also that it would be proportionate under article 8(2) to make the order, presents no difficulties of principle or practice in relation to secure tenancies.
As explained above, no order for possession can be made against a secure tenant unless, inter alia, it is reasonable to make the order.
Any factor which has to be taken into account, or any dispute of fact which has to be resolved, for the purpose of assessing proportionality under article 8(2), would have to be taken into account or resolved for the purpose of assessing reasonableness under section 84 of the 1985 Act.
Reasonableness under that section, like proportionality under article 8(2), requires the court to consider whether to order possession at all, and, if so, whether to make an outright order rather than a suspended order, and, if so, whether to direct that the outright order should not take effect for a significant time.
Moreover, reasonableness involves the trial judge tak[ing] into account all the relevant circumstances in a broad common sense way: Cumming v Danson [1942] 2 All ER 653, 655, per Lord Greene MR.
It therefore seems highly unlikely, as a practical matter, that it could be reasonable for a court to make an order for possession in circumstances in which it would be disproportionate to do so under article 8.
The implications of article 8 being potentially in play are much more significant where a local authority is seeking possession of a persons home in circumstances in which domestic law imposes no requirement of reasonableness and gives an unqualified right to an order for possession.
In such a case the courts obligation under article 8(2), to consider the proportionality of making the order sought, does represent a potential new obstacle to the making of an order for possession.
The wide implications of this obligation will have to be worked out.
As in many situations, that is best left to the good sense and experience of judges sitting in the County Court.
The present appeal involves a type of case which arises relatively rarely, namely a claim for possession against a demoted tenant, and we heard relatively little in the submissions about other types of case.
When it comes to possession proceedings, a demoted tenant is unusual in two respects: (a) he has already been the subject of proceedings which have resulted in the loss of statutory protection, and (b) he will have been given notice of the grounds on which possession is being sought, and an opportunity to challenge those grounds.
The conjoined appeals in Salford City Council v Mullen [2010] EWCA Civ 336, which are due to be heard by this Court later this month, involve possession orders made in different and more common circumstances, namely the introductory tenancy regime (under Chapter 1 of Part V of the 1996 Act) and the homelessness regime (under Part VII of the 1996 Act).
Those appeals may therefore provide a more appropriate vehicle for the giving of general guidance.
Moreover, in relation to the homelessness regime, this Court will be able to consider whether any guidance can usefully be given to local authorities as to what course to take before seeking possession in cases where there is no provision for the kind of procedure envisaged in sections 143E and 143F of the 1996 Act.
In the light of our decision in the present appeal the lawyers preparing for those appeals will have the opportunity to give particular attention to these aspects of the matter.
Nevertheless, certain general points can be made, even at this stage.
First, it is only where a persons home is under threat that article 8 comes into play, and there may be cases where it is open to argument whether the premises involved are the defendants home (e g where very short term accommodation has been provided).
Secondly, as a general rule, article 8 need only be considered by the court if it is raised in the proceedings by or on behalf of the residential occupier.
Thirdly, if an article 8 point is raised, the court should initially consider it summarily, and if, as will no doubt often be the case, the court is satisfied that, even if the facts relied on are made out, the point would not succeed, it should be dismissed.
Only if the court is satisfied that it could affect the order that the court might make should the point be further entertained.
Fourthly, if domestic law justifies an outright order for possession, the effect of article 8 may, albeit in exceptional cases, justify (in ascending order of effect) granting an extended period for possession, suspending the order for possession on the happening of an event, or even refusing an order altogether.
Fifthly, the conclusion that the court must have the ability to assess the article 8 proportionality of making a possession order in respect of a persons home may require certain statutory and procedural provisions to be revisited.
For example, section 89 of the 1980 Act limits the period for which a possession order can be postponed to 14 days, or, in cases of exceptional hardship, 42 days.
And some of the provisions of CPR 55, which appear to mandate a summary procedure in some types of possession claim, may present difficulties in relation to cases where article 8 claims are raised.
Again, we say no more on the point, since these aspects were not canvassed on the present appeal to any significant extent, save in relation to the legislation on demoted tenancies which we are about to discuss under the third issue.
Sixthly, the suggestions put forward on behalf of the Equality and Human Rights Commission, that proportionality is more likely to be a relevant issue in respect of occupants who are vulnerable as a result of mental illness, physical or learning disability, poor health or frailty, and that the issue may also require the local authority to explain why they are not securing alternative accommodation in such cases seem to us well made.
Third issue: the application of this conclusion to demoted tenancies
Introductory
As explained above, where an order for possession is made against a demoted tenant, such as Mr Pinnock, the court is involved at two different stages.
The first stage, which arises if the landlord decides to apply for a demotion order, requires the court to decide whether to make such an order.
The second stage, which arises if the landlord decides to make an application for an order for possession while the demotion order applies, requires the court to decide whether to make an order for possession.
Each stage involves a significant and direct assault on the tenants right to occupy his home, and therefore engages article 8.
So far as the first stage is concerned, before making a demotion order, the court must consider for itself the factual basis for making such an order.
Moreover, the court can only make such an order once it is satisfied (a) that the facts which it investigates and determines justify the order under section 82A(4)(a), and (b) that it is reasonable to make the order under section 82A(4)(b).
I therefore find it impossible to conceive of circumstances where the requirements of article 8 would not be satisfied by the plain words of the relevant statutory provisions.
Greater problems arise, however, when one turns to the second stage where, as in this case, the court is asked to make an order for possession against a demoted tenant.
The proper interpretation of section 143D(2) of the 1996 Act
The first argument raised against the conclusion that the County Court judge who is asked to make an order for possession under section 143D(2) can carry out his own article 8 assessment of the proportionality of making such an order arises from the wording of the sub section.
We have quoted it at para 10 above.
The provision requires the court to make an order for possession, unless it thinks that the procedure under sections 143E and 143F has not been followed.
If one construes that section in accordance with the traditional approach to interpretation, it is hard to see how the court could have the power either to investigate for itself the facts relied on to justify the decision to seek possession, or to refuse to make an order for possession if it considered that it would be disproportionate to do so.
Therefore there is obvious force in the point that, in the absence of any article 8 Convention right, section 143D(2) would limit the court to satisfying itself that the procedural requirements of sections 143E and 143F had been complied with.
Stanley Burnton LJ took that view in the Court of Appeal.
At any rate, absent the HRA, the purpose of section 143D appears to be to deprive the courts of almost any ability to stand in the way of a landlord who had decided to seek possession against a demoted tenant.
However, as the Convention requires the court to have the power to consider the proportionality under article 8 of making a possession order at the instance of a local authority in respect of a persons home, the effect of section 3(1) of the HRA is that section 143D(2) should be read as not excluding that power, if at all possible.
Accordingly, it is necessary to examine the issue rather more critically.
Clearly, the local authority, when deciding to bring possession proceedings against a demoted tenant under section 143E, and any Panel reviewing that decision under section 143F have a duty in domestic law to act rationally and to investigate the relevant facts fairly, as well as a duty under article 8 to consider proportionality, which includes investigating the relevant facts.
Rightly, in our view, it is common ground that a court has jurisdiction, under normal judicial review principles, to satisfy itself that the local authority and Panel have indeed acted reasonably and have investigated the relevant facts fairly, when deciding to bring possession proceedings.
From this it must follow that any decision by the local authority to continue possession proceedings is similarly susceptible to judicial review.
At the same time, it is right to emphasise that it would almost always require a marked change of circumstances following a Panels decision to approve the proceedings, before an attempt could properly be made to judicially review the continuance of proceedings which were initially justified.
In our judgment, once it is accepted that it is open to a demoted tenant to seek judicial review of a landlords decision to bring and continue possession proceedings, then it inevitably follows that, as a generality, it is open to a tenant to challenge that decision on the ground that it would be disproportionate and therefore contrary to article 8.
Further, as we saw at paras 31 to 43 above, the EurCtHR jurisprudence requires the court considering such a challenge to have the power to make its own assessment of any relevant facts which are in dispute.
We have already pointed out, at para 28 above, that Lord Scott and Lord Mance, in particular, reached this conclusion in Doherty v Birmingham [2009] 1 AC 367, paras, 68 and 138.
The EurCtHR acknowledged this development in Kay v UK (App no 37341/06), para 73.
In these circumstances we are satisfied that, wherever possible, the traditional review powers of the court should be expanded so as to permit it to carry out that exercise.
In summary.
Where it is required in order to give effect to an occupiers article 8 Convention rights, the courts powers of review can, in an appropriate case, extend to reconsidering for itself the facts found by a local authority, or indeed to considering facts which have arisen since the issue of proceedings, by hearing evidence and forming its own view.
Much the more difficult question, however, is whether it is possible to read and give effect to section 143D(2) in a way that would permit the County Court judge to carry out this exercise.
As we have pointed out at para 69 above, the purpose of the subsection appears to be to ensure that the court makes an order for possession in all cases except where it thinks that the procedure under sections 143E and 143F has not been followed.
In other words, the purpose is to ensure that the court does nothing more than check whether the procedure has been followed.
It could therefore be argued that holding that the court could assess the proportionality of the local authoritys decision to bring and to continue the possession proceedings would go against the whole import of the section and would amount to amending rather than interpreting it.
We have come to the conclusion that we should reject that argument.
In our view, if the procedure laid down in section 143E or 143F has not been lawfully complied with, either because the express requirements of that section have not been observed or because the rules of natural justice have been infringed, the tenant should be able to raise that as a defence to a possession claim under section 143D(2).
After all, the tenants argument in such circumstances would be within the scope of the ambit of section 143D(2), namely that the procedure under sections 143E and 143F has not been [lawfully] followed, since lawfulness must be an inherent requirement of the procedure.
It must equally be open to the court to consider whether the procedure has been lawfully followed, having regard to the defendants article 8 Convention rights and section 6 of the HRA.
This approach is borne out by section 7(1) of the HRA which, so far as relevant, provides: 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 (b) rely on the Convention right or rights concerned in any legal proceedings.
By virtue of this provision, an occupier who is the defendant in possession proceedings in the County Court and who claims that it would be incompatible with his article 8 Convention rights for him to be put out of his home must be able to rely on those rights in defending those proceedings.
This approach fits with the observation of the EurCtHR in Pauli v Croatia (App no 3572/06), para 43, that the court need consider proportionality only if it is raised by the person whose article 8 rights are said to be infringed.
We therefore consider that section 143D(2) should be read as allowing the court to exercise the powers which are necessary to consider and, where appropriate, to give effect to, any article 8 defence which the defendant raises in the possession proceedings.
This approach to the interpretation of section 143D(2) also goes a long way towards disposing of Mr Ardens argument that, even if article 8 required this kind of review, the County Court does not have jurisdiction to carry it out.
So, he suggested, the issue would have to be referred to the High Court, where it would presumably be assigned to the Administrative Court.
In effect, section 7(1)(b) confers the necessary jurisdiction on County Court judges when it is necessary for them to deal with a defence which relies on an alleged breach of the defendants article 8 Convention rights.
The same conclusion can be justified on the rather wider basis that, where a tenant contends that the decision of a local authority landlord to issue, or indeed to continue, possession proceedings can in some way be impugned, the tenant should be entitled to raise that contention in the possession proceedings themselves, even if they are in the County Court.
This seems to us to follow from the decision of the House of Lords in Wandsworth v Winder [1985] AC 461, as cited and approved in the present context in Kay v Lambeth [2006] 2 AC 465, para 110, and again in Doherty v Birmingham [2009] 1 AC 367, paras 56, 123 and 157 (see para 28 above).
This approach also derives strong support from the observations of Lord Bingham in Kay v Lambeth [2006] 2 AC 465, para 30.
This second reason involves disapproving part of the reasoning of the Court of Appeal in Manchester City Council v Cochrane [1999] 1 WLR 809, by which, understandably, the Court of Appeal in this case appears to have regarded itself as bound.
In Manchester City the Court of Appeal held that an introductory tenant could not raise a defence to a claim for possession when that defence was based on the contentions that (a) there had been no breaches of the tenancy agreement (the substantive ground relied on by the Council for bringing the instant proceedings), (b) the relevant Regulations had not been complied with, and (c) there had been a failure to comply with the rules of natural justice in the conduct of the review by the Panel.
As a result of our conclusion on the first issue on this appeal, article 8 would require the court to be able to consider the facts, as well as proportionality, for itself.
However, even in the absence of article 8, a court would have had power to consider whether a reasonable local authority and panel could have reached the conclusion that such breaches existed.
Similarly, a court would have had power to consider whether the relevant Regulations had been followed, and whether the rules of natural justice had been followed.
The question is whether that court could be the court hearing the possession claim, given that it is (virtually always) the County Court.
In Manchester City [1999] 1 WLR 809, three reasons were given for concluding that the defences sought to be raised could not be pursued in the County Court.
The first was that section 127(2) of the 1996 Act, which is in similar terms to section 143D(2), required the court to make an order for possession: [1999] 1 WLR 809, 818G 820B.
That is, in substance, the view which we have rejected in paras 76 79 above.
The second reason for the Court of Appeals conclusion in Manchester City was based on the contrast between section 127(2) and section 204 of the 1996 Act, in Part VII of the 1996 Act which is concerned with homelessness: [1999] 1 WLR 809, 820B C, 821H 822A.
However, like Lord Fraser of Tullybelton in Wandsworth v Winder [1985] AC 461, 510A B, we would adopt the principle stated by Viscount Simonds in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1960] AC 260, 286, that a citizens recourse to Her Majestys courts for the determination of his rights is not to be excluded except by clear words.
The third reason for the Court of Appeals decision in Manchester City is discussed at [1999] 1 WLR 809, 820C 821E, and relies on the presumption that possession claims against demoted tenants could be procedurally derailed if tenants could raise public law points in the course of the possession proceedings.
We do not consider that this presumption is correct.
Indeed, the ability of a tenant to delay possession proceedings by raising a public law point would be greater if such points had to be taken in separate proceedings in the High Court.
For these reasons we are satisfied that we should apply the approach of the House of Lords in Wandsworth v Winder [1985] AC 461.
This permits us to confirm our earlier conclusion that section 143D(2) should be read as allowing the County Court to exercise the powers which are necessary to consider and, where appropriate, to give effect to, any article 8 defence which the defendant raises in possession proceedings brought in that court.
Section 17(1)(a) of the Crime and Disorder Act 1998
A further difficulty which is said to stand in the way of the conclusion that the County Court judge can carry out a proportionality exercise is based on section 17(1)(a) of the Crime and Disorder Act 1998 (section 17), which provides Without prejudice to any other obligation imposed on it, it shall be the duty of each authority to which this section applies to exercise its various functions with due regard to the likely effect of the exercise of those functions on, and the need to do all that it reasonably can to
prevent (a) crime and disorder in its area
This section, Mr Arden rightly submitted on behalf of the Council, applied when, inter alia, a local authority was exercising its function as the landlord of its housing stock.
He then went on to submit that the Councils duty under section 17 could conflict with its duty, by virtue of the occupiers article 8 Convention rights, to consider whether it would be proportionate to bring or continue possession proceedings against him.
For instance, bringing such proceedings might be a reasonable way of preventing crime and disorder in the authoritys area, even though bringing those proceedings would be disproportionate when viewed in the particular context of the individual concerned.
In our view, this argument is devoid of substance.
In the first place, section 17 begins with the qualifying words Without prejudice to any other obligation imposed on it.
Therefore, if the effect of the HRA is to impose an obligation on a local authority landlord to consider proportionality under article 8 before embarking on possession proceedings against a demoted tenant, section 17 is not inconsistent with, and does not undermine, that obligation.
As far as the County Court is concerned, insofar as it is to be treated as reviewing the local authoritys decision to bring proceedings, the same point applies, and, insofar as it is to be treated as carrying out its own assessment, nothing in section 17 impinges on it.
Secondly, section 17 requires a local authority to exercise its functions, paying due regard to the need to prevent crime and disorder.
The section imposes no absolute obligation on an authority to do everything to reduce crime and disorder, irrespective of other persons rights or of its own other duties and it would be very surprising if it did.
Accordingly, the furthest this point goes is to suggest that a local authority, when deciding to bring possession proceedings against a demoted tenant, should take into account its duty under section 17, as well as the article 8 Convention rights of the tenant and any other Convention rights that may be in play.
That would also be a factor to be taken into account by the Panel when reviewing the local authoritys decision.
Similarly, it would be a factor for the County Court judge to take into account when considering whether the local authority had acted proportionately.
Section 6(2) of the Human Rights Act
We have concluded that section 143D(2) of the 1996 Act can be read and given effect compatibly with the article 8 Convention rights of any occupiers of local authority housing.
So no question of the application of section 6(2) of the HRA arises in that respect.
Nor, indeed, did Mr Arden argue that section 6(2) would make it lawful for the local authority to disregard the occupiers article 8 Convention rights when deciding whether to bring possession proceedings against him.
On the contrary, it was, rightly, common ground that a local authority must take into account a demoted tenants article 8 rights when taking possession proceedings under the 1996 Act.
The same applied to a Panel reviewing that decision.
But, as is plain from the speeches of Lord Walker and Lord Mance in Doherty v Birmingham City Council [2009] 1 AC 367, at paras 110 113 and 141 153, respectively, two passages at paras 86 and 114 in the speech of Lord Hope in Kay v Lambeth [2006] 2 AC 465, could be interpreted as indicating that section 6(2) did apply to the local authoritys decision as to whether to bring possession proceedings in the circumstances of those cases so as to make it lawful for the authority to disregard the occupiers article 8 Convention rights.
The absence of any real debate on the point makes the present case an unsuitable vehicle for any wide ranging discussion of section 6(2).
Nevertheless, we think it right to confirm that, in our view, the subsection has no application to the decision of a local authority as to whether to bring or continue possession proceedings against demoted tenants.
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.
Plainly, subsection (2)(a) applies only where legislation imposes a duty to act.
That provision is not relevant for present purposes since the local authority is under no statutory duty which would compel it to take possession proceedings against a demoted tenant.
The statutory provision which relates to the bringing of possession proceedings against demoted tenants is section 143D(1) of the 1996 Act.
It provides: (1) The landlord may only bring a demoted tenancy to an end by obtaining (a) an order of the court for the possession of the dwelling house, and (b) the execution of the order.
In addition, as already explained, section 143E provides for the local authority to give notice of its decision to apply for an order for possession of the tenants house.
Section 143F provides for the Panel to review that decision at the request of the tenant.
It does not particularly matter on which of these provisions we choose to concentrate.
But it can be assumed, for the purposes of the argument, that, when a local authority landlord decides to bring possession proceedings against a demoted tenant, the authority is acting so as to give effect to section 143D(1) within the meaning of section 6(2) of the HRA.
Then the only question is whether section 143D(1) can be given effect in a way that is compatible with the demoted tenants article 8 Convention rights.
If so, section 6(2) does not apply.
For the reasons which we have already set out in detail, the answer is that section 143D(1) can unquestionably be given effect in a way that is compatible with the demoted tenants article 8 Convention rights.
Most obviously, the local authority will give effect to section 143D(1) in a way that is compatible with those rights when it brings proceedings that are proportionate because the demoted tenant has, for instance, continued to act in a manner that causes a nuisance to his neighbours.
That being so, section 6(2) of the HRA has no application to the decision of a local authority to bring or continue possession proceedings against a demoted tenant.
In these circumstances, mutatis mutandis, the conclusion of Lord Mance in Doherty v Birmingham City Council [2009] 1 AC 367, 447, para 153, applies in the present situation: Accordingly, a local authority which fails to take into account Convention values when deciding whether or not to give any and if so what length of notice to quit cannot, in my opinion, be said to be acting so as to give effect to or enforce statutory provisions which are incompatible with the Convention rights.
As the Council accept, the result therefore is that section 6(2) does not make it lawful for a local authority to fail to consider whether it would be proportionate to bring or continue such proceedings.
The same must apply to a local authoritys decision to take possession proceedings against other occupiers who are not secure tenants.
Conclusion on the third issue
We are, accordingly, of the view that a County Court judge who is invited to make an order for possession against a demoted tenant pursuant to section 143D(2) can consider whether it is proportionate to make the order sought, and can investigate and determine any issues of fact relevant for the purpose of that exercise.
It follows that the demoted tenancy regime in the 1996 Act is compatible with article 8.
Having said that, there are two further points we should make.
First, as already observed, there appears to be no express fetter on the nature of the grounds which a local authority can invoke for seeking possession against a demoted tenant.
It would seem that, as in this case, local authorities seeking possession against demoted tenants in practice normally rely on repetitions of the type of incidents which gave rise to the demotion order.
It may well be that the nature of the grounds upon which possession can be sought against demoted tenants is limited in that way, as a matter of law.
However, that would involve implying some sort of limitation into the statute, as there is no express provision which would prevent a local authority relying on, say, the fact that it has a more deserving potential occupier of the premises in question.
We say no more on the matter since the point does not arise in this appeal, and it was not the subject of any argument.
Secondly, we have expressed reservations about the view that, in relation to possession claims generally, article 8 will assist an occupier only in highly exceptional circumstances.
However, there are two features of possession claims under section 143D which enable us to express such a view in relation to these claims.
First, the court will already have decided that it was reasonable (and therefore proportionate under article 8) to have made the demotion order, largely removing the tenants security of tenure.
The court will have done this less than two years (and, no doubt, in some cases less than one year) before it is being asked to make an order for possession.
The two sets of proceedings must be viewed as a whole for the purposes of article 8: Zehentner v Austria (App no 20082/02), para 54 (quoted at para 39 above).
This highlights the fact that, while article 8 is still engaged at the second, possession order, stage, it would be difficult for the tenant successfully to invoke it, given that its requirements had been satisfied at the first, demotion order, stage.
Secondly, as with introductory tenancies, the tenant will have been given the local authoritys reasons for deciding to seek possession.
So he will have had the opportunity to challenge the decision and to have that challenge considered by the Panel.
Fourth issue: application of these conclusions to the facts of this case
For the reasons already explained, neither Judge Holman nor the Court of Appeal thought that they had jurisdiction either to consider whether the making of an order for possession in this case was necessary in a democratic society under article 8 (i e, whether it was proportionate to evict Mr Pinnock and Ms Walker from the property), or to resolve any disputes of fact between the parties in relation to that issue.
As we have concluded that the Judge had jurisdiction to deal with both matters, there are two alternative courses that we could now take: we could address the proportionality issue ourselves, or we could remit the issue to the Manchester County Court.
If we can take the former course, we should do so: it is more than three years since the demotion order was made in respect of Mr Pinnocks tenancy, and more than two years since these possession proceedings were started against him.
Before they reached this court, they had already taken up three days of court time (plus the six hearing days before the Recorder who made the demotion order).
However, we can only determine the issue of article 8 proportionality if we can do so without needing to hear further evidence.
In order to consider which course to take, we must set out the relevant circumstances in a little more detail.
After stating that, as the tenant, he was responsible for the behaviour of every person (including children) living in or visiting [his] home, Mr Pinnocks tenancy agreement contained covenants to the effect that neither he nor anyone residing with him would cause a nuisance, annoyance or disturbance to any other person or would harass any other person.
Examples were given in the agreement of possible breaches of these covenants.
They included offensive drunkenness and doing anything that interferes with the peace, comfort or convenience of others.
The events which led the Recorder to conclude that a demotion order was justified were many and serious.
In very summary terms, Anti Social Behaviour Injunctions (under section 152 of the 1996 Act) had been granted against Ms Walker and one of Mr Pinnocks sons, Clive, in 2003.
Ms Walker had gone on to breach the injunction.
Anti Social Behaviour Orders had been granted against another son, Devon, in 2002, and against his twin sons, Orreon and Orraine, in 2004.
Each of them had been breached.
Further, each of the five children had appeared before the criminal courts where they had been convicted of a variety of offences, including a racial Public Order Act offence, driving while disqualified and blackmail.
The last of these involved the obtaining of some 1,000 by repeated, almost daily, threats of violence against a 16 year old youth.
In a schedule to his judgment, the Recorder listed no fewer than 32 crimes or serious nuisances which were committed by Ms Walker and Mr Pinnocks five children between 1992 and 2006.
There are some differences among the allegations relied on by the Council in its Notice served on 6 June 2008 under section 143E, the allegations relied on by the Panel which carried out the review pursuant to section 143F, the allegations relied on by Judge Holman, and the allegations relied on by the Court of Appeal.
In our view, however, the Court of Appeals analysis of the relevant allegations was clearly correct.
We would make three comments in relation to that analysis.
First, there is nothing in the statutory provisions relating to the demoted tenancy regime which limits the particular grounds on which a local authority can rely when deciding to issue possession proceedings against a demoted tenant.
Subject to the possible type of limitation discussed in para 106 above, we see no reason to restrict those grounds in a particular case, save by reference to rationality in domestic law and proportionality in the light of the Convention.
This view is not based only on a reluctance to imply words or conditions into statutory provisions.
It is also based on the point that, by demoting a tenancy, a court has decided that the tenant has forfeited any statutory protection for at least a year, and it seems wrong to imply a degree of protection back into the statute, unless it is necessary to do so e g, because the Convention requires it.
We are therefore satisfied that a local authority is not limited to relying on matters which amount to breaches of the tenancy in question in order to justify a decision to issue and continue a claim for possession against a demoted tenant.
Secondly, the Panel should be able to take into account all the available information when it assesses the justification for, and proportionality of, the local authority issuing a claim for possession against a demoted tenant.
It seems obvious that before the Panel the tenant could raise events that happened after the Notice, and it is hard to see why the same should not apply to the landlord.
In any event, if the tenant raises his article 8 Convention rights as a defence to possession proceedings, the court must consider all relevant issues.
These must include a matter that arose after the date of the Notice.
We are therefore satisfied that it is open to the Panel and to the court hearing the possession claim to take into account grounds which are not contained in the Notice.
Thirdly, we can see no reason why the fact that a Notice contains a bad reason should destroy the landlords right to seek possession, unless, for instance, the bad reason somehow infects the good faith of the landlord.
On that basis, the following matters are relied on as supporting the Councils decision to bring and maintain the possession proceedings against Mr Pinnock.
First, on 22 September 2007, Clive Pinnock resisted arrest at the property and ran off.
In due course he was convicted of resisting or obstructing a constable in the execution of his duty.
Although this conduct was obviously an annoyance for the police officers involved, there was no evidence that it caused nuisance or annoyance to neighbours.
Therefore it may not have constituted a breach of the tenancy agreement.
Nevertheless, it was plainly relevant to the housing management functions of the Council.
Further, as Stanley Burnton LJ pointed out, this behaviour was capable of causing nuisance or annoyance to any person.
Secondly, Devon Pinnock pleaded guilty to causing death by dangerous driving, and driving a vehicle while disqualified and uninsured on 18 January 2008.
A young woman died and two others were seriously injured in the incident which occurred 1.55 miles from the property.
It is relevant to mention that Ms Walker blamed the police for the incident and did not accept that Devon was in any way responsible.
As Stanley Burnton LJ said, this bore on whether she and Mr Pinnock were able and willing to exercise parental control over their children who lived at, or visited, the property so as to bring their anti social behaviour to an end.
Thirdly, in February 2008, Orreon Pinnock committed a burglary of premises a few minutes walk from the property an offence which also involved an assault on a woman.
He was convicted of this offence after the service of the Notice, but the Judge and the Court of Appeal rightly held that this was a relevant factor when deciding whether to issue and prosecute possession proceedings against Mr Pinnock.
Judge Holman thought that the second incident (but only in so far as it involved Ms Walker blaming the police and excusing Devon) and the third incident could be relied on by the Council as a ground for justifying its claim for possession against Mr Pinnock.
He therefore concluded, at para 70, that there was material before the review panel . entitling it to uphold the decision to terminate.
To much the same effect, Stanley Burnton LJ said he could not see any basis for a finding that the review panels decision was one that no reasonable person could consider appropriate, and if the judge had had jurisdiction to review that decision I would have upheld his decision to uphold it: [2009] EWCA Civ 852, para 67.
Mr Pinnocks case is that it would be disproportionate to evict him (now a pensioner) and Ms Walker (still in employment) from their home of over 30 years, given that none of their five children lives with them, and that there have been no further incidents since February 2008.
In this connection Mr Drabble QC made a number of points which he said that the Panel, Judge Holman and the Court of Appeal had failed to take into account.
None of the matters relied on, he said, constituted a breach of the tenancy agreement.
Ms Walker had committed no nuisance, offence or harassment since 2003, and there was no suggestion that she or Mr Pinnock is likely to commit any nuisance or crime in the future.
As for the children save for Orreon, they did not reside in the property at the date of the offences relied on.
Further, any crime or nuisance which they might commit in the area in the future could not be attributable to the tenancy continuing, as they do not live in the property.
For the same reason, Mr Pinnock could not be treated as responsible for their behaviour.
Moreover, there was no evidence that the children were, or would be, particularly drawn to the area by their parents living at the property.
In any event, other remedies such as Anti Social Behaviour Orders and Injunctions, and orders excluding the children from the area under section 153C of the 1996 Act, would be more effective deterrents.
We see the force of these points.
But, unless there is some dispute of fact which needs to be resolved, we are not persuaded that this is a case where the occupiers of the property have any real prospect of successfully relying on article 8 proportionality, or indeed on the contention that the decision of the Council to issue and maintain possession proceedings against them was unreasonable.
The history of crime, nuisance and harassment on the part of those living at the property in the period leading up to the demotion order made in June 2007 was extraordinary in its extent and persistence.
Were it not for Mr Pinnock being innocent of any such conduct on his own account, we doubt whether the Recorder would have thought it right to refuse the Councils original claim for possession.
As it was, he made it clear that the demotion order represented what was very much a last chance for Mr Pinnock (and for Ms Walker).
Despite this being their last chance, as we have explained, there were incidents at or near the property.
Clive resisted arrest at the property and ran away from the police (of which he was convicted).
Devon caused death by dangerous driving in the vicinity of the property and then ran away (of which he was convicted).
Ms Walker refused to accept that Devon was in any way responsible for this and, instead, blamed the police.
Orreon committed a burglary near the property (and was later imprisoned).
In short, there were three serious incidents in a year, one in the property, two in its immediate vicinity.
Mr Pinnocks children were responsible for all of them.
Moreover, there is every sign that Ms Walker, at least, has learnt nothing.
All this happened under the shadow of a demotion order.
The argument that none of the children lives in the property any longer is of scant assistance to Mr Pinnock since his case is that none of them has lived there since the demotion order was made.
Even if that is true, it is clear that the children visit the property, and, unfortunately, when they do, they appear to commit crimes and make a nuisance of themselves in the vicinity.
Furthermore, there is no guarantee that at least some of the children will not stay at the property on a temporary, intermittent or permanent basis.
For the Council to evict Mr Pinnock on such grounds may well seem to him harsh.
However, in the light of the history, the demotion order, the interests of their neighbours, and the Councils right and duty to manage and allocate its housing stock, the decision cannot be characterised as unreasonable or disproportionate.
If some of the children did in fact live in the property, then Mr Pinnock has been dishonest, and the Councils case is even stronger.
In this connection it should be said that there is good reason to think that Devon did live in the property.
Mr Pinnocks evidence to the Panel was that Devon had moved out about five years earlier, but that evidence had been given to, and rejected by, the Recorder not least because Devon had given the property as his address to the criminal courts in July 2005, June 2006, and March 2007.
When he appeared in court on the charge of causing death by dangerous driving in January 2008, he again gave his address as the property.
The only new evidence before the Panel disputing his residence at the property was a statement by the mother of his girlfriend.
But she, too, said that he had ceased to live at the property four or five years previously.
It is thus hard to see how any tribunal could conclude that he did not reside there, but, as the Judge said, the Panel ducked the issue of residence in their written decision.
The fact that some (or even all) of the grounds justifying the rationality and proportionality of the Councils decision to seek possession may not have involved any breach of the tenancy agreement does not give rise to a problem.
There is no requirement in the 1996 Act that they should, and, as already mentioned, there is no warrant for implying any such requirement into the statute.
The fact that Mr Pinnock may not be responsible for the incidents is not of great significance: the order for possession was not sought or made to punish him.
The fact that there may be other remedies to deal with the children is also of little force: rather than seeking ASBOs or ASBIs to keep them out of the vicinity, it is scarcely irrational or disproportionate to decide to remove their parents, whom they undoubtedly visit, even if (which is an unresolved issue) they do not live with them.
Conclusion
In these circumstances, it is unnecessary to remit this case for the question of proportionality to be determined.
The only issues of fact which are in dispute are whether Devon lived at the property at the time he caused death by dangerous driving and whether Clives resisting his arrest actually caused any nuisance locally.
For the reasons just given in para 128 above, it is unnecessary to decide whether Devon was living at the property at the relevant time.
Equally, it is unnecessary to establish whether Clives action actually resulted in a nuisance: as Stanley Burnton LJ said, it is sufficient that he resisted arrest and that this could have caused a nuisance.
Hilary Term [2011] UKSC 6 On appeal from: [2009] EWCA Civ 852 JUDGMENT Manchester City Council (Respondent) v Pinnock (Appellant) (no. 2) before Lord Phillips, President Lord Hope, Deputy President Lord Rodger Lord Walker Lady Hale Lord Brown Lord Mance Lord Neuberger Lord Collins JUDGMENT GIVEN ON 9 February 2011 Heard on 5, 6, 7 and 8 July 2010 Appellant Richard Drabble QC James Stark (Instructed by Platt Halpern) Intervener (Secretary of State for Communities and Local Government) Daniel Stilitz QC Ben Hooper (Instructed by Treasury Solicitor) Respondent Andrew Arden QC Jonathan Manning (Instructed by Manchester City Council ) Intervener (Equality and Human Rights Commission) Jan Luba QC (Instructed by Equality and Human Rights Commission) LORD NEUBERGER 1.
Following the handing down of our judgment on 3 November 2010, the parties have made written submissions on two issues, namely the terms of the consequential order which the court should make, and the allocation of costs.
The issue relating to the terms of the order gives rise to a point of a little difficulty and potentially more general application.
It therefore seems right to set out our conclusions and reasons on the two issues in this short further judgment.
Introductory 2.
In summary terms, the facts giving rise to the appeal were as follows.
Mr Pinnock was a demoted tenant of residential premises (and therefore had limited statutory protection), and his landlord, Manchester City Council, applied to the Manchester County Court for an order for possession against him.
In a judgment given on 22 December 2008, His Honour Judge Holman rejected Mr Pinnocks contention that the court had to be satisfied that article 8 of the Convention was satisfied before making an order for possession, and therefore he did not consider whether it was proportionate to make an order for possession against Mr Pinnock.
The Judge accordingly made an order requiring Mr Pinnock to deliver up possession of the premises on 12 January 2009.
He also gave Mr Pinnock permission to appeal, and stayed enforcement of the possession order provided that the notice of appeal was served by 26 January 2009. 3.
Mr Pinnock served a notice of appeal by that date, arguing that the Judge should have taken into account article 8, and therefore should have considered whether it was proportionate to order Mr Pinnock to deliver up possession of the premises.
The Court of Appeal rejected his appeal, [2009] EWCA Civ 852; [2010] 1 WLR 713, and Mr Pinnock appealed to the Supreme Court.
The Court of Appeal did not continue the stay imposed by the Judge, but the parties agreed that the possession order would not be enforced pending the outcome of the appeal to this court. 4.
In our decision, [2010] UKSC 45; [2010] 3 WLR 1441, we held that the Judge and the Court of Appeal were wrong in taking the view that article 8 could not be raised by Mr Pinnock, and that, in those circumstances, there were two alternative courses that we could take: we could address the proportionality issue ourselves, or we could remit the issue to the Manchester County Court [2010] 3 WLR 1441, para 108.
We then went on to decide that we would take the former course, because, for the reasons set out at [2010] 3 WLR 1441, paras 119 124 and 127 130, we were not persuaded that this is a case where the occupiers of the property have any real prospect of successfully relying on article 8 proportionality, or indeed on the contention that the decision of the Council to issue and maintain possession proceedings against them was unreasonable [2010] 3 WLR 1441, para 125.
The form of order 5.
At any rate at first sight, the terms of the order we should make seem to present no problem: the Judge made an order for possession, which the Court of Appeal upheld, which it can be said we have upheld, albeit for different reasons, and accordingly we should simply dismiss the appeal.
However, the Council argues that this apparently simple course would produce an unjust result, which arises form the transitional provisions of the Housing and Regeneration Act 2008. 6.
In this case, the order for possession made by Judge Holman took effect on 12 January 2009; under section 143D(3) of the Housing Act 1996 this meant that Mr Pinnocks demoted tenancy came to an end on that date.
His status thereafter was that of a tolerated trespasser, as discussed in Austin v Southwark London Borough Council [2010] UKSC 28, [2010] 3 WLR 144. 7.
Section 299 of, and schedule 11 to, the 2008 Act abolished the concept of tolerated trespass in relation to various types of tenancy, including demoted tenancies, by providing that, where an order for possession is made, the tenancy comes to an end on the date that the order is executed rather than (as was previously the position) the date on which the tenant is to give up possession pursuant to the order.
In the case of demoted tenancies this was achieved by the insertion of a new subsection (1A) into section 143D of the 1996 Act see para 13 of schedule 11 to the 2008 Act. 8.
These provisions of the 2008 Act, which were prospective in their effect, came into force on 20 May 2009 (pursuant to article 2 of the Housing and Regeneration Act 2008 (Commencement No.5) Order 2009 SI 2009/1261), some eighteen weeks after Judge Holmans order for possession took effect.
If that order is confirmed, the effect will be, by virtue of paras 16, 19 and 26 of Schedule 11 to the 2008 Act, that on 20 May 2009, a new demoted tenancy will have been created in favour of the former tenant and tolerated trespasser.
On the basis that that might indeed prove to be the position, the Council served a notice of proceedings under section 143E of the 1996 Act, in respect of which Mr Pinnock requested a review under section 143F (as explained at [2010] 3 WLR 1441, para 11).
Further proceedings on that notice have been adjourned. 9.
The Council contends that, although it has protected its position if we simply dismiss Mr Pinnocks appeal and effectively affirm the orders of the Judge and the Court of Appeal, it would be contrary to any rational legal principle to require the Council to incur the expense, effort and delay, as well as any possible uncertainty of outcome, of further possession proceedings against Mr Pinnock based on his new demoted tenancy, given the procedure that has already been undertaken, as described in [2010] 3 WLR 1441, paras 14 17. 10.
Accordingly, the Council argues that we should vary Judge Holmans order to adjust the date on which he is to deliver up possession from 12 January 2009 to 21 May 2009. 11.
Mr Pinnock does not challenge this proposal on its merits, but contends that, for two reasons, we have no jurisdiction to make the variation sought by the Council.
The first reason is said to be that we cannot in 2011 retrospectively amend Judge Holmans order, made in December 2008, in order to deprive Mr Pinnock of a tenancy which statute gave to him on 20 May 2009; the second reason is that, by virtue of section 89(1) of the Housing Act 1980, Judge Holman was precluded from making an order for possession which took effect more than six weeks after 22 December 2008, when he made the order for possession, and we cannot amend Judge Holmans order in a way which would mean that, albeit retrospectively, it would conflict with that provision. 12.
Mr Pinnock is right not to challenge the good sense of the Councils argument.
There may be force in the two technical points that he takes, particularly the second, but there is no need for us to consider these.
The wide terms of Rule 29(1) of the Supreme Court Rules 2009 permit us to adopt an alternative way of giving effect to the Councils justified concerns which is not open to such objections. 13.
We propose to set aside the order for possession made by Judge Holman, and substitute a fresh order for possession to take effect on 10 March 2011.
The effect of this will be to preserve Mr Pinnocks original demoted tenancy, which started on 8 June 2007 (as explained at [2010] 3 WLR 1441, para 16) and which has continued pending the resolution of these proceedings.
It will come to an end when possession is obtained against him pursuant to our order for possession. 14.
This course is consistent with the reasoning in our judgment.
We decided that the Judge and the Court of Appeal had reached their conclusions on an erroneous basis, and accordingly we had to make our own assessment as to whether an order for possession should be made.
Thus, we were effectively overruling the order for possession made and affirmed below, and were concluding that we should make our own order for possession.
That is well demonstrated by the passage quoted from [2010] 3 WLR 1441, paras 108 and 125 quoted in para 4 above.
If we had taken the course of remitting the case to the County Court, we would have set aside the original order for possession, and the County Court would in due course have made a fresh order for possession (for the reasons we gave at [2010] 3 WLR 1441, paras 119 130): it would be anomalous if a different result obtained because we decided that we could make the order for possession ourselves without remitting it. 15.
In those circumstances, to set aside the orders below and make our own order for possession more accurately reflects our reasoning than simply dismissing Mr Pinnocks appeal. 16.
Quite apart from this, it would seem rather curious if we could not make an order which achieves the outcome for which the Council contends.
If the Judge had dismissed the claim for possession, and had been upheld in the Court of Appeal, our decision that an order for possession should be made would have led to no difficulties for the Council.
It would seem a bit odd if the position of the Council were to be prejudiced by the fact that it in fact succeeded in both of the courts below.
The costs 17.
As to the issue of costs, the dispute, in summary terms, is as follows.
The Council seeks an order for costs against Mr Pinnock, on the ground that, as between the parties, the ultimate issue was whether the Council was entitled to claim possession of the premises, and its claim succeeded at every stage, most importantly in this court.
On the other hand, Mr Pinnock argues for an issue based approach, contending that the real issue between the parties, which resulted in most of the costs and justified the case coming to the Supreme Court, was whether he could rely on article 8, and, as he won on that point, the correct order is that the Council pays 50% of his costs, at least in the Supreme Court. 18.
In our view, there should be no order for costs in the Supreme Court or in the Court of Appeal, and the order for costs made in favour of the Council in the County Court should stand.
As to the order in the County Court, the Council claimed possession while Mr Pinnock resisted the claim, and the effect of our decision is that the claim succeeds, so an order for costs in favour of the Council should follow, absent a good reason to the contrary, and no such reason appears to exist.
The decision to make no order for costs in the Court of Appeal and in this court is arrived at on a somewhat rough and ready basis, but it appears to us to reflect the relative degree of success enjoyed by each party on appeal, and therefore the overall justice of the position.
The effect of the appeal process is that the Council has succeeded against Mr Pinnock on the ultimate issue between the parties, namely whether it is entitled to maintain its right to possession, whereas Mr Pinnock has succeeded against the Council in establishing a fundamental general principle, namely that article 8 can be relied on by someone whose home is the subject of a possession claim.
Conclusion 19.
In these circumstances, we set aside the order for possession made by Judge Holman, we make an order for possession to take effect on 10 March 2011, we make no order for costs in this court or the Court of Appeal, and the order for costs made by Judge Holman stands.
No doubt the parties can agree any other terms of the order which are outstanding.
We shall accordingly dismiss the appeal and uphold the order for possession made against Mr Pinnock, albeit for reasons that are rather different from those of Judge Holman and the Court of Appeal.
Mr Pinnock is, and was, entitled to an opportunity of having the proportionality of the measure determined by a court, and, if necessary for that purpose, of having any relevant issue of fact resolved.
That right was not acknowledged by the courts below (for wholly understandable reasons).
We have, however, afforded him the opportunity to have the proportionality of the possession order considered.
Having considered the issue, we are satisfied that it was proportionate to make the order, irrespective of the truth relating to the two possible issues of fact between Mr Pinnock and the Council.
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This appeal concerns the question of whether article 8 of the European Convention on Human Rights (article 8) requires UK courts to consider the proportionality of evicting an occupier from his home in claims for possession by local authorities and, if so, whether the demoted tenancy regime in the Housing Acts 1985 and 1996 (the 1985 Act and 1996 Act respectively) can properly be interpreted so as to comply with the requirements of article 8.
Most residential occupiers of local authority properties are secure tenants under Part IV of the 1985 Act who cannot be evicted other than pursuant to the grounds in section 84 of the 1985 Act.
The Anti Social Behaviour Act 2003 Act gave the courts power, however, to remove this security of tenure by making a demotion order.
A demoted tenancy will last for a year and then revert to being a secure tenancy, unless within that year the landlord brings possession proceedings under section 143D of the 1996 Act effectively requesting a court to end the demoted tenancy.
Section 143D(2) provides that the court must make an order for possession unless it thinks that the procedure under sections 143E and 143F has not been followed.
Under sections 143E and 143F of the 1996 Act, before issuing possession proceedings against a demoted tenant, the landlord must serve a notice informing the tenant, inter alia, of its decisions (with reasons why) to seek possession and, if so requested by the tenant, must carry out a review of its decision.
The Appellant, Cleveland Pinnock, is a demoted tenant.
He contests a possession order made against him under section 143D.
Mr Pinnock has lived in a property owned by the Respondent local authority, Manchester City Council (the Council), for over 30 years with his partner, Ms Walker, and, from time to time, with all or some of their five children.
The demotion order was made on the basis of a number of incidents of serious anti social behaviour caused by all members of Mr Pinnocks family (other than Mr Pinnock himself) at or near the property.
A day before the effective lapse of the demoted tenancy, the Council served a notice under section 143E seeking possession of the property and citing further incidents of anti social behaviour by Mr Pinnocks sons which had occurred after the demotion order.
A review under section 143F effectively upheld the Councils possession notice.
The Council then issued a claim for possession in the Manchester County Court.
Following a two day hearing, the court granted an order for possession of the property.
Mr Pinnock appealed to the Court of Appeal, who dismissed his appeal.
Mr Pinnock then appealed to the Supreme Court.
Mr Pinnocks main contention is that the possession order violates his right to respect for his home under article 8 as it is disproportionate.
In view of the previous line of the House of Lords authorities, both the Manchester County Court and the Court of Appeal rejected Mr Pinnocks article 8 arguments on the basis that it was not open to them to review the Councils decision on the ground that it was disproportionate.
Approaching the matter on a domestic law basis, both courts concluded that the Councils decision to seek possession was rational.
In a judgment of the Court delivered by Lord Neuberger, the Supreme Court unanimously dismissed the appeal (but for different reasons from those of the County Court and the Court of Appeal).
The Court identified four issues of increasing specificity facing the court in this appeal [21]: (1) whether the European Convention on Human Rights (the Convention) requires domestic courts to consider the proportionality of evicting a person from his home before making an order for possession; (2) if so, the general implications of this conclusion in practice for claims for possession; (3) the implications of this conclusion on the compatibility of the statutory demoted tenancy regime with the Convention; and (4) the application of conclusions (1) (3) above to the facts of Mr Pinnocks appeal.
In light of the clear and constant line of jurisprudence of the European Court of Human Rights, the Court departed from the previous line of the House of Lords authorities and concluded that a court, which is asked by a local authority to make an order for possession of a persons home, must have the power to assess the proportionality of making the order and, in making that assessment, to resolve any factual disputes between the parties [49], [74].
The Court emphasised that this conclusion relates to possession claims by local authorities and is not intended to bear on cases where the person seeking possession is a private landlord, which issue will have to be determined when it arises [50].
The Court noted that the appeal involved a comparatively rare type of possession claim, a claim against a demoted tenant.
Nevertheless, the Court was able to make certain general points [61] [64]: (1) article 8 only comes into play where a persons home is involved; (2) as a general rule, the proportionality of seeking possession will only need to be considered if the point is raised by the occupier concerned; (3) any article 8 defence should initially be considered summarily; (4) even where an outright order for possession is valid under domestic law, article 8 may justify granting an extended period for possession, suspending any possession order or refusing an order altogether; (5) the conclusion that the court must have the ability to consider the article 8 proportionality of making a possession order may require certain statutory and procedural provisions to be revisited; and (6) article 8 proportionality is more likely to be relevant in respect of occupiers who are vulnerable, due to either a mental or a physical disability.
The Court went on to conclude that it was possible to read and give effect to section 143D(2) in a way that would permit the court to review the proportionality of a landlords decision to seek possession and, if necessary, to make its own assessment of facts in dispute.
In particular, he concluded that, by virtue of section 7(1) of the Human Rights Act, County Court judges have the necessary jurisdiction to carry out the article 8 proportionality review [77] [80].
It therefore followed that the demoted tenancy regime is compatible with the Convention [104].
Given the above conclusions, the Court went on to consider whether it was proportionate to evict Mr Pinnock and his family from the property in light of their article 8 Convention rights.
Having regard to the undisputed evidence of three serious offences committed by Mr Pinnocks sons in, or in the vicinity of, the property during the year when the demotion order was in force, the Court concluded that the possession order against Mr Pinnock was indeed proportionate and should be upheld [127] [132].
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This appeal concerns the application of the test of obviousness under section 3 of the Patents Act 1977 to a dosage patent.
In summary, a patent, whose validity is not challenged, identified a compound as an efficacious treatment but did not identify an optimal dosage regime.
A pharmaceutical company, which had acquired the patent, conducted extensive research into ascertaining the optimal dosage of the compound.
It discovered a dose which not only was safe and effective but also, unexpectedly, could be administered in a new and beneficial manner, because of both the half life of the compound and its minimal side effects at that dose.
A number of generic drug manufacturers challenge the validity of the dosage patent on the basis that it involves no inventive step.
The appeal raises two principal questions.
The first relates to the application of the obviousness test to a dosage patent and the second is concerned with whether the Court of Appeal was entitled to reverse the judgment of the judge at first instance on that question in the circumstances of this case.
The patent under challenge
The dosage patent which is the subject of this appeal is EP(UK) 1,173,181 (the 181 patent).
It is owned by ICOS and exclusively licensed to Eli Lilly (collectively Lilly).
It relates to the use of tadalafil in a dosage form for the treatment of sexual dysfunction.
It was filed on 26 April 2000 and claims priority from US application no 60/132036P filed on 30 April 1999.
It was granted on 15 October 2003.
The form of the 181 patent is a B3 specification following centralised amendments made in the European Patent Office (EPO) on 25 March 2015.
The claimants, who are the respondents in this appeal, raised proceedings to revoke the 181 patent and Lilly defended the claim and counterclaimed that the claimants were threatening to infringe its patent.
The earlier phases of this litigation involved challenges to the 181 patent based on (a) priority, (b) added matter, (c) lack of novelty, (d) obviousness and (e) insufficiency.
Of those challenges, the principal matter of contention is obviousness.
The claimants challenges on priority, added matter and lack of novelty arise only if this court upholds the appeal by Lilly against the Court of Appeals finding of obviousness.
Factual background
Erectile dysfunction (ED) is a common medical condition which affects approximately 50% of the male population between the ages of 40 and 70.
It is caused by a number of disorders, both physiological and psychological.
Unsurprisingly, the discovery of a drug to treat ED, called sildenafil, which was and is sold under the brand name VIAGRA, proved to be a very great commercial success.
The drug, which is the subject of the patent in dispute, is called tadalafil.
Tadalafil is the generic name for a drug which is sold under the brand name CIALIS for the treatment of ED and benign prostatic hyperplasia, and under the brand name ADCIRCA for the treatment of pulmonary arterial hypertension.
CIALIS has also enjoyed great commercial success.
In 2014 worldwide sales amounted to about $2.29 billion and UK sales amounted to about $99m.
In that year UK sales of ADCIRCA amounted to about $1m.
Technical background
I derive my summary of the technical background from the judgment of Kitchin LJ, who wrote the leading judgment in the Court of Appeal [2017] EWCA Civ 1671; [2018] RPC 7, and the findings of the trial judge, Birss J [2016] EWHC 1955 (Pat).
The penis contains smooth muscle.
When in its normal resting state, the smooth muscle contracts and so restricts the arteries supplying blood to the penis.
When an erection is triggered, the smooth muscle relaxes and no longer restricts the supply of arterial blood, causing the penis to become tumescent.
The smooth muscle relaxation which leads to the erection results from a cascade of complex biochemical reactions within the body.
Sexual stimulation causes the release of the neurotransmitter nitric oxide (NO) which enters the smooth muscle cells where it leads to an increase in the production of a second molecule, cyclic guanosine 3, 5 monophosphate (cGMP). cGMP in turn binds to and activates an enzyme which regulates the activity of other intracellular proteins and leads to the relaxation of the smooth muscle.
An increase in the intracellular level of cGMP, through NO production, therefore promotes smooth muscle relaxation, while a decrease in the intracellular level of cGMP tends to cause the smooth muscle to return to its ordinary contracted state.
The intracellular concentrations of cGMP and another second molecule, cyclic adenosine 3,5 monophosphate (cAMP), are regulated by a class of enzymes known as cyclic nucleotide phosphodiesterases (PDEs).
By the priority date in 1999 at least six PDE families had been identified.
It was known that the PDE family most prevalent in the penis was PDE5.
This binds cGMP and hydrolyses it to its non cyclic form GMP, so leading to a reduction in smooth muscle relaxation and the prevention of penile tumescence.
It is necessary to mention also the concept of potency.
Potency is the amount of the drug required to produce a defined biological effect of given intensity.
Potency can be measured as the concentration or dose of a drug required to produce 50% of the drugs maximal effect (EC50 or ED50) as depicted by a graded dose response curve.
In the context of a drug that inhibits the action of another substance, potency can be expressed as the concentration of a drug required to inhibit a given biological process by half, ie the in vitro concentration of the drug which is required for 50% inhibition (IC50).
A higher potency drug will have a lower concentration because less drug will be required to achieve the same effect.
As Kitchin LJ illustrated in paras 17 and 18 of his judgment the dose response curve of a drug is illustrated graphically as a sigmoid (or S shaped) curve with a flat or gently inclined base at which increasing doses are slow to manifest a significant effect, a steep central part at which increasing doses have an increasing effect, and a plateau at the top at which increasing doses have no increased effect.
The minimum effective dose is the smallest dose in the dose response curve at which a clinically relevant effect can be seen.
The concept of the minimum effective dose would be known to the skilled team, who would be aware that regulators could ask for it to be identified.
But they would also know that it is not always required.
The trial judge found that it had not been established that the skilled team would always seek to identify the minimum effective dose for a given drug.
It might be sufficient to know that the minimum effective dose was somewhere in a range.
In the context of ED, there was no agreed definition of a minimum clinically relevant effect and this had a bearing on the judges reasoning in relation to obviousness.
Identification of the minimum effective dose depends on a value judgment, as the skilled team would know.
The primary task of the skilled team was and is to make safe, tolerable and effective medicines.
Sildenafil and tadalafil
Sildenafil was marketed as an orally administered PDE5 inhibitor, which prevented PDE5 from hydrolysing cGMP to the inactive GMP. cGMP levels remain elevated as a result and this promotes smooth muscle relaxation.
This leads to greater arterial blood flow into the penis when it is stimulated and results in penile tumescence.
A disadvantage of sildenafil was its effect on other PDE families and, in particular, PDE6 which was associated with known visual side effects.
Sildenafil was also associated with normally mild and transient side effects including flushing, headache and dyspepsia, which were thought to be related to its mode of action as a PDE5 inhibitor.
Sildenafil was known to be administered on demand with an onset of action of about one hour and a half life of about four hours.
It was marketed at doses of 25mg, 50mg and 100mg.
It was known that broadly efficacy increased with dose and so did side effects.
Those were the doses upon which a skilled team would focus although it was also known that a 10mg dose of sildenafil had been investigated in trials and shown to be efficacious.
Sildenafil was a first in class drug which validated the rationale for trying to treat ED using an oral PDE5 inhibitor.
Any other PDE5 inhibitor for ED would be known as a second in class drug.
A clinical pharmacologist would have an enhanced expectation that a second in class drug would be efficacious.
But the idea of investigating chronic dosing of a drug for ED was not part of the common general knowledge.
Tadalafil is a second in class drug.
It is another PDE5 inhibitor and operates in essentially the same way as sildenafil.
An advantage which tadalafil was found to have over sildenafil was its selectivity; it was able to bind to and inhibit its target PDE5 while having significantly less effect than sildenafil on other PDE families and, in particular, PDE6.
This selectivity resulted in less and a smaller number of side effects.
The skilled team
The parties agreed that the notional skilled team, by reference to which the question of the obviousness of the patent in dispute would be assessed, would include a clinical pharmacologist with experience in pharmacokinetics and a clinician specialising in urology.
Both were important and would work together.
The clinical pharmacologist would take the lead in the quantification of doses and the dose response.
The clinician would take the lead when assessing the clinical significance of an effect, whether a desired effect or a side effect.
The clinical pharmacologist would be primarily responsible for selecting the doses to be tried in the dose ranging study, with input from the clinician.
The phases of clinical research
It was of central importance to the case of obviousness which the claimants presented that clinical research into a new medicine follows a standard pathway of four phases.
The judge set out this pathway in paras 76 81 of his judgment and below I draw heavily on Kitchin LJs summary of that exposition.
A new drug, identified through appropriate in vitro testing and pre clinical animal studies, is taken forward into human tests.
The first of such tests are known as Phase I and they are carried out on healthy volunteers to test safety rather than efficacy.
The tests provide pharmacokinetic information and allow an assessment of bio availability.
If these tests are positive, the next step is to move the drug into Phase II.
Phase II studies are generally carried out in two stages, Phase IIa and Phase IIb.
Phase IIa, which consists of what are sometimes known as go, no go studies, provides proof of concept.
The studies are generally carried out at one dose, selected to be high enough to give the drug the best chance of showing a positive effect on the disease, albeit not too high to risk serious side effects.
Phase IIb involves testing a range of doses to show the effect of the dose.
In the judges words, the idea is that the highest dose will show a larger clinical effect than the smallest dose.
The obviousness challenge in this case focuses on what the hypothetical skilled team would do in this phase of clinical research.
If the decision after Phase II is positive, the next phase is Phase III.
This is a large scale clinical trial designed to generate data to support an application for regulatory approval.
Phase IV studies take place after regulatory approval and are not relevant to the issues arising in this appeal.
The Daugan patent
Glaxo filed an application for a patent which was published on 6 February 1997 and led to patent EP 0 839 040 (the Daugan patent or Daugan).
Glaxo did not take forward the research to implement the Daugan patent but transferred it to ICOS.
The Daugan patent discloses the idea of using certain compounds which are PDE5 inhibitors for the treatment of ED.
It specifically describes two compounds, A and B. Compound A is tadalafil.
Daugan discloses tadalafils (and Compound Bs) potency (ie IC50) against PDE5 as 2 nM. Daugan discloses that doses of Compounds A and B will generally be in the range of 0.5mg to 800mg daily for the average adult patient.
It gives examples of a tablet containing a 50mg dose of the active ingredient.
But the Daugan patent does not purport to set out an appropriate dosage regime as an oral treatment of ED.
It is not disputed that at the priority date it was entirely obvious for the notional skilled team, given the Daugan patent, to set out taking tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED.
The statements in Daugan and the huge success of sildenafil as an oral PDE5 inhibitor made it very obvious.
Tadalafil would be an attractive potential second in class medicine to develop because Daugan teaches that it has a promising IC50 against PDE5.
It is more potent than sildenafil, which has an IC50 of about 3 or 3.9 nM.
The trial judge found that the skilled team would understand the limitations of in vitro IC50 data and would know that there could be all sorts of factors such as bioavailability and tissue compartmentalisation which might limit tadalafils clinical utility.
But he found that that would not deter the skilled team from embarking on a routine pre clinical and clinical trial programme.
The central question in this appeal is whether in the light of the common general knowledge which I have summarised in paras 8 16 and 18 22 above and the Daugan patent as the nearest prior art, the relevant claims in the 181 patent were obvious.
I therefore turn to the 181 patent.
The 181 patent
The 181 patent is a dosage patent.
In the specification (para 1) it refers for priority to the provisional patent application to the US Patent and Trademark Office Serial no 60/132036, which was filed on 30 April 1999.
It asserts (para 2) that the invention relates to a highly selective PDE enzyme inhibitor and to its use in a pharmaceutical unit dosage form.
In particular it relates to a potent inhibitor of PDE5 that is useful for the treatment of sexual dysfunction.
In its description of the background of the invention, it refers to VIAGRA, its lack of selectivity for PDE6 and its side effects (para 4).
It refers in para 7 to the Daugan patent and its disclosures.
It asserts (para 8) that the applicants have discovered that tadalafil (which it described as compound (I)) can be administered in a unit dose that provides an effective treatment without the side effects associated with the presently marketed PDE5 inhibitor, sildenafil.
Prior to the present invention such side effects were considered inherent to the inhibition of PDE5.
It continues (para 9) that clinical studies revealed that the product is effective with a reduced tendency to cause flushing and, unexpectedly, can be administered with clinically insignificant side effects associated with the combined effects of a PDE5 inhibitor and an organic nitrate.
In its summary of the invention (paras 11 15) it discloses a pharmaceutical dosage form for human pharmaceutical use of about 1 to about 5mg of tadalafil in a unit dosage form suitable for oral administration for the treatment of sexual dysfunction, including ED up to a maximum total dose of 5mg per day.
The relevant claims are as follows.
Claim 1 asserts A pharmaceutical unit dosage composition comprising 1 to 5mg of a compound having [the illustrated structural formula of tadalafil] said unit dosage form suitable for oral administration up to a maximum total dose of 5mg per day.
Claims 2 and 3 assert dosage forms comprising 2.5mg and 5mg of the compound respectively.
Claim 6 states: the dosage form of any one of claims 1 through 3 for use in treating a condition where inhibition of PDE5 is desirable.
Claim 7 refers to the dosage form of claim 6 wherein the condition is a sexual dysfunction.
It is a claim for a purpose limited product, known as an EPC 2000 claim, which, since 2011, the European Patent Office (EPO) issues in place of Swiss form claims, and claim 8 refers to the sexual dysfunction of ED.
Claim 10 is a Swiss form claim which, as is well known, is a purpose limited process claim, giving a monopoly for the use of compound X in the manufacture of a medicament for the treatment of indication Y. It is in the following terms: 10.
Use of a unit dose containing 1 to 5mg of a compound having the structure [of tadalafil] for the manufacture of a medicament for administration up to a maximum total dose of 5mg of said compound per day in a method of treating sexual dysfunction in a patient in need thereof.
Kitchin LJ in his judgment (para 46) observed that the purpose limited claim 7 is dependent on claim 6 and claim 1 and construed it as manifesting an intention that the maximum dose per day constituted part of the purpose limitation of the claim.
He also interpreted claims 7 and 10 as being directed to the treatment of sexual dysfunction by the administration of a dose of no more than 5mg tadalafil per day.
The claimed invention is the application of the discovery that sexual dysfunction may be treated by administering such a dose and with minimal side effects (paras 50 52).
The claimants do not challenge those findings.
Lilly asserts that the essence of the invention is the discovery that tadalafil is effective in treating ED at such a low dose and with minimal side effects.
This discovery has allowed the drug to be taken daily (for chronic use) rather than on demand, thus avoiding the need to anticipate when sexual activity might occur.
This is, Lilly claims, a significant technical advantage as sildenafil by contrast is approved for on demand use only.
Obviousness: the claimants challenge and Lillys answer
Before Birss J the claimants submitted that it would be obvious for a skilled team given the Daugan patent to take tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED at the priority date.
While costly and time consuming, the programme would involve nothing other than routine work and no inventive effort was required.
In the course of the programme to establish tadalafil as a safe, tolerable and effective treatment for ED, a 5mg dose would be one of the doses used on patients as it was obvious to ascertain the lowest dose at which the drug was effective.
Standard dose ranging studies would lead to the claims in the 181 patent.
The programme would reveal the invention without any inventive step.
The fact that the 5mg per day dosage has a surprising beneficial property of minimal side effects was simply a bonus which did not make the dosage regime an invention.
Lillys response was first that the discovery of the dosage regime was the result of expensive and unpredictable research which was entitled to patent protection.
Secondly, at the start of the programme it was not obvious to try a low dose like 5mg per day as there was no reason to think that it would be effective at that dosage.
To invalidate the claim, it would be necessary to show that at the start of the programme it was obvious to the skilled team that a 5mg/day dose would be safe and effective and also would have the minimal PDE5 related side effects.
Lilly referred to the EPOs problem and solution approach and sought to apply it to the facts of the case.
Birss J accepted neither approach in its entirety.
He analysed the obviousness case by concentrating on claim 7.
He reminded himself that the test for obviousness is a single and relatively simple question of fact.
It is a question of fact to be decided by detailed technical arguments and evidence concerning the particular facts and circumstances, a task with which wide generalisations do not assist.
He accepted that some experiments which were undertaken without a particular expectation as to the result were obvious.
When considering pre clinical and clinical research it may be necessary to consider a step wise series of tests which the skilled team would undertake.
But even if each of those steps were obvious, one must avoid the risk of hindsight by standing back and looking at the facts as a whole.
The fact that routine tests have uncertain results does not on its own turn those results into an invention.
Similarly, the fact that, before the pre clinical, Phase I and Phase IIa tests had been performed, one cannot say what particular doses will be tested in a Phase IIb test does not of itself make those doses inventive if some of them are found to work.
He referred to the statement by Kitchin J in Generics (UK) Ltd v H Lundbeck A/S [2007] RPC 32, which I set out in para 63 below, and identified as relevant factors in his assessment of obviousness in this case the following: motive, multiple avenues, the effort involved and the expectation of success, the occurrence of unexpected and surprising results and the need for and nature of value judgments which have to be made in carrying out the project.
The judges findings of fact were based principally on the evidence of (i) Mr Gary Muirhead a consultant to the pharmaceutical industry, whom the claimants called and who had worked for Pfizer on the development of drugs, including sildenafil, (ii) Dr Jay Saoud, whom Lilly called and who had over 25 years of experience in clinical development, pharmacokinetics and statistical analysis in industry, academia and contract research organisations and (iii) Dr Gerald Brock, whom Lilly called and who is a practising clinical urologist with extensive clinical, academic and advisory experience in matters concerning treatments for ED.
In his careful assessment of their evidence Birss J held, at paras 287 et seq, that it would have been entirely obvious for a skilled team given Daugan to set out to take tadalafil forward into a routine pre clinical and clinical trial programme as an oral treatment for ED at the priority date.
The Phase I studies would produce results which would lead the skilled team to design and undertake the Phase IIa go no go study of a single 50mg dose of tadalafil in a relatively small group of patients.
They would embark on that study with a reasonable expectation that the drug would be safe, tolerable and effective at that dose.
Turning to the Phase IIb studies, Birss J concluded that the first dose ranging study would be of on demand dosing using 25, 50 and 100mg of the drug.
He did not accept Mr Muirheads suggestion that a 5mg dose would be included in this first study.
The skilled teams expectations would be that they would hope that the study would show a dose response relationship.
But the results would not be what the team expected because they would show no difference in efficacy between the three doses, demonstrating an apparent therapeutic plateau.
The critical dispute at this stage was whether in the light of those findings it was an obvious thing for the skilled team to conduct a further dose ranging study or studies to investigate lower doses and determine the minimum effective dose.
Birss J did not accept the claimants case that it was.
He held that the skilled team would be well aware that there was no defined standard of minimal efficacy in relation to ED and that it would require a value judgement to characterise a minimum effective dose.
He concluded (para 327) that it was not inevitable that the skilled team would investigate lower doses after discovering the therapeutic plateau because they had found a dose (at least 25mg) which was safe, tolerable and effective and thus had secured the prime objective of the programme; but he held that it was very likely that they would.
A skilled team would be familiar with multiple dose ranging studies as necessary as a generality.
If the skilled team carried out a further dose ranging study they would have included 5mg and 10mg doses.
They would not have any expectation that the minimum effective dose was substantially lower than 25mg or that they would find a dose below 25mg at which there was a clinically relevant effect with reduced side effects.
The discovery that at a 5mg dose tadalafil was efficacious and had reduced side effects would surprise the team.
The investigation of chronic daily dosing in addition to on demand dosing would follow the similar pattern but the initial study would probably include a 10mg dose.
The teams expectation would be the same.
Having conducted this step by step analysis, Birss J then looked at the programme as a whole and assessed obviousness overall.
He concluded that, given Daugan, a 25mg/day dose of tadalafil was obvious as a treatment for ED but that a 5mg daily dose was not.
In para 343 he summarised his reasons in these terms: i) In terms of motives to find a solution to the problem the patent addresses, the skilled team would be highly motivated by Daugan and the success of sildenafil to investigate tadalafil as a treatment for [ED]. ii) As for possible avenues of research, overall tadalafil would be obvious to investigate.
In terms of doses however, 5mg/day is a significantly lower dose than the 50mg dose exemplified in the Daugan prior art and the marketed doses of sildenafil.
It is also significantly lower than the 50mg dose which would be chosen for the first test of efficacy at Phase IIa.
It would not be chosen in the routine first dose ranging study.
The team would not have anticipated daily dosing as something to be studied from the outset but once the half life was discovered it is likely that daily dosing would be included.
In terms of effort, overall the programme would involve iii) very substantial resources of time, money and people but it would be pursued.
However, by the time the idea of investigating lower doses presents itself, the team would have established safe, tolerable and effective doses of tadalafil at 25mg on demand and 10mg for daily dosing.
At that stage the impetus to investigate lower doses would be reduced but not eliminated. iv) Expectations of success can be considered overall and in relation to particular studies.
Overall the team would embark on the project with a reasonable expectation of success in establishing tadalafil as a safe, tolerable and effective treatment for [ED].
However, the claimants failed to prove that efficacy at 5mg tadalafil was predictable or worth considering by the skilled team based on the properties of tadalafil as compared to sildenafil.
The team would know that in principle there would be a minimum effective dose for tadalafil but would also know that its definition depends on a value judgment made by the team.
In relation to the dose ranging studies, the team would conduct them hoping for a dose response.
Following discovery of a plateau starting at 25mg or 10mg, there would very likely be a subsequent dose ranging study which included 5mg.
The team would include a 5mg dose in this study hoping to see a dose response but that does not mean they would have a reasonable expectation that 5mg would produce a clinically relevant effect at all nor one with minimal side effects.
Assuming a 5mg/day dose of tadalafil was tested, it would not be tested with a reasonable expectation of success. v) Considering unexpected or surprising results, the position is as follows.
The path to a 5mg dose requires the discovery of new information such as the half life and the IC50 vs PDE6.
That information would inevitably be found in any clinical programme.
The path includes an important result which is unexpected even if it is not actually surprising, ie the plateau in the dose response from 10 to 100mg.
There is also a surprising result: the existence of a useful effect with reduced side effects.
The claimed 5mg/day dose has that property. vi) A number of value judgments would be required of a skilled team in a programme which reaches the claimed invention.
One is to define the level of clinical effect to be regarded as relevant.
Another is to embark on investigating daily dosing.
An important value judgment is what to do when an unexpected plateau in the dose response has been identified as the same time as a marketable dose.
He therefore concluded that claim 7 of the 181 patent involves an inventive step.
The Court of Appeal reached a contrary conclusion and allowed the appeal on the ground that claims 1, 7 and 10 were invalid for lack of inventive step.
In the leading judgment, Kitchin LJ addressed the claimants case that, in the light of Daugan, it was obvious to take tadalafil forward into routine pre clinical and clinical trial programme to assess its use as an oral treatment for sexual dysfunction.
The claimants argued that nearly all dosage regimes in a Swiss form claim will be obvious: Actavis UK Ltd v Merck & Co Inc [2008] EWCA Civ 444; [2009] 1 WLR 1186, Jacob LJ at para 32.
A 5mg daily dose would be used in patients in the course of that programme and would reveal that it was a safe, tolerable and effective treatment.
In other words, it would reveal the invention.
The alleged invention was merely the product of standard practice in a routine clinical trials process and the purpose of Phase IIb studies was to provide an understanding of the dose response relationship.
Lillys answer was that at the start of the programme it was not obvious to try a 5mg dose because the skilled team would have no idea if it would be a safe, tolerable and effective treatment.
The skilled team had to make a series of value judgements in order to arrive at the invention and would have had no expectation that the 5mg dose would be efficacious or that it would have reduced side effects.
Kitchin LJ stated, at paras 131 135, that it was not the law that investigations into appropriate dosage regimes cannot yield patentable inventions and that Jacob LJ had not suggested otherwise in Actavis v Merck.
The statutory task of the court was to have regard to all the relevant circumstances in order to answer the single question: was it obvious to the skilled but unimaginative addressee in light of the prior art and the common general knowledge to make a product or carry out a process falling within the claim? He affirmed that the judge would have had this well in mind.
Accordingly, where no question of principle was involved, an appellate court had to be very cautious in differing from a judges evaluation.
Nonetheless, he held that claim 1 was invalid for obviousness.
It had no purpose limitation and encompassed a unit dosage composition comprising 1mg to 5mg of tadalafil which was suitable for administration up to a maximum total dose of 5mg per day but which was intended and was in fact used for administration of a higher per day total dose.
On the judges findings, given Daugan, it was obvious to develop such a composition and the judge should have so found.
I do not understand Lilly to challenge this finding in this appeal.
Instead, the battleground relates to claims 7 and 10.
In relation to those claims, the debate in the Court of Appeal appears to have focussed on the notional skilled teams approach to the Phase II trial.
Kitchin LJ recorded Lillys case that, having carried out the initial Phase IIb study, which would have found the 25mg dose on demand to be safe and efficacious, the skilled team needed to go no further but if they chose to do so, would test a 10mg dose before deciding whether to go further and test a 5mg dose.
The skilled team also had to decide whether to test daily dosing.
There were therefore various possible avenues of research, involving value judgements and it was not inevitable that the skilled team would investigate lower doses.
Kitchin LJ accepted that it was relevant to consider whether the skilled team, starting with Daugan, would be faced with various possible avenues of research.
He recognized that the skilled team would be faced with choices when embarking on Phase II studies, including how to proceed with the dose ranging studies and whether to study on demand or daily dosing.
But in relation to the latter decision, he pointed out that the judge had found that the Phase I trial would have revealed the half life of tadalafil and that the team would have decided to pursue both on demand and daily dosing in Phase II.
In relation to the former decision, Kitchin LJ pointed out that the judge had found that the team would very likely investigate the 5mg dose of tadalafil after the first or, in the case of on demand dosing, a possible second dose ranging study.
This finding was supported by the purpose of dose ranging studies, which was to ascertain the dose response relationship of the drug, and the fact that, so long as the study showed the IC50 remaining on the upper therapeutic plateau, that dose response relationship had not been found.
Further, it was consistent with the evidence of the expert clinical pharmacologists, Mr Muirhead and Dr Saoud, and Kitchin LJ quoted the latters evidence on cross examination that, having discovered the therapeutic plateau, it was a no brainer to test a lower dose and that the skilled team would have done so.
Kitchin LJ therefore rejected the idea that the skilled team would have been faced with a series of parallel avenues of studies and would have no expectation that any one of them would prove fruitful.
Further, the team would have addressed both on demand and daily dosing and each avenue of inquiry would be very likely to lead the team to the invention.
Kitchin LJ held that the judge should not have attached weight to the fact that a 5mg dose was considerably less than the 50mg dose which would have been used in Phase IIa, because the Phase IIb tests were carried out for a different purpose, that is to ascertain the dose response relationship.
Nor should the judge have attached weight to the conclusion that a 5mg dose would not be tested in the first Phase IIb study because he had also found that the team would very likely investigate it afterwards: the impetus to investigate lower doses would have remained because the purpose of the Phase IIb study had not been fulfilled.
The finding that the skilled team could not predict at the outset that a 5mg dose would be safe and efficacious was of little weight because at least one of the purposes of the Phase IIb studies is to understand better the dose response relationship of the drug and so identify the appropriate dose for the target population.
Similarly the judge was wrong to attach weight to the conclusion that the team would not have an expectation of success when testing the 5mg dose: the judge had held that the team were very likely to test the 5mg dose as part of the dose ranging study but it was hard to see why they would have done so unless they had a reasonable expectation that it would assist them better to understand the dose response relationship.
Kitchin LJ also held that little weight could be attached to the fact that it was surprising (a) that there was a therapeutic plateau from 10mg to 100mg, and (b) that a 5mg per day dose was efficacious and had reduced side effects.
While the discovery of a surprising or unexpected technical effect may be suggestive of invention, in this case the discovery of the therapeutic plateau and the efficacy of the 5mg dose was the product of a routine trial programme and the unexpected reduced side effects of the 5mg dose was a bonus effect which did not cause the 5mg dose to cease to be obvious.
He also concluded that the value judgments to which the judge referred in para 343(vi) of his judgment (para 38 above) provided no effective support for the judges conclusion in the face of his critical finding that it was very likely that the team would test the 5mg dose.
Kitchin LJ summarised his conclusions in this way, at para 152: Drawing the threads together, I am satisfied that Mr Speck has made good his criticisms of the judges reasoning.
The judge has lost sight of the fact that, on his own findings, the claimed invention lies at the end of the familiar path through the routine pre clinical and clinical trials process.
The skilled but non inventive team would embark on that process with a reasonable expectation of success and in the course of it they would carry out Phase IIb dose ranging studies with the aim of finding out, among other things, the dose response relationship.
It is very likely that in so doing they would test a dose of 5mg tadalafil per day and, if they did so, they would find that it is safe and efficacious.
At that point they would have arrived at the claimed invention.
In my judgment claims 7 and 10 are therefore invalid.
Floyd and Lewison LJJ issued concurring judgments to which I will refer in the discussion below.
Mr Waughs challenge to the judgment of the Court of Appeal can be boiled down to one central submission: the statutory question in section 3 of the 1977 Act is whether the claimed invention was obvious at the priority date.
This straightforward approach to the assessment of obviousness, he submitted, required the court to look at the invention set out in the relevant claim or claims of the patent and ask itself whether that asserted invention was obvious to the notional skilled but uninventive team at the priority date having regard to the state of the art at that date.
Therefore, the question which the Court of Appeal should have asked was whether at the priority date, before the skilled team embarked on its investigation, it was obvious in the light of Daugan, and without knowledge of the alleged invention, that a 5mg per day dose of tadalafil would be a safe and effective treatment, with minimal side effects, for sexual dysfunction.
The Court of Appeal erred by not adopting that approach and instead by holding that the invention was obvious, because the claimed invention was the product of a familiar and routine path of pre clinical and clinical research, in which each step was likely to follow the outcome of the prior step.
This erroneous approach failed to address the question whether it was obvious to try that low dose because there was a reasonable expectation of success at the outset.
It was also in conflict with the approach of the EPO which adopted a problem and solution analysis.
Costly and time consuming research which led to an unexpected technical effect will be patentable, whether such work is routine or not.
The Court of Appeal, which accepted the trial judges findings of fact, was not entitled to overrule his analysis.
Mr Speck sought to answer this case by making seven propositions.
They were, first, that patent law is concerned with technical information which is of use industrially.
A technical contribution is the difference between what a skilled person is enabled to do (a) in light of the state of the art and (b) with the teaching of the patent.
Secondly, there was a symmetry or balance in the patent system which required an enabling disclosure, in other words a technical contribution, as the basis of a patent.
Thirdly, the fundamental principle underlying the grant of a monopoly through a patent is that the monopoly must be commensurate with that technical contribution.
The monopoly cannot cover that which the skilled person is already able to do or make, including obvious modifications or additions to the state of the article Those he described as the skilled persons repertoire.
Fourthly, if all that a skilled person discovers is more information about products or processes that are already within that notional persons repertoire, there is no basis for the grant of a patent because that information does not add to the products or processes which the skilled person can make or do.
Fifthly, the principle advanced by Lilly, that it is not permissible to take into account information not known at the priority date, is contrary to the basic scheme of patent law.
Sixthly, if that principle were correct, it would apply whether or not the research revealed an unexpected benefit.
Seventhly, patent law excludes from consideration information which is routinely ascertained using routine methods as part of the state of the art and using them for a routine purpose towards a routine end: in this case the implementation of the Daugan patent.
Discussion i)
I am not persuaded that the law adopts the extreme position of either submission.
Lillys approach would require the court to disregard the work which a skilled person would carry out after the priority date in order to implement the teaching of the Daugan patent.
That approach, as Mr Speck submitted, is contrary to the basic scheme of patent law.
Actaviss approach in its reliance on the skilled persons repertoire, in other words on what the skilled person could already do, cannot be a general test for obviousness as it would render irrelevant many of the The approach to obviousness factors to which the courts have had regard in the assessment of obviousness, some of which I mention below.
Since the enactment of the 1623 Statute of Monopolies, which prohibited the grant of a monopoly by the Crown but in section VI created an exception for a patent for the sole working or making of any manner of new Manufactures to the true and first Inventor and Inventors of such Manufactures , the purpose of a grant of a patent has been to encourage innovation.
The monopoly granted by the patent rewards the inventor by enabling him or her to charge a higher price than would have been possible if there had been competition.
The patent bargain is this: the inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired.
Lord Mansfield stated the point with his characteristic succinctness in Liardet v Johnson (1778): The condition of giving encouragement is this: that you must specify upon record your invention in such a way as shall teach an artist, when your term is out, to make it and to make it as well by your directions: for then at the end of the term, the public shall have benefit of it.
The inventor has the benefit during the term, and the public have the benefit after (quoted in Hulme, On the History of Patent Law (1902) 18 LQR 280, 285 and cited by Lord Sumption in the leading judgment in Generics (UK) Ltd (trading as Mylan) v Warner Lambert Co LLC [2018] UKSC 56; [2019] Bus LR 360, para 17).
This overarching principle has survived the amendment of UK patent law after accession to the European Patent Convention.
The EPO Technical Board of Appeal has confirmed the principle in, for example, its decision of 12 September 1995 in Agrevo/Triazoles (Case T 939/92) [1996] EPOR 171, para 2.4.2 in which it stated: it has for long been a generally accepted legal principle that the extent of the patent monopoly should correspond to and be justified by the technical contribution to the article [T]his general legal principle was applied in relation to the extent of the patent protection that was justified by reference to the requirements of articles 83 and 84 EPC, the same legal principle also governs the decision that is required to be made under article 56 EPC, for everything falling within a valid claim has to be inventive.
See also EXXON/Fuel Oils (Case T 409/91) [1994] OJ EPO 653 at paras 3.3 and 3.4.
Articles 83 and 84 of the EPC are concerned with the sufficiency of the disclosure of the invention in the patent application and the support which the description gives to the claims in that application.
Section 14(3) and (5) of the 1977 Act correspond to those requirements.
Article 56 of the EPO is concerned with the inventive step and provides: An invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the article Section 3 of the 1977 Act, which I set out below, corresponds to this requirement.
As is well known, section 130(7) of the 1977 Act declares that specified sections of the 1977 Act 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, the Community Patent Convention and the Patent Co operation Treaty have in the territories to which those Conventions apply.
Those sections include the sections which govern (a) the principal conditions of validity, that is to say novelty (section 2), inventive step (section 3), capability of industrial application (section 4) sufficiency of disclosure and the support of the claim by the description in the patent application (section 14(3) and (5)), and (b) the power of the court to revoke a patent on application, on grounds which include that the invention is not a patentable invention (which is a reference via section 1 to inter alia sections 2, 3 and 4) and inadequate disclosure in the patent application to enable the skilled person to perform the invention (section 72(1)).
It is also well established in the jurisprudence of courts in the United Kingdom that our courts, although not bound to do so, should normally follow the settled jurisprudence of the EPO (especially decisions of its Enlarged Board of Appeal) on the interpretation of the European Patent Convention in the interests of uniformity, especially when the question is one of principle: Merrell Dow Pharmaceuticals Inc v H N Norton & Co Ltd [1996] RPC 76, 82 per Lord Hoffmann; Gales Application [1991] RPC 305, 322 per Nicholls LJ; Actavis UK Ltd v Merck & Co Inc [2009] 1 WLR 1186, paras 45 48 per Jacob LJ; Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49; [2008] 4 All ER 621, para 3 per Lord Hoffmann; Generics (UK) Ltd v H Lundbeck A/S [2009] UKHL 12; [2009] 2 All ER 955, para 35 per Lord Walker of Gestingthorpe; Dr Reddys Laboratories (UK) Ltd v Eli Lilly and Co Ltd [2010] RPC 9, para 102 per Lord Neuberger of Abbotsbury MR; Eli Lilly and Co v Human Genome Sciences Inc [2011] UKSC 51; [2012] 1 All ER 1154; [2012] RPC 6, paras 83 87 per Lord Neuberger.
The general principle that the extent of the patent monopoly should correspond to and be justified by the actual technical contribution to the art is thus part of the jurisprudence of both the EPO and the UK courts and, as Lord Sumption observed in Generics v Warner Lambert (above), para 17, the principal conditions of validity, novelty, inventive step, industrial application and sufficiency are all, in one way or another, directed to satisfying the principle thus expressed.
There is therefore a balance or symmetry in patent law, as Mr Speck submitted.
This case is concerned with the condition which requires there to be an inventive step.
Section 3 of the 1977 Act provides: An invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art by virtue only of section 2(2) above (and disregarding section 2(3) above).
Section 2(2) provides: The state of the art in the case of an invention shall be taken to comprise all matter (whether a product, a process, information about either, or anything else) which has at any time before the priority date of that invention been made available to the public (whether in the United Kingdom or elsewhere) by written or oral description, by use or in any other way.
These statutory provisions mandate the court to assess whether an invention is obvious by having regard to the state of the art at the priority date of the invention.
If the invention is not obvious to the skilled person at that date, section 3 deems the invention to involve an inventive step.
The notional skilled person, while having the compendious knowledge of the state of the art which section 2(2) requires, has no inventive capacity.
But that does not mean that the skilled person has no skill to take forward in an uninventive way the teaching of the prior article In this case the notional skilled team comprises the clinical pharmacologist and the clinician specialising in urology (para 17 above).
That notional team is treated as exercising the professional skills of its members in responding to the teaching of the Daugan patent.
It follows that uninventive steps which the skilled team would take after the priority date to implement the Daugan patent are not excluded from consideration in assessing the obviousness of the alleged invention at the priority date.
In addressing the statutory question of obviousness in section 3 of the 1977 Act it is common for English courts to adopt the so called Windsurfing/Pozzoli structure which asks these questions: Identify the notional person skilled in the art; Identify the relevant common general knowledge (1) (a) (b) of that person; Identify the inventive concept of the claim in question (2) or if that cannot readily be done, construe it; (3) Identify what, if any, differences exist between the matter cited as forming part of the state of the art and the inventive concept of the claim or the claim as construed; (4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention? (Pozzoli SPA v BDMO SA [2007] EWCA Civ 588; [2007] FSR 37, para 23 per Jacob LJ).
The fourth question is the statutory question and the first three questions or tasks, the second and third of which involve knowledge and consideration of the invention, are a means of disciplining the courts approach to that fourth question: DSM NVs Patent [2001] RPC 35, para 55 per Neuberger J; Actavis UK Ltd v Novartis AG [2010] EWCA Civ 82; [2010] FSR 18, para 21 per Jacob LJ.
In this case the trial judge adopted the Pozzoli approach.
There is no dispute about the first question.
Mr Waugh emphasises the focus of the second question on the wording of the claim, as I shall discuss below.
An alternative approach which the EPO often adopts, is the so called problem and solution approach.
The EPO has described the approach in these terms: the Boards of Appeal consistently decide the issue of obviousness on the basis of an objective assessment of the technical results achieved by the claimed subject matter, compared with the results obtained according to the state of the article It is then assumed that the inventor did in fact seek to achieve these results and, therefore, these results are taken to be the basis for defining the technical problem (or, in other words, the objective) of the claimed invention.
The next step is then to decide whether the state of the art suggested the claimed solution of this technical problem in the way proposed by the patent in suit (Agrevo/Triazoles (above) para 2.4.3) The test is helpfully summarised in the EPOs Guidelines for Examination in the EPO (November 2017) (Part G Chapter VII) para 5: Problem and solution approach In order to assess inventive step in an objective and predictable manner, the so called problem and solution approach should be applied.
Thus deviation from this approach should be exceptional.
In the problem and solution approach there are three main stages: (i) (ii) establishing the objective technical problem to be solved, and (iii) considering whether or not the claimed invention, starting from the closest prior art and the objective technical problem, would have been obvious to the skilled person. determining the closest prior art, Again, Mr Waugh urges the application of this approach because of the emphasis which, he submits, it places on the terms of the claim.
While both approaches focus on the inventive concept put forward in the claims, neither approach should be applied in a mechanistic way.
Both are glosses on the text of section 3 of the 1977 Act and article 56 of the EPC and neither require a literalist approach to the wording of the claim in identifying the inventive concept.
In Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49; [2008] RPC 28; [2008] 4 All ER 621, at para 42 Lord Hoffmann endorsed the fact specific approach which Kitchin J set out in Generics (UK) Ltd v H Lundbeck [2007] RPC 32, para 72 where he stated: The question of obviousness must be considered on the facts of each case.
The court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances.
These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success.
Kitchin Js list of factors is illustrative and not exhaustive.
Another factor which needs to be considered in the present case is the routineness of the research.
Much of the interest and controversy which the Court of Appeals judgment has generated relates to how people have understood or misunderstood the significance which that court has attached to the routine nature of the pre clinical and clinical research which I have described.
Again, I discuss this below (paras 102 104).
Factors which are relevant considerations in the present case include the following.
First, it is relevant to consider whether at the priority date something was obvious to try, in other words whether it was obvious to undertake a specific piece of research which had a reasonable or fair prospect of success: Conor v Angiotech (above) para 42 per Lord Hoffmann; MedImmune Ltd v Novartis Pharmaceuticals UK Ltd [2012] EWCA Civ 1234; [2013] RPC 27, paras 90 and 91 per Kitchin LJ.
In many cases the consideration that there is a likelihood of success which is sufficient to warrant an actual trial is an important pointer to obviousness.
But as Kitchin LJ said in Novartis AG v Generics (UK) Ltd [2012] EWCA Civ 1623, para 55, there is no requirement that it is manifest that a test ought to work; that would impose a straightjacket which would preclude a finding of obviousness in a case where the results of an entirely routine test are unpredictable.
As Birss J observed in this case (para 276), some experiments which are undertaken without any particular expectation as to result are obvious.
The relevance of the obvious to try consideration and its weight when balanced against other relevant considerations depend on the particular facts of the case.
Secondly, it follows that the routine nature of the research and any established practice of following such research through to a particular point may be a relevant consideration which is weighed against the consideration that the claimed process or product was not obvious to try at the outset of a research programme.
Again, it is only one of several factors to be weighed in the assessment and it has no primacy and certainly no paramount status as a consideration.
Thirdly, the burden and cost of the research programme is relevant.
But the weight to be attached to this factor will vary depending on the particular circumstances.
This appeal concerns a pharmaceutical patent claiming as an invention a dosage regime.
The cost and effort involved in bringing a drug to market through pre clinical and clinical trials are notorious.
Mr Waugh referred to the extrajudicial writing of Sir Hugh Laddie, Patents whats invention got to do with it? (in Intellectual property in the new millennium: essays in honour of William R Cornish (2004), p 91 et seq), in which he stated, at p 92: In this field it is apparent that, without patents, few new products would be marketed.
The expense in producing a new pharmaceutical is in the research and development stage.
Normally, once it has been discovered and given regulatory approval, the manufacture of a new pharmaceutical will be comparatively cheap and its replication by competitors easy.
Without the protection of patents, there will be no ability to recoup the cost of the research and development, let alone fund such activities in the future.
No private company is going to enter this business unless it can see a reasonable prospect of obtaining a return on investment.
The need to facilitate expensive pharmaceutical research is an important policy consideration for legislators and others involved in intellectual property law.
It was a factor behind the creation of the Swiss form claim and the EPC 2000 claim as well as the supplementary protection certificate regime under Regulation (EC) 469/2009, which is available after market authorisation to give the patent owner the protection of the patent for up to 15 years, and the data exclusivity regime which Directive 2001/83/EC (article 10) and Regulation (EC) 726/2004 (article 14), which may confer ten years of exclusive marketing protection against competition from generic manufacturers.
But the effort involved in research is only one of several factors which may be relevant to the answer to the statutory question of obviousness.
Fourthly, the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme are relevant considerations as both the trial judge and the Court of Appeal held.
Fifthly, the existence of alternative or multiple paths of research will often be an indicator that the invention contained in the claim or claims was not obvious.
If the notional skilled person is faced with only one avenue of research, a one way street, it is more likely that the result of his or her research is obvious than if he or she were faced with a multiplicity of different avenues.
But it is necessary to bear in mind the possibility that more than one avenue of research may be obvious.
In Brugger v Medic Aid Ltd (No 2) [1996] RPC 635, 661, Laddie J stated: [I]f a particular route is an obvious one to take or try, it is not rendered any less obvious from a technical point of view merely because there are a number, and perhaps a large number, of other obvious routes as well.
I agree.
As a result, the need to make value judgments on how to proceed in the course of a research programme is not necessarily a pointer against obviousness.
Sixthly, the motive of the skilled person is a relevant consideration.
The notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind.
It is not sufficient that a skilled person could undertake a particular trial; one may wish to ask whether in the circumstances he or she would be motivated to do so.
The absence of a motive to take the allegedly inventive step makes an argument of obviousness more difficult.
In Agrevo/Triazoles (above), para 2.4.2, the Technical Board of Appeal of the EPO, having referred to the principle that the extent of the patent monopoly should correspond to and be justified by the technical contribution to the art (see para 54 above) made the point in these terms: Moreover, in the Boards judgment, it follows from this same legal principle that the answer to the question what a skilled person would have done in the light of the state of the art depends in large measure on the technical result he had set out to achieve.
In other words, the notional person skilled in the art is not to be assumed to seek to perform a particular act without some concrete technical reason: he must, rather, be assumed to act not out of idle curiosity but with some specific technical purpose in mind.
This forms the basis of the EPOs problem and solution approach to obviousness which I have quoted in para 61 above.
Seventhly, the fact that the results of research which the inventor actually carried out are unexpected or surprising is a relevant consideration as it may point to an inventive step, at least in so far as it suggests that a test was not obvious to try or otherwise the absence of a known target of the research which would make it less likely that the skilled person would conduct a test.
Eighthly, the courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness.
That is expressly stated in the fourth of the Windsurfing/Pozzoli questions.
Where the pattern of the research programme which the notional skilled person would undertake can clearly be foreseen, it may be legitimate to take a step by step analysis.
In Gedeon Richter plc v Bayer Schering Pharma AG [2011] EWHC 583 (Pat); [2011] Bus LR D153, Floyd J stated (para 114): I think that the guiding principle must be that one has to look at each putative step which the skilled person is required to take and decide whether it was obvious.
Even then one has to step back and ask an overall question as to whether the step by step analysis, performed after the event, may not in fact prove to be unrealistic or driven by hindsight.
The obvious danger of a step by step analysis is that the combination of steps by which the inventor arrived at his invention is ascertained by hindsight knowledge of a successful invention.
Lord Diplock warned against this in Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd [1972] RPC 346, 362, a warning which judges have reiterated in later cases.
I am not persuaded by Mr Specks suggestion that Technograph is concerned only with a case in which a step by step approach was constructed by counsel on cross examination in the absence of evidence of routine steps of research.
The case contains a wider warning against the use of hindsight and has been interpreted as doing so.
I agree with Birss Js analysis in Hospira UK Ltd v Genentech Inc [2014] EWHC 3857 (Pat), para 240, where he stated: The particular point made in Technograph was that it was wrong to find an invention was obvious if it was only arrived at after a series of steps which involve the cumulative application of hindsight.
In some circumstances success at each step in a chain is a necessary predicate for the next one and it is only the hindsight knowledge of the invention as the target which could motivate a skilled person to take each step without knowledge about the next one.
In a situation like that, Technograph is important.
But the Technograph warning has no bearing in a case in which the steps which the notional skilled person would take can readily be ascertained without the taint of hindsight.
Ninthly, it is necessary to consider whether a feature of a claimed invention is an added benefit in a context in which the claimed innovation is obvious for another purpose.
In Hallen & Co v Brabantia (UK) Ltd [1991] RPC 195 the Court of Appeal was concerned with an alleged selection patent for a self pulling corkscrew which had a helix coated with polytetrafluoroethylene (PTFE) which was a known friction reducing material.
At the priority date PTFE had been used for several years to coat the helix of a twin lever type corkscrew to aid its penetration into the cork.
The PTFE coated helix had this effect also on the self pulling corkscrew, a fact which was obvious at the priority date.
The PTFE coat when applied to a self pulling corkscrew also had a non obvious benefit of making a striking improvement in the extraction of the cork.
The trial judge, Aldous J, held that the patent was invalid on the ground of obviousness because it was obvious to select the features of the claim for the first purpose notwithstanding that it was not obvious for the other purpose: [1989] RPC 307, 326 327.
The Court of Appeal agreed with the judge, holding (pp 215 216) that it was self evident that a PTFE coating would improve the penetration by any corkscrew and that the golden bonus or added benefit of the dramatic improvement in extraction of the cork would not found a valid patent as the claimed innovation was obvious for another purpose.
Mr Waugh does not challenge this principle but submits that the 181 patent does not involve such an added benefit.
ii) Dosage patents
The courts are enjoined to have regard to all the relevant facts of particular case in assessing whether an alleged invention is obvious.
One of those facts is the nature of the invention.
A tenth consideration, therefore, is that here we are concerned with a dosage patent with a Swiss form claim and an EPC 2000 claim.
The possibility that a dosage patent with such claims may be valid has been recognized both by the EPO and in the United Kingdom courts.
In decision Abbott Respiratory LLC/Dosage regime (G 0002/08) EP:BA:2010:G000208.20100219 the Enlarged Board of Appeal of the EPO decided that, when it was already known to use a medicament to treat a particular illness, it was possible to obtain a patent for a new and inventive dosage regime for that medicament to treat that illness.
In so finding the Enlarged Board decided (a) that the dosage patent did not breach the prohibition against the patenting of medical treatment in article 53(c) of the EPC and (b) that a novel dosage regime for the treatment of the same illness could be a specific use under article 54(5) of the European Patent Convention.
Recognizing the risks of undue prolongation of patent rights, the Enlarged Board confirmed that the whole body of jurisprudence relating to the assessment of novelty and inventive step generally also applies.
In relation to the assessment of obviousness this included consideration whether the dosage regime caused a new technical effect (para 6.3).
The EPO has therefore not sanctioned any relaxation of the tests of obviousness in relation to dosage patents.
In the United Kingdom the Court of Appeal addressed the question of dosage patents in Actavis UK Ltd v Merck & Co Inc [2009] 1 WLR 1186.
The case concerned an application to revoke a patent which included a Swiss form claim for the use of a specified dose of a known and already patented substance, finasteride, in the treatment of androgenic alopecia.
The Court of Appeal reversed the trial judges revocation of the patent, holding (para 29) that there was no policy reason why a novel non obvious dosage regime, which was the product of expensive and unpredictable research, should not be rewarded with a patent of a Swiss form claim.
Jacob LJ, who delivered the judgment of the court, added this significant qualification (para 32): So holding is far from saying that in general just specifying a new dosage regime in a Swiss form claim can give rise to a valid patent.
On the contrary nearly always such dosage regimes will be obvious it is standard practice to investigate appropriate dosage regimes.
Only in an unusual case such as the present (where, see below, treatment for the condition with the substance had ceased to be worth investigating with any dosage regime) could specifying a dosage regime as part of the therapeutic use confer validity on an otherwise invalid claim.
The reason for this qualification is no mystery.
The target of the skilled persons research is in large measure pre determined.
As Jacob LJ stated (para 109), the skilled person would aim for a dose as low as possible consistent with effectiveness.
That would normally be the appropriate dosage regime.
I recognize and respect Birss Js finding of fact that there was no defined standard of minimal efficacy in relation to ED and that this would require the skilled team to make a value judgment (para 36 above).
But he also found that it was common general knowledge that regulators were often interested in and could require evidence of the minimum effective dose (para 83 of his judgment) and that the skilled team would be familiar with multiple dose ranging studies as necessary as a generality (para 327 of his judgment).
In my view, the inventiveness of the dosage regime falls to be assessed in that context.
iii) The role of the appellate court
Finally, before addressing directly the question whether the Court of Appeal was entitled to reverse Birss Js finding of non obviousness, I remind myself of the limits of an appellate courts power to overturn the evaluation of a trial judge in this field.
Where inferences from findings of primary fact involve an evaluation of numerous factors, the appropriateness of an intervention by an appellate court will depend on variables including the nature of the evaluation, the standing and experience of the fact finding judge or tribunal, and the extent to which the judge or tribunal had to assess oral evidence: South Cone Inc v Bessant, In re Reef Trade Mark [2002] EWCA Civ 763; [2003] RPC 5, paras 25 28 per Robert Walker LJ.
An experienced patent judge faced with a challenge to a patent on the ground of obviousness, and who has heard oral evidence including cross examination, carries out an evaluation of all the relevant factors, none of which alone is decisive but each of which must be weighed in the balance in reaching a conclusion.
In Biogen Inc v Medeva plc [1997] RPC 1, 45, Lord Hoffmann emphasised the need for appellate caution in reversing the judges evaluation of the facts where the application of a legal standard involved no question of principle but was simply a matter of degree.
He held that it would be wrong to interfere with the judges assessment if no question of principle were involved.
What is a question of principle in this context? An error of principle is not confined to an error as to the law but extends to certain types of error in the application of a legal standard to the facts in an evaluation of those facts.
What is the nature of such an evaluative error? In this case we are not concerned with any challenge to the trial judges conclusions of primary fact but with the correctness of the judges evaluation of the facts which he has found, in which he weighs a number of different factors against each other.
This evaluative process is often a matter of degree upon which different judges can legitimately differ and an appellate court ought not to interfere unless it is satisfied that the judges conclusion is outside the bounds within which reasonable disagreement is possible: Assicurazioni Generali SpA v Arab Insurance Group (Practice Note) [2002] EWCA Civ 1642; [2003] 1 WLR 577, paras 14 17 per Clarke LJ, a statement which the House of Lords approved in Datec Electronic Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325, para 46 per Lord Mance.
Thus, in the absence of a legal error by the trial judge, which might be asking the wrong question, failing to take account of relevant matters, or taking into account irrelevant matters, the Court of Appeal would be justified in differing from a trial judges assessment of obviousness if the appellate court were to reach the view that the judges conclusion was outside the bounds within which reasonable disagreement is possible.
It must be satisfied that the trial judge was wrong: see, by way of analogy, In re B (A Child) (Care Proceedings Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 90 93 per Lord Neuberger, para 203 per Lady Hale. iv) Were claims 7 and 10 of the 181 patent obvious?
The patent bargain which Lord Mansfield described and the EPO has used as an overarching principle (paras 53 and 54 above) underpins and creates a symmetry between the various provisions of the 1977 Act which govern the validity of a patent (para 55 above).
Bearing in mind that symmetry, the starting point in the assessment of obviousness in this case is the Daugan patent.
Its validity is not contested.
Indeed, Lillys case assumes its validity.
But to be valid it must both disclose and enable.
It must disclose the invention, that is that tadalafil may be used as a PDE5 inhibitor for the treatment of ED, to the notional skilled person who uses common general knowledge in construing the patent.
It must also enable the notional skilled person to perform the invention using the disclosed matter, common general knowledge, and that persons uninventive skill in making trial and error experiments.
In Synthon BV v SmithKline Beecham plc [2005] UKHL 59; [2006] 1 All ER 685, the House of Lords addressed and distinguished the concepts of disclosure and enablement in the context of a challenge to the validity of a patent on the ground of lack of novelty because of anticipation by a prior patent application under section 2(3).
But their Lordships discussion of the need for both disclosure and enablement is equally relevant to the validity of a patent under sections 14(3) and 72(1)(c) as Lord Hoffmann stated at para 27 and Lord Walker at paras 63 and 64.
One begins therefore with the assumption that the Daugan patent has enabled the skilled person to perform the invention of the use of tadalafil for the treatment of ED.
The notional skilled persons task is to implement the ex hypothesi valid patent.
That involves finding the appropriate dosage regime having regard to safety, tolerability and effectiveness.
The procedures to achieve that end are familiar and routine.
In my view it is important to see the Court of Appeals discussion of familiar routine research in this case in this context (paras 102 104 below).
In assessing whether the Court of Appeal was entitled to reject the trial judges evaluation it is important to recognize that the Court of Appeal did not reverse any of Birss Js findings of primary fact.
Both courts accepted that it was obvious for the skilled team to pursue the pre clinical and clinical research in order to implement Daugan.
Motive was clearly present.
It was not in dispute that the target of that research was to identify the appropriate dosage regime for tadalafil in the treatment of ED.
It was accepted that the skilled team were looking for a dose response relationship and that they would know that, as a generality, multiple dose ranging studies were necessary.
There was no challenge to the finding that the discovery of a therapeutic plateau between 25mg and 100mg doses would have surprised the skilled team.
Birss J, without relying on hindsight, held that it was very likely that the skilled team would research further by testing doses of 10mg and 5mg.
That finding was amply justified as both Mr Muirhead and Lillys expert, Dr Saoud, agreed that the skilled team would not stop the dose ranging studies when they had revealed that therapeutic plateau.
Indeed, as Kitchin LJ recorded, Dr Saoud accepted that the decision to test the lower doses, including the 5mg dose, was a no brainer.
In short, the skilled team, having embarked on the Phase IIb tests, would have continued their search for a dose response relationship, because the purpose of the Phase IIb study had not been fulfilled.
The Court of Appeal was correct to attach significance to this central finding because it undermined several of the factors which Birss J placed in the balance as pointing to non obviousness in para 343 of his judgment.
The fact that a 5mg dose was so much lower than the 50mg dose, which was recommended for sildenafil, mentioned in the Daugan patent for tadalafil, and used in the notional skilled teams Phase IIa tests, is neither here nor there.
The lack of an expectation of efficacy at a 5mg dose is a factor of little weight if, as was found, the skilled team would be very likely to study such a dose in the search for a dose response relationship.
For the same reason the fact that the effectiveness of tadalafil at a dose of 5mg was a surprise can carry little, if any, weight.
Similarly, the finding that there was an important value judgment to be made when the therapeutic plateau was identified at the same time as a marketable dose can bear little weight when there is a finding, which is not tainted by hindsight, that the skilled team would continue their tests.
I consider that the Court of Appeal was entitled to treat the judges failure to appreciate the logical consequences of the finding that it was very likely that the skilled team would continue the testing as an error of principle which allowed an appellate court to carry out its own evaluation.
Lilly also argues that the daily dosing regime by which a person prescribed tadalafil can take the drug once per day rather than on demand in expectation of sexual activity was enabled by the technical effect of the drug, namely the maintenance of efficacy with minimal side effects, which was not obvious and which justified the patent.
I disagree for two reasons.
First, the judge correctly treated the daily dosing regime as obvious because it was the result of the inevitable discovery of the half life of tadalafil in Phase 1 of the tests.
Secondly, claims 7 and 10 are not confined to the daily dosing regime but also cover on demand use of the drug subject to a maximum total dose of 5mg per day.
That is fatal to this argument.
The inventive concept by which a patentee seeks to justify his or her monopoly must apply to all embodiments falling within the claims which are said to have independent validity.
In Brugger v Medic Aid Ltd (No 2) [1996] RPC 635, 656 Laddie J stated: It is not legitimate to define the inventive step as something narrower than the scope of the relevant claims.
In particular it is not legitimate to identify a narrow sub group of embodiments falling within the claim and which have certain technical advantages and then to define the inventive step in terms which apply to that sub group but not the rest of the claim.
I agree.
A similar rule applies in the EPOs problem and solution approach in the requirement that the identified problem must be covered by all embodiments of the claim: see for example (Cognis IP Management GmBH / Satuarated dicarboxylic acids) (Case T 1014/07) EP:BA:2012:T101407.20120702, para 5.
The daily dosing regime is not a factor which pointed against obviousness.
Standing back from the step by step analysis, it is clear that the skilled team was engaged in the familiar and routine testing of a drug to establish the appropriate dosage regime for tadalafil in order to implement the teaching of the Daugan patent.
That target was never in doubt.
It was obvious to embark on that exercise and carry out tests in a routine way until that appropriate dose was ascertained.
Those tests included the completion of the dose ranging studies which were the purpose of Phase IIb.
The fact that tadalafil at the dose of 5mg, while remaining effective as a treatment of ED, also, and unexpectedly, had the additional benefit of reduced side effects was an added benefit which does not prevent the identification of 5mg as the appropriate dose from being obvious.
The completion of the Phase IIb dose ranging studies led to the asserted invention.
Mr Waugh also submits (a) that the Court of Appeal lost sight of the requirement that obviousness must be assessed by reference to the subject matter of the relevant claims a dose of tadalafil of between 1mg and 5mgs for oral administration up to a maximum total dose of 5mg per day for the treatment of sexual dysfunction and not a loose paraphrase of what the claim or the process by which the dose is discovered, and (b) that the Court of Appeals approach conflicts with the problem and solution approach which the EPO adopts.
In support of the first submission, he refers to the statement of Kitchin LJ in MedImmune Ltd v Novartis (above), para 93, that the court must answer a relatively simple question of fact: was it obvious to the skilled but unimaginative addressee to make a product or carry out a process falling within the claim (emphasis added).
He also refers to Lord Hoffmanns statement in Conor v Angiotech (above) para 19, that the patentee is entitled to have the question of obviousness determined by reference to his claim and not a vague paraphrase based upon the extent of his disclosure.
I am not persuaded that, in the context of a dosage patent, it is necessary for the skilled team to identify in advance of the Phase IIb tests the specific dose which is the subject of the claim.
Were it otherwise, many, if not most, dosage regimes would be patentable, whether the results of the tests were surprising or not, simply because the precise doses which ultimately are specified in the claim may not be sufficiently foreseeable.
In my view, the MedImmune requirement is met if the step by step approach, without the benefit of hindsight, demonstrates that the skilled team would be very likely to pursue the tests to the point at which they would ascertain the product or process falling within the claims.
Conor v Angiotech does not assist Lilly in this context.
In that case the relevant claim of the patent taught the use of a stent coated with taxol in the prevention or treatment of recurrent stenosis, or restenosis, which is the constriction of an arterial channel after the insertion of a stent.
Conor, which challenged the patent on the ground of obviousness and not on the ground of insufficiency, sought to argue by reference to the patents specification that the patent taught no more than that taxol was worth trying.
The House of Lords rejected this challenge, directed attention to the terms of the claim, as section 125 of the 1997 Act requires, rather than the specification, and held that the specification supported that claim.
The case is not authority for the proposition that, in all circumstances, obviousness must be assessed by reference to the precise wording of the claim.
In relation to the second submission, that the Court of Appeals approach was in conflict with the EPOs problem and solution approach, it is important to recall Jacob LJs words in Actavis v Novartis (above) (para 26) that no one has ever suggested that the problem and solution approach is the only way to go about considering obviousness.
Like the Windsurfing/Pozzoli approach, it provides a structured approach which may assist in avoiding the dangers of hindsight and may be more helpful in some cases than in others.
No formula should distract the court from the statutory question: Generics (UK) Ltd v Daiichi Pharmaceutical Co Ltd [2009] EWCA Civ 646; [2009] RPC 23, para 17 per Jacob LJ.
Further, there is considerable room for judgment and disagreement on the formulation of the objective technical problem to be solved.
The EPOs Guidelines for Examination state (Part G Chapter VII, para 5.2): In the context of the problem and solution approach, the technical problem means the aim and task of modifying or adapting the closest prior art to provide the technical effects that the invention provides over the closest prior article The technical problem thus defined is often referred to as the objective technical problem.
The Guidelines recognize the difficulty which a court or tribunal faces in formulating the objective technical problem and state: The objective technical problem derived in this way may not be what the applicant presented as the problem in his application.
The latter may require reformulation, since the objective technical problem is based on objectively established facts, in particular appearing in the prior art revealed in the course of the proceedings, which may be different from the prior art of which the applicant was actually aware at the time the application was filed.
In particular, the prior art cited in the search report may put the invention in an entirely different perspective from that apparent from reading the application only.
It is noted that the objective technical problem must be so formulated as not to contain pointers to the technical solution, since including part of a technical solution offered by an invention in the statement of the problem must, when the state of the art is assessed in terms of that problem, necessarily result in an ex post facto view being taken of inventive activity (see T 229/85, [OJ 1987, 237]).
The expression technical problem should be interpreted broadly; it does not necessarily imply that the technical solution is an improvement to the prior article Thus the problem could be simply to seek an alternative to a known device or process which provides the same or similar effects or is more cost effective.
The Guidelines continue in para 5.3 to discuss the could would approach, which the EPO adopts in the problem and solution approach, stating: the point is not whether the skilled person could have arrived at the invention by adapting or modifying the closest prior art, but whether he would have done so because the prior art incited him to do so in the hope of solving the objective technical problem or in expectation of some improvement or advantage (see T 2/83) When an invention requires various steps to arrive at the complete solution of the technical problem, it should nevertheless be regarded as obvious if the technical problem to be solved leads the skilled person to the solution in a step by step manner and each individual step is obvious in the light of what has already been accomplished and of the residual task still to be solved (see T 623/97 and T 558/00).
I am not persuaded that the problem and solution approach would necessarily give a different answer from that of the Court of Appeal.
The closest prior art is the Daugan patent and the well established procedures of pre clinical and clinical testing.
The problem posed by Daugan was the identification of an appropriate dosage regime.
The EPO approach to assessing the obviousness of the claimed invention would then be to apply the could would approach, which means asking not whether the skilled person could have carried out the invention, but whether he would have done so in the hope of solving the underlying technical problem or in the expectation of some improvement or advantage: T 2/83 OJ 1984 265 (Rider/Simethicone tablet), para 7; T 1014/07 (above) paras 7 and 8.
The tangible evidence which reveals why the skilled team would have been prompted to come upon the asserted invention is that (a) the team would not have completed the dose ranging studies which Phase IIb requires if it had stopped after the initial dose ranging studies which revealed the therapeutic plateau and (b) Dr Saouds evidence that it was a no brainer to go on with the tests.
The judges finding that the skilled team would not have had an expectation of effectiveness at a 5mg dose does not militate against the conclusion that the team would have investigated that dose in the course of a sequence of tests which had as its purpose the solution of the underlying technical problem, which the implementation of the Daugan patent entailed.
Foreign judgments
The court heard submissions about the judgments of the courts of other countries which are signatories of the EPC on parallel revocation proceedings against the 181 patent.
The claimants founded principally on the judgments in the Netherlands and Germany, in which in each case the national court revoked the patent on the ground of obviousness.
We were also referred to judgments from other jurisdictions concerning the same patent, including Belgium and Portugal, which upheld the obviousness challenge, and Denmark, Poland and the Czech Republic, which reached a different view.
I do not find the judgments particularly helpful.
While consistency of approach between the domestic courts of the signatory states to the EPC on matters of principle is desirable, we are not bound by the judgments of other national courts and it is possible that national courts applying the same law may come to different conclusions for various reasons: Conor v Angiotech (above) para 3 per Lord Hoffmann; Dr Reddys Laboratories (UK) Ltd v Eli Lilly (above) paras 79 82 per Jacob LJ, para 92 per Lord Neuberger MR; Actavis UK Ltd v Eli Lilly & Co [2017] UKSC 48; [2017] RPC 21, para 52 per Lord Neuberger.
The Dutch District Court of the Hague in Teva Pharmaceuticals Europe BV v ICOS Corpn (14 March 2018) held the patent to be invalid as obvious over Daugan and in its judgment referred in some detail to the decisions of Birss J and the Court of Appeal in this case.
The court treated as important the objective of the Phase IIb test and Dr Saouds evidence in the English proceedings (para 4.22).
The court recorded (para 4.24) that it had not used the problem and solution approach but that if it had, the outcome would probably not have been different: if one adopted ICOSs formulation of the problem as providing an improved dosing regime the skilled team, having ascertained the half life of tadalafil, would have tested doses during the dose ranging studies that enabled safe and effective daily use.
The German Federal Patent Court in its judgment in Hexal AG v ICOS Corpn of 24 October 2017 analysed the problem in the problem and solution approach to be to provide dosages of tadalafil for effective treatment of sexual dysfunction and stated that the skilled team would conduct dose finding studies as part of the standard repertoire in [their] field of activity.
It considered and disagreed with the judgment of Birss J on the significance of the unexpected reduction in side effects, which in German case law would be treated as a bonus effect.
One can draw some support from judicial decisions in other national courts which reach the same conclusion as one has come to.
But it is necessary to recognize not only that the first instance decisions in the Netherlands and Germany are the subject of appeals but also that the evidence led before different courts in parallel proceedings may differ and, even when the same evidence is led, each courts findings of fact based on that evidence may not be the same.
For example, the German court attached weight to evidence (a) that sildenafil was effective at a 5mg dose and the skilled person would infer from that that tadalafil would be more effective at low dosages because of its IC50 value (a finding which supported the conclusion that the skilled team had a reasonable expectation of success in a test at that level) and (b) that it was customary to start dose ranging studies with very low initial doses and increase the doses if tolerated.
Neither of those findings was made in the English proceedings.
Similarly, the Dutch court in its analysis of the Phase IIb studies accepted a mathematical calculation which Tevas expert, Dr Cohen, advanced in those proceedings which was similar to the three factors point which the claimants put on cross examination to Dr Saoud in the English proceedings but which Dr Saoud accepted only as a paper exercise and Birss J rejected as the thinking of the skilled team (paras 297 303 of his judgment).
It is also necessary to observe, as Mr Waugh pointed out, that there was also a judgment in favour of Lilly on obviousness in Australia, which is not a signatory of the European Patent Convention.
Because of the differences in the evidence led, the manner by which it is tested, and the differing findings to which that evidence gives rise, one may derive support from the approach to the question and methods of reasoning of other national courts but should never rely uncritically on the outcome.
Interventions, selection patents and improvement patents
In this appeal the court had the benefit of interventions from the IP Federation, Medicines for Europe, the British Generic Manufacturers Association, and the UK BioIndustry Association.
The first intervener represents the views of a wide range of UK industry on policy and practice in relation to intellectual property rights.
The second and third interveners represent the interests of a range of manufacturers of generic drugs.
The fourth intervener is a national trade association for innovative enterprises in the bioscience sector of the UK economy.
Several interveners advocated that obviousness be approached by a fact specific assessment on a case by case basis, an approach which is consistent with my approach in this judgment, and resisted the recognition of any one factor as being of overriding importance, whether it be the cost and effort which pre clinical and clinical trials entail, or the standardised and sometimes routine nature of such tests.
The UK BioIndustry Association asked for guidance on the relevance in the assessment of obviousness of (a) the reasonable expectation of success as a factor and (b) the problem and solution approach of the EPO.
It expressed concern that the judgment of the Court of Appeal might support the view that empirical research in the field of bioscience would not be seen as inventive in so far as the methods of research were well established.
The IP Federation similarly expressed concern about a perceived risk that people might extrapolate from statements in the Court of Appeals judgments that the result of routine investigations cannot lead to a valid patent claim.
It expressed a particular concern about the breadth of the statement by Lewison LJ (in para 180): in a case which involves routine pre clinical and clinical trials, what would be undertaken as part of that routine is unlikely to be innovative.
Its concern was that a simplistic adoption of this phrase as a blanket test without regard to the facts of the specific case would be contrary to the fundamental principles of patent law.
I do not interpret the Court of Appeals judgments, including Lewison LJs statement which I have quoted, as supporting such an extrapolation.
Kitchin LJ gave the leading judgment, in which he adopted a fact specific assessment based on the facts of this case and involving the weighing up of several factors, and Floyd and Lewison LJJ agreed with his reasoning and conclusions.
I do not construe the judgments of the Court of Appeal as supporting any general proposition that the product of well established or routine enquiries cannot be inventive.
If that had been what the experienced judges had said, I would have respectfully disagreed.
But it is not.
As Jacob LJ stated in Actavis v Merck (above) para 29, there is no policy reason why a novel and inventive dosage regime should not be rewarded by a patent.
A fortiori, efficacious drugs discovered by research involving standard pre clinical and clinical tests should be rewarded with a patent if they meet the statutory tests (para 54 above).
Mr Waugh in his reply attacks Mr Specks proposition that nothing which was already within the skilled persons repertoire could be inventive.
He suggests that such a proposition would undermine the so called selection patents and improvement patents.
But because I do not accept Mr Specks submission on the skilled persons repertoire in this broad formulation, this judgment does not militate against selection patents or improvement patents.
Selection patents are patentable as involving an inventive step if the selection is not arbitrary and is justified by a hitherto unknown technical effect (Agrevo/Triazoles (above) para 2.5.3) or, in other words, when they make a real, novel and non obvious technical advance (Dr Reddys Laboratories (above) para 50 per Jacob LJ; para 104 per Lord Neuberger MR).
Improvement in the context of the law of patents is in the most technical sense an invention which comes within the claims of an earlier patent but contains a further inventive step: Buchanan v Alba Diagnostics Ltd [2004] UKHL 5; 2004 SC (HL) 9; [2004] RPC 34, para 32 per Lord Hoffmann.
The use of well known research tests of itself does not render such selections and improvements obvious.
Summary
The balance or symmetry in patent law and the pre established or at least readily foreseeable target of the skilled teams tests hold the key to the resolution of this dispute.
The Daugan patent is ex hypothesi valid and it is not in dispute that it discloses an invention that is the use of tadalafil in the treatment of ED in a manner which enables the skilled person to perform it as section 14(3) of the 1977 Act requires.
The task which the notional skilled team would undertake was that of implementing Daugan.
The target of the skilled team would be to ascertain the appropriate dose, which would usually be the lowest effective dose.
The skilled team would know of that target from the outset of its research.
The pre clinical and clinical tests involved familiar and routine procedures and normally progressed to the discovery of the dose response relationship in Phase IIb.
In this case the trial judges findings of what would have been the sequence of the tests, which did not depend upon hindsight, included the finding, which the evidence clearly justified, that the team, having found a therapeutic plateau, would be very likely to test lower doses and so come upon the dosage regime which is the subject matter of the patent.
For the reasons which I have given above, I am satisfied that the Court of Appeal was entitled to interfere with the trial judges assessment of obviousness and to hold that the 181 patent was invalid for lacking an inventive step.
The claimants other challenges
Having reached that conclusion, it is not necessary to address the claimants alternative arguments for revocation on the grounds of non disclosure by the priority document, anticipation, and added matter.
Conclusion
I would dismiss the appeal.
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Tadalafil is the generic name for a drug which is sold under the brand name CIALIS for the treatment of, among other things, erectile dysfunction (ED).
Tadalafil is a competitor (second in class) to sildenafil, which was and is sold under the brand name, VIAGRA.
The patent which is the subject of this appeal is EP(UK) 1,173,181 (the 181 patent).
It is owned by ICOS and exclusively licensed to Eli Lilly (collectively Lilly).
It was filed on 26 April 2000 and granted on 15 October 2003.
The 181 patent relates to the use of tadalafil in a dosage form for the treatment of ED.
This case is concerned with section 3 of the Patents Act 1977 (1977 Act): Section 2(2) of the 1977 Act provides: An invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art by virtue only of section 2(2) above (and disregarding section 2(3) above).
The state of the art in the case of an invention shall be taken to comprise all matter (whether a product, a process, information about either, or anything else) which has at any time before the priority date of that invention been made available to the public (whether in the United Kingdom or elsewhere) by written or oral description, by use or in any other way.
These statutory provisions mandate the court to assess whether an invention is obvious by having regard to the state of the art at the priority date of the invention.
If the invention is not obvious to the skilled person at that date, section 3 deems the invention to involve an inventive step.
Lilly asserts that the essence of the invention is the discovery that tadalafil is effective in treating ED at a low dose and with minimal side effects.
This discovery has allowed the drug to be taken daily (for chronic use) rather than on demand, avoiding the need to anticipate when sexual activity might occur.
This is, Lilly claims, a significant technical advantage as sildenafil is approved for on demand use only.
The respondents raised proceedings to revoke the 181 patent.
Lilly defended the claim and counterclaimed that the respondents were threatening to infringe its patent.
The High Court held that a 5mg daily dose of tadalafil was not obvious as a treatment for ED and therefore concluded that the 181 patent involves an inventive step.
The Court of Appeal allowed the appeal on the ground that the 181 patent lacked inventive step.
Lilly appealed to the Supreme Court.
The Supreme Court unanimously dismisses the appeal.
Lord Hodge gives the sole judgment with which the other Justices agree.
Since the enactment of the 1623 Statute of Monopolies, the purpose of a grant of a patent has been to encourage innovation.
The patent bargain is this: the inventor obtains a monopoly in return for disclosing the invention and dedicating it to the public for use after the monopoly has expired [53].
This overarching principle has survived the amendment of UK patent law after accession to the European Patent Convention [54].
In addressing the statutory question of obviousness in section 3 of the 1977 Act it is common for English courts to adopt the so called Windsurfing/Pozzoli structure [60].
An alternative approach which the EPO often adopts is the so called problem and solution approach [61].
While both approaches focus on the inventive concept put forward in the claims, neither approach should be applied in a mechanistic way [62].
The question of obviousness must be considered on the facts of each case [63].
Factors which are relevant considerations in the present case include the following [64].
First, it is relevant to consider whether at the priority date something was obvious to try, in other words whether it was obvious to undertake a specific piece of research which had a reasonable or fair prospect of success [65].
Secondly, it follows that the routine nature of the research and any established practice of following such research through to a particular point may be a relevant consideration [66].
Thirdly, the burden and cost of the research programme is relevant [67].
Fourthly, the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme are relevant considerations [68].
Fifthly, the existence of alternative or multiple paths of research will often be an indicator that the invention contained in the claim or claims was not obvious [69].
Sixthly, the motive of the skilled person is a relevant consideration.
The notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind [70].
Seventhly, the fact that the results of research which the inventor actually carried out are unexpected or surprising is a relevant consideration as it may point to an inventive step [71].
Eighthly, the courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness [72].
Ninthly, it is necessary to consider whether a feature of a claimed invention is an added benefit in a context in which the claimed innovation is obvious for another purpose [73].
A tenth consideration is the nature of the invention.
In this case, the Court is concerned with a dosage patent with a Swiss form claim and an EPC 2000 claim.
The possibility that a dosage patent with such claims may be valid has been recognized both by the EPO and in the United Kingdom courts [74].
In the present dispute, the Court considers that the balance or symmetry in patent law and the pre established or at least readily foreseeable target of the skilled teams tests hold the key to its resolution.
The prior art discloses an invention that is the use of tadalafil in the treatment of ED in a manner which enables the skilled person to perform it.
The task which the notional skilled team would undertake was that of implementing patent EP 0 839 040 (the Daugan patent), which was the nearest prior article The Daugan patent had disclosed that doses of tadalafil for the treatment of ED will generally be in the range of 0.5mg to 800mg daily for the average adult patient.
The target of the skilled team would be to ascertain the appropriate dose, which would usually be the lowest effective dose.
The skilled team would know of that target from the outset of its research.
The pre clinical and clinical tests involved familiar and routine procedures and normally progressed to the discovery of the dose response relationship in Phase IIb [105].
In this case the trial judges findings of what would have been the sequence of the tests, which did not depend upon hindsight, included the finding, which the evidence clearly justified, that the team, having found a therapeutic plateau, would be very likely to test lower doses and so come upon the dosage regime which is the subject matter of the patent [105].
The Court considers that the Court of Appeal was entitled to treat the judges failure to appreciate the logical consequences of the finding that it was very likely that the skilled team would continue the testing as an error of principle which allowed an appellate court to carry out its own evaluation [82].
As such, the Court is satisfied that the Court of Appeal was entitled to interfere with the trial judges assessment of obviousness and to hold that the 181 patent was invalid for lacking an inventive step [105].
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This appeal concerns the permissibility and in particular compatibility with European Union law and Human Rights Convention rights, of a procedure (conveniently described as a closed material procedure) whereby an applicant and his representatives may be excluded from certain aspects of employment tribunal proceedings on grounds of national security, and a special advocate may represent his interests so far as possible in relation to the aspects closed to him and his representatives.
In the relevant employment tribunal proceedings, the appellant, Mr Kashif Tariq, complains that his security clearance as an immigration officer was withdrawn in circumstances involving direct or indirect discrimination on grounds of race and/or religion, and that this was contrary to the Race Relations Act 1976 and the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660).
The Home Offices case is that there was no such discrimination, that the decisions taken in relation to Mr Tariq were taken for the purposes of safeguarding national security, and that the order for a closed material procedure made by the Employment Tribunal (on the Home Offices application) on 15 February 2008 was made justifiably and for the same protective purposes.
Mr Tariqs challenge to the Employment Tribunals order for a closed material procedure was dismissed by the Employment Appeal Tribunal on 16 October 2009, UKEAT 168/09, [2010] ICR 223 and the Court of Appeal on 4 May 2010 [2010] EWCA Civ 462, [2010] ICR 1034, but it was declared (by the Employment Appeal Tribunals order dated 24 November 2009, upheld in the Court of Appeal) that article 6 of the European Convention on Human Rights requires [Mr Tariq] to be provided with the allegations being made against him in sufficient detail to enable him to give instructions to his legal team so that those allegations can be challenged effectively (a requirement which can conveniently be described as gisting), even if this put the Home Office in the invidious position of having to make difficult decisions about disclosure and whether or how a claim is to be defended: [2010] ICR 1034, para 50, per Maurice Kay LJ.
The Home Office appeals to the Supreme Court against the latter conclusion, while Mr Tariq cross appeals against the conclusion that a closed material procedure was permissible.
The factual background in more detail
Mr Tariq started employment with the Home Office as an immigration officer on 21 April 2003, having received the necessary security clearance on 18 February 2003.
On 19 August 2006 he was suspended from duty on basic pay, while consideration was given to the withdrawal of his security clearance, and on 20 December 2006 his clearance was withdrawn.
His internal appeal against this decision was dismissed on 9 August 2007, and his further appeal to the Security Vetting Appeals Panel (SVAP) was unsuccessful in January 2011.
The background to the Home Offices decisions to suspend and withdraw Mr Tariqs security clearance consists in the arrest of his brother and cousin on 10 August 2006 during a major counter terrorism investigation into a suspected plot to mount a terrorist attack on transatlantic flights.
Mr Tariq's brother was subsequently released without charge.
Mr Tariq's cousin, Tanvir Hussain, was convicted on 8 September 2008 of conspiracy to murder, having previously also pleaded guilty to two counts of conspiracy to cause explosions and to commit a public nuisance.
He is now serving a sentence of life imprisonment.
Inquiries were made at the time of the arrests to establish whether or not Mr Tariq was involved in any way with the plot or could be affected by it.
No information suggested that Mr Tariq had himself been involved in any terrorism plot, but the Home Office (in grounds of resistance served in the Employment Tribunal proceedings on 6 August 2007 and amplified on 20 December 2007) states that it was concerned in August 2006 that [Mr Tariq] could be vulnerable to an approach to determine if terrorist suspects had been flagged to the authorities or to smuggle prohibited items airside and that its decision to withdraw security clearance in December 2006 was based on [his] close association with individuals suspected of involvement in plans to mount terrorist attacks and on its view that association with such individuals might make him vulnerable to attempts to exert undue influence on [him] to abuse his position.
Mr Tariq commenced the employment tribunal proceedings claiming direct or indirect discrimination on grounds of race and/or religion on 15 March 2007.
He stated at the outset that he had been advised that his suspension and the withdrawal of his security clearance were because of his perceived association with certain relatives or associates of relatives suspected of association with terrorist activities and the risk of their attempting to exert influence on him to abuse his position.
He denied any such association or risk.
On 10 July 2007 he provided what he said were (considering, he said, the extremely limited information as to the grounds for his treatment to that date given) the best further particulars possible to give pending disclosure by the Home Office.
These particulars alleged, inter alia, that the Home Office had relied upon stereotypical assumptions about him and/or Muslims and/or individuals of Pakistani origin such as susceptibility to undue influence, coercion or brainwashing and had indirectly discriminatory security policies, procedures and methods of investigation.
The Home Office in its grounds of resistance denied this and maintains, as stated, that it acted throughout to protect national security.
The legislation
The Race Relations Act 1976 provides: 1 Racial discrimination (1) A person discriminates against another in any circumstances relevant for the purposes of any provision of this Act if (a) on racial grounds he treats that other less favourably than he treats or would treat other persons; . (lA) A person also discriminates against another if, in any circumstances relevant for the purposes of any provision referred to in subsection (lB), he applies to that other a provision, criterion or practice which he applies or would apply equally to persons not of the same race or ethnic or national origins as that other, but (a) which puts or would put persons of the same race or ethnic or national origins as that other at a particular disadvantage when compared with other persons, (b) which puts or would put that other at that disadvantage, and (c) which he cannot show to be a proportionate means of achieving a legitimate aim. 42 Acts safeguarding national security Nothing in Parts II to IV shall render unlawful an act done for the purpose of safeguarding national security if the doing of the act was justified by that purpose.
The Race Relations Act 1976 is the means by which the United Kingdom gives effect to its obligations under Council Directive 2000/43/EC of 29 June 2000 (the Race Directive) implementing the principle of equal treatment between persons irrespective of racial or ethnic origin.
On 27 November 2000 Council Directive 2000/78/EC (the Employment Equality Directive) established a general framework for equal treatment in employment and occupation.
This led to the making, under section 2 of the European Communities Act 1972, of the Employment Equality (Religion or Belief) Regulations 2003 (the Employment Equality Regulations), prohibiting discrimination on grounds of religion or belief and providing: 3.(1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if (a) on grounds of religion or belief, A treats B less favourably than he treats or would treat other persons; or (b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same religion or belief as B, but (i) which puts or would put persons of the same religion or belief as B at a particular disadvantage when compared with other persons, (ii) which puts B at that disadvantage, and (iii) which A cannot show to be a proportionate means of achieving a legitimate aim.
Exception for national security 24.
Nothing in Part II or III shall render unlawful an act done for the purpose of safeguarding national security, if the doing of the act was justified by that purpose.
The issues regarding closed material procedure in more detail
Employment Tribunals are established under the Employment Tribunals Act 1996.
Section 7 entitles the Secretary of State to make by regulations (employment tribunal procedure regulations) . such provision as appears to him to be necessary or expedient with respect to proceedings before employment tribunals.
Section 10, which I set out in the annex to this judgment, specifically authorises the making in the interests of national security of regulations providing for a closed material procedure, either by direction of a minister or by order of the employment tribunal or judge, and for the appointment by the Attorney General in that context of a special advocate.
The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861) contain in Schedules 1 and 2 provisions made under sections 7 and 10 of the Act.
Schedule 1, headed the Employment Tribunals Rules of Procedure (the ET Procedure Rules), contains rule 54, set out in the annex, providing specifically for a closed material procedure where a minister so directs (rule 54(1)) or where the tribunal or employment judge concludes that such a procedure is appropriate and so orders (rule 54(2)).
Schedule 2, headed the Employment Tribunals (National Security) Rules of Procedure (the ET National Security Rules), contains rules 8 and 10, also set out in the annex, providing for special advocates and reasons in national security proceedings.
Regulation 16 provides that the rules in Schedule 1 apply to employment tribunal proceedings generally, but that such rules shall be modified in accordance with Schedule 2 wherever any power conferred on the minister, the tribunal or an employment judge by rule 54 of Schedule 1 is exercised.
Regulation 2 of the 2004 Regulations contains definitions, again set out in the annex.
Mr Tariqs cross appeal (a) general
The power to give directions conferred on the minister by rule 54(1) has not been exercised in this case.
The Supreme Court was told that it has never been exercised in any case.
The probable reasons are not difficult to discern, bearing in mind the scope for challenge both by judicial review and, more fundamentally, under the Human Rights Act 1998 or, Mr Robin Allen QC also submits for Mr Tariq, European Union law.
While the conferral of the power is expressly authorised by the 1996 Act, it is hard to see how it could be compatible with article 6 of the European Convention on Human Rights for a minister to have power to make such a direction to a judicial tribunal.
Instead of giving any direction, the minister made an application to the tribunal, asking it to order a closed material procedure with a special advocate under the discretionary power conferred by rule 54(2).
On 15 February 2008, the tribunal held that it was expedient in the interest of national security to make orders under rule 54 that the whole of the proceedings be in private, and directed that Mr Tariq and his representative should be excluded from part of the proceedings when closed evidence and/or documents were being considered, that the Tribunal would consider both open and closed documents and that the Home Office would make available the appropriate closed material to any special advocate appointed.
It further stated that the terms so ordered would be reviewed at a later case management discussion.
At a case management discussion held on 30 May 2008, in the presence of representatives of the parties and of Ms J Farbey of counsel nominated by the Attorney General to act as special advocate, the judge ordered that her role as special advocate should take effect and that she should proceed in discussions with Mr Tariq.
Meanwhile, reasons for the tribunals decision on 15 February 2008 were outstanding.
The minister, to whom the tribunal was required by rule 10 of the ET National Security Rules to submit such reasons in the first instance, directed that one paragraph be abridged and another omitted.
As a result, an edited version, identifying the positions of the amendment and abridgement, was initially issued to Mr Tariq and his representatives on 15 October 2008.
However, on 9 December 2008 the full reasons were released.
One may speculate that this resulted from submissions made by the special advocate.
The paragraphs amended and omitted do not, on their face, seem likely to impact on national security.
This course of events offers therefore a cautionary message, but, quite possibly also, an indication of at least one purpose which a special advocate may serve.
In the upshot, there is not now any ministerial order in effect under rule 10.
Whatever objections may be made to a rule giving the executive power to direct the judiciary with regard to reasons do not therefore arise for consideration on this appeal.
This appeal concerns an exercise by the Tribunal of its power under rule 54(2) of the ET Procedure Rules, read with rule 8 of the ET National Security Rules.
(b) The European Union Directives
On behalf of Mr Tariq, Mr Allen submits that rule 54(2) and rule 8 are contrary to European Union law and/or the European Human Rights Convention.
These rules were made pursuant to the express statutory authority to make such rules conferred by section 10 of the Employment Tribunals Act 1996.
Mr Allens first submission is that they are, none the less, in conflict with European legal principles governing discrimination, contained in the European Treaties and in the Race and Employment Equality Directives, to which the 1996 Act, the Race Relations Act 1976 and the Employment Equality Regulations must all be read, at least as far as possible, as being subject.
Mr Allen notes in this connection a contrast between the two Directives.
The Employment Equality Directive makes express reference to national security, providing in article 2(5): 5.
This Directive shall be without prejudice to measures laid down by national law which, in a democratic society, are necessary for public security, for the maintenance of public order and the prevention of criminal offences, for the protection of health and for the protection of the rights and freedoms of others.
There is no equivalent provision in the Race Directive.
Mr Allen suggests that this may be because the Race Directive does not preclude discrimination on grounds of nationality: article 3(2).
Mr Allen further notes that neither Directive makes express provision for closed hearings, and that the Court of Justice has on more than one occasion made clear that the European Treaties contain no general power for states to derogate from European law and the rights it confers on grounds of public safety or national defence, outside specific situations identified in Treaty articles, none of which applies here: Case 222/84 Johnston v Chief Constable of the Royal Ulster Constabulary [1987] QB 129; Case C 337/05 Commission of the European Communities v Italian Republic [2008] ECR I 2173.
None of these points is, in my view, relevant in the present context.
I agree with the reasoning and conclusions of Maurice Kay LJ in paras 12 to 22 of his judgment in the Court of Appeal: [2010] ICR 1034.
The authorities cited by Mr Allen deal with derogation from principles of substantive law, here the rights not to be discriminated against conferred by the Directives.
The legitimacy of closed hearings and of the use of a special advocate are matters of procedural law.
Procedure is primarily a matter for national law.
It is, however, a basic principle of European Union law that national law should provide effective legal protection, by establishing a system of legal remedies and procedures which ensure respect for the relevant right: Case C 312/93 Peterbroeck v Belgian State [1995] ECR I 4599; Case C 432/05 Unibet (London) Ltd v Justitie Kanslern [2007] ECR I 2271.
In that respect, European Union law directs attention primarily to principles established under articles 5 and 6 of the European Convention on Human Rights as a guide to what constitutes effective legal protection.
Mr Allen points out that the Directives both contain provisions (article 7(1) of the Race Directive and article 9 of the Employment Equality Directive), whereby: Member states shall ensure that judicial and/or administrative procedures, including where they deem it appropriate conciliation procedures, for the enforcement of obligations under this Directive are available to all persons who consider themselves wronged by failure to apply the principle of equal treatment to them, even after the relationship in which the discrimination is alleged to have occurred has ended.
Further, by articles 8 and 10 respectively of these Directives: Member states shall take such measures as are necessary, in accordance with their national judicial systems, to ensure that, when persons who consider themselves wronged because the principle of equal treatment has not been applied to them establish, before a court or other competent authority, facts from which it may be presumed that there has been direct or indirect discrimination, it shall be for the respondent to prove that there has been no breach of the principle of equal treatment.
Again, and as this wording contemplates, it is for each national judicial system to ensure an effective system of legal procedures enabling a claimant to establish facts from which it may be presumed that there has been direct or indirect discrimination.
In the present case, Mr Allen has not suggested that Mr Tariq has not been able to do this.
Mr Allen also submits that Mr Tariq could lose his claim by reason of section 42 of the Race Relations Act 1976 and/or regulation 24 of the Employment Equality Regulations on a basis which, by reason of the closed material procedure, would not be disclosed.
Section 42 and regulation 24 are dealing with substantive law.
If they were read and applied as excusing what would otherwise be unlawful discrimination, they might therefore be open to challenge under the principle of European Union law identified in para 14 above.
But the present case is far from involving any such issue.
First, the issue could only arise from a substantive decision, and the Tribunal is a long way from reaching such a decision.
Second, it is far from clear that section 42 and regulation 24 are to be read as entitling a tribunal or court to excuse what would otherwise be unjustified discrimination on grounds of national security.
The question would arise: if it would involve unjustified discrimination, how could the doing of the act be justified for the purpose of safeguarding national security? Third, the Home Offices dominant aim in the present proceedings is to show that there was no discrimination at all on any prohibited ground, but a rational and proportionate decision taken in the public interest.
If the Employment Tribunal were at some future stage to find that there was discrimination on a prohibited ground, but that the effect of section 42 and/or regulation 24 was that such discrimination could none the less be regarded as justified as being for the purpose of safeguarding national security, the Tribunal would be obliged to identify this basis of decision, however generally, in open reasons, to enable its legitimacy under European Union law to be challenged.
There is no reason to assume that the Tribunal, assisted as it would also be by a special advocate, would fail to do this.
(c) Effective legal protection
The question is therefore whether the closed material procedure authorised by United Kingdom law provides effective legal protection, by establishing a system of legal remedies and procedures to ensure respect for the relevant rights conferred by the Race Relations Act and the Employment Equality Regulations in implementation of the United Kingdoms obligations under the two Directives.
Mr Allen relies upon the decisions of the Court of Justice in Joined Cases C 402/05 P and C 415/05 P Kadi v Council of the European Union and the General Court in Case T 85/09 Kadi v Commission of the European Union (Council of the European Union intervening).
These two cases concerned the validity of the European Unions own measures, and the two European Courts were charged not merely with ascertaining and interpreting the relevant European legal principles applicable under the Treaties, but also with applying these to the particular measures and circumstances before them.
In the former case [2009] AC 1225, the Court of Justice addressed Council Regulation 881/2002 which aimed to mirror within Europe a similar asset freezing regime to that mandated by Security Council Resolutions for all member states of the United Nations.
The Regulation, in its Annex I, simply listed as persons whose assets were to be frozen persons whose names appeared on a list drawn up by the Security Councils Sanctions Committee, and no opportunity was given before or after its passing to such persons to mount any legal challenge to such listing at either the Security Council or the European level.
The Court of Justice accepted that: 342 . with regard to a Community measure intended to give effect to a resolution adopted by the Security Council in connection with the fight against terrorism, overriding considerations to do with safety or the conduct of the international relations of the Community and of its Member States may militate against the communication of certain matters to the persons concerned and, therefore, against their being heard on those matters.
It went on: 343 However, that does not mean, with regard to the principle of effective judicial protection, that restrictive measures such as those imposed by the contested regulation escape all review by the Community judicature once it has been claimed that the act laying them down concerns national security and terrorism. 344 In such a case, it is none the less the task of the Community judicature to apply, in the course of the judicial review it carries out, techniques which accommodate, on the one hand, legitimate security concerns about the nature and sources of information taken into account in the adoption of the act concerned and, on the other, the need to accord the individual a sufficient measure of procedural justice (see, to that effect, the judgment of the European Court of Human Rights in Chahal v United Kingdom (1996) 23 EHRR 413, para 131).
The Regulation was annulled in respect of Mr Kadi and Al Barakaat (a Swedish foundation) because there had been no procedure for communicating any evidence or for any hearing of persons listed, so that such persons rights of defence and to an effective legal remedy were infringed.
But the Court postponed the annulment for up to three months from 3 September 2008.
The second Kadi case [2011] 1 CMLR 697 was a sequel.
After the first case, the Commission sought and obtained from the Sanctions Committee a summary of its reasons for listing Mr Kadi, communicated that to him and received his comments on it on 10 November 2008.
On 28 November 2008 the Commission by Commission Regulation (EC) No 1190/2008, made pursuant to a power in Regulation 881/2002 to amend Annex I to that Regulation, recited this course of events and purported on that basis to amend Annex I to reinsert Mr Kadi and Al Barakaat.
Mr Kadi again successfully challenged this.
The General Court held that his rights of defence had been observed only in the most formal and superficial sense, as the Commission in actual fact considered itself strictly bound by the Sanctions Committees findings and therefore at no time envisaged calling those findings into question in the light of the applicants observations (para 171).
The General Court went on to say that the Commission, notwithstanding recitals in its Regulation, failed to take due account of the applicants comments (para 172) and that the procedure followed by the Commission, in response to the applicant's request, did not grant him even the most minimal access to the evidence against him.
In actual fact, the applicant was refused such access despite his express request, whilst no balance was struck between his interests, on the one hand, and the need to protect the confidential nature of the information in question, on the other (see, in that regard, the judgment of the Court of Justice in Kadi, paras 342 to 344) (para 173).
The General Court noted that this conclusion was consistent with the reasoning on the European Court of Human Rights in A v United Kingdom [2009] 49 EHRR 625 (para 176).
Earlier in its judgment, at paras 146 147, the General Court said this about national security issues, with reference to its previous judgment in Case T 228/02 Organisation des Modjahedines du Peuple d'Iran v Council of the European Union [2006] ECR II 4665 (OMPI): 146 The General Court also noted in that regard, at para 156 of OMPI, that, although the European Court of Human Rights recognises that the use of confidential information may be necessary when national security is at stake, that does not mean, in that court's view, that national authorities are free from any review by the national courts simply because they state that the case concerns national security and terrorism (see the judgment of the European Court of Human Rights in Chahal v United Kingdom, para 131, and case law cited, and its judgment in calan v Turkey (2003) 37 EHRR 238, para 106 and case law cited). 147 The General Court added, at para 158 of OMPI, that it was not necessary for it to rule, in the action before it, on the separate question as to whether the applicant and/or its lawyers could be provided with the evidence and information alleged to be confidential, or whether they had to be provided only to the Court, in accordance with a procedure which remained to be defined so as to safeguard the public interests at issue whilst affording the party concerned a sufficient degree of judicial protection.
The question identified by the General Court in para 147 did not arise for decision in either of the two Kadi cases.
It is, however, clear from both Kadi cases that the Court of Justice will look for guidance in the jurisprudence of the European Court of Human Rights when deciding whether effective legal protection exists, and how any balance should be struck when a question arises whether civil procedures should be varied to reflect concerns relating to national security.
A national court, faced with an issue of effective legal protection or, putting the same point in different terms, access to effective procedural justice, can be confident that both European courts, Luxembourg and Strasbourg, will have the same values and will expect and accept similar procedures.
Article 6(2) of the Treaty on the European Union (The Union shall respect fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950 and as they result from the constitutional traditions common to the Member States, as general principles of Community law) and the Charter of Fundamental Rights already point strongly in this direction.
Assuming that the European Union will in due course formally subscribe to the European Convention on Human Rights, as contemplated by the Treaty amendments introduced under the Treaty of Lisbon, the expectation will receive still further reinforcement.
In the present case, the Home Office applied for and obtained the Tribunals order for a closed material procedure in order to be able to defend itself against Mr Tariqs claim that the removal of his security clearance involved unlawful discrimination on grounds of race or religion.
The case concerns a different subject matter from that of both Kadi cases, where freezing orders were in issue.
The effect of freezing orders (made under United Kingdom legislation directly implementing the Security Councils Resolutions) was examined by the Supreme Court in A v HM Treasury (JUSTICE intervening) [2010] UKSC 2; [2010] 2 AC 534.
Persons subject to such orders became effectively prisoners of the state and there was a devastating effect on them and their families: para 60.
A v United Kingdom, to which the General Court in Kadi referred, also involved a different subject matter to the present, concerning, as it did, the detention of foreign nationals suspected of terrorist involvement.
Rights said that: In A v United Kingdom 49 EHRR 695 the European Court of Human 216 The Court takes as its starting point that, as the national courts found and it has accepted, during the period of the applicants detention the activities and aims of the AlQaeda network had given rise to a public emergency threatening the life of the nation.
It must therefore be borne in mind that at the relevant time there was considered to be an urgent need to protect the population of the United Kingdom from terrorist attack and, although the United Kingdom did not derogate from article 5(4), a strong public interest in obtaining information about AlQaeda and its associates and in maintaining the secrecy of the sources of such information (see also, right under article 5(4) in this connection, Fox, Campbell and Hartley (1991) 13 EHRR 157, para 39). 217 Balanced against these important public interests, however, was the applicants' to procedural fairness.
Although the Court has found that, with the exception of the second and fourth applicants, the applicants detention did not fall within any of the categories listed in sub paragraphs (a) to (f) of article 5(1), it considers that the case law relating to judicial control over detention on remand is relevant, since in such cases also the reasonableness of the suspicion against the detained person is a sine qua non (see para 197 above).
Moreover, in the circumstances of the present case, and in view of the dramatic impact of the lengthy and what appeared at that time to be indefinite deprivation of liberty on the applicants' fundamental rights, article 5(4) must import substantially the same fair trial guarantees as article 6(1) in its criminal aspect (Garcia Alva v Germany (2003) 37 EHRR 335, para 39, and see also see Chahal, cited above, paras 130 131). 218 Against this background, it was essential that as much information about the allegations and evidence against each applicant was disclosed as was possible without compromising national security or the safety of others.
Where full disclosure was not possible, article 5(4) required that the difficulties this caused were counterbalanced in such a way that each applicant still had the possibility effectively to challenge the allegations against him. 219 The Court considers that SIAC, which was a fully independent court (see para 84 above) and which could examine all the relevant evidence, both closed and open, was best placed to ensure that no material was unnecessarily withheld from the detainee.
In this connection, the special advocate could provide an important, additional safeguard through questioning the states witnesses on the need for secrecy and through making submissions to the judge regarding the case for additional disclosure.
On the material before it, the Court has no basis to find that excessive and unjustified secrecy was employed in respect of any of the applicants' appeals or that there were not compelling reasons for the lack of disclosure in each case. 220 The Court further considers that the special advocate could perform an important role in counterbalancing the lack of full disclosure and the lack of a full, open, adversarial hearing by testing the evidence and putting arguments on behalf of the detainee during the closed hearings.
However, the special advocate could not perform this function in any useful way unless the detainee was provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate.
While this question must be decided on a case by case basis, the Court observes generally that, where the evidence was to a large extent disclosed and the open material played the predominant role in the determination, it could not be said that the applicant was denied an opportunity effectively to challenge the reasonableness of the Secretary of State's belief and suspicions about him.
In other cases, even where all or most of the underlying evidence remained undisclosed, if the allegations contained in the open material were sufficiently specific, it should have been possible for the applicant to provide his representatives and the special advocate with information with which to refute them, if such information existed, without his having to know the detail or sources of the evidence which formed the basis of the allegations.
An example would be the allegation made against several of the applicants that they had attended a terrorist training camp at a stated location between stated dates; given the precise nature of the allegation, it would have been possible for the applicant to provide the special advocate with exonerating evidence, for example of an alibi or of an alternative explanation for his presence there, sufficient to permit the advocate effectively to challenge the allegation.
Where, however, the open material consisted purely of general assertions and SIAC's decision to uphold the certification and maintain the detention was based solely or to a decisive degree on closed material, the procedural requirements of article 5(4) would not be satisfied.
In Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, the House of Lords applied the reasoning in para 220 of A v United Kingdom when concluding that a closed material procedure involving a special advocate could be legitimate in the context of the imposition of a control order on a suspected terrorist, so long as the case was not based solely or to a decisive extent on closed material.
Mr Allen submits that the fundamental nature of equality rights makes it just as critical that Mr Tariq should receive the fullest procedural rights in this case as it was for Mr Kadi or A or AF to have such rights.
However, the reasoning in para 217 of the European Court of Human Rights judgment in A v United Kingdom emphasises the context of that decision, the liberty of the individual.
Detention, control orders and freezing orders impinge directly on personal freedom and liberty in a way to which Mr Tariq cannot be said to be exposed.
In R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287; [2009] 1 WLR 2049, a claim for judicial review of the refusal of an application for British citizenship, the Court of Appeal distinguished A v United Kingdom on the ground that it was focusing on detention.
In my opinion, it was justified in making this distinction.
An applicant for British citizenship has, of course, an important interest in the appropriate outcome of his or her application.
Mr Tariq also has an important interest in not being discriminated against which is entitled to appropriate protection; and this is so although success in establishing discrimination would be measured in damages, rather than by way of restoration of his security clearance (now definitively withdrawn) or of his position as an immigration officer.
But the balancing exercise called for in para 217 of the European Courts judgment in A v United Kingdom depends on the nature and weight of the circumstances on each side, and cases where the state is seeking to impose on the individual actual or virtual imprisonment are in a different category to the present, where an individual is seeking to pursue a civil claim for discrimination against the state which is seeking to defend itself.
That the outcome of the balancing exercise may differ with the circumstances is confirmed by three decisions of the European Commission and Court of Human Rights: Leander v Sweden (1987) 9 EHRR 433, Esbester v United Kingdom (1993) 18 EHRR CD72 and Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010.
In Leander, the applicant had been refused permanent employment as museum technician with the Naval Museum, which was adjacent to the Karlskrona Naval Base in which the Museum had storage rooms and other objects to which he would need access.
The refusal was on account of secret information, contained in an annex compiled by the police, which was alleged to make him a security risk and to which he was refused access.
He claimed that there had been breaches of, inter alia, articles 8 and 13 of the Convention.
The Court did not accept this.
Article 8 provides that everyone has the right to respect for his private life, and that 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 other specified interests.
As to article 8, the Court held that, although there was adverse interference with Mr Leanders private life through the consequences for his access to certain sensitive posts (para 59) and although he was refused any possibility of challenging the correctness of the information concerning him (para 61), the system for collecting and using the secret information contained a number of internal safeguards (para 62) and it could not be concluded that the interference involved in the non communication of the information to Mr Leander was not necessary in a democratic society in the interests of national security, as it is the very absence of such communication which, at least partly, ensures the efficacy of the personnel control procedure (para 66).
Article 13 provides that everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority.
As to article 13, the Court in Leander held by a majority (4 to 3) that an effective remedy under article 13 must mean a remedy that is as effective as can be, having regard to the restricted scope for recourse inherent in any system of secret surveillance for the protection of national security (para 84), and that, even if the procedure of complaint to the Government (which Mr Leander had followed and which had led to the Cabinet rejecting his complaint) were not considered sufficient, the aggregate of that and the other remedies of complaint to the Swedish Parliamentary Ombudsman and Chancellor of Justice (which he could also have pursued, although their views would only have been advisory) satisfied the conditions of article 13 (para 84).
In Esbester 18 EHRR CD72 the Commission was again concerned with a refusal to employ, in this case as an administrative officer with the Central Office of Information (COI).
The COI having offered to employ Mr Esbester subject to the satisfactory completion of our inquiries ., gave as its reasons for refusal simply that having completed our inquiries . we are unable to offer you an appointment.
Mr Esbester claimed infringement of articles 8 and 13, maintaining that it was likely that the intelligence services had in the course of negative vetting procedures obtained and relied upon information about his private life, which he had had no opportunity to refute.
He also alleged that there was inadequate legal regulation regarding the gathering of such information, and that the Security Service Tribunal responsible for investigating complaints gave inadequate protection and was prevented from giving reasons for its decisions.
The Commission accepted, following Leander, that security vetting based on information about a persons private life constitutes interference within article 8, and it accepted, following Klass v Federal Republic of Germany (1978) 2 EHRR 214 and Malone v United Kingdom (1985) 7 EHRR 14 that the existence in the United Kingdom of a system for secret surveillance for vetting and the circumstances giving rise to the refusal to employ Mr Esbester gave rise to an inference that such interference had taken place.
But it rejected Mr Esbesters complaints as manifestly unfounded.
In finding the United Kingdoms system to be in accordance with the law, the Commission noted that the Court had held in Leander that the requirement of foreseeability in the special context of employment vetting in sectors affecting national security cannot be the same as in many other fields.
In finding that the system was necessary in a democratic society, the Commission said, again with reference to Leander, that regard must also be had in this context to the margin of appreciation of the respondent state which in the area of assessing the requirements of and means of pursuing interests of national security has been held by the Court to be wide.
In considering whether there existed adequate and effective guarantees against abuse, as required by the Courts decision in Klass, the Commission noted that the term national security was not amenable to exhaustive definition, and that, as regards the lack of reasons for the decisions of the Tribunal, the Court in Klass, when considering a similar problem, had found that the state could legitimately fear that the efficacy of surveillance systems might be jeopardised if information is divulged to the person concerned.
The Commission concluded its discussion of article 8 by saying that In the absence of any evidence or indication that the system is not functioning as required by domestic law, the Commission finds that the framework of safeguards achieves a compromise between the requirements of defending democratic society and the rights of the individual which is compatible with the provisions of the Convention.
Consequently it concludes that the interference in the present case was necessary in a democratic society in the interests of national security.
As to article 13, the Commission held that the complaint of lack of an effective remedy failed in the absence of any arguable claim for breach of article 8.
In Kennedy v United Kingdom decided by its Fourth Section on 18 May 2010, the Court was concerned with a claim that there had been breaches of articles 6 (the right to a fair trial in the determination of civil rights and obligations), 8 and 13 in circumstances where the claimants requests to MI5 and GCHQ under the Data Protection Act 1998 to discover whether information about him was being processed had been refused on the grounds of national security.
Complaints about such refusals to the Investigatory Powers Tribunal (IPT) chaired by Lord Justice Mummery were examined in private.
They concluded with the IPT simply notifying Mr Kennedy that no determination had been made in his favour in respect of his complaints.
This meant either that there had been no interception or that any interception which took place was lawful (para 20).
As to article 8, the Court held that the domestic law, practice and safeguards relating to surveillance satisfied the conditions of that article.
It referred to, inter alia, Leander v Sweden as establishing that the requirement that the consequences of the domestic law must be foreseeable, before any interference could be said to be in accordance with the law under article 8(2), cannot be the same in the context of interception of communications as in many other fields (paras 151 152).
As to article 6, the Court in Kennedy found it unnecessary to decide whether this article applies to proceedings concerning a decision to put someone under surveillance, because it concluded that, assuming it does, the IPTs rules of procedure complied with the requirements of article 6(1) (para 179).
The parties respective cases appear from the following paragraphs of the Courts judgment: 181.
The applicant submitted that even where national security was at stake, a domestic court could not infringe the fair hearing principle in a blanket and uncritical manner.
He argued that less restrictive measures were available to achieve the aim pursued, including arrangements to protect witnesses' identities, disclosure of documents with redactions approved by the IPT, provision of a summary of particularly sensitive material under the supervision of the IPT and appointment of special advocates to whom disclosure of sensitive material could be made.
He referred to a recent report on secret evidence published in June 2009 by the non governmental organisation, JUSTICE, which called for the strengthening of disclosure procedures and increased transparency in court proceedings. 182.
The Government emphasised that even where article 6(1) applied to a field falling within the traditional sphere of public law, this did not in itself determine how the various guarantees of article 6 should be applied to such disputes (citing Vilho Eskelinen v Finland (2007) 45 EHRR 993, para 64).
The obligation to read the Convention as a whole meant that the scope of the article 6 guarantees in such a case should be in harmony with the Court's approach to judicial control under article 8.
The Government argued that the overarching consideration was that an individual could not be notified of interception measures while interception was ongoing or where notification would jeopardise the capabilities or operations of intercepting agencies.
They therefore disputed that the less restrictive measures proposed by the applicant were appropriate.
They noted that protection of witnesses' identities would not assist in keeping secret whether interception had occurred.
Nor would disclosure of redacted documents or summaries of sensitive material.
Further, unless they were appointed in every case, the appointment of special advocates would also allow a complainant to draw inferences about whether his communications had been intercepted. 183.
The Government argued that the procedure before the IPT offered as fair a procedure as could be achieved in the context of secret surveillance powers.
In particular, a complainant did not have to overcome any evidential burden to apply to the IPT and any legal issues could be determined in a public judgment after an inter partes hearing.
Further, the IPT had full powers to obtain any material it considered necessary from relevant bodies and could call upon the assistance of the Commissioner.
It could appoint an advocate to assist it at closed hearings.
Finally, in the event that the complainant was successful, a reasoned decision would be provided.
The Court, in holding that there had been no violation of article 6 or 13 in Kennedy, substantially aligned itself with the United Kingdom Governments position particularly in so far as it endorsed in relation to the concept of a fair trial under article 6 the relevance of similar considerations to those taken into account, previously and in Kennedy itself, when applying articles 8 and 13.
It held: 184.
The Court reiterates that according to the principle of equality of arms, as one of the features of the wider concept of a fair trial, each party must be afforded a reasonable opportunity to present his case under conditions that do not place him at a substantial disadvantage vis a vis his opponent .
The Court has held none the less that, even in proceedings under article 6 for the determination of guilt on criminal charges, there may be restrictions on the right to a fully adversarial procedure where strictly necessary in the light of a strong countervailing public interest, such as national security, the need to keep secret certain police methods of investigation or the protection of the fundamental rights of another person.
There will not be a fair trial, however, unless any difficulties caused to the defendant by a limitation on his rights are sufficiently counterbalanced by the procedures followed by the judicial authorities (see, for example, Doorson v The Netherlands (1996) 22 EHRR 330, para 70; Jasper v United Kingdom (2000) 30 EHRR 441, paras 51 to 53; and A v United Kingdom (2009) 49 EHRR 625, para 205).
A similar approach applies in the context of civil proceedings. 185.
The Court notes that the IPT, in its preliminary ruling of 23 January 2003, considered the applicant's complaints regarding the compliance of the Rules with article 6(1).
It found that, with the exception of rule 9(6) which required all oral hearings to be held in private, the Rules challenged by the applicant were proportionate and necessary, with special regard to the need to preserve the Government's neither confirm nor deny policy 186.
At the outset, the Court emphasises that the proceedings related to secret surveillance measures and that there was therefore a need to keep secret sensitive and confidential information.
In the Court's view, this consideration justifies restrictions in the IPT proceedings.
The question is whether the restrictions, taken as a whole, were disproportionate or impaired the very essence of the applicant's right to a fair trial. 187.
In respect of the rules limiting disclosure, the Court recalls that the entitlement to disclosure of relevant evidence is not an absolute right.
The interests of national security or the need to keep secret methods of investigation of crime must be weighed against the general right to adversarial proceedings (see, mutatis mutandis, Edwards and Lewis v United Kingdom (2005) 40 EHRR 593, para 46).
The Court notes that the prohibition on disclosure set out in rule 6(2) admits of exceptions, set out in rules 6(3) and (4).
Accordingly, the prohibition is not an absolute one.
The Court further observes that documents submitted to the IPT in respect of a specific complaint, as well as details of any witnesses who have provided evidence, are likely to be highly sensitive, particularly when viewed in light of the Government's neither confirm nor deny policy.
The Court agrees with the Government that, in the circumstances, it was not possible to disclose redacted documents or to appoint special advocates as these measures would not have achieved the aim of preserving the secrecy of whether any interception had taken place.
It is also relevant that where the IPT finds in the applicant's favour, it can exercise its discretion to disclose such documents and information under rule 6(4) . 188.
As regards limitations on oral and public hearings, the Court recalls, first, that the obligation to hold a hearing is not absolute.
There may be proceedings in which an oral hearing is not required and where the courts may fairly and reasonably decide the case on the basis of the parties' submissions and other written materials.
The character of the circumstances that may justify dispensing with an oral hearing essentially comes down to the nature of the issues to be decided by the competent national court (see Jussila v Finland (2006) 45 EHRR 900, paras 41 to 42).
The Court notes that rule 9(2) provides that oral hearings are within the IPT's discretion and it is clear that there is nothing to prevent the IPT from holding an oral hearing where it considers that such a hearing would assist its examination of the case. 189.
Concerning the provision of reasons, the Court emphasises that the extent to which the duty to give reasons applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case (see Ruiz Torija v Spain (1994) 19 EHRR 553, para 29).
In the context of the IPT's proceedings, the Court considers that the "neither confirm nor deny" policy of the Government could be circumvented if an application to the IPT resulted in a complainant being advised whether interception had taken place.
In the circumstances, it is sufficient that an applicant be advised that no determination has been in his favour.
The Court further notes in this regard that, in the event that a complaint is successful, the complainant is entitled to have information regarding the findings of fact in his case . 190.
In light of the above considerations, the Court considers that the restrictions on the procedure before the IPT did not violate the applicant's right to a fair trial.
In reaching this conclusion, the Court emphasises the breadth of access to the IPT enjoyed by those complaining about interception within the United Kingdom and the absence of any evidential burden to be overcome in order to lodge an application with the IPT.
In order to ensure the efficacy of the secret surveillance regime, and bearing in mind the importance of such measures to the fight against terrorism and serious crime, the Court considers that the restrictions on the applicant's rights in the context of the proceedings before the IPT were both necessary and proportionate and did not impair the very essence of the applicant's article 6 rights.
As regards article 13, the Court held that the IPT offered to the applicant an effective remedy insofar as his complaint was directed towards the alleged interception of his communications and, in respect of the applicants general complaint under article 8, it reiterated its case law to the effect that article 13 does not require the law to provide an effective remedy where the alleged violation arises from primary legislation, citing in this respect also Leander v United Kingdom 9 EHRR 433.
These three cases Leander, Esbester and Kennedy establish that the demands of national security may necessitate and under European Convention law justify a system for handling and determining complaints under which an applicant is, for reasons of national security, unable to know the secret material by reference to which his or her complaint is determined.
The critical questions under the Convention are whether the system is necessary and whether it contains sufficient safeguards.
But, subject to satisfactory answers on these questions, national security considerations may justify a closed material procedure, closed evidence (even without use of a special advocate) and, furthermore, (as in Kennedy itself) a blanket decision leaving the precise basis of determination unclear.
There is however a further decision, even more recent than Kennedy, on which Mr Allen relies in an opposite sense.
That is Uukauskas v Lithuania (Application No 16965/04) decided by the Second Section of the Court on 6 July 2010.
The applicant had a licence to keep a pistol and hunting rifle.
His request for a licence for another kind of firearm was refused and his existing licence was withdrawn, after his listing by the police in an operational records file maintained by the police to hold data for law enforcement bodies obtained during operational activities.
He instituted proceedings challenging his listing, and the court, after examining classified material submitted by the police without disclosure to the applicant, upheld the listing.
He complained to the European Court of Human Rights on the basis that there had been a breach of article 6(1).
The Court said (para 48): The Court is not insensitive to the goals which the Lithuanian law enforcement authorities pursued through their operational activities.
Likewise, the Court shares the Government's view that documents which constitute state secrets may only be disclosed to persons who possess the appropriate authorisation.
And yet the Court notes that Lithuanian law and judicial practice provide that such information may not be used as evidence in court against a person unless it has been declassified, and that it may not be the only evidence on which a court bases its decision (see paras 20 22 above).
It went on to indicate that the file was the only evidence of the applicants alleged danger to society, that he had repeatedly asked for its disclosure to him, even in part, and that, without it, he had no possibility of being apprised of the evidence against him or of being able to respond to it (paras 50 51).
The Court concluded (para 51): In conclusion, therefore, the Court finds that the decision making procedure did not comply with the requirements of adversarial proceedings or equality of arms, and did not incorporate adequate safeguards to protect the interests of the applicant.
It follows that there has been a violation of article 6(1) in the present case.
The case has the special feature that the procedure adopted was contrary to Lithuanian law.
Quite probably for this reason, no reference was made to any of the decisions considered in paras 28 to 36 of this judgment.
There was evidently also no procedure under Lithuanian law for the use of a special advocate to consider closed material: the choice lay between declassification and no use of the material at all.
The decision is therefore very far from the present, and does not offer assistance on the issues which arise on this appeal.
(d) Necessity for a closed material procedure in this case
In the present case, Mr Allen submits that no necessity is shown for a closed material procedure.
He submits that the rule of law and the maintenance of the modern democratic state [will] not [be] imperilled if the Home Office loses this case for want of advancing a secret case.
In other words, the worst that may happen is that the Home Office has to pay an unmeritorious claim.
On this basis, Mr Allen distinguishes control order cases such as AF (No 3), in which it could be said that national security would be directly imperilled if secret evidence could not be used to justify imposing a control order.
This distinction would positively encourage unmeritorious claims; and it would on any view mean that the government could only operate a security vetting system on pain of having to accept or pay all claims for discrimination which appeared sufficiently arguable to avoid being dismissed as abusive.
The only other possibility is that a court might, following the Court of Appeal decision in Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786, determine that, if the national security material could not be deployed in defence, the claim might not be fairly justiciable at all.
Laws LJ said of this situation in Carnduff (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.
Under that possibility, it would be Mr Tariqs case which would fail in limine.
Neither of these possibilities is one which the law should readily contemplate.
In the penal context, an accused is presumed innocent until proved guilty; there is a public interest in the trial of suspects before a court, but it is better that the state should forego prosecution than that there should be any risk of an innocent person being found guilty through inability to respond to the full case against them.
These imperatives do not operate in quite the same way in a civil context like the present, where the state may not be directly involved as a party at all.
The rule of law must, so far as possible, stand for the objective resolution of civil disputes on their merits by a tribunal or court which has before it material enabling it to do this.
In considering how this may be achieved, if a defendant can only defend itself by relying on material the disclosure of which would damage national security, a balance may have to be struck between the interests of claimant and defendant in a civil context.
Mr Allens submission also involves anomalies.
The Leander, Esbester and Kennedy cases demonstrate that, had Mr Tariq been claiming that the decision to suspend or remove security clearance was unjustified on its merits, he could not have complained about the use of a closed material procedure.
Yet, on Mr Allens submission, all such a claimant would (presumably) have to do would be to claim damages, rather than any other relief.
The Home Office could still only defend the claim by disclosing material contrary to the national interest; but, on Mr Allens case, no problem arises: the Home Office would not have to damage the national interest by making disclosure; instead, it could simply admit liability or defend fruitlessly and lose for want of being able to deploy the material.
I cannot think that that is the law, in Strasbourg or domestically.
(e) The acceptability of a special advocate procedure
I do not therefore consider that a closed material procedure is in principle inconsistent with the right to an effective remedy in respect of alleged discrimination or with the Human Rights Convention.
But there are further strings to Mr Allens case, which call for closer examination of the actual procedure, in particular the use of a special advocate.
A special advocate procedure has been accepted as potentially useful in both United Kingdom and Strasbourg case law.
Thus, in A v United Kingdom, addressing the issue of detention of terrorist suspects without trial, the Court of Human Rights said (para 220): The Court further considers that the special advocate could perform an important role in counterbalancing the lack of full disclosure and the lack of a full, open, adversarial hearing by testing the evidence and putting arguments on behalf of the detainee during the closed hearings.
However, the special advocate could not perform this function in any useful way unless the detainee was provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate.
The Court went on: While this question must be decided on a case by case basis, the Court observes generally that, where the evidence was to a large extent disclosed and the open material played the predominant role in the determination, it could not be said that the applicant was denied an opportunity effectively to challenge the reasonableness of the Secretary of State's belief and suspicions about him.
In other cases, even where all or most of the underlying evidence remained undisclosed, if the allegations contained in the open material were sufficiently specific, it should have been possible for the applicant to provide his representatives and the special advocate with information with which to refute them, if such information existed, without his having to know the detail or sources of the evidence which formed the basis of the allegations.
It concluded by saying that where the open material consisted of general assertions and the decision to maintain the detention was based solely or to a decisive degree on closed material, the procedural requirements of article 5(4) would not be satisfied.
Domestically, the House of Lords in both Secretary of State for the Home Department v MB [2007] UKHL 46; [2008] AC 440 and Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 accepted a special advocate procedure, while endorsing in AF (No 3) the applicability, in the context of control orders, of the approach taken in A v United Kingdom.
Mr Allen draws attention to a report of the Joint Committee on Human Rights of the Houses of Lords and Commons on Counter Terrorism Policy and Human Rights (Session 2006 2007) (HL Paper 157, HC 394), published 30 July 2007, which precedes the cases mentioned in the previous paragraph.
The Committee was addressing the use of special advocates in, in particular, control order proceedings, but it also heard evidence from four special advocates (including Ms Farbey who acts in this case), which ranged more widely.
It identified a number of concerns.
These included, first, the overriding duty to which it saw both SIAC and a court as being subject, to ensure that material was not disclosed contrary to the public interest, in other words its inability to balance the interests of justice to the individual against the public interest in non disclosure (paras 196 and 199).
It was also concerned by, secondly, the difficulties presented if closed material was not gisted (paras 195 and 199) and, thirdly, the inflexibility of the prohibition on communication between special advocates and the person concerned or his or her legal representatives, once the special advocate had seen the closed material (paras 203 and 205).
The first of these concerns is covered and resolved by case law subsequent to the Joint Committees Report.
Under rule 54(2) the employment tribunal or judge has a discretion.
This is subject to rule 54(4), according to which a tribunal or judge, when exercising its or his functions, shall ensure that information is not disclosed contrary to the interests of national security.
But the tribunal or judge is subject to the overriding objective to deal with cases justly under regulation 3 of the Employment Procedure Regulations, and, most importantly also, obliged under section 3 of the Human Rights Act 1996 to interpret primary and secondary legislation in a way which is compatible with Convention rights.
In Secretary of State for the Home Department v MB [2008] AC 440 (decided 31 October 2007), the House of Lords held that paragraph 4(3)(d) of the Prevention of Terrorism Act 2005 (the terms of which parallel those of rule 54(2)) should be read and given effect except where to do so would be incompatible with the right . to a fair trial (para 72, per Lady Hale; and see paras 84 and 92 per Lord Carswell and Lord Brown).
The result was that, when and if the court did not consider that material could safely remain closed, the Secretary of State had a choice: either to disclose to the person concerned, or to withdraw reliance on the material.
The House followed and applied this reasoning in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269, when deciding that persons subject to control orders must be told the gist of the case against them.
Applying it in the context of the present secondary legislation in rule 54(2), it means that, even if disclosure of material to the person concerned might involve some potential damage to national security, an employment tribunal or court might, weighing the interests of justice, conclude that either the state should make such disclosure, not merely to the special advocate but also to the person concerned, or it should withdraw any reliance on the material.
Likewise, in relation to the third concern, it is a matter of discretion how far such contact is permitted, and the tribunal or judge can and should exercise such discretion flexibly and after balancing the competing interests.
The second concern involves consideration of the case law and issue discussed in paras 28 to 37 above and 63 to 68 below.
Mr Allen submits, first, that, despite the general endorsement of its potential appropriateness in these cases, the special advocate procedure involves flaws undermining its acceptability; and, secondly, that, even if the special advocate procedure is otherwise acceptable, this can only be on the basis of disclosure of the substance of the Home Offices case (gisting) in respect of Mr Tariq.
Since the Court of Appeal accepted this second submission, it arises for consideration as a result of the Home Offices cross appeal.
The flaws which Mr Allen identifies relate to the special advocates role and powers and the lack of guidance as to their exercise or supervision.
These are matters of detail which he submits have gone largely and unjustifiably without scrutiny in previous cases.
As to role, Mr Allen takes issue at the outset with the appointment of special advocates by the Attorney General who is the governments principal legal adviser.
This is a point which was addressed and is the subject of previous authority in the form of the House of Lords decision in R v H [2004] UKHL 3; [2004] 2 AC 134, where the suitability of the Attorney General to act in this respect had been questioned in the courts below.
Lord Bingham giving the unanimous opinion of the House said (para 46): In our opinion such doubt is misplaced.
It is very well established that when exercising a range of functions the Attorney General acts not as a minister of the Crown (although he is of course such) and not as the public officer with overall responsibility for the conduct of prosecutions, but as an independent, unpartisan guardian of the public interest in the administration of justice: see Halsbury's Laws of England, 4th ed, vol 44(1) (1995), para 1344; Edwards, The Law Officers of the Crown (1964), pp ix, 286, 301 302.
It is in that capacity alone that he approves the list of counsel judged suitable to act as special advocates or, now, special counsel, as when, at the invitation of a court, he appoints an amicus curiae.
Counsel roundly acknowledged the complete integrity shown by successive holders of the office in exercising this role, and no plausible alternative procedure was suggested.
It would perhaps allay any conceivable ground of doubt, however ill founded, if the Attorney General were to seek external approval of his list of eligible advocates by an appropriate professional body or bodies, but such approval is not in current circumstances essential to the acceptability of the procedure.
Special advocates are appointed from the independent bar or solicitor advocates on the basis of open competition, and are selected for inclusion on the panel on the basis of their abilities.
Mr Tariq was able to make representations as to the choice of his special advocate, in accordance with para 98 of the Treasury Solicitors Special Advocates Guide, Special Advocates A Guide to the Role of Special Advocates and the Special Advocates Support Office (SASO).
His suggested choice was appointed.
Para 88 of the Special Advocates Guide further makes clear that: The role of the Attorney General (or Solicitor General, acting in his place by virtue of section 1 Law Officers Act 1997) in appointing a special advocate is purely formal.
No 'instructions' (other than in the purely formal sense) will come from the Law Officers to special advocates indicating any particular way that the case in which the special advocate is instructed is to be argued.
That is a matter for special advocates and the appellant, to the extent that the appellant engages with the special advocates.
Mr Allens first point on role is therefore one I reject.
Mr Allen next submits that special advocates are subject to a conflict of interest which would be prohibited in private litigation.
This is said to arise from the fact that they are supported by a unit (SASO) which is located within the Treasury Solicitors Department.
It is not disputed (or disputable) that legal and administrative support is necessary for a special advocate procedure to work; and it is unclear as to where else such support might or should be located.
The submission is simply that there is an impermissible conflict of interest.
Reliance is placed on the Solicitors Code of Conduct 2007.
Rule 3 precludes a solicitor from acting (without informed consent) where there is a conflict of interests defined as existing where, inter alia, the solicitor or his firm owes separate duties to act in the best interests of two or more clients in relation to the same or related matters, and those duties conflict, or there is a significant risk that those duties may conflict.
Mr Allen further submits that there is no sufficient Chinese wall between SASO and the remainder of the Treasury Solicitors Office to enable reliance on that possibility, which was discussed in the House of Lords in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222.
In my opinion, these objections also fail.
As to the former, the Treasury Solicitor does not have two clients and is not in breach of the professional code.
The special advocate is an independent (security cleared) member of the bar or solicitor advocate, who is not professionally engaged by or on behalf of Mr Tariq, though he or she is charged to represent Mr Tariqs interests.
As the Special Advocates Guide states (para 113): Actual conflicts of interest in the usual sense do not arise, since a special advocate owes no duty to the person whose interests he represents.
However, a special advocate should be careful to ensure that no situation arises in which there could be any perception of anything other than absolute independence on his part.
The Guide then reminds special advocates of the need for care to avoid any perceived conflict of interest when undertaking the role as well as in the future.
SASO, which supports special advocates, operates for all practical purposes as a separate unit, with an established Chinese wall arrangement dividing it from the rest of the Treasury Solicitors Office.
Maurice Kay LJ set out the position (para 30): SASO was set up in 2006 in response to the recommendation of the Constitutional Affairs Select Committee in its report on the operation of the Special Immigration Appeals Commission and use of SAs [special advocates] (7th report, session 2004 2005, 3 April 2005).
The functions of SASO are described in Special Advocates A Guide to the Role of Special Advocates and the Special Advocates' Support Office, which is published on the Treasury Solicitor's Department's website.
It is SASO that provides an SA with formal instructions.
It also provides legal and administrative support to SAs and acts as the librarian of closed case law for them.
Although formal instructions originate with SASO, it has no input into decisions such as whether to appeal a closed adverse judgment or to open part of a closed judgment.
Such matters are for the independent judgment of the SA alone.
Although SASO is physically located within the premises of the Treasury Solicitor at One Kemble Street, it has an established Chinese wall arrangement and is for all practical purposes a separate entity.
It comprises five lawyers and three administrators.
Four lawyers and two administrators form the SASO (closed) team, the remaining lawyer and administrator forming the SASO (open) team.
The open team does not have security clearance.
It alone communicates with the litigant's open representatives.
Although other relevant litigation teams within the office of the Treasury Solicitor are able to share their facilities, this is not so in relation to SASO's resources and facilities.
It has completely separate document handling, communication, storage and technology facilities.
The four lawyers who carry out casework on cases in which the SAs are instructed do not carry out any work for any other part of the Treasury Solicitor's office.
The fifth lawyer is at Grade 6 level.
He does not have his own casework in relation to cases involving SAs.
His role is more supervisory and he has a wider line management role which extends to the general private law litigation team.
He may report to the Attorney General but only in relation to open issues in matters where SAs are instructed.
In addition, in order to protect the independence of the SASO team, there are conflict checks to ensure that other members of the private law team do not act in cases which are in any way relevant to SASO.
Mr Allen challenges the adequacy of this system.
The information about its operation based on the Special Advocates Guide was amplified by a Home Office note produced during the Court of Appeal hearing.
Mr Tariq invites scepticism about information provided in the context of litigation in which, he suggests, the Treasury Solicitor has an interest in the status quo.
The information that SASO operates on a Chinese wall basis with the Treasury Solicitor teams who represent the Government in cases in which special advocates appear is however contained in the Special Advocates Guide (para 87).
The arrangements described in both documents evidence a serious intention to achieve such a separation, and there is no reason to doubt their genuineness or efficacy.
Significantly, as Maurice Kay LJ indicated in the passage quoted above, the position is that, although formal instructions originate with SASO, SASO has no input into special advocates decisions, which are taken only by the relevant independent special advocate.
One can also be confident that, if any special advocate or court at any point suspected that the separation between SASO and other government legal teams was in any way incomplete, this would at once be brought to light.
Maurice Kay LJ, based on his own experience, commented (para 32): If I may be permitted a subjective observation: if such problems were evident they would be expected to provoke adverse judicial comment but, in my experience, the system, although inherently imperfect, enjoys a high degree of confidence among the judges who deal with cases of this kind on a regular basis.
In these circumstances, Mr Allen focuses on the fifth of the five SASO lawyers, a grade 6 lawyer who has no case work responsibility at all, but who does have a line management role in relation to both the SASO team and the Treasury Solicitors general private law team.
He also chairs the monthly special advocates meetings at which cases and tactics are discussed, the minutes of which are sent to the Attorney Generals office, and he may occasionally brief the Attorney Generals office on open issues only.
After pointing out that a person in Mr Tariqs position will instruct the special advocate before any closed material procedure begins, Mr Allen suggests that the description given of the grade 6 lawyers activity means that the content of such instructions could be shared with parts of the Treasury Solicitors office outside the SASO team or even with the Attorney General.
I do not regard this as realistic.
Substantive legal decisions are, as stated, taken by the special advocate.
The grade 6 lawyer has no case work responsibility, and would not on the face of it be likely even to know of any instructions given by Mr Tariq.
Even if he did know, disclosure to anyone outside the SASO team would involve a serious breach of his duty.
There is no reason to think that minutes of the monthly meeting circulated to the Attorney Generals office would disclose such instructions, and the special advocate would presumably receive them and ensure that they did not.
There is also no reason to think any briefing of the Attorney Generals office could or would go into detail about individual cases, still less about instructions given by Mr Tariq.
It is clear that the Attorney General has no role and no detailed knowledge in relation to individual cases.
In Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 the House was concerned with accountants (KPMG) who were in possession of information confidential to a former client (Prince Jefri) which might be relevant to instructions which they then accepted from the Brunei Investment Agency, of which Prince Jefri had been chairman, to investigate the whereabouts of certain assets suggested to have been used by Prince Jefri for his own benefit.
The House granted an injunction restraining KPMG from acting for the Agency.
It held that the burden was on KPMG to show that there was no risk of the information coming into the possession of those within KPMG acting for the Agency.
KPMG had attempted to erect a Chinese wall, but this was ad hoc and within a single department; further the two teams involved one which had acted for Prince Jefri and the one which was acting for the Agency contained large and rotating memberships of persons accustomed to working with each other.
In these circumstances, the House held that, although there was no rule of law that Chinese walls or other similar arrangements were insufficient, nevertheless, to eliminate the risk, an effective Chinese wall needs to be an established part of the organisational structure of the firm, not created ad hoc and dependent on the acceptance of evidence sworn for the purpose by members of staff engaged on the relevant work (per Lord Millett, at p 239D E).
The present case falls into an opposite category.
SASO has a small team which works separately under arrangements which are not ad hoc, but well established, and it uses the services of independent outside special advocates, who can be relied upon to reinforce the culture and reality of such separation.
There is no reason to doubt the genuineness and efficacy of the Chinese wall which has been set up in this way to service special advocates needs, in particular by providing assistance described in para 90 of the Special Advocates Guide.
Mr Allen makes other further criticisms of the arrangements for special advocates: he submits that special advocates lack supervision, that there is insufficient guidance as to their role and that they lack any or sufficiently defined powers in respect of matters such as disclosure, the calling and cross examination of witnesses and appeal.
I do not regard these criticisms as well founded or as rendering the whole closed material procedure unfair.
Special advocates are experienced independent practitioners, accustomed to act of their own initiative and to take difficult decisions, and able to raise points of doubt or difficulty with the tribunal or court before which they appear.
The special advocates role is familiar in a variety of contexts.
It has been extensively described in the Special Advocates Guide.
It divides into two parts, the open and closed.
The Guide notes that throughout the open part, where the parties are exchanging open material, the special advocate will have the opportunity to meet the person in whose interests he or she is to act and to obtain as good an understanding as possible of his or her case (paras 99 100).
Once the open stages have been completed the Secretary of State will serve his or her closed material upon the special advocate only (paras 101 102).
The Guide goes on (para 102): The receipt of closed material marks the end of the period in which the special advocate may communicate directly with the appellant.
It should be noted that communication with the appellant is still possible at this point but any communication from the special advocate to the appellant after this time requires the permission of the Court and the proposed format of it must be notified to the Secretary of State who can make objections if he so wishes (see SIAC Rule 36(4) and CPR 76.25(4)).
During the closed phase, the special advocates role was summarised by Sedley LJ in Murungaru v Secretary of State for the Home Department [2008] EWCA Civ 1015, [2009] INLR 180 in this way at para 17: The ways in which a special advocate will seek to represent the interests of an appellant are, first, to test by cross examination, evidence and argument the strength of the case for non disclosure.
Secondly, to the extent that non disclosure is maintained, the special advocate is to do what he or she can to protect the interests of the appellant, a task which has to be carried out without taking instructions on any aspect of the closed material.
In relation to the protection of the interests of the person in Mr Tariqs position in relation to disclosure after the closed phase has begun, the Guide amplifies the special advocates role (in the largely parallel context of his or her role in proceedings before SIAC) as follows (para 103): It is now for the special advocate to take a view himself on the material and to decide whether any of what is contained within the closed material should in fact be made open (and therefore be disclosed to the appellant) because its disclosure would not harm the public interest e.g. the material is already in the public domain or could not be regarded as damaging to national security or other public interests.
Sometimes, the special advocate will submit that a summary or gist of the material could be safely disclosed to the appellant.
The special advocate has a period after service of the closed material in which to consider and prepare written submissions on what, if any, of the 'closed' material should become open.
These are known as rule 38 submissions in SIAC and rule 29 submissions in Control Order proceedings (although they are in fact governed by CPR 76.29).
These submissions may also include requests to the Secretary of State for further information or documents to be provided to the special advocate.
This period has usually in SIAC been a period of two to three weeks (although no period is specified see SIAC Rules rule 38(3)).
In the CPR, similar provisions specify a period of two weeks for the special advocate to indicate whether he challenges the Secretary of state's assessment of what is open and what is closed (see rule 76.29(3)), though the Court may modify it in appropriate circumstances.
With regard to the hearing on the merits, the special advocate will be present during the open part, when he or she will have the opportunity to observe how the case is put by counsel both for and against the person whose interests the special advocate will be protecting during the closed phase.
The closed hearing will take place, and all but the special advocate and the Secretary of State will withdraw.
I see no reason why a special advocate may not, where appropriate, take steps to call factual or expert evidence during the closed phase, if necessary applying for any necessary witness summons.
The Guide is in my view correct in contemplating this (para 108): There is also a possibility that the special advocate may call his own witnesses.
This latter has never, to date, been undertaken, certainly not in a SIAC context.
There appears no reason in principle, however, why this should not be possible, and special advocates in proceedings in the High Court will have the considerable advantage of being able to call on both the remainder of the CPR (insofar as not disapplied) and on the inherent jurisdiction of the Court to achieve such an end.
In its June 2005 Response to the Constitutional Affairs Select Committee's Report into the Operation of SIAC and the Use of Special Advocates, the Government acknowledged that it is, in principle, open to special advocates in SIAC appeals to call expert evidence.
On any appeal, it is well established that the special advocate is able both to appear and represent an appellants interests in any closed phase of the appeal.
Mr Allen suggests that the special advocates role in positively instituting an appeal in relation to events or decisions occurring during the closed phase is insufficiently clear.
Again (and consistently with Maurice Kay LJs description in para 30, cited in para 50 above) I see no reason why the special advocates role should not embrace this.
The special advocate may, with the courts permission, communicate with Mr Tariq, even after the closed phase has begun (para 50 above); the court would no doubt permit a special advocate to inform a person in Mr Tariqs position that there were closed matters which merited consideration on appeal, even though such matters could not in any way be disclosed.
In this way, an appeal could be lodged to enable the special advocate to pursue such matters, although the subject matter and basis of the appeal would remain unknown to the person in Mr Tariqs position.
Reference to the Court of Justice
Mr Allen submits that the Supreme Court should refer to the Court of Justice points arising in this case on which European Union law is relevant.
Article 267 of the Treaty on the European Union provides: The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union; Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.
Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring
the matter before the Court
The principles of European Union law which arise for consideration in this case are clear.
There must in particular be effective legal protection in respect of the rights not to be discriminated against which Mr Tariq invokes, and, so far as guidance is necessary, it is to be found for the relevant purposes in the European Convention on Human Rights and the case law of the European Court of Human Rights.
The principles which the European Court of Human Rights would apply in the area of national security have been confirmed recently by the decision in Kennedy.
The questions before the Supreme Court involve the application of such principles to the circumstances of this case, and in particular to the closed material procedure involving a special advocate which the Employment Tribunal has ordered.
There is on this basis no question of interpretation of the European Treaties which calls for a reference under article 267 as explained by the Court of Justice in Case 283/81 Srl CILFIT v Ministry of Health [1982] ECR 3415.
It is not the role of the Court of Justice to rule on the application of established general criteria to a particular provision or arrangement, which must be considered in the light of the particular circumstances of the case in question: compare Case C 237/02 Freiburger Kommunalbauten GmbH Baugesellschaft & Co KG v Hofstetter [2004] 2 CMLR 291, paras 21 23, explaining and distinguishing Joined Cases C 240/98 to 244/98 Ocano Grupo Editorial SA v Murciano Quintero [2002] 1 CMLR 1226.
I add that, if Mr Tariq were to have cause for complaint about the application of the relevant legal principles as established by the European Convention on Human Rights, there will always exist the potential to seek redress in Strasbourg.
The European Court of Human Rights is not limited to the examination of questions of interpretation or law arising under the Convention, but will re examine the fairness of their application as a whole in the light of the circumstances of the particular case.
It follows that I would hold that the use of a closed material procedure before the Employment Tribunal was and is lawful in the present case, and dismiss Mr Tariqs appeal accordingly.
The Home Offices appeal
It is as well to bear in mind at the outset that the general nature of the Home Offices case has been communicated to Mr Tariq.
It is that the Home Office was concerned in August 2006 that [Mr Tariq] could be vulnerable to an approach to determine if terrorist suspects had been flagged to the authorities or to smuggle prohibited items airside and that its decision to withdraw security clearance in December 2006 was based on [his] close association with individuals suspected of involvement in plans to mount terrorist attacks and on its view that association with such individuals might make him vulnerable to attempts to exert undue influence on [him] to abuse his position: para 5 above; Mr Tariq must be able to meet this case on a general basis, in particular, by disclosing and describing his relationship and the nature and extent of his association with those of his relatives suspected and his cousin who was ultimately convicted of terrorist activity; and he has, further, on the basis of, in particular, his questioning in interview also been able to mount a sufficiently arguable case of discrimination to avoid any application to strike out his claim: para 6 above.
What is in issue is the declaration made by the Employment Appeal Tribunal and upheld by the Court of Appeal to the effect that article 6 of the European Convention on Human Rights requires [Mr Tariq] to be provided with the allegations being made against him in sufficient detail to enable him to give instructions to his legal team so that those allegations can be challenged effectively: para 3 above.
This is worth repeating, because some language used in the Court of Appeal might suggest that Mr Tariq knew nothing at all of the nature of the case against him, as opposed to particular allegations supporting it.
Thus, for example, Maurice Kay LJ said that, although a closed material procedure was in principle justified, it was none the less the right of a litigant to know the essence of the case against him, if necessary by gisting ([2010] ICR 1034, para 43).
He went on to acknowledge that, in a particular case, this may put the public authority in the invidious position of having to make difficult decisions about disclosure and whether or how a claim is to be defended, but said that all that is for the future in this litigation.
It is the consequence of the requirements of justice.
The Home Office by its appeal challenges this conclusion, pointing out that it raises directly the dilemma addressed by the Court of Appeal in the case of Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786.
If the disclosure of material would harm national security, but without disclosure the public authority could not defend and would have to capitulate, the claim itself may not be justiciable.
The appeal raises the question whether there is an absolute requirement that a claimant should him or herself see and know the allegations forming the basis of the states defence in sufficient detail to give instructions to the defence legal team to enable the allegations to be challenged effectively.
One problem about the declaration made by the Employment Appeal Tribunal and upheld by the Court of Appeal is that it is questionable whether or how far it differs in any significant way from the ordinary duty of any party in any litigation to disclose the nature of its factual allegations, where no issue of national security arises at all.
A second point is that the declaration made does not correspond with any requirement expressed in section 7 of the Employment Tribunals Act 1996 or in the language of the statutory instruments made under that Act.
But the submission is no doubt that, if the Convention requires gisting of the nature declared in every case, even though this could damage national security, then the court should under section 3 of the Human Rights Act 1998 find it possible to read into the Employment Tribunals Act 1996 and the ET Procedure Rules and ET National Security Rules introduced under it, some qualification to enable such gisting to occur.
The question is therefore whether there is in the European Convention on Human Rights, as explained by the European Court of Human Rights, any such absolute requirement, where this would involve the disclosure to Mr Tariq of the detail of allegations which would in normal litigation require to be disclosed, but which the interests of national security require to be kept secret.
Clearly, it is a very significant inroad into conventional judicial procedure to hold a closed material procedure admissible, if it will lead to a claimant not knowing of such allegations in such detail.
As the Home Office acknowledges, it is an inroad which should only ever be contemplated or permitted by a court, if satisfied after inspection and full consideration of the relevant material as well as after hearing the submissions of the special advocate, that it is essential in the particular case; and this should be kept under review throughout the proceedings.
However, to say that it is not possible under the Convention as interpreted by the Court in Strasbourg is in my view impossible, in the light of the clear line of jurisprudence culminating in the Courts decision in Kennedy which I have already discussed in paras 27 to 37 above.
It is significant that, when the Court of Appeal reached its decision, it did not have the benefit of Kennedy.
I would therefore allow the Home Offices appeal, and set aside the declaration made below to the effect that there exists an absolute requirement that Mr Tariq personally or his legal representatives be provided with sufficient detail of the allegations made against him to enable him to give instructions to his legal representatives on them.
As I have indicated, both Mr Tariq and his legal representatives already know of the general nature of the Home Offices case.
The Employment Tribunal will, with the assistance of the special advocate, keep under review and will be able to determine whether any and what further degree of gisting of the Home Offices case, or of disclosure regarding the detail of allegations made in support of it, is required, having regard to (a) the nature of the relevant allegations and of the national security interest in their non disclosure and in the light of its best judgment as to (b) the significance of such allegations for the Home Offices defence and (c) the significance for Mr Tariqs claim of the disclosure or non disclosure of such allegations to him.
Employment Tribunals Act 1996, section 10 ANNEX (judgment, para 9) (5) Employment tribunal procedure regulations may make provision enabling a Minister of the Crown, if he considers it expedient in the interests of national security (a) to direct a tribunal to sit in private for all or part of particular Crown employment proceedings; (b) to direct a tribunal to exclude the applicant from all or part of particular Crown employment proceedings; (c) to direct a tribunal to exclude the applicant's representatives from all or part of particular Crown employment proceedings; (d) to direct a tribunal to take steps to conceal the identity of a particular witness in particular Crown employment proceedings; (e) to direct a tribunal to take steps to keep secret all or part of the reasons for its decision in particular Crown employment proceedings. (6) Employment tribunal procedure regulations may enable a tribunal, if it considers it expedient in the interests of national security, to do in relation to particular proceedings before it anything of a kind which, by virtue of subsection (5), employment tribunal procedure regulations may enable a Minister of the Crown to direct a tribunal to do in relation to particular Crown employment proceedings. (7) In relation to cases where a person has been excluded by virtue of subsection (5)(b) or (c) or (6), employment tribunal procedure regulations may make provision (a) for the appointment by the Attorney General . of a person to represent the interests of the applicant; .
The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861) Schedule 1 The Employment Tribunals Rules of Procedure 54(1) A Minister of the Crown (whether or not he is a party to the proceedings) may, if he considers it expedient in the interests of national security, direct a tribunal or Employment Judge by notice to the Secretary to: (a) conduct proceedings in private for all or part of particular Crown employment proceedings; (b) exclude the claimant from all or part of particular Crown employment proceedings; (c) exclude the claimant's representative from all or part of particular Crown employment proceedings; (d) take steps to conceal the identity of a particular witness in particular Crown employment proceedings. (2) A tribunal or Employment Judge may, if it or he considers it expedient in the interests of national security, by order (a) do in relation to particular proceedings before it anything which can be required by direction to be done in relation to particular Crown employment proceedings under paragraph (1); (b) order any person to whom any document (including any judgment or record of the proceedings) has been provided for the purposes of the proceedings not to disclose any such document or the content thereof: (i) to any excluded person; (ii) in any case in which a direction has been given under [sub ]paragraph (l)(a) or an order has been made under [sub ]paragraph (2)(a) read with sub paragraph (1)(a), to any person excluded from all or part of the proceedings by virtue of such direction or order; or (iii) in any case in which a Minister of the Crown has informed the Secretary in accordance with paragraph (3) that he wishes to address the tribunal or Employment Judge with a view to an order being made under sub paragraph (2)(a) read with sub paragraph (l)(b) or (c), to any person who may be excluded from all or part of the proceedings by virtue of such an order, if an order is made, at any time before the tribunal or Employment Judge decides whether or not to make such an order; (c) take steps to keep secret all or part of the reasons for its judgment.
The tribunal or Employment Judge (as the case may be) shall keep under review any order it or he has made under this paragraph. (3) In any proceedings in which a Minister of the Crown considers that it would be appropriate for a tribunal or Employment Judge to make an order as referred to in paragraph (2), he shall (whether or not he is a party to the proceedings) be entitled to appear before and to address the tribunal or Employment Judge thereon.
The Minister shall inform the Secretary by notice that he wishes to address the tribunal or Employment Judge and the Secretary shall copy the notice to the parties. (4) When exercising its or his functions, a tribunal or Employment Judge shall ensure that information is not disclosed contrary to the interests of national security.
The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Schedule 2 The Employment Tribunals (National Security) Rules of Procedure 8 Special advocate (1) In any proceedings in which there is an excluded person the tribunal or Employment Judge shall inform the Attorney General of the proceedings before it with a view to the Attorney General , if he thinks it fit to do so, appointing a special advocate to represent the interests of the claimant in respect of those parts of the proceedings from which (a) any representative of his is excluded; (b) both he and his representative are excluded; or (c) he is excluded, where he does not have a representative. (2) A special advocate shall have a general qualification for the purposes of section 71 of the Courts and Legal Services Act 1990 or shall be an advocate or a solicitor admitted in Scotland. (3) Where the excluded person is the claimant, he shall be permitted to make a statement to the tribunal or Employment Judge before the commencement of the proceedings, or the part of the proceedings, from which he is excluded. (4) Except in accordance with paragraphs (5) to (7), the special advocate may not communicate directly or indirectly with any person (including an excluded person) (a) (except in the case of the tribunal, Employment Judge and the respondent) on any matter contained in the grounds for the response referred to in rule 3(3); (b) (except in the case of a person who was present) on any matter discussed or referred to during any part of the proceedings in which the tribunal or Employment Judge sat in private in accordance with a direction or an order given or made under rule 54. (5) The special advocate may apply for orders from the tribunal or Employment Judge authorising him to seek instructions from, or otherwise to communicate with, an excluded person (a) on any matter contained in the grounds for the response referred to in rule 3(3); or (b) on any matter discussed or referred to during any part of the proceedings in which the tribunal or Employment Judge sat in private in accordance with a direction or an order given or made under rule 54. (6) An application under paragraph (5) shall be made in writing to the Employment Tribunal Office and shall include the title of the proceedings and the grounds for the application. (7) The Secretary shall notify the Minister of an application under paragraph (5) and the Minister shall be entitled to address the tribunal or Employment Judge on the application. (8) In these rules and those in Schedule I, in any case in which a special advocate has been appointed to represent the interests of the claimant in accordance with paragraph (I), any reference to a party shall (save in those references specified in paragraph (9)) include the special advocate. 10 Reasons in national security proceedings (1) This rule applies to written reasons given under rule 30 of Schedule 1 for a judgment or order made by the tribunal or Employment Judge in national security proceedings. (2) Before the Secretary sends a copy of the written reasons ('the full written reasons') to any party, or enters them in the Register under rule 32 of Schedule I, he shall send a copy of the full written reasons to the Minister. (3) If the Minister considers it expedient in the interests of national security and he has given a direction or the tribunal or an Employment Judge has made an order under rule 54 in those proceedings, the Minister may (a) direct the tribunal or Employment Judge that the full written reasons shall not be disclosed to persons specified in the direction, and to prepare a further document ('the edited reasons') setting out the reasons for the judgment or order, but with the omission of such of the information as is specified in the direction; (b) direct the tribunal or Employment Judge that the full written reasons shall not be disclosed to persons specified in the direction, but that no further document setting out the tribunal or Employment Judge's reasons should be prepared. (4) Where the Minister has directed the tribunal or Employment Judge in accordance with sub paragraph 3(a), the edited reasons shall be signed by the Employment Judge and initialled in each place where an omission has been made. (5) Where a direction has been made under sub paragraph (3)(a), the Secretary shall (a) send a copy of the edited reasons referred to in subparagraph (3)(a) to any person specified in the direction and to the persons listed in paragraph (7); (b) enter the edited reasons in the Register, but omit from the Register the full written reasons; and (c) send a copy of the full written reasons to the persons listed in paragraph (7). (6) Where a direction has been made under sub paragraph (3)(b), the Secretary shall send a copy of the full written reasons to the persons listed in paragraph (7), but he shall not enter the full written reasons in the Register. (7) The persons to whom full written reasons should be sent in accordance with paragraph (5) or (6) are (a) the respondent; (b) the claimant or the claimant's representative if they were not specified in the direction made under paragraph (3); (c) if applicable, the special advocate; (d) where the proceedings were referred to the tribunal by a court, to that court; and (e) where there are proceedings before a superior court (or in Scotland, an appellate court) relating to the decision in question, to that court.
The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 Regulation 2 Definitions excluded person means, in relation to any proceedings, a person who has been excluded from all or part of the proceedings by virtue of: (a) a direction of a Minister of the Crown under rule 54(1)(b) or (c) of Schedule 1, or (b) an order of the tribunal under rule 54(2)(a) read with 54(1)(b) or (c) of Schedule 1; national security proceedings means proceedings in relation to which a direction is given under rule 54(1) of Schedule 1, or an order is made under rule 54(2) of that Schedule; special advocate means a person appointed in accordance with rule 8 of Schedule 2 .
LORD HOPE
I agree that, for the reasons so fully set out by Lord Mance in his judgment and the further reasons given by Lord Brown and Lord Dyson, the appeal by the Home Office should be allowed and that the cross appeal by Mr Tariq should be dismissed.
At the heart of both the appeal and the cross appeal are two principles of great importance.
They pull in different directions.
On the one hand there is the principle of fair and open justice.
As OConnor J declared in Hamdi v Rumsfeld 542 US 507 (2004), 533, parties whose rights are to be affected are entitled to be heard and in order that they may enjoy that right they must first be notified.
In European Convention terms, this is the principle of equality of arms which is part of the wider concept of a fair trial: Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010, para 184.
On the other there is the principle that gives weight to the interests of national security.
This is one of the legitimate aims referred to in articles 8(2), 10(2) and 11(2) of the Convention.
The extent of the discretion that must be accorded to the national authorities in this field was recognised in Leander v Sweden (1987) 9 EHHR 433, para 59.
National security was described as a strong countervailing public interest in Kennedy, para 184.
But it must be weighed against the fundamental right to a fair trial.
The context will always be crucial to a resolution of questions as to where and how this balance is to be struck.
Mr Tariq was employed by the Home Office in a capacity for which security clearance was required in the interests of national security.
To be effective security vetting will usually, if not invariably, require to be carried out in secret.
Its methods and the sources of information on which it depends cannot be revealed to the person who is being vetted.
Those who supply the information must be able to do so in absolute confidence.
In some cases, their personal safety may depend on this.
The methods, if revealed to public scrutiny, may become unusable.
These are the unusual circumstances in which the claim Mr Tariq seeks to make in this case must be determined.
Mr Tariqs complaint against the Home Offices decision to suspend his security clearance is that it was based on grounds that amounted to direct or indirect discrimination against him on grounds of his race and religion.
There is no doubt that he is entitled to a fair and public hearing in the relevant tribunal of his claim that the rights conferred on him by the Race Relations Act 1976 and the Employment Equality (Religion or Belief) Regulations 2003 (SI 2003/1660) have been breached.
The principle of equal treatment is part of European Union law, but it is for national law to ensure that the right to a fair hearing is respected according to the principles established under the European Convention.
By section 10(6) of the Employment Tribunals Act 1996 it is provided that the employment tribunal procedure regulations may enable a tribunal, if it considers it expedient in the interests of national security, to adopt a closed procedure.
Section 10(7) of the 1996 Act provides that the procedure regulations may make provision in that event for the appointment by the Attorney General of a special advocate to represent the interests of the applicant.
The provisions that were made in the exercise of that power are to be found in the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861).
Rule 54 of Schedule 1 to the Regulations provides for the use of closed procedure, and rule 8 of Schedule 2 provides for the appointment of special advocates.
No one doubts Mr Tariqs right not to be discriminated against on grounds of his race or his religion.
But it was his own choice to seek employment in a post for which, in the interests of national security, security clearance was required.
He was a volunteer, not a conscript.
This is not a case where he is the victim of action taken against him by the state which deprived him of his fundamental rights.
Furthermore, as I have already indicated, security vetting is a highly sensitive area.
Its intensity will no doubt vary from case to case, but common to them all is the need to preserve the integrity of sources of information and the methods of obtaining it.
That must always be the paramount consideration, whatever the nature of the proceedings in which the issue arises.
It ensures that the national interest is protected when people are appointed to posts where security clearance is required.
Issues of employment and discrimination law raised by people appointed to those posts may require access to the way this process has been carried out.
It was no doubt for that reason that the use of the closed procedure and the appointment of special advocates was expressly authorised by the statute.
The question then is whether the difficulties that Mr Tariq faces in making good his discrimination claim are sufficiently counterbalanced by the procedures that the Home Office wishes the employment tribunal to adopt.
First, there is the use of the closed procedure for the consideration of the material on which the Home Office wishes to rely in its defence.
Is the procedure that the Regulations have prescribed for use in national security cases compatible with European Union law? This is the point raised by Mr Tariqs cross appeal.
Second, if the use of the closed procedure is lawful, how is it to be applied in this case? Is the Home Office obliged to give sufficient detail of the material on which it relies to enable Mr Tariq to give detailed instructions to his special advocate to enable that material to be challenged effectively? This is the point raised by its appeal.
The Court of Appeal held that the principle illustrated by Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269 must apply.
This was despite the fact that this would put the Home Office in the invidious position of having to make decisions as to whether, and if so how, the claim was to be defended: [2010] EWCA Civ 462, [2010] ICR 1034, para 50.
I have found the second issue more troublesome than the first.
As to the first, which is the issue raised in Mr Tariqs cross appeal, the question is whether the use of the closed procedure in cases of this type impairs the very essence of his right to a fair trial.
The right to a fair trial itself is an absolute right, but rights that are to be implied from article 6 of the European Convention are not: Brown v Stott [2003] 1 AC 681, 719.
Their purpose is to give effect, in a practical way, to the fundamental right.
The right to a fair hearing must ordinarily carry with it the right to have proceedings conducted in open court, with full disclosure by both sides.
But, for the reasons already mentioned, the use of an open procedure where details of the security vetting process are in issue cannot be resorted to without risk to the integrity of the system which in the national interest must be preserved.
The observations of the Court of Justice in Joined Cases C 402/05P and C 415/05P Kadi v Council of the European Union [2009] AC 1225, para 344 indicate that European law is willing to accept a closed material procedure in the interests of national security so long as the individual is accorded a sufficient measure of procedural justice.
That this is the position that the Strasbourg court too has adopted is amply demonstrated by its decisions in Kennedy v United Kingdom, paras 184 190.
Parliament has expressed a clear democratic judgment that the tribunal may in its discretion make use of the closed procedure with the assistance of a special advocate.
As for the procedure that the 2004 Regulations provide for, several features indicate that the balance has been struck in the right place.
First, there is the fact that, under the procedure provided for by rule 54(2) of Schedule 1 to the Regulations, the decision as to whether closed procedure should be resorted to rests with the tribunal or the employment judge.
The fact that the decision is taken by a judicial officer is important.
It ensures that it is taken by someone who is both impartial and independent of the executive.
Second, there is the fact that, as this is a judicial decision, it will not be taken without hearing argument in open court from both sides.
It will be an informed decision, not one taken without proper regard to the interests of the individual.
Third, it opens the door to the use of the special advocate.
Fourth, it is a decision that can and should be kept under review as the case proceeds: see the last sentence of rule 54(2).
Fifth, the special advocate can and should be heard as the process of keeping it under review proceeds.
As against all that, account must be taken of the consequences for national security if this procedure were not to be available to the tribunal.
Without it, there would be a stark choice: to conduct the entire defence in open proceedings however damaging that might be to the system of security vetting, and in particular to those who contributed to it in this case; or to concede the case and accept the consequences.
They would not only be financial.
They would lead to the government being seen as an easy target for unjustified claims.
That would be a field day for the unscrupulous.
They could lead to tensions if those who were in a position to make discrimination claims were thought to be enjoying an unfair advantage because their claims were not likely to be contested if they were to be pressed to the point of a public hearing.
I think that the balance lies firmly in favour of allowing the tribunal, in its discretion, to make use of the closed procedure.
I would dismiss the cross appeal.
As for the second issue, there is a very real problem.
Procedural justice indicates that Mr Tariq should be given sufficient information to enable him to give detailed instructions to his special advocate so that she can challenge the withheld material on his behalf.
But Mr Eadie QC for the Home Office insists that the process of gisting as envisaged in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269 cannot be resorted to in this case without risk to those who were involved in the security vetting process.
In the AF (No 3) case I said that what would be needed would vary from case to case, and that the judge would be in the best position to strike the balance between what was needed to enable the special advocate to challenge the case against the individual and what could properly be kept closed: para 86.
But I also said that if the concept of an effective challenge was to be applied, where detail matters it must be met by detail: para 87.
That is what Mr Eadie objects to in this case.
Here again the context for the argument is what matters.
This is an entirely different case from Secretary of State for the Home Department v AF (No 3).
There the fundamental rights of the individual were being severely restricted by the actions of the executive.
Where issues such as that are at stake, the rule of law requires that the individual be given sufficient material to enable him to answer the case that is made against him by the state.
In this case the individual is not faced with criminal proceedings against him or with severe restrictions on personal liberty.
This is a civil claim and the question is whether Mr Tariq is entitled to damages.
He is entitled to a fair hearing of his claim before an independent and impartial tribunal.
But the Home Office says that it cannot defend the claim in open proceedings as, for understandable reasons, it cannot reveal how the security vetting was done in his case.
That conclusion is unavoidable, given the nature of the work Mr Tariq was employed to do.
How then is the balance to be struck here? Mr Tariq will be at a disadvantage if the closed procedure is adopted.
But the disadvantage to the Home Office is greater, as unless the closed procedure is adopted it will have to concede the claim.
There is no way that the disadvantage to the Home Office can be minimised.
It will simply be unable to defend itself.
It will be unable to obtain a judicial ruling on the point at all.
That would plainly be a denial of justice.
The disadvantage to Mr Tariq, on the other hand, is less clear cut.
He is not entirely without information, as the general nature of the Home Offices case has been disclosed to him.
He will have the services of the special advocate, with all that that involves second best by far, no doubt, but at least the special advocate will be there.
His claim will be judicially determined by an independent and impartial tribunal, which can be expected to take full account of the fact that the details of the case for the Home Office have had to be kept closed.
If inferences have to be drawn because of the quality or nature of the evidence for the Home Office, they will have to be drawn in Mr Tariqs favour and not against him.
And throughout the process the need for the evidence to be kept closed will be kept under review as rule 54 of Schedule 1 to the Regulations requires, with the assistance of the special advocate.
There cannot, after all, be an absolute rule that gisting must always be resorted to whatever the circumstances.
There are no hard edged rules in this area of the law.
As I said at the beginning, the principles that lie at the heart of the case pull in different directions.
It must be a question of degree, balancing the considerations on one side against those on the other, as to how much weight is to be given to each of them.
I would hold that, given the nature of the case, the fact that the disadvantage to Mr Tariq that the closed procedure will give rise to can to some extent be minimised and the paramount need to protect the integrity of the security vetting process, the balance is in favour of the Home Office.
I would allow the appeal.
LORD BROWN
I have read Lord Mances comprehensive judgment and, like him, would allow the Home Offices appeal and dismiss Mr Tariqs cross appeal.
As to the cross appeal the question whether a closed material procedure in the employment tribunal can ever be compatible with the Race Directive and the Equal Treatment Framework Directive there is almost nothing I wish to add to Lord Mances judgment.
To my mind plainly it can.
The submission that it is never necessary for reasons of national security to deploy secret evidence in employment tribunal discrimination proceedings because instead the government can simply pay up I find not merely unpersuasive but wholly preposterous.
Is it seriously to be suggested that, however unmeritorious such claims may be, the complainant should simply be paid off? Taxpayers money aside, consider the appalling consequences for the governments reputation were there to be a succession of findings of unlawful racial or religious discrimination and the insidious effect of all this upon relations between different racial groups.
As for the appeal in effect the question whether a complainant in Mr Tariqs position has to be provided with sufficient details of the allegations being made against him (however sensitive the information on which they are based) to enable him to give instructions to his special advocate in order effectively to challenge them I conclude no less clearly that this is not required.
On this question, however, I wish to add a few further thoughts of my own.
It is, as I understand it, Mr Tariqs case on the appeal apparently supported by Mr John Howell QC for JUSTICE and Liberty that, assuming (contrary to his primary case) that a closed material procedure is available at all in employment tribunal proceedings, the complainant has exactly the same rights to be provided with sufficient information about the allegations against him to enable him to give effective instructions to the special advocate as the Grand Chamber in A v United Kingdom (2009) 49 EHRR 625 (at para 220) decided had to be given to those deprived of their liberty at Belmarsh Prison pursuant to the Anti terrorism, Crime and Security Act 2001.
For simplicitys sake I shall call this degree of disclosure A type disclosure.
As is well known, the nine Members of the House of Lords sitting in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269 unanimously held that A type disclosure was similarly required in control order cases under the regime established by the Prevention of Terrorism Act 2005 in place of the detention regime.
Substantially relying on A and on AF (No 3), Mr Allen QC submits that in any special advocate context to which article 6 applies, there is required an irreducible minimum standard of fairness which in every case demands A type disclosure.
Prominent amongst the passages prayed in aid from the AF (No 3) judgments are, to my considerable surprise, these from my own judgment: . the suspect must always be told sufficient of the case against him to enable him to give effective instructions to the special advocate, notwithstanding that sometimes this will be impossible and national security will thereby be put at risk (para 116).
Plainly there now is a rigid principle.
Strasbourg has chosen in para 220 of A to stipulate the need in all cases to disclose to the suspect enough about the allegations forming the sole or decisive grounds of suspicion against him to enable him to give effective instructions to the special advocate (para 119).
The argument, notwithstanding its apparent acceptance by the Court of Appeal, is to my mind unsustainable.
As all the judgments in AF (No 3), my own not least, made plain, the Grand Chambers judgment in A was to be regarded as indistinguishable simply because of the striking similarities between the two situations then under consideration: Belmarsh detention and the control order regime.
To suggest that the identical rigid principle will be imported into every situation where article 6 applies notwithstanding that sometimes this [A type disclosure] will be impossible and national security will thereby be put at risk is absurd.
It is, indeed, to re assert here the very argument already rejected in relation to the cross appeal: the argument that, if giving effect to A type disclosure will compromise national security, then it is always open to government instead to pay up.
True it is that in the control order context, government has on a number of occasions since AF (No 3) chosen to abandon the control order rather than make the necessary degree of disclosure.
That, however, is a far cry from recognising that governments should face the same dilemma in the context of a monetary claim for discrimination.
Although the Court of Appeal did not regard these cases as being in a different category (para 50 of Maurice Kay LJs judgment below), for my part I strongly disagree.
Not merely, moreover, is there no support for Mr Allens argument to be found in our domestic jurisprudence but, as Lord Mance convincingly demonstrates, it is now clearly belied by a series of Strasbourg decisions culminating most recently and most decisively in Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010.
Kennedy concerned a complaint, largely on article 6 grounds, against the ruling of the Investigatory Powers Tribunal (IPT) made on 23 January 2003 as to the legality of various of their rules.
A sufficient description of the highly restrictive nature of these rules is to be found at paras 7 and 25 of my judgment in this Court in R (A) v Director of Establishments of the Security Service [2009] UKSC 12, [2010] 2 AC 1 (at paras 8 and 30 of which I noted that the IPTs own decision on these rules was shortly to be considered by the European Court of Human Rights, as now it has been in Kennedy).
The Court in Kennedy assumed (at para 179 of its judgment) that article 6 applies to proceedings before the IPT and then, at paras 181 190 of its judgment (cited by Lord Mance at paras 34 and 35 above) comprehensively rejected the claim that it had been violated.
There could hardly be a clearer example of a procedure being held compliant with article 6 notwithstanding the conspicuous absence of anything approaching A type disclosure.
The final comments I wish to make in the appeal are these.
Security vetting by its very nature often involves highly sensitive material.
As an immigration officer, Mr Tariq required security clearance to a comparatively high level (above that of a counter terrorist check albeit below that of developed vetting).
Immigration officers require long term, frequent and controlled access to secret information and assets.
It is surely, therefore, not altogether surprising that, upon his brothers and his cousins arrest and more particularly since his cousins conviction and life sentence for conspiracy to murder arising out of a terrorist plot to attack transatlantic flights from Heathrow he has been suspended from duty (albeit continuing to be paid) and his security clearance withdrawn.
No one suggests that Mr Tariq himself was involved in the plot.
What is suggested, however, is that he could be vulnerable to pressures from someone in his community to abuse his position as an immigration officer.
Mr Tariq submitted an internal appeal against the Departmental Security Officers decision to withdraw his security clearance but this was dismissed by the Permanent Secretary of the Home Office (following his consideration of a full report from the Director of Human Resource Services).
Mr Tariq then made a further appeal to the Security Vetting Appeals Panel (SVAP) (presided over by a retired High Court judge) which held both open and closed hearings, with a special advocate appointed for the closed hearings, and which as recently as January 2011 dismissed the appeal. (No objection is taken to the SVAPs use of a closed procedure and special advocate, apparently on the basis that it was bound to use such a procedure and that in any event its decision on the appeal is solely advisory, the department being free to ignore it.)
We know nothing of the underlying facts of this case.
Assume, however, in a case like the present that someone in the employees community (perhaps a relative or associate) has given information in confidence to those responsible for reviewing the employees security clearance which is detrimental to his case.
Perhaps it belies assurances he has given as to the limited nature and extent of his contacts with those suspected of terrorist activity.
It surely goes without saying that nothing of this could properly be disclosed to the employee beyond perhaps telling him that the department was not satisfied with the assurances he has given.
To give chapter and verse of any inconsistencies between those assurances and the information given to the department would be to betray the information provided and quite likely put its provider at risk.
Similar considerations could well apply even in respect of an initial vetting procedure.
Is it really sensible, one cannot help wondering, to attempt to force disputes in such cases as these into the comparative straitjacket of employment tribunal proceedings.
Even if it is, is it sensible to operate in parallel two sets of proceedings, both with closed procedures and special advocates, one before the SVAP, the other before the Employment Tribunal.
Of course I recognise that the issues they are determining are not identical.
But there must inevitably be some substantial overlap between them and the effort, time and expense involved in all this hardly bears thinking about.
In my judgment in R (A) v Director of Establishments of Security Service (at paras 34 and 35) I expressly contemplated that in certain circumstances the IPTs exclusive jurisdiction might with advantage be widened.
True, I was not considering a case like the present.
I seriously wonder, however, whether it might not be wise to channel all disputes arising in security vetting cases to a single tribunal if not the IPT itself, then a body sharing some at least of its characteristics.
That, however, is a thought for the future perhaps for consideration in relation to a Green Paper we are told will be published later this year with regard to possible ways of resolving, or at least mitigating, the undoubted problems faced by Government in litigation raising sensitive security issues.
LORD KERR
Introduction
On 14 February 2008 the Employment Tribunal dealing with Mr Tariqs case sent to the minister a copy of the reasons it proposed to give for making its order under rule 54 of the First Schedule to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (SI 2004/1861).
It was required to do so by rule 10 of the Employment Tribunals (National Security) Rules 2004 which are contained in Schedule 2 to the 2004 Regulations.
The reasons were amended by the minister (or, more probably, by someone acting on his behalf) and were eventually issued to the claimant and his advisers in their amended form on 15 October 2008.
The reasons that the tribunal proposed to give Mr Tariq related to the way in which his case would be dealt with.
They purported to explain why he and his representatives would be excluded from those parts of the proceedings at which closed evidence was to be given or closed documents were to be considered; why a special advocate was to be appointed to represent his interests in any part of the proceedings from which he and his representatives were to be excluded; and why the proceedings should be held entirely in private.
As a means of explaining these matters to Mr Tariq, the reasons given were, to say the least, not informative.
Para 10 encapsulated them.
It stated: Having read the relevant documents and having heard submissions, I was satisfied that it was expedient in the interest of national security to make an order under rule 54 as set out in the separate document marked as Orders.
I was further satisfied that it would be in the interest of the claimant if a special advocate were to be appointed for the matter to be further reviewed, as I am required to do, at the next case management discussion on 1 May 2008 when not only can the issues as to what documents should be in the closed and open bundles and what should be included in the closed and open witness statements be addressed but also any submissions from the special advocate in that regard at that case management discussion in the anticipation that there would have been such an appointment before then.
Beyond saying that the decisions as to the way in which his case was to be heard had been taken for reasons of national security, this paragraph conveyed precisely nothing to the claimant.
The paragraphs that had preceded it did little more.
Apart from rehearsing the submissions that had been made by either party, they said virtually nothing.
But that did not make them immune from the ministers blue pen.
In para 5 of the reasons the tribunal had set out (in 5.1, 5.2 and 5.3) the Home Office submissions that the entire proceedings should be held in private; that Mr Tariq and his representative should be excluded while closed evidence or documents were being considered; and that the tribunal should consider both the closed evidence and closed documents and that these would be provided to a special advocate, if one was appointed.
In its original form, the statement of reasons continued at para 6: The respondents made this application on the basis that given the circumstances and the relationship of the claimant to other parties involved in what was believed to be unlawful activities and the fact that he might have contact with them that there could be inadvertent disclosure by him of information that was either sensitive or classified.
Now it should be noted that on 30 August 2006, the departmental security officer, Jacqueline Sharland, had met Mr Tariq and his union representative and she had then explained that the review of Mr Tariq's security clearance had been prompted by national security concerns and that these related to Mr Tariq's vulnerability.
At that meeting Mr Tariq indicated that he understood that the withdrawal of his security clearance had occurred because his brother had been arrested.
There was no demur from Ms Sharland to this suggestion.
Despite this, in October 2008, more than two years later, the minister (or a civil servant acting on his behalf) felt that para 6 of the tribunals reasons required amendment.
He directed that it should be changed so as to read as follows: The respondents made the applications at paras 5.1 5.3 above, on the basis that the material in the closed bundle provided to the tribunal was sensitive on grounds of national security and accordingly should not be disclosed to the claimant or his representative.
So, although Mr Tariq had been informed by the departmental security officer that his security clearance had been reviewed because he was considered to be vulnerable, and although he had responded that he believed that that had happened because his brother had been arrested, the Home Office view was that it was necessary on national security grounds that he should not be told in October 2008 that others who were believed to be involved in unlawful activities might receive sensitive or classified information that he might inadvertently impart to them.
It has never been explained why the view was taken that this information could not be disclosed.
Mystifying though this is, the second change to the statement of reasons directed by the minister is even more inexplicable.
This required the complete deletion of para 8 of the reasons.
This paragraph had done no more than summarise an argument made on the respondents behalf in the presence of Mr Tariqs representative, an argument of which, therefore, it must be assumed, he was fully aware.
It had stated: The respondents further maintained that due to the nature of the contact and the place of contact (the claimant's parents home at which he partially resided with his family during most week ends), it was inappropriate for all these matters to be disclosed on a public basis and that there were matters properly to be dealt with on a closed basis and for the hearing generally to be in private.
Again no explanation for the decision to withhold this information has been given.
It seems likely that its subsequent disclosure and the full revelation of what para 6 contained was brought about by representations made by the special advocate appointed to act on Mr Tariqs behalf.
Lord Mance has said that this is an indication of one of the purposes that a special advocate may serve.
It may very well amount to such an indication but the fact that the intervention of the special advocate was required to secure the release of material which ought never to have been withheld is, in my opinion, profoundly troubling.
Lord Mance has suggested that the course of events about the disclosure of this information offers a cautionary message.
It does more than that.
It illustrates all too clearly the dangers inherent in a closed material procedure where the party which asks for it is also the repository of information on the impact that an open system will avowedly have on national security.
The common law right to know and effectively challenge the opposing case
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.
In Kanda v Government of Malaya [1962] AC 322, 337 Lord Denning said: 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.
This appears in all the cases from the celebrated judgment of Lord Loreburn LC in Board of Education v Rice down to the decision of their Lordships Board in Ceylon University v Fernando.
It follows, of course, that the judge or whoever has to adjudicate must not hear evidence or receive representations from one side made behind the back of the other.
The centrality of this right to the fairness of the trial process has been repeatedly emphasised.
Thus, in In re K (Infants) [1963] Ch 381 Upjohn LJ at pp 405 406 said: It seems to be fundamental to any judicial inquiry that a person or other properly interested party must have the right to see all the information put before the judge, to comment on it, to challenge it and if needs be to combat it, and to try to establish by contrary evidence that it is wrong.
It cannot be withheld from him in whole or in part.
If it is so withheld and yet the judge takes such information into account in reaching his conclusion without disclosure to those parties who are properly and naturally vitally concerned, the proceedings cannot be described as judicial.
And in Brinkley v Brinkley [1965] P 75, 78 Scarman J said that for a court to take into consideration evidence which a party to the proceedings has had no opportunity during trial to see or hear, and thus to challenge, explain or comment upon, seems to us to strike at the very root of the judicial process.
In Pamplin v Express Newspapers Ltd [1985] 1 WLR 689 at 691 Hobhouse J expressed the principle in similarly forthright terms: The first principle is the principle of natural justice which applies wherever legal proceedings involve more than one person and one party is asking the tribunal for an order which will affect and bind another.
Natural justice requires that each party should have an equivalent right to be heard.
This means that if one party wishes to place evidence or persuasive material before the tribunal, the other party or parties must have an opportunity to see that material and, if they wish, to submit counter material and, in any event, to address the tribunal about the material.
One party may not make secret communications to the court.
Exceptions to the rule that a party to the proceedings must be informed of every detail of his opponents case have, of course, been recognised.
But it is essential to be aware of the starting point from which one must embark on the inquiry whether the principle of equality of arms (which is such a vital hallmark of our adversarial system of the trial of contentious issues) may be compromised.
As a general indeed, basic rule, those who are parties to litigation need to know what it is that their opponent alleges against them.
They need to have the chance to counter those allegations.
If that vital entitlement is to be denied them, weighty factors must be present to displace it.
And it is self evident that he who wishes to have it displaced must show that there are sufficiently substantial reasons that this should happen.
Put shortly, he who thus avers must establish that nothing less will do.
The case made on behalf of the appellant in this appeal has been stigmatised by the suggestion that it amounts to a claim that the state must accept that it should pay compensation even in those instances where the claimant is known to be wholly undeserving but it is impossible to adduce evidence that would establish this because of national security considerations.
The respondent claimed and the majority have accepted that the law will not contemplate such a situation.
In my view, however, this approach carries the danger of allowing the possible consequences of the implementation of the proper principle to effect a modification of the principle itself.
So, because, it is said, the state, faced with the dilemma of having to choose between revealing the information on which it relies to defeat the claim and compromising national security by doing so, would be forced to settle the case, a better solution must be found.
That better solution is that the state should be allowed to deploy the information on which the claim can be defeated but be absolved from the need to disclose it to the claimant.
This solution, it is clear, is founded not on principle but on pragmatism.
Pragmatic considerations, of course, have their part to play in the resolution of difficult legal conundrums but, I suggest, they have no place here.
Where, as in this case, the challenged decision is the subject of factual inquiry or dispute and the investigation of the disputed facts centres on an individuals actions or, to bring the matter directly to the circumstances of this case, his supposed vulnerability, that individual is the critical source of information needed to discover the truth; in many cases he may be the only source.
If he is denied information as to the nature of the case made either directly against him or, as seems more likely here, against others whose presumed relationship with the claimant renders it unsuitable for him to retain security clearance and if he is thereby forced to speculate on the content of the defendants case, no truly adversarial proceedings are possible.
As Upjohn LJ put it in In re K, the proceedings are not judicial.
The withholding of information from a claimant which is then deployed to defeat his claim is, in my opinion, a breach of his fundamental common law right to a fair trial.
Even if the closed material procedure was compatible with article 6 of the European Convention on Human Rights (and for reasons that I will discuss presently, I do not believe that it is) this has no bearing on the appellants right at common law to be provided with details of the case against him sufficient to enable him to present a reasoned challenge to it.
This courts endorsement of a principle of non disclosure whereby a party in civil proceedings may have withheld from him the allegations forming the basis of the opposing case is a landmark decision, marking a departure from the common laws long established commitment to this basic procedural right.
In my view, the removal of that right may only be achieved by legislation and only then by unambiguous language that clearly has that effect.
In R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, dealing with Parliaments power to legislate contrary to fundamental human rights, Lord Hoffmann at p 131 said: Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights.
The Human Rights Act 1998 will not detract from this power.
The constraints upon its exercise by Parliament are ultimately political, not legal.
But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost.
Fundamental rights cannot be overridden by general or ambiguous words.
This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process.
In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual.
In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document.
Although that statement of principle was made in the context of legislation overriding human rights, it applies with equal force to legislation affecting other constitutional rights such as arise in this case.
In R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604, at para 27 Lord Steyn said of Lord Hoffmanns dictum, this principle may find its primary application in respect of cases under the European Convention on Human Rights.
But the Convention is not an exhaustive statement of fundamental rights under our system of law.
Lord Hoffmann's dictum applies to fundamental rights beyond the four corners of the Convention.
In my view it is engaged in the present case.
And it therefore seems to me remarkable that a modification of such a fundamental right can be achieved without the unambiguous legislative provision that would be required to alter a right arising under the Convention.
To recognise that this right continues to exist at common law does not mean that every time the state wishes to withhold information from a claimant which, although vital to the defence of the claim, cannot be revealed for reasons of national security, it must submit to settlement of the claim.
As the experience in Carnduff v Rock [2001] EWCA Civ 680, [2001] 1 WLR 1786 illustrates, it is perfectly proper and, more importantly, principled to find in such cases that they cannot be regarded as justiciable because no just trial is possible.
Where insistence upon a fully fair hearing for a claimant will deny the defendant (or where it is not a party, the state) the protection of its vital interests that the law should recognise, then a truly fair proceeding is not possible and the trial should be halted in limine.
Lord Mance has said that this is not an option that the law should readily contemplate.
I agree but it seems to me to be a plainly more palatable course than to permit a proceeding in which one party knows nothing of the case made against him and which, by definition, cannot be subject to properly informed challenge.
At least in the Carnduff situation both parties are excluded from the judgment seat.
In the state of affairs that will result from the decision of the majority in this case, one party has exclusive access to that seat and the system of justice cannot fail to be tainted in consequence.
Article 6
Article 6(1) of the European Convention on Human Rights and Fundamental Freedoms provides: 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 is well established that the overriding right guaranteed by article 6(1), the right to a fair trial, is absolute see Montgomery v HM Advocate [2003] 1 AC 641, 673, Brown v Stott [2003] 1 AC 681, 719 and Dyer v Watson [2002] UKPC D1, [2004] 1 AC 379 at para 73.
But the constituent rights comprised, whether expressly or implicitly, within article 6 are not themselves absolute: Brown v Stott at 704 per Lord Steyn.
One of the implicit constituent rights of article 6 is that there should be equality of arms between the parties to proceedings.
Of this constituent right, Lord Bingham said in Brown v Stott at 695 that it lay at the heart of the right to a fair trial.
Equality of arms is the means by which a fair adversarial contest may take place.
It requires that there must be an opportunity for all parties to be aware of and to comment on all the evidence adduced or observations submitted, with a view to influencing the courts decision Vanjak v Croatia (Application No 29889/04) (unreported) 14 January 2010, at para 52.
Although, as a constituent element of article 6, equality of arms is not an absolute right, restrictions may only be placed upon it where it is strictly necessary and proportionate do so.
A strong countervailing public interest is required to satisfy this requirement.
Moreover, the restriction must be sufficiently counterbalanced by appropriate procedures allowed by the judicial authorities.
And the restrictions must not be such as effectively to extinguish the very essence of the right.
These propositions derive from a series of decisions of the European Court of Human Rights (ECtHR) which constitute a clear and constant line of authority emanating from Strasbourg.
One may begin with Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249.
At para 72 the court said: 72.
The Court recalls that article 6(1) embodies the right to a court, of which the right of access, that is the right to institute proceedings before a court in civil matters, constitutes one aspect.
In this respect, the contracting states enjoy a certain margin of appreciation, although the final decision as to the observance of the Convention's requirements rests with the Court.
It must be satisfied that the limitations applied do not restrict or reduce the access left to the individual in such a way or to such an extent that the very essence of the right is impaired.
Furthermore, a limitation will not be compatible with article 6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved.
So the very essence of the right must not be impaired and the restriction on the constituent right must be proportionate.
In Rowe and Davis v United Kingdom (2000) 30 EHRR 1 at para 61 the court said: . as the applicants recognised, the entitlement to disclosure of relevant evidence is not an absolute right.
In any criminal proceedings there may be competing interests, such as national security or the need to protect witnesses at risk of reprisals or keep secret police methods of investigation of crime, which must be weighed against the rights of the accused.
In some cases it may be necessary to withhold certain evidence from the defence so as to preserve the fundamental rights of another individual or to safeguard an important public interest.
However, only such measures restricting the rights of the defence which are strictly necessary are permissible under article 6(1).
Moreover, in order to ensure that the accused receives a fair trial, any difficulties caused to the defence by a limitation on its rights must be sufficiently counterbalanced by the procedures followed by the judicial authorities.
A precisely similar formula was employed by the court in para 52 of its judgment in Jasper v United Kingdom (2000) 30 EHRR 441 and in para 52 of Pocius v Lithuania (Application No 35601/04) (unreported) 6 July 2010.
Significantly, it was also used by the court at para 184 of its judgment in Kennedy v United Kingdom (Application No 26839/05) (unreported) 18 May 2010 where it was confirmed that these principles apply with equal force to civil proceedings.
From these statements it is clear that the balancing exercise between, on the one hand, full access to all the elements of the equality of arms principle and, on the other, the withholding of evidence on the grounds of national security, must be conducted on the basis that only such restriction on full access to relevant material as is absolutely required can be countenanced.
And even if that hurdle is surmounted, it must be shown that the limitation on the rights of the party who is denied such access is adequately offset by sufficient counterbalancing measures.
It seems to me that measures can only be regarded as sufficient if they either wholly eliminate the disadvantage that would otherwise have accrued or if they diminish the difficulties deriving from the non disclosure of the relevant material to a condition of insignificance.
Thus as the interveners, Justice and Liberty, have put it, restrictions on untrammelled access to relevant material can only be justified in a justiciable case where sufficient information about the substantive case which a party has to meet is disclosed so that he may effectively challenge it.
Otherwise, the limitation on the right to equality of arms can in no sense be regarded as having been sufficiently counterbalanced.
A function of the counterbalancing measures is to ensure that the very essence of the right is not impaired.
It is, I believe, important to have a clear understanding of what is meant by the essence of the right.
If equality of arms lies at the heart of a fair trial, the essence of the right must surely include the requirement that sufficient information about the case which is to be made against him be given to a party so that he can give meaningful instructions to answer that case.
In Secretary of State for the Home Department v MB [2007] UKHL 46, [2008] AC 440, a case involving a challenge to a non derogating control order, Lord Bingham referred to the general acceptance by the House of Lords in R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738 that there was a core, irreducible, minimum entitlement for the appellant, as a life sentence prisoner, to be able effectively to test and challenge any evidence which decisively bore on the legality of his detention.
That irreducible minimum entitlement also applied in the case of a control order: see para 43 of MB.
The opportunity to know and effectively test the case against him (the core irreducible minimum entitlement) surely captures the essence of the right.
And it seems to me that the essence of the right cannot change according to the context in which it arises.
Whether a hearing should be conducted in private or in open session; whether information about the case against an individual should be provided by way of full disclosure or by redacted statements or in the form of a summary or gist; whether witnesses should be anonymised all of these are variables to which recourse may be had in order to reflect the context in which the requirements of article 6 must be examined.
But if the essence of the right is to be regarded (as I believe it must be) as the indispensable and necessary attributes of the right as opposed to those which it may or may not have, its essence cannot alter according to the circumstances in which it falls to be considered.
Para 217 of the European Court of Human Rights judgment in A v United Kingdom (2009) 49 EHRR 625 has been cited by Lord Mance as an example of the emphasis given by the court to the context in which the requirements of the right were being considered.
That case involved a challenge to the decision of the Home Secretary to certify that each of the applicants should be detained because he reasonably believed that their presence in the United Kingdom posed a threat to national security.
As it seems to me the only relevant part of para 217 is contained in the following passage: In view of the dramatic impact of the lengthy and what appeared at that time to be indefinite deprivation of liberty on the applicants fundamental rights, article 5(4) must import substantially the same
fair trial guarantees as article 6(1) in its criminal aspect
This says nothing about the essence of the right to equality of arms.
It merely (but unsurprisingly) confirms that if ones liberty is to be deprived on foot of the order of the Secretary of State, the same guarantees as are available to defendants in a criminal trial should be extended to those who were the subject of detention orders.
Lord Mance also expressed agreement with the decision of the Court of Appeal in R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287; [2009] 1 WLR 2049 where, according to Lord Mances analysis, it was held that a claim for judicial review of the refusal of an application for British citizenship could be distinguished from the requirements prescribed by A v United Kingdom on the ground that the latter cases focus was on detention.
I do not agree that the AHK case distinguished A v United Kingdom or, at least, that it suggested (contra the decision in A v UK), that abrogation of the right of a claimant to know the essential elements of the case to be made against him was permissible.
The AHK case was principally concerned with the question whether a special advocate should be appointed.
In the list of principles to be applied in cases where the Secretary of State has decided that the reasons for refusing British citizenship could not be fully disclosed Sir Anthony Clarke MR at para 37 (iv) (d) said: All depends upon the circumstances of the particular case, but it is important to have in mind the importance of the decision from the claimant's point of view, the difficulties facing the claimant in effectively challenging the case against him in open court and whether the assistance of a special advocate will or might assist the claimant in meeting the Secretary of State's case and the court in arriving at a fair conclusion.
Underlying this statement is the acknowledgment that the claimant must be assisted in meeting the Secretary of States case.
There is no reason to suppose that the Court of Appeal would have endorsed a procedure where the claimant was effectively prevented from knowing and meeting the essential case made against him.
At a theoretical level it is possible that advocates retained to consider material that cannot be disclosed to a claimant can supply the vital ingredient of ensuring that the case made against the claimant is effectively met.
In such circumstances the essence of the article 6 right is not lost.
But AHK is not authority for the proposition that where that indispensable requirement cannot be fulfilled and the claimant is prevented from presenting a fully informed opposition to the case made against him, no violation of article 6 arises because the consequences for the claimant are less serious than the deprivation of his liberty.
It is, I believe, crucial to a proper understanding of ECtHR jurisprudence in this area that the essence of the right under article 6 is that a party is entitled to know and effectively challenge the case made against him.
Equality of arms, or a properly set adversarial contest, requires that both parties have equal, or at least a sufficient, access to the material that will be deployed against them.
The adversarial contest sets the context and the adversarial contest arises in relation to article 6 rights as opposed to other Convention rights.
Thus cases such as Leander v Sweden (1987) 9 EHRR 433 (which was concerned with alleged violations of articles 8, 10 and 13) and Esbester v United Kingdom (1998) 18 EHRR CD72 (which dealt with claims under article 8 and 13) are of little assistance in determining the requirements of the equality of arms principle under article 6.
Equality of arms did not arise in these cases.
No adversarial contest was engaged.
Whether it is legitimate to withhold information in an article 8 or an article 10 context has nothing to do with the propriety of its non disclosure where parties are seeking a resolution of competing cases from a properly informed and impartial tribunal.
Articles 8 and 10 are qualified rights.
Interference with those rights may be justified on grounds specified in the articles.
By contrast, article 6 is not subject to exemption from the effect of interference.
Kennedy v United Kingdom involved complaints made by the applicant to the Investigatory Powers Tribunal (IPT) that his communications were being intercepted.
The applicant had sought specific directions regarding the conduct of the proceedings in order to ensure the protection of his Convention rights under article 6 (1).
In particular, he asked that his arguments and evidence be presented at an oral hearing; that all hearings be conducted in public; that there be mutual disclosure and inspection between the parties of all witness statements and evidence upon which parties sought to rely and exchange of skeleton arguments in relation to planned legal submissions; that evidence of each party be heard in the presence of the other party or their legal representatives, with oral evidence being open to cross examination by the other party; that any opinion received from a commissioner be disclosed to the parties; and that, following its final determination, the IPT state its findings and give reasons for its conclusions on each relevant issue.
IPT had held that the applicants proceedings before that tribunal engaged article 6.
That finding was somewhat diffidently contested before ECtHR, the government contending that there was no civil right involved.
It was not contended, as it might well have been, that article 6, according to the courts constant jurisprudence, did not apply to cases of surveillance.
ECtHR proceeded on the assumption that article 6 did apply.
It is significant that the courts judgment is largely preoccupied with a consideration of the various specific claims made by the applicant about how the proceedings should be conducted.
The question of providing him with sufficient information in the form of a gist or summary to meet the case against him did not feature in the list of those claims.
The question of supplying redacted documents is discussed, however, and the courts decision seems largely to have been influenced by the argument advanced on behalf of the government that it was simply not possible to produce the information that the applicant sought because national security would inevitably be compromised.
That stance is entirely consistent with the view that surveillance cases do not engage article 6.
It is surprising that more was not made of this by the government and that the court did not address the issue directly.
If it had done and if it had followed its own constant jurisprudence, the anomaly, which I believe the decision in Kennedy represents, would have been avoided.
In Klass v Federal Republic of Germany (1978) 2 EHRR 214 at para 75 ECtHR said this about secret surveillance: As long as it remains validly secret, the decision placing someone under surveillance is thereby incapable of judicial control on the initiative of the person concerned, within the meaning of article 6; as a consequence, it of necessity escapes the requirements of that article.
The logic of this position is inescapable.
The entire point of surveillance is that the person who is subject to it should not be aware of that fact.
It is therefore impossible to apply article 6 to any challenge to the decision to place someone under surveillance, at least until notice of termination of the surveillance has been given.
This approach has been consistently applied by the court.
So for instance in Rotaru v Romania (2000) 8 BHRC 449 at para 69 the court said where secret surveillance is concerned, objective supervisory machinery may be sufficient as long as the measures remain secret.
It is only once the measures have been divulged that legal remedies must become available to the individual.
It is precisely because the fact of surveillance must remain secret in order to be efficacious that article 6 cannot be engaged.
It appears to me, therefore, that the decision in Kennedy ought to have been made on the basis that article 6 was not engaged because the issues that the case raised were simply not justiciable.
That the decision is out of line with the established jurisprudence of the court is perhaps best exemplified by contrasting it with the approach of the Grand Chamber in A v United Kingdom as applied by the House of Lords in Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269.
At para 59 Lord Phillips said this about the ratio in A v United Kingdom: I am satisfied that the essence of the Grand Chamber's decision lies in para 220 and, in particular, in the last sentence of that paragraph.
This establishes that the controlee must be given sufficient information about the allegations against him to enable him to give effective instructions in relation to those allegations.
Provided that this requirement is satisfied there can be a fair trial notwithstanding that the controlee is not provided with the detail or the sources of the evidence forming the basis of the allegations.
Where, however, the open material consists purely of general assertions and the case against the controlee is based solely or to a decisive degree on closed materials the requirements of a fair trial will not be satisfied, however cogent the case based on the closed materials may be.
Whilst Lord Phillips at para 65 implied that the Grand Chambers decision (that non disclosure cannot deny a party knowledge of the essence of the case against him) might apply only where the consequences for an individual were as severe as those normally imposed under a control order, there are indications in his and other speeches that the principle is of general application.
In particular, Lord Phillips rejected the suggestion that there should be a different standard where the control order did not amount to detention para 63 and at para 64 he said this: The best way of producing a fair trial is to ensure that a party to it has the fullest information of both the allegations that are made against him and the evidence relied upon in support of those allegations.
Where the evidence is documentary, he should have access to the documents.
Where the evidence consists of oral testimony, then he should be entitled to cross examine the witnesses who give that testimony, whose identities should be disclosed.
Both our criminal and our civil procedures set out to achieve these aims.
In some circumstances, however, they run into conflict with other aspects of the public interest, and this is particularly the case where national security is involved.
How that conflict is to be resolved is a matter for Parliament and for government, subject to the law laid down by Parliament.
That law now includes the Convention, as applied by the HRA.
That Act requires the courts to act compatibly with Convention rights, in so far as Parliament permits, and to take into account the Strasbourg jurisprudence.
That is why the clear terms of the judgment in A v United Kingdom resolve the issue raised in these appeals.
The views of Lord Hope were equally clear and comprehensive.
At para 83 he said: The approach which the Grand Chamber has adopted is not, as it seems to me, at all surprising.
The principle that the accused has a right to know what is being alleged against him has a long pedigree.
As Lord Scott of Foscote observed in A v Secretary of State for the Home Department [2005] 2 AC 68, para 155, a denunciation on grounds that are not disclosed is the stuff of nightmares.
The rule of law in a democratic society does not tolerate such behaviour.
The fundamental principle is that everyone is entitled to the disclosure of sufficient material to enable him to answer effectively the case that is made against him.
Lady Hale in para 103 said that Strasbourg had now made it entirely clear what the test of a fair hearing is.
The test was whether the controlled person had had the possibility to challenge effectively the allegations made against him.
He had to have sufficient information about those allegations to be able to give effective instructions to his special advocate.
If the majority in this appeal are right, however, the test of a fair hearing in Mr Tariqs case is different.
He need not be given sufficient information about the allegations against him to challenge them effectively or to give effective instructions to his special advocate.
For my part I cannot understand why this should be so.
The result of the decision of the majority is to create a different class of case from that where what Lord Brown has helpfully described as A type disclosure must be given.
The eligibility criteria for inclusion in this privileged group are not clear.
Certainly, the class is not confined to those whose liberty is at stake, as the speeches in AF (No 3) make clear.
And, presumably, it must also include freezing order cases Kadi v Council of the European Union Joined Cases C 402/05 P and C 415/05 P [2009] AC 1225, as applied by the European General Court in Kadi II Case T 85/09 [2011] 1 CMLR 697.
If A type disclosure is required in challenges to freezing orders, does it extend to property rights more generally? If it does, why should property rights be distinguished from loss of employment cases? After all, loss of livelihood may be just as devastating as having ones assets frozen.
It seems to me that there is no principled basis on which to draw a distinction between the essence of the right to a fair trial based on the nature of the claim that is made.
A fair trial in any context demands that certain indispensable features are present to enable a true adversarial contest to take place.
That conclusion is reflected in the later decision of ECtHR of Uukauskas v Lithuania (Application No 16965/04) (unreported) 6 July 2010.
Lord Mance has sought to distinguish this case on the basis that the procedure adopted was contrary to national law.
But that consideration was in no sense central to the courts reasoning.
On the contrary, the observation (at para 48) that Lithuanian law and judicial practice provide that such information may not be used as evidence in court against a person unless it has been declassified, and that it may not be the only evidence on which a court bases its decision was made in order to draw a contrast with the view that documents which constitute state secrets may only be disclosed to persons who possess the appropriate authorisation.
It is quite clear that the violation of article 6 which the court held to have occurred was based on conventional ECtHR principles.
This much is evident from para 51 where the court said; In conclusion, therefore, the Court finds that the decision making procedure did not comply with the requirements of adversarial proceedings or equality of arms, and did not incorporate adequate safeguards to protect the interests of the applicant.
It follows that there has been a violation of article 6(1) in the present case.
The unavoidable result from this case is that Strasbourg has again made it entirely clear what the test for a fair hearing is where someone seeks to challenge a decision that he should be removed from a firearms register.
He is entitled to know the reasons that this has happened in order to be able to effectively challenge them.
If that is so, why should someone who has been dismissed from his employment be in a less advantageous position?
Conclusions
I have concluded that the Court of Appeal was correct in finding that where article 6 is engaged, it is necessary for a party to proceedings to be provided with sufficient information about the allegations against him to allow him to give effective instructions to his legal representatives and, if one has been appointed, the special advocate so that those allegations can be effectively challenged.
I would therefore dismiss the appeal by the Home Office.
For the reasons given by Lord Mance, with which I agree, I would hold that the closed material procedure provided for in the Employment Tribunal legislative scheme is not in principle incompatible with article 6 and EU law.
I would therefore also dismiss the cross appeal.
LORD DYSON
I agree that for the reasons given by Lord Mance the Court of Appeal was correct to hold that the closed material procedure provided for in the Employment Tribunal legislative scheme, including its provision for the appointment of special advocates is in principle compatible with article 6 of the European Convention on Human Rights (ECHR) and EU law.
I also agree that the Court of Appeal was wrong to find that, in all cases in which article 6 (civil) is engaged, it is necessary for an individual to be provided with sufficient information about the allegations against him (the gist) to enable him to give effective instructions to his legal representatives and the special advocate (where one has been appointed) in relation to those allegations.
It is on this second question that I wish to add some words of my own.
General observations about closed procedures
The article 6 right to a fair trial is absolute: see, for example, per Lord Hope in Dyer v Watson [2002] UKPC D1 [2004] 1 AC 379 at para 73.
In principle, a fair trial presupposes adversarial proceedings and equality of arms.
Thus, for example, in Vanjak v Croatia (Application No 29889/04) (unreported) 14 January 2010, at para 52, the European Court of Human Rights said: . . independently of whether the case is a civil, criminal or disciplinary one, the right to adversarial proceedings has to be complied with.
That right means in principle the opportunity for the parties to court proceedings falling within the scope of article 6 to have knowledge of and comment on all evidence adduced or observations submitted, with a view to influencing the courts decision.
But the constituent elements of a fair process are not absolute or fixed: see Brown v Stott [2003] 1 AC 681 at 693D E per Lord Bingham; 719G H per Lord Hope; and 727H per Lord Clyde.
This was re affirmed by the ECtHR in relation to article 5(4) in A v United Kingdom (2009) 49 EHRR 625 at para 203: The requirement of procedural fairness under article 5(4) does not impose a uniform, unvarying standard to be applied irrespective of the context, facts and circumstances.
Moreover, it has been recognised by the ECtHR that there are circumstances where a limitation on what would otherwise be a general rule of fairness is permissible.
Thus in Rowe and Davis v United Kingdom (2000) 30 EHRR 1, at para 61, the European Court of Human Rights said: the entitlement to disclosure of relevant evidence is not an absolute right.
In any criminal proceedings there may be competing interests, such as national security or the need to protect witnesses at risk of reprisals or keep secret police methods of investigation of crime, which must be weighed against the rights of the accused.
In some cases it may be necessary to withhold certain evidence from the defence so as to preserve the fundamental rights of another individual or to safeguard an important public interest.
However, only such measures restricting the rights of the defence which are strictly necessary are permissible under article 6(1).
Moreover, in order to ensure that the accused receives a fair trial, any difficulties caused to the defence by a limitation on its rights may be sufficiently counterbalanced by the procedures followed by the judicial authorities.
Prima facie, a closed material procedure denies the party who is refused access to the closed material the right to full and informed participation in adversarial proceedings and to that extent is inconsistent with the principle of equality of arms.
There are two factors which the Secretary of State says are sufficient to counterbalance the effects of the closed material procedure in the present case.
The first is that there is scrutiny by an independent court (the Employment Tribunal) fully appraised of all relevant material and experienced in dealing with discrimination cases.
The second is the testing by a special advocate of the Home Offices case in closed session.
But are these factors sufficient in circumstances where the gist of the Home Office case is not disclosed to the claimant? How can the special advocate represent the claimants interests if the claimant is unable to give full instructions to him? The answer to these questions in the context of proceedings involving the liberty of the subject is clear.
If the special advocate is unable to perform his function in any useful way unless the detainee is provided with sufficient information about the allegations to enable him to give effective instructions to the special advocate, then there must be disclosure to the detainee of the gist of that information: see A v United Kingdom at para 220 and, in the context of control orders, Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2010] 2 AC 269.
In such a case, there must be disclosure, regardless of how important the competing national interest may be in favour of withholding the information.
The consequence of this will inevitably be that in some cases the prosecuting or detaining authorities will be faced with the invidious choice of disclosing sensitive information or risking losing the case.
But what is the position in cases which do not involve the liberty of the subject? For the reasons given by Lord Mance and Lord Brown, I agree that neither A v United Kingdom nor AF (No3) decides this question.
Mr Allen QC and Mr Howell QC submit that the reasoning in A v United Kingdom is not limited to cases involving the liberty of the subject and should be applied to civil claims too.
They submit that, properly understood, the Strasbourg jurisprudence does not support the proposition that a different approach may be adopted to the problem in civil claims.
They also say that to distinguish between the requirements of article 6 on the basis of a classification of the type of case involved is unprincipled and will give rise to uncertainty and confusion.
But it is clear from para 203 of A v United Kingdom itself that article 6 does not require a uniform approach to be adopted in all classes of case.
In Kennedy v United Kingdom (Application No 26839) (unreported) 18 May 2010, the European Court of Human Rights said that the entitlement to disclosure of relevant evidence is not an absolute right (para 187); the character of the proceedings may justify dispensing with an oral hearing (para 188); and the extent to which the duty to give reasons applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case (para 189).
I therefore agree with what Sir Anthony Clarke MR said when giving the judgment of the court in R(AHK) v Secretary of State for the Home Department (Practice Note) [2009] EWCA Civ 287, [2009] 1 WLR 2049 at para 45: The above analysis shows that the European Court of Human Rights considers each class of case separately.
The issues in this class of case are a far cry from the issues that arise in the criminal cases discussed by the court in A v United Kingdom 19 February 2009.
Moreover, without in any way minimising the effect of being refused British citizenship, the consequences of a deprivation of (or even interference with) liberty are plainly very much more serious.
In these circumstances we do not think that the approach of the court in criminal cases or in cases of deprivation or interference with liberty can or should be applied directly to this class of case.
That is not to say that, as explained earlier, each individual is not entitled to a fair hearing of his application for judicial review.
Nevertheless, I would accept that the general rule is that an applicant should enjoy the full panoply of article 6 rights, including full disclosure of all relevant material and that any limitation on the ordinary incidents of article 6 requires careful justification.
In deciding how to strike the balance between the rights of the individual and other competing interests, the court must consider whether scrutiny by an independent court and the use of special advocates are sufficient to counterbalance the limitations on the individuals article 6 rights.
In many cases, an individuals case can be effectively prosecuted without his knowing the sensitive information which public interest considerations make it impossible to disclose to him.
For example, in a discrimination claim such as that of Mr Tariq, the central issue may well not be whether the underlying security concerns are well founded, but rather whether the decision making process was infected by discrimination.
As Mr Eadie QC points out, Mr Tariqs appeal is not against the assessments or conclusions of the Home Office as to the withdrawal of his security clearance.
SVAP provides the expert forum for considering such issues.
It was not for the Employment Tribunal to determine whether, for example, it believed or did not believe Mr Tariqs assertions about the nature of his relationships with persons involved in or associated with terrorist activities.
Thus in the conduct of a discrimination claim, the special advocate and indeed the judge can to a considerable extent test the case of the alleged discriminator without the input of the claimant.
The surveillance/security vetting cases
Lord Mance has referred at para 68 to what he describes as the clear line of jurisprudence culminating in the Courts decision in Kennedy which demonstrates that, in civil cases, it is not necessary to provide the gist of information which the interests of national security require to be kept secret.
I think that it is necessary to examine the authorities with some care to see precisely what these cases do establish.
In the absence of special circumstances, our courts should follow any clear and constant jurisprudence of the European Court of Human Rights: 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.
The first case to note is Klass v Federal Republic of Germany (1978) 2 EHRR 214.
This involved a challenge to legislation which permitted the authorities to open and inspect mail and listen to telephone conversations in order to protect, inter alia, against imminent dangers threatening the existence or the security of the state.
The challenge was based on an alleged breach of articles 6, 8 and 13 of the European Convention on Human Rights.
At para 75, the European Court of Human Rights said : As long as it remains validly secret, the decision placing someone under surveillance is thereby incapable of judicial control on the initiative of the person concerned, within the meaning of article 6; as a consequence, it of necessity escapes the requirements of that article.
The cases of Leander v Sweden (1987) 9 EHRR 433 and Esbester v United Kingdom (1993) 18 EHRR CD72 are discussed by Lord Mance at paras 28 to 32 above.
They can be considered together, although at first sight it may seem odd to refer to them at all since they are not article 6 cases.
The claim in Leander was brought under articles 8, 10 and 13 and in Esbester under articles 8 and 13.
I accept that what may be a proportionate and justified interference with a persons rights under article 8 may not correspond precisely with what may be a strictly necessary and sufficiently counterbalanced invasion of his right to a fair trial under article 6.
Moreover, it is right to point out that Leander and Esbester were referred to by the European Court of Human Rights in Kennedy, but only in its discussion of the claims under articles 8 and 13: see paras 122, 152, 195 and 197.
The section in Kennedy which deals with article 6 does not refer to either of these authorities.
Mr Eadie accepts that Leander and Esbester did not concern article 6.
He relies on them as being directly analogous to the present case, relating to security vetting in an employment context.
Issues of fairness were central to the issues arising under articles 8 and 10 and the right to an effective remedy under article 13.
The European Court of Human Rights found that the vetting systems in those cases were compatible with article 8 and upheld the right of the state not to disclose the reasons for the rejection of the applicants application for employment as a result of a security vetting process.
Whereas Klass is a case where it seems to have been held that article 6 did not apply at all and Leander and Esbester are not article 6 cases, there can be no doubt that Kennedy is an article 6 case.
In Kennedy (which was decided after the decision of the Court of Appeal in the present case), the applicant complained about an alleged interception of his communications, claiming that it was a violation of his article 8 rights.
He also complained that the hearing before the Investigatory Powers Tribunal (IPT) was not attended by adequate safeguards as required under article 6 and that, as a result, he had been denied an effective remedy under article 13.
Lord Mance has set out the relevant passages of the judgment at paras 34 and 35 above.
The submissions of the parties summarised at paras 180 to 183 of the judgment were directed to the question of what article 6 required.
It is of note that the Government submitted that the scope of the article 6 guarantees in that case should be in harmony with the Courts approach to judicial control under article 8.
The courts assessment at paras 184 to 191 was explicitly on the basis of the application of article 6.
In contrast with para 75 of Klass, the court did not say that the case escapes the requirements of [article 6].
Thus at para 186, the court emphasised that the proceedings related to secret surveillance measures and that there was therefore a need to keep secret sensitive and confidential information.
The court continued: this consideration justifies restrictions in the IPT proceedings.
The question is whether the restrictions, taken as a whole, were disproportionate or impaired the very essence of the applicants right to a fair trial.
This is the classic approach to article 6.
The courts conclusion at para 190 was that the restrictions on the procedure before the IPT did not violate the applicants right to a fair trial.
In reaching this conclusion, the court took into account the breadth of access to the IPT (an independent court) enjoyed by those complaining about interception and the absence of any evidential burden to be overcome in order to lodge an application with the IPT.
It concluded: In order to ensure the efficacy of the secret surveillance regime, and bearing in mind the importance of such measures to the fight against terrorism and serious crime, the Court considers that the restrictions on the applicants rights in the context of the proceedings before the IPT were both necessary and proportionate and did not impair the very essence of the applicants article 6 rights.
Mr Allen and Mr Howell submit that Kennedy should be understood as a decision that, so long as the very subject matter of the dispute must justifiably remain secret, is effectively non justiciable and the substantive protections that article 6 contains cannot be applied in substance to its resolution.
In other words, they submit that the decision in Kennedy should be analysed as an application of para 75 of Klass.
If, however, the court had intended to adopt this approach, it would have said so.
Instead, it clearly purported to apply article 6.
Kennedy is a striking decision.
But for the security issues raised in the case, it is surely inconceivable that the court would have concluded that the restrictions on the applicants rights before the IPT (a completely closed procedure without even the protection of a special advocate) were necessary and proportionate and did not impair the very essence of the applicants article 6 rights.
The crucial reason for this conclusion was that the restrictions on the applicants rights were necessary in order to ensure the efficacy of the secret surveillance regime.
Kennedy was a case about a secret surveillance regime by interception of his communications.
This same language was used by the court in Klass at para 58 to justify the interference with the applicants article 8 rights in that case (another interception of communications case): the fact of not informing the individual once surveillance has ceased cannot itself be incompatible with this provision, since it is this very fact which ensures the efficacy of the interference.
The same reasoning appears in the security vetting cases of Leander and Esbester.
Thus, for example, at para 66 of Leander, the court said that the very fact that the information released to the military authorities was not communicated to Mr Leander cannot by itself warrant the conclusion that the interference was not necessary in a democratic society in the interests of national security, as it is the very absence of such communication which, at least partly, ensures the efficacy of the personnel control procedure.
In support of this proposition, the court referred to para 58 of Klass.
There is similar reasoning in the Commissions decision in Esbester.
In my view, the significance of Kennedy is that it is a decision explicitly based on an application of article 6 which adopted the same approach as that which was taken by the court in applying articles 8 and 13 in Leander and by the Commission in Esbester.
This provides clear support for the submission of Mr Eadie that, for the purposes of the issues that arise in the present case, there is no material difference between articles 8 and 13 on the one hand and article 6 on the other.
I do not consider that, if the complaints in Leander and Esbester had been based on article 6, the outcome in these cases would have been different.
The other point to emphasise is that these cases show that there is no material difference between surveillance cases (such as Klass and Kennedy) and security vetting cases (such as Leander and Esbester).
In the former, restrictions on an individuals right to disclosure and participation in a hearing will be considered necessary and proportionate if they are required in order to ensure the efficacy of the secret surveillance regime.
In the latter, the restrictions will be considered necessary and proportionate if they are required in order to ensure the efficacy of the personnel control procedure.
Mr Allen and Mr Howell submit that the limited significance of Leander, Esbester and Kennedy is demonstrated by the decision of the ECtHR in Uukauskas v Lithuania (Application No 16965/04) (unreported) 6 July 2010.
Lord Mance has set out the facts at para 37 above.
I find this a difficult decision to interpret.
On the one hand, the court approached the matter in conventional article 6 terms: see para 46 where it noted that (i) the entitlement to disclosure of relevant evidence is not an absolute right; (ii) it may be necessary to withhold certain evidence to safeguard an important public interest; but (iii) only such measures restricting the rights of the defence which are strictly necessary are permissible and there must be sufficient counterbalancing.
At para 48 the court referred to the fact that, according to Lithuanian law and judicial practice, secret information may not be used as evidence in court unless it has been declassified and it may not be the only evidence on which a court bases its decision.
It is not clear to me to what extent the court based its conclusion that there had been a breach of article 6 on the fact that use of the secret material against the applicant (which was of decisive importance to his case) was contrary to Lithuanian law.
But I accept that on the face of it, this is an article 6 decision which does not sit easily with the surveillance/vetting procedure cases to which I have referred.
There is no reference to them.
There is no weighing of the national interest in the protection of the community against crime against the general right to adversarial proceedings.
For these reasons and because it is unclear to what extent the position under Lithuanian law influenced the decision, I agree with Lord Mance that this decision does not cast doubt on the approach adopted in the surveillance/security vetting cases.
Unlike Lord Mance, however, I doubt whether the fact that there is no procedure under Lithuanian law for the use of a special advocate to consider closed material is of significance, since, as was pointed out by the European Court of Human Rights in Kennedy at para 187, the procedure before the IPT did not permit the use of special advocates either.
In my judgment, these decisions show that there is a clear line of authority to support the proposition that, in surveillance and security vetting cases, an individual is not entitled to full article 6 rights if to accord him such rights would jeopardise the efficacy of the surveillance or security vetting regime itself.
On the material shown to us, the line of authority may not be very long, but in my view it is sufficiently clear that it should be followed by our courts.
The cases show, in particular, that there is no right to be given the gist of relevant information if and to the extent that this would jeopardise the efficacy of the surveillance or security vetting regime.
The present case
I have no doubt that article 6 does not require that Mr Tariq should be given the gist of information which would damage or jeopardise national security.
First, and above all, this is a security vetting case and in such a case article 6 does not require gisting if and in so far as it would jeopardise the efficacy of the personnel control procedure.
That is a sufficient reason for allowing the Home Office appeal.
There is no sensible basis for distinguishing the present case from Leander and Esbester.
In those cases (which concerned a complaint about the manner in which security vetting was conducted where the applicant was applying for a sensitive post), article 8 did not require disclosure of the security material.
In the present case, the complaint is about the decision not to allow a person to remain in a post where security vetting was employed.
There can be no distinction in principle between the two cases.
A related point is that in all cases where security clearance is sought, it is because the individual has volunteered to undergo the clearance process for the purpose of doing (or continuing to do) the job that he is employed to do.
He must be taken to know that checks will be made that may produce material that cannot be shown to him.
As Lord Hope points out, he is a volunteer.
I would add the following points which reinforce the Home Office case.
First, the subject matter of the claim is a claim for damages for alleged discrimination.
I do not wish to underestimate the importance of the right not to be subjected to discrimination.
But on any view, discrimination is a less grave invasion of a persons rights than the deprivation of the right to liberty.
Secondly, the issues in the present case are such that the presence of an independent court and a special advocate are likely to go a long way to making up for the fact that Mr Tariq will be unable fully to participate in the proceedings.
As I have explained at para 147 above, there is likely to be only limited (if any) scope for Mr Tariq to be able to give instructions to the special advocate which are necessary to enable her to test the Home Office case effectively.
Conclusion
I would, therefore, allow the Home Offices appeal primarily on the ground that this case concerns a decision taken in the context of security vetting.
In other classes of civil case which are outside the surveillance/security vetting context, the balance between the individuals article 6 rights and other competing interests may be struck differently.
It is said that this gives rise to undesirable uncertainty.
But much of the content of the European Convention on Human Rights is about striking balances.
This is sometimes very difficult and different opinions can reasonably be held.
As a consequence, outcomes are sometimes difficult to predict.
This is inevitable.
But it is not a reason for striving to devise hard and fast rules and rigid classifications.
It is, however, at least possible to say that, in principle, article 6 requires as much disclosure as possible.
It is very easy for the state to play the security card.
The court should always be astute to examine critically any claim to withhold information on public interest grounds.
For the reasons that I have given, I would allow the Home Office appeal.
I would also dismiss the appeal of Mr Tariq for the reasons given by Lord Mance.
LORD PHILLIPS, LADY HALE AND LORD CLARKE
I agree that, for the reasons given by Lord Hope, Lord Brown, Lord Mance and Lord Dyson, the appeal of the Home Office should be allowed and that the cross appeal of Mr Tariq should be dismissed.
LORD RODGER
Lord Rodger, who died before judgment was given in this case, had indicated that he agreed with the judgments of Lord Mance and Lord Brown.
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This appeal concerns the permissibility of a procedure whereby a claimant in employment tribunal proceedings may be excluded along with his representatives from certain aspects of those proceedings on grounds of national security.
In particular the question arises as to whether such a procedure, known as a closed material procedure, is compatible with European Union law and the European Convention on Human Rights.
Mr Tariq was employed as an immigration officer with the Home Office until 2006 when he was suspended and his security clearance withdrawn.
The background for these decisions was the arrest of Mr Tariqs brother and cousin during an investigation into a suspected plot to mount a terrorist attack on transatlantic flights.
Mr Tariqs cousin was convicted in 2008 of various offences in relation to that plot.
No information suggested that Mr Tariq had himself been involved in any terrorism plot.
Mr Tariq commenced proceedings in the Employment Tribunal claiming direct and indirect discrimination on grounds of race and religion.
He alleged that the Home Office had relied on stereotypical assumptions about him, Muslims and individuals of Pakistani origin such as susceptibility to undue influence and that the Home Office had indirectly discriminatory policies and procedures.
The Home Office denied this and stated that its decisions were based on Mr Tariqs association with individuals suspected of involvement in terrorist activities and the risk of their attempting to exert influence on him to abuse his position.
Section 10(6) of the Employment Tribunals Act 1996 provides that the Secretary of State may make regulations that enable a tribunal to adopt a closed material procedure if it considers this expedient in the interests of national security.
Rule 54(2) of Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 (the Regulations) provides for the adoption of a closed material procedure if the tribunal so orders.
Schedule 2 provides for the use of special advocates, whose role is to represent a claimants interests so far as possible in relation to the aspects closed to him and his representatives.
The Employment Tribunal made an order for a closed material procedure, directing that Mr Tariq and his representatives should be excluded from the proceedings when closed evidence or documents were being considered.
Mr Tariq appealed the order to the Employment Appeal Tribunal.
The appeal was dismissed and a further appeal was dismissed by the Court of Appeal.
The Court of Appeal, however, declared that Article 6 of the European Convention on Human Rights required Mr Tariq to be provided with the allegations being made against him in sufficient detail to enable him to give instructions to his legal team so that those allegations can be challenged effectively.
This requirement is known as gisting.
The Home Office appealed to the Supreme Court against the declaration and Mr Tariq cross appealed against the conclusion that a closed material procedure was permissible.
The Supreme Court by a majority of 8 1 allows the Home Offices appeal and sets aside the declaration made by the Court of Appeal requiring the provision of a gist.
Lord Kerr dissents.
The Supreme Court unanimously dismisses Mr Tariqs cross appeal, holding that a closed material procedure is compatible with Article 6 of the European Convention on Human Rights and EU Law.
Mr Tariqs Cross Appeal The issue in the cross appeal was whether the provisions in the Regulations providing for a closed material procedure were contrary to EU law or the European Convention on Human Rights.
It is a basic principle of EU law that national law should provide effective legal protection of EU law rights.
Those rights include the right not to be discriminated against on grounds of race or religion.
As to whether the closed material procedure provided effective legal protection, the case law of the European Court of Justice is clear that EU law will look for guidance on the subject in the case law of the European Court of Human Rights.
That Court has established in a line of cases culminating in Kennedy v UK that the demands of national security may necessitate a system for determining complaints under which a claimant is, for reasons of national security, unable to know the secret material by reference to which his complaint is determined.
The tests are whether the system is necessary and whether it contains sufficient safeguards.
On the facts, both were satisfied.
The system was necessary because security vetting is a highly sensitive area in which integrity of sources of information and the means of obtaining it must be protected.
The alternatives of the Home Office routinely having to pay unmeritorious claims or the courts refusing to hear claims at all are not possibilities that the law should readily contemplate.
The rule of law must, so far as possible, stand for the objective resolution of civil disputes on their merits by a court which has before it material enabling it to do so.
The system contained sufficient safeguards in the form of special advocates, who can usefully protect the claimants interests.
For these reasons the use of the closed material procedure in this case was lawful and the cross appeal must be dismissed.
The Home Offices Appeal The question in the appeal was whether there is an absolute requirement that a claimant should be able to see the allegations against him in sufficient detail to give instructions to his legal team to enable the allegations to be challenged effectively.
Mr Tariq argued that the European Convention on Human Rights contained such a principle.
The Supreme Court, however, held that the line of cases culminating in Kennedy v UK recognised that there was no absolute requirement.
Article 6 of the European Convention on Human Rights provides the right to a fair trial.
The European Court of Human Rights has held that where the liberty of the subject is involved, Article 6 requires the provision of a gist as described by the Court of Appeal.
In cases such as the present not involving the liberty of the subject, however, the question is whether the use of the closed material procedure will impair the very essence of the right to a fair trial.
That cannot be said to be so in this case, as Mr Tariqs claim will be determined by an independent and impartial tribunal and the disadvantages that the procedure gives rise to will as far as possible be minimised.
The appeal was therefore allowed.
Lord Kerr dissented.
He held, first, that the withholding of information from a claimant which is then deployed to defeat his claim is a breach of his fundamental common law right to a fair trial.
The removal of that right can only be achieved by legislation framed in unambiguous language.
Secondly, such withholding also constitutes a breach of a claimants Article 6 right to a fair trial.
Kennedy v UK was an anomaly.
Lord Kerr would therefore have dismissed the appeal.
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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:
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These three appeals concern requests for extradition under European arrest warrants (EAWs).
The Lithuanian Ministry of Justice issued EAWs for Mindaugas Bucnys based on convictions for housebreaking and fraud and for Marius Sakalis based on his conviction for sexual assaults.
The Estonian Ministry of Justice issued an EAW for Mr Dimitri Lavrov based on a conviction for murder.
EAWs are warrants intended to meet the requirements of Council Framework Decision 2002/584/JHA on surrender procedures between member states of the EU (the Framework Decision).
Within the United Kingdom, Part 1 of the Extradition Act 2003 (the 2003 Act) 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) (now the National Crime Agency (NCA), the designated authority under section 2(8), 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.
On 12 December 2012, the Divisional Court answered the first question affirmatively and the second negatively.
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), and that, in this connection, 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.
On the evidence before it, it held that the EAWs issued by the Lithuanian Ministry in respect of Mr Bucnys and Mr Sakalis were valid, while the EAW issued by the Estonian Ministry in respect of Mr Lavrov was invalid.
Mr Bucnys and Mr Sakalis now appeal, while the Estonian Ministry appeals in the case of Mr Lavrov.
During the appeal further evidence was adduced about the legal position and procedures in Lithuania and Estonia.
Since the hearing, the Court has been informed by those instructed by Mr Bucnys that he has [regrettably] died.
The issue remains of importance, and this judgment records the Courts conclusions on it.
The Supreme Court unanimously holds that the arrest warrants issued for Mr Bucnys and Mr Lavrov were valid, whereas that issued for Mr Sakalis was not.
Mr Bucnyss appeal is therefore dismissed.
Mr Sakaliss appeal and the Estonian Ministrys appeal in Mr Lavrovs case are allowed.
Whether a justice ministry can be a judicial authority Mr Bucnys, Mr Sakalis and Mr Lavrov submitted that the relevant ministries of justice could not be a judicial authority because they were not part of the courts or judiciary as ordinarily understood.
The Supreme Court, in a judgment given by Lord Mance with which all other Justices agree, holds that member states were not intended to have carte blanche to define judicial authority however they choose.
The concept is embedded in European Union law.
The Framework Decision is based on article 31(1)(a) of the former Treaty of European Union, which itself distinguishes between ministries and judicial authorities [23].
The concept falls under EU law to be interpreted by looking at the instruments context and intended effects [45].
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 [45].
An EAW issued by a ministry for a convicted person with a view to his or her surrender can be regarded as issued by a judicial authority if the ministry under the relevant national law 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, the court responsible for the sentence or by some other person or body properly regarded as a judicial authority responsible for its execution [66].
If this condition is satisfied, the existence of a discretion on the part of the ministry not to issue a EAW which the responsible court (or other judicial authority) has decided appropriate and requested it to issue does not affect this [66].
That could work only in favour of the person sought by the warrant and would be in the spirit of the Framework Decision [56].
In issuing the EAWs for the arrest of Mr Bucnys and Mr Lavrov, the respective ministries acted only at the request of and by way of endorsement of a decision made by a court responsible for the sentence.
These two EAWs therefore satisfied the above test [66] and are valid.
However, in issuing the EAW for Mr Sakaliss arrest, the Lithuanian ministry was acting only on a request from the prison service, and this EAW did not meet the above test and is invalid [67].
The certification of the requests Mr Bucnys, Mr Sakalis and Mr Lavrov also submitted that the terms of section 2(7) of the 2003 Act meant that a ministry of justice could be certified by SOCA only if it was responsible for issuing domestic arrest warrants rather than European ones.
While that was not inconsistent with the bare language of the Act, such an interpretation would involve SOCA in onerous investigations of overseas practice and may have perverse results where, for example, the European warrants with which Part 1 is concerned were issued by a different, but more senior, judicial authority than the domestic ones [26 28].
The correct interpretation was that section 2(7) referred to the authority responsible for issuing European arrest warrants [33].
The warrants and certification were thus unobjectionable in that respect.
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On a Tuesday afternoon in July 2008 Mrs Elizabeth Robinson, described by the Recorder as a relatively frail lady then aged 76, was walking along Kirkgate, a shopping street in the centre of Huddersfield, when she was knocked over by a group of men who were struggling with one another.
Two of the men were sturdily built police officers, and the third was a suspected drug dealer whom they were attempting to arrest.
As they struggled, the men knocked into Mrs Robinson and they all fell to the ground, with Mrs Robinson underneath.
She suffered injuries as a result.
The principal question which has to be decided in this appeal is whether the officers owed a duty of care to Mrs Robinson.
The other important question is whether, if they did, they were in breach of that duty.
Mr Recorder Pimm held that the officers had been negligent, but that police officers engaged in the apprehension of criminals were immune from suit.
The Court of Appeal held that no duty of care was owed, and that, even if the officers had owed Mrs Robinson such a duty, they had not acted in breach of it: [2014] EWCA Civ 15.
As will appear, the simple facts of this case have given rise to proceedings raising issues of general importance.
Most of those issues can be decided by applying long established principles of the law of negligence.
The fact that the issues have reached this court reflects the extent to which those principles have been eroded in recent times by uncertainty and confusion.
The facts
The events leading to Mrs Robinsons accident began when DS Neil Willan spotted Mr Ashley Williams apparently dealing drugs in a park in the centre of Huddersfield.
He did not attempt to arrest Williams immediately, as Williams was young and physically fit, and Willan thought that he was unlikely to be able to arrest him without his running away.
He called for backup, and DC Ian Green and DS Damian Roebuck then made their way to join him.
Williams went to a bookmakers on Kirkgate, and Willan followed him inside.
He decided not to attempt an arrest inside the shop, as there were people there whom he recognised, and he was concerned that attempting an arrest would endanger both his own safety and that of the customers and staff.
Williams then left the shop and stood outside it.
Green and Roebuck then arrived, and another officer, PC Dhurmea, arrived soon afterwards.
Like Willan, they were in plain clothes.
Willan and Roebuck formed a plan to arrest Williams while he was standing outside the bookmakers.
The plan involved Willan and Dhurmea approaching Williams from one direction, taking hold of him and effecting the arrest, while Roebuck and Green were positioned in the opposite direction, to prevent his escape and assist once Willan and Dhurmea had taken hold of him.
Willan and Dhurmea positioned themselves up the street from the bookmakers, while Green and Roebuck took up a position some distance down the street.
Kirkgate was moderately busy at the time with pedestrians and traffic.
Mrs Robinson was one of a number of pedestrians walking along the pavement.
She passed Willan and Dhurmea, and then Williams, very shortly after two other pedestrians.
Almost immediately after she passed Williams, and when she was within a yard of him, Willan and Dhurmea approached him.
Mrs Robinson was then in their line of sight.
The officers took hold of Williams and attempted to arrest him.
Williams resisted arrest.
As the men tussled, they moved towards Mrs Robinson and collided with her.
The initial contact was between her and Williams, who backed into her.
She fell over, and the men fell on top of her.
Roebuck and Green arrived three seconds later and assisted in arresting Williams.
The proceedings before the Recorder
Mrs Robinson issued proceedings for damages for personal injury, on the basis first of the negligence of the officers, and secondly assault and trespass to the person occasioned by DS Willan.
The latter aspect of the claim is no longer in issue.
Following a hearing on liability, the Recorder dismissed the claim.
In relation to the facts, the Recorder relied on CCTV footage of the incident, together with the evidence of DS Willan, DS Roebuck and DC Green concerning the planning of the arrest.
He accepted Willans evidence that the officers had identified the risk that Williams would try to run away, and regarded it as significant.
Willan also said that he was aware of the potential for harm to members of the public if Williams tried to escape.
His evidence was that in any situation it was necessary to consider the risk to those in the vicinity.
He said that if it had appeared to him that someone was in harms way, he would have walked past Williams without effecting the arrest.
The Recorder noted that that was in accordance with the risk assessment guidance provided to police officers in relation to arrests in drugs cases, to which he had been referred in the evidence.
Willan said that he had not been aware of Mrs Robinsons presence when he attempted to arrest Williams.
Willan also gave evidence that there was some urgency in effecting the arrest.
He had seen Williams taking the drugs from a bag secured around his neck.
It was important to arrest him while he still had drugs in his possession.
Without the drugs, there was unlikely to be sufficient evidence for a successful prosecution.
DS Roebuck said that it had taken him and DC Green about three seconds to get from the place where they had taken up position prior to the attempted arrest to the scene where the other three men were on top of Mrs Robinson.
He said that suspects like Williams could have recognised them as police officers if they had been any closer.
The Recorder did not accept that evidence, which was unsupported by any other evidence.
As far as appeared from the evidence, Roebuck and Green would, he found, just have been two men walking along the street.
In the light of the evidence, the Recorder found that the decision to arrest Williams at the time and place selected by the officers involved a foreseeable risk that Mrs Robinson would be injured.
She was in very close proximity to Williams at that moment, she was an elderly lady, and there was a significant and foreseeable risk that he would try to escape.
In the view of the Recorder, the officers had acted negligently.
First, Willan accepted that he ought to have been taking care for the safety of members of the public in the vicinity.
Although Mrs Robinson had just walked past Williams and was within a yard of him, Willan did not notice her.
That was prima facie in breach of his duty of care.
Secondly, in view of the known risk that Williams would try to escape, the officers could have waited and selected a safer opportunity to effect the arrest.
Thirdly, there was a clear need for all four officers to be present if the arrest was to be carried out safely with pedestrians passing.
Roebuck and Green had however been too far away to assist their colleagues until several seconds had passed.
The risk could have been minimised if they had been closer at the time when the arrest was attempted.
The Recorder held, however, that the decision in Hill v Chief Constable of West Yorkshire [1989] AC 53 had conferred on the police an immunity against claims in negligence.
In the light of the decision of the Court of Appeal in Desmond v Chief Constable of Nottinghamshire Police [2011] EWCA Civ 3; [2011] PTSR 1369, that immunity was not confined to cases of omission.
It therefore applied in the present case.
The proceedings in the Court of Appeal
In the Court of Appeal, Hallett LJ considered that the Caparo test [Caparo Industries plc v Dickman [1990] 2 AC 605, 617 618] applies to all claims in the modern law of negligence (para 40).
In consequence, [t]he court will only impose a duty where it considers it right to do so on the facts (ibid).
The general principle was that most claims against the police in negligence for their acts and omissions in the course of investigating and suppressing crime and apprehending offenders will fail the third stage of the Caparo test (para 46).
That is to say, [i]t will not be fair, just and reasonable to impose a duty (ibid).
That is because the courts have concluded that the interests of the public will not be best served by imposing a duty [on] to individuals (ibid).
The answer to counsels rhetorical question, what would the public think if the police, in the process of arresting criminals, could injure innocent members of the public with impunity, was that provided the police act within reason, the public would prefer to see them doing their job and taking drug dealers off the street (para 47).
One might observe that if the police are not under a duty of care, then it is irrelevant to the issue whether they act within reason or not.
On the other hand, if they act with reasonable care, then they will not be in breach of a duty of care, even if an innocent member of the public is injured.
Hallett LJ accepted that the authorities suggested that there might be a number of possible exceptions to the general principle: cases of outrageous negligence, cases which did not relate to core functions, and cases where police officers had assumed responsibility for a claimant.
The present case did not fall into any of those categories.
It was a paradigm example of why the courts are loath to impose a duty towards individual members of the public on the police engaged in their core functions (para 51).
Hallett LJ added that, even if counsel for Mrs Robinson had been correct in her argument that there was no immunity from liability where police officers caused direct physical harm to members of the public, it was in any event clear that Williams was responsible for the harm.
This was therefore a claim based on the officers failure to prevent Williams from harming Mrs Robinson: in the language used in other cases, it concerned an omission, rather than a positive act.
Such a claim fell at the first hurdle: it was not fair, just or reasonable to impose liability on those facts.
Furthermore, Hallett LJ considered that there was no proximity between Mrs Robinson and the police officers, notwithstanding that she had been injured when they fell on top of her.
It was not enough to find that there was a reasonably foreseeable risk of her being physically injured in the course of carrying out the arrest.
Hallett LJ also added that, had it been necessary, she would have felt obliged to overturn the Recorders finding of negligence.
In that regard, she criticised him for acting as if he were an expert in the arrest and detention of suspects.
In her own view, DS Willan could not afford to wait.
He was bound to attempt the arrest or risk losing the suspect and the evidence.
The delay of three seconds in the other two officers reaching the scene was hardly worthy of criticism.
Arnold J delivered a concurring judgment, and Sullivan LJ agreed with Hallett LJ.
The issues
The issues arising from the judgments below and the parties submissions can be summarised as follows: (1) Does the existence of a duty of care always depend on the application of the Caparo test to the facts of the particular case? (2) Is there a general rule that the police are not under any duty of care when discharging their function of investigating and preventing crime? Or are the police generally under a duty of care to avoid causing reasonably foreseeable personal injuries, when such a duty would arise in accordance with ordinary principles of the law of negligence? If the latter is the position, does the law distinguish between acts and omissions: in particular, between causing injury, and protecting individuals from injury caused by the conduct of others? (3) positive act? (4) Did the police officers owe a duty of care to Mrs Robinson? (5) finding that the officers failed in that duty? (6) her injuries caused by that breach? If so, was the Court of Appeal entitled to overturn the Recorders If the latter is the position, is this an omissions case, or a case of a If there was a breach of a duty of care owed to Mrs Robinson, were
(1) Caparo
The proposition that there is a Caparo test which applies to all claims in the modern law of negligence, and that in consequence the court will only impose a duty of care where it considers it fair, just and reasonable to do so on the particular facts, is mistaken.
As Lord Toulson pointed out in his landmark judgment in Michael v Chief Constable of South Wales Police (Refuge and others intervening) [2015] UKSC 2; [2015] AC 1732, para 106, that understanding of the case mistakes the whole point of Caparo, which was to repudiate the idea that there is a single test which can be applied in all cases in order to determine whether a duty of care exists, and instead to adopt an approach based, in the manner characteristic of the common law, on precedent, and on the development of the law incrementally and by analogy with established authorities.
Caparo was decided in the aftermath of Lord Wilberforces attempt in Anns v Merton London Borough Council [1978] AC 728, 751 752 to lay down an approach which could be applied in all situations in order to determine the existence of a duty of care.
That approach had two stages: first, it was necessary to decide whether there was a prima facie duty of care, based on the foreseeability of harm, and secondly, in order to place limits on the breadth of the first stage, it was necessary to consider whether there were reasons of public policy for excluding or restricting any such prima facie duty.
That approach had major implications for public authorities, as they have a multitude of functions designed to protect members of the public from harm of one kind or another, with the consequence that the first stage enquiry was readily satisfied, and the only limit to liability became public policy.
Anns led to a period during which the courts struggled to contain liability, particularly for economic loss unassociated with physical damage or personal injury, and for the acts and omissions of public authorities.
Commenting extra judicially during that period, Lord Oliver of Aylmerton said that what has been seen as a principle of prima facie liability has been prayed in aid in subsequent cases to justify claims for damages which have become progressively more divorced from common sense and as placing on the defendant a burden, sometimes virtually insurmountable, of showing some good reason in policy why he should not be held liable: Judicial Legislation: Retreat from Anns, Third Sultan Azlan Shah Law Lecture (1988).
It was in the context of the retreat from Anns that emphasis was placed in a number of cases on the concept of proximity, and on the idea that it must be fair to impose a duty of care on the defendant.
In Caparo, Lord Bridge of Harwich noted that, since Anns, a series of decisions of the Privy Council and the House of Lords, notably in judgments and speeches delivered by Lord Keith of Kinkel (including his speech in Hill v Chief Constable of West Yorkshire), had emphasised the inability of any single general principle to provide a practical test which can be applied to every situation to determine whether a duty of care is owed and, if so, what is its scope (p 617).
It is ironic that the immediately following passage in Lord Bridges speech has been treated as laying down such a test, despite, as Lord Toulson remarked in Michael, the pains which he took to make clear that it was not intended to be any such thing: What emerges [from the post Anns decisions] is that, in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity or neighbourhood and that the situation should be one in which the court considers it fair, just and reasonable that the law should impose a duty of a given scope upon the one party for the benefit of the other.
But it is implicit in the passages referred to that the concepts of proximity and fairness embodied in these additional ingredients are not susceptible of any such precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to the features of different specific situations which, on a detailed examination of all the circumstances, the law recognises pragmatically as giving rise to a duty of care of a given scope. (pp 617 618; emphasis added)
Lord Bridge immediately went on to adopt an incremental approach, based on the use of established authorities to provide guidance as to how novel questions should be decided: I think the law has now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the varied duties of care which the law imposes.
We must now, I think, recognise the wisdom of the words of Brennan J in the High Court of Australia in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44, where he said: It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories . (p 618) It was that approach, and not a supposed tripartite test, which Lord Bridge then proceeded to apply to the facts before him.
Applying the approach adopted in Caparo, there are many situations in which it has been clearly established that a duty of care is or is not owed: for example, by motorists to other road users, by manufacturers to consumers, by employers to their employees, and by doctors to their patients.
As Lord Browne Wilkinson explained in Barrett v Enfield London Borough Council [2001] 2 AC 550, 560, Once the decision is taken that, say, company auditors though liable to shareholders for negligent auditing are not liable to those proposing to invest in the company . that decision will apply to all future cases of the same kind.
Where the existence or non existence of a duty of care has been established, a consideration of justice and reasonableness forms part of the basis on which the law has arrived at the relevant principles.
It is therefore unnecessary and inappropriate to reconsider whether the existence of the duty is fair, just and reasonable (subject to the possibility that this court may be invited to depart from an established line of authority).
Nor, a fortiori, can justice and reasonableness constitute a basis for discarding established principles and deciding each case according to what the court may regard as its broader merits.
Such an approach would be a recipe for inconsistency and uncertainty, as Hobhouse LJ recognised in Perrett v Collins [1999] PNLR 77, 90 91: It is a truism to say that any case must be decided taking into account the circumstances of the case, but where those circumstances comply with established categories of liability, a defendant should not be allowed to seek to escape from liability by appealing to some vaguer concept of justice or fairness; the law cannot be re made for every case.
Indeed, the previous authorities have by necessary implication held that it is fair, just and reasonable that the plaintiff should recover in the situations falling within the principles they have applied.
It is normally only in a novel type of case, where established principles do not provide an answer, that the courts need to go beyond those principles in order to decide whether a duty of care should be recognised.
Following Caparo, the characteristic approach of the common law in such situations is to develop incrementally and by analogy with established authority.
The drawing of an analogy depends on identifying the legally significant features of the situations with which the earlier authorities were concerned.
The courts also have to exercise judgement when deciding whether a duty of care should be recognised in a novel type of case.
It is the exercise of judgement in those circumstances that involves consideration of what is fair, just and reasonable.
As Lord Millett observed in McFarlane v Tayside Health Board [2000] 2 AC 59, 108, the court is concerned to maintain the coherence of the law and the avoidance of inappropriate distinctions if injustice is to be avoided in other cases.
But it is also 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.
In the present case, Hallett LJ cited the decision of this court in Smith v Ministry of Defence (JUSTICE intervening) [2013] UKSC 41; [2014] AC 52 as an example of a decision in which there was a focus on the three ingredients mentioned by Lord Bridge.
That was however a case raising a novel legal issue, relating to the provision of protective equipment to soldiers on active duty, and the scope of combat immunity: it did not concern an established category of liability.
Hallett LJ also relied on a passage in the speech of Lord Steyn in Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1996] AC 211, 235, in which he remarked that the elements of foreseeability and proximity as well as considerations of fairness, justice and reasonableness are relevant to all cases.
That was a case concerned with the loss of a ship and its cargo as a result of negligent advice, in which the reasoning was essentially directed to considerations relevant to economic loss.
As Hobhouse LJ observed in Perrett v Collins at p 92: Marc Rich should not be regarded as an authority which has a relevance to cases of personal injury or as adding any requirements that an injured plaintiff do more than bring his case within established principles.
If a plaintiff is attempting to establish some novel principle of liability, then the situation would be different.
It was in any event made clear in Michael that the idea that Caparo established a tripartite test is mistaken.
Properly understood, Caparo thus achieves a balance between legal certainty and justice.
In the ordinary run of cases, courts consider what has been decided previously and follow the precedents (unless it is necessary to consider whether the precedents should be departed from).
In cases where the question whether a duty of care arises has not previously been decided, the courts will consider the closest analogies in the existing law, with a view to maintaining the coherence of the law and the avoidance of inappropriate distinctions.
They will also weigh up the reasons for and against imposing liability, in order to decide whether the existence of a duty of care would be just and reasonable.
In the present case, however, the court is not required to consider an extension of the law of negligence.
All that is required is the application to particular circumstances of established principles governing liability for personal injuries.
Addressing, then, the first of the issues identified in para 20 above, the existence of a duty of care does not depend on the application of a Caparo test to the facts of the particular case.
In the present case, it depends on the application of established principles of the law of negligence. (2) The police
(i) Public authorities in general
Before focusing on the position of the police in particular, it may be helpful to consider the position of public authorities in general, as this is an area of the law of negligence which went through a period of confusion following the case of Anns, as explained in paras 22 23 above.
That confusion has not yet entirely dissipated, as courts continue to cite authorities from that period without always appreciating the extent to which their reasoning has been superseded by the return to orthodoxy achieved first in Stovin v Wise [1996] AC 923 and then, more fully and clearly, in Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15; [2004] 1 WLR 1057.
At common law, public authorities are generally subject to the same liabilities in tort as private individuals and bodies: see, for example, Entick v Carrington (1765) 2 Wils KB 275 and Mersey Docks and Harbour Board v Gibbs (1866) LR 1 HL 93.
Dicey famously stated that every official, from the Prime Minister down to a constable or collector of taxes, is under the same responsibility for every act done without legal justification as any other citizen: Introduction to the Study of the Law of the Constitution 3rd ed (1889), p 181.
An important exception at common law was the Crown, but that exception was addressed by the Crown Proceedings Act 1947, section 2.
Accordingly, if conduct would be tortious if committed by a private person or body, it is generally equally tortious if committed by a public authority: see, for example, Dorset Yacht Co Ltd v Home Office [1970] AC 1004, as explained in Gorringe, para 39.
That general principle is subject to the possibility that the common law or statute may provide otherwise, for example by authorising the conduct in question: Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430.
It follows that public authorities are generally under a duty of care to avoid causing actionable harm in situations where a duty of care would arise under ordinary principles of the law of negligence, unless the law provides otherwise.
On the other hand, public authorities, like private individuals and bodies, are generally under no duty of care to prevent the occurrence of harm: as Lord Toulson stated in Michael, the common law does not generally impose liability for pure omissions (para 97).
This omissions principle has been helpfully summarised by Tofaris and Steel, Negligence Liability for Omissions and the Police (2016) 75 CLJ 128: In the tort of negligence, a person A is not under a duty to take care to prevent harm occurring to person B through a source of danger not created by A unless (i) A has assumed a responsibility to protect B from that danger, (ii) A has done something which prevents another from protecting B from that danger, (iii) A has a special level of control over that source of danger, or (iv) As status creates an obligation to protect B from that danger.
As that summary makes clear, there are certain circumstances in which public authorities, like private individuals and bodies, can come under a duty of care to prevent the occurrence of harm: see, for example, Barrett v Enfield London Borough Council and Phelps v Hillingdon London Borough Council [2001] 2 AC 619, as explained in Gorringe at paras 39 40.
In the absence of such circumstances, however, public authorities generally owe no duty of care towards individuals to confer a benefit upon them by protecting them from harm, any more than would a private individual or body: see, for example, Smith v Littlewoods Organisation Ltd [1987] AC 241, concerning a private body, applied in Mitchell v Glasgow City Council [2009] UKHL 11; [2009] AC 874, concerning a public authority.
That is so, notwithstanding that a public authority may have statutory powers or duties enabling or requiring it to prevent the harm in question.
A well known illustration of that principle is the decision of the House of Lords in East Suffolk Rivers Catchment Board v Kent [1941] AC 74.
The position is different if, on its true construction, the statutory power or duty is intended to give rise to a duty to individual members of the public which is enforceable by means of a private right of action.
If, however, the statute does not create a private right of action, then it would be, to say the least, unusual if the mere existence of the statutory duty [or, a fortiori, a statutory power] could generate a common law duty of care: Gorringe, para 23.
A further point, closely related to the last, is that public authorities, like private individuals and bodies, generally owe no duty of care towards individuals to prevent them from being harmed by the conduct of a third party: see, for example, Smith v Littlewoods Organisation Ltd and Mitchell v Glasgow City Council.
In Michael, Lord Toulson explained the point in this way: It is one thing to require a person who embarks on action which may harm others to exercise care.
It is another matter to hold a person liable in damages for failing to prevent harm caused by someone else. (para 97) There are however circumstances where such a duty may be owed, as Tofaris and Steele indicated in the passage quoted above.
They include circumstances where the public authority has created a danger of harm which would not otherwise have existed, or has assumed a responsibility for an individuals safety on which the individual has relied.
The first type of situation is illustrated by Dorset Yacht, and in relation to the police by the case of Attorney General of the British Virgin Islands v Hartwell [2004] 1 WLR 1273, discussed below.
The second type of situation is illustrated, in relation to the police, by the case of An Informer v A Chief Constable [2013] QB 579, as explained in Michael at para 69.
In Anns, however, it was decided that a local authority owed a duty of care at common law, when exercising its power to inspect building works, to protect the ultimate occupier of the building from loss resulting from defects in its construction.
The House of Lords thus held a public authority liable at common law for a careless failure to confer a benefit, by preventing harm caused by another persons conduct, in the absence of any special circumstances such as an assumption of responsibility towards the claimant.
It added to the confusion by importing public law concepts, and the American distinction between policy and operational decisions, into questions concerning duties arising under the law of obligations.
Although the decision was overruled in Murphy v Brentwood District Council [1991] 1 AC 398 on a limited basis (relating to the categorisation of the type of harm involved), its reasoning in relation to these matters was not finally disapproved until Stovin v Wise.
The position was clarified in Gorringe v Calderdale Metropolitan Borough Council, which made it clear that the principle which had been applied in Stovin v Wise in relation to a statutory duty was also applicable to statutory powers.
Lord Hoffmann (with whom Lord Scott of Foscote, Lord Rodger of Earlsferry and Lord Brown of Eaton under Heywood agreed) said that he found it difficult to imagine a case in which a common law duty could be founded simply on the failure, however irrational, to provide some benefit which a public authority had power (or a public law duty) to provide (para 32).
He was careful to distinguish that situation from cases where a public authority did acts or entered into relationships or undertook responsibilities giving rise to a duty of care on an orthodox common law foundation (para 38).
However, until the reasoning in Anns was repudiated, it was not possible to justify a rejection of liability, where a prima facie duty of care arose at the first stage of the analysis from the foreseeability of harm, on the basis that public bodies are not generally liable for failing to exercise their statutory powers or duties so as to confer the benefit of protection from harm.
Instead, it was necessary to have recourse to public policy in order to justify the rejection of liability at the second stage.
That was accordingly the approach adopted by the House of Lords and the Court of Appeal in a series of judgments, including Hill.
The need to have recourse to public policy for that purpose has been superseded by the return to orthodoxy in Gorringe.
Since that case, a public authoritys non liability for the consequences of an omission can generally be justified on the basis that the omissions principle is a general principle of the law of negligence, and the law of negligence generally applies to public authorities in the same way that it applies to private individuals and bodies.
Equally, concerns about public policy cannot in themselves override a liability which would arise at common law for a positive act carried out in the course of performing a statutory function: the true question is whether, properly construed, the statute excludes the liability which would otherwise arise: see Gorringe at para 38 per Lord Hoffmann.
That is not to deny that what might be described as policy considerations sometimes have a role to play in the law of negligence.
As explained earlier, where established principles do not provide a clear answer to the question whether a duty of care should be recognised in a novel situation, the court will have to consider whether its recognition would be just and reasonable.
(ii) The police in particular
Turning to consider specifically the position of the police (helpfully discussed in Purshouse, Arrested development: Police negligence and the Caparo test for duty of care (2016) Torts Law Journal 1), Lord Toulson explained in the case of Michael at paras 29 35 that the police owe a duty to the public at large for the prevention of violence and disorder.
That public law duty has a number of legal consequences.
For example, the police cannot lawfully charge members of the public for performing their duty (Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270), and a police officer who wilfully fails to perform his duty may be guilty of a criminal offence (R v Dytham [1979] QB 722).
Some members of the public may have standing to enforce the duty, for example in proceedings for judicial review (R v Commissioner of Police of the Metropolis, Ex p Blackburn [1968] 2 QB 118), but in doing so they are not enforcing a duty owed to them as individuals.
In relation to the question whether, and in what circumstances, a private law duty of care might be owed by the police to particular individuals, Lord Toulson discussed in Michael the case of Hill, and in particular the speech of Lord Keith, with whom Lord Brandon of Oakbrook, Lord Oliver and Lord Goff of Chieveley agreed.
Since it is apparent from the judgments below in the present proceedings, and from the submissions to this court, that Lord Keiths reasoning continues to be misunderstood, it is necessary to consider it once more.
For the purposes of the present case, the most important aspect of Lord Keiths speech in Hill is that, in the words of Lord Toulson (Michael, para 37), he recognised that the general law of tort applies as much to the police as to anyone else.
What Lord Keith said was this: There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions.
So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence. (p 59; emphasis supplied) The words like anyone else are important.
They indicate that the police are subject to liability for causing personal injury in accordance with the general law of tort.
That is as one would expect, given the general position of public authorities as explained in paras 32 33 above.
Lord Keiths dictum is vouched by numerous authorities.
Those which he cited were Knightley v Johns [1982] 1 WLR 349, where a police officer who attended the scene of a road accident carelessly created an unnecessary danger to the claimant, and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242, where police officers attending a siege at a gunsmith's shop, where a psychopathic intruder had armed himself and was firing from the building, carelessly caused damage to the premises in the course of an attempt to end the siege, by firing a CS gas canister into the building in the absence of fire fighting equipment.
That decision, cited with approval in Hill and in later authorities, is inconsistent with any supposed rule that the police owe no duty of care in respect of action taken in the course of suppressing crime.
Lord Keith also referred to the decision in Dorset Yacht, where prison officers who brought young offenders on to an island and then left them unsupervised, when it was reasonably foreseeable that they would attempt to escape, and in doing so cause damage to property, were held to be in breach of a duty of care.
Other examples concerning the police include Attorney General of the British Virgin Islands v Hartwell, where police authorities were held to have been negligent in entrusting a firearm to an officer who was still on probation and had shown signs of mental instability, and cases such as Frost v Chief Constable of South Yorkshire Police [1999] 2 AC 455, in which police forces, although not technically employers, have been treated as owing the same common law duty as employers to take reasonable care for the safety of their officers.
There are also numerous cases concerned with road accidents involving police cars, such as Marshall v Osmond [1983] QB 1034, where Sir John Donaldson MR observed that the duty owed by a police driver to a suspected criminal whom he was pursuing was the same duty as that owed to anyone else, namely to exercise such care and skill as is reasonable in the circumstances.
One might also mention Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310, where the House of Lords accepted, applying principles developed in cases concerning private individuals and bodies, that a duty of care was owed by the police, when they were responsible for crowd control at a football match, to persons who suffered psychiatric injuries as a result of deaths and injuries sustained by members of the crowd, subject to those persons being sufficiently proximate in time and space to the incident, and to their having a sufficiently close relationship to the dead and injured.
These cases are not anomalous exceptions to the general absence of a duty of care, and cannot all be explained as falling within particular categories of the kind listed by Hallett LJ in the present case: cases of outrageous negligence, cases which did not relate to core functions, and cases where police officers had assumed responsibility for a claimant.
The cases of Rigby v Chief Constable of Northamptonshire and Marshall v Osmond, for example, are plainly inconsistent with any supposed rule that the police owe no duty of care when engaged in their core operational activities, or that outrageous negligence or an assumption of responsibility must be established.
On the contrary, these cases are examples of the application to the police of the ordinary common law duty of care to avoid causing reasonably foreseeable injury to persons and reasonably foreseeable damage to property.
There are also examples concerned with other torts, such as Ashley v Chief Constable of Sussex Police (Sherwood intervening) [2008] AC 962, where relatives of a suspected drug dealer who had been shot dead by a police officer during a raid were held to have a cause of action for damages for battery (liability for negligence having been conceded), Minio Paluello v Commissioner of Police of the Metropolis [2011] EWHC 3411 (QB), where a protestor who suffered serious injuries when being pulled up from the ground by a police officer with excessive force was found entitled to damages for assault, and McDonnell v Commissioner of Police of the Metropolis [2015] EWCA Civ 573, where a claim for damages by a suspected drug dealer for assault arising from the use of excessive force during his arrest failed only on its facts.
On the other hand, as Lord Toulson noted in Michael (para 37), Lord Keith held that the general duty of the police to enforce the law did not carry with it a private law duty towards individual members of the public.
In particular, police officers investigating a series of murders did not owe a duty to the murderers potential future victims to take reasonable care to apprehend him.
That was again in accordance with the general law of negligence.
As explained earlier, the common law does not normally impose liability for omissions, or more particularly for a failure to prevent harm caused by the conduct of third parties.
Public authorities are not, therefore, generally under a duty of care to provide a benefit to individuals through the performance of their public duties, in the absence of special circumstances such as an assumption of responsibility.
This was recognised by Lord Toulson in Michael.
As he explained: The refusal of the courts to impose a private law duty on the police to exercise reasonable care to safeguard victims or potential victims of crime, except in cases where there has been a representation and reliance, does not involve giving special treatment to the police .
The question is therefore not whether the police should have special immunity, but whether an exception should be made to the ordinary application of common law principles. (paras 115 116)
As previously explained, however, the reasoning by which Lord Keith arrived at the same conclusion as Lord Toulson reflects the period during which the case was decided, when Anns continued to be influential.
Following the two stage approach to liability set out in Anns, Lord Keith considered first the argument that a duty of care arose in consequence of the foreseeability of harm to potential victims if the murderer was not apprehended.
In that regard, Lord Keith emphasised that the foreseeability of harm was not in itself a sufficient basis for the imposition of a duty of care, and introduced the concept of proximity as a further ingredient.
He concluded that there was no ingredient or characteristic giving rise to the necessary proximity between the police and the claimants daughter (who was one of the murderers victims), and that the circumstances of the case were not capable of establishing a duty of care owed towards her by the police.
As Lord Toulson remarked in Michael (para 42), if Lord Keith had stopped at that point, it is unlikely that the decision would have caused controversy.
However, having observed that what he had said was sufficient for the disposal of the appeal, Lord Keith went on to discuss the application of the second stage of the approach laid down in Anns: namely, whether there were reasons of public policy why an action should not lie in circumstances such as those of the present case (p 63).
He concluded that there were such reasons, and expressed the view that the Court of Appeal had been right to take the view that the police were immune from an action of this kind (pp 63 64).
It is important to note that this part of Lord Keiths speech was unrelated to a determination of whether the police were liable for negligence resulting in personal injury, where anyone else would be subject to liability under ordinary principles of the law of tort.
He had already confirmed the existence of liability in those circumstances, as explained at paras 45 46 above.
His comments about public policy were concerned with a different question, namely whether the police generally owe a duty of care to individual members of the public, in the performance of their investigative function, to protect them from harm caused by criminals: a question to which, on the principles established prior to Anns and subsequently reinstated in Stovin v Wise, Gorringe and Michael, as explained in paras 34 37 and 39 above, the answer was plainly no.
In relation to that issue, the decision in Hill has now to be understood in the light of the later authorities.
In Michael, in particular, Lord Toulson (with whom Lord Neuberger, Lord Mance, Lord Hodge and I agreed) reached the same conclusion as in Hill, but did so primarily by applying the reasoning in Stovin v Wise and Gorringe.
Policy arguments were considered when addressing the argument that the court should create a new duty of care as an exception to the ordinary application of common law principles (see, in particular, paras 116 118).
Lord Toulson concluded that, in the absence of special circumstances, there is no liability in cases of pure omission by the police to perform their duty for the prevention of violence (para 130).
The case of Hill is not, therefore, authority for the proposition that the police enjoy a general immunity from suit in respect of anything done by them in the course of investigating or preventing crime.
On the contrary, the liability of the police for negligence or other tortious conduct resulting in personal injury, where liability would arise under ordinary principles of the law of tort, was expressly confirmed.
Lord Keith spoke of an immunity, meaning the absence of a duty of care, only in relation to the protection of the public from harm through the performance by the police of their function of investigating crime.
Arguing against that conclusion, counsel for the respondents relied particularly on five authorities as supporting the existence of a general immunity.
The first was the decision of the House of Lords in Calveley v Chief Constable of the Merseyside Police [1989] AC 1228, in which police officers who had been suspended pending the completion of disciplinary proceedings sought damages in respect of an alleged failure to conduct the proceedings expeditiously.
They claimed to have suffered damage to their reputation, depression, and a loss of earnings.
They alleged that they were owed a duty by the investigating officers to exercise proper care and expedition in the conduct of the investigation.
It was argued that a police officer investigating a suspected crime owes a duty of care to the suspect and that the same principle applied to the investigation of a disciplinary offence.
The House of Lords rejected the argument.
Lord Bridge pointed out that the claims in negligence foundered on the rocks of elementary principle (p 1238).
The losses claimed, so far as non financial, were not reasonably foreseeable, and the financial claims ran up against the formidable obstacles in the way of liability in negligence for purely economic loss.
Lord Bridge added that all other considerations apart, it would be contrary to public policy to prejudice the fearless and efficient discharge by police officers of their vitally important public duty of investigating crime by requiring them to act under the shadow of a potential action for damages for negligence by the suspect.
Reliance was placed on the latter dictum, but it is of no assistance to the respondent in the present case.
Lord Bridges remark has to be understood in its context.
The case sought to establish a novel type of liability relating to the manner in which an investigation was conducted.
Lord Bridges reference to policy considerations was directed to that claim: he was not addressing the question whether the police may owe a duty of care to avoid causing reasonably foreseeable physical injury in the course of their operations.
The second authority relied on was the judgment of Steyn LJ in Elguzouli Daf v Commissioner of Police of the Metropolis [1995] QB 335.
The issue in the appeal was whether the Crown Prosecution Service owed a duty of care to a person it was prosecuting to act with reasonable diligence in obtaining and acting on scientific evidence which showed him to be innocent.
The Court of Appeal held that no such duty was owed.
Steyn LJ observed that the question raised was a novel one, which in the light of Caparo had to be considered by analogy with established categories of liability.
In that regard, the case of Hill was considered instructive.
Steyn LJ noted that the issue in that case was whether a claim against the police for a negligent failure to apprehend a violent criminal was sustainable.
He summarised the effect of the second part of Lord Keiths speech as being that the House of Lords further held, as a second and separate ground of decision, that as a matter of public policy the police were immune from actions of negligence in respect of their activities in the investigation and suppression of crime (p 347).
Steyn LJ added that it did not follow that the police might not be liable where there was some form of assumption of responsibility.
The decision in Elguzouli Daf has been cited with approval on many occasions, and its correctness was recently confirmed by this court in SXH v Crown Prosecution Service (United Nations High Commissioner for Refugees intervening) [2017] UKSC 30; [2017] 1 WLR 1401.
But Steyn LJs summary of the effect of the second part of Lord Keiths speech in Hill might convey a misleading impression if taken out of context.
Steyn LJ can hardly have meant that the police enjoyed a blanket immunity in respect of anything done in the course of their activities in the investigation and suppression of crime, given his reliance on Lord Keiths speech in Hill.
As already explained, Lord Keith confirmed the liability of the police for personal injuries in accordance with the ordinary law of tort, and cited the decision in Rigby v Chief Constable of Northamptonshire with approval.
Thirdly, reliance was placed on the speech of Lord Steyn in Brooks v Commissioner of Police of the Metropolis [2005] UKHL 24; [2005] 1 WLR 1495.
In that case, the claimant sought damages in respect of a psychiatric illness which he claimed to have suffered in consequence of his insensitive treatment by officers investigating an incident in which he had been assaulted and a friend of his had been murdered.
The issue before the House of Lords was whether it was arguable that the police owed him a duty of care (a) to take reasonable steps to assess whether he was a victim of crime and, if so, to accord him reasonably appropriate protection and support, (b) to take reasonable steps to afford him the protection, assistance and support commonly afforded to a key eye witness to a serious crime of violence, and (c) to afford reasonable weight to the account given by him and to act on the account accordingly.
The House held that it was not.
The correctness of that conclusion is not in question.
On ordinary principles, behaviour which is merely insensitive is not normally actionable, even if it results in a psychiatric illness.
Lord Steyn recognised that this was a novel type of claim, to which Lord Bridges observations in Caparo applied.
As in Elguzouli Daf, he based his approach to the question whether it would be right to recognise a duty of care of the kind alleged on Lord Keiths speech in Hill.
He cited first Lord Keiths confirmation of the liability of the police for the negligent infliction of personal injuries in accordance with the general law of tort.
He went on to cite the part of Lord Keiths speech concerning whether the police owed a duty of care to future victims in the performance of their investigative function.
In the passage on which reliance was placed, he stated (para 30): A retreat from the principle in Hills 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 polices 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 Hills case, be bound to lead to an unduly defensive approach in combating crime.
As Lord Toulson noted in Michael, by endorsing the principle in the Hill case in the terms that he did, Lord Steyn confirmed that the functions of the police which he identified were public law duties and did not give rise to private law duties of care in the absence of special circumstances, such as an assumption of responsibility.
Nothing in his reasoning is inconsistent with the existence of a duty of care to avoid causing physical harm in accordance with ordinary principles of the law of negligence.
Lord Steyn plainly had no intention of undermining the confirmation in Hill that the police were under such a duty of care.
The passage cited was directed towards a different issue.
Fourthly, reliance was placed on Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225, one of two appeals which the House of Lords heard together, the other being Van Colle v Chief Constable of the Herefordshire Police (Secretary of State for the Home Department intervening).
The case of Smith concerned the question whether, where a person had informed the police that he had received threats of violence, the police then owed him a duty of care to prevent the threats from being carried out.
Applying the established principles discussed earlier, the answer was no, in the absence of special circumstances such as an assumption of responsibility, and the House of Lords so held.
The House was not however referred to the line of authority including East Suffolk Rivers Catchment Board v Kent, Stovin v Wise and Gorringe, which would have provided a basis for deciding the case; nor did it rely on the equivalent body of authority concerned with omissions by private individuals and bodies, such as Smith v Littlewoods Organisation Ltd. Those were the bases on which a very similar issue was subsequently decided in Michael.
In Smith v Chief Constable of Sussex Police, the majority of the House were in agreement that, absent special circumstances such as an assumption of responsibility, the police owed no duty of care to individuals affected by the discharge of their public duty to investigate offences and prevent their commission.
Lord Hope, with whose reasoning the other members of the majority agreed, followed the approach adopted in Brooks in the passage cited in para 61 above, and emphasised the risk that the imposition of a duty of care of the kind contended for would inhibit a robust approach in assessing a person as a possible suspect or victim.
He acknowledged that [t]here are, of course, cases in which actions of the police give rise to civil claims in negligence in accordance with ordinary delictual principles, and cited Rigby as an example (para 79).
Lord Phillips of Worth Matravers CJ summarised the core principle to be derived from Hill and Brooks as being that in the absence of special circumstances, the police owe no common law duty of care to protect individuals against harm caused by criminals.
Lord Brown approached the matter in a similar way, concluding that, in the absence of an assumption of responsibility towards the eventual victim, the police generally owe no duty of care to prevent injuries deliberately inflicted by third parties, when they are engaged in discharging their general duty of combating and investigating crime.
None of the speeches is inconsistent with the existence of a duty of care to avoid causing physical harm in accordance with ordinary principles of the law of negligence.
Fifthly, reliance was placed on the judgment of the Court of Appeal, delivered by Sir Anthony May P, in Desmond v Chief Constable of Nottinghamshire Police.
The issue in the case was whether the chief constable owed a duty of care when providing information to the criminal records bureau about the claimant, so as to enable the bureau to respond to a request for an enhanced criminal record certificate, made in connection with a job application.
The chief constable was under a statutory duty to provide such information as was in his opinion relevant and ought to be included in the certificate.
It was argued that the chief constable had made an error of judgement in deciding that certain information was relevant and ought to be included, with the result that the job application had been unsuccessful.
The claim was for damages in respect of financial loss, stress and anxiety.
The court correctly identified the relevant legal principles as being those laid down in East Suffolk River Catchment Board v Kent, Stovin v Wise and Gorringe, and concluded that no duty of care was owed.
Reliance was however placed by counsel on an earlier part of the judgment, in which the court considered the cases on which the judge below had based his approach Hill, Elguzouli Daf, Brooks, and Smith v Chief Constable of Sussex Police and explained why, in its view, they did not provide an answer to the case at hand.
The court summarised the principle to be derived from those decisions as being that in the absence of special circumstances, the police and the Crown Prosecution Service do not generally in the interests of the whole community owe individual members of the public, be they victims, witnesses or those who are prosecuted, a common law duty of care in undertaking and performing their operational duties of investigating, detecting, suppressing and prosecuting crime (para 31).
The court went on to state that that principle might not apply in exceptional circumstances at the margins; to an ordinary case where, for instance, in a road accident the police cause personal injury or physical damage by negligent driving; nor to cases where on particular facts a police officer is taken to have assumed responsibility to an individual claimant (para 32).
That summary of the law appears to treat the police as being generally under no duty of care when undertaking and performing their operational duties, other than in special circumstances.
It does not reflect the acceptance of the House of Lords in Hill, reflected also in later cases such as Frost, Alcock and Smith v Chief Constable of Sussex Police, that the police are generally under a duty of care to avoid causing personal injury where such a duty would arise according to ordinary principles of the law of negligence.
Nor can a case such as Rigby be distinguished as an exceptional case at the margins: it was treated both in Hill and in Smith v Chief Constable of Sussex Police not as an anomaly, but as an instance of a wider principle.
In short, while it is not suggested in the present case that the decision in Desmond was wrong, the particular passage relied on is not an accurate summary of the law.
On examination, therefore, there is nothing in the ratio of any of the authorities relied on by the respondent which is inconsistent with the police being under a liability for negligence resulting in personal injuries where such liability would arise under ordinary principles of the law of tort.
That is so notwithstanding the existence of some dicta which might be read as suggesting the contrary.
points made by Lord Hughes in his judgment: In relation to this discussion, it is necessary to respond briefly to some of the 1.
I do not suggest that the discussion of policy considerations in cases such as Hill, Brooks and Smith should be consigned to history.
But it is important to understand that such discussions are not a routine aspect of deciding cases in the law of negligence, and are unnecessary when existing principles provide a clear basis for the decision, as in the present appeal.
I would not agree with Lord Hughess statement that they are the ultimate reason why there is no duty of care towards victims, suspects or witnesses imposed on police officers engaged in the investigation and prevention of crime.
The absence of a duty towards victims of crime, for example, does not depend merely on a policy devised by a recent generation of judges in relation to policing: it is based on the application of a general and long established principle that the common law imposes no liability to protect persons against harm caused by third parties, in the absence of a recognised exception such as a voluntary assumption of responsibility. 2.
The courts are not policy making bodies in the sense in which that can be said of the Law Commission or government departments.
But the exercise of judgement about the potential consequences of a decision has a part to play when the court is asked to decide whether a novel duty of care exists, together with a consideration of existing principles and of the need for the law to develop coherently and incrementally: see para 24 above. 3.
Hill, Brooks and Smith were all cases in which novel types of claim were made.
Hill was also decided at a time when, following Anns, policy arguments were particularly prominent in judicial reasoning, and when the principle in East Suffolk Rivers Catchment Board, which could otherwise have provided a solution, had been rejected.
Brooks and Smith were cases in which existing principles pointed strongly towards the rejection of a duty of care, but since those principles were challenged or argued to be subject to exceptions which would accommodate the instant case, it is entirely understandable that the House of Lords referred to policy considerations as supporting their conclusion. 4.
The distinction between careless acts causing personal injury, for which the law generally imposes liability, and careless omissions to prevent acts (by other agencies) causing personal injury, for which the common law generally imposes no liability, is not a mere alternative to policy based reasoning, but is inherent in the nature of the tort of negligence.
For the same reason, although the distinction, like any other distinction, can be difficult to draw in borderline cases, it is of fundamental importance.
The central point is that the law of negligence generally imposes duties not to cause harm to other people or their property: it does not generally impose duties to provide them with benefits (including the prevention of harm caused by other agencies).
Duties to provide benefits are, in general, voluntarily undertaken rather than being imposed by the common law, and are typically within the domain of contract, promises and trusts rather than tort.
It follows from that basic characteristic of the law of negligence that liability is generally imposed for causing harm rather than for failing to prevent harm caused by other people or by natural causes.
It is also consistent with that characteristic that the exceptions to the general non imposition of liability for omissions include situations where there has been a voluntary assumption of responsibility to prevent harm (situations which have sometimes been described as being close or akin to contract), situations where a person has assumed a status which carries with it a responsibility to prevent harm, such as being a parent or standing in loco parentis, and situations where the omission arises in the context of the defendants having acted so as to create or increase a risk of harm. 5.
The argument that most cases can be equally analysed in terms of either an act or an omission, sometimes illustrated by asking whether a road accident is caused by the negligent drivers act of driving or by his omission to apply the brakes or to keep a good lookout, does not reflect the true nature and purpose of the distinction, as explained above.
The argument was answered by Lord Hoffmann in Stovin v Wise (p 945): One must have regard to the purpose of the distinction as it is used in the law of negligence, which is to distinguish between regulating the way in which an activity may be conducted and imposing a duty to act upon a person who is not carrying on any relevant activity.
To hold the defendant liable for an act, rather than an omission, it is therefore necessary to be able to say, according to common sense principles of causation, that the damage was caused by something which the defendant did.
If I am driving at 50 miles an hour and fail to apply the brakes, the motorist with whom I collide can plausibly say that the damage was caused by my driving into him at 50 miles an hour. 6.
In relation to the cases discussed in Lord Hughess para 114, it follows from the foregoing explanation of the distinction between acts and omissions that Hill and Smith were concerned with omissions, as in each case the claimant sought to have the police held liable for death or personal injuries which had been caused not by the police but by a third party.
Calveley, Elguzouli Daf and Brooks, on the other hand, were concerned with positive acts, but were cases in which a duty of care was held not to exist for other reasons, as explained earlier.
In Calveley, the plaintiffs sought to have the police held liable for economic loss and other harm which they had caused by subjecting the plaintiffs to disciplinary proceedings which were unduly prolonged.
In Elguzouli Daf, the plaintiffs sought to have the Crown Prosecution Service held liable for a loss of liberty which they had caused by subjecting the plaintiffs to criminal proceedings which were unduly prolonged.
In Brooks, the claimant sought to have the police held liable for a mental illness which they had caused by treating him inconsiderately. 7.
So far as the cases discussed in Lord Hughess paras 115 117 are concerned, Goldman v Hargrave [1967] 1 AC 645 and Thomas Graham Ltd v Church of Scotland 1982 SLT (Sh Ct) 26 concerned the responsibilities of an occupier of land in respect of dangers to his neighbours property which arise on his land: responsibilities which can be understood as arising from his exclusive right of possession.
Michael was clearly concerned with an omission, as Lord Toulsons judgment made clear: the police were sought to be made liable for the death of a woman at the hands of a third party.
Barrett v Enfield London Borough Council, as explained in Gorringe at para 39, was a case where there was an assumption of parental responsibilities.
Phelps v Hillingdon London Borough Council, as explained in Gorringe at para 40, concerned a relationship which involved an implied undertaking to exercise reasonable care, akin to the relationship between doctor and patient.
Returning, then, to the second of the issues identified in para 20 above, it follows that there is no general rule that the police are not under any duty of care when discharging their function of preventing and investigating crime.
They generally owe a duty of care when such a duty arises under ordinary principles of the law of negligence, unless statute or the common law provides otherwise.
Applying those principles, they may be under a duty of care to protect an individual from a danger of injury which they have themselves created, including a danger of injury resulting from human agency, as in Dorset Yacht and Attorney General of the British Virgin Islands v Hartwell.
Applying the same principles, however, the police are not normally under a duty of care to protect individuals from a danger of injury Is this case concerned with an omission or with a positive act? In the light of that conclusion, the remaining issues in the case are relatively which they have not themselves created, including injury caused by the conduct of third parties, in the absence of special circumstances such as an assumption of responsibility.
straightforward and can be dealt with comparatively briefly. (3)
The role of the police in the accident in which Mrs Robinson was injured is not comparable to that of the defendant in the examples commonly given of pure omissions: for example, someone who watches and does nothing as a blind man approaches the edge of a cliff, or a child drowns in a shallow pool.
Nor, to cite more realistic examples, is it comparable to that of the police authority in Hill, which failed to arrest a murderer before a potential future victim was killed, or the police authority in Michael, which failed to respond to an emergency call in time to save the caller from an attack.
In such cases the defendant played no active part in the critical events.
Nor is this a case in which the chief constable is sought to be made liable for the conduct of a third party.
Lord Reids observation in Dorset Yacht (at p 1027) is apposite: the ground of liability is not responsibility for the acts of the escaping trainees; it is liability for damage caused by the carelessness of these officers in the knowledge that their carelessness would probably result in the trainees causing damage of this kind.
In the present case, the ground of action is liability for damage caused by carelessness on the part of the police officers in circumstances in which it was reasonably foreseeable that their carelessness would result in Mrs Robinsons being injured.
Her complaint is not that the police officers failed to protect her against the risk of being injured, but that their actions resulted in her being injured.
In short, this case is concerned with a positive act, not an omission. (4) Did the police officers owe a duty of care to Mrs Robinson?
It was not only reasonably foreseeable, but actually foreseen by the officers, that Williams was likely to resist arrest by attempting to escape.
That is why Willan summoned assistance in the first place, before attempting to arrest Williams, and why it was decided that DS Roebuck and DC Green should be positioned on the opposite side of Williams from Willan and Dhurmea, so as to block his escape route.
The place where the officers decided to arrest Williams was a moderately busy shopping street in a town centre.
Pedestrians were passing in close vicinity to Williams.
In those circumstances, it was reasonably foreseeable that if the arrest was attempted at a time when pedestrians especially physically vulnerable pedestrians, such as a frail and elderly woman were close to Williams, they might be knocked into and injured in the course of his attempting to escape.
That reasonably foreseeable risk of injury was sufficient to impose on the officers a duty of care towards the pedestrians in the immediate vicinity when the arrest was attempted, including Mrs Robinson. (5) Was the Court of Appeal entitled to overturn the Recorders finding that the officers had failed in their duty of care?
The Court of Appeal was correct to emphasise the importance of not imposing unrealistically demanding standards of care on police officers acting in the course of their operational duties.
That is most obviously the case where critical decisions have to be made in stressful circumstances with little or no time for considered thought.
This point has long been recognised.
For example, in Marshall v Osmond, concerned with a police driver engaged in the pursuit of a suspect, Sir John Donaldson MR stated, as noted at para 47 above, that the officers duty was to exercise such care and skill as is reasonable in all the circumstances.
He went on to state that those were no doubt stressful circumstances, and that although there was no doubt that the officer made an error of judgment, he was far from satisfied that the officer had been negligent (p 1038).
The same point was made, in a context closer to that of the present case, by May LJ in Costello v Chief Constable of Northumbria [1999] ICR 752, 767, where he remarked that liability should not turn on . shades of personal judgment and courage in the heat of the potentially dangerous moment.
It is also necessary to remember that a duty to take reasonable care can in some circumstances be consistent with exposing individuals to a significant degree of risk.
That is most obviously the case in relation to the police themselves.
There are many circumstances in which police officers are exposed to a risk of injury, but in which such exposure is consistent with the taking of reasonable care for their safety.
Equally, there may be circumstances which justify the taking of risks to the safety of members of the public which would not otherwise be justified.
A duty of care is always a duty to take such care as is reasonable in the circumstances.
In the present case, the Recorders finding of negligence was based on a number of matters.
It is unnecessary to consider them all, as at least one of them clearly did not involve imposing on the officers an unrealistically high standard of care.
The Recorder accepted DS Willans evidence that the officers were aware that there was a significant risk that Williams would try to run away, and that he was aware of the potential for harm to members of the public in that event.
Willan also gave evidence that it was necessary to consider the risk to those in the vicinity, and that if it had appeared to him that someone was in harms way, he would have walked past Williams without effecting the arrest.
The Recorder noted that that was in accordance with the relevant guidance provided to police officers.
Although Mrs Robinson had just walked past Williams and was within a yard of him, in full view of the officers, Willan simply failed to notice her.
The Recorder was entitled to find negligence on that basis alone, regardless of the soundness of his other criticisms of how the arrest was carried out.
Willan accepted that he ought to have been taking care for the safety of members of the public in the immediate vicinity.
If he had been taking such care, he would have noticed Mrs Robinson: she was immediately in front of him, next to Williams.
This was not a situation in which Williams had to be arrested at that precise moment, regardless of the risk that a passer by might be injured: on Willans evidence, if he had noticed that someone was in harms way, he would not have made the arrest at that moment. (6) Were Mrs Robinsons injuries caused by the officers breach of their duty of care?
The chain of events which resulted in Mrs Robinsons being injured was initiated by DS Willans and PC Dhurmeas attempt to arrest Williams.
It was their taking hold of him which caused him to attempt to struggle free, and it was in the course of the resultant tussle between the three men that Mrs Robinson was knocked over and injured.
In these circumstances, it is impossible to argue that the chain of causation linking the attempt to arrest Williams to Mrs Robinsons being injured was interrupted by Williams voluntary decision to resist arrest, which resulted in his knocking into her.
The voluntary act of a third party, particularly when it is of a criminal character, will often constitute a novus actus interveniens, but not when that act is the very one which the defendant was under a duty to guard against: see, for example, Dorset Yacht and Attorney General of the British Virgin Islands v Hartwell.
It would be absurd to say that the officers owed Mrs Robinson a duty of care not to arrest Williams when she was in the immediate vicinity, because of the danger that she might be injured if he attempted to escape, and then to hold that his attempted escape broke the chain of causation between their negligently arresting him when she was next to him, and her being injured when he attempted to escape.
In short, Mrs Robinson was injured as a result of being exposed to the very danger from which the officers had a duty of care to protect her.
Conclusion
For these reasons, I would allow the appeal, hold that the Chief Constable is liable in damages to Mrs Robinson, and remit the case for the assessment of damages.
LORD MANCE:
I have read with benefit the judgments prepared by Lord Reed and Lord Hughes in this case.
I agree that the case is one of positive conduct by the police in instigating an arrest on public pavement, which caused injury to Mrs Robinson, an otherwise uninvolved passer by.
Having watched the excellent CCTV recording and compared it with the judges findings, I confess to the same doubt as Lord Hughes about the judges finding of negligence.
The pavement was quite busy, the relevant suspects were for the first time stationary, and Mrs Robinson might appear to have passed by and to be at a little distance, by the time the police seized what they obviously thought was the opportune moment.
However, like Lord Hughes and bearing in mind the evidence accepted by the judge as set out by Lord Reed in his para 77, I do not on balance consider that this is a case where an appellate court should interfere with the judges conclusions, after hearing all the evidence.
As Lord Reed demonstrates, it is unnecessary in every claim of negligence to resort to the three stage analysis (foreseeability, proximity and fairness, justice and reasonableness) identified in Caparo Industries Ltd v Dickman [1990] 2 AC 605.
There are well established categories, including (generally) liability for causing physical injury by positive act, where the latter two criteria are at least assumed.
The concomitant is that there is, absent an assumption of responsibility, no liability for negligently omitting to prevent damage occurring to a potential victim.
This also provides a rationale for the general rule that the police and CPS have no liability for failure, by efficient investigation or pursuit of an actual or potential offence, to prevent a subsequent victim from suffering physical injury at the hands of a third party for whose acts the State is not responsible: Michael v Chief Constable of South Wales Police [2015] UKSC 2; [2015] AC 1732, paras 114 130 and 137.
Economic loss also falls outside the established category of liability for physical injury, but an assumption of responsibility for economic loss will, as discussed in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, likewise satisfy the latter two Caparo criteria.
Outside any established category, the law will proceed incrementally, and all three stages of the Caparo analysis will be material.
It would be unrealistic to suggest that, when recognising and developing an established category, the courts are not influenced by policy considerations.
No one now suggests that the common law has not changed since the Saxon era, merely to be revealed from time to time by an increasingly perceptive judiciary.
As Lord Reid said famously in The Judge as Law maker: There was a time when it was thought almost indecent to suggest that judges make law they only declare it .
But we do not believe in fairy tales any more: 12 Journal of the Society of Public Teachers of Law 22 (1972); see also Lord Goffs comments on the declaratory theory of the common law in Kleinwort Benson Ltd v Lincoln County Council [1999] 2 AC 349, 377 379.
The courts are not a Law Commission, but, in recognising the existence of any generalised duty in particular circumstances they are making policy choices, in which considerations such as proximity and fairness, justice and reasonableness must inhere.
Landmark examples are Donoghue v Stevenson [1932] UKHL 100; [1932] AC 562, in relation to physical injury, and Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, in circumstances where there has been an assumption of responsibility to give accurate information upon which it is foreseeable that the recipient will rely to its economic benefit or detriment.
The key to the application of the above principles is to ascertain whether or not a particular situation falls within an established category.
Lord Reed treats physical loss resulting foreseeably from positive conduct as constituting axiomatically such a category, whatever the precise circumstances.
I accept that principle as generally correct: see eg Alcock v Chief Constable of South Yorkshire [1992] 1 AC 310, 396F G, per Lord Keith.
But I am not persuaded that it is always a safe guide at the margins.
I note that Lord Oliver went no further in Caparo than to say that, in the context of loss caused by physical damage, the existence of the nexus between the careless defendant and the injured plaintiff can rarely give rise to any difficulty: p 632F.
He went on to identify Hill, so far as concerns the alternative ground of that decision, as a case where, in any ordinary meaning of the words, a relationship of proximity (in the literal sense of closeness) exists but where the law, whilst recognising the fact of the relationship, nevertheless denies a remedy to the injured party on the ground of public policy: p 633D E.
Lord Reed says that Smith v Ministry of Defence [2013] UKSC 41; [2014] AC 52 was a case where it was appropriate to apply the three stage Caparo approach because it raised a novel legal issue, relating to the provision of protective equipment to soldiers on active duty, and the scope of combat immunity: it did not concern an established category of liability.
But, why not? Combat immunity, where it applies, is, I suggested at para 114, itself 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.
And, however that may be, a reading of the judgments shows that no distinctions were there drawn between acts and omissions, either generally or in the specific context of the discussion which is to be found on prior authority, including Hill v Chief Constable of West Yorkshire [1989] AC 53, Elguzouli Daf v Commissioner of Police for the Metropolis [1995] QB 335, Stovin v Wise [1996] AC 923, Brooks v Commissioner of Police for the Metropolis [2005] 1 WLR 1495 and Van Colle v Chief Constable of the Hertfordshire Police [2009] AC 225: see Smiths case at eg paras 82 83, 95 96 and 97, per Lord Hope and paras 108 109, 114, 117 and 136, per Lord Mance (dissenting).
Lord Carnwaths (dissenting) judgment at paras 157 170 is also of interest, for noting that the issue was a novel one, and that the closest analogy consisted in the above line of cases about police responsibility, again without drawing any distinction between acts and omissions.
The case was a novel one, not because it fell outside the general category of negligent acts or omissions allegedly causing physical loss, but because it was not (yet) established that the established category embraced the particular types of acts or omissions alleged and the circumstances in which soldiers might suffer from them.
Indeed, it was accepted on all sides that combat immunity meant that the established category was not on any view completely unqualified, and the question arose in that respect what scope the courts should, as a matter of policy, attach to the principle of combat immunity.
A similar difficulty arises in fitting other authorities which Lord Reed accepts as correctly decided into any absolutely fixed legal mould.
The cases of Hill and Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225 can, I agree, be rationalised as cases of omission, but that was not how they were reasoned.
The case of Calveley v Chief Constable of the Merseyside Police [1989] AC 1228 involved a claim by police officers for pursuing disciplinary proceedings with insufficient expedition, thereby, it was alleged, causing them physical loss, which was held to be unforeseeable, and economic loss of a kind, which is, in the absence of any assumption of responsibility, generally irrecoverable.
But again Lord Bridge buttressed his conclusion with general statements about the need to shield the police from the pursuit of claims in relation to their investigative activity, without distinction between acts and omissions.
In Elguzouli Daf there were two similarly based claims, but the consequences of the CPSs failure to pursue their investigation with sufficient expedition were alleged to be that the claimants remained in custody for some 22 and 85 days respectively.
In the absence of any specific assumption of responsibility, the Court of Appeal held that policy factors argued against the recognition of a duty of care owed by the CPS to those it prosecutes: p 349B C, per Steyn LJ, who went on: While it is always tempting to yield to an argument based on the protection of civil liberties, I have come to the conclusion that the interests of the whole community are better served by not imposing a duty of care on the CPS.
As Morritt LJ put it at p 352G H, policy considerations similar to those which weighed with Lord Keith in Hills case excluded any general duty to use reasonable care in the institution and conduct of criminal proceedings.
The reasoning contains no hint of a categorical distinction between acts and omissions.
A year later, the House had before it in Marc Rich & Co AG v Bishop Rock Marine Co Ltd [1996] 1 AC 211 a claim by cargo owners against a classification society by whose alleged negligence the carrying vessel was allowed to continue on her voyage after temporary repairs to a crack in her hull, which then caused the loss of both vessel and cargo.
Cargo owners primary submission was that, this being a case of physical damage to property in which the plaintiff had a proprietary or possessory interest, the only requirement was proof of reasonable foreseeability.
The House rejected this categorically, in the following passage from Lord Steyns speech, p 235D H): Counsel for the cargo owners submitted that in cases of physical damage to property in which the plaintiff has a proprietary or possessory interest the only requirement is proof of reasonable foreseeability.
For this proposition he relied on observations of Lord Oliver of Aylmerton in Caparo Industries Plc v Dickman [1990] 2 AC 605, 632C 633D.
Those observations, seen in context, do not support his argument.
They merely underline the qualitative difference between cases of direct physical damage and indirect economic loss.
The materiality of that distinction is plain.
But since the decision in Dorset Yacht Co Ltd v Home Office [1970] AC 1004 it has been settled law that the elements of foreseeability and proximity as well as considerations of fairness, justice and reasonableness are relevant to all cases whatever the nature of the harm sustained by the plaintiff.
Saville LJ explained at 1077[D E]: . whatever the nature of the harm sustained by the plaintiff, it is necessary to consider the matter not only by inquiring about foreseeability but also by considering the nature of the relationship between the parties; and to be satisfied that in all the circumstances it is fair, just and reasonable to impose a duty of care.
Of course, these three matters overlap with each other and are really facets of the same thing.
For example, the relationship between the parties may be such that it is obvious that a lack of care will create a risk of harm and that as a matter of common sense and justice a duty should be imposed.
Again in most cases of the direct infliction of physical through loss or injury carelessness, it is self evident that a civilised system of law should hold that a duty of care has been broken, whereas the infliction of financial harm may well pose a more difficult problem.
Thus the three so called requirements for a duty of care are not to be treated as wholly separate and distinct requirements but rather as convenient and helpful approaches to the pragmatic question whether a duty should be imposed in any given case.
In the end whether the law does impose a duty in any particular circumstances depends upon those circumstances, .
That seems to me a correct summary of the law as it now stands.
It follows that I would reject the first argument of counsel for the cargo owners. (italics added for emphasis) While both the House and Saville LJ (as he was) were happy to accept that in most cases of the direct infliction of physical loss or injury through carelessness, liability was self evident, they were cautious to warn against absolute rules in that respect.
Elguzouli Daf was, as Lord Reed notes, para 59, followed and applied in SXH v Crown Prosecution Service [2017] UKSC 30; [2017] 1 WLR 1401, where the complaint was that the CPS had acted unreasonably in prosecuting an asylum seeker, leading to her detention for some months.
Lord Toulson giving the majority judgment said: 38.
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.
The claim here was clearly for a positive act, causing excessive detention.
Finally, Lord Reed dismisses Brookss case on the basis that it concerned police behaviour which was merely insensitive and so not normally actionable, even if it results in a psychiatric illness: para 60.
But the starting point for the Houses consideration of the case was that Mr Brooks had, as a key witness to the fatal attack on Stephen Lawrence on 22 April 1993, suffered from a very serious post traumatic stress disorder until the spring of 1998, and that this had been severely exacerbated or aggravated as a result of the polices failure to treat him lawfully: para 10.
Lord Steyn said in this connection that: In particular the matter must be considered on the basis that Mr Brooks has suffered personal injury (in the form of an exacerbation of or aggravation of the post traumatic stress that was induced by the racist attack itself) in consequence of the negligence of the officers and that injury of this type was reasonably foreseeable. (para 16) That being the basis on which the matter fell to be considered, the appellant advanced the argument that Hills case could be distinguished.
The House disposed of that argument tersely as follows, para 32: The only suggested distinction ultimately pursued was that in Hills case the police negligence was the indirect cause of the murder of the daughter whereas in the present case the police directly caused the harm to Mr Brooks.
That hardly does justice to the essential reasoning in Hills case.
In any event, Calveley , Elguzouli Daf , and Kumar were cases of alleged positive and direct negligence by the police.
The distinction is unmeritorious.
According to the Houses decision in Alcocks case, what is necessary in order to recover damages for negligently caused psychiatric injury is not only foreseeability, but also proximity.
Both requirements appear clearly to have been present in Brooks case.
In the event, Lord Steyn also treated the third stage of the Caparo test (fairness, justice and reasonableness) as applicable.
But it is clear that the House decided the case by reference to a general principle derived from the cases of Hill, Calveley and Elguzouli Daf, and not on the basis of any general distinction between either physical and psychiatric injury or acts or omission.
Rather, it decided the case on the basis that, outrageous negligence aside, the police owe no duty of care not to cause by positive act or omissions harm to victims of serious crime, or witnesses to serious crime, with whom they have contact; and it rejected categorically any distinction between indirect causation of the murder of an innocent victim, due to failure properly to investigate past offences against other victims (Hills case) and harm directly caused to Mr Brooks (Brookss case itself): paras 18 and 32.
What I think emerges from this examination of past authority is that it is not possible to state absolutely that policy considerations may not shape police or CPS liability in a context where the conduct of the police may perfectly well be analysed as positive, rather than simply as involving some form of omission.
It is at least clear that extended detention and psychiatric injury, due to the polices or CPSs positive acts or omissions, will be treated as outside any otherwise generally established category of liability for negligence.
As to the present appeal, I also think that there was open to the law a genuine policy choice whether or not to hold the police responsible on a generalised basis for direct physical intervention on the ground, causing an innocent passer by physical injury, in the performance of their duties to investigate, prevent and arrest for suspected offending by some third person(s).
In my opinion, that policy choice should now be made unequivocally in the sense indicated by Lord Reed.
In Hills case Lord Keith stated (p 59B C), that: There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions.
So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence.
Lord Keith then cited as instances where liability for negligence has been established two authorities: Knightley v Johns [1982] 1 WLR 349 and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242.
Neither comes particularly close to the present case, and indeed, in reasoning to some extent echoed in the present Court of Appeal decision, the Court of Appeal (Leveson and Toulson LJJ) in Desmond v Chief Constable of Nottinghamshire Police [2011] EWCA Civ 3; [2011] PTSR 1369, identified the modified core principle in Hill as meaning that: Absent special circumstances, the police do not owe individual members of the public a common law duty of care in undertaking their operational duties of investigating, detecting, suppressing and prosecuting crime: para 31.
But it recognised that the modified core principle in Hill may not apply in exceptional circumstances at the margins.
It gave as examples of where it would not apply cases of negligent driving by the police and of assumption of responsibility.
It also identified as further examples the two cases mentioned by Lord Keith.
As to those two cases, the former concerned police (mis)management of the aftermath of a relatively mundane traffic accident, by giving instructions to an officer to ride against the traffic flow in a tunnel, as a result of which he suffered personal injury.
The latter concerned police failure to re equip themselves with fire fighting equipment, before taking the drastic step, with a view to forcing the intruders arrest, of firing an incendiary canister into a building in which an intruder had broken with a gun.
The present case concerns in contrast a quite delicate operational decision involving coordination between four officers, with a view to the arrest of suspected drug dealers, in a public place.
It can be suggested that this raises special considerations, negativing any duty of care.
But in my view we should not accept that suggestion.
Rather we should now recognise the direct physical interface between the police and the public, in the course of an arrest placing an innocent passer by or bystander at risk, as falling within a now established area of general police liability for positive negligent conduct which foreseeably and directly inflicts physical injury on the public.
On that basis, I would also allow this appeal and restore the judges judgment.
LORD HUGHES:
The question of law
The general question of importance in this appeal is when the police do or do not owe a legal duty of care to individuals in the course of performing their public functions of investigating and preventing crime.
It is important that the question is posed in those terms.
It may have become a convenient shorthand to express the decisions of the House of Lords and this court in Hill v Chief Constable of West Yorkshire, Brooks v Commissioner of Police of the Metropolis, Smith v Chief Constable of Sussex Police and Michael v Chief Constable of South Wales in terms of a rule of police immunity.
That may not be surprising since Lord Keith did at one point in Hill refer to the police as immune from an action of the kind there brought.
Whether convenient or not, that shorthand is misleading, as Lord Toulson explained in Michael at para 44.
Whatever the answer to the question posed, the police do not enjoy some immunity from liability which otherwise would arise.
Like others, however, they do not owe a duty of care to avoid harm or damage in every situation where such harm or damage can be foreseen.
The general rule of law of tort is that the foreseeability of harm is a necessary but not a sufficient condition for liability.
So in all the many situations and relationships which may result in damage, the question becomes: when is the defendant under a legal duty of care to the claimant to take reasonable steps to avoid it.
For the reasons very clearly set out by Lord Reed at paras 21 30 it is neither necessary nor appropriate to treat Caparo Industries v Dickman [1990] 2 AC 605 as requiring the application of its familiar three stage examination afresh to every action brought.
Where the law is clear that a particular relationship, or recurrent factual situation, gives rise to a duty of care, there is no occasion to resort to Caparo, at least unless the court is being invited to depart from previous authority.
The four cases of Hill, Brooks, Smith and Michael make it clear that they do not touch on the liability of police officers if by positive negligent act they cause physical harm to individuals or damage to property.
That is apparent from: i) the approval in those cases of the decisions in Rigby v Chief Constable of Northamptonshire (negligent use of a CS gas canister in an attempt to force an armed psychopath from a shop in which he had gone to ground) and Knightley v Johns (negligent organisation of traffic in an emergency situation); and ii) subsequent cases, that: the explicit statement by Lord Keith in Hill at 59B, approved in There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions. (although see below for consideration of omissions).
There are other examples of recognition of the duty of care which police officers owe not by positive negligent act to cause physical harm.
They include Marshall v Osmond (a car chase) and Ashley v Chief Constable of Sussex Police (where negligent shooting of a suspected criminal was conceded).
The principal cases, however, also contain explicit statements of the vital policy considerations which impose limits on the duties of care which the police owe to individuals when engaged in their public function of investigating and preventing crime.
The analysis begins with Lord Keith in Hill.
With the express agreement of three other members of the court, and a concurring speech by the fifth, he said at 63A: That is sufficient for the disposal of the appeal.
But in my opinion there is another reason why an action for damages in negligence should not lie against the police in circumstances such as those of the present case, and that is public policy Potential existence of such liability may in many instances be in the general public interest, as tending towards the observance of a higher standard of care in the carrying on of various different types of activity.
I do not, however, consider that this can be said of police activities.
The general sense of public duty which motivates police forces is unlikely to be appreciably reinforced by the imposition of such liability so far as concerns their function in the investigation and suppression of crime.
From time to time they 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.
Lord Templeman added this at 65: Moreover, if this action lies, every citizen will be able to require the court to investigate the performance of every policeman.
If the policeman concentrates on one crime, he may be accused of neglecting others.
If the policeman does not arrest on suspicion a suspect with previous convictions, the police force may be held liable for subsequent crimes.
The threat of litigation against a police force would not make a policeman more efficient.
The necessity for defending proceedings, successfully or unsuccessfully, would distract the policeman from his duties.
This action is in my opinion misconceived and will do more harm than good.
In Brooks at para 28 Lord Steyn qualified that part of what Lord Keith had said about the best endeavours of police officers, saying that a more sceptical approach to the carrying out of all public functions was necessary.
His qualification was shared by Lord Bingham at paras 3 and 4 and by Lord Nicholls at para 6.
But notwithstanding that reservation, Lord Steyn, with whom Lord Rodger and Lord Brown fully agreed, otherwise fully endorsed the reasoning of Lord Keith.
At para 30 he held that the core principle of Hill had remained unchallenged for many years.
He went on: 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 Queens 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 Hills 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 polices 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 Hills case, be bound to lead to an unduly defensive approach in combating crime.
As Lord Steyn pointed out (para 19), there can be no doubt that Lord Keiths analysis represented the alternative ground of decision for, and part of the ratio decidendi of, Hill.
In the same case, Lord Bingham, at para 4, said of the suggested duties of care to witnesses which were advanced by the claimant, But these are not duties which could be imposed on police officers without potentially undermining the officers performance of their functions, effective performance of which serves an important public interest.
That is, in my opinion, a conclusive argument in the Commissioners favour.
And at para 5 Lord Nicholls held that These duties would cut across the freedom of action the police ought to have when investigating serious crime.
In Smith Lord Bingham dissented on the extent of the duty of care owed to those who complained to the police about risks from another identified person and advanced what he termed a liability principle recognising a duty of care in narrow circumstances.
But notwithstanding that opinion, he reviewed the policy considerations voiced by Lord Keith in Hill and by the House in Brooks and, except for the reservation entered in Brooks which is explained above, he did not question them: see paras 48 52.
The majority of the House expressly endorsed the policy considerations subject to the same reservation.
At para 74 Lord Hope addressed Lord Binghams opinion that the limited liability which he would have imposed was not inconsistent with the policy factors, and that the observations in Hill and Brooks were to be read in the context of the duties there contended for.
He held that they were not so limited: In my opinion however it is clear from Lord Steyns opinion, read as a whole, that he was laying down a principle of public policy that was to be applied generally.
In para 22 he referred to his own judgment in Elguzouli Daf v Comr of Police of the Metropolis [1995] 1 QB 335.
That was, as he said, a different case altogether, as it raised the question whether the Crown Prosecution Service (CPS) owed a duty of care to those whom it was prosecuting.
But he relied on the case by analogy.
In holding in Elguzouli Daf that policy factors argued against the recognition of a duty of care owed by the CPS to those whom it prosecutes, he said this at p 349: While it is always tempting to yield to an argument based on the protection of civil liberties, I have come to the conclusion that the interests of the whole community are better served by not imposing a duty of care on the CPS.
In my view, such a duty of care would tend to have an inhibiting effect on the discharge by the CPS of its central function of prosecuting crime.
It would in some cases lead to a defensive approach by prosecutors to their multifarious duties.
It would introduce a risk that prosecutors would act so as to protect themselves from claims of negligence. 75.
The phrase the interests of the whole community was echoed in the last sentence of the passage which I have quoted from Lord Steyns opinion in Brooks.
There is an echo too in Brooks of the warning against yielding to arguments based on civil liberties: see the first sentence of that quotation where he warns against a retreat from the core principle.
The point that he 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 Steyn's 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.
A principle of public policy that applies generally may be seen to operate harshly in some cases, when they are judged by ordinary delictual principles.
Those are indeed the cases where, as Lord Steyn put it, the interests of the wider community must prevail over those of the individual. 76.
The risk that the application of ordinary delictual principles would tend to inhibit a robust approach in assessing a person as a possible suspect or victim, which Lord Steyn mentioned in the last sentence of the passage that I have quoted from his opinion in Brooks, is directly relevant to cases of the kind of which Smiths case is an example Police work elsewhere may be impeded if the police were required to treat every report from a member of the public that he or she is being threatened with violence as giving rise to a duty of care to take reasonable steps to prevent the alleged threat from being executed.
Some cases will require more immediate action than others.
The judgment as to whether any given case is of that character must be left to the police.
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
At para 89 Lord Phillips observed that public policy has been at the heart of consideration whether a duty of care is owed by police officers to individuals.
After reviewing the policy factors he concluded at para 97: police in order to deal with claims advanced for alleged breaches of private law duties owed to individuals.
At para 108 Lord Carswell said this:
Lastly, Lord Brown added, at paras 131 133 The factor of paramount importance is to give the police sufficient freedom to exercise their judgment in pursuit of their objects in work in the public interest, without being trammelled by the need to devote excessive time and attention to complaints or being constantly under the shadow of threatened litigation.
Over reaction to complaints, resulting from defensive policing, is to be avoided just as much as failure to react with sufficient speed and effectiveness.
That said, one must also express the hope that police officers will make good use of this freedom, with wisdom and discretion in judging the risks, investigating complaints and taking appropriate action to minimise or remove the risk of threats being carried out. 131.
Fourthly, some at least of the public policy considerations which weighed with the House in Hill and Brooks to my mind weigh also in the present factual context.
I would emphasise two in particular. 132.
First, concern that the imposition of the liability principle upon the police would induce in them a detrimentally defensive frame of mind.
So far from doubting whether this would in fact be so, it seems to me inevitable.
If liability could arise in this context (but not, of course, with regard to the polices many other tasks in investigating and combating crime) the police would be likely to treat these particular reported threats with especial caution at the expense of the many other threats to life, limb and property of which they come to learn through their own and others endeavours.
They would be likely to devote more time and resources to their investigation and to take more active steps to combat them.
They would be likely to arrest and charge more of those reportedly making the threats and would be more likely in these cases to refuse or oppose bail, leaving it to the courts to take the responsibility of deciding whether those accused of making such threats should remain at liberty.
The police are inevitably faced in these cases with a conflict of interest between the person threatened and the maker of the threat.
If the police would be liable in damages to the former for not taking sufficiently strong action but not to the latter for acting too strongly, the police, subconsciously or not, would be inclined to err on the side of over reaction.
I would regard this precisely as inducing in them a detrimentally defensive frame of mind.
Similarly with regard to their likely increased focus on these reported threats at the expense of other police work. 133.
The second public policy consideration which I would emphasise in the present context is the desirability of safeguarding the police from legal proceedings which, meritorious or otherwise, would involve them in a great deal of time, trouble and expense more usefully devoted to their principal function of combating crime.
This was a point made by Lord Keith of Kinkel in Hill and is of a rather different character from that made by Lord Steyn in para 30 of his opinion in Brooks see para 51 of Lord Binghams opinion.
In respectful disagreement with my Lord, I would indeed regard actions pursuant to the liability principle as diverting police resources away from their primary function.
Not perhaps in every case but sometimes certainly, the contesting of these actions would require lengthy consideration to be given to the deployment of resources and to the nature and extent of competing tasks and priorities.
In Michael Lord Toulson (at para 121) was inclined to accord force to criticism of the fear of defensive policing.
But he held that it was possible to imagine that liability might lead to police forces changing their priorities, and that it was hard to see it as in the public interest that the determination of priorities should be affected by the risk of being sued.
He added that the one thing of which any court could be sure is that the payment of compensation would have to come from police budgets, at the expense of spending on policing unless an increase in budgets from the public purse were to ensue.
It should be acknowledged that it is sometimes asserted that that part of the policy considerations which related to the danger of defensive policing lacks hard evidence.
That may technically be so, since there has not existed the kind of duty of care which would test it in practice.
But like Lord Brown in Smith I for my part would regard that risk as inevitable.
It can scarcely be doubted that we see the consequences of defensive behaviour daily in the actions of a great many public authorities.
I do not see that it can seriously be doubted that the threat of litigation frequently influences the behaviour of both public and private bodies and individuals.
However that may be, the several statements of the policy considerations, especially in three different decisions of the House of Lords, are simply too considered, too powerful and too authoritative in law to be consigned to history, as I do not understand Lord Reed to suggest that they should be.
Nor do I see it as possible to treat them as no more than supporting arguments.
As all of them, and especially the speech of Lord Hope set out at para 10 above, make clear, the statements are intended as ones of general principle.
No doubt Hill was decided at a time when Anns v Merton London Borough Council was understood to provide the test for the existence of a duty of care.
But the error of Anns was exposed at the latest in 1991 in Murphy v Brentwood Council, whilst Brooks and Smith were decided in 2005 and 2008 respectively.
In any event, the error of Anns lay chiefly in its effective imposition of an often impossible burden on a defendant to demonstrate that public policy ought to negate the existence of a duty of care.
The relevance of considerations of public policy, such as those so fully adumbrated in Hill, Brooks and Smith, and the fact that they may indeed demonstrate that a duty of care is not owed, remains unchanged by the different formulation in Caparo.
In Michael (at para 97) Lord Toulson helpfully brought into the analysis the general reluctance of English law to impose liability in tort for pure omissions.
Smith v Littlewoods Organisation Ltd [1987] AC 241, to which he referred, is a good example.
There, the claimant suggested that the occupiers of a disused cinema, awaiting demolition and reconstruction as a shop, owed a duty to exclude vandals from getting in, so that they were liable to neighbours when the vandals started a fire which spread to adjoining properties.
That was, no doubt, a case of pure omission, and was so analysed by Lord Goff, although not by the majority of the House of Lords, through Lord Mackay.
It is clear that the reluctance of the common law to impose liability in tort for pure omissions is another reason why the police do not owe a duty of care to individuals who turn out to be the victims of crime (as in Hill or Smith) or to witnesses (as in Brooks) or to suspects (as in Calveley v Chief Constable of Merseyside and Elguzouli Daf ).
But analysis in terms of omissions cannot be the only, or sufficient, reason why such duties of care are not imposed, nor why there is very clearly no duty owed to individuals in the manner in which investigations are conducted.
There are at least two reasons why this is so.
First, the rule against liability for omissions is by no means general.
In Smith v Littlewoods Organisation Ltd Lord Goff identified at any rate several situations where such liability is imposed.
One is where there has been an assumption of responsibility towards the claimant.
The law readily finds such an assumption in many common situations, such as employment, teaching, healthcare and the care of children, and imposes liability for omitting to protect others.
It could equally readily do so in the case of police officers with a general public duty to protect the peace, but it does not.
Another was epitomised by Goldman v Hargrave and by Thomas Graham Ltd v Church of Scotland 1982 SLT (Sh Ct) 26, a case very similar to Littlewoods where the occupier knew of previous incursions by third parties and where Lord Goff accepted that liability was rightly imposed for omission to keep them out.
If the occupation of land is treated as imposing liability for an omission, the law could, and might, have said that the same applies to police officers where they are aware of the risk posed by (or to) those they are investigating, but it does not.
For the same reasons, the question whether a statutory public duty gives rise to a private duty or not is a fluid one.
Stovin v Wise and Gorringe are examples where no private duty of care was held to exist.
Barrett v Enfield London Borough Council, decided after Stovin v Wise, accepted at least in principle the possibility of such a duty in relation to the different statutory scheme there in question.
Secondly, there is no firm line capable of determination between a case of omission and of commission.
Some cases may fall clearly on one side of the line, and Hill may have been one of them.
But the great majority of cases can be analysed in terms of either.
Michael could be said to be a case of omission to respond adequately to the 999 call.
But it was argued for the claimant as a case of a series of positive acts, such as, for example, misreporting the complaint when passing it from one police force to another.
Barrett v Enfield London Borough Council was a case of mixed acts (allegedly negligent placements) and omissions (to arrange adoption).
Phelps v Hillingdon London Borough Council similarly involved allegedly negligent examination, also a positive act.
The ultimate reason why there is no duty of care towards victims, or suspects or witnesses imposed on police officers engaged in the investigation and prevention of crime lies in the policy considerations examined above and, in the end, in the clear conclusion, as expressed by Lord Hope in Smith (see para 10 above) that the greater public good requires the absence of any duty of care.
Likewise the policy considerations will be directly relevant to any suggestion that a duty of care exists towards individuals such as victims, witnesses or suspects via the route of foreseeable risk of psychiatric harm.
The law remains uncertain about when a claimant can properly be regarded as a primary or a secondary victim for the purposes of recovering damages for psychiatric harm: see Frost v Chief Constable of South Yorkshire Police [1999] 2 AC 455, McLoughlin v Grovers [2001] EWCA Civ 1743 per Hale LJ as she then was, and Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310.
But it is clear that no duty of care towards victims of crime, witnesses or suspects can be erected on the back of foreseeability of psychiatric harm, and the reason clearly lies in the policy considerations.
Thus whilst there remains a duty of care imposed on police officers not by positive action to occasion physical harm or damage to property which ought reasonably to be avoided, there is no duty of care towards victims, witnesses or suspects in the manner of the investigation of offences or the prevention of crime.
That also means that there is no duty of care to protect individuals from harm caused by the criminal acts of third parties.
Of course, where action is brought on the basis of physical harm done by positive act of the police, it will succeed if but only if negligence is proved.
As Lord Reed explains at para 75, policing may sometimes involve unavoidable risk to individuals.
It may very often involve extremely delicate balancing of choices.
Crowd control, hostage situations, violent outbreaks of crime and the allocation of scarce resources where there are large numbers of persons with the potential to offend, even at the terrorist level, are simply examples.
Sometimes decisions may have to be made under extreme pressure; at other times they may remain very difficult notwithstanding time for analysis, and there may be a high level of risk that they turn out to be wrong.
The question is always not whether, with hindsight, the decision was wrong, but whether in all the circumstances it was reasonable.
The present case
I agree that the present case is one of positive act, namely arresting the suspect, which directly caused physical harm.
It matters not that the suspect was the first to be in physical contact with the claimant given that the collision with her was by him plus two of the policemen.
I confess that I have pondered hard about the finding of negligence.
That the suspect might run away was known, but the limited risk that he not only would do so, but also would cannon into a pedestrian if he did, had to be balanced against the duty to effect an arrest promptly.
Many might regard the decision when to effect the arrest as a marginal one.
But it is important that appellate courts do not second guess trial judges who have had the opportunity to hear the witnesses in person, as well as to examine the CCTV in the light of the way the case is argued.
It does not seem to me that even if one were to entertain doubts about how one might oneself have decided the issue, it can be right to displace the finding of the trial judge unless there is error of principle.
It is impossible to say that the judge was not entitled to attach the significance he did to the fact that Mr Willan had lost sight of the claimant at the moment he moved in.
In those circumstances I would allow the appeal and restore the finding of the trial judge.
The case must be remitted to the court of trial for the still outstanding assessment of damages.
|
In July 2008, the Appellant, then aged 76, was knocked over on a street in the centre of Huddersfield by a group of men.
Two of the men were police officers (DS Willan and PC Dhurmea) and the third was a suspected drug dealer (Williams) whom they were attempting to arrest.
As the officers struggled with Williams, he backed into the Appellant, who was standing close by.
She fell over, and the three men fell on top of her, causing her to be injured.
The officers had foreseen that Williams would attempt to escape.
They had not noticed that the Appellant was in the immediate vicinity.
The principal question to be decided in this appeal was whether the officers owed a duty of care to the Appellant and whether, if they did, they were in breach of that duty.
The judge held that the officers had been negligent, but that the police were immune from claims against them in negligence.
The Court of Appeal found that most claims against the police when engaged in their core functions will fail the third stage of the Caparo test i.e. that it will not be fair, just and reasonable to impose a duty of care.
The Court also found that Williams had caused the harm to the Appellant and the case therefore concerned an omission by the police, rather than a positive act.
Finally, the Court considered that even if the officers had owed the Appellant a duty of care, they had not acted in breach of it.
The issues to be resolved in the Supreme Court were (1) does the existence of a duty of care always depend on an application of the Caparo test (2) is there a general rule that the police are not under any duty of care when discharging their core functions, and is there any distinction between acts and omissions (3) was this a positive act or an omissions case (4) did the police owe a duty of care to the Appellant (5) if so, was the Court of Appeal correct to overturn the judges finding that the officers failed in that duty and (6) if there was a breach of a duty of care, were the Appellants injuries caused by it?
The Appeal is allowed.
Lord Reed gives the lead judgment with which Lady Hale and Lord Hodge agree.
Lord Mance and Lord Hughes also allow the appeal but reach the conclusion that a duty of care existed by different reasoning.
The proposition that there is a Caparo test which applies to all claims in the modern law of negligence, and that in consequence the court will only impose a duty of care where it considers it fair, just and reasonable to do so on the particular facts, is mistaken [21 24].
It is normally only in novel cases, where established principles do not provide an answer, that the courts need to exercise judgment that involves consideration of what is fair, just and reasonable [27].
This case concerned an application of established principles of the law of negligence and so the existence of a duty of care did not depend on the application of a Caparo test [30].
Like other public authorities, in accordance with the general law of tort, the police are subject to liability for causing personal injury [45 48].
On the other hand, as held by the Supreme Court in Michael v Chief Constable of South Wales Police (Refuge and others intervening) [2015] UKSC 2, the general duty of the police to enforce the criminal law does not carry with it a private law duty towards individual members of the public.
The common law does not normally impose liability for omissions, or, more particularly, for a failure to prevent harm caused by the conduct of third parties [50].
The case of Hill v Chief Constable of West Yorkshire [1989] AC 53 is not authority for the proposition that the police enjoy a general immunity from suit in respect of anything done by them in the course of investigating or preventing crime.
The effect of Hill is that the police do not owe a duty of care, in the absence of special circumstances, to protect the public from harm through the performance of their function of investigating crime [54 55].
The authorities relied on by the respondent [56 66] are not inconsistent with the police being generally under a duty of care to avoid causing personal injury where such a duty would arise according to ordinary principles of the law of negligence [67 68].
Applying these principles, the police may be under a duty of care to protect an individual from danger of injury which they have themselves created [70].
The present case concerned a positive act, not an omission.
The reasonably foreseeable risk of injury to the Appellant when the arrest was attempted was enough to impose a duty of care on the officers [74].
The judge was entitled to find negligence where Willan accepted that he was aware of the risk that Williams would attempt to escape and of the risk to members of the public in that event, that he would not have attempted the arrest at a time when he was aware that someone was in harms way, and that he had failed to notice the Appellant [75 78].
The Appellants injuries were caused by the officers breach of their duty of care; she was injured as a result of being exposed to the danger from which they had a duty of care to protect her [79 80].
Both Lord Mance and Lord Hughes agreed with the majority that the present case concerned a positive act, not an omission, and that the finding of the trial judge on negligence should be restored [82; 122 124].
However, Lord Mance found it unrealistic to suggest that, when recognising and developing an established category of liability, the courts are not influenced by policy considerations [84].
It was not possible to state absolutely that policy considerations may not shape police liability where the conduct of the police may be analysed as positive, rather than simply as involving some form of omission [85 94].
However, he concluded that we should now recognise the direct physical interface between the police and the public, in the course of an arrest placing an innocent passer by at risk, as falling within a now established area of general police liability for positive negligent conduct which foreseeably and directly inflicts physical injury [97].
Lord Hughes referred to vital policy considerations which impose limits on the duty of care which the police owe to individuals.
Such considerations are the ultimate reason why there is no duty of care imposed on police officers engaged in the investigation and prevention of crime towards victims, suspects or witnesses.
The greater public good requires the absence of any duty of care [103 120].
In response to these points, Lord Reed emphasised that discussion of policy considerations is not a routine aspect of deciding cases in the law of negligence, and is unnecessary when existing principles provide a clear basis for the decision, as in the present appeal [69].
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This is a case about the rights of unmarried fathers to take part in childrens hearings under Part II of the Children (Scotland) Act 1995.
It raises two distinct issues.
The first concerns the kind of order made in the sheriff court which would be competent to give a father the right to take part in the childrens hearing.
The second concerns the compatibility of the present scheme with the rights of the father (and indeed the child) under the European Convention on Human Rights.
As the reader will discern, Lord Hope has taken the primary responsibility for dealing with the first issue in paras 2 31, and Lady Hale has taken primary responsibility for the second in paras 32 69.
But this is a judgment of the court with which all members agree.
The facts
The appellant K is an unmarried father.
He is the father of a child, L, who was born on 6 May 2002.
The childs mother is JR, with whom K formed a relationship in about April 2000.
They cohabited, together with Ks daughter and JRs son from previous relationships, and then with their own child L. They registered her birth together on 14 May 2002.
Their relationship broke down in either 2003 or 2004, although there were short periods of separation before then.
K continued to have contact with L after the separation.
She had a medical condition which necessitated overnight stays in hospital, and he continued to be involved with her hospital appointments until at least September 2003.
One might have hoped that it would have been possible for K to maintain contact with her thereafter without recourse to the court.
But this proved not to be so.
In about May 2004 he raised proceedings in the sheriff court at Glasgow under section 11 of the Children (Scotland) Act 1995 (the 1995 Act) seeking full parental responsibilities and parental rights in relation to L and a contact order.
The sheriff made an interim contact order on 11 May 2004.
Residential contact took place every weekend in terms of that order until December 2005.
JR then alleged that L had been sexually abused by K, and Ls contact with K was stopped.
The allegation was investigated by the police, who concluded that there was insufficient evidence to support it.
But it continued to cast a shadow over Ks attempts to resume contact.
K returned to the sheriff court on 21 March 2006 when he asked the sheriff to ordain JR to appear to explain her failure to obtemper the interim contact order.
The sheriff declined to do so, and on 5 May 2006 he suspended interim contact and ordered a report from a local solicitor.
By then steps had been taken by the local authoritys social work services department to refer Ls case to the Principal Reporter under chapter 3 of Part II of the 1995 Act, on the ground that she was in need of compulsory measures of supervision.
The referral was made on 9 March 2006.
It was stated that the department were concerned both about Ls welfare, given the level of conflict which had arisen between her parents which might have caused significant trauma to L, and about the fact that JR had made serious allegations about her ex partner K and continued to do so without appearing to be willing to address these issues by engaging with social work services.
On 28 June 2006 a childrens hearing was held, which was attended by L and JR.
K had been notified and was in the building, but he was not allowed to attend the hearing or to participate in the discussion.
This was because he was not regarded as a relevant person within the meaning of section 93(2)(b) of the 1995 Act: see also section 45(8) as to the right of a relevant person to attend all stages of the hearing.
It was also noted that there was high level of conflict between him and JR.
No decisions were taken and the panel continued the hearing to a later date.
A further childrens hearing was held on 20 July 2006.
K was again notified, but he did not attend.
It can be assumed that he would not have been allowed to attend or participate in this discussion, for the reasons that were given on 28 June 2006.
The grounds for referral were read out to JR by the chairman, as required by section 65(4) of the 1995 Act.
They included an allegation in terms of section 52(2)(d) of the 1995 Act that L was a child in respect of whom an offence of the kind mentioned in Schedule 1(2) to the Criminal Procedure (Scotland) Act 1995 had been committed by a person who had parental responsibilities in relation to her.
This was because JR had stated to a general practitioner at Shettleston Health Centre that L had told her that K had stuck his finger in her and that L had had a vaginal discharge.
JR accepted the majority of the statements of facts but denied the grounds for the referral.
Because she did not accept the grounds and also because L was too young to understand them, the Principal Reporter was directed to apply to the sheriff for a finding as to whether the grounds for referral were established: see section 65(7) and (9) of the 1995 Act.
The matter came before the sheriff on 11 August 2006.
The hearing was attended by a solicitor for the Principal Reporter and a solicitor for the curator ad litem to L. K was not entitled to be there as he was not a relevant person within the meaning of section 93(2)(b), and he did not attend.
The sheriff was told that the grounds of referral and the facts contained therein, which had been amended following objections by JR, had been accepted by the relevant parties.
So he deemed them to be established under section 68(8) and remitted the case as amended to the childrens hearing for consideration and determination under section 68(10) of the 1995 Act.
Section 93(2)(b) of the 1995 Act, as amended, provides that, unless the context otherwise requires, the expression relevant person in relation to a child means: (a) any parent enjoying parental responsibilities or parental rights under Part I of this Act; (b) any person in whom parental responsibilities or rights are vested by, under or by virtue of this Act; and (ba) any person in whom parental responsibilities or parental rights are vested by, under or by virtue of a permanence order (as defined in section 80(2) of the Adoption and Children (Scotland) Act 2007 (asp 4); and (c) any person who appears to be a person who ordinarily (and other than by reason only of his employment) has charge of, or control over, the child.
This brief narrative is sufficient to identify the issue that lies at the heart of the appeal which has brought the matter before the Supreme Court.
Decisions of a childrens hearing or a sheriff under Part II of the 1995 Act are not appealable to this court.
Section 51(1) provides that a child or a relevant person may appeal to the sheriff against a decision of a childrens hearing, and section 51(11) provides that an appeal shall lie by way of stated case either on a point of law or in respect of any irregularity in the conduct of the case from any decision of the sheriff to the sheriff principal or to the Court of Session and, with the leave of the sheriff principal, from any decision of the sheriff principal to the Court of Session.
It also provides that the decision of the Court of Session in the matter shall be final.
But the issue has come before this court by a different route, to which the provisions about appeals under section 40(1) of the Court of Session Act 1988 apply.
These proceedings
On 4 October 2006 a childrens hearing took place which K was permitted to attend, but not as a relevant person.
He told the hearing that he wished to continue to have contact with L, which he had been permitted to do by the sheriff on 18 August 2006 at a contact centre each Saturday.
The sheriff had also appointed a curator ad litem to L on 18 August 2006 and assigned 27 October 2006 as a child welfare hearing so that he could give more detailed consideration to the case.
At a resumed hearing on 19 October 2006, which K also attended, the childrens hearing felt that it was appropriate to leave contact where it was in terms of the courts order.
But it decided to place L on a supervision requirement.
On 27 October 2006 the sheriff conducted the child welfare hearing for which the diet had been assigned on 18 August 2006.
The hearing was attended by K and JR and their solicitors and by the curator ad litem but not, of course, by the Principal Reporter.
Having heard submissions from all parties, the sheriff (Sheriff Totten) pronounced the following interlocutor: The sheriff, having heard the curator ad litem and agents for both parties, grants pursuers motion, no 7/2, in part, conjoined by the curator ad litem despite defenders opposition, and in terms thereof; grants the pursuer parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to the child [L], born 6 May 2002; continues interim contact previously granted; assigns 9 January 2007 at 11 am as a child welfare hearing to monitor contact.
This interlocutor survived unchallenged by the Principal Reporter until March 2009.
K was permitted to attend a series of childrens hearings and to participate in the discussion on the assumption that he was a relevant person in terms of the interlocutor.
It was not until over two years later that the Principal Reporter questioned its competency.
This came about in the following way.
It will be recalled that the childrens hearing had originally been content to allow contact between father and child to continue in terms of the sheriffs interlocutor of 18 August 2006.
However, on 13 August 2007, the hearing imposed a condition of no contact between them.
Initially this was intended as a temporary measure while the social work department assessed the situation in the light of the allegations which had been made as long ago as December 2005.
But matters dragged on for more than a year without any progress being made.
Eventually, on 19 January 2009 a childrens hearing took place at which K asked the hearing to remove the condition of no contact, arguing that there was no substance in the allegations that had been made against him and that he had a right to see his daughter.
The childrens hearing decided to continue the supervision order and directed that K was not to have contact with L. K appealed against this decision to the sheriff under section 51(1) of the 1995 Act.
He averred that he was a relevant person for the purposes of those proceedings in terms of section 93(2)(b).
The Principal Reporter did not at first challenge this averment.
But in her amended answers she averred that K did not fall into any of the categories listed in section 93(2)(b).
Faced with the fact that K had obtained an interlocutor from the sheriff which appeared to be inconsistent with that averment, she presented a petition to the Court of Session in March 2009 for suspension of the interlocutor of 27 October 2006 on the ground that it was incompetent.
On 27 March 2009 the Lord Ordinary, Lady Stacey, suspended the sheriffs interlocutor of 27 October 2006 ad interim.
K then lodged answers to the Principal Reporters petition in which, after averring that the interlocutor was competently made, he averred that it was not competent for the petitioner to seek suspension of it, as she had invited K to the childrens hearings and had involved him in proceedings adverse to him which she was now seeking to prevent him from appealing and had delayed challenging it for several years.
He then averred that, esto the interlocutor was incompetent and/or ambiguous as averred by the petitioner, it together with the provisions of the 1995 Act should be read and given effect in a way that was compatible with his rights under articles 6 and 8 of the Convention, read individually and when taken together with article 14.
On 14 May 2009 Lady Stacey gave leave to reclaim against her interlocutor of 27 March 2009.
The case called before the First Division (the Lord President (Hamilton), Lady Paton and Lord Carloway) for a hearing on the summar roll on 17 and 18 November 2009.
On 21 January 2010 the First Division refused Ks reclaiming motion and his application for a declaration that section 93(2)(b) of the 1995 Act was incompatible with Ks rights under articles 6, 8 and 14 of the European Convention on Human Rights.
It granted decree for suspension of the interlocutor of 27 October 2006 in terms of the prayer of the petition.
The opinion of the court was delivered by Lord Carloway.
It is against that interlocutor that K now appeals to this court.
The issues
The parties are agreed that the issues arising in this appeal are as follows: (i) whether K was entitled to participate in childrens hearings by virtue of the interlocutor of 27 October 2006, or whether that order was incompetently pronounced and was therefore appropriately suspended by the Court of Session; (ii) whether the operation of section 93(2)(b) of the 1995 Act in defining persons entitled to participate in a childrens hearing is such as to be incompatible with Ks rights under articles 6, 8 or 14 of the Convention; and (iii) if so, whether such incompatibility can be addressed by reading down section 93(2)(b) of the 1995 Act under section 3 of the Human Rights Act 1998 or whether there ought to be a declaration of incompatibility.
Underlying these three questions there is a fundamental issue about fairness.
It is most clearly demonstrated by what happened on 20 July 2006 when, in Ks absence, the childrens hearing considered whether the grounds of referral were accepted and by what happened on 11 August 2006 when, again in Ks absence, the sheriff held that the grounds of referral were established.
Those grounds were based in part on allegations about Ks conduct which, if found to be established, were bound to affect the way Ls case was dealt with from then on, especially with regard to issues about whether there should be contact between her and K.
Yet K was given no opportunity to be heard so that he could refute the allegations.
This strikes us as quite contrary to one of fundamental rules of natural justice, the right to be heard.
The fundamental issue of fairness is also demonstrated by the decision of the childrens hearing to deny all contact between father and child.
That requirement effectively superseded any order for contact which had been made by the sheriff court.
Yet if the Principal Reporter is correct, the father had no right to appear in the childrens hearing to contest the requirement or to appeal against it to the sheriff court, unless and until he got an appropriate order in separate proceedings before the sheriff court.
That too strikes us as quite contrary to one of the fundamental rules of natural justice.
A childs mother has parental responsibilities and parental rights in relation to her child, whether or not she is or has been married to the childs father: section 3(1)(a) of the 1995 Act.
As such, she will always be a relevant person within the meaning of section 93(2)(b)(a) (unless and until she is deprived of all the parental responsibilities and parental rights by order of a court).
By section 23 of the Family Law (Scotland) Act 2006 it was provided that section 3(1) of the 1995 Act be amended to the effect that unmarried fathers who are registered as the childs father under section 18 of the Registration of Births, Deaths and Marriages (Scotland) Act 1965 or the equivalent enactments in England and Wales or Northern Ireland were automatically to have parental responsibilities and parental rights in relation to the child.
So they too will always be a relevant person within the meaning of section 93(2)(b)(a).
But by section 23(4) of the 2006 Act it was provided that the amendment to section 3(1) of the 1995 Act was not to confer parental responsibilities or parental rights on a man who was registered as the childs father jointly with the mother before the coming into force of the amendment.
K was registered as Ls father on 14 May 2002, shortly after she was born.
But, as the amendment is not retrospective, it does not apply to him.
An unmarried father can acquire parental responsibilities and parental rights by agreement with the childs mother under section 4 of the 1995 Act.
In Ks case, once his relationship with JR had broken down, this was unlikely to be possible.
The only way he could acquire them was by applying to the court for a grant of those rights under section 11 of the 1995 Act, which is what he did in May 2004, as we pointed out in para 2.
The right to be heard is not, of course, an absolute right that must be made available in all circumstances.
In Russell v Duke of Norfolk [1949] 1 All ER 109, 118 Tucker LJ said: There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal.
The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth.
These observations were approved in Ceylon University v Fernando [1960] 1 WLR 223 and in In re K (Infants) [1965] AC 201.
The point was made in the latter case that the requirement had to yield to the paramount consideration, which was the welfare of the children.
No doubt there will be circumstances where a childrens hearing may think it necessary, in the interests of the child, to exclude a relevant person from the hearing under section 46 of the 1995 Act: see further in para 46 below.
In this case however, where the issue is whether allegations which profoundly affect the relationship between parent and child have been established, the inequality of treatment between the mother and unmarried fathers who were registered after 4 May 2006 on the one hand and unmarried fathers in Ks position on the other is striking.
The question whether the amendment should apply to fathers who had already registered was considered by the Scottish Executive prior to its enactment.
It preferred to give the benefit of it only to unmarried fathers who registered the birth after the legislation came into force, on the ground that the law should be clear, precise and predictable: see Parents and Children (Scottish Executive, 2000), paras 2.16 2.18.
The majority of those who responded to the consultation shared this view: Family Matters, Improving Family Life in Scotland (Scottish Executive, 2004), p 15.
It is understandable that the Scottish Parliament would not wish retrospectively to confer all the parental responsibilities and parental rights upon all registered unmarried fathers irrespective of their actual relationship with the child.
But in the present context it is very hard to see how the difference in treatment under Part II of the 1995 Act can be justified.
Issue (i): the sheriff's interlocutor
The operative part of the interlocutor of 27 October 2006 falls into three parts: (i) the granting to K of parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to the child [L]; (ii) the continuation of the interim contact previously granted; and (iii) the assigning of a further diet as a child welfare hearing to monitor contact.
It is the first part only that is said by the Principal Reporter to be incompetent.
The First Divisions discussion of this issue begins by making the point, with which no one would disagree, that interlocutors should be unambiguous and that they must mean what they say: para 58.
It is then said that there is no principle of reading interlocutors down in a way which would make them compatible with Convention rights.
It is true that the direction in section 3 of the Human Rights Act 1998 deals only with the way primary and subordinate legislation should be read and given effect.
But a court is a public authority, and if an interlocutor is capable of being read and given effect in a way which is compatible with Convention rights that way of construing it is to be preferred to one that does not do so.
As the discussion proceeds, however, this apparently rather uncompromising approach gives way to a recognition that if the problem was just a lack of specification that might not, in itself, render the interlocutor incompetent: para 60.
The question to which the discussion then turns is whether it was open to the sheriff to make an order under section 11(1) of the 1995 Act which did no more than grant to the father a right to be heard at a childrens hearing: para 65.
It is pointed out that such a right is not a defined responsibility or right in terms of the statute.
Reference is made to the reasoning of Sheriff Principal Dunlop QC in T v A 2001 SCLR 647, 2001 GWD 15 567 in which he said that the court should not grant an order under section 11 simply because the father would thereby become entitled to appear at a childrens hearing, and to observations to the same effect by Sheriff BA Kerr QC in Greenhorn v Hamilton, unreported, 2 March 1999.
This part of the discussion concludes at the end of para 66 with these words: The scheme of the Act is that a father must first persuade the court on the merits, applying the overarching principles, of imposing upon him the defined parental responsibilities, or one or more of them.
Success in such an application will make the father a relevant person.
We see no reason to disagree with this observation, although we would include the possibility of the father being given the parental rights, or one or more of them, as well: see section 11(2)(b).
The point that the sheriff would have misdirected himself if he thought that it was open to him simply to grant a right to be heard at a childrens hearing was not, in the end, the reason why the First Division held that the interlocutor was incompetent.
There are indications in paras 68 70 that it might have considered altering the interlocutor by suspending it in part or substituting different words, had it not been for the fact that a proof had been set down in the sheriff court to take place in less than two months time.
The basis of the decision that the interlocutor is incompetent is to be found in para 67, where it is said that, when he restricted himself to the limited question of whether the fathers presence would be of assistance to the hearing in determining the appropriate order to make in the interests of the childs welfare, the sheriff did not address the three overarching principles: see section 11(7) of the 1995 Act.
This point is summarised at the end of para 67 in these words: In failing to form a view, by applying the overarching principles, the sheriff erred in law.
He acted otherwise than within the powers conferred by the Act (section 11(7)) and thus in an incompetent manner.
If there had been some evidence to show that the sheriff failed to address his mind to the overarching principles, there would have been something to be said for the view that he had misdirected himself in law.
This would have provided a ground for the parties to appeal, but of course the Principal Reporter was not a party to the proceedings in the sheriff court.
Her only method of challenge was by the proceedings which are now before us, but she did not bring these timeously.
Instead, K attended childrens hearings and was involved in the discussion on the basis of the interlocutor in the reporters presence without objection for more than two years.
In McDougall v Galt (1863) 1 M 1012, 1014 Lord Ardmillan said that if there is any point settled in the courts practice, it is that when a judgment has been implemented it cannot be reviewed by suspension: see also Mackay, Practice of the Court of Session (1877 1879), vol ii, p 483; Maclaren, Court of Session Practice (1916), p 153.
We very much doubt whether suspension was an appropriate remedy in the events that happened in this case.
But, as this point was not developed in argument and there are more fundamental objections to the First Divisions decision, we shall not say any more about it.
First there are the questions that have been raised about the terms of the interlocutor and whether it was one which the sheriff had power to grant under section 11(1) of the 1995 Act.
The critical phrase in the interlocutor is that part of it which is introduced by the words to the extent that: viz: grants the pursuer parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral relating to [L].
Section 11(1) provides that an order may be made under that subsection in relation to parental responsibilities and parental rights.
Section 11(2) provides that the court may make such order under subsection (1) as it thinks fit and that, without prejudice to the generality of that subsection, it may in particular make any of the orders that it then lists.
These include: (b) an order (i) imposing upon a person (provided he is at least sixteen years of age or is a parent of the child) such responsibilities; and (ii) giving that person such rights; An order giving a person the right to participate in a childrens referral is not one of those listed in section 11(2).
It is not all that difficult, however, to understand what the sheriff was seeking to achieve.
One of the parental responsibilities listed in section 1(1) of the 1995 Act is the responsibility to safeguard and promote the childs health, development and welfare.
Among the parental rights that are listed in section 2(1) to enable the parent to fulfil his parental responsibilities is the right if the child is not living with him, to maintain personal relations and direct contact with the child on a regular basis.
The effect of the referral was to subject the exercise of parental responsibilities and parental rights to the control and supervision of the childrens hearing: see sections 69 and 70 of the 1995 Act.
But the participation of those listed in section 93(2)(b) as relevant persons is an essential part of the exercise.
That is why such a person has the right, and indeed the duty unless the hearing are satisfied that it would be unreasonable to require his attendance, to attend.
K was a person with whom L was to continue to have interim contact, as the sheriff ordered in part (ii) of his interlocutor (see para 19, above).
The effect of the referral was that continuation of this contact was subject to the views of the childrens hearing.
K needed to be given the parental right to maintain personal relations with L so that he could participate in the discussions which were to take place there.
He also needed to be made subject to the parental responsibility to safeguard and promote Ls health, development and welfare so that the hearing could be confident that he would contribute to a discussion of those aspects of Ls well being responsibly.
The problem therefore lies in the wording of the interlocutor rather than what, on a sensible reading of it, the sheriff was seeking to achieve.
Miss Wise, very helpfully, provided some suggestions as to how the interlocutor might be re worded so as to bring it within the scope of section 11(1).
The first of these suggestions was as follows: makes an order ad interim in terms of section 11(2)(b) of the Children (Scotland) Act 1995 imposing upon the pursuer the parental responsibility in respect of the child, X, to safeguard and promote the said childs health, development and welfare but restricts the exercise of said parental responsibility to participation in proceedings before the childrens hearing in respect of said child.
Another suggestion would have imposed upon the pursuer the parental responsibilities and given him the parental rights too, but would have limited their exercise in the same way.
The point that these suggestions illustrate is that the defect in the sheriffs interlocutor is one of specification, not one of substance.
He did not refer to section 1(1) or 2(1) or to section 11(2), and he did not spell out in terms those parental rights and parental responsibilities that were relevant in Ks case.
Nor did he refer in terms to participation in the childrens hearing as setting the limits within which the parental responsibilities and parental rights could be exercised.
It would have been better if he had.
But it would be going too far to hold that his interlocutor was incompetent because he did not do so.
His wording appears not to have given rise to any misunderstanding or difficulty until the Principal Reporter sought to challenge the interlocutor in these proceedings.
It is true, as the First Division said in para 58 of its opinion, that interlocutors should be unambiguous and not capable of alternative constructions.
But it has not been suggested that this interlocutor, less than perfect though it may be, suffers from an ambiguity which rendered its application in Ks case uncertain or impracticable.
We would therefore reject this ground, which was the one relied on by the Principal Reporter, for holding that the interlocutor of 27 October 2006 was incompetent.
What basis is there, then, for the conclusion that the sheriff did not address his mind to the overarching principles when he pronounced his interlocutor? There is nothing in the wording of the interlocutor itself which suggests this.
If anything, the second and third parts of it (see para 19, above) suggest the contrary.
He decided to continue the interim contact previously granted and to assign a further diet as a child welfare hearing to monitor contact.
The first of these orders was an order of the kind contemplated by section 11(2)(d) of the 1995 Act.
So when the sheriff was considering whether or not to make it under section 11(1), he was required by section 11(7) to have regard to the overarching principles.
The same applied to his decision to appoint a hearing to monitor contact, as this was to assist him in deciding whether or not to make any further orders about contact.
The fact that he made these further orders, to the competency of which no objection has been taken, indicates that the sheriff had the overarching principles in mind during the hearing on 27 October 2006.
This would not be at all surprising, as Sheriff Totten had been designated for dealing with cases of this kind and was well equipped for doing so by training and experience.
Counsel for the curator ad litem, Miss Clark, informed the court that the sheriff was invited at the hearing to address the section 11(7) principles when he was considering whether to make any order under section 11(1) of the 1995 Act.
He was asked to consider the childs best interests as paramount and to consider whether it would better that an order be made than that no order be made.
She submitted that it was to be inferred that the sheriff, who had heard these submissions, determined that it was in Ls best interests that K should participate in the decision making process and, applying the section 11(7) principles, that it was better for the child that an order be made.
Miss Wise QC for the Principal Reporter said that she did not support the reasoning in para 67 of the First Divisions judgment.
Her point was that the right which the sheriff appeared to have granted was one which he had no power to grant under section 11(1).
It was the nature of the order he made that she objected to, not any defect in the process of reasoning that led up to it.
We do not think that there was a sound basis for the First Divisions view that the sheriff failed to apply the overarching principles.
All the indications are to the contrary.
If suspension was an appropriate remedy, which we doubt, we think that there were no grounds for suspending this interlocutor because this very experienced sheriff did not apply his mind to the overarching principles.
It would require clear evidence to justify the conclusion that he failed to address his mind to them.
Evidence of that kind is completely lacking.
Indeed, such evidence as there is suggests that he had these principles in mind throughout the hearing.
In any event, failure to apply the correct principles when making an order, while it may well be a ground of appeal, would not normally render the order incompetent.
We would therefore reject this ground also for holding that the interlocutor was incompetent.
Issue (ii): articles 6, 8 and 14 of the Convention
In his answers to the petition K raised this issue on an esto basis only.
It was put forward as an alternative argument, which would require to be addressed only if the court were to hold that the interlocutor of 27 October 2006 was incompetent.
The First Division had to deal with the issue as it held that the interlocutor was incompetent.
It held that there was no incompatibility with Ks Convention rights: paras 78 81.
As we disagree with its finding that the interlocutor was incompetent, it follows that the contingency to which Ks averments were addressed has not arisen.
But as a public authority the court has its own duty to act compatibly with the Convention rights.
If we take the view that these have been infringed in the case before us, that duty requires us to say so.
The issue also raises a point of general public importance which is particularly relevant at the present time.
The Scottish Parliament is currently examining the Childrens Hearings (Scotland) Bill, which deals with the standing of unmarried fathers in clauses 80(3) and 185(1).
The Parliament is obliged to legislate compatibly with the Convention rights.
Unless an unmarried father in Ks position can qualify as a relevant person he is at a severe disadvantage from the outset because he has no right to be heard either by the childrens hearing, or by the sheriff on a referral, if allegations are made against him.
It was said that he could apply to the sheriff for an order under section 11(1) so that this obstacle could be overcome very quickly.
However, both the appellant and his daughters curator ad litem argue that obtaining an appropriate order from the sheriff court will not always be enough to comply with the Convention rights of either father or child and, indeed, it was not enough in this case.
Childrens hearings often have to act in an emergency.
Vital decisions may be made which will determine how the child lives for the foreseeable future.
It is in the interests of the child as well as the father that he should not be absent at this crucial stage.
As this case clearly demonstrates, the grounds for referral may be found to be established, with or without a contest, without any involvement from one of the people most closely affected.
Unpicking these actions and returning to the status quo ante may be well nigh impossible.
Furthermore, beginning formal proceedings in the sheriff court may be beyond the means and the resources of the father.
In todays climate, legal aid cannot be guaranteed.
Speedy decisions also cannot be guaranteed, especially if the claim is contested.
As Lord Rodger vividly put it during the hearing, the train may have left the station while the father is still waiting at the barrier.
Requiring this initial filter is said to breach the Convention rights of both father and child under article 8; of the father under article 14 taken with article 8; and of the father under article 6.
Article 8
The relevant portions of article 8 read as follows: 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 . for the protection of health or morals, or for the protection of the rights and freedoms of others.
First, therefore, it must be established that father and child have a family life together.
The Strasbourg Court has consistently expressed the view that the natural connection between mother and child at birth amounts to family life, which subsequent events could only break in exceptional circumstances: see Berrehab v The Netherlands (1988) 11 EHRR 322; Gl v Switzerland (1996) 22 EHRR 93.
Fathers will normally have family life with their children if they are married to or living with the mother and child: see, for example, Johnston v Ireland (1986) 9 EHRR 203, para 55; Keegan v Ireland (1994) 18 EHRR 342, para 44.
But cohabitation is not essential; it will depend upon the relationship established and the degree of commitment shown.
The principles were summed up like this in Lebbink v The Netherlands (2004) 40 EHRR 417, at para 35: 35.
The Court recalls that the notion of family life . is not confined to marriage based relationships and may encompass other de facto family ties where the parties are living together out of wedlock.
A child born out of such a relationship is ipso iure part of that family unit from the moment and by the very fact of its birth.
Thus there exists between the child and the parents a relationship amounting to family life [referring to Keegan v Ireland (1994) 18 EHRR 342, para 44; Elsholz v Germany [GC] (2000) 34 EHRR 1412, para 43; and Yousef v The Netherlands (2003) 36 EHRR 345, para 51]. 36.
Although, as a rule, cohabitation may be a requirement for such a relationship, exceptionally other factors may also serve to demonstrate that a relationship has sufficient constancy to create de facto family ties [referring to Kroon v TheNetherlands (1995) 19 EHRR 263, para 30].
The existence or non existence of family life for the purposes of article 8 is essentially a question of fact depending upon the real existence in practice of close personal ties [referring to K and T v Finland (2000) 31 EHRR 484, para 150].
Where it concerns a potential relationship which could develop between a child born out of wedlock and its natural father, relevant factors include the nature of the relationship between the natural parents and the demonstrable interest in and commitment by the father to the child both before and after its birth [referring to Nylund v Finland , (Application No 27110/95), (unreported) decision of 29 December 1999] [emphasis supplied].
However, mere biology is not enough:
The court does not agree with the applicant that a mere biological kinship, without any further legal or factual elements indicating the existence of a close personal relationship, should be regarded as sufficient to attract the protection of article 8. 37.
Nevertheless, in that case, although the parents had never lived together and the father had not sought to recognise the child, there had been a real relationship between the parents, the father had been present at the childs birth, had visited regularly, even changed her nappy a few times and babysat once or twice, and was in touch with the mother about the childs impaired hearing.
This was enough to establish family life between father and child and the Dutch courts should have entertained his application for contact.
Family members other than biological parents may also enjoy family life with a child.
This dates back at least as far as the seminal case of Marckz v Belgium (1979) 2 EHRR 330, at para 45, where the Court stated its opinion that family life within the meaning of article 8, includes at least the ties between near relatives, for instance, those between grandparents and grandchildren, since such relatives may play a considerable part in family life (see also, for example, Bronda v Italy (1998) 33 EHRR 81, para 50; GHB v United Kingdom [2000] EHRLR 545; L v Finland (2000) 31 EHRR 737, para 101).
In X, Y and Z v United Kingdom (1997) 24 EHRR 143, the Court recognised that a female to male transsexual, his partner and their child conceived by donor insemination were a family.
And in Jucius and Juciuvien v Lithuania (2008) 49 EHRR 70, the Court held that there was family life between a maternal uncle and aunt and two orphaned children who had lived with them for three years.
But, of course, whether family life has been established will depend upon the facts of each case.
Furthermore, it may be harder to establish an interference with these wider family ties and such interferences may be easier to justify than interferences with the core family unit.
In this case, it is not in dispute that this father did enjoy family life with his child.
He (and his daughter from a previous relationship) were living with her mother when she was born.
The parents registered the birth together.
They had lived as one household after the childs birth.
The father was heavily involved with her medical treatment in hospital.
It is not entirely clear when he separated from the mother but he had regular contact with his daughter after that.
In May 2004 he applied to the sheriff court for parental responsibilities and parental rights and a contact order.
An interim order for weekly overnight stays was made and contact took place in accordance with that order until December 2005.
The father has been pursuing contact and a parental relationship with his daughter ever since.
Next, it must be shown that a public authority has interfered with the right to respect for this family life.
This too is not in dispute.
Any court order which regulates or restricts the mutual enjoyment of each others company which constitutes a fundamental element of family life will amount to an interference: see, for example, Johansen v Norway (1996) 23 EHRR 33, para 52; L v Finland, above, para 101.
The decision of a childrens hearing to impose a supervision requirement empowering a public authority to intervene in the childs life will constitute an interference with the family life of the child and the parent with whom she lives and is likely also to interfere with the family life of the child and her other parent.
Manifestly an order that they were not to have contact with one another did so.
But it goes further than this, because there are positive procedural obligations inherent in the right to respect for family life.
Parents must be enabled to play a proper part in the decision making process before the authorities interfere in their family life with their children.
This has been established time and time again in the Strasbourg jurisprudence, dating back to W v United Kingdom (1987) 10 EHRR 29, at para 64: 64.
In the Courts view, what therefore has to be determined is whether, having regard to the particular circumstances of the case and notably the serious nature of the decisions to be taken, the parents have been involved in the decision making process, seen as a whole, to a degree sufficient to provide them with the requisite protection of their interests.
If they have not, there will have been a failure to respect their family life and the interference resulting from the decision will not be capable of being regarded as necessary within the meaning of article 8.
That case was concerned with the local authoritys decision making processes, at a time when the English courts had no jurisdiction to make orders relating to contact between parents and their children in care.
But the same obviously applies to judicial decisions such as those made by a childrens hearing.
In a whole series of cases involving unmarried fathers claims for contact the Strasbourg Court has examined whether the procedural steps taken by the national court were enough to safeguard his interests.
Thus in Elsholz v Germany (2000) 34 EHRR 1412, at para 52, the Court, sitting as a Grand Chamber, repeated the principle derived from W v United Kingdom and concluded, at para 53, that the refusal of the district court to order an independent psychological assessment of the child and the absence of an oral hearing before the regional court revealed an insufficient involvement of the applicant in the decision making process and thus that his rights under article 8 had been violated.
Two further points are apparent from the Strasbourg jurisprudence, exemplified by Elsholz, at para 49.
Thus, while the Court is prepared to allow the authorities a wide margin of appreciation in decisions about residence and taking a child into care, a stricter scrutiny is called for in respect of any further limitations, such as restrictions placed by those authorities on parental rights of access, and of any legal safeguards designed to secure an effective protection of the right of parents and children to respect for their family life.
This reflects Strasbourgs understanding that it is one thing for parents to have to live separately from their children after all, it is an inevitable result of parental separation that they cannot be together all the time but another thing to restrict or bring to an end the contact between them.
It also reflects Strasbourgs pre occupation with ensuring that there are sufficient procedural safeguards where fundamental rights are in issue.
In case after case, including for example, McMichael v United Kingdom (1995) 20 EHRR 205, and Jucius and Juciuvien v Lithuania, above, the court has found violations of article 8, not because of the substance of the decision taken by the national authorities but because the family were not sufficiently involved in the decision making process.
The point of those procedural safeguards is to ensure that the interference is necessary in a democratic society; in other words, that it can be justified as a proportionate response to a legitimate aim; or, as the Court normally puts it when considering the substance of the interference, that the reasons for the interference are relevant and sufficient: see, for example, K and T v Finland (2000) 31 EHRR 484, at para 135.
Next, therefore, it must be asked whether the interference in the procedural rights of father and child is necessary in a democratic society.
The justifications for interfering with family life need to be kept separate from the justifications for excluding the father from the decision making process at a crucial stage.
Such justification as there is will fall within the overall aim of protecting health or morals and the rights and freedoms of others, in this case, the interests of the child concerned.
But the child as well as her father has an interest in the full participation of her father in important decisions about her future.
The childrens hearing has to have the best and most accurate information that it can in order to make the best decisions about the child.
Everyone is deprived of that information if findings of fact are made by agreement without the participation of the very person whose conduct is in question.
If decisions are then made on an inaccurate factual basis the child is doubly let down.
Not only is the everyday course of her life altered but she may be led to believe bad things about an important person in her life.
No child should be brought up to believe that she has been abused if in fact she has not, any more than any child should be persuaded by the adult world that she has not been abused when in fact she has.
So what are the reasons given for excluding a father from the childrens hearings process unless and until he secures a parental responsibilities and parental rights order from the sheriff court? The only justification advanced is that these are meant to be informal round table discussions with only the people present who can make a meaningful contribution to the debate.
It is important to restrict the numbers involved to those whose participation is indeed necessary.
But it is difficult to see how excluding a father such as this can possibly be proportionate to that aim.
The 2006 Act (see para 16 above) provides that all fathers registered since 4 May 2006 are entitled to be present irrespective of the strength of their family life with the child, of whether the decisions of the childrens hearing are likely to interfere with that family life, and of whether they have a relevant contribution to make to the issues in debate.
Again, it is difficult to see why the exclusion of fathers registered before that date can possibly be justified.
But registration is not always a reliable guide to whether or not the father has established family life with the child.
For one thing, it depends upon the co operation of the mother.
Furthermore, when the alleged grounds for referring the child for compulsory measures of intervention consist almost entirely of allegations against the father, it cannot possibly be legitimate to exclude him for the purpose of restricting the numbers.
He has to be there so that the grounds for interfering in the childs life, let alone in his, can be properly established.
If they are established, he has to be there so that sensible and proportionate measures can be taken to protect the child.
Of course, the child herself has both the right and the duty to attend the hearing: 1995 Act, section 45(1).
The hearing may release the child from that obligation if satisfied that it would be detrimental to the interests of the child for her to be present, but the child still has the right to be there if she wishes: 1995 Act, section 45(2); and see Childrens Hearings (Scotland) Rules 1996, rule 6.
In some cases, it could be suggested that the presence of the father would be detrimental to the child.
But the same is true of any relevant person who has a right to be present.
The Act provides that the hearing may exclude a relevant person, and/or his representative, but only for so long as it is necessary in the interests of the child where they are satisfied that they must do so in order to obtain the views of the child or that the presence of the person in question is causing or likely to cause significant distress to the child: see 1995 Act, section 46(1).
It has not been suggested that the risk of silencing or causing distress to the child is a good reason for excluding a father such as this.
However, some importance was attached to the fact that the attendance of a relevant person is not only a right but also an obligation, backed up by a modest criminal sanction for failure to attend: see 1995 Act, section 45(8) and (9).
It was suggested that it would be wrong to impose such an obligation upon unmarried fathers who might have had nothing at all to do with the child.
But the obligation only exists unless the hearing are satisfied that it would be unreasonable to require his attendance or that his attendance is unnecessary for the proper consideration of the case: see section 45(8)(b).
In those circumstances, he, like the child, must be informed of the hearing and of his right to attend it but that he is not obliged to do so: see 1996 Rules, rule 7(2).
None of these very sensible provisions, therefore, can be any obstacle to the involvement of a parent who wishes to be there.
In conclusion, therefore, a parent (or other person) whose family life with the child is at risk in the proceedings must be afforded a proper opportunity to take part in the decision making process.
As currently constituted the childrens hearing system violated the article 8 rights of this father (and indeed of his child) and risks violating the rights of others in the same situation.
Article 14
Article 14 prohibits discrimination in the enjoyment of the Convention rights on any ground such as, inter alia, birth or other status.
It is not necessary to show that one of the Convention rights has been violated as long as the facts fall within the ambit of one of those rights.
In this case, it is not in dispute that the facts fall within the ambit of article 8.
As there has been a violation of the rights of both father and child under article 8, it is not strictly necessary to consider article 14.
However, the matter was fully canvassed before us and it may be helpful to offer some observations upon it and in particular upon the case of McMichael v United Kingdom, on which so much weight was placed by the respondent and the Lord Advocate.
As the Grand Chamber observed in Sommerfeld v Germany (2003) 38 EHRR 756, para 92, it is well established that a difference in treatment is discriminatory for the purposes of article 14 if it has no objective and reasonable justification, that is 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.
The Grand Chamber continued, at para 93: The court has already held that very weighty reasons need to be put forward before a difference in treatment on the ground of birth out of or within wedlock can be regarded as compatible with the Convention (see Mazurek v France, 1 February 2000, at para 49; and Camp v The Netherlands (2000) 34 EHRR 1446, at paras 37 38).
The same is true for a difference in the treatment of the father of a child born of a relationship where the parties were living together out of wedlock as compared with the father of a child born of a marriage based relationship.
See also Sahin v Germany [2003] 2 FLR 671, paras 93 and 94.
However, the Court has consistently held that the wide variations in the circumstances of unmarried parents may justify an initial attribution of parental authority to the mother alone: see, for example, Zaunegger v Germany (2009) 50 EHRR 952, at paras 55 56.
But when it comes to later disputes between the parents about residence or contact, the Court has also held that differences in treatment between married and unmarried fathers cannot be justified.
This has been applied to matters of substance, such as requiring the mothers consent to joint custody (as in Zaunegger v Germany) or placing a heavier burden on a father seeking access (as in Sahin v Germany).
Where matters of procedure are concerned, the court has not drawn any distinction between the procedural protection which must be afforded to married and unmarried fathers against interference with their family lives with their children (as in Elsholz v Germany, Sahin v Germany; Sommerfeld v Germany).
It is significant that in the case of McMichael v United Kingdom (1995) 20 EHRR 205, which concerned unmarried parents in the childrens hearing system, the article 8 rights of each parent were held to have been violated by their inability to have sight of important documents before the childrens hearing: see para 92.
The fathers complaint of a breach of article 14 was rejected.
But it is clear that the main focus of that complaint was against his status as a natural father in Scots law and it is only that complaint which the Court addressed in holding that the initial allocation of parental authority was justified by the aim of distinguishing meritorious from unmeritorious unmarried fathers: see para 98.
Although the father also complained that he had no legal rights to participate in the care proceedings (see para 94), the court did not address this; this is scarcely surprising as the father had in fact participated throughout the proceedings as representative of the mother.
The issue which we now face is the discrimination between married and unmarried fathers, and indeed between mothers and unmarried fathers, in their rights to participate in the childrens hearing when the parents are in conflict.
The series of German cases, upholding the right of any father who enjoys family life with his child to participate in important decisions about that childs future, is therefore much more in point than McMichael.
We would not, therefore, be disposed to find that the automatic imposition of a burdensome procedural hurdle before some unmarried fathers can become involved in vital decisions about their childrens lives could be justified under article 14.
The case law suggests the opposite: that the initial allocation of parental rights and responsibilities to mothers alone can be justified because of the wide variations in the actual relationships between unmarried fathers and their children; but that if an unmarried father has in fact established family life with his child, it is no more justifiable to interfere in that relationship without proper procedural safeguards than it is justifiable to interfere in the relationship between a married father and his child.
If this analysis be correct, a complaint under article 14 would succeed if a complaint under article 8 would succeed and would fail if a complaint under article 8 would fail.
It would be different, of course, if an unmarried father had been unable to establish family life with his child.
Then it would be necessary to examine whether the obstacles which either the law or the mother had put in the way of his doing so were unjustifiably discriminatory.
Elsewhere in the United Kingdom, it has not been thought either necessary or justifiable to place any obstacles in the way of an unmarried father who wishes to bring or participate in legal proceedings about his child.
But that is not this case and we need not consider it further.
Article 6
The relevant portion of article 6(1) reads as follows: In the determination of his civil rights and obligations . , everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
Is the childrens hearing the determination of the fathers civil rights and obligations? On the one hand, it may be said that he has no parental rights unless and until a court gives him some.
However, it can scarcely be said that a person who does not currently have a civil right, but who is able to go to court to acquire one, is not entitled to a fair hearing of that claim under article 6(1).
The courts decision will determine whether or not he has that right.
That must apply to the determination of a claim under section 11 of the 1995 Act.
But does it also apply to the determination of a childrens hearing which might for the time being override that claim? If it did, all would depend upon who amongst the people not currently holding any of the parental rights or parental responsibilities, or the benefit of a court order relating to the child, was entitled to bring a claim for an order under section 11 of the 1995 Act.
The court has power to make such orders in the relevant circumstances: see section 11(1).
The relevant circumstances are either (a) that an application has been made by someone who is entitled to do so or (b) that the court thinks that it should make an order of its own motion.
Those entitled to apply are (ii) someone who currently has parental responsibilities or parental rights in relation to the child; (iii) someone who has had parental responsibilities or parental rights but no longer does so; and (i) anyone else who claims an interest.
It would be absurd to suggest that the childrens hearing is the determination of the civil rights of any person who might at some future date claim an interest in the child for the purpose of making an application under section 11.
The childrens hearing is not standing in the way of their making a claim to the sheriff court.
If the circumstances are right, and the over arching principles permit, the sheriff court can make an order which would entitle that person to take part in the childrens hearing.
It is different, however, if a person has established family life with the child with which the decision of the childrens hearing may interfere.
As Lord Nicholls of Birkenhead pointed out in In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10, [2002] 2 AC 291, at para 71, all the Convention rights are now civil rights in United Kingdom law as a result of the Human Rights Act 1998.
The position now is therefore different from that in McMichael.
Thus the question of whether the childrens hearing is the determination of a civil right brings us back to the question of whether the decision may interfere with established family life between a person and the child.
Once again, therefore, if this analysis be correct, article 6 adds nothing to the established position under article 8.
It is fair to say that Mrs Janys Scott QC, on behalf of the father, did not put article 6 at the forefront of her argument.
Miss Clark, for the childs curator ad litem, concentrated solely on article 8.
Issue (iii): how can the incompatibility be cured?
If it be right that the present position violates the article 8 rights of some unmarried fathers and indeed of some other people and their children, how can it be cured? None of the parties before this court, and in particular the Lord Advocate whose principal interest this was, wished us to make a declaration of incompatibility if this could be avoided.
Under section 3(1) of the Human Rights Act 1998, all legislation must be read and given effect in a way which is compatible with the Convention rights.
As Lord Steyn said in Ghaidan v Godin Mendoza [2004] UKHL 30, [2004] 2 AC 557, para 50, interpretation under section 3(1) is the primary remedy and resort to making a declaration of incompatibility must always be an exceptional course.
The question is whether we can be confident that the words that are needed are consistent with what the legislation was seeking to achieve.
There is, of course, an important distinction between interpretation and amendment.
As Lord Rodger explained in Ghaidan v Godin Mendoza, at para 121: If the court implies words that are consistent with the scheme of the legislation but necessary to make it compatible with Convention rights, it is simply performing the duty which Parliament has imposed on it and on others.
It is reading the legislation in a way that draws out the full implications of its terms and of the Convention rights.
And, by its very nature, an implication will go with the grain of the legislation.
By contrast, using a Convention right to read in words that are inconsistent with the scheme of the legislation or with its essential principles as disclosed by its provisions does not involve any form of interpretation, by implication or otherwise.
It falls on the wrong side of the boundary between interpretation and amendment of the statute.
The provision in question is the definition of a relevant person contained in section 93(2)(b).
It is worth setting out once more the four different kinds of person listed: (a) any parent enjoying parental responsibilities or parental rights under Part I of this Act; (b) any person in whom parental responsibilities or rights are vested by, under or by virtue of this Act; and (ba) any person in whom parental responsibilities or parental rights are vested by, under or by virtue of a permanence order (as defined in section 80(2) of the Adoption and Children (Scotland) Act 2007 (asp 4); and (c) any person who appears to be a person who ordinarily (and other than by reason only of his employment) has charge of, or control over, the child.
It will be seen, therefore, that (a) includes all mothers unless and until they are deprived of all parental rights and responsibilities by order of a court; all fathers who are married to the childs mother at conception or subsequently, again unless and until deprived of all parental rights and responsibilities by order of a court; all fathers who have been put in the same position as a married father by an agreement with the mother or (which amounts to much the same thing) by having been registered as the father of the child after 4 May 2006; and any other father for so long as he has been given any of the parental responsibilities or parental rights by order of a court (it is not suggested that paragraph (a) requires such a father to have been given all the parental responsibilities and parental rights).
As a result of the decision of the Extra Division in Authority Reporter v S [2010] CSIH 45, 2010 SLT 765, it also includes any parent enjoying a right of contact in terms of a contact order under Part I of this Act.
Paragraphs (b) and (ba) are clearly concerned with persons other than parents in whom parental responsibilities or parental rights are vested.
This would include, for example, guardians appointed by the parents to act after their death: see 1995 Act, section 7; it would also include people enjoying any of the parental responsibilities or parental rights under a court order.
Paragraph (c) is different from the other two paragraphs in that it does not depend upon readily ascertainable matters of public record but upon a qualitative judgment.
It recognises that there are people who should be involved in a childrens hearing even though they do not have the benefit of registered parenthood or a court order.
It would clearly include an unmarried father while he was living with the mother and the child.
But in the course of the hearing before us it was acknowledged that it might also include an unmarried father who was sharing care with the mother indeed, it might well include a father such as this one with whom the child was staying overnight once a week.
That was a significant concession.
The reading down which would be necessary to render section 93(2)(b) compatible with the Convention rights depends upon the right with which it would otherwise be incompatible.
Thus, if the present position violated the article 14 rights of all unmarried fathers, the obvious solution would be to delete the words enjoying parental responsibilities or parental rights under Part I of this Act from section 93(2)(b)(a).
This is the solution preferred by Mrs Scott on behalf of the father.
It could, however, be seen as going against the grain of the Act by breaking the link between automatic participation and parental responsibilities.
In particular, as Miss Wise pointed out, it would include parents who had been deliberately deprived of all parental responsibilities and parental rights by order of a court.
In any event it would go further than is necessary to cure the incompatibility which we have identified, which is the failure to respect the procedural rights of fathers who have established family life with their children.
If the present position were held to violate the right to a fair hearing, under article 6 of the Convention, of those who currently enjoy neither parental rights and parental responsibilities nor family life with the child, then considerable violence would have to be done to the language of section 93(2)(b) in order to put it right.
Fortunately, that is not the basis upon which we have held there to be a violation.
Mrs Scotts second solution was to insert the words or appears to be a parent who has a de facto family tie with the child into section 93(2)(b)(c).
This comes much closer to addressing the incompatibility which this court has found.
However, it may not go far enough.
Persons other than parents may have article 8 procedural rights which require to be protected.
This is not as dramatic an extension as it may seem.
It is not every aspect of family life which attracts its procedural protection.
The family succession rights which were in issue in Marckz v Belgium (1979) 2 EHRR 330, or more recently in Pla v Andorra (2004) 42 EHRR 522, are not affected by the childrens hearing.
The uncle and aunt in Jucius and Juciuvien v Finland (2008) 49 EHRR 70 would be covered by the existing wording of section 93(2)(a)(c), as it appears would be the grandparents in Bronda v Italy (1998) 33 EHRR 81.
If all that may be at risk is informal contact with the wider family, then the participation of each parent and the child will in most cases afford adequate procedural protection for any article 8 rights which the child and other family members may have.
But there are cases in which the childs hope of reintegration in her natural family depends upon maintaining the close relationship established with a grandparent or other family member.
There would then be a procedural obligation to involve that relative in the decision making process.
The potential for violation could therefore be cured by inserting the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere.
This goes very much with, rather than against, the grain of the legislation.
The aim of the hearing is to enlist the family in trying to find solutions to the problems facing the child.
This is simply widening the range of such people who have an established relationship with the child and thus something important to contribute to the hearing.
Mostly, these will be unmarried fathers, but occasionally it might include others.
It will, of course, involve the Reporter initially and then the childrens hearing in making a judgment.
But section 93(2)(b)(c) already does this.
The discussion during the course of the hearing before this court as to whether a father who shared care with the mother might already be covered by this paragraph was ample demonstration of this.
The case law on whether unmarried fathers have established family life with their children is sufficiently clear and constant for Reporters to develop a checklist or rules of thumb to guide them.
At the very least, it is likely that all unmarried fathers who were living with the mother when the child was born; or who were registered as the childs father; or who are having contact with the child whether by court order or arrangements with the mother will have established family life with the child.
In a borderline case, it would be safer to include him and let others argue than to leave him out.
The fact that the Extra Division in Authority Reporter v S [2010] CSIH 45, 2010 SLT 765, with the support of all the parties, felt able to read words into section 93(2)(b)(a) fortifies us in the belief that it is open to us to adopt this course in order to cure the incompatibility which we have found.
It does not depart from a fundamental feature of the Act and is well within the overall purpose to which the definition in section 93(2)(b) is directed.
Conclusion
We would therefore allow the appeal.
We would recall the First Divisions interlocutor, sustain Ks first, second and sixth pleas in law and dismiss the petition.
We would also declare that section 93(2)(b)(c) of the Children (Scotland) Act 1995 should be read so as to include the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere.
We would also make a finding that K is a relevant person within the meaning of section 93(2)(b)(c) of the 1995 Act as so read.
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This is a case about the rights of unmarried fathers to take part in childrens hearings under Part II of the Children (Scotland) Act 1995.
It raises two distinct issues.
The first concerns the kind of order made in the sheriff court which would be effective to give a father the right to take part in the childrens hearing.
The second concerns the compatibility of the statutory scheme for participation in the childrens hearing with the rights of the father (and indeed the child) under the European Convention on Human Rights.
The appellant K is an unmarried father.
He formed a relationship with JR.
They cohabited and had a child, L, born in May 2002, whose birth they registered together.
Their relationship subsequently broke down.
After the separation, K continued to have contact with L, and was involved with her hospital appointments until at least September 2003.
In about May 2004, K raised proceedings in the sheriff court seeking full parental responsibilities and parental rights and a contact order.
An interim order for weekly overnight stays was made.
In December 2005, JR alleged that K had abused L. In March 2006, the local authoritys social work services department referred the case to the Principal Reporter on the ground that L was in need of compulsory measures of supervision.
There were childrens hearings in June and July and in August the sheriff deemed the grounds of referral proved and remitted the case to the childrens hearing.
K was not entitled to attend any of these hearings as he was not a relevant person within the meaning of section 93(2)(b) of the 1995 Act.
At a child welfare hearing on 27 October 2006, the sheriff made an order granting K parental rights and responsibilities to the extent that he becomes a relevant person in the childrens referral.
Thereafter K attended the childrens hearings.
In August 2007, the hearing imposed a condition of no contact between K and L.
In January 2009 K appealed against the continuation of this condition.
The Principal Reporter then challenged the sheriffs order in the Court of Session on the ground that it was incompetent.
On 27 March 2009, the Lord Ordinary suspended the sheriffs order of 27 October 2006.
On 21 January 2010 the First Division refused Ks appeal and his application for a declaration of incompatibility with the European Convention on Human Rights.
Section 11(1) of the 1995 Act provides that the sheriff court may make an order in relation to parental responsibilities and parental rights.
Subsection (7) provides that in considering whether to make an order under subsection (1), the court shall regard the welfare of the child as its paramount consideration, shall not make an order unless it would be better for the child to do so, and, where practicable, shall ascertain the childs views.
These considerations are referred to as the overarching principles.
Section 93(2)(b) defines relevant person as a person (including a parent) with parental responsibilities or parental rights or who appears to be a person who ordinarily has charge of, or control over, the child.
The Supreme Court unanimously allows the appeal.
Lord Hope and Lady Hale give the judgment of the Court.
The Court holds that the sheriffs order of 27 October 2006 was not incompetent and so recalls the First Divisions interlocutor and dismisses the petition.
The Court declares that section 93(2)(b)(c) of the Children (Scotland) Act 1995 should be read so as to include the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere.
The Court makes a finding that K is a relevant person within the meaning of section 93(2)(b)(c) as so read.
The Court notes that the case raises a fundamental issue about fairness.
Neither in July nor in August 2006 did K have the opportunity to refute the allegations in the grounds of referral.
This is contrary to one of the fundamental rules of natural justice, the right to be heard. [14] The order of 27 October 2006 was competently pronounced.
The order was one which the sheriff had power to grant under section 11(1) of the 1995 Act.
The defect in the order is one of specification, not of substance.
While it would have been better if the sheriff had expressly referred to the relevant provisions of the 1995 Act and to the relevant parental responsibilities and rights, and to the fact that participation in the childrens hearing set the limits for the exercise of those responsibilities and rights, the order was not incompetent because he did not do so. [24] [28] There was not a sound basis for the First Divisions view that the sheriff failed to apply the overarching principles.
Such evidence as there is suggests that the very experienced sheriff had these principles in mind throughout the hearing.
In any event, failure to apply the correct principles when making an order, while it may be a ground of appeal, would not normally render the order incompetent. [31] A parent (or other person) whose family life with the child is at risk in the proceedings must be afforded a proper opportunity to take part in the decision making process.
As currently constituted the childrens hearing system violated the article 8 rights of K (and indeed of L) and risks violating the rights of others in the same situation.
The childrens hearing has to have the best and most accurate information that it can in order to make the best decisions about the child.
The only justification advanced for excluding a father unless and until he secures a parental responsibilities and parental rights order from the sheriff court is to ensure that only persons who can make a meaningful contribution to the hearing are present.
However, it is difficult to see how excluding a father such as K can possibly be proportionate to that aim.
All fathers registered since 4 May 2006 are entitled to be present.
Further, when the alleged grounds for referring the child consist almost entirely of allegations against the father, it cannot possibly be legitimate to exclude him for the purpose of restricting the numbers. [39] [48] The incompatibility with Article 8 can be cured by inserting the words or who appears to have established family life with the child with which the decision of a childrens hearing may interfere into section 93(2)(b)(c) of the 1995 Act. [69]
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The first issue on this appeal is whether a statutory limitation period, which would otherwise bar the claim of the four appellants against the three respondents for damages for participation in an unlawful cartel, failed to comply with the European legal principles of effectiveness and legal certainty.
If it was, the second issue is what if any effect that has on the application of that limitation period as between parties to civil litigation, in which it has now been held that the limitation period applies as a matter of domestic law to bar the claim.
I will refer to the appellants and the respondents respectively as BCL and BASF.
The cartel related to the supply of vitamins within the European Union.
By Commission Decision COMP/E 1/37.512 of 21 November 2001, the European Commission found that the cartel infringed Article 81 of the EC Treaty (now TFEU 101) and imposed fines accordingly.
Members of the cartel had until 31 January 2002 to appeal against the Commissions decisions.
In the event, on 31 January 2002, only BASF appealed, and BASF only appealed against the fine levied.
Notice of its appeal was published in the Official Journal on 4 May 2002 (C109/49).
The Commissions Decision to which the appeal related was only published in the Official Journal of the European Communities on 10 January 2003.
The Court of First Instance on 15 March 2006 reduced the fine imposed on BASF.
The deadline for any further appeal by BASF to the European Court of Justice expired on 25 May 2006 without any further appeal being lodged.
Under the Limitation Act 1980, section 2, BCL had six years to bring an action for tort in the High Court, running or almost certainly running (as Mr Vajda QC for BCL accepted in the notice of appeal and his oral submissions) from 21 November 2001.
However, on 20 June 2003 section 47A of the Competition Act 1998, as inserted by section 18(1) of the Enterprise Act 2002, came into force, giving BCL the alternative possibility of a claim for damages in proceedings brought before the Competition Appeal Tribunal.
The possibility was exercisable under certain conditions, the effect of which, as now conclusively established by the Court of Appeal, is that the time for bringing such a claim expired on 31 January 2004, two years after the time allowed for appeal against the Commissions decision on infringement, without any possibility of extension.
No High Court proceedings were brought, but proceedings were in January 2004 issued in the Tribunal against other cartel members.
The first intimation by BCL to BASF of any intended claim was on 21 November 2006, and proceedings were not issued in the Tribunal by BCL against BASF until 12 March 2008.
BASF responded by contending that the claim was time barred.
Reversing the Tribunal, the Court of Appeal held on 22 May 2009 that the claim was time barred and could proceed, if at all, only with an extension of time, [2009] EWCA Civ 434.
The Tribunal on 19 November 2009 assumed that it had power to grant an extension, but declined to do so on the merits, [2009] CAT 29.
The Court of Appeal held on 12 November 2010 that the Tribunal had no power to extend time under United Kingdom law: BCL Old Co Ltd v BASF SE (No 2) [2010] EWCA Civ 1258, [2011] Bus LR 428.
It held further that European law did not override the United Kingdom time bar or require a power to extend to be treated as existing.
On this basis, the merits of any application for an extension, if there had been such a power, became irrelevant.
With the Supreme Courts permission, BCL now appeals to the Supreme Court against the Court of Appeals decision of 12 November 2010, but solely on the issue of European law.
The UK legislative scheme
The detailed legislative scheme is for convenience set out in the Annex to this judgment.
For immediate purposes, it is sufficient to draw attention to the following features.
First, BCLs right to claim damages in proceedings before the Tribunal under subsection (5) of section 47A did not arise until a decision (in this case by the Commission) had established that the relevant prohibition in question has been infringed.
Then it was, under subsection (8), postponed, though subject to a discretion in the Tribunal, during any period during which proceedings against the Commission decision might be instituted in the European Court of Justice and, if any such proceedings were instituted, during the period before those proceedings were determined.
Second, by virtue of Rule 31 of the Competition Appeal Tribunal Rules 2003 (SI 2003/1372) made under the Act, any such claim for damages required to be made within two years of the later of the end of that period or the date on which the cause of action accrued.
The issues in greater detail
BCLs main submission in the Tribunal and the Court of Appeal was that the limitation period for its claim against BASF in the Tribunal only began to run on 25 May 2006; that is, two years after the end of the period during which BASF could have lodged a further appeal in relation to the fine imposed on it.
This submission was based on the proposition that the decision [which] has established that the relevant prohibition has been infringed, to which subsections (5) and (6) of section 47A of the Act refer and against which subsection (8) contemplates that proceedings might be brought in the European Court, embraced not merely the Commissions decision that there had been an infringement but also its decision as to the penalty to be imposed for the infringement.
The Tribunal (Barling J, Ann Kelly and Michael Davey) on 25 September 2008 accepted this submission: [2008] CAT 24.
It considered that other sections of the Act offered little assistance and that findings on penalty could be relevant to the nature and extent of any infringement.
On 22 May 2009 the Court of Appeal (Waller, Lloyd and Richards LJJ) [2009] EWCA Civ 434 in a judgment given by Richards LJ took a different view of the plain and ordinary meaning of the statutory language and the natural reading of the section (paras 26 28 and 33).
It regarded this as drawing a clear distinction between decisions as to infringement and as to penalty.
It considered that the Tribunals concerns as to any overlap between decisions on infringement and penalty were over stated, and did not consider that they could in any event justify a departure from the sections natural meaning.
No further appeal followed.
The distinction between decisions on infringement and penalty decisions has been taken up and applied more recently by the Court of Appeal in its judgment in Deutsche Bahn AG v Morgan Crucible Co plc [2012] EWCA Civ 1055, to which the Supreme Court was referred, without submissions, after the oral hearing of this appeal.
On the basis of Richards LJs remarks on 22 May 2009, the existence of a power to extend time was conceded by BASF for the purposes of the applications decided by the Tribunal on 19 November 2009, [2009] CAT 29.
The Tribunal (Vivien Rose QC, The Hon Anthony Lewis and Dr Arthur Pryor CB) therefore assumed that it had power under rules 19 and 44 to extend the time limit under rule 31.
But reservations were made as to the right to challenge the existence of any such power in the Court of Appeal.
When the matter came before the Court of Appeal (Maurice Kay V P, Lloyd and Sullivan LJJ) on 12 November 2010, [2010] EWCA Civ 1258, the challenge to the existence of any power to extend time succeeded and no further appeal was permitted.
Whether BCL would have been better off if the challenge had failed would have depended upon whether it could have disturbed the Tribunals conclusion that it was not in any event appropriate to exercise any power to extend.
BCLs submission now is that the operation of the two year limitation period (in particular as regards its commencement) and the lack of any power to extend the limitation period were legally uncertain matters, which rendered it excessively difficult for BCL to pursue its claim against BASF in time.
BCL point out that, where a specialist tribunal like the Competition Appeal Tribunal exists, the principle of effectiveness applies to proceedings before that tribunal, even if recourse to the ordinary courts remains available: Case C 268/06 Impact v Minister for Agriculture and Food [2008] ECR I 2483, para 51.
Mr Brealey QC for BASF does not take issue with this.
To explain why BCL did not in fact bring proceedings against BASF in January 2004 at the same time as proceedings were brought against other cartel members, BCL refers to a paragraph in a witness statement by its solicitor, Mr Edward Perrott, stating: 17 We considered bringing a claim against BASF at that point.
It was discussed with Counsel and the conclusion from these discussions was that we were precluded from bringing the claims until the BASF appeal, about which we knew little, had been decided by the European Court.
In the Court of Appeal on 12 November 2010, Lloyd LJ observed, with justification, at para 56, that It seems unlikely that the advice was in fact that they could not bring proceedings against BASF at that time.
For Counsel to have said that he or she would have had to have ignored the words otherwise than with the permission of the Tribunal in section 47A(5)(b), the words without permission in section 47A(7) and (8), and rule 31(3).
The exiguous account given by BCL of its thinking and of the advice received (from counsel not instructed on the present appeal) makes it difficult to say more, even assuming it to be relevant to try to do so.
The European principles of effectiveness and legal certainty
The principles of effectiveness and legal certainty on which Mr Christopher Vajda QC for BCL relies are well recognised.
Mr Vajda referred in particular to Case C 453/99 Courage Ltd v Crehan [2002] QB 507, [2001] ECR I 6297, Case C 445/06 Danske Slagterier v Germany [2009] ECR I 2119 and Case C 456/08 Commission v Ireland [2010] ECR I 859 as well as the pithy statement by Advocate General Sharpston in Case C 512/08 European Commission v France, para 50.
In Courage Ltd v Crehan the question was whether a publican who was party to a standard form of exclusive purchase obligation lease which infringed the then Article 85 (the precursor to Article 81) could claim damages against the brewery imposing the obligation or was precluded by virtue of the domestic law maxim ex turpi causa non oritur actio.
The European Court held that Article 85 precluded any rule of national law which barred such a claim on the sole ground that the claimant was a party to the unlawful agreement (though the application of such a rule could be appropriate in a case where the claimant bore significant responsibility for the distortion of competition: para 31).
It was (para 29) for national courts to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness)
In Danske Slagterier Danish pig exporters, Danske Slagterier, brought an action against the Federal Republic for breach of European law in imposing certain import restrictions.
The German courts held the cause of action to have become time barred after three years, applying by analogy the limitation period applicable under the German Civil Code BGB paragraph 852 to tort claims.
The Court of Justices judgment records (para 30) that Danske Slagterier has bemoaned the lack of clarity in the legal position in Germany as to the national limitation rule applicable to claims seeking reparation on account of State liability for breach of Community law, stating that this question has not yet been dealt with by any legislative measure or any decision of the highest court, while academic legal writers are also divided on the issue as several legal bases are possible.
In its view, application, for the first time and by analogy, of the time limit laid down in Paragraph 852 of the BGB to actions for damages against a State for breach of Community law would infringe the principles of legal certainty and legal clarity as well as the principles of effectiveness and equivalence.
The Court regarded a three year limitation period as reasonable (para 32), but said that: 33. in order to serve their purpose of ensuring legal certainty, limitation periods must be fixed in advance.
A situation marked by significant legal uncertainty may involve a breach of the principle of effectiveness, because reparation of the loss or damage caused to individuals by breaches of Community law for which a Member State can be held responsible could be rendered excessively difficult in practice if the individuals were unable to determine the applicable limitation period with a reasonable degree of certainty.
Significantly for the present case, it continued: 34.
It is for the national court, taking account of all the features of the legal and factual situation at the time material to the main proceedings, to determine, in light of the principle of effectiveness, whether the application by analogy of the time limit laid down in Paragraph 852(1) of the BGB to claims for reparation of loss or damage caused as a result of the breach of Community law by the Member State concerned was sufficiently foreseeable for individuals.
It is to be noted that Danske Slagterier was a case brought against the Federal Republic.
Any infringement of the principle of effectiveness could therefore be visited directly on the other party to the proceedings, by in particular refusing to allow it to rely upon the time limit or, in appropriate circumstances, awarding damages against it for any loss flowing from any enforcement of the time limit.
Commission v Ireland arose from a challenge to the award to Celtic Roads Group (CRG) of a contract for the construction of the Dundalk Western Bypass by the Irish National Roads Authority (NRA), a statutory body with the overall responsibility for the planning and supervision of works for the construction and maintenance of national roads.
SIAC Construction Ltd (SIAC), a member of a rival consortium (EuroLink), was informed on 14 October 2003 that the NRA had decided to designate CRG as the preferred tenderer, in terms indicating that this meant that the NRA would be proceeding with discussions with CRG, but that, if they broke down, it might still enter into discussions with EuroLink.
However, on 9 December 2003 the NRA decided to award the contract to CRG, and on 5 February 2004 it signed a contract with CRG accordingly.
Proceedings were commenced by SIAC on 8 April 2004, on the basis that their time for bringing an action started to run on 5 February 2004.
But the proceedings were dismissed by the Irish High Court on 16 July 2004, as out of time under Order 84A(4) of the Courts Rules.
Order 84A(4) provided: An application for the review of a decision to award or the award of a public contract shall be made at the earliest opportunity and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending such period.
The Irish High Court held that any action had to be brought no later than three months from 14 October 2003.
The Commission pursued a complaint against Ireland on the ground that it had in two respects breached the Council Directives regulating the award of public works contracts and the remedies required thereby, notably Directive 89/665/EEC, as amended by Directive 92/50/EEC, and Directive 93/37/EEC, as amended by Directive 97/52/EC.
First, the NRA had failed to notify SIAC promptly and in good time before contracting with CRG of its decision to award the contract to CRG, to enable SIAC to mount its challenge.
Secondly, and materially for present purposes, Ireland was in breach by maintaining in force Order 84A(4) of the Rules of the Superior Courts, in the version resulting from Statutory Instrument No 374 of 1998, in so far as it gives rise to uncertainty as to which decision must be challenged through legal proceedings and as to how periods for bringing an action are to be determined.
The Court held that both these alleged heads of infringement were established.
With regard to the second head, the Court reiterated that national limitation periods are as such permissible, but applied the principles of effectiveness and legal certainty in holding that the period prescribed by Order 84A(4) infringed European law.
It did this in a series of paragraphs which it is necessary to set out in full, because the language of the English version differs somewhat between paragraphs, with the result that each side has selected the formulation best suiting its case and maintained that it is clear that this reflects the true principle.
If, perish the thought, any real uncertainty exists about what the Court of Justice meant, Mr Vajda submits that the question should, under the CILFIT criteria, be sent to Luxembourg to achieve clarity (see Case C 283/81 Srl CILFIT v Ministry of Health [1982] ECR 3415).
The relevant paragraphs read as follows: 53 On the other hand, national limitation periods, including the detailed rules for their application, should not in themselves be such as to render virtually impossible or excessively difficult the exercise of any rights which the person concerned derives from Community law (Lmmerzahl, paragraph 52). 54 Order 84A(4) of the RSC provides that an application for the review of a decision to award or the award of a public contract must be made within a specified period. 55 However, as occurred in the dispute which gave rise to the High Courts judgment of 16 July 2004, the Irish courts may interpret that provision as applying not only to the final decision to award a public contract but also to interim decisions taken by a contracting authority during the course of that public procurement procedure.
If the final decision to award a contract is taken after expiry of the period laid down for challenging the relevant interim decision, the possibility cannot be excluded that an interested candidate or tenderer might find itself out of time and thus prevented from bringing an action challenging the award of the contract in question. 56 According to the Courts settled case law, the application of a national limitation period must not lead to the exercise of the right to review of decisions to award public contracts being deprived of its practical effectiveness (see, to that effect, Case C 470/99 Universale Bau and Others [2002] ECR I 11617, paragraph 72; Case C 327/00 Santex [2003] ECR I 1877, paragraphs 51 and 57; and Lmmerzahl, paragraph 52). 57 As observed by the Advocate General in point 51 of her Opinion, only if it is clear beyond doubt from the national legislation that even preparatory acts or interim decisions of contracting authorities at issue in public procurement cases start the limitation period running can tenderers and candidates take the necessary precautions to have possible breaches of procurement law reviewed effectively within the meaning of Article 1(1) of Directive 89/665 and to avoid their challenges being statute barred. 58 Accordingly, it is not compatible with the requirements of Article 1(1) of that directive if the scope of the period laid down in Order 84A(4) of the RSC is extended to cover the review of interim decisions taken by contracting authorities in public procurement procedures without that being clearly expressed in the wording thereof. 59 Ireland disagrees with this finding, contending that the application of such a period for challenging interim decisions corresponds to the objectives of Directive 89/665, in particular the requirement of rapid action. 60 It is true that Article 1(1) of Directive 89/665 requires Member States to ensure that decisions taken by contracting authorities may be reviewed effectively and as rapidly as possible.
In order to attain the objective of rapidity pursued by that directive, Member States may impose limitation periods for actions in order to require traders to challenge promptly preliminary measures or interim decisions taken in public procurement procedures (see, to that effect, Universale Bau and Others, paragraphs 75 to 79; Case C 230/02 Grossmann Air Service [2004] ECR I 1829, paragraphs 30 and 36 to 39; and Lmmerzahl, paragraphs 50 and 51). 61 However, the objective of rapidity pursued by Directive 89/665 must be achieved in national law in compliance with the requirements of legal certainty.
To that end, Member States have an obligation to create a legal situation that is sufficiently precise, clear and foreseeable to enable individuals to ascertain their rights and obligations (see, to that effect, Case C 361/88 Commission v Germany [1991] ECR 1 2567, paragraph 24, and Case C 221/94 Commission v Luxembourg [l996] ECR 1 5669, paragraph 22). 62 The abovementioned objective of rapidity does not permit Member States to disregard the principle of effectiveness, under which the detailed methods for the application of national limitation periods must not render impossible or excessively difficult the exercise of any rights which the person concerned derives from Community law, a principle which underlies the objective of ensuring effective review proceedings laid down in Article 1(1) of Directive 89/665. 63 The extension of the limitation period under Order 84A(4) of the RSC to interim decisions taken by contracting authorities in public procurement procedures in a manner which deprives the parties concerned of their right of review satisfies neither the requirements of legal certainty nor the objective of effective review.
Interested parties must be informed of the application of limitation periods to interim decisions with sufficient clarity to enable them effectively to bring proceedings within the periods laid down.
The failure to provide such information cannot be justified on grounds of procedural rapidity. 64 Ireland submits that the Irish courts interpret and apply Order 84A(4) of the RSC in conformity with the requirements of Directive 89/665.
This argument refers to the significant role played by case law in common law countries such as Ireland. 65 It should be noted in this regard that, according to the Court's settled case law, although the transposition of a directive into domestic law does not necessarily require the provisions of the directive to be reproduced in precisely the same words in a specific, express provision of national law and a general legal context may be sufficient, it is nevertheless necessary that that legal context be sufficiently clear and precise as to enable the parties concerned to be fully informed of their rights and, if necessary, avail themselves of those rights before the national courts (judgment of 29 October 2009 in Case C 474/08 Commission v Belgium, paragraph 19 and case law cited). 66 Order 84A(4) of the RSC, however, does not satisfy those requirements inasmuch as it allows national courts to apply, by analogy, the limitation period which it provides for challenges to public contract award decisions to challenges to interim decisions taken by contracting authorities in the course of those procurement procedures, in respect of which no express provision was made by the legislature for that limitation period to apply.
The resulting legal situation is not sufficiently clear and precise to exclude the risk that concerned candidates and tenderers may be deprived of their right to challenge decisions in public procurement matters handed down by a national court on the basis of its own interpretation of that provision. 67 It follows that the first part of the second head of claim is well founded.
Resuming the effect of these cases: in Courage Ltd v Crehan the European Court was concerned with an English law rule which rendered recourse impossible, but pointed out that it was also impermissible for a rule of law to render the exercise of European legal rights excessively difficult.
In Danske Slagterier the Court was concerned with the latter situation, and held it to apply where it was not ascertainable with a reasonable degree of certainty or not sufficiently foreseeable whether a limitation period applied.
The same test, whether a national rule renders it impossible or excessively difficult to exercise European rights is stated and restated in paragraphs 53 and 62 in Commission v Ireland.
In paragraphs 61, 65 and 66 the Court joins this with references to the need for Member States to create a legal situation which is sufficiently, precise, clear and foreseeable or sufficiently clear and precise to enable individuals to ascertain and avail themselves of their rights, and (in that case) to exclude the risk of their being deprived of the right to challenge a public procurement decision by a decision handed down by a national court on the basis of its own interpretation of its Rules.
In paragraph 58 the Court summarised its conclusion in Commission v Ireland as being that it was not compatible with the Directive if the scope of the period laid down in Order 84A(4) was extended to cover the review of interim decisions . without that being clearly expressed in the wording thereof.
All these statements of principle in Commission v Ireland appear readily reconcilable.
The requirement is that the true effect or interpretation should be sufficiently foreseeable or clear.
Clarity was especially important and was emphasized in the context of Commission v Ireland because Order 84A(4) on its face allowed review within three months of either the decision to award or the award of a public contract.
It would have been hard to anticipate, without clear warning, that time for a challenge to the latter would run from the former.
Under the equivalent English Rule of Court, which was in effectively identical terms to the Irish, it had been established at the highest level by May 2002 that a challenge to a grant of planning permission could be made within three months of the grant, and need not be brought within three months of any earlier resolution conditionally authorizing the grant: R (Burkett) v Hammersmith and Fulham LBC [2002] UKHL 23, [2002] 1 WLR 1593, per Lord Slynn para 5 and Lord Steyn para 42.
The English courts would not have taken the same limiting view of Order 84A(4) as the Irish High Court did.
Where a rule like Order 84A(4) points on its face to a course being open to a litigant, it is necessary for it to be made clear if a contrary result is intended.
Less easily reconcilable in paragraph 57 of the English text is the endorsement by the Court of Advocate General Kokotts statement that only if it is clear beyond doubt from the national legislation that even preparatory acts or interim decisions . start the limitation period running can tenderers and candidates take the necessary precautions to have possible breaches of procurement law reviewed effectively and to avoid their challenges being statute barred.
In its own terms, and without any supporting reference in the Advocate Generals opinion or the Courts judgment, it appears more an explanation of the effect of the established test in the particular circumstances of Commission v Ireland than a statement of a new legal test.
That is consistent with what is said in paragraph 18 above about the obvious need, in the light of the apparent meaning of Order 84A(4), to make it clear if time for all complaints was in fact intended to run from the date of any preparatory act or interim decision.
But paragraph 57 has been relied upon by Mr Vajda for BCL as establishing, or explaining, the relevant test as being whether the commencement and operation of the limitation period, as held by the Court of Appeal, were clear beyond doubt.
Mr Vajda points out that in Commission v Ireland, in contrast to Danske Slagterier, the Court of Justice had to determine for itself whether the principles of effectiveness and legal certainty had been infringed, and he submits that this was the test it applied.
Other language versions do not appear to me to lend real support to Mr Vajdas case on this point.
In the French, the equivalent words to the English only if it is clear beyond doubt from the national legislation that . are ce nest que lorsquil ressort clairement de la lgislation nationale que .; in the German, they are nur . wenn aus den nationalen Rechtsvorschriften klar hervorgeht, dass .; in the Dutch, they are zijn slechts wanneer uit de nationale wettelijke regeling duidelijk blijkt dat ., and in the Portugese, they are s se resultar claramente da legislao nacional que .
These versions all emphasise the need for clarity, nothing more, without reference to excluding doubt.
The Spanish version slo cuando resulte inequvocamente posible de la legislacin nacional que . uses a word inequvocamente with the sense of unequivocally, but this is attached to the word posible.
The Italian reads solo laddove dalla normativa nazionale risulti in maniera inequivoca che . , and on its face therefore endorses a need for an unequivocal provision.
But the general tenor of these other language versions is that clarity was to be expected if Order 84A(4) was to be understood (contrary to its natural meaning) as barring claims which were not made within three months of any relevant preliminary act or interim decision.
That, in the particular context, was understandable, for reasons already explained, but it does not mean that the Court of Justice was in paragraph 57 substituting a new test for that expressed in previous case law or elsewhere in its same judgment.
If clarity beyond doubt were the appropriate general test, then any doubt presumably, any reasonably arguable question about the running of the limitation period or, more generally, about the way in which national law implements European law would infringe the principles of effectiveness and legal certainty.
That is, unless and until a court presumably the final appellate court had resolved the doubt, one way or the other.
The wide ranging significance of such a principle for national law barely needs mention.
There could also be implications for European law.
Any point of European law, which was open to doubt under the relevant Union instrument and which, when an issue arose in proceedings, would require a reference to the Court of Justice under the CILFIT criteria, might also be said to involve a breach of the European legal principles of effectiveness and legal certainty.
Be that as it may be, it is hard to envisage that the European Court envisaged anything of this sort in paragraph 57 of its judgment in Commission v Ireland.
Nor did Advocate General Sharpston consider that the European Court had done so.
In her opinion in Commission v France, para 50, she said this: 50.
It is true that the Court has consistently held that the right of individuals to rely on directly effective provisions of the Treaty before national courts is only a minimum guarantee and is not sufficient in itself to ensure the full and complete implementation of the Treaty. (34) It is likewise established that, in order to guarantee legal certainty, Member States must create a legal situation that is sufficiently precise, clear and foreseeable to enable individuals to ascertain their rights and obligations. (35) Her endnote 35 referred in support of the second sentence to paragraph 61 in Commission v Ireland and the case law cited there.
When considering what test may be appropriate, some relevance might be suggested to attach to the relief available for any infringement of the principles of effectiveness and legal certainty.
If the only remedy is against the State for introducing a law which is uncertain in its impact, that might make it easier to accept a broader principle of certainty than if the remedy is, as claimed by the present appeal, against the other party to civil litigation.
But that approach is of no assistance to BCL on this appeal, in which the State is not involved.
Mr Vajdas case is that a party in BASFs shoes can establish its right to rely on a time bar under national law, by a decision which BCL can no longer challenge as a matter of national law, and yet fail because the State had not left it clear beyond doubt what the legal position regarding limitation was at the time when the limitation period was (as now established) running.
If that were the European legal position (which I do not believe it is: see paragraphs 44 to 47 below), it might militate in favour of a narrow view of the principle of legal certainty.
For present purposes, however, I shall ignore any such argument in favour of a narrower principle of effectiveness and legal certainty, but at the same time ignore the fact that BASF is distinct from and may not be answerable for any failings of the State.
On this basis, the considerations which I have so far identified lead me to conclude that the English language text of paragraph 57 should not be taken literally or read out of context.
The Court cannot have intended to substitute a new test for the well established test of excessive difficulty which applies where the legal position was not sufficiently clear and precise, ascertainable with a reasonable degree of certainty or reasonably foreseeable.
The European Court of Justices judgment in Commission v Ireland must be read as a whole.
So read, I do not consider that there is any doubt about the appropriate test or any need to refer a question to the Court of Justice on it.
I add that, as will appear, even if one were to adopt a simple test of clarity, it would not change the outcome of this appeal.
In reality, however, any distinction between on the one hand clarity and on the other sufficient or reasonable clarity is elusive.
At the high point of his submissions, Mr Vajda was in effect arguing for absolute certainty, beyond any doubt, as a test.
But, as Oliver Wendell Holmes once said, Certainty generally is illusion, and repose is not the destiny of man.
The true test is more flexible and more reflective of the real world.
Mr Brealey QC for BASF also referred to decisions of the European Court of Human Rights on the concepts of right of access to a court, rules prescribed by law and legal certainty.
It is not necessary for the opinion which I have formed to rely on the reasoning in these decisions.
But I agree that they are of interest, in showing how that Court understands concepts which one would expect to parallel those adopted in Luxembourg regarding legal effectiveness and certainty.
In Stubbings v United Kingdom (1996) 23 EHRR 213, the Court of Human Rights accepted as unproblematic a decision of the House of Lords (Stubbings v Webb [1993] AC 498) overruling the Court of Appeal on a difficult limitation point and interpreting the fixed six year time limit under section 2 of the Limitation Act 1980 as applicable to deliberate assaults including rape and indecent assault committed against a child. (The difficulty is evidenced by the fact that, 15 years later, the House departed from this decision and held instead in A v Hoare [2008] AC 844 that deliberate torts fell within the flexible knowledge based rule in section 11.)
In Sunday Times v United Kingdom (1979) 2 EHRR 245 the newspaper submitted that the English law of contempt was too vague and uncertain, and its extension by some members of the House of Lords to public prejudgement of the outcome of proceedings novel, to the extent that it was not reasonably foreseeable or therefore prescribed by law within Article 10 of the Convention.
The Court of Human Rights said that: 49.
In the Court's opinion, the following are two of the requirements that flow from the expression 'prescribed by law'.
First, the law must be adequately accessible: the citizen must be able to have an indication that is adequate in the circumstances of the legal rules applicable to a given case.
Secondly, a norm cannot be regarded as a 'law' unless it is formulated with sufficient precision to enable the citizen to regulate his conduct: he must be able if need be with appropriate advice to foresee, to a degree that is reasonable in the circumstances, the consequences which a given action may entail.
Those consequences need not be foreseeable with absolute certainty: experience shows this to be unattainable.
Again, whilst certainty is highly desirable, it may bring in its train excessive rigidity and the law must be able to keep pace with changing circumstances.
Accordingly, many laws are inevitably couched in terms which, to a greater or lesser extent, are vague and whose interpretation and application are questions of practice.
In the upshot the submission of uncertainty was rejected, with the Court saying: 52.
To sum up, the Court does not consider that the applicants were without an indication that was adequate in the circumstances of the existence of the 'prejudgment principle'.
Even if the Court does have certain doubts concerning the precision with which that principle was formulated at the relevant time, it considers that the applicants were able to foresee, to a degree that was reasonable in the circumstances, a risk that publication of the draft article might fall foul of the principle.
The further cases of Vogt v Germany (1995) 21 EHRR 205 and Sahin v Turkey (2005) 44 EHRR 99 contain statements by the Court of Human Rights confirming that the mere fact that a legal provision is capable of more than one construction does not mean that it does not meet the requirement implied in the notion prescribed by law (Vogt, para 48) or that it fails to meet the requirement of foreseeability for the purposes of the Convention (Sahin, para 91).
In my opinion, the approach of the Court of Human Rights confirms the view which I consider that the Court of Justice would take in relation to suggestions that the existence of arguable doubt or of a need for interpretation is of itself sufficient to render national law insufficiently foreseeable or to make it excessively difficult for the subjects of the law to know their position.
Was the commencement of the limitation period sufficiently foreseeable?
Taking the statutory provisions by themselves, I have no doubt about the answer to the question whether the commencement of the two year limitation period was sufficiently foreseeable.
The Court of Appeals analysis was impeccable and it was in my opinion well justified in speaking of the plain and ordinary meaning of the statutory language and of the legal position as clear.
The Competition Act uses throughout clear language, speaking repeatedly of a decision . that the [or a] prohibition has been infringed: see e.g. sections 31, 32, 36, 46 and 47A.
Such a decision is explicitly distinguished in section 36(1) from a requirement imposed by the OFT on an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement and in section 46(3)(i) from a decision . as to the imposition of any penalty under section 36 or as to the amount of any such penalty.
On a correct reading, an appeal to the Court of First Instance (now the General Court) will take issue with either or both of the decisions on infringement and on penalty.
It is a question of analysis which it does.
If an appeal which is nominally directed only against the penalty levied in fact takes issue with the existence or nature of the infringement, it may involve an appeal against infringement as well penalty.
In the present case, it is accepted that BASFs appeal was against, and only against, the fine imposed on it.
Mr Vajda showed us the summary of the nature of BASFs appeal published in the Official Journal on 4 May 2002 (which was not apparently put before the Court of Appeal), and suggested that it left unclear the actual nature of the appeal.
But he confirmed that he did not seek to raise any new suggestion to the effect that BCL had been misled on that score, and also that he did not challenge the finding of fact made by the Tribunal on 19 November 2009 that (para 29) BCL knew that BASF was not challenging the finding of infringement in its appeal to the Court of First Instance.
The Official Journal summary was relied upon simply as forensic support for BCLs case that the line between decisions on infringement and penalty can be unclear with the implication that it could not have been envisaged with any certainty that the Competition Act and Rules drew such a line.
On this, I would disagree.
The Act and Rules were and are to my mind clear in drawing that precise distinction.
Whatever the issues that might arise in particular cases as to whether there had been an appeal against liability as well as penalty, there is no suggestion in the present case that BASF did in fact appeal against liability or that BCL was misled into thinking that it had.
I am also unimpressed by BCLs reliance on the fact that it did not itself commence legal proceedings either in the High Court or before the Tribunal within what has been established to have been the available limitation period.
An individual partys conduct cannot serve as an assay of the clarity or otherwise of statutory provisions.
In any event, the account of the relevant thinking and of the advice which is said to have led to it is so exiguous and to some extent puzzling that I could not attach to it any real significance in this context.
But Mr Vajda also points to a number of Tribunal decisions, some of which he submits reached conclusions or pointed in an opposite sense to those now established as correct.
The first is Emerson Electric Co v Morgan Crucible Company plc [2007] CAT 28, which followed from a Commission decision dated 3 December 2003 establishing an infringement involving six concerns.
Three of the concerns (SGL Carbon AG, Schunk GmbH and Schunk Kohlenstofftechnik GmbH and Le Carbone Lorraine SA SGL, Schunk and Carbone) lodged appeals with the Court of First Instance, seeking annulment of the Decision and/or cancellation or reduction of the fine imposed.
Morgan Crucible, the whistle blower which had been granted immunity from any fine, lodged no appeal.
On 9 February 2007 Emerson, an alleged victim of the cartel, made a claim for damages against Morgan Crucible in the Tribunal at a time when the appeals by the other cartel members were still outstanding.
The Tribunal (Marion Simmons QC, Adam Scott TD and Vindelyn Smith Hillman) held on 17 October 2007 that the two year limitation period under section 47A(8)(b) had not yet commenced, because (para 64): the phrase if any such [EC] proceedings are instituted in subsection (8) clearly indicates that as long as any proceedings have been brought in the European Court, permission of the Tribunal is required to bring a monetary claim under section 47A.
It also said (paras 70 71) that the word decision in section 47A(8) could not be read in a restrictive sense as referring to that part of [it] which is the subject of the appeal to the [European Court], rather than to the whole of the Commissions decision.
The proceedings against Morgan Crucible were, on this basis, premature, unless Tribunal permission could be obtained for their early pursuit under section 47A(5)(b).
But the Tribunal also considered, on an opposite hypothesis and assuming the two year limitation period to have expired, whether the Tribunal had power to extend the time for commencement of proceedings.
It expressed the view obiter that it did, under Rule 19(2)(i).
The Tribunal decision of 28 April 2008 recites ([2008] CAT 8, para 4) that permission was then granted to the Emerson claimants under section 47A(5)(b) to bring premature proceedings against Morgan Crucible.
Permission was also sought to bring such proceedings against SGL, Schunk and Carbone.
It was submitted that their outstanding appeals were, in fact, merely against the level of the fines imposed.
The Tribunal in its decision of 28 April 2008 proceeded on the basis that the appeals appear to be primarily concerned with the imposition and/or level of the fine imposed by the Commission (para 90) and that the facts upon which the Commission had based its statement of objections (the original complaint regarding the existence of a cartel) were substantially uncontested (para 93).
But it noted that there were challenges to the scope of the infringement found by the Commission which could affect the damages claims (paras 90 91) and considered it impossible to draw a bright line between different appeals against an infringement decision, saying that each case must depend on its facts (para 88).
On the facts before it, it refused permission to the Emerson claimants to bring early proceedings against SGL, Schunk and Carbone.
At a later date, 17 October 2008, the Tribunal (with Barling J in the chair instead of Marion Simmons QC, who had in the meantime sadly died) ordered that the Emerson claimants should pay 50% of the defendants costs incurred by the claimants unsuccessful applications: [2008] CAT 28.
On 25 September 2008 the present case came before the Tribunal in a different composition consisting of Barling J, Ann Kelly and Michael Davey [2008] CAT 24 for determination of the issue whether the two year period for commencement of BCLs claim had begun to run at the end of January 2002 (the last date for an appeal by BASF against the Commissions decision that it had infringed Article 81) or whether its commencement was postponed until BASFs appeal against the fine imposed on it was determined on 15 March 2006.
In the former case the claim brought by BCL against BASF on 12 March 2008 was out of time, in the latter case it was in time.
The Tribunal took the latter view, pointing again to the possibility that an appeal on the level of fine might be relevant to and determined by the nature and extent of the infringement being penalized (paras 34 37).
It found reinforcement for its view in the previous Tribunal decisions in Emerson Electric.
On 22 May 2009 the Court of Appeal reversed the Tribunals decision of 25 September 2008: paragraphs 4 and 7 above.
On 12 November 2010 the Court of Appeal held that the Tribunal did not have the power to extend time for the commencement of proceedings which had been assumed by the Tribunal when it refused on the facts to exercise any such power on 19 November 2009: paragraphs 4 and 8 above.
The domestic legal position resulting from the course of events outlined in paragraphs 32 to 36 is now unchallenged and unchallengeable.
But it took time and a process of appeals to reach this position.
Does that mean that English law lacked the requisite legal certainty, that its requirements or effect were not sufficiently foreseeable or that it was excessively difficult for BCL to take advantage of the possibility of making a claim for damages against BASF? The first point to note is that the line of decisions which I have identified began on 17 October 2007 with the first Emerson decision by the CAT.
By then the two year period for a claim for damages before the Tribunal was long expired (on 31 January 2004).
There remained just over a month of the six year period for the bringing of a High Court claim for damages, a course which BCL do not in fact appear at any stage to have contemplated.
There is no suggestion that BCL considered or relied upon the first Emerson Electric decision in the period between 17 October and 21 November 2007.
Nor could they sensibly have done so.
The Tribunal in Emerson Electric was not directly addressing the present issue, which is whether the decision of the Commission referred to in section 47A(8) includes both its decision on infringement and any decision on fine.
Further, the Tribunals decision, on the point which it had to decide, was, in the Courts view, erroneous and at the very least obviously vulnerable to challenge on appeal.
The word any has and can have no such general significance as the Tribunal appears to have attached to it.
Either the decision establishing that the relevant prohibition has been infringed refers to the particular proposed defendant (so that an appeal by another concern against the finding of infringement is irrelevant) or it refers to all concerns implicated in the alleged infringement (in which case an appeal by one may postpone the time for a follow on claim for damages against another who has not appealed).
The Court of Appeal in Deutsche Bahn AG v Morgan Crucible Co plc [2012] EWCA Civ 1055, after close consideration of these alternative analyses, came down firmly in favour of the latter.
The Supreme Court, as noted in paragraph 7 above, has not heard submissions on this conclusion.
It was not relevant to do so.
What is unchallenged and unchallengeable is that an appeal by an involved concern against a fine alone is not in any sense a relevant appeal which can postpone the time for a follow on claim against that (or any other) concern which has not appealed against the finding of infringement made against it.
The Tribunal decisions considered in paragraphs 32 to 38 above were irrelevant to BCLs actual conduct.
But do they demonstrate objectively the existence of such uncertainty in English law as to infringe the relevant European legal principles? Clearly, it is unfortunate if Competition Appeal Tribunals arrive at conclusions on the commencement of a limitation period and on the power to grant an extension of time which are held erroneous on appeal to the Court of Appeal.
But an appellate system is there to remedy error and to establish the correct legal position.
I do not accept that its ordinary operation is the hallmark of a lack of legal certainty or effectiveness.
The language and effect of the Competition Act were subsequently, and rightly, held by the Court of Appeal to be clear.
The Emerson Electric and BCL Tribunals gave the words any and decision significance which they could not bear.
They also failed to interpret section 47A in the context of the statute and its other sections read as a whole.
It was by any standard readily foreseeable that an opposite view would be taken on appeal.
The Tribunal decisions do not in my view lead to a conclusion that English law was insufficiently certain or that it made the bringing of a claim in time excessively difficult.
At the very least, the risks of not bringing proceedings against BASF by 31 January 2004 were or should have been evident.
These conclusions are sufficient to resolve the present appeal so far as it relates to the alleged uncertainty of the starting date of the two year limitation period.
But I add that it was also open to BCL to issue Tribunal proceedings, and, if they were held to be premature, to request the Tribunals permission for their early commencement under section 47A(8)(b).
Mr Vajda pointed in this connection to the costs order made against the Emerson claimants on 17 October 2008 following their unsuccessful application to begin early proceedings against SGL, Schunk and Carbone.
But that was long after the expiry of all limitation periods in the present case.
The reality is that, if BCL had in January 2004 taken the steps to protect its position which one would have expected, it would not have confined itself to an application to bring early proceedings under section 47A(8)(b), but would have maintained that the two year period for proceedings against BASF had begun in January 2002, and would, if necessary, have pursued that point to the Court of Appeal, where it would have won upon it.
Was the lack of any power to extend sufficiently foreseeable?
Again, I have no doubt that it was.
Part II of the Competition Appeal Tribunal Rules deals with appeals to the Tribunal.
Within Part II, Rule 19 headed Directions is the first in a block of rules headed Case management.
Its entire subject matter is directed to the management of proceedings which are on foot and being pursued.
In that context it is plain that it says nothing about the commencement of proceedings.
The reference to directions . as to the abridgement or extension of any time limits, whether or not expired says nothing to indicate that it could cover time limits for the commencement of proceedings.
The fact that it refers to abridgement as well as extension of time does however underline the implausibility of its suggested application to time limits for commencing the proceedings in which Rule 19 allowed directions to be given.
Abridgement occurs in the course of proceedings.
It is inconceivable that the time for commencement of proceedings could be abridged.
Just as, if not more, significantly, the topic of commencement of proceedings is in Part II covered in another block of rules, of which Rule 8(2) expressly permits the extension of the time limit for appeal proceedings in circumstances shown to the Tribunal to be exceptional.
Part IV headed Claims for damages incorporates by reference Rule 19 by virtue of both Rule 30 and Rule 44, which is the first of another block of rules headed Case management.
Rule 44 makes no mention of Rule 8.
Rule 30 makes expressly clear that Rule 8 is not applicable to Part IV claims for damages, and there is no equivalent power to extend in Part IV.
Accordingly, it is plain that the Secretary of State in making the Rules deliberately decided that there should be no power to extend time for the commencement of claims for damages in, as opposed to appeals to, the Tribunal.
The Tribunals contrary view was first expressed in Emerson Electric on 17 October 2007.
It was understandably asserted to be correct by BCL before the Court of Appeal in April/May 2009, and Richards LJs judgment adopts that assumption, which was in turn adopted by the Tribunal in BCL on 19 November 2009.
But, when the point was argued, the Court of Appeal held the contrary, noting the points which I have already made, and various other points.
In my opinion, it is impossible to suggest that this interpretation of the Rules was not sufficiently foreseeable or clear.
Again, the fact that a Tribunal arrives at an erroneous conclusion which is corrected on appeal cannot mean that the law is uncertain to a point making it excessively difficult to take advantage of its provisions.
Again, it is not and could not be suggested that the Tribunals decision of 17 October 2007 was instrumental in any course of action which BCL actually did or did not take.
For these reasons, I reject BCLs case that the English legal position regarding the commencement of the relevant two year period for a claim for damages under section 47A and Rule 31 of the Competition Appeal Tribunal Rules and regarding the possibility of seeking an extension of time were insufficiently foreseeable or clear and made it excessively difficult for BCL to commence and pursue such a claim in time.
In my view, the contrary is the case.
Absolute certainty is not the test, but it was eminently and sufficiently foreseeable that the English legal position would be established on both points to the effect which the Court of Appeal held.
I would, if necessary, also go further and, in company with the Court of Appeal, describe the legal position as clear on a careful reading of the relevant Act and Rules.
It is for the domestic court to determine whether, in the particular legal and factual situation, the principles of effectiveness and legal certainty were satisfied: Danske Slagterier, para 34, cited in paragraph 12 above.
In my view, they were here.
There is therefore no basis for any reference to the Court of Justice on this aspect.
BCLs appeal in these circumstances fails and must be dismissed.
Appropriate relief where the principles of effectiveness and legal certainty are
breached
It is unnecessary, in the light of the above, to decide what relief might have been appropriate, had the conclusion been that the principles of effectiveness and/or legal certainty had in any respect been breached.
However, I shall briefly address this subject.
If the effect of a statute made by Parliament and of a statutory instrument made by the Secretary of State under statute is unclear in a way which breaches the European legal principle of effectiveness or legal certainty, the State is in breach of its European legal obligations, and liable accordingly, as Commission v Ireland illustrates.
It is quite another matter to suggest that another party to civil litigation is deprived of the right to rely upon legal provisions which, once construed in a manner resolving any uncertainty, are shown to exist for their benefit.
That the party sued was a member of a cartel infringing Article 81 does not alter its prima facie entitlement to rely upon any limitation period contained in the relevant legislation.
Limitation periods are periods of repose intended to benefit those who are liable as well as the entirely innocent.
Otherwise, they would have no point, and it would always be necessary to try every case.
I find it impossible to think that European law requires the setting aside as between civil parties of a limitation defence, which a defendant, who is independent of the State, has successfully established under domestic law, on the ground that its existence or scope under domestic law was uncertain until the court decision establishing it.
For a successful party other than the State to be deprived in this way of the fruits of victory on limitation would mean that there was little point in raising the limitation defence in the first place.
No one would then ever know with clarity what the true legal position was.
The national limitation period would be deprived of effectiveness and national law of legal certainty.
Some confirmation that this is not the European legal position is, I think, also provided by the nature of the proceedings and the decision in Commission v Ireland itself.
The Commission there brought proceedings against Ireland because of the application of a limitation provision of previously uncertain effect in proceedings between SIAC and the NRA, a statutory body.
The complaint was not that the Irish courts acted contrary to European law in giving effect to the limitation provision.
But it should have been, were it the European legal position that legal uncertainty invalidates a limitation period as between parties to civil litigation, as Mr Vajda contends.
The judgment did not proceed on that basis either.
Rather, it, like the complaint, accepted the validity as between the parties of the limitation provision in the sense determined by the Irish High Court.
But it declared the Irish State to be in breach of the Directives dealing with public works and remedies by maintaining in force Order 84A(4) of the Rules of the Superior Courts . in so far as it gives rise to uncertainty as to which decision must be challenged through legal proceedings and as to how periods for bringing an action are to be determined.
The limitation provision was, in short, treated as valid between the parties, but the State was in breach for maintaining it in force in uncertain terms.
On this basis, if (contrary to my view) BCL were to have any complaint, it would lie against the United Kingdom, and not affect BASFs right to rely upon the limitation period to which it has established its entitlement in the Court of Appeal in the present proceedings.
While it does not arise, I would, if necessary, have regarded this point as sufficiently free of any reasonable doubt to be acte clair and inappropriate for reference to the Court of Justice.
Conclusion
Part I of the Competition Act 1998 prohibits by section 2 agreements between undertakings or decisions or concerted practices of undertakings which affect trade and have as their object or effect the prevention, restriction or distortion of competition within the UK (the Chapter I prohibition) while section 18 prohibits abuse of dominant position (the Chapter II prohibition).
Under section 25, contained in Chapter III of Part I of the Act, the Office of Fair Trading (OFT) was given power to investigate any such agreement as was mentioned in section 2, as well as any agreement which may affect trade between European Community Member States and have as its object or effect the prevention, restriction or distortion of competition within the Community, while section 31 defines a decision made as a result of any such investigation as meaning a decision of the OFT that a Chapter I or II prohibition or the prohibition in Article 81(1) or 82 has been infringed.
The Act continues: 32(1) If the OFT has made a decision that an agreement infringes the Chapter I prohibition or that it infringes the prohibition in Article 81(1), it may give to such person or persons as it considers appropriate such directions as it considers appropriate to bring the infringement to an end. 36(1) On making a decision that an agreement has infringed the Chapter I prohibition or that it has infringed the prohibition in Article 81(1), the OFT may require an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement.
Chapter IV, containing sections 45 to 49 of the Act, includes section 46 permitting any party to an agreement in respect of which the OFT has made a decision to appeal to the Tribunal against, or with respect to, the decision, and defines decision as follows: (3) In this section decision means a decision of the OFT (a) as to whether the Chapter I prohibition has been infringed, (b) as to whether the prohibition in Article 81(1) has been infringed, (c) as to whether the Chapter II prohibition has been infringed, (d) as to whether the prohibition in Article 82 has been infringed, (e) cancelling a block or parallel exemption, (f) withdrawing the benefit of a regulation of the Commission pursuant to Article 29(2) of the EC Competition Regulation, (g) not releasing commitments pursuant to a request made under section 31A(4)(b)(i), (h) releasing commitments under section 31A(4)(b)(ii), (i) as to the imposition of any penalty under section 36 or as to the amount of any such penalty, and includes a direction under section 32, 33 or 35 and such other decisions under this Part as may be prescribed. 2.
Section 47A of the Competition Act 1998 applies, by virtue of subsection (1), to any claim for damages as a result of the infringement of a relevant prohibition.
Subsection (3) then disapplies any limitation period that would apply in court proceedings, while subsection (4) provides for a claim to which section 47A applies to be made in proceedings brought before the Tribunal, subject to this time limit: (5) But no claim may be made in such proceedings (a) until a decision mentioned in subsection (6) has established that the relevant prohibition in question has been infringed; and (b) otherwise than with the permission of the Tribunal, during any period specified in subsection (7) or (8) which relates to that decision. 3.
Subsection (6) lists various categories of decision by the OFT, the Tribunal or the European Commission that a specified prohibition . has been infringed (or, in one case involving the Commission, a finding made).
The relevant provision for present purposes is in subsection (6)(d): a decision of the European Commission that the prohibition in Article 81(1) or Article 82 of the Treaty has been infringed.
Subsections (7) and (8) identify various periods during which one or more appeals may be made in relation to the various categories of decision listed in subsection (6), and during which any claim for damages under section 47A depends accordingly, under subsection (5)(b), on the Tribunals permission for its pursuit.
Subsection (8) is presently relevant: (8) The periods during which proceedings in respect of a claim made in reliance on a decision or finding of the European Commission may not be brought without permission are (a) the period during which proceedings against the decision or finding may be instituted in the European Court; and (b) if any such proceedings are instituted, the period before those proceedings are determined.
Subsection (9) provides that, in determining any claim under section 47A the Tribunal is bound by any decision mentioned in subsection (6) which establishes that the prohibition in question has been infringed. 4.
The Competition Appeal Tribunal Rules 2003, which came into force under, and on the same day (20 June 2003) as, section 47A of, the Competition Act 1998 read: PART IV CLAIMS FOR DAMAGES Application of rules to claims for damages 30.
The rules applicable to proceedings under sections 47 A and 47B of the 1998 Act (claims for damages) are those set out in this Part, and in Part I, Part II (except for rules 8 to 16) and Part V of these rules.
COMMENCEMENT OF PROCEEDINGS Time limit for making a claim for damages 31. (1) A claim for damages must be made within a period of two years beginning with the relevant date. (2) The relevant date for the purposes of paragraph (1) is the later of the following (a) the end of the period specified in section 47A(7) or (8) of the 1998 Act in relation to the decision on the basis of which the claim is made; (b) the date on which the cause of action accrued.
CASE MANAGEMENT Case management generally 44. (1) In determining claims for damages the Tribunal shall actively exercise the Tribunal's powers set out in rules 17 ., 18., 19 (Directions) . 5.
Rule 19 appears in Part II of the Rules headed Appeals and dealing with appeals to the Tribunal.
The initial block of Rules in Part II is headed Commencing Appeal Proceedings, and it commences with rule 8(1).
Rule 8(1) requires any appeal to be made within two months of notification or publication of the disputed decision and Rule 8(2) continues: The Tribunal may not extend the time limit provided under paragraph (1) unless it is satisfied that the circumstances are exceptional.
Rule 19 is the first in a block of rules headed Case Management.
It provides: Directions 19. (1) The Tribunal may at any time, on the request of a party or of its own initiative, at a case management conference, pre hearing review or otherwise, give such directions as are provided for in paragraph (2) below or such other directions as it thinks fit to secure the just, expeditious and economical conduct of the proceedings. (2) The Tribunal may give directions (a) as to the manner in which the proceedings are to be conducted, including any time limits to be observed in the conduct of the oral hearing; (b) that the parties file a reply, rejoinder or other additional pleadings or particulars; (c) for the preparation and exchange of skeleton arguments; (d) requiring persons to attend and give evidence or to produce documents; (e) as to the evidence which may be required or admitted in proceedings before the Tribunal and the extent to which it shall be oral or written; (f) as to the submission in advance of a hearing of any witness statements or expert reports; (g) as to the examination or cross examination of witnesses; (h) as to the fixing of time limits with respect to any aspect of the proceedings; (i) as to the abridgement or extension of any time limits, whether or not expired; (j) to enable a disputed decision to be referred back in whole or in part to the person by whom it was taken; (k) for the disclosure between, or the production by, the parties of documents or classes of documents; (l) for the appointment and instruction of experts, whether by the Tribunal or by the parties and the manner in which expert evidence is to be given; (m) for the award of costs or expenses, including any allowances payable to persons in connection with their attendance before the Tribunal; and (n) for hearing a person who is not a party where, in any proceedings, it is proposed to make an order or give a direction in relation to that person. (3) The Tribunal may, in particular, of its own initiative (a) put questions to the parties; (b) invite the parties to make written or oral submissions on certain aspects of the proceedings; (c) ask the parties or third parties for information or particulars; (d) ask for documents or any papers relating to the case to be produced; (e) summon the parties' representatives or the parties in person to meetings.
For these reasons, I would dismiss BCLs appeal.
|
The three respondents were part of a vitamins cartel which the European Commission found by Commission Decision COMP/E 1/37.512 of 21 November 2001 had infringed Article 81 of the EC Treaty (now Article 101 TFEU).
Accordingly, the Commission imposed fines on the cartelists who were given until 31 January 2002 to appeal against; (a) the infringement decision; and/or (b) the fine.
Only BASF exercised that right of appeal and they did so only in respect of the amount of the fine; no appeal was made against the Commissions decision that an infringement had occurred.
On 15 March 2006 the Court of First Instance (CFI) reduced the amount of the fine and the deadline for any further appeal expired shortly afterwards (on 25 May 2006) without any further appeal being lodged.
Section 47A of the Competition Act 1998 (the 1998 Act) provides that following an infringement finding by the Commission, any person who has suffered loss as a result of that infringement may bring a follow on claim for damages.
On 12 March 2008 the four appellants sought to bring such claims against the respondents before the UK Competition Appeal Tribunal (CAT).
The respondents argued that the appellants were precluded from doing so on the grounds that the two year limitation period for the bringing of such claims had expired with the result that the claims were time barred.
The respondents contended that the limitation period started running on the date on which BASFs time for appealing against the Commissions infringement decision expired (31 January 2002) with the result that the limitation period expired two years later (31 January 2004) and the proposed claims were therefore time barred.
The appellants rejected this interpretation contending instead that the limitation period commenced on the date on which BASFs time for appealing the CFIs decision on the level of the fine expired (25 May 2006) with the result that the limitation period expired on 25 May 2008 and the proposed claims were in time.
The CAT held that the appellants interpretation was correct and that the proposed follow on damages claims had been brought in time.
The Court of Appeal (CA) granted the respondents permission to appeal and allowed the appeal holding that the plain and ordinary meaning of the statutory language drew a clear distinction between infringement decisions and penalty decisions.
Only infringement decisions were of relevance in determining when the limitation period started to run.
The CA further held that the CAT had no power to extend the time in which follow on damages claims could be brought and EU law did not override the UK time bar or require that a power to extend time be held to exist.
The appellants appealed to the Supreme Court on the grounds that the operation of the two year limitation period caused legal uncertainty and thus made it excessively difficult for the appellants to pursue follow on damages claims against the respondents in time in breach of EU law.
The Supreme Court unanimously dismisses the appeal.
There is no failure to comply with the European legal principles of effectiveness and legal certainty; the statutory limitation period is sufficiently clear, precise and foreseeable as to allow individuals to ascertain their rights and obligations and to exercise those rights without excessive difficulty.
The judgment of the Court is given by Lord Mance.
National limitation periods are permissible under EU law but they should not operate so as to render practically impossible or excessively difficult the exercise of EU law rights [15]; whether or not they do so is a matter for the national courts to determine in light of the European principles of effectiveness and legal certainty [12].
EU law does not require that the interpretation or true effect of a statutory limitation period be clear beyond doubt [20 22].
The true test is more flexible and does not impose a requirement for absolute clarity.
Instead what is required is that national law is sufficiently clear, precise and foreseeable as to enable individuals to ascertain their rights and obligations and exercise those rights without excessive difficulty [23 24].
Section 47A of the 1998 Act satisfies that test as it is sufficiently clear, precise and foreseeable as to enable individuals to ascertain when the limitation period commences.
In this case, the statutory limitation period commenced following the expiry of the time within which the respondents could appeal against the Commissions infringement decision; it did not commence following the expiry of the time within which the respondents could appeal against the CFIs decision as to the level of the fine [29].
The Competition Act 1998 repeatedly distinguishes between infringement decisions on the one hand and penalty decisions on the other, making clear that only infringement decisions are of relevance in determining the date upon which a limitation period commences: see e.g. sections 31, 32, 36, 46 and 47A [30].
Given that BASF did not appeal against the Commissions infringement decision it was sufficiently clear that the two year limitation period started on 31 January 2002 following the expiry of the time for appealing against the Commissions infringement decision.
As the operation of the statutory time limit is sufficiently clear, precise and foreseeable the statute did not render it excessively difficult for the appellants to exercise their EU law rights.
Consequently, EU law does not require that a power to extend time be treated as existing.
Indeed, it is clear that the Secretary of State in making the CAT rules deliberately decided that there should be no power to extend time for the commencement of damages claims [42].
Had the Court found that the statutory limitation period failed to comply with the European principles of effectiveness and legal certainty then the United Kingdom would have been in breach of its obligations under EU law and State liability would have arisen.
However, even in such circumstances the appellants could not have brought follow on damages claims against the respondents as EU law does not require the setting aside as between civil parties of a limitation defence, successfully established under domestic law, on the grounds that its effect would have been insufficiently clear, precise and foreseeable prior to the court decision establishing it [44 47].
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Mr Thomas Arthur Watkins lived near Tredegar in South Wales.
He was employed by the National Coal Board (later British Coal Corporation) (British Coal) as a miner from 1964 until 1985.
In that employment he was required to use vibratory tools and as a result of such exposure, in common with very many other miners, Mr Watkins developed Vibration White Finger (VWF) which is a form of Hand/Arm Vibration Syndrome (HAVS).
He first experienced the symptoms, which consist of whitening, stiffness, numbness and tingling of the fingers of both hands, not later than the early 1980s.
After he left the employment of British Coal in 1985, he worked as a driver of road sweeping vehicles until he retired in 1997.
Shortly after that he was diagnosed with osteoarthritis in both knees which became increasingly acute.
One symptom of VWF can be a reduction in grip strength and manual dexterity in the fingers.
A common, although not invariable, consequence is that a person suffering from these conditions becomes unable, without assistance, to carry out routine domestic tasks such as gardening, do it yourself or car maintenance.
The Scheme
A group of test cases, representative of some 25,000 similar claims, established that British Coal had been negligent in failing to take reasonable steps to limit the exposure of employed miners to VWF from the excessive use of vibratory tools (Armstrong v British Coal Corpn [1998] CLY 975).
As a result, the Department for Trade and Industry (DTI), which had assumed responsibility for British Coals relevant liabilities, set up a scheme in 1999 to provide tariff based compensation to miners who suffered from VWF as a result of exposure to excessive vibration (the Scheme).
The Scheme was administered pursuant to a Claims Handling Arrangement (the CHA) dated 22 January 1999 and made between the DTI and a group of solicitors firms representing claimant miners suffering from VWF.
The central objective of the CHA was to enable very large numbers of similar claims to be presented, examined and resolved expeditiously.
The Scheme contemplated the making of two main types of compensatory award to miners suffering from VWF, corresponding broadly with general and special damages for personal injuries.
The Scheme provided for compensation to be paid for pain, suffering and loss of amenity (General Damages), and for handicap on the labour market and other financial losses (Special Damages) including past and/or future loss of earnings.
Pursuant to a Services Agreement dated 9 May 2000 the special damages could include a services award for qualifying miners in respect of the need for assistance in performing domestic tasks.
Under the Scheme, each claimant was required to complete a questionnaire on his work history and IRISC, the claims handling organisation which acted on behalf of the DTI, would then allocate him to a particular occupational group, depending on his likely exposure to vibration.
He would then undergo a medical examination in accordance with a defined Medical Assessment Process (MAP) by a doctor appointed under the Scheme.
The resulting MAP 1 report was in standard format and was intended to determine whether the claimant suffered from VWF and, if so, the severity of the condition by reference to the stagings on the Stockholm Workshop Scale.
The V score was a measure of the vascular symptoms and depended largely on reporting from the patient.
The extension of blanching was recorded diagrammatically by the examining doctor.
The sensori neural signs and symptoms were assessed partly from the claimants account and partly by standardised testing, the results of which were recorded as Sn markings.
It was open to a claimant to challenge the findings of the MAP 1 report but there was no provision for IRISC to do so.
Within 56 days of receipt of the MAP 1 report IRISC was obliged to make an offer of compensation or to reject the claim with reasons.
The Services Agreement of 9 May 2000 was incorporated in the CHA as Schedule 7(1).
It recorded an agreed approach to compensation for services.
The respective medical experts of the parties to the Scheme rejected the idea that there should be an individual assessment of each claimants ability to carry out particular household tasks.
Instead it was agreed that an assumption be made that once the condition had reached a certain level(s) causation it should be presumed that a man could no longer carry out certain tasks without assistance.
The examining doctor would then merely have to consider whether there were any other conditions (VWF apart) which of themselves would have prevented the man from undertaking the task in question thereby rebutting the presumption. (Schedule 7.1, paragraph 3.1(ii)) Six tasks were identified for this purpose: gardening work, window cleaning, do it yourself, decorating, car washing and car maintenance (Schedule 7.1, paragraph 3.3).
Claims under the Services Agreement were processed in the following way.
The experts produced a matrix identifying in respect of each staging of 2V and 2Sn late, or higher, the tasks for which a claimant would be presumed to require assistance.
Once a claimant had a staging of at least 2V or 2Sn late, a claimant was entitled to a services award if he had previously performed one of the identified tasks, but now required assistance to do so as a result of his VWF.
Men at 2V on the scale would be expected to have difficulty with all tasks except do it yourself and decorating and at 3V would be expected to have difficulty with decorating.
It was further assumed that the condition would not have deteriorated since cessation of exposure to vibration (Schedule 7.1, paragraphs 4.1, 4.2).
A claimant did not have to show that his condition wholly disabled or prevented him from carrying out the relevant task.
It was enough that he could no longer carry it out without assistance.
The approach left to be determined when a claimant reached the relevant stages, whether he suffered from any other conditions which would have prevented him from continuing to carry out any tasks in any event (co morbidity), and, if so, what that condition was, when it developed and the extent to which it compromised his ability to carry out the relevant tasks expressed on a scale of nil, material, moderate, serious and complete (Schedule 7.1, paragraphs 3.7, 5.1).
Factual evidence concerning a services claim was presented by a simple questionnaire completed by the claimant.
Because it would be impracticable to investigate individual claims in any detail, the Scheme provided that broad assumptions will be made about the average assistance that would be required for the particular task by the individual at the relevant stage (Schedule 7.1, paragraph 6.7).
Schedule 7 stated that practical and other considerations militate against other than a tariff based approach given the number of claims and the need for a quick, efficient and inexpensive approach to their settlement. (Schedule 7, paragraph 6.2) In addition, a claimants most recent helpers would complete questionnaires.
A claimant would then be sent for a further medical examination (MAP 2) which was solely concerned to consider whether there were any other conditions which, of themselves, would have prevented the claimant from undertaking the task in question.
A claimant was not usually contacted by IRISC concerning his claim, but helpers were.
This normally consisted of a telephone interview, which might last 15 minutes, during which the helper would be asked whether he or she had assisted with the tasks claimed and, if so, when they started to do so.
Even where the helper was out by a few years on dates, the information in the questionnaire would still be accepted.
On receipt of the questionnaires, IRISC would consider each claim on its merits, adopting a pragmatic approach.
If IRISC did not accept the claim entirely it had to set out in detail the reasons for rejecting the claim in whole or part.
Compensation was calculated by application of a multiplier/multiplicand approach and an index linked tariff was set in respect of each task according to the particular staging.
IRISC could reject a claim for services in whole or in part if a claimants work history after leaving the mining industry was such as to indicate that his ability to carry out the relevant tasks was not impaired.
However, in order to be entitled to rebut the presumption that a man with a particular claimants stagings could not carry out the relevant tasks without assistance, IRISC had to discharge the burden of establishing that the work actually carried out by the claimant was such as to demonstrate that he could reasonably be expected to carry out all aspects of the task without assistance.
Pending resolution of the services claim, a claimant was entitled to receive an interim payment in respect of his claim for general damages and handicap on the labour market.
Mr Watkinss claim
In February 1999 Mr Watkins instructed Hugh James Ford Simey Solicitors (the appellant) to act for him in relation to a claim under the Scheme.
His claim was notified to the DTIs claims handlers on 10 February 1999.
By November 1999 Mrs Barbara Kinsey, litigation solicitor within the appellant firm, had assumed responsibility for many VWF claims, including that of Mr Watkins, at the appellants office in Bargoed and, from 2001, Treharris.
On 31 January 2000 Mr Watkins underwent an interview and examination performed in part by Dr Chadha, a general practitioner appointed under the Scheme, and in part by an unnamed laboratory technician, to assess whether he was suffering from VWF and, if so, how his condition should be categorised under the Stockholm Workshop Scale for its vascular and sensorineural components.
This was referred to as a Medical Assessment Process 1 (MAP 1) examination.
In a report dated 3 February 2000 Dr Chadha indicated that Mr Watkins suffered from VWF with stagings of 3V and 3Sn bilaterally (ie in both hands).
Those stagings were sufficient for Mr Watkins to obtain general damages and to entitle him to a presumption in his favour that he satisfied the qualifying requirements for a services award.
Mr Watkins did choose to seek a services award.
He and his assistants completed the necessary questionnaires which were sent to the DTIs claims handlers on 23 March 2001.
They initially sought to deny Mr Watkinss entire claim on the basis that he had not been exposed to excessive vibration while working for British Coal.
The appellant challenged that decision and eventually the claims handlers were persuaded to accept Mr Watkinss claim under the Scheme.
As a result of this delay, it was not until 12 February 2003 that the claims handlers wrote to the appellant, offering Mr Watkins the sum of 9,478 in full and final settlement of all [Mr Watkinss] claims arising out of his exposure to vibration during the course of his employment with the British Coal Corporation. 9,478 was the tariff award for general damages to which Mr Watkins would have been entitled under the Scheme on the basis of the stagings of 3V and 3Sn bilaterally.
The offer made did not include any allowance for a services award.
The appellant wrote to Mr Watkins on 18 February 2003, reporting the offer which had been received and advising him as to what would be involved should he wish to proceed with a special damages claim.
On 23 February 2003 Mr Watkins spoke by telephone with Mrs Kinsey at the appellant and told her that he didnt want to proceed any further with the special damages claim as he had other conditions and had had various operations which in his view prevented him from carrying out certain tasks.
He indicated that he was quite happy to continue with general damages only and would accept the offer.
Mr Watkins completed a form of acceptance on 24 February 2003 and the appellant wrote to the claims handlers on 27 February 2003 accepting the offer in full and final settlement of Mr Watkinss VWF claim against British Coal.
The professional negligence proceedings
Nearly five years later, in January 2008, Mr Watkins, having seen a newspaper advertisement offering assistance to any ex miner who may have had his VWF claim settled at an undervalue, instructed fresh solicitors, who issued proceedings against the appellant on 11 August 2010.
By the amended particulars of claim it is contended that as a result of the appellants negligence, Mr Watkins has lost the opportunity to bring a services claim under the Scheme or otherwise.
That lost opportunity is quantified at 6,126.22 plus interest.
On 22 October 2010, His Honour Judge Hawkesworth QC made an order in relation to a number of claims against solicitors arising out of the Scheme, directing that disputes about expert evidence and disclosure be dealt with at a hearing before him.
The six test cases identified in the order did not include Mr Watkinss claim.
Following a hearing, by order dated 3 May 2011 Judge Hawkesworth ordered that his directions should apply to all prospective and existing claims alleging negligence against solicitors in the context of the advice given by those solicitors in respect of claims for damages [under the Scheme].
He directed that expert evidence should be obtained in the form of a report by a single joint expert.
A schedule to the order set out a standard form letter of instruction to such a single joint expert in terms approved by the judge.
That standard form was adopted in the letter dated 21 January 2013 by which the parties to the present proceedings jointly instructed Mr Tennant, a consultant vascular surgeon.
It stated: It is an issue in the proceedings whether Mr Watkins would, if properly advised, in fact have brought a Services claim at all.
Whether Mr Watkins was, as a result of HAVS, in fact disabled from carrying out (in whole or in part) the tasks he alleges would have formed the basis of his Services claim is relevant to that issue.
Accordingly, we wish jointly to instruct you to carry out a medical examination of Mr Watkins and, on the basis of that examination and your consideration of the documents referred to below and attached to this letter, to prepare a report stating your opinion as to whether Mr Watkins is and was at any time from the date of onset of HAVS symptoms: (1) Disabled by HAVS as a matter of fact and, to the extent that he was, unable to carry out (in whole or in part), without assistance, the tasks which he alleges would have formed the basis of his Services Claim; and (2) Suffering from any co morbid medical condition which would, in any event, have affected his ability to carry out those tasks without assistance.
In relation to co morbidity, could you please express your opinion as to whether any such co morbidity was at any time since the date of onset of HAVS symptoms: nil; minor; moderate; serious; complete (ie would have prevented the carrying out of the task in any event) If, in the course of your medical examination, you conclude that Mr Watkins does not, in fact, suffer from HAVS, you should report that opinion in your Report.
The letter made clear that the expert was not to apply in Mr Watkinss favour the presumption under the Scheme that he could no longer carry out the relevant tasks without assistance by reason of his VWF staging.
Mr Tennant examined Mr Watkins and, in a report dated 17 May 2013, he stated: Mr Watkins gives a good description of vasospasm and is graded 1V in this report as the white discolouration reaches the distal interphalangeal joint.
The only abnormality on testing was of a mild lack of dexterity.
As there is no other sensory loss in a warm environment, in my opinion this amounts only to HAVS grade Sn1.
There is certainly no justification for Sn3 at this examination, and to reach Sn2 would require evidence of reduced sensory perception, which I could not demonstrate.
Grading of 1V, 1Sn would not be expected to produce any disability in the domains tested below.
In response to further questions from Mr Watkinss solicitors, Mr Tennant confirmed on 23 June 2013 that Mr Watkins met the criteria for the diagnosis of HAVS.
He further stated that it was apparent at interview that the client had devolved certain tasks to others in the long term.
Mr Watkins died in January 2014 at the age of 72.
His daughter, Mrs Jean Edwards, was appointed to continue the claim on behalf of Mr Watkinss estate.
The trial of the claim against the appellant took place in the County Court at Leeds before Mr Recorder Miller in March 2016.
The parties had permission to rely on Mr Tennants written evidence at trial but an application by the appellant, made in advance of trial, for permission to call Mr Tennant was refused and that order was not appealed.
The statements of Mr Watkins were admitted as hearsay evidence.
In a reserved judgment, handed down on 16 May 2016, the judge held that the claim in negligence was not time barred, that the advice contained in the appellants letter dated 18 February 2003 had been negligent and that if Mr Watkins had received appropriate advice, he would probably have decided to reject the settlement offer of 9,478 and would have continued to pursue his services claim.
However, the judge also held that Mr Watkins had suffered no loss and accordingly he dismissed the claim against the appellant.
He observed: If, as here, expert or other evidence which post dates the settlement or other disposal of the original claim, establishes beyond any (or any but negligible) doubt that the claim could and would have been resolved only in one specific way had that evidence been available to the parties and the tribunal at the time, then the Court in the professional negligence action has the full facts adverted to by Laws LJ in Whitehead [v Searle [2009] 1 WLR 549, para 20] and should find accordingly, thereby avoiding an uncovenanted windfall or correcting injustice to a claimant whose case has turned out to be undoubtedly stronger than had been previously assumed.
In the case of Mr Watkins, I can and should find that his chose in action has been shown to have had no value given the damages actually paid to him; another way of putting it is that, as I have found on the full facts, his services claim had no chance of success, for the same reason: it is beyond a peradventure that faced with Mr Tennants clinical findings and conclusions any award would have fallen short of 9,478.
It is fanciful to assume otherwise.
The judge took that view because on the consultants findings Mr Watkins would only have been offered 1,790 for general damages and a services claim would not have been possible.
On appeal to the Court of Appeal (Underhill, Irwin and Singh LJJ) the appeal was allowed: [2018] PNLR 30.
The Court of Appeal, influenced by the decision of the Court of Appeal in Perry v Raleys Solicitors [2017] PNLR 27 (more recently reversed by this Court [2019] 2 WLR 636) held that the trial judge had been wrong to conduct a trial within a trial to determine the value of Mr Watkinss claim against the DTI and to determine the severity of his VWF.
It further held that the judge had been wrong to determine these matters on the basis of the evidence of Mr Tennant, since that evidence would not have been available at the time of Mr Watkinss notional services claim under the Scheme.
Irwin LJ observed (at para 70) that it would be particularly inappropriate to lose sight of what would have been the outcome under the Scheme by reference to after coming evidence which would not have been brought into being at the time.
The Court of Appeal further acknowledged exceptions in the case of fraud and in cases, such as Whitehead v Searle [2009] 1 WLR 549, where the consequences of a supervening event were of such a significant or serious scale that public policy required a departure from normal principles in order to do justice between the parties.
In its view, such circumstances did not exist in the present case.
The appellant now appeals to this court with the permission of this court.
Although the appellant sought to appeal on 14 (partly overlapping) grounds, permission was limited to the sole question of whether the prospects of success of the claim are to be judged as at the date when the claim was lost or at the date when damages are awarded and it directed that the parties consider the relevance of the principle in Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, namely that where the court assessing damages has knowledge of what has actually happened it should not speculate about what might have happened but base itself on what is now known to have happened. (See McGregor on Damages, 20th ed (2018), para 10 118.).
Although this was the reason why permission to appeal was granted, the Court has concluded, in the light of the wide ranging arguments presented to us, that the Bwllfa principle is not relevant in the particular circumstances of this case.
On behalf of the appellant, Mr Michael Pooles QC submits that the trial judge was right to rely on the evidence of Mr Tennant for four reasons. (1) In the circumstances of this case, the question whether Mr Watkins had suffered loss should be determined as at the date of the trial of the claim against the appellant, applying the Bwllfa principle. (2) In a professional negligence claim arising from personal injury litigation, the issue of loss should be determined as at the date of the trial of the professional negligence proceedings as it would have been in personal injury litigation (Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353, per Lord Bingham of Cornhill at para 13). (3) Even if the issue of loss should be determined at an earlier date, the Court should in making that determination take account of all of the evidence available at the trial of the professional negligence proceedings, following the decisions in Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278, Dudarec v Andrews [2006] 1 WLR 3002 and Whitehead v Searle, as this would enable the court to make a more accurate assessment of what the original personal injury claim was actually worth. (4) That evidence was needed in the present case to enable the issue of loss to be determined with all the adversarial rigour of a trial as required by the Supreme Court in Perry v Raleys Solicitors: [2019] 2 WLR 636, para 19.
On behalf of the respondent, Mr Richard Copnall submits that the court should assess the prospects of success as at the date when the claim was lost, on the facts as they were and the evidence available at that time, subject to the following established exceptions. (1) Evidence that would have been available, in the absence of negligence, at the time the claim was lost will be admissible (Charles; Dudarec v Andrews [2006] 1 WLR 3002). (2) Evidence of the original parties attitude to settlement at the time that the claim was lost will be admissible (Somatra Ltd v Sinclair Roche and Temperley [2003] 2 Lloyds Rep 855). (3) Evidence of dishonesty or misconduct will be admissible (Perry; Green v Collyer Bristow [1999] Lloyds Law Rep PN 798). (4) Evidence of any accomplished fact within the meaning of the Bwllfa principle will be admissible.
Discussion
We are concerned with a claim in the tort of negligence.
Although the claim for breach of contract was time barred, the judge held that, by virtue of section 14A of the Limitation Act 1980, as inserted by section 1 of the Latent Damage Act 1986 (Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual), the claim in negligence was not.
In order to succeed in negligence against Mr Watkins former solicitors his estate had to establish a negligent breach of duty, causation and loss.
A negligent breach of duty was found by the judge, on the basis that the appellants letter of 18 February 2003 was misleading and deficient in a number of respects and those features were not corrected in the subsequent conversation between Mr Watkins and Mrs Kinsey on 23 February 2003.
There has been no appeal against that conclusion.
In addition, the judge made a finding that, had Mr Watkins received non negligent advice, he would have pursued an honest services claim.
That claim had already been notified and supporting statements provided.
The judge considered that, had Mr Watkins been more fully and accurately informed as to where he stood and how the scheme operated, he would probably have instructed Mrs Kinsey to let the services claim and a MAP 2 medical examination proceed.
The judge expressly rejected the submission on behalf of the appellants that, in reality, Mr Watkins had realised that his evidence in support of the services claim was grossly exaggerated or invented and, as a result, he had discontinued it for fear of getting into trouble or losing out financially further down the line.
There has been no appeal against that conclusion.
Accordingly, the issue considered by the Supreme Court in Perry v Raleys Solicitors does not arise in this case and, in my view, that decision has no direct bearing on the issues which we have to decide.
For the claim by Mr Watkinss estate to succeed, however, it is also necessary to prove loss.
There is a legal burden on the estate to prove that in losing the opportunity to pursue the claim Mr Watkins has lost something of value ie that his claim had a real and substantial rather than merely a negligible prospect of success.
It is only if the estate can establish that Mr Watkinss chances of success in pursuing his service claim were more than negligible that it is appropriate to go on to evaluate those chances on a loss of chance basis by making a realistic assessment of what would have happened had the original claim been pursued (Mount v Barker Austin [1998] PNLR 493 per Simon Brown LJ at pp 510D to 511C).
In the view of Mr Recorder Miller, the present claim failed at the first hurdle.
On the basis of the evidence of Mr Tennant the judge considered that Mr Watkinss chose in action had no value given the damages actually paid to him.
It was clear, in his view, that any award would have fallen short of the 9,478 which Mr Watkins had already received under the settlement.
Against this background, the argument before this court has focussed on the issue of the admissibility in a professional negligence action of subsequently acquired evidence relating to the value of the original claim, an issue on which we have heard elaborate submissions.
However, it is not necessary to express a concluded view in relation to these matters because the evidence contained in Mr Tennants report was not relevant to any issue before the court in the professional negligence proceedings.
As a result, the authorities relied on by the appellant are not relevant in the particular circumstances of this case.
It is important not to lose sight of the fact that Mr Watkinss original claim was a claim within the Scheme and not one made in the course of conventional civil litigation.
It is necessary to consider whether Mr Watkinss original claim, which was accepted by the judge to be an honest claim, was of more than negligible value within the context of the Scheme.
When the evidence of Mr Tennant is considered in this light, it is not the knock out blow which the appellant suggests.
The Scheme has been described by Irwin LJ in the Court of Appeal and by counsel before us as a rough and ready scheme.
This is a fair description.
It was intended to provide an efficient and economic system for dealing with a huge number of claims in a way that was broadly fair.
No doubt, it was considered that the decision not to require a detailed medical assessment of the level of disability of every claimant for a services award was justified by the savings in cost.
A deliberate decision was taken to deal with services claims by reference to presumptions derived from the diagnosis and staging found at MAP 1, as opposed to requiring a precise assessment of the underlying disability.
Medical assessment in the MAP 2 procedure was to be limited to the issue of co morbidity.
More specifically, there was no provision within the Scheme whereby the DTI could appeal against a general award, nor did the Scheme contemplate reopening or reassessing the diagnosis or staging of the condition or the entitlement to a general award established at MAP 1.
Recoverability under the Scheme, therefore, did not depend on entitlement at common law nor did it correspond with what might have been the outcome in conventional civil proceedings.
In this case Mr Watkins lost the value of his claim under the Scheme as it would have been administered in accordance with its terms.
In this regard it is instructive to consider why Judge Hawkesworth QC made the order in the professional negligence proceedings for further medical reports.
In his judgment of 3 May 2011, he explained that it was common ground that the claims were for the lost chance to bring a claim under the MAP 2 procedure.
On behalf of the claimants it was contended that the scope of the medical evidence should be a replication of the MAP 2 procedure which was limited to the issue of comorbidity, while on behalf of the defendants it was contended, initially at least, that there should be a more comprehensive medical examination by a consultant specialist which could revisit the original diagnosis of VWF as well as address the issue of comorbidity.
For the claimants it was submitted that because the MAP 2 examination did not revisit or reopen the original diagnosis it would not be appropriate for the medical expert in the professional negligence proceedings to address them.
During the hearing, however, it became clear that counsel for the defendants were not contending for a medical examination in order to revisit the diagnosis and staging of the VWF condition, but in order to evaluate the claimants case on causation ie in order to assess whether a claimants failure to pursue a services claim arose from negligent advice or from an inability to assert truthfully that he had lost the ability to perform those specified activities which would enable him to bring a claim for a services award.
It was said that the extent of disability was relevant to that issue, while the medical examination in the MAP 1 procedure was predominantly directed at diagnosis and staging of the condition as opposed to the level of disability.
Miss Foster [who appeared for four defendant firms of solicitors] did not seek to say that the fact of a MAP 1 diagnosis and its consequences for the subsequent progression to a services claim could be called into question.
However, the defendants were entitled to investigate the implied averment that had the claimant been properly advised he would have made a services claim. (at para 7) The judge seems to have made the order for expert reports on that basis but expressly left open (at para 9) the question as to the extent to which any findings by an examining doctor could or could not be taken into account in valuing the loss of a chance to bring a services claim.
The joint letter of instruction sent to Mr Tennant on 21 January 2015 (set out at para 13, above) reflected this reasoning.
As a result, the instructions and the resulting medical examination and report departed significantly from those in a MAP 2 procedure.
Most significantly, the expert was not to apply the presumption resulting from the diagnosis and staging at MAP 1 which applied under the Scheme.
Mr Tennants report may have been relevant to the issue of causation in the claim by Mr Watkinss estate against his former solicitors.
However, the judge decided that issue in favour of the estate, finding that if Mr Watkins had received non negligent advice he would have pursued an honest services claim.
That conclusion has not been challenged on appeal.
In my view, Mr Tennants report is not relevant to the issue of loss.
We must assume that had Mr Watkins pursued a services claim the Scheme would have operated in accordance with its provisions.
The conclusion of Dr Chadha that Mr Watkins was suffering at the level of 3V, 3Sn bilaterally had entitled him, under the tariffs applied within the Scheme, to an award of general damages of 9,478 and also created a rebuttable presumption that he did require assistance with the tasks prescribed under Schedule 7 of CHA.
Mr Watkins would have had to undergo a second medical examination but that would have been limited to assessing co morbidity.
There would have been no equivalent of Mr Tennants report, no reassessment of the diagnosis or staging found in the MAP 1 procedure and no reduction of the general award.
Entitlement to a services award would have been decided in accordance with the procedure described at paras 4 8 above.
The appellant now seeks to add to the counterfactual situation the effect of a further medical examination and report which would never have been commissioned.
There is no justification for such a modification of the counterfactual situation and the judge erred in taking it into account when concluding that the lost claim was of no value.
When Mr Tennant conducted his examination of Mr Watkins and prepared his report, he acted in accordance with his instructions in expressing his view as to whether and to what extent Mr Watkins was disabled by HAVS as a matter of fact and, to the extent he was, unable to carry out without assistance the tasks which formed the basis of his services claim.
His opinion is set out at para 14 above.
However, he then proceeded to set out his opinion on co morbidity in accordance with the Scheme by taking as his starting point the conclusions of Dr Chadha (3V, 3Sn) as in the MAP 1 report and grading disability for the purpose of a services claim on that basis.
In doing so he provided an insight into the value of the claim which Mr Watkins lost.
For each of the five activities relevant to Mr Watkinss case (car washing, car maintenance, gardening, DIY and decorating) his disability is assessed as complete.
Mr Tennant states that on the basis of the MAP 1 report his HAVS would be expected to produce severe or complete disability in the tested domains.
The only comorbidity to take into account is Mr Watkinss arthritic knees and this results in a comorbidity finding of moderate in all of the tested domains other than gardening where the finding is severe.
In these circumstances I am unable to accept that the services claim had no chance of success and that the claim lost was of no value.
At the heart of this case lies Mr Pooless assertion that Mr Tennants report shows that because of an error Mr Watkins had already been over compensated and that a professional negligence claim should reflect his true entitlement to just compensation and not what would have been an uncovenanted windfall.
However, this overlooks the nature and operation of the Scheme.
The payment of a services award to Mr Watkins would simply have been a consequence of the way in which the Scheme operated and was intended to operate.
We are not concerned here with a claim in conventional civil proceedings but with a scheme possessing unusual features.
The evidence in question, the report of Mr Tennant, is simply not relevant when constructing the counterfactual situation which would have arisen if Mr Watkinss solicitors had fulfilled their duty to him.
I consider, therefore, that the Recorder erred in concluding that Mr Watkinss services claim could and would have been resolved only in one specific way had Mr Tennants report, or its equivalent, been available to IRISC and in concluding that the claim had been shown to have no value given the award already paid.
On the contrary, Mr Watkins had lost a claim under the Scheme of some value and the Recorder should have proceeded to assess its value on a loss of opportunity basis.
I would therefore dismiss the appeal and remit the matter for assessment of the value of the loss of the opportunity to pursue the services claim.
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This appeal relates to a compensation scheme (the Scheme) set up in 1999 by the Department for Trade and Industry to provide tariff based compensation to miners employed by the British Coal Corporation (British Coal) who suffered from a medical condition called vibration white finger (VWF) as a result of excessive exposure to vibration through the use of vibratory tools.
The Scheme provided for compensation to be paid for pain, suffering and loss of amenity (General Damages) and handicap on the labour market and other financial losses including past and/or future loss of earnings (Special Damages), which could include a services award to cover the need for assistance in performing specified domestic tasks.
Rather than conducting an individual assessment of each claimants ability to carry out the specified tasks, the Scheme applied a presumption based on the condition reaching a certain level of severity.
Mr Arthur Watkins was employed by British Coal as a miner from 1964 until 1985 and had developed VWF by the early 1980s.
In 1999 he instructed the appellant to act for him in relation to a claim under the Scheme.
Findings from a medical examination and interview indicated that Mr Watkins could obtain General Damages and qualified for the presumption in his favour that he satisfied the requirements for a services award.
Mr Watkins sought a services award.
In 2003 he was instead offered the tariff award for General Damages in full and final settlement of his claims.
The appellant wrote to Mr Watkins on 18 February 2003 reporting the offer.
After a telephone conversation with an employee of the appellant, Mr Watkins accepted the offer.
In 2008, Mr Watkins instructed new solicitors to bring a claim against the appellant for professional negligence, on the basis that as a result of the appellants negligence Mr Watkins had lost the opportunity to bring a services claim under the Scheme.
Mr Watkins died in 2014 and his daughter, Mrs Jean Edwards, was appointed to continue the claim on behalf of his estate.
The first instance court held that the letter of 18 February 2003 and the advice given had been negligent and that had Mr Watkins received appropriate advice he would probably have rejected the offer and pursued his services claim.
A jointly instructed medical expert, who had been instructed not to apply the presumption that would have applied under the Scheme, provided a report that concluded Mr Watkinss symptoms would have been insufficient to succeed on a services claim.
The court therefore held that Mr Watkins had suffered no loss and dismissed the claim.
Mr Watkins successfully appealed to the Court of Appeal, which decided that the trial judge had been wrong to determine the value of the services claim on the basis of evidence that would not have been available at the time of the notional claim.
The appellant seeks to appeal that decision.
The issue in the appeal is whether, in assessing the prospects of success of the negligence claim, the court should have taken account of the further medical report.
The Supreme Court unanimously dismisses the appeal and remits the matter for assessment of the value of the loss of the opportunity to pursue the services claim.
Lord Lloyd Jones gives the judgment, with which all members of the Court agree.
In order to succeed in his claim in the tort of negligence, Mr Watkins had to establish a negligent breach of duty, causation and loss.
The trial judge found that there had been a negligent breach of duty and that causation was established.
Neither conclusion has been appealed [22].
To succeed, therefore, Mr Watkinss estate must prove loss, specifically that in losing the opportunity to pursue the claim Mr Watkins lost something of value, i.e. that his services claim had a real and substantial rather than merely a negligible prospect of success [23].
Mr Watkinss original claim was within the Scheme, and it is therefore necessary to consider whether the claim was of more than negligible value within the context of that Scheme [25].
The expert report was concerned with causation, not loss, and was prepared to assist in the assessment of whether Mr Watkinss failure to pursue a services claim arose from negligent advice or from an inability to assert truthfully that he had lost the ability to perform activities that would qualify him for a services award [27].
As a result, the expert was instructed not to apply the presumption used under the Scheme [28].
Had Mr Watkins pursued a services claim it would have proceeded on the basis of the Schemes procedures.
He would have had to undergo only a limited second medical examination and there would have been no equivalent of the experts report.
His entitlement to a services award would have been decided by the application of the Schemes presumption.
There was no justification for considering a further medical examination and report which would not have been commissioned under the Scheme and therefore the judge erred in taking this into account [29].
Given other findings in the expert report, the court is unable to accept that the services claim had no chance of success so that the lost claim was of no value [30].
The first instance judge should have proceeded to assess the value of the lost claim on a loss of opportunity basis.
The court therefore dismisses the appeal and remits the matter for that assessment [32].
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The appellant brought a claim for judicial review of a decision of the respondent, on 21 February 2012, to approve a Revenue Budget for 2012/13 in relation to the provision of youth services.
In his claim form he applied for declarations that the respondent had failed to comply with section 149 of the Equality Act 2010 and section 507B of the Education Act 1996 and for an order quashing the decision to approve the budget.
The claim was dismissed at first instance (Wyn Williams J) and the appellant was ordered to pay the respondents costs, subject to a proviso against enforcement of the order without further permission of the court.
He obtained limited permission to appeal on two grounds.
The Court of Appeal (Moore Bick, Rimer and Underhill LJJ) decided the two substantive issues in his favour but did not grant him any relief, dismissed his appeal and ordered him to pay half of the respondents costs of the appeal.
This appeal is about the form of the Court of Appeals disposal of the matter.
The appellant submits that since the court held that the respondent had failed in its statutory obligations, it should have made a declaration to that effect and should have made an order for costs in his favour.
The underlying facts and issues are set out in the very thorough judgment of Wyn Williams J, [2012] EWHC 1928 (Admin), and recapitulated, so far as was necessary, in the judgment of the Court of Appeal delivered by Rimer LJ, [2013] EWCA Civ 1320.
For present purposes a briefer outline will be sufficient.
The appellant was born on 17 April 1991.
He suffers from ADHD and has other difficulties.
He was therefore a qualifying young person within the meaning of section 507B of the 1996 Act, which required the respondent, so far as reasonably practicable, to secure access for him to sufficient educational and recreational leisure time activities for the improvement of his well being.
Section 507B(9)(b) required the respondent in exercising its functions under that section to secure that the views of qualifying young persons in the authoritys area are taken into account.
The appellants disability was also a protected characteristic which brought into play, in relation to him, the public sector equality duty (PSED) contained in section 149 of the 2010 Act.
The section required the respondent to have due regard to the statutory equality needs in the exercise of its functions.
By its decision on 21 February 2012 the respondent approved a reduction in its youth services budget for 2012/13 of 364,793.
The appellant was concerned about the impact which this was likely to have on the provision of services for young persons with disabilities and, in particular, on a weekly youth club for vulnerable young people which he used to attend.
At first instance wide ranging criticisms were made of the way in which the respondent had reached its decision.
They were all rejected.
At the end of the hearing and before giving judgment, the judge asked counsel for written submissions on relief if he found that there had been illegality.
The note on relief provided by Mr David Wolfe QC and Ms Aileen McColgan on behalf of the appellant stated that he asked for a quashing order.
No mention was made of alternative relief in the form of a declaration.
Ms Jane Oldham noted the omission in her response on behalf of the respondent, observing that it appears that no declaratory relief is sought and D takes it that the claim for declaratory relief [in the claim form] is abandoned, since otherwise C would, in response to the request of Wyn Williams J, have set out the terms of any declaratory relief sought.
Mr Wolfe and Ms McColgan provided a written reply which again made no reference to asking for declaratory relief.
In view of the judges rejection of the challenges to the legality of the respondents approval of the budget, the question of relief did not arise for decision, but the judge rejected an argument by the respondent that the provisions of the Local Government Finance Act 1992 would have prevented him from quashing the decision to approve the budget.
He said that if he had been persuaded that the respondent had acted unlawfully, it would have been open to him to grant any remedy which was appropriate.
The grounds on which the appellant was given leave to appeal were that the respondent had failed in its equality duty (PSED) under section 149, because although equality impact assessments (EIAs) had been carried out relating to the impact of the budgetary cuts, the EIAs had not been provided to the members who took the decision (and the judge had been wrong to infer that the members had read them merely because they had been told how they could be accessed); and that it had failed in its consultation duty under section 507B(9)(b) because there was no evidence of consultation with young people before making the decision to cut the budget (as distinct from meetings with management committees of young peoples organisations to explain to them where the axe would fall).
These grounds were developed in the appellants skeleton arguments in the Court of Appeal.
As to relief, it was submitted that the decision under challenge should be quashed.
No alternative submission was made about declaratory relief.
The judgment of the Court of Appeal was given on 6 November 2013.
The court upheld the appellants argument under section 149.
It expressed some doubt about whether section 507B(9) was applicable, but this was not disputed by the respondent.
Accordingly the court proceeded on the assumption (but without deciding) that the section was applicable, and on that assumption it upheld the appellants argument.
However, the court refused to make the quashing order which was sought.
Rimer LJ said that although in theory a quashing order could be made, the court could not see how this could be done without quashing the respondents decision to approve the entire revenue budget for the financial year 2012/13, which had expired nearly three months before the appeal was heard.
He concluded: 94.
It is now too late to unwind what has been done.
Judicial review is a discretionary remedy and, even though we have accepted the substantive points which Mr Hunt has advanced, we are of the firm view that he ought not to be granted the quashing order for which he asks.
To do so would be detrimental to good administration. 95.
We refuse to grant any relief to Mr Hunt and therefore dismiss the appeal.
No mention was made in the judgment about whether the order should include a declaration to reflect what was said in it about the respondents failure to discharge its statutory obligations, no doubt because the subject had never been raised on behalf of the appellant and in any event it would be open to counsel to make suggestions as to the appropriate form of order in the light of the matters determined in the judgement.
It would have also have been open to counsel to raise the matter of declaratory relief on receiving the judgment in draft if it was something which they had meant to raise.
Counsel for the appellant did neither.
Counsel for the respondent prepared a draft order stating that the appeal was dismissed, and counsel for the appellant stated in written submissions that the parties were agreed on the order except in relation to costs.
I would reject the appellants complaint that the Court of Appeal was wrong not to make a declaration of its own initiative.
The complaint is redolent of hindsight.
It is no doubt triggered by the courts decision on costs, but they are separate matters.
The judgment of the Court of Appeal itself ruled that the respondent acted unlawfully, and the authority of the judgment would be no greater or less by making or not making a declaration in the form of the order to the same effect.
However, in circumstances where a public body has acted unlawfully but where it is not appropriate to make a mandatory, prohibitory or quashing order, it will usually be appropriate to make some form of declaratory order to reflect the courts finding.
In some cases it may be sufficient to make no order except as to costs; but simply to dismiss the claim when there has been a finding of illegality is likely to convey a misleading impression and to leave the claimant with an understandable sense of injustice.
That said, there is no must about making a declaratory order, and if a party who has the benefit of experienced legal representation does not seek a declaratory order, the court is under no obligation to make or suggest it.
The appellant is on much stronger ground in relation to costs.
The submissions to the Court of Appeal on his behalf made no reference to the costs at first instance, and it was remiss to agree to an order that the appeal should be dismissed, when there were obvious grounds for arguing that in relation to costs the judges order should be set aside and replaced by an order in the appellants favour.
However, in relation to the costs in the Court of Appeal, the points were properly made that the appellant had succeeded on both the issues as to the respondents statutory duty; that there were wider lessons for local authorities to learn from the case about their duties under each of the relevant sections; that the lapse of time, as a result of which the relevant financial year had now passed, was not the fault of the appellant; and that to deny the appellant his costs would be likely in practice to dissuade claimants from pursuing legitimate public law challenges.
The respondent submitted that the appellant had not in substance been successful; that he had not obtained any result of any practical utility; and that he had known about the practical problems which would be involved in attempting to unwind the budget from evidence submitted by the respondent before the original hearing.
Delivering the reasons for the courts judgment on costs, ([2013] EWCA Civ 1483) Rimer LJ said that by the time that the appeal came on for hearing, it was far too late to consider granting any relief (by which he must have had in mind a quashing order), even if as to which the court had doubts it might have been appropriate for relief to be granted a year earlier when the matter was before Wyn Williams J. He continued: 5.
In these circumstances, the court considers that it would be wrong in principle to award any costs to Mr Hunt.
The appeal proved to be of no practical value to him; and, in the courts view it was always one which was destined to fail. 6.
As the council was the successful party in the appeal, the court considers that it is in principle entitled to its costs.
On the other hand, the court has regard to the fact that the council resisted the appeal not only on the basis that this was not a case for relief, but also on the two substantive grounds on which it lost.
Its resistance on those two grounds increased the costs of the appeal.
We regard that consideration as pointing away from an order awarding the council all of its costs.
The court concluded that the respondent should be entitled to recover half of its costs of the appeal.
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.
The rejection of the respondents case on the two issues on which the appellant was given leave to appeal was of greater significance than merely that the respondent had increased the costs of the appeal by its unsuccessful resistance.
The respondent was successful only in the limited sense that the findings of failure came too late to do anything about what had happened in the past, not because the appellant had been slow to raise them but because the respondent had resisted them successfully until the Court of Appeal gave its judgment.
The respondent was unsuccessful on the substantive issues regarding its statutory responsibilities.
There are also wider public factors to consider.
Public law is not about private rights but about public wrongs, as Sedley J said in R v Somerset County Council, Ex p Dixon [1998] Env LR 111 when considering a question of standing.
A court may refuse permission to bring a judicial review claim if it considers the claimant to be a mere meddler or if it considers that the proceedings are unlikely to be of sufficient significance to merit the time and costs involved.
But in this case the court considered that the issues were of sufficient significance to give permission.
And the ruling of the court, particularly under section 149, contained a lesson of general application for local authorities regarding the discharge by committee members of the councils equality duty.
If a party who has been given leave to bring a judicial review claim succeeds in establishing after fully contested proceedings that the defendant acted unlawfully, some good reason would have to be shown why he should not recover his reasonable costs.
I cannot see that the fact that in this case the determination of illegality came after it was too late to consider reopening the 2012/13 budget provided a principled reason for making the appellant pay any part of the respondents costs.
On the contrary, for the reasons stated the appellant was in principle entitled to some form of costs order in his favour.
The issues raised by the appellant at first instance were considerably wider than the issues on which he was given permission to appeal.
They included, for example, a far reaching challenge to the adequacy of the respondents EIAs.
This challenge required detailed rebuttal by the respondent.
The appellant also persisted in seeking an order to quash the decision approving the budget when that was unrealistic.
Those are reasons for limiting the order for costs in his favour.
Logically it might be said that a distinction should be drawn between the costs at first instance and in the Court of Appeal to reflect the different issues, but each hearing occupied the court for one day and the assessment can only be broad brush.
I would allow the appeal, set aside the Court of Appeals order and substitute an order that the appellant should recover two thirds of his costs both at first instance and in the Court of Appeal.
Having succeeded in reversing the costs orders made by the courts below, the appellant is entitled to his reasonable costs of so doing.
However, a significant proportion of his written and oral argument before this court was directed to the question of a declaration.
On that issue his argument had no merit when examined against the way that his case was presented in the lower courts, which only emerged fully from the submissions of the respondent.
As at present advised, I would order that the appellant should recover two thirds of his costs in this court, to be assessed if not agreed; but the order should not be drawn up for seven days, during which time either party may, if so advised, make written submissions as to why a different order should be made.
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Mr Aaron Hunt, born on 17 April 1991, suffers from ADHD, learning difficulties and behavioural problems.
As a result, North Somerset Council (the Council) are statutorily required, so far as reasonably practicable, to secure access for him to sufficient educational and recreational leisure time activities for the improvement of his well being.
On 21 February 2012, the Council made a decision to approve a reduction of 364,793 from its youth services budget for 2012/2013.
Mr Hunt, concerned about the impact this would have on the provision of services for young persons with disabilities, brought judicial review proceedings of that decision.
He argued that the decision was unlawful on two grounds: (1) the Council had failed its duty under section 507B of the Education Act 1996 to take properly into account the views of young persons with difficulties such as his; and, (2) it failed to fulfil its public sector equality duty under section 149 of the Equality Act 2010 to have due regard to the statutory equality needs of disabled individuals.
He sought a declaration that the Councils decision was unlawful and an order that the decision be quashed.
At the end of the High Court hearing, but before giving judgment, Wyn Williams J asked the parties barristers for written submissions on relief in the event that he found in favour of Mr Hunt.
The note provided by Mr Hunts barristers stated that he sought a quashing order but made no reference to a declaration.
Ultimately, Wyn Williams J rejected Mr Hunts challenges to the legality of the decision.
Mr Hunt was ordered to pay the Councils costs, subject to a proviso against enforcement of the costs order without further permission of the Court.
The Court of Appeal allowed Mr Hunts appeal on both grounds.
It, nonetheless, refused to make a quashing order, considering that it was too late to unwind the entire revenue budget for the financial year.
It also ordered him to pay half of the Councils costs.
Mr Hunts barristers did not make alternative submissions about declaratory relief so no mention was made of this in the Court of Appeals judgment.
Mr Hunts barristers did not raise this omission on receiving the judgment in draft and did not make suggestions as to the appropriate form of the order in light of the judgment.
The Councils barristers prepared a draft order stating that the appeal was dismissed.
Mr Hunts barristers stated in written submissions that the parties were agreed on the order except in relation to costs.
Mr Hunt appealed to the Supreme Court on the basis that the Court of Appeal should have made: (1) a declaration that the Council had failed in its statutory obligations; and, (2) an order for costs in his favour.
The Supreme Court unanimously allows the appeal in relation to costs but dismisses it in relation to declaratory relief.
Lord Toulson delivers the judgment of the Court.
Declaratory relief Lord Toulson rejects Mr Hunts argument that the Court of Appeal should have made a declaration of its own initiative.
The judgment of the Court of Appeal itself contained a ruling that the Council acted unlawfully and the authority of its judgment would be no greater or less by making or not making a declaration in the form of the order to the same effect.
A court is not required to make declaratory orders where, although a finding of illegality has been made, it is not asked to make a declaratory order by a partys experienced legal representatives [12].
Costs In relation to costs, although courts have wide discretion in this matter, the Court of Appeal fell into error by treating the Council as the successful party.
As the Court of Appeal rejected the Councils case on the two issues, it was only successful in the limited sense that the findings of failure came too late to do anything about what had happened in the past, although this occurred through no fault on Mr Hunts part.
It was unsuccessful on the substantive issues regarding its statutory responsibilities [15].
Indeed, the Court of Appeal judgment contained a lesson of general application for local authorities regarding the discharge by committee members of the Councils equality duty.
In such circumstances, where a local authority is shown to have acted unlawfully, some good reason would have to be shown why a claimant should not recover his reasonable costs [16].
Despite this, the reasons for limiting Mr Hunts order for costs in his favour in this case are that: he raised issues much wider than the issues on which he was given permission to appeal and which required detailed rebuttal; and, he persisted in seeking an unrealistic remedy a quashing order [17].
Consequently, the Court of Appeals order should be set aside and substituted with an order that Mr Hunt recover two thirds of his costs both in the High Court and in the Court of Appeal [18].
As to costs in this Court, although Mr Hunt is entitled to his reasonable costs, having succeeded in reversing the costs orders made by the courts below, a significant proportion of his argument was directed to the question of a declaration.
This had no merit.
Therefore, Mr Hunt should recover two thirds of his costs subject to either party making written submissions as to why a different order should be made [19].
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The appellant was born in Rwanda.
He came to the United Kingdom in August 2000 and sought refugee status because of what he claimed was a well founded fear of persecution if he returned to his native land.
His claim was accepted on 26 October 2000 on the basis that he was a member of a particular social group (Hutu).
He was recognised as a refugee pursuant to the 1951 Refugee Convention and granted indefinite leave to remain.
Since he arrived in the United Kingdom DN has been convicted of a number of offences.
He has also been cautioned twice.
The most significant of his convictions occurred on 22 January 2007 when he pleaded guilty to assisting the unlawful entry of a non EEA national to the United Kingdom contrary to section 25 of the Immigration Act 1971.
The circumstances leading to the conviction were these: DN and his sister had travelled to the Netherlands where they met a niece.
DN returned to the UK with his niece who used his sisters travel documents in an attempt to obtain entry to this country.
Although this was a serious offence, it was accepted by the trial judge that DN had had no financial motivation for the crime.
At the same court before which he had pleaded guilty to the immigration offence, however, DN was convicted, again on his plea of guilty, of three offences of obtaining or attempting to obtain a pecuniary advantage by seeking or taking employment in anothers name.
He was sentenced to 12 months imprisonment for the Immigration Act offence and two months consecutively for each of the three pecuniary advantage offences making a total sentence of 18 months imprisonment.
On 2 July 2007 DN completed the custodial element of his sentence.
On the same date the Home Secretary decided to deport him subject to a final decision on the issue of his refugee status.
This was followed by a decision on 3 July that DN should be deported pursuant to article 33(2) of the Refugee Convention which allows the expulsion of refugees whom there are reasonable grounds for regarding as a danger to the security of the country.
It was said that DN had been convicted of a particularly serious crime and that he constituted a danger to the community.
The decision was based on section 72(4)(a) of the Nationality, Immigration and Asylum Act 2002.
He was notified of the decision to deport him, and detained on foot of that decision on 2 July 2007, pursuant to paragraph 2(2) of Schedule 3 to the Immigration Act 1971, which provides that where notice has been given to a person of a decision to make a deportation order against him, he may be detained under the authority of the Secretary of State pending the making of the deportation order.
Pursuant to powers conferred by section 72(4)(a) of the 2002 Act, the Home
Secretary had made the Nationality, Immigration and Asylum Act 2002 (Specification of Particularly Serious Crimes) Order 2004.
This specified several offences which were said to be particularly serious crimes.
Assisting unlawful immigration to a member state contrary to section 25 of the 1971 Act was included among them.
On that basis, the appellants conviction for the immigration offence was deemed to warrant his deportation.
Section 72(4)(a) also provided that a person convicted of an offence specified in the 2004 Order was rebuttably presumed to have been guilty of a particularly serious crime and constituted a danger to the community.
DN appealed the Home Secretarys decision.
His appeal was heard by the Asylum and Immigration Tribunal (AIT) on 22 August 2007.
On 29 August the tribunal dismissed the appeal.
It found that the appellant constituted a danger to the community of the United Kingdom; that his attempt to circumvent the immigration law in itself amounted to a danger to the community; that he could now be expelled pursuant to article 33(2) of the Refugee Convention; and that he had failed to rebut the presumption created by the 2004 Order that a person convicted of an offence specified by the Order was deemed to have been convicted of a particularly serious crime and to constitute a danger to the community of the United Kingdom.
DN sought reconsideration of the decision.
On 18 September 2007 that was refused.
An application for a statutory review by the High Court of the AITs decision under section 103A of the 2002 Act was dismissed on 7 December 2007.
On 31 January 2008 the Secretary of State signed the deportation order and made an order for DNs detention pending deportation.
That order was made pursuant to paragraph 2(3) of Schedule 3 to the 1971 Act which, although subsequently amended, at the time provided that Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom (and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise). (Emphasis added)
Before the deportation order was signed, no suggestion had been made on DNs behalf that the 2004 Order was unlawful.
After it was made, however, solicitors, who had replaced those who originally acted for DN, wrote to the Secretary of State making that precise case.
On that account the Secretary of State was invited to revoke the deportation order.
It was also claimed that DNs detention since 2 July 2007 was unlawful.
On 29 February 2008 the appellant was released on bail by order of an immigration judge.
By that time, he had spent 242 days in immigration detention.
The proceedings
On 20 March 2008 DN sought judicial review.
He claimed that the deportation order should be quashed and applied for a declaration that the 2004 Order was ultra vires the 2002 Act.
He also claimed damages and declaratory relief in respect of what he said was his unlawful detention.
In two other cases appeals were made from decisions of the AIT in which the vires of the 2004 Order was challenged.
These materialised into the decision of the Court of Appeal in EN (Serbia) v Secretary of State for the Home Department; KC (South Africa) v Secretary of State for the Home Department [2010] QB 633.
Although permission to apply for judicial review had initially been denied the appellant, this was granted by Charles J on 28 November 2008 but stayed pending the decision in EN.
That decision was duly delivered on 26 June 2009 and the Court of Appeal held that the 2004 Order was ultra vires the enabling power and was therefore unlawful.
On 15 March 2010 the Home Secretary wrote to DN informing him that article 33(2) of the Refugee Convention was no longer relied on as a basis for his deportation, but instead cited a material change of circumstances in Rwanda sufficient to trigger article 1(C)(5) of the Convention (the cessation clause) which, in material part, provides: This Convention shall cease to apply to any person falling under the terms of section A if: (5) He can no longer, because the circumstances in connection with which he has been recognised as a refugee have ceased to exist, continue to refuse to avail himself of the protection of the country of his nationality .
On 15 and 16 May 2012, the Court of Appeal heard an appeal in the case of R (Draga) v Secretary of State for the Home Department.
DNs application for judicial review was stayed pending the decision in Draga.
Judgment was given on 21 June 2012 ([2012] EWCA Civ 842).
At issue in that case was whether a distinction could be drawn between, on the one hand, a decision to make a deportation order and the making of the order, and, on the other, the decision to detain.
It was argued that a flaw in the decision to make a deportation order/the making of the order did not impact upon the lawfulness of the decision to detain.
That argument was, in essence, accepted by the Court of Appeal.
Sullivan LJ (who delivered the leading judgment) considered the decision of this court in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245.
At paras 65 and 66 of his judgment in that case, Lord Dyson had said: 65.
All that a claimant has to prove in order to establish false imprisonment is that he was directly and intentionally imprisoned by the defendant, whereupon the burden shifts to the defendant to show that there was lawful justification for doing so.
As Lord Bridge of Harwich said in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, 162C D: The tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it. 66.
The causation test shifts the focus of the tort on to the question of how the defendant would have acted on the hypothesis of a lawful self direction, rather than on the claimants right not in fact to be unlawfully detained.
There is no warrant for this.
A purported lawful authority to detain may be impugned either because the defendant acted in excess of jurisdiction (in the narrow sense of jurisdiction) or because such jurisdiction was wrongly exercised.
Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 established that both species of error render an executive act ultra vires, unlawful and a nullity.
In the present context, there is in principle no difference between (i) a detention which is unlawful because there was no statutory power to detain and (ii) a detention which is unlawful because the decision to detain, although authorised by statute, was made in breach of a rule of public law.
For example, if the decision to detain is unreasonable in the Wednesbury sense, it is unlawful and a nullity.
The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires: see Boddington v British Transport Police [1999] 2 AC 143, 158D E.
At para 88 of Lord Dysons judgment in Lumba a significant passage appears: To summarise, therefore, in cases such as these, all that the claimant has to do is to prove that he was detained.
The Secretary of State must prove that the detention was justified in law.
She cannot do this by showing that, although the decision to detain was tainted by public law error a decision to detain free from error could and would have been made.
Having reflected on Lumba, Sullivan LJ said this at paras 57 and 58 of his judgment: 57.
Applying the approach in Lord Dyson JSCs judgment in Lumba to the present case, both the deeming decision under section 3(5)(a) and the decision to make a deportation order under section 5(1), although authorised by statute, were made in breach of a rule of public law.
The sole basis for both decisions was the unlawful 2004 Order.
This error was sufficient to render those decisions unlawful, but did it bear upon, and was it relevant to, the decision to detain under paragraph 2(2) of Schedule 3? 58.
I have not found this an easy question to answer.
As a matter of first impression, the answer to the question is obvious: the unlawful decisions under sections 3(5)(a) and 5(1) did bear upon and were relevant to the decision to detain: without the prior decisions there could have been no decision to detain.
But this approach does not pay sufficient regard to the statutory scheme as a whole.
Making a deportation order is a two stage process.
First the Secretary of State must serve notice of the decision to make a deportation order.
The notice explains that there is a right of appeal under section 82(1) against the decision, and sets out of (sic) the grounds of appeal under section 84(1).
Those grounds are not limited to the ground that removal in consequence of the decision would be unlawful under the Refugee Convention or the ECHR, they enable the person served with the notice to challenge the lawfulness of the notice on the basis of any breach of a rule of public law: that the decision is otherwise not in accordance with the law If there is an appeal the Secretary of State may not proceed to the second stage of the process the making of the deportation order until the appeal has been finally determined And at para 62 Sullivan LJ said: It would frustrate the operation of the statutory scheme if the Secretary of State was not able to rely upon the tribunals decision, dismissing an appeal, once time for applying for permission to appeal against the decision had expired, as a lawful basis for making a deportation order.
On 27 November 2014 the High Court (Collins J) dismissed the appellants claim by consent, after both parties agreed that Draga was binding on him and that there was no need for a substantive hearing.
The judge refused permission to appeal to the Court of Appeal.
On 5 January 2015 DN applied to the Court of Appeal for permission to appeal and on 19 January 2016 Vos LJ granted the application.
The appeal was heard on 18 January 2018 by the Court of Appeal (Arden, Longmore and Lewison LJJ).
On 22 February 2018, the Court of Appeal dismissed the appeal, holding that it was not open to it to depart from the decision in Draga: [2019] QB 71.
Although permission to appeal to this court was refused on the conventional basis that it is customarily a matter for the Supreme Court to decide whether permission should be given, Arden LJ observed (in para 42 of her judgment) that the issues in the case were worthy of further consideration.
Longmore and Lewison LJJ agreed.
Permission to appeal was granted by this court on 26 November 2018.
Discussion
The reference in para 57 of Sullivan LJs judgment in Draga to the question whether the unlawful decisions (founded on the ultra vires status of the 2004 Order) bore upon or were relevant to the decision to detain was prompted by a statement in para 68 of Lumba.
There Lord Dyson had said that the breach of public law must bear on and be relevant to the decision to detain.
But his observations there must be read in the light of his more important statements in paras 66 and 88 (cited above at paras 12 and 13).
In the first of these passages Lord Dyson made it clear that there was no difference between a detention which is unlawful because there was no statutory power to detain and a detention which is unlawful because the decision to detain was made in breach of a rule of public law.
Here, as in Lumba, there was no lawful statutory power to detain.
The statutory power to which recourse had been had in deciding to make the deportation order, and in making it, was invalid.
Detention in this instance was for the express purpose of facilitating the deportation.
Without the existence of a deportation order, the occasion for (much less the validity of) detention would simply not arise.
To divorce the detention from the deportation would be, in my view, artificial and unwarranted.
The making of a deportation order is, as Sullivan LJ said, a two stage process, involving (a) notice of a decision to deport and (b) the making of the deportation order.
Detention at both of these stages is entirely dependent on the decision to deport.
Without that decision the question of detention could not arise, much less be legal.
The detention was, therefore, inevitably, tainted (to borrow the expression from para 88 of Lord Dysons judgment) by public law error.
The principle in Lumba applies with full force and effect to the circumstances of this case.
In this connection reference to the recent decision of this court in R (Hemmati) v Secretary of State for the Home Department [2019] UKSC 56; [2019] 3 WLR 1156 is pertinent.
In his judgment in that case Lord Kitchin discussed the Lumba decision extensively see, in particular, paras 49 and 50.
I agree entirely with what Lord Kitchin had to say about the Lumba decision and R (Kambadzi) v Secretary of State for the Home Department [2011] UKSC 23; [2011] 1 WLR 1299.
As Lord Carnwath has pointed out (in paras 37 et seq of his judgment) that principle can be displaced by a specific rule of law.
For the reasons that he gives in para 38 there is no such specific rule in the present case.
The existence of a right of appeal does not constitute such a rule.
The respondent argued that the independent judicial decision made in statutory appeals (per section 82 of the 2002 Act) was a step removing the legal error in question.
It had, the respondent said, the equivalent effect of a break in the chain of causation, so that the decision to detain became independent of the decision to deport.
I do not accept that argument.
The notice of a decision to deport/deportation order is a prerequisite to detention under paragraph 2(2)/2(3).
The rubric chain of causation is inapposite in this context.
Where the deportation order is invalid, the unlawfulness of a paragraph 2(2)/2(3) detention which is founded upon it is inevitable.
This is not an instance of a series of successive steps, each having, potentially, an independent existence, capable of surviving a break in the chain.
To the contrary, the lawfulness of the detention is always referable back to the legality of the decision to deport.
If that is successfully challenged, the edifice on which the detention is founded crumbles.
The need for finality in litigation likewise does not warrant displacement of the Lumba principle.
As Lord Carnwath says (para 38 of his judgment), finality and legal certainty are desirable objectives.
But they cannot extinguish a clear legal right.
In this case DN was detained on foot of an intended, and then actual, deportation order which proved to be unlawful.
His detention was uniquely linked to that deportation order.
The unlawfulness of that detention is inescapable.
The desiderata of finality and certainty cannot impinge on that inevitable result.
I agree with what Lord Carnwath has had to say (in paras 39 and 40) about
the judgment of Pill LJ in Draga which gave somewhat different reasons from those of Sullivan LJ in dismissing the appeal.
For the reasons given by Lord Carnwath, I consider that Draga was wrongly decided.
I also agree with his discussion about the status of Ullah (Ullah v Secretary of State for the Home Department [1995] Imm AR 166).
Indeed, I would go further and express doubt as to whether that case was correctly decided.
In Ullah notice of intention to make a deportation order was served on the claimant, who was then detained under the authority of the Secretary of State for 17 days before being released.
His release was prompted by the Secretary of State having concluded that the decision to deport was not in accordance with the law.
This was because full consideration had not been given to applications made by the claimant before the deportation notice was served.
Both Kennedy LJ and Millett LJ considered that paragraph 2(2) of Schedule 3 to the 1971 Act supplied the answer to Mr Ullahs claim for damages for false imprisonment.
At the material time, it provided: Where notice has been given to a person in accordance with regulations under section 18 of this Act of a decision to make a deportation order against him he may be detained under the authority of the Secretary of State pending the making of the deportation order.
Kennedy LJ said that all that is required by paragraph 2(2) of Schedule 3 in order to make detention legitimate is the giving of a notice of intention to make a deportation order.
Millett LJ similarly said that [w]here the requirements of that paragraph are satisfied, the detention is lawful and no claim for false imprisonment can be maintained.
Ullah was considered by the Court of Appeal in D v Home Office [2006] 1 WLR 1003.
At para 120, Brooke LJ (who delivered the lead judgment) said that the court should not regard itself bound to follow Ullah and in that paragraph articulated a number of compelling reasons why this should be so.
At para 121 he said: we are at liberty, unconstrained by binding authority, to interpret Schedule 2 to the 1971 Act without any preconceived notions.
If we do so, there is nothing there to suggest that Parliament intended to confer immunity from suit on immigration officers who asked themselves the wrong questions, so that their decision to deprive an immigrant of his liberty was a nullity and consequently unlawful.
In that case it had been alleged that immigration officers had made decisions in a manner which fell outside the jurisdiction conferred on them by the 1971 Act.
The Court of Appeal held that, in the event that this was established, their decisions would be ultra vires and unlawful; that there was nothing peculiar about a private individual bringing a private law claim for damages against an executive official who had unlawfully infringed that individuals private rights, and there was nothing in Schedule 2 to the 1971 Act to suggest that Parliament had intended to confer immunity from suit on immigration officers who asked themselves the wrong questions in such circumstances so that their decision to deprive an immigrant of his liberty was a nullity and consequently unlawful; and that, accordingly, immigration officers had no immunity from claims for damages for false imprisonment.
As with immigration officers, so with those who caused the appellant to be detained without lawful authority.
What Lord Dyson said in Lumba about there being no difference between a detention which is unlawful because there was no statutory power to detain and a detention which is unlawful because the decision to detain was made in breach of a rule of public law is pertinent here (see paras 12 and 13 above).
If, and inasmuch as, Ullah suggests that paragraph 2(2) of Schedule 3 provides a stand alone authority for lawful detention, no matter what has gone before, and irrespective of the fact that the decision to deport lacks a legal basis, I consider that the decision was wrong and should now be recognised as such.
The giving of notice of the decision to make a deportation order, the making of the deportation order, and the detention on foot of it are essential steps in the same transaction.
The detention depends for its legality on the lawfulness of the deportation itself.
Absent a lawful basis for the making of a deportation order, it is not possible to breathe legal life into the decision to detain.
Conclusion
I would allow the appeal and confirm that the appellant is entitled to pursue a claim for damages for false imprisonment.
The prospects of success in that claim are not, of course, a matter for this court, particularly because lines of possible defence to the claimants case, not pursued (or, at least, not pursued with any vigour), might be canvassed on the hearing of the claim.
Lord Carnwath has discussed (in paras 44 to 63) the questions of res judicata and issue estoppel.
He has said that, despite the parties reluctance to espouse these as possible ripostes to the appellants claim, he regarded them as potentially providing a straightforward answer to the questions raised by this case.
So it may be.
But this is an area which is distinctly one which is not free from controversy and it seems to me that it is also one where much further diligent thought may be needed.
In any event, as Lord Carnwath says, [s]ince the Secretary of State has not hitherto relied on the principle of res judicata or issue estoppel, it would clearly be unfair to DN for the court to introduce it at this stage as a possible reason for determining the appeal against him (para 65).
For that reason, as well as what I consider to be the considerable debate that may have to be had concerning whether these issues are relevant to a case such as the appellants, I have concluded that it would be unwise to express even a tentative view as to their possible relevance.
LORD CARNWATH:
Introduction
I agree generally with Lord Kerrs judgment allowing the appeal on the arguments as presented to us.
However, since we are disagreeing with a carefully reasoned decision of the Court of Appeal of R (Draga) v Secretary of State for the Home Department, given on 21 June 2012 ([2012] EWCA Civ 842) which has stood for some years, it may be helpful to add my own thoughts.
I also take the opportunity to raise a topic res judicata or issue estoppel which was not discussed in argument, but which to my mind could provide a complete answer in similar cases in the future.
I gratefully adopt Lord Kerrs statement of the background law and facts.
In Draga the court held that there was no right of action for damages.
In the
leading judgment (paras 58 62) Sullivan LJ distinguished Lumba.
Although he thought it obvious, as a matter of first impression, that the unlawful decisions relating to deportation did bear on the decision to detain, in the words of Lord Dyson in that case, it was necessary to take account of the different statutory scheme governing detention pending deportation.
That provided for a two stage process, for an opportunity (under section 84) to challenge the deportation decision on a wide range of grounds including any breach of a rule of public law, and precluding the making of the deportation order until the appeal had been finally determined.
It had been accepted by counsel for Mr Draga that in most cases the mere fact that an appeal had been allowed under section 82(1) would not mean that the deportation decision was unlawful in a way relevant to the decision to detain.
Sullivan LJ continued: 60.
There will, however, be some cases where appeals are allowed by the tribunal on the basis that there was a breach of a rule of public law in the process of making the decision to make the order, where the nature of the breach will have been such as to render the detention unlawful It must, however, be acknowledged that it is difficult to identify any principled basis for distinguishing between those public law errors which will render the decision to detain unlawful and those which will not.
Errors of law are many and various and, as Lord Dyson said in para 66 of Lumba: The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires 61.
The statutory scheme does not provide any mechanism for challenging the lawfulness of the kind of decision that was in issue in Lumba: an (unlawful) decision to detain where there had been a (lawful) decision to make a deportation order/the making of a (lawful) deportation order.
The lawfulness of such a decision can be challenged only by way of judicial review.
In sharp contrast, Parliament has established a comprehensive statutory scheme for determining the lawfulness of a decision by the Secretary of State to make a deportation order.
The Secretary of State may not make the order until an appeal against the decision to make it has been finally determined There was, he thought, a very strong case for treating the tribunals decision under section 82(1) (subject to appeal to the Court of Appeal) as determinative of the issues as between the parties, in order to ensure finality in litigation and legal certainty, and so as not to frustrate the operation of the statutory scheme (paras 61 and 62).
Pill LJ agreed that the detention was lawful because it was pursuant to the apparently lawful 2004 Order made by the Secretary of State following the procedure specified in section 72 of the 2002 Act, including placing the Order before Parliament I do not consider that the analysis is invalidated because the same actor, the Secretary of State, made both the 2004 Order and the deportation order.
In making both orders, the Secretary of State was acting under statutory powers but the power to make the 2004 Order was distinct from the power that then arose to make a deportation order in reliance on it. (paras 81 and 82) He distinguished R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, in which the prison governor had sought to justify detention by reference to views expressed by the Divisional Court subsequently held to be erroneous: That is distinguishable from a deportation order based on the apparently lawful 2004 Order, lawfully made and also, in this case, upheld by the decision of the tribunal promulgated on 15 February 2007.
Lord Hope, at p 35A to C in Evans, distinguished the case from one where the governor was acting within the four corners of an order which had been made by the court. (para 83)
Permission to appeal from the Court of Appeal in Draga was refused by this court.
The arguments in the present appeal
Mr Knafler QC for DN submits that this case falls clearly within the principle established in Lumba.
Whichever of the tests enunciated in the various judgments applies, the illegality of the deportation order bore directly on the decision to detain and rendered it ultra vires so as to preclude the Secretary of State from relying on it as justification for the detention.
He submits that Draga was wrongly decided.
For this purpose he submits that a distinction must be drawn between different categories of error which found an appeal against a deportation order.
Where the dispute is not simply about the merits of the decision, but, as here, goes to its legal validity, the decision of the tribunal cannot be relied on in subsequent proceedings.
By way of illustration, he contrasts a case where the tribunal disagrees with the Secretary of State on the application of article 8 of the European Convention on Human Rights (ECHR) in a particular case, with one where the Secretary of State has simply ignored the Convention altogether.
The latter error, unlike the former, would render the earlier decision ultra vires, and so of no effect in subsequent proceedings.
On the other side Mr Tam QC for the Secretary of State submits that Draga was correctly decided.
He accepts that, on a strict application of the ultra vires doctrine, any public law error underlying the decision to detain could be said to render it a nullity and in theory could give rise to a claim for damages.
However, he argues against a strict doctrinal approach, relying (inter alia) on the caution expressed by Lord Walker of Gestingthorpe in Lumba about translating judicial review principles too readily to other forms of private law action, such as false imprisonment (Lumba, para 193; see also R (Privacy International) v Investigatory Powers Tribunal [2019] UKSC 22; [2019] 2 WLR 1219, paras 57 58).
He submits that, taking any of the tests proposed in Lumba, the legal error must be one relating to the decision to detain itself.
A decision made two or more steps back, in this case in the secondary legislation relating to the decision to deport, is too remote to satisfy the Lumba test.
He suggests that this approach is consistent with the empirical approach taken by the courts to issues of invalidity, fashioning in each legal context a solution that is practical and pragmatic.
Mr Tam further submits that the power to detain is dependent simply on the giving of the relevant notice as a matter of fact, regardless of any issue as to its legality (following Ullah v Secretary of State for the Home Department [1995] Imm AR 166).
More generally he follows Sullivan LJs reliance on the specific statutory appeal process available in respect of the decision to deport, and on the importance of finality and legal certainty in this area of the law.
Discussion
I start from the position that the decision to detain in this case was directly dependent on the deportation decision.
Without it there would have been no detention, nor any legal basis for detention.
Even if the illegality was two steps back as Mr Tam submits, that step was the foundation of what followed.
I agree therefore with Mr Knafler that DNs claim for damages comes clearly within the Lumba principle, unless excluded by some specific rule of law, statutory or otherwise.
No such rule, in my view, emerges from the reasons of the Court of Appeal in Draga nor from the submissions for the Secretary of State before us.
Sullivan LJ referred to the existence of a statutory right of appeal against deportation; the risk of frustrating that statutory scheme; the difficulty of distinguishing between different grounds of appeal; and, the need to ensure finality in litigation and legal certainty.
I do not, with respect, see how the mere existence of a right of appeal can be read as taking away what would otherwise be a clear common law right, absent a specific statutory exclusion; nor why the existence of such a right can be said to frustrate or impede the working of the appeal process.
Similarly, the wide scope of the statutory grounds of appeal under section 84, extending to issues of law as well as of policy or fact, does not, expressly or implicitly, detract from the clear conceptual distinction between the two in the context of a common law claim for false imprisonment.
Similarly, finality in litigation and legal certainty are of course desirable objectives, but that in itself cannot convert them into legal rules in the context of a common law claim, except to the extent that they are reflected in recognised defences such as res judicata and issue estoppel (to which I will return below).
In his concurring judgment in Draga Pill LJ made two additional points, not in terms adopted by Sullivan LJ nor by Mr Tam before us.
With respect I find neither persuasive.
First, his suggested grounds for distinguishing the Brockhill case are not supported by the full passage in the judgment of Lord Hope of Craighead to which he referred.
Lord Hope said of the prison governor: His position would have been different if he had been able to show that he was acting throughout within the four corners of an order which had been made by the court for the applicants detention.
The justification for the continued detention would then have been that he was doing what the court had ordered him to do. (R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, 35) Here there was no comparable order made by the court for the applicants detention, nor could the Secretary of State claim in that respect to be doing what any court or tribunal had ordered him to do.
The decision of the tribunal, confirmed by the High Court, related only to deportation.
Secondly, I note Pill LJs observation that Sullivan LJs analysis was not invalidated because the same actor (the Secretary of State) made both orders.
This I take to be a reference to the so called Theory of the second actor, developed by Professor Forsyth among others to explain how an unlawful and void administrative act may none the less have legal effect: It is built on the perception that while unlawful administrative acts (the first acts) do not exist in law, they clearly exist in fact.
Those unaware of their invalidity (the second actors) may take decisions and act on the assumption that these (first) acts are valid (Wade and Forsyth Administrative Law 11th ed, pp 251 252; see also footnote 145 for a list of judicial citations.) The best known example (though not at the time explained in those terms) is Percy v Hall [1997] QB 924, in which the Court of Appeal rejected a claim against police officers for wrongful arrest, where the byelaws on which they had relied were later found to have been invalid.
Counsel for Mr Draga had sought to distinguish that case on the grounds that here there was only one decision maker throughout the process the Secretary of State (para 53).
Whatever the precise scope of the second actor theory, that distinction seems to me in principle correct.
Where the government, through the Secretary of State, was directly responsible for the order later found to be unlawful, it would be odd if it could rely on it to support the validity of later actions based on it.
I note also that neither Lord Justice placed reliance on the decision of the Court of Appeal in Ullah.
In my view they were right not to do so.
Mr Tam mentions that case somewhat tentatively in support of his argument that it is enough that a notice of the decision to deport has been served in fact, regardless of its basis in law.
In setting out the arguments before him (paras 44 45, 52) Sullivan LJ had referred in some detail to the reasoning of the Court of Appeal in Ullah as then relied on by counsel for the Secretary of State, but he noted also the reasons given by Brooke LJ in D v Home Office [2005] EWCA Civ 38; [2006] 1 WLR 1003, paras 120 121, for regarding the decision as no longer binding on the court in the light of subsequent case law, including the Brockhill case.
I take, from the lack of any mention of Ullah in the discussion section of his judgment, that Sullivan LJ shared Brooke LJs view.
If so, I would respectfully agree.
More generally, Mr Tam relies on the case law as supporting what he calls an empirical approach, leading the court to fashion solutions that are practical and pragmatic, and he asks us to do the same.
Whether or not that is a fair interpretation of the cases to which he refers, it is not in my view an acceptable approach in considering the available defences to a common law tort as well established and fundamental as that of false imprisonment.
Indeed it contradicts the strict approach taken in that context by the House of Lords in the Brockhill case, where practicality and pragmatism might well have been thought to lend strong support to the prison governors position.
Accordingly, on the arguments as presented to the court, I would hold that Draga was wrongly decided, and allow the present appeal.
Finality, res judicata and issue estoppel
During the course of argument I invited both parties to consider whether the Secretary of States position could have been supported by reference to the principle of res judicata or issue estoppel.
Mr Tam did not take up the implicit invitation to adopt that as part of his case, but both parties produced helpful notes on the subject.
The general theme of their submissions was that res judicata as such was of limited or at most doubtful application in the context of judicial review or public law.
Since this aspect may arise in other similar cases which may come before the courts, I feel it desirable to explain why I find those doubts to be unjustified, and why, subject to further argument, I regard res judicata or issue estoppel as potentially providing a straightforward answer to the questions raised by this case.
The authorities
By way of introduction, I refer to the speech of Lord Bridge of Harwich, agreed by the other members of the House in Thrasyvoulou v Secretary of State for the Environment [1990] 2 AC 273.
This was a planning case.
In 1982 the owner had appealed under section 88 of the Town and Country Planning Act 1971 against enforcement notices issued by the local planning authority alleging a material change of use of certain properties to use as a hotel or to use as a hostel.
On appeal the inspector quashed the notices, finding that the use was correctly characterised as hotel use, not as hostel use, and that the hotel use had been carried on since 1960.
In 1985 the council issued further enforcement notices alleging a material change of use of the properties to use as hostels.
It was common ground that there had been no change of use since 1982.
The Court of Appeal held that in these circumstances an issue estoppel arose which prevented the council on the appeals against the 1985 notices from contending that the use of either property was as a hostel, so contradicting the finding made by the 1982 inspector.
The authoritys appeal to the House of Lords was dismissed.
The sole reasoned speech was given by Lord Bridge, agreed by his colleagues.
He made clear that for these purposes there was no distinction between public and private law: It is well established that a statutory body cannot by contract fetter its own freedom to perform its statutory duties or exercise its statutory powers and by parity of reasoning it has been held that no such fetter can arise from an estoppel by representation But the rationale which underlies the doctrine of res judicata is so different from that which underlies the doctrine of estoppel by representation that I do not think these authorities have any relevance for present purposes.
The doctrine of res judicata rests on the twin principles which cannot be better expressed than in terms of the two Latin maxims interest reipublicae ut sit finis litium and nemo debet bis vexari pro una et eadem causa.
These principles are of such fundamental importance that they cannot be confined in their application to litigation in the private law field.
They certainly have their place in criminal law.
In principle they must apply equally to adjudications in the field of public law.
In relation to adjudications subject to a comprehensive self contained statutory code, the presumption, in my opinion, must be that where the statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right, the principle of res judicata applies to give finality to that determination unless an intention to exclude that principle can properly be inferred as a matter of construction of the relevant statutory provisions. (p 289) He distinguished between issues of law or fact, such as, in that case, whether there had been a material change of use, and issues of planning judgement which would arise under other grounds of appeal, in respect of which members of the public would have the right to attend any public inquiry and to be heard as objectors against the grant of planning permission.
It is clear from the passage quoted above that the case did not rest on any peculiarity of planning law, but was based on a principle of fundamental importance in both private and public law, unless excluded by the particular statutory scheme.
Nor is there anything to suggest that the principle is one sided, in public law any more than in private law.
It may be invoked by either party, public or private.
Indeed the two Latin maxims quoted by Lord Bridge make clear that it is a principle of general public concern, quite apart from the particular interests of the parties, public or private.
It is true that the passage refers to an issue which establishes the existence of a legal right, but that phrase is applicable, not only to the legal right of a private owner in respect of his property, but equally to the legal right of the authority to bring enforcement proceedings in the public interest.
Later in the speech he explained the difference in this context between two categories estoppel per rem judicatam and issue estoppel by reference to the classic description of Diplock LJ in Thoday v Thoday [1964] P 181.
Of the latter Diplock LJ said: The second species, which I will call issue estoppel, is an extension of the same rule of public policy.
There are many causes of action which can only be established by proving that two or more different 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. (p 198)
A useful illustration of the strength of the principle in a quasi public context, again at the highest level, is Watt v Ahsan [2007] UKHL 51; [2008] AC 696.
A Labour Party councillor, of Pakistani origin, had brought a claim against the Labour Party in the employment tribunal for unlawful discrimination on racial grounds (contrary to section 12 of the Race Relations Act 1976) in failing to select him as an election candidate.
A preliminary issue as to whether the Labour Party was a qualifying body for the purposes of section 12 was determined by the tribunal in his favour, and an appeal to the Employment Appeal Tribunal was dismissed.
Before the final determination of the claim on the merits, it was held by the Court of Appeal in unrelated proceedings that a political party was not acting as a qualifying body when selecting candidates for public office.
However, the tribunal regarded itself as bound by its original decision, and upheld the claim.
Its decision was upheld by the House of Lords (disagreeing with the majority of the Court of Appeal).
In his dissenting judgment in the Court of Appeal ([2005] EWCA Civ 990; [2005] ICR 1817), Sedley LJ explained that public and private law march together on jurisdictional issues: In neither field may a jurisdictional challenge to the decision of an inferior court or tribunal act as proxy for an appeal.
This is fundamental to the functioning of the legal system. (para 29) He added: 33.
These interlocking principles of precedent, appeal and finality cannot coexist with a separate doctrine, founded on a catholic meaning of jurisdiction, which undercuts them.
In agreement with the Employment Appeal Tribunal, I consider that the effect of [counsels] argument is to erect such a doctrine.
It is, in effect, an argument that an error of law on the part of a tribunal, although standing uncorrected by any superior court, invalidates all its subsequent proceedings not simply by exposing them to a successful appeal but by allowing them and their outcome to be disregarded or collaterally challenged.
Such a proposition is serious enough when applied to an excess of a tribunals constitutive jurisdiction, but there it is generally irresistible because the courts cannot ordinarily equip a nullity with the force of law.
To apply it to an excess of a tribunals adjudicative jurisdiction, by contrast, would be to supplant the entire edifice of finality and appeal by (to use a deliberate oxymoron) a retroactive system of precedent.
Agreeing with that approach, in the leading speech in the House of Lords, Lord Hoffmann said: 30.
Although it is well established that the parties cannot by agreement or conduct confer upon a tribunal a jurisdiction which it does not otherwise have, the question in this case is whether an actual decision by a tribunal that it has jurisdiction can estop the parties per rem judicatam from asserting the contrary.
Neither Buxton LJ nor Rimer J cited any authority which decides that it cannot.
The law on this point is not at all trite.
Although estoppel in pais and estoppel per rem judicatam share the word estoppel, they share very little else.
The former is based upon a policy of giving a limited effect to non contractual representations and promises while the latter is based upon the altogether different policy of avoiding relitigation of the same issues.
It is easy to see why parties should not be able to agree to confer upon a tribunal a jurisdiction which Parliament has not given it.
And if they cannot do this by contract, it would be illogical if they could do it by non contractual representations or promises.
But when the tribunal has decided that it does have jurisdiction, the question of whether this decision is binding at a later stage of the same litigation, or in subsequent litigation, involves, as Sedley LJ explained in his dissenting judgment, quite different issues about fairness and economy in the administration of justice.
Issue estoppel arises when a court of competent 31. jurisdiction has determined some question of fact or law, either in the course of the same litigation (for example, as a preliminary point) or in other litigation which raises the same point between the same parties: see Thoday v Thoday [1964] P 181, 198.
The question is therefore whether the appeal tribunal was a court of competent jurisdiction to determine whether the Labour Party was a qualifying body within the meaning of section 12.
Having answered that question in the affirmative, he noted the possibility of departing from the rule in special circumstances, but held that such circumstances did not exist on the facts of that case: 34.
It is true that the severity of this rule is tempered by a discretion to allow the issue to be reopened in subsequent proceedings when there are special circumstances in which it would cause injustice not to do so: see Arnold v National Westminster Bank plc [1991] 2 AC 93.
As Lord Keith of Kinkel said, at p 109, the purpose of the estoppel is to work justice between the parties In the instant case he thought it would be unjust not to apply the rule, against the background that the claimant had been involved in a lengthy and expensive hearing, during which the merits had been fully examined, and that it would be quite unfair for him to have to start again in the County Court.
Although that passage might suggest that the court has a broad discretion to disapply the principle in the interests of justice, reference to the Arnold case itself shows the limits of that approach.
That case related to the construction of a lease providing for rent reviews at five yearly intervals, such reviews to be carried out by reference to a hypothetical lease for the residue of the term.
In the context of the first rent review, an issue arose as to whether the hypothetical lease was to be construed as itself containing a rent review clause.
Walton J held, on an appeal from an arbitrator, that it was not to be so construed, and refused a certificate (under the Arbitration Act 1979) allowing an appeal against his decision.
In subsequent cases between other parties, it was held by the Court of Appeal that his decision on this point was wrong.
Before the date of the second five year review the tenants sought a declaration as to the basis of review, relying on the later decisions.
The landlord applied to strike out the claim as barred by issue estoppel.
It was held by the House of Lords, agreeing with the lower courts, that the action was not barred.
In the leading speech in Arnold, Lord Keith affirmed the general principles governing res judicata and issue estoppel.
He emphasised that there was no logical difference between a point which was previously raised and decided and one which might have been but was not (p 108); nor should there be a different result according to whether he decided not to take the point, thinking it hopeless, or argue it faintly without any real hope of success (p 109).
However, he recognised the existence of an exception for special circumstances as he defined them: In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings.
One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result (p 109)
He went on to consider the extent to which the special circumstance could involve a decision on a point of law, posing the question thus: If a judge has made a mistake, perhaps a very egregious mistake, as is said of Walton Js judgment here, and a later judgment of a higher court overrules his decision in another case, do considerations of justice require that the party who suffered from the mistake should be shut out, when the same issue arises in later proceedings with a different subject matter, from reopening that issue? (p 109) He concluded that justice required an exception to the rule, against the background of Walton Js erroneous decision and refusal of a certificate allowing an appeal: I consider that anyone not possessed of a strictly legalistic turn of mind would think it most unjust that a tenant should be faced with a succession of rent reviews over a period of over 20 years all proceeding upon a construction of his lease which is highly unfavourable to him and is generally regarded as erroneous (p 110)
It is important to note that there was no suggestion that the decision on the
first rent review could be reopened.
The potential unfairness arose when the same issue arose in later proceedings with a different subject matter.
In the context of a lease with 20 years to run it was unfair that all future reviews should be governed by the erroneous decision on the first review.
Finally, for completeness I should refer to the most recent discussion of the topic in this court: Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160.
For present purposes, it is sufficient to cite Lord Sumptions summary of the effect of Arnold: 22.
Arnold is accordingly authority for the following propositions. (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully.
If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised.
Issue estoppel in the present case
Applying the thinking of those authorities to the present case, and subject to any argument in a future case, the answer seems to me relatively clear.
DNs private law claim for damages depended on the fact of detention and the absence of lawful justification.
The former is not in doubt.
But its lawfulness depended on the lawfulness of the deportation decision at the time it was made.
That issue was conclusively determined by the decision of the tribunal in August 2007 and the decision of the High Court rejecting the application for review.
There is no unfairness in treating that decision as precluding a claim for damages based on the alleged illegality of the original deportation decision, given that DN had had the opportunity to challenge it by reference to the invalidity of the 2004 Order, and failed to take it.
In that respect Arnold is arguably a stronger case for an exception, since the tenant had taken the relevant point, but was precluded by the statute from challenging Walton Js decision.
On the other hand, as in that case, it would be unfair to treat the decision as binding as respects the future conduct of the Secretary of State, once it had been shown to be erroneous by the higher courts.
It could not be relied on to justify DNs continuing detention following the decision in EN (Serbia).
It matters not whether that is treated as an application of the Arnold special circumstances exception, or of the Secretary of States duty in public law to keep the proposed deportation and detention under continuing review in the light of changing circumstances.
As it happens DN had by then been released in any event.
The parties submissions on res judicata
Mr Knafler relied on cases which say, as he puts it, that res judicata and issue estoppel, as those terms are understood in private law, either have no application in judicial review or do not apply in the ordinary way.
They include at Court of Appeal level: R v Secretary of State for the Environment, Ex p Hackney London Borough Council [1984] 1 WLR 592, R (Munjaz) v Mersey Care NHS Trust [2003] EWCA Civ 1036; [2004] QB 395, Ocampo v Secretary of State for the Home Department [2006] EWCA Civ 1276.
He submits that Thrasyvoulou should be seen as a particular decision in a particular context with a specific and self contained statutory code.
Alternatively he argues that Lord Bridge had focused on the statutory construction of the particular statutory code there in issue.
His words could not be applied to the special protection afforded to personal liberty, which could be diluted by only the plainest statutory language, citing Khawaja v Secretary of State for Home Department [1984] AC 74, 122F per Lord Bridge.
He also referred to a case in which Thrasyvoulou was cited, but an exception made.
This was another planning case, this time at High Court level: R (East Hertfordshire District Council) v First Secretary of State [2007] EWHC 834 (Admin).
On appeal against an enforcement notice alleging erection of a building without complying with the approved plans, the inspector had felt bound to allow the appeal and quash the notice because of the inadequacy of the plans with which he had been supplied, but he purported to do so without prejudice to the service of a further enforcement notice by the council if they thought it expedient to do so.
In response to a further enforcement notice, the owner pleaded issue estoppel.
Sullivan J accepted that Lord Bridges statement of principle in Thrasyvoulou remained authoritative, and unaffected by Lord Hoffmanns comments on the limited role of estoppel in modern public law in R (Reprotech) v East Sussex County Council [2002] UKHL 8; [2003] 1 WLR 348.
However he considered that the circumstances of the instant case were so unusual as to amount to special circumstances justifying a departure from the estoppel rule.
Mr Tam also referred to the cases in which doubts have been expressed as to the relevance of these principles in judicial review, the reasons for which appeared to stem from a number of factors, mentioned by different courts at different times: i) A lack of formal pleadings in judicial review proceedings; ii) There being no lis between the named parties in the judicial review proceedings that is being determined; iii) The lack of finality in the determination of the judicial review proceedings, as in many cases the relief leaves the redetermination of the underlying dispute to the original decision maker; iv) The discretionary nature of judicial review relief; v) The fact that, in judicial review, there is always a third party who is not present: the wider public or public interest, which should not be prejudiced if the court on the first occasion does not have all of the relevant material and argument before it when deciding the first judicial review application; vi) The interaction between the acceptance and rejection of separate grounds in judicial review proceedings and the result of the application, with the consequent limitation on the ability of a successful party in judicial review to appeal in relation to grounds on which it was unsuccessful.
Mr Tam observed that most of these considerations apply with limited force to an immigration appeal, which does generally decide the issues between two parties and in which an identifiable lis can be formulated.
He suggested that the most relevant judicial finding in this context would be the finding that DN had been convicted of a particularly serious crime, and discusses what he sees as the potential analytical difficulties in seeking to prevent DN from reopening this issue in subsequent proceedings.
It is not necessary, or indeed appropriate, in the context of the present appeal to reach a concluded view on these points.
I would however make the following observations: i) None of the judgments referred to by Mr Knafler went further than to express doubts on the question.
More importantly in none of them was reference made to Thrasyvoulou, or in particular to Lord Bridges emphasis on the fundamental importance of the principle in both public and private law.
I note, for example, Hale LJs statement in Munjaz (para 79) that issue estoppel is a doctrine appropriate to proceedings in private law and contrasting judicial review where there is always a third party who is not present: the wider public or public interest .
It is very unlikely that she would have spoken in these terms if Lord Bridges words had been drawn to her attention. ii) Wade and Forsyth Administrative Law 11th ed (2014), p 201, in a section headed Res Judicata, states that res judicata plays a restricted role in administrative law, since it must yield to two fundamental principles of public law: that jurisdiction cannot be exceeded; and that statutory powers and duties cannot be fettered.
However, it is accepted that within those limits the principle can extend to a wide variety of statutory tribunals, of which examples are given, including Thrasyvoulou.
In the present context those principles do not pose an impediment; the tribunal had full jurisdiction to determine the legality of the detention, and there is no fetter on the Secretary of States exercise of powers in the future. iii) In any event, it is misleading to consider cases on judicial review generally.
Although the present proceedings were brought by judicial review, the issues are the same as would have arisen in an ordinary common law action for damages for false imprisonment. iv) Mr Knaflers suggestion as to the narrow scope of Thrasyvoulou is impossible to reconcile with the clarity and generality of Lord Bridges statement of the principle, with the support of the whole House.
There is no reason why it should not apply in the present context where the statutory immigration appeal process is equally specialised and self contained. v) Lord Bridges words in Khawaja about the special protection for personal liberty were directed to imprisonment without trial.
The issue here is not about DNs personal liberty, but about the ordinary disciplines applicable to a common law claim for damages. vi) As regards the East Hertfordshire case, while I agree with Sullivan J that nothing said in Reprotech detracts from the authority of Lord Bridges statement of principle, the decision turned on its very special facts and gives no further assistance in the present context. vii) I agree with Mr Tam that the considerations which have led to doubts about the application of the principle in judicial review generally do not apply with the same force in the present context.
However he seems to miss the point as to its potential application in this case.
The relevant issue is not the seriousness of the crime, but the lawfulness of the decision to deport DN, and hence his detention, at the relevant time.
That is the issue on which there was a definitive and final ruling in 2007, and which arises directly in his claim for false imprisonment.
Conclusion
Since the Secretary of State has not hitherto relied on the principle of res judicata or issue estoppel, it would clearly be unfair to DN for the court to introduce it at this stage as a possible reason for determining the appeal against him, whatever the position may be in future cases.
On the arguments as presented to us, for the reasons set out earlier in this judgment, I would allow the appeal.
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The appellant, DN, is a Rwandan national who was granted refugee status in the UK pursuant to the 1951 Refugee Convention on 26 October 2000.
He was subsequently convicted in the UK of a number of offences, the most serious of which occurred on 22 January 2007 when he pleaded guilty to assisting the unlawful entry of a non EEA (European Economic Area) national in the UK contrary to section 25 of the Immigration Act 1971 (the 1971 Act).
He was sentenced to 12 months imprisonment for the Immigration Act offence and two months consecutively for each of three pecuniary advantage offences making a total sentence of 18 months imprisonment.
The Secretary of State for the Home Department has powers, under the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) to order the deportation of persons convicted of serious offences.
Section 72(4)(a) of the 2002 Act provides that a person shall be presumed to have been convicted of a particularly serious crime and to constitute a danger to the community of the United Kingdom if s/he is convicted of an offence specified by order of the Secretary of State.
The Secretary of State specified several offences which were said to be particularly serious crimes by way of the Nationality, Immigration and Asylum Act 2002 (Specification of Particularly Serious Crimes) Order 2004 (the 2004 Order).
Assisting unlawful immigration contrary to section 25 of the 1971 Act was included among them.
At the conclusion of DNs imprisonment on 2 July 2007, the Secretary of State made a decision to deport DN, based on section 72(4)(a) of the 2002 Act: DN was presumed, on the basis of the 2004 Order, to have been convicted of a particularly serious crime and to constitute a danger to the community.
On 31 January 2008, the Secretary of State, using his powers of administrative detention conferred by Schedule 3, paragraph 2(3) of the 1971 Act, ordered DNs detention pending deportation.
DN brought a claim for judicial review of the deportation order.
Following a stay and the decision in EN (Serbia) v Secretary of State for the Home Department [2009] EWCA Civ 630, [2010] QB 633, which determined that the 2004 Order was unlawful, DN amended his judicial review proceedings to concentrate on the lawfulness of the detention.
Following a further stay and the decision in R (Draga) v Secretary of State for the Home Department [2012] EWCA Civ 842, where the Court of Appeal ruled detention lawful even where based on an unlawful deportation order, the Court of Appeal dismissed DNs substantive appeal.
The Supreme Court unanimously allows the appeal.
It holds that the appellant was unlawfully detained and is entitled to pursue a claim for damages for false imprisonment.
Lord Kerr, with whom Lord Wilson, Lady Black and Lord Kitchin agree, gives the lead judgment.
Lord Carnwath gives a concurring judgment.
Lord Kerr, with whom Lord Wilson, Lady Black and Lord Kitchin agree First, the Court notes that Lord Dyson in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12 made it clear that there is no difference between a detention that is unlawful because there was no statutory power to detain and a detention that is unlawful because the decision to detain was made in breach of a rule of public law.
Here, as in Lumba, there was no statutory power to detain.
The 2004 Order upon which the decision to deport was based was ruled unlawful in EN (Serbia).
As detention was for the express purpose of facilitating deportation, without a lawful deportation order the occasion for detention simply does not arise [17].
Second, detention is entirely dependent on the decision to deport.
DNs detention was uniquely linked to the deportation order.
Without a lawful decision to deport, the question of detention cannot arise, much less be legal [18, 20].
The lawfulness of detention is always referable back to the legality of the decision to deport, and this is not an instance of a series of successive steps, each having an independent existence.
For this reason, the Court does not accept the argument that the independent judicial decision made in statutory appeals (per section 82 of the 2002 Act) is a step removing the legal error in question.
The rubric, chain of causation is inapposite in this context [19].
The Court considers that Draga was wrongly decided, for the reasons given by Lord Carnwath.
Further, the Court considers that, if and insomuch as Ullah suggests that paragraph 2(2) of Schedule 3 of the 1971 Act provides stand alone authority for lawful detention, no matter what has gone before and irrespective of the fact that the decision to deport lacks legal basis, that decision too was wrong.
Lord Carnwath Lord Carnwath agrees with Lord Kerrs judgment, but adds his thoughts, particularly on the issue of res judicata / issue estoppel, which was not discussed in argument but which to his mind could provide a complete answer in similar cases in the future [1].
Lord Carnwath agrees that the decision to detain in this case was directly dependent on the deportation decision and that, as such, DNs claim for damages comes clearly within the Lumba principle, unless excluded by some specific rule of law.
No such rule emerges from the reasons of the Court of Appeal in Draga or from submissions for the Secretary of State [9 10].
Lord Carnwath considers Draga was wrongly decided for two reasons.
First, Pill LJs suggested grounds for distinguishing R v Governor of Brockhill Prison, Ex p Evans (No 2) [2002] 2 AC 19 are unpersuasive: it could not be said that the Secretary of State was acting within the four corners of a court order relating to the applicants detention.
Rather, the decision of the tribunal related only to deportation [11 12].
Second, Pill LJs reliance on the second actor theory was misplaced: where the Secretary of State is directly responsible for making the order later found to be unlawful, it would be odd if it could rely on it to support the validity of later actions based on it [12].
Finally, Lord Carnwath considers that issue estoppel, if argued, could have provided the answer to this appeal.
DNs private law claim for damages depended on the lawfulness of the deportation decision at the time it was made.
That issue was conclusively determined by the decision of the tribunal in August 2007 and the decision of the High Court rejecting the application for review.
DN had the opportunity to challenge the legality of the original deportation decision by reference to the invalidity of the 2004 Order, but did not do so.
Hence, he would be estopped from challenging it at a later date [30].
However, since the Secretary of State did not rely on res judicata, it would be unfair to DN for the court to introduce it at this stage [37].
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In early 2006 the appellant, The United States of America, decided for strategic reasons to close the watercraft repair centre, known as RSA Hythe, which the United States Army maintained in Hampshire.
The respondent, Mrs Nolan, was employed there as a civilian budget assistant, and the closure on 30 September 2006 involved her dismissal for redundancy on the previous day.
She brought Employment Tribunal proceedings on 9 November 2006.
The proceedings were brought under Part IV Chapter II, containing sections 188 to 198 of the Trade Union and Labour Relations (Consolidation) Act 1992 as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587).
I will call the Act as amended TULCRA and the Regulations by which it was amended the 1995 Regulations.
Mrs Nolans complaint was that the appellant as her employer had, when proposing to dismiss her and other employees, failed to consult with any employee representative as required by the procedure for handling collective redundancies prescribed by Part IV Chapter II of TULCRA.
There was no trade union at the base to represent Mrs Nolans and other employees interests.
Accordingly, she made her complaint on the basis that she was an employee representative within section 188(1B).
The appellant accepts that it made clear in June 2006 that there would be neither discussions nor consultation about the forthcoming closure.
It denies that it was under the alleged duty.
State immunity
The appellant did not rely on state immunity when the proceedings were begun.
It is common ground that it could successfully have done so.
Whether this would have been under the State Immunity Act 1978 or at common law is presently immaterial.
The 1978 Act is under section 16(2) inapplicable to proceedings relating to anything done by or in relation to the armed forces of a state while present in the United Kingdom.
Assuming that section 16(2) applies, there would have been immunity under common law principles, summarised by Lord Millett in Holland v Lampen Wolfe [2000] 1 WLR 1573, 1583D F. Littrell v United States of America (No 2) [1995] 1 WLR 82 is an example of a successful common law plea of state immunity; see also Sengupta v Republic of India [1983] ICR 221.
As to why there was no plea of state immunity, it was not apparent at the outset that the duty to consult under section 188 would apply to the closure of a base, rather than the consequences for employees after its closure.
The potential for this extended understanding of the duty was only highlighted by the Employment Appeal Tribunal decision on 28 September 2007 in UK Coal Mining Ltd v National Union of Mineworkers (Northumberland Area) [2008] ICR 163.
By then, the Employment Tribunal held, it was too late for the plea of state immunity which the appellant sought at that stage to raise.
The validity of the extended understanding of the duty remains open to debate notwithstanding a later Court of Justice decision in Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy (Case C 44/08) [2009] ECR I 8163, [2010] ICR 444, [2009] IRLR 944 (Fujitsu).
TULCRA and EU law
Section 188 of TULCRA is in general terms.
Subsection 1 provides: (1) Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be [affected] by the proposed dismissals or may be affected by measures taken in connection with those dismissals.
Subsections (2) and (3) state the aims and nature of the required consultation.
Subsection (7) provides: (7) If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsections (1A), (2) or (4) the employer shall take all such steps towards compliance with that requirement as are reasonably practicable those circumstances.
Various types of public employment are or may be taken outside the Part IV Chapter II, or outside the Act as a whole.
Service as a member of the armed forces and employment which a minister certifies as required to be excepted from the Act for the purpose of safeguarding national security are taken entirely outside the Act by sections 274 and 275.
Under section 273(1) to (4) the provisions of Part IV Chapter II of TULCRA have, for present purposes, no effect in relation to Crown employment and persons in Crown employment.
Crown employment here 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 an enactment, and employee and contract of employment mean a person in Crown employment and the terms of employment of such a person subject to a presently immaterial exception.
Employment as a relevant member of House of Lords or House of Commons staff is outside Part IV Chapter II under sections 277 and 278.
Under section 280, the term employee or worker does not include a person in police service, defined as meaning service as a member of any constabulary maintained by virtue of an enactment, or in any other capacity by virtue of which a person has the powers or privileges of a constable.
Finally, under section 286(2) the Secretary of State may by order made by statutory instrument provide that the provisions of inter alia Part IV Chapter II shall not apply to persons or employment of such classes as the order may prescribe, or shall only apply to them with such exceptions and modifications as the order may prescribe.
Part IV Chapter II of TULCRA gives effect to the United Kingdoms duty under European Union law to implement Council Directive 98/59/EC and its predecessor Council Directive 77/187/EEC.
As originally enacted, it did not do so fully, with the result that the Commission brought proceedings against the United Kingdom which led to a Court of Justice judgment dated 8 June 1994 in Case C 383/92 [1994] ECR I 2479, [1994] ICR 664.
One flaw identified by the judgment was that TULCRA (and its predecessor the Employment Protection Act 1975) did not require consultation in circumstances where employees did not enjoy union representation recognised by the employer.
The Court of Justice held that Council Directive 77/187/EEC required member states to ensure that employee representatives would be designated for consultation purposes in such circumstances.
The 1995 Regulations make provision accordingly by amending section 188.
The Directive contains the following articles: Definitions and scope Article 1 1.
For the purposes of this Directive: collective redundancies means dismissals effected by (a) an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the member states, the number of redundancies is: (i) either, over a period of 30 days: at least ten in establishments normally employing more than 20 and less than 100 workers, at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers, at least 30 in establishments normally employing 300 workers or more, (ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question; workers representatives means (b) the workers representatives provided for by the laws or practices of the member states.
For the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employers initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies. 2.
This Directive shall not apply to: (a) collective redundancies effected under contracts of employment concluded for limited periods of time or for specific tasks except where such redundancies take place prior to the date of expiry or the completion of such contracts; (b) workers employed by public administrative bodies or by establishments governed by public law (or, in member states where this concept is unknown, by equivalent bodies); (c) the crews of seagoing vessels.
Final provisions Article 5 This Directive shall not affect the right of member states to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers.
While TULCRA in its original form (and its 1975 predecessor) failed until the 1995 Regulations properly to implement European Union law in certain respects identified in the Court of Justices judgment in Case C 383/92 (para 6 above), in other respects they went beyond the requirements of such law.
In particular: they provided until the 1995 Regulations that the consultation a) obligations arose if even a single redundancy was proposed; b) they provided for consultation at the earliest opportunity until 1995 (when this was replaced by the Directive requirement in good time) and further provided (as TULCRA continues to do) for specific time limits within which consultation must occur (there being no such time limits in the Directives); and c) they applied (and TULCRA continued until 2013 to apply) to fixed term contracts (to which the Directive under article 1(2)(a) does not apply).
Most importantly for the present appeal, TULCRA in its original and amended form and its 1975 predecessor: d) contained and contain no express homologue of article 1(2)(b).
They all exclude Crown employees and those in the police service.
But they do not exclude public administrative bodies or public law establishments generally.
The present proceedings
The proceedings initiated by Mrs Nolan have not taken a straightforward course.
She succeeded before the Employment Tribunal (LJ Guyer, Mrs S Foulser and Mr M W Heckford), obtaining on 17 March 2008 an order for remuneration for a one month protected period.
The order was on 15 May 2009 upheld on appeal by the Employment Appeal Tribunal (Slade J, Mr D Norman and Mrs R Chapman).
On a further appeal, the Court of Appeal (Laws, Hooper and Rimer LJJ) on 26 November 2010 ordered that there should be a reference to the Court of Justice on the question, raised by the decision in UK Coal, whether the obligation to consult arises (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only when that decision has actually been made and he is then proposing consequential redundancies?
The Court of Justice did not answer this question (Case C 583/10) [2013] ICR 193.
It raised the issue whether Mrs Nolans dismissal by the appellant, which is not an EU member state, fell within the scope of Directive 98/59/EC, having regard in particular to article 1(2)(b).
Having heard submissions on this point, the court on 18 October 2012 gave a judgment with two parts.
First, the court held that the Directive was both by virtue of its adoption under article 100 of the former EC Treaty (now article 94 TEU) and by nature part of the legislation aimed at improving the internal market; that activities like national defence, falling within the exercise of public powers, are in principle excluded from classification as economic activity; and that, by virtue of article 1(2)(b), the dismissal of staff of a military base falls outside the scope of the Directive, whether or not the base belongs to a non member state (para 43).
Secondly, the court addressed Mrs Nolans submission that it should nonetheless rule on the question referred by the Court of Appeal, on the basis that TULCRA extends the provisions of the Directive in national law to cover article 1(2)(b) situations (other than in respect of Crown employment or employees and persons in the police service).
The court (disagreeing on this point with Advocate General Mengozzis approach) declined to give any such ruling on the basis that If the EU legislature states unequivocally that the measure which it has adopted does not apply to a precise area, it renounces the objective [of] seeking uniform interpretation and application of the rules of law in that excluded area (para 55).
The upshot was that the Court of Justice simply declined jurisdiction.
So the questions raised by UK Coal/Fujitsu and the Court of Appeals reference will in the present case have to be resolved, if ever necessary, domestically without further assistance from the Court of Justice.
Whether it will be necessary to resolve them in this case appears doubtful.
The first part of the Court of Justices judgment lent encouragement to an argument by the appellant that, since EU law did not require or intend a foreign state to be subject to the Directives consultation obligations, United Kingdom law should be read in the same sense.
When the matter came back before the Court of Appeal after the Court of Justices ruling, Mrs Nolan was prepared to concede the correctness in law of this argument and did not appear.
The Court of Appeal (Moore Bick, Rimer and Underhill LJJ) [2014] ICR 685 after hearing submissions from Mr John Cavanagh QC and Sir Daniel Bethlehem QC for the appellant nonetheless dismissed the appeal, and made an order (stayed pending any appeal to the Supreme Court) that there be a further hearing to deal with the remaining UK Coal/Fujitsu issue.
The appellant duly sought permission to appeal to the Supreme Court.
This was given on the basis that the appellant bear its own costs in respect of the appeal, including those of any advocate to the court who might be appointed, and do not seek any costs order in respect of any instance of the proceedings.
The appeal has proceeded on that basis and The Honourable Michael Beloff QC and Sarah Wilkinson have been appointed and appeared as advocates to the court.
The government, which might be expected to have an interest in the third point (vires) identified in the next paragraph, has not sought to intervene.
The issues
The appellant has through counsel raised two points of construction and one of vires.
The first point of construction, argued by Mr Cavanagh QC, is that the domestic legal provisions should be given an interpretation conforming to that given in the first part of the Court of Justices judgment, at least as regards foreign states jure imperii activity.
By jure imperii, is here meant any decision or act which is not jure gestionis, (or commercial) in nature.
A state enjoys no general immunity in respect of jure gestionis decisions or acts.
The second point, argued by Sir Daniel Bethlehem QC, is that the same construction should be reached as regards foreign states by virtue of or by reference to principles of international law forming part of or inspiring domestic law.
The third point, that of vires, argued by Mr Cavanagh, is that the 1995 Regulations were ultra vires section 2(2) of the European Communities Act 1972, in that, when providing workers without trade union representation with the protection which the Court of Justice held in (Case C 383/92) to be required, they did not confine themselves to the sphere of EU law, as confirmed by the court in the present case, but went further by conferring extended protection on workers without trade union representation employed by public administrative bodies or public law establishments.
There is some overlap between the considerations relied upon by the appellant in relation to the two points of construction.
The appellant focused on the overlap, which meant in its submission that TULCRA could not and should not on any view apply to foreign states jure imperii activity.
The two points have however different underlying logics.
The logic of the first point is that TULCRA should be construed so as not to apply to employment by any public administrative body or public law establishment.
The logic of the second is that TULCRA should be construed so as not to apply to foreign states jure imperii activity.
The third point, vires, only arises if neither point of construction is accepted.
It would if accepted have an effect similar to the first point, but only in circumstances where there is no trade union representation.
In circumstances where there is trade union representation consultation would be required by primary legislation (TULCRA without reference to the 1995 Regulations), so that no question of vires could arise.
The first point of construction
Taking the first point of construction, it is a cardinal principle of European and domestic law that domestic courts should construe domestic legislation intended to give effect to a European Directive so far as possible (or so far as they can do so without going against the grain of the domestic legislation) consistently with that Directive: Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C 106/89) [1990] ECR I 4135, Vodafone 2 v Revenue and Customs Comrs [2009] EWCA Civ 446, [2010] Ch 77, paras 37 38 and Swift v Robertson [2014] UKSC 50, [2014] 1 WLR 3438, paras 20 21.
But that means avoiding so far as possible a construction which would have the effect that domestic implementing legislation did not fully satisfy the United Kingdoms European obligations.
Where a Directive offers a member state a choice, there can be no imperative to construe domestic legislation as having any particular effect, so long as it lies within the scope of the permitted.
Where a Directive allows a member state to go further than the Directive requires, there is again no imperative to achieve a conforming interpretation.
It may in a particular case be possible to infer that the domestic legislature did not, by a domestic formulation or reformulation, intend to go further in substance than the European requirement or minimum.
R (Risk Management Partners Ltd) v Brent London Borough Council [2011] UKSC 7, [2011] 2 AC 34, considered below, is a case where the Supreme Court implied into apparently unqualified wording of domestic Regulations a limitation paralleling in scope that which had been implied by the Court of Justice into general wording of the Directive to which the Regulations were giving effect: see Teckal Srl v Comune di Viano (Case C 107/98) [1999] ECR I8121 (Teckal).
It concluded that the two had been intended to be effectively back to back.
A reformulation may also have been aimed at using concepts or tools familiar in a domestic legal context, rather than altering the substantive scope or effect of the domestic measure from that at the European level.
But that is as far as it goes.
Directive 98/59/EC introduces requirements in favour of workers engaged in fields of economic activity.
But it leaves it open to member states to apply or introduce even more favourable laws, regulations or administrative provisions than those it requires (article 5), and, whether or not article 5 confirms this, it certainly leaves it open to member states to apply or introduce similar or more favourable provisions in areas of non economic activity, such as those of workers employed by public administrative bodies or public law establishments excluded from the Directive because of its internal market base and focus.
Heavy reliance was placed by the appellant on the Supreme Courts decision in R (Risk Management Partners Ltd) v Brent London Borough Council and Harrow London Borough Council [2011] 2 AC 34, in furtherance of the appellants case that the Regulations must be limited in scope by reference to the Directive.
The Supreme Court in Risk Management applied under the Public Contracts Regulations 2006 (SI 2006/5), passed to give effect to Council Directive 2004/18/EC, similar reasoning to that adopted by the Court of Justice in Teckal.
In Teckal the Comune de Viano had decided, without inviting competing tenders, to switch responsibility for its fuel supplies and heating system servicing from a private company, Teckal, to a corporate entity (AGAC), set up by a consortium of Italian municipalities to provide energy and environmental services to the participating authorities.
Teckal challenged this decision as breaching Directive 93/36/EEC (a predecessor to Directive 2004/18/EC) on supply of goods.
The Court of Justice examined the principles determining whether the new arrangement fell within the Directive 93/36/EEC, which contained the following definitions in article 1: (a) public supply contracts are contracts for pecuniary interest concluded in writing involving the purchase, lease [,] rental or hire purchase, with or without option to buy, of products between a supplier (a natural or legal person) and one of the contracting authorities defined in (b) below.
The delivery of such products may in addition include siting and installation operations; contracting authorities shall be the state, regional or (b) local authorities, bodies governed by public law, associations formed by one or several of such authorities or bodies governed by public law;
The Court of Justice gave this guidance: 50.
In that regard, in accordance with article 1(a) of Directive 93/36, it is, in principle, sufficient if the contract was concluded between, on the one hand, a local authority and, on the other, a person legally distinct from that local authority.
The position can be otherwise only in the case where the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities. 51.
The answer to the question must therefore be that Directive 93/36 is applicable in the case where a contracting authority, such as a local authority, plans to conclude in writing, with an entity which is formally distinct from it and independent of it in regard to decision making, a contract for pecuniary interest for the supply of products, whether or not that entity is itself a contracting authority.
In Risk Management, Risk Management Partners Ltd (RMP) complained that Harrow London Borough Council had awarded insurance contracts to a mutual insurer established by various local authorities without going through the public contract award procedure required by the 2006 Regulations.
The Regulations applied to a public services contract, defined as: a contract, in writing, for consideration (whatever the nature of the consideration) under which a contracting authority engages a person to provide services but does not include a public works contract; or a public supply contract; The Regulations contained a list of contracting authorities which included a local authority.
Article 1 of the Directive, to which the Regulations gave effect, applied to public contracts, defined as: contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive.
The Directive defined contracting authorities as meaning: the state, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law.
There was nothing in the Regulations in issue in Risk Management positively to have prevented the legislator going further than European law required.
Nonetheless, the Supreme Court in Risk Management read the wording as qualified so as to have a like scope to that which the Court of Justice had given the Directive in issue in Teckal.
The Supreme Courts reasoning is however important.
In his leading judgment, Lord Hope of Craighead noted that the Teckal exemption was not referred to anywhere in the Directive.
It is a judicial gloss on its language (para 17), and went on to say (para 22) that:
In the other leading judgment in the case, Lord Rodger of Earlsferry said to
like effect (para 92): the basis for implying the Teckal exemption into the 2006 Regulations is to be found in their underlying purpose, which was to give effect to the Directive.
The absence of any reference to the exemption in the Regulations is of no more significance than the absence of any reference to it in the Directive that was being transposed.
The exemption in favour of contracts which satisfy its conditions was read into the Directive by the Court of Justice in Teckal because it was thought to be undesirable for contracts of that kind to be opened up for public procurement.
This was not just a technicality.
It was a considered policy of EU law.
It would be odd if a significant and policy based exemption were to apply in some member states and not others, especially as one of the aims of the Directive was to harmonise procedures.
The 2006 Regulations give effect to the Directive in English law.
In other words, they are the way in which English law secures the free movement of services and the opening up to undistorted competition in relation to contracts which are to be placed by English local authorities.
That being the purpose of the Regulations, they, too, cannot be meant to apply in circumstances where that purpose is not relevant because a contracting authority intends to contract with a body which is not properly to be regarded as an outside body.
Although the Teckal criteria were formulated with particular reference to the predecessors of the Directive, they are simply a way of identifying situations where the authority can be regarded as obtaining the products or services which it requires in house and, so, where there is no need to secure the free movement of services and the opening up to undistorted competition.
In my view, the criteria are an equally good indication of situations where, for that reason, the 2006 Regulations have no application.
The insight of Advocate General Trstenjak in para 83 of her opinion in Coditel Brabant [2008] ECR I 8457, 8482 is instructive.
To hold that the Regulations did apply in these circumstances would involve saying that the legislature intended to attach weight to competition law objectives in an area where they have no legitimate application.
This would, in turn, involve inappropriate interference with local authorities right to co operate in discharging their public functions.
Lord Hopes further observations about the domestic legal history of the Regulations are relevant not only to construction, but also to the third point on vires, which I consider later.
He said (para 24): As Waller LJ said in Oakley Inc v Animal Ltd (Secretary of State for Trade and Industry intervening) [2006] Ch 337, para 39, the primary objective of any secondary legislation under section 2(2) must be to bring into force laws which, under the Treaties, the United Kingdom has agreed to make part of its laws.
There is nothing in the explanatory memorandum to the Regulations that was prepared by the Office of Government Commerce and laid before Parliament to indicate that it was intended to depart from the jurisprudence of the court as to the scope of the Directive.
In paras 7.2 7.4 of the memorandum it was stated that the change to the legislation was necessary to implement the new public procurement Directive, that it clarified and modernised the previous texts and that the simpler and more consistent public sector text should reduce the burdens involved under the EU rules.
If the Teckal exemption were to be held not to apply to the 2006 Regulations, it could only be because the purpose of the Regulations was to apply the public procurement rules to relationships that fell outside the regime provided for by the Directive.
But that would not be consistent with the memorandum, and it would not be a permitted use of the power.
In Risk Management, the indications were that the domestic measure was intended in the relevant respect to be no more than back to back with the European Directive.
That cannot be said to be so in the present case.
TULCRA contains no equivalent of article 1(2)(b) of the Directive.
Instead, it contains specific and limited exceptions for Crown employment and employees and for certain others in public service.
It is true that the remainder of the category of public workers comprised by article 1(2)(b) would have been relatively confined, comprising those engaged in the exercise of public powers, rather than economic functions, as the Court of Justice indicated in Scattolon v Ministero dellIstruzione, dellUniversit, e della Ricerca (Case C 108/10) [2012] ICR 740, paras 43 44.
But this remaining category is nonetheless significant.
Contrary to the appellants submission, its inclusion within the scope of TULCRA cannot have been mere oversight.
The careful exclusion of several specified categories of public employee speaks for itself.
The variation of the Directive scheme enables, and according to the Employment Appeal Tribunal (para 84) has in many cases enabled, cases to be brought by those representing workers in public authorities.
There are also other respects in which provisions of TULCRA have given protection in the form of consultation obligations which extends or has in the past extended, clearly deliberately, beyond the European requirement.
It is, as Underhill LJ observed in the Court of Appeal (para 24) well understandable that a Labour government should in 1975, with trade union encouragement, have decided to give the scheme an extended domestic application to public employees.
That does not mean that the legislator in the present case necessarily realised or foresaw the existence of employees of a public authority consisting of a foreign non EU member state such as the appellant, operating within the United Kingdom a base with its own employees.
The appellant is the only foreign state with military bases in the United Kingdom, and it appears that civilian employees at United States Air Force (as distinct from Army) bases in the United Kingdom were and are, it seems, employed by the Crown.
But the fact that a particular rare situation affecting a foreign state has not been foreseen is no reason for reading into clear legislation a specific exemption which would not reflect the wording or scope of any exemption in European law.
This is particularly so, when the natural reaction to any suggestion that a foreign state might be adversely affected in its jure imperii decisions taken, according to the appellant, at the level of the US Secretary of Defense and US Secretary of the Army and in Washington would have been that the foreign state would be entitled to rely on state immunity, in response to any suggestion that it should have consulted with its workforce in relation to a strategic decision to close any such facility.
While there is no positive indication that this played a part in legislative or ministerial thinking, it is a factor of relevance when considering whether objectively TULCRA must be read as containing any such implied limitation as the appellant suggests.
The Court of Appeal and the advocates to the court also referred to section 188(7), with its limitation under special circumstances of any obligation to consult to whatever might be reasonably practicable in those circumstances.
It may be that this could be of assistance to the appellant, in resisting a claim that it had breached the consultation obligations in section 188.
But to my mind it provides an unconvincing basis for any conclusion that this was, or is objectively, the way in the legislator should be seen as having catered for the possible anomalies that might flow from expecting a sovereign state to consult about a jure imperii decision to close a naval or military facility.
Section 188(7) is directed to special factual situations raising issues of feasibility apt for evaluation by the Employment Tribunal.
It is much less obviously designed for situations where consultation might be thought to be incongruous for high policy reasons.
The second point of construction
I turn therefore to the second point of construction and to the additional considerations which it raises.
As in the courts below, so before us the arguments advanced have been, as Slade J described them, both sophisticated and imaginative.
They have also been careful and helpful in enabling the court to reach a conclusion on them.
But like the courts below, I would reject them.
In substance, Sir Daniel Bethlehems submission on behalf of the appellant is that international legal considerations should lead to the recognition by the court of a tailored exemption from TULCRA in respect of dismissals involving redundancies arising from a jure imperii decision taken by a foreign state.
He does not suggest that, if TULCRA otherwise applies, the appellant enjoys any defence outside TULCRA (such as act of state, which would only here arise if the challenge was to a decision or act of the appellant in the United States).
His case depends on construing TULCRA as inapplicable to what happened.
His starting point is the prima facie presumption that the legislator intends to legislate consistently with, and that legislation (if reasonably capable of being so construed) should be construed consistently with, the principles of international law: Salomon v Customs and Excise Comrs [1967] 2 QB 116, Alcom Ltd v Republic of Columbia [1984] 1 AC 580 and Assange v Swedish Prosecution Authority [2012] UKSC 22, [2012] 2 AC 471, para 10.
Reduced to their essence, his submissions regarding international law are that: a) the application of TULCRA to dismissals of this nature would conflict with settled international law principles that one state does not legislate to affect the jure imperii activity of another; b) it would place the appellant in a unique position of potentially infringing United Kingdom law, by failing to consult, when the Crown in respect of British bases would have no such obligation, and when EU principles of non discrimination would mean that other member states would also have to be regarded as having no such obligation; it would in that respect infringe either EU law or general international legal principles regarding non discrimination.
Jurisdiction is primarily territorial in both international and domestic law.
As the Permanent Court of International Justice said in The Case of the SS Lotus (1927) PCIJ Series A No 10, pp 18 19, that: the first and foremost restriction imposed by international law upon a state is that failing the existence of a permissive rule to the contrary it may not exercise its power in any form in the territory of another state.
In this sense jurisdiction is certainly territorial; it cannot be exercised by a state outside its territory except by virtue of a permissive rule derived from international custom or from a convention.
It does not, however, follow that international law prohibits a state from exercising jurisdiction in its own territory, in respect of any case which relates to acts which have taken place abroad, and in which it cannot rely on some permissive rule of international law.
Such a view would only be tenable if international law contained a general prohibition to states to extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, and if, as an exception to this general prohibition, it allowed states to do so in certain specific cases.
But this is certainly not the case under international law as it stands at present.
Far from laying down a general prohibition to the effect that states may not extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion which is only limited in certain cases by prohibitive rules; as regards other cases, every state remains free to adopt the principles which it regards as best and most suitable.
The following overview appears in Brownlies Public International Law 8th ed (2012), (ed by James Crawford SC, FBA), Chapter 21, pp 456 457: The starting point in this part of the law is the presumption that jurisdiction (in all its forms) is territorial, and may not be exercised extra territorially without some specific basis in international law.
However, the territorial theory has been refined in the light of experience and what amounts to extra territorial jurisdiction is to some extent a matter of appreciation.
If there is a cardinal principle emerging, it is that of genuine connection between the subject matter of jurisdiction and the territorial base or reasonable interests of the state in question.
In the present case, the United Kingdom was in my opinion legislating in TULCRA entirely consistently with these principles.
TULCRA is expressly stated to extend to England, Wales and Scotland.
Part IV Chapter II regulates the procedures for dismissal on the grounds of redundancy of employees at institutions in those territories.
It requires consultation within the jurisdiction with employees who are and whose employment is within the jurisdiction.
Merely because the appellant may have taken a decision at the highest level in Washington, which led to dismissals on grounds of redundancy at a base in England, does not mean that the United Kingdom was legislating extra territorially.
It is in this sort of situation that a plea of state immunity may be most useful.
Sir Daniel Bethlehem referred to the American legal position, in particular the American Law Institute Restatement (Third) of the Foreign Relations Law of the United States (published May 14, 1986) and the United States Supreme Court decision of F Hoffmann la Roche v Empagran SA (2004) 542 US 155).
Section 402 of the Reinstatement indicates that, subject to section 403, a state has jurisdiction to prescribe law with respect to (a) conduct that, wholly or in substantial part, takes place within its territory; (b) the status of persons, or interests in things, present within its territory; (c) conduct outside its territory that has or is intended to have substantial effect within its territory.
The qualification in section 403 is that, even when one of the bases for jurisdiction under section 402 is present, a state may not exercise jurisdiction to prescribe law with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable, this to be determined by evaluating all relevant factors.
The drafters seek to give this evaluation some bones by listing eight potentially relevant (but not exclusive) factors.
Among them are (a) the extent to which the activity takes place within the territory, or has substantial, direct and foreseeable effect upon or in the territory and (c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities .
The US Supreme Courts decision in Hoffmann la Roche illustrates the significance of the principles in the Restatement.
The case concerned the ambit of the Sherman Act in relation to a price fixing conspiracy between foreign and domestic vitamin sellers allegedly raising prices both inside and outside the United States.
The issue was whether the Sherman Act applied to purchases (described as foreign transactions) by foreign distributors for delivery by Hoffmann la Roche outside the United States.
The Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) provided that the Sherman Act shall not apply to conduct involving trade or commerce with foreign nations unless (1) such conduct has a direct, substantial, and reasonably foreseeable effect (A) on trade or commerce which is not trade or commerce with foreign nations [ie domestic trade or commerce] (15 USC section 6a).
The words trade or commerce with foreign nations were by the court held to cover foreign transactions.
But the Court of Appeals had held that the qualifying words (unless ) brought all transactions, foreign and domestic within the Sherman Act.
The US Supreme Court disagreed, holding that so far as the complaint depended on an adverse foreign effect on prices independent of any adverse domestic effect, it lay outside the scope of the Sherman Act.
Breyer JA, giving the judgment of the court, identified two main reasons, derived from comity and the statutory history, for concluding that the FTAIA did not bring independently caused foreign injury within the scope of the Sherman Act.
In their light he rejected linguistic arguments to the contrary advanced by the complainants.
As to the first reason, comity, he said, in Part IV of the judgment (with characteristic emphasis, as italicised): this court ordinarily construes ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations.
This rule of construction reflects principles of customary international law law that (we must assume) Congress ordinarily seeks to follow.
See Restatement (Third) of Foreign Relations Law of the United States sections 403(1), 403(2) (1986) (hereinafter Restatement) (limiting the unreasonable exercise of prescriptive jurisdiction with respect to a person or activity having connections with another state); Murray v Schooner Charming Betsy, 2 Cranch 64, 118 (1804) ([A]n act of Congress ought never to be construed to violate the law of nations if any other possible construction remains); This rule of statutory construction cautions courts to assume that legislators take account of the legitimate sovereign interests of other nations when they write American laws.
It thereby helps the potentially conflicting laws of different nations work together in harmonya harmony particularly needed in todays highly interdependent commercial world.
No one denies that Americas antitrust laws, when applied to foreign conduct, can interfere with a foreign nations ability independently to regulate its own commercial affairs.
But our courts have long held that application of our antitrust laws to foreign anticompetitive conduct is nonetheless reasonable, and hence consistent with principles of prescriptive comity, insofar as they reflect a legislative effort to redress domestic antitrust injury that foreign anticompetitive conduct has caused.
But why is it reasonable to apply those laws to foreign conduct insofar as that conduct causes independent foreign harm and that foreign harm alone gives rise to the plaintiffs claim? Like the former case, application of those laws creates a serious risk of interference with a foreign nation's ability independently to regulate its own commercial affairs.
But, unlike the former case, the justification for that interference seems insubstantial.
See Restatement section 403(2) (determining reasonableness on basis of such factors as connections with regulating nation, harm to that nations interests, extent to which other nations regulate, and the potential for conflict).
Why should American law supplant, for example, Canadas or Great Britains or Japans own determination about how best to protect Canadian or British or Japanese customers from anticompetitive conduct engaged in significant part by Canadian or British or Japanese or other foreign companies?
The FTAIA was capable of interpretation in two senses.
An interpretation which excluded from its grasp foreign transactions causing foreign damage was, for the reasons given in this passage, readily available and understandable.
The present case presents a different picture.
There is no lack of clarity in the wording of TULCRA.
The base at RSA Hythe, the complainants, the contracts of employment and the dismissals for redundancy which were regulated (on the face of it) by TULCRA were and are all within the United Kingdom.
I am ready to assume that the base was operated in the United Kingdom for strategic reasons, and it is common ground that the decision to close it was taken in the United States for strategic reasons.
The appellants case is that there should be carved out of TULCRA, or any other relevant legislation, an exception for circumstances in which a foreign state takes a decision or commits an act of a jure imperii nature abroad which would otherwise lead to a person in the United Kingdom having a domestic right and remedy in respect of domestic employment or other domestic activity in the United Kingdom.
The submission is far reaching.
It would require substantial re formulation and expansion of the presumptive principles of construction referred to in the Restatement and in Hoffmann la Roche, and I am unable to accept it.
The submission would amount, in effect, as Sir Daniel recognised, to reading domestic legislation as subject to an exception or as inapplicable, at least prima facie, in relation to a foreign state in any circumstances where the foreign state could rely on a plea of state immunity, to avoid the adjudicative processes of another state in which proceedings had been brought against it.
I do not accept that there is any such principle.
It would make quite largely otiose the procedures and time for a plea of state immunity.
As Hazel Fox CMG QC and Philippa Webb observe in The Law of State Immunity 3rd ed (2013), p 20: Jurisdiction and immunity are two separate concepts.
Jurisdiction relates to the power of a state to affect the rights of a person or persons by legislative, executive or judicial means, whereas immunity represents the independence and exemption from the jurisdiction or competence of the courts and tribunals of a foreign state and is an essential characteristic of a state.
Logically the existence of jurisdiction precedes the question of immunity from such jurisdiction but the two are inextricably linked (see Chapter IV).
In Chapter IV, p 82, the authors go on further to explain the relationship, in this passage: Immunity comports freedom or exemption from territorial jurisdiction.
It bars the bringing of proceedings in the courts of the territorial state (the forum state) against another state.
It says nothing about the underlying liability which the claimant alleges.
Immunity does not confer impunity; the underlying accountability or substantive responsibility for the matters alleged in a claim remain; immunity merely bars the adjudication of that claim in a particular court.
As a matter of logic, the determination of jurisdiction precedes the consideration of immunity.
A states latitude to assert immunity in the face of a claim is different from the inapplicability of the law, by way of exemption or otherwise, to the impugned conduct of the foreign state in the first place.
Immunity operates as a bar to the adjudicative jurisdiction of the courts of the forum state.
It does not address the legislative or prescriptive jurisdiction of that state.
A claim of immunity thus at some level acknowledges the forum states legislative competence and the putative application of the domestic law in question to the foreign state but for the assertion of immunity.
In its written case, para 116, the appellant put the same point in a way
met with the advocates to the courts assent:
Sir Daniel Bethlehem sought to emphasise the importance for a foreign state such as the appellant of recognising in TULCRA an implied exemption for a decision to dismiss for redundancy taken on jure imperii grounds.
The appellant would wish to comply with domestic law, and the ability to plead state immunity in any proceedings would not alter the fact that, without such an exemption, it would be and have been in breach of domestic law.
That is true, but carried to its logical conclusion it would mean that all legislation should, however clear in scope, be read as inapplicable to a foreign state in any case where the state could plead state immunity.
That would elide two distinct principles, and, as noted already, very largely make redundant a plea of state immunity at least in respect of any statutory claim.
On Sir Daniels argument, the legislation relating to unfair dismissal on which the claimant relied in Sengupta v Republic of India [1983] ICR 221 would presumably also have to be read as containing an implied exception for foreign states in jure imperii contexts, as would perhaps also the principles of common law negligence on which the claimant relied in Littrell v United States of America (No 2) [1995] 1 WLR 82.
Sir Daniel Bethlehems submissions on discrimination start with the exclusion from the scope of Part IV Chapter II of TULCRA of Crown and police service employees.
The exclusion is specific, and that itself makes it difficult to argue for an equivalent implied exclusion in respect of foreign state employees.
In any event, there are circumstances in which, even on Sir Daniels case, it would not be inappropriate for Part IV Chapter II to apply to a foreign government, for example in the (admittedly perhaps rare) case where a foreign state was itself responsible for a commercial activity in the United Kingdom, in respect of which it wished to declare all or some of its employees redundant.
Be that as it may be, Sir Daniel argues that non discrimination is a general principle of international law.
It was in terms accepted as such by the Court of Appeal in Benkharbouche v Embassy of the Republic of Sudan [2015] EWCA Civ 33, [2015] 3 WLR 301, para 61, but the context there was a claim by an individual foreign employee, asserting that section 4 of the State Immunity Act was contrary to articles 6 and 14 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and/or European Union law. (This was because it only lifted a foreign states immunity in favour employees with contracts made in the United Kingdom or work to be wholly or partly performed there if such employees were nationals of or habitually resident in the United Kingdom.) A state cannot take advantage of articles 6 and 14 of the European Convention.
Articles 1 and 2 of the Universal Declaration of Human Rights, article 26 of the International Covenant on Civil and Political Rights and article 14 of the European Convention, cited by the Court of Appeal, are likewise all provisions by states in favour of persons, not states.
I will return to articles 20 and 21 of the Charter of Fundamental Rights of the European Union, which the Court of Appeal also cited.
The position as between states is expressed in Oppenheims International Law 9th ed (1992) as follows, at para 114: Although states are equal as legal persons in international law, this equality does not require that in all matters a state must treat all other states in the same way.
There is in customary international law no clearly established general obligation on a state not to differentiate between other states in the treatment it accords to them.
Nevertheless, discrimination is widely regarded as undesirable, and in some particular respects a rule of non discrimination may exist, within limits which are not clear.
Oppenheim goes on to discuss some possibilities, eg multi lateral treaties, none of which is relevant here.
To give teeth to his submissions, Sir Daniel Bethlehem invokes European Union law, to which the Court of Appeal in Benkharbouche also referred.
Article 18 TFEU 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.
The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may adopt rules designed to prohibit such discrimination.
A provision in, effectively, the same terms as the first sentence is contained in the Charter of Fundamental Rights, article 21(2).
On the basis of these provisions, Sir Daniel argues that United Kingdom courts would have to recognise other member states of the European Union as enjoying like exemptions from TULCRA to those TULCRA provides for UK Crown employees.
This would in principle leave non EU states out on a limb, but the only non EU state actually shown to be affected would in practice be or be likely to be the appellant.
That would, Sir Daniel submits, be absurd and should itself lead to an implication that foreign states should enjoy the like immunity.
In any event, he submits, the principle of non discrimination operates under European Union law horizontally to protect the appellant, even though it is neither a European citizen or an EU member state; in this connection, Sir Daniel invokes the Court of Justices well known if controversial jurisprudence in Mangold v Helm (Case C 144/04) [2006] All ER (EC) 383 and Kckdeveci v Swedex GmbH & Co KG (Case C 555/07) [2010] All ER (EC) 867, both in fact cases of age discrimination.
Whether article 18 TFEU and/or article 21(2) of the Charter of Fundamental Rights apply in favour of member states can be left open.
Whether, if they do, it would be open to a member state to rely on them horizontally as against a complainant like Mrs Nolan can also be left open.
It is not clear in European law how far and when the principles in Mangold and Kckdeveci apply in cases not involving age discrimination.
The court considered such an issue in Association de mdiation sociale v Union locale des Syndicates CGT (Case C 176/12) [2014] ICR 411.
The domestic Labour Code excluded from calculation holders of an accompanied employment contract (young persons being directed towards more stable employment or social activities), of whom the Association de mdiation sociale (AMS), a private non profit making organisation, employed well over 100.
The result of the exclusion was that AMS counted as having only eight employees under the Labour Code, and so fell domestically below a threshold of 50 (based on the Directive 2002/14/EC) which would otherwise have triggered obligations on its part to inform and consult.
The court held that the Labour Code by excluding accompanied employees from the calculation of numbers was in breach of the Directive.
Article 27 of the Charter requires that Workers or their representatives must, at the appropriate levels, be guaranteed information and consultation in good time in the cases and under the conditions provided for by Union law and national laws and practices.
The question thus arose whether article 27 of the Charter, read with the Directive, could be relied on horizontally in proceedings between AMS and the Union locale des Syndicates.
Differing on this point from Advocate General P Cruz Villaln, the Court of Justice held that it could not, saying that it was clear from the wording of article 27 of the Charter that, for this article to be fully effective, it must be given more specific expression in European Union or national law (para 45).
This was so although the Labour Code must, it appears, have contained specific provisions regarding information and consultation for those employers who, under its own defective method of calculation, did have 50 or more employees.
So it is at least open to question whether article 18 TFEU or article 21(2) of the Charter, read with the provisions of TULCRA, would necessarily have direct horizontal effect in favour of another EU member state.
There are however to my mind two fundamental flaws in Sir Daniels submissions at this point.
The first is that articles 18 and 21(2) apply expressly only within the scope of application of European law, or, as it was paraphrased in Association de mdiation sociale, para 42, in situations governed by European law.
The same point was made by the Court of Justice as long ago as 1974 in Walrave v Association Union Cycliste Internationale (Case C 36/74) [1974] ECR 1405.
In the present case, the Court of Justice declined to rule on the interpretation of Directive 98/59/EC for the very reason that, to the extent that TULCRA covers workers employed by public administrative bodies or by public law establishments, it goes beyond European Union law into an area to which the EU legislature states unequivocally that the measure which it has adopted does not apply, and in which the objective [of] seeking uniform interpretation and application of the rules of law has been renounced: para 55.
Since the issue in the present case arises in precisely that area, it is not possible to conclude that the appellant or indeed any EU member state, let alone any non member state, could insist on European Union law as giving it any horizontal or other entitlement.
The second flaw is that I do not regard a non member state as being within the protection of articles 18 and 21(2) in any circumstances.
In Patmalniece v Secretary of State for Work and Pensions [2011] UKSC 11, [2011] 1 WLR 783, para 83, Lady Hale said of the then equivalent article: This is not a general prohibition of discrimination on grounds of nationality.
Only the nationals of member states are protected.
Discrimination against third country nationals is not prohibited.
Indeed it is positively expected.
The underlying purpose is to promote the objects of the Union and in particular the free movement of workers between the member states and the free establishment of businesses within them.
The Court of Justices case law is to like effect: Vatsouras v Arbeitsgemeinschaft (AGRE) Nrnberg 900 (Joined Cases C 22/08 and C 23/08) [2009] ECR I 4585, [2009] ALL ER (EC) 747, para 52 and Martinez Sala v Freistaat Bayern (Case C 85/96) [1998] ECR I 2691, para 62.
The Court of Appeal recently reached the same conclusion in Sanneh v Secretary of State for Work and Pensions [2015] EWCA Civ 49, para 106.
The freedom of this countrys universities to charge unrestricted tuition fees to non EU citizens, while having in this respect to assimilate citizens of other EU countries with British citizens, is an example of the impact of this principle.
For these reasons, I am unable to accept the appellants second point on construction any more than its first.
The third point the vires of the 1995 Regulations
I come to the third point, the appellants submission that the 1995 Regulations were ultra vires section 2 of the European Communities Act 1972.
When providing workers without trade union representation with the protection which the Court of Justice had in (Case C 383/92) held to be required, the Regulations did not confine themselves to the sphere of EU law, confirmed by the court in the present case.
They went further by conferring extended protection on workers without trade union representation employed by public administrative bodies or public law establishments.
In that respect, the appellant submits, they went beyond any power conferred by section 2.
Section 2 of the 1972 Act (as amended by sections 27 and 33 of the Legislative and Regulatory Reform Act 2006 and sections 3 and 8 of and Part I of the Schedule to the European Union (Amendment) Act 2008) reads: General implementation of Treaties (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. (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; and in the exercise of any statutory power or duty, including any power to give directions or to legislate by means of orders, rules, regulations or other subordinate instrument, the person entrusted with the power or duty may have regard to the objects of the EU and to any such obligation or rights as aforesaid. (3) (4) The provision that may be made under subsection (2) above includes, subject to Schedule 2 to this Act, any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this part of this Act, shall be construed and have effect subject to the foregoing provisions of this section; but, except as may be provided by any Act passed after this Act, Schedule 2 shall have effect in connection with the powers conferred by this and the following sections of this Act to make Orders in Council or orders, rules, regulations or schemes.
Schedule 2 paragraph 1 (as amended by section 32 of the Criminal Law Act 1977 and sections 38 and 46 of the Criminal Justice Act 1982) contains the following restriction on the powers conferred by section 2(2): The powers conferred by section 2(2) of this Act to make provision for the purposes mentioned in section 2(2)(a) and (b) shall not include power to make any provision imposing or increasing (a) taxation; or to make any provision taking effect from a date (b) earlier than that of the making of the instrument containing the provision; or (c) to confer any power to legislate by means of orders, rules, regulations or other subordinate instrument, other than rules of procedure for any court or tribunal; or (d) to create any new criminal offence punishable with imprisonment for more than two years or punishable on summary conviction with imprisonment for more than three months or with a fine of more than level 5 on the standard scale (if not calculated on a daily basis) or with a fine of more than 100 a day.
Section 2 of the 1972 Act recognises the different types of EU legislative measure.
Article 288 TFEU states a well known trifurcation: A Regulation shall have general application.
It shall be binding in its entirety and directly applicable in all member states.
A Directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods.
A decision shall be binding in its entirety.
A decision which specifies those to whom it is addressed shall be binding only on them.
Section 2(1) gives the force of law in the United Kingdom to all the rights, etc and remedies and procedures to which it refers, which are in accordance with the Treaties without further enactment to be given legal effect or used in the United Kingdom.
It is the means by which Regulations have effect.
Section 2(2) concerns obligations of the United Kingdom to be implemented, or rights of the United Kingdom to be enjoyed, under or by virtue of the Treaties.
A right or obligation under a Directive is the classic instance.
As article 288 indicates, Directives are not as specific as Regulations in their impact or, often, in their terms.
Member states have a degree of latitude in their implementation, provided they achieve the intended result.
Paragraph (a) of section 2(2) enables provision to be made by order in council or ministerial or departmental order, rule, regulation or scheme for the purpose of implementing any such obligation, or enabling any such right to be exercised.
Paragraph (b) enables provision to be made for 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).
The ambit of section 2(2) has been considered in a number of cases.
The leading authority is Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337.
Since then section 2(2) has been considered by Moses LJ in R (Cukorova Finance International Ltd) v HM Treasury [2008] EWHC 2567 (Admin), [2009] EuLR 317, by Lord Hope in Risk Management [2011] 2 AC 34 (para 22 above), by the Employment Appeal Tribunal in Pothecary Witham Weld v Bullimore [2010] ICR 1008 and by Floyd J, who identified as many as 14 relevant principles in ITV Broadcasting Ltd v TV Catchup Ltd (No 2) [2011] EWHC 1874 (Pat), [2011] FSR 40.
In Oakley, Directive 98/71/EC on the legal protection of designs required member states to approximate their legislation, but provided an option permitting them to derogate and retain in force existing legislation for registered designs.
The option, found in article 11(8) of the Directive, read: 8.
Any member state may provide that, by way of derogation from paragraphs 1 to 7, the grounds for refusal of registration or for invalidation in force in that state prior to the date on which the provisions necessary to comply with this Directive enter into force shall apply to design applications which have been made prior to that date and to resulting registrations.
In issuing the Registered Designs Regulations 2001 (SI 2001/3949), the Secretary of State made use of this option.
By regulation 12 he retained in force the Registered Designs Act 1949, as amended in 1988, in relation to designs already registered, so making use of this option.
The Court of Appeal rejected the submission that regulation 12 required primary legislation.
All three members of the court considered that regulation 12 could be regarded as being within section 2(2)(a) of the 1972 Act, as having been for the purpose of implementing an EU obligation or enabling one to be implemented (para 29, per Waller LJ, para 46 per May LJ and paras 64 67 per Jacob LJ).
All three members of the court also went on to express views on the scope of section 2(2)(b).
Waller LJ considered that the words used in section 2(2)(b) must take their context from the primary purpose of section 2, that being the bringing into force under section 2 of the laws, which under the Treaties the United Kingdom has agreed to make part of its laws; para 39.
On that basis he added this in the same paragraph: section 2(2)(b), from its position in section 2, from the fact that it adds something to both subsections (1) and (2), and from its very wording is a subsection to enable further measures to be taken which naturally arise from or closely relate to the primary purpose being achieved.
I accept that I will be accused of adding the words naturally and closely, but I believe that describes the context which provides the meaning of the words.
May LJ said (para 47): I do not consider that to hold that the making of these transitional provisions came within section 2(2)(a) has the effect of making section 2(2)(b) devoid of content.
There is a distinction between providing something which, although it is a choice, is a choice which the implementation of the Directive requires you to make, and one which is not so required, but which has the effect of tidying things up or making closely related original choices which the Directive does not necessarily require.
Section 2(2)(b) is confined by its words and context.
Redefinition in the abstract is to be avoided.
Jacob LJ addressed the topic in some detail.
He had no doubt that section 2(2)(a) covered the case where a Directive contains explicit alternatives and the implementing statutory instrument merely selects one of these (para 73).
Questioning whether it also covers the supply of detail which Directives frequently leave to member states to spell out, he observed that, in his view, the wider section 2(2)(a), the narrower section 2(2)(b) is likely to be (para 74).
In paras 79 80 he expressed his provisional views: 79.
My own view, provisional though it must be in the absence of any specific context relevant to this case, is this: that section 2(2)(a) covers all forms of implementation whether by way of choice of explicit options or by way of supply of detail.
Both of these are for the purpose of implementing or enabling any such obligation to be implemented.
Supplying detail required by a Directive is just that. 80.
So section 2(2)(b) indeed adds more .
How much more must depend on the particular circumstances of the case the statutory language is the guide.
It says for the purpose of dealing with matters arising out of or related to.
Whether a particular statutory instrument falls within those words must depend on what it purports to do and the overall context.
One cannot put a gloss on the meaning.
If Otton LJ [in R v Secretary of State for Trade and Industry, Ex p UNISON [1996] ICR 1003] was adding a gloss distinct, separate or divorced from it then I do not agree with that gloss.
You just have to apply the statutory language to the case concerned.
And in doing so you bear in mind that the purpose of the power given by the section is European the article10 purpose.
Whether or not Otton LJ was right in the circumstances of, I do not decide.
It would not be right to do so in the absence of the affected parties.
The reference to Otton LJs words was to a sentence in which Otton LJ said that he was satisfied that the provision made was related to a Community obligation, and not distinct, separate, or divorced from it (R v Secretary of State for Trade and Industry, Ex p UNISON [1996] ICR 1003, 1014G H).
Article 10 of the then Treaty establishing the European Community read: Member states shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community.
Some general observations are possible, arising from these passages.
First, so far as possible, it is clearly desirable to avoid paraphrase, though almost impossible to do so completely, if any greater light is to be shed on the scope of their application.
Second, as Waller LJ (and also May LJ) indicated, words such as those used in section 2(2) must be seen in the context of the primary purpose of section 2, that being the bringing into force under section 2 of the laws, which under the Treaties the United Kingdom has agreed to make part of its laws.
Third, that is the context in which Parliament was prepared to delegate law making ability to the executive because the focus of section 2(2) is on obligations to the implementation of which the United Kingdom is already committed (and rights to which it is already entitled) at the European level by virtue of its EU membership.
Parliament will itself have had prior opportunities for scrutiny of, and input into the content of, the European measures giving rise to such obligations and rights, through in particular Select Committee procedures, at the stage when such measures were being developed and proposed by the European Commission and considered in Europe by member states and the European Parliament.
Fourth, section 2(2) authorises the making of provisions for two differently expressed purposes.
In the case of paragraph (a), the purpose expressed is implementing or enabling the implementation of any EU obligation (or the enabling the exercise of any EU right enjoyed by the United Kingdom).
In the case of paragraph (b), it is 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 section 2(1).
It is not in my view appropriate to get too involved in a linguistic debate about whether these paragraphs should be read entirely disjunctively or whether there may be some overlap.
But Jacob LJ was, I think, right in saying that the wider section 2(2)(a), the narrower section 2(2)(b) is likely to be that is so, because the language of paragraph (b) introduces bottom line limitations of the power it confers.
What can in my view be said, from the wording and positioning of these two paragraphs, is that paragraph (a) is the main vehicle for implementation of EU obligations and rights which are not directly enforceable.
Paragraph (b) goes further, in authorising provision for different purposes, but those purposes are limited by reference to the United Kingdoms EU obligations or rights (or the coming into force, or operation, of section 2(1)).
The words arising out of limit the power to provisions dealing with matters consequential upon an EU obligation or right (or the coming into force, etc, of section 2(1)).
The further phrase related to any such obligation or rights, must, unless redundant, go somewhat further.
But the relationship required must exist objectively; and the positioning of the phrase and its conjunction with the earlier wording of section 2(1) suggest to me, as they did to Waller and May LJJ, that by speaking of a relationship the legislature envisaged a close link to the relevant obligation or right.
A relationship cannot on any view arise from or be created by simple ministerial decision that it would be good policy or convenient to have domestically a scheme paralleling or extending EU obligations in a field outside any covered by the EU obligations.
That would be to treat paragraph (b) as authorising a purpose to implement policy decisions not involving the implementation of, not arising out of and unrelated to any EU obligation.
A fifth and final point is that it is, in the light of the above, possible to describe section 2(2) as both wide and confined in scope.
It is wide because it authorises almost every conceivable provision required to fulfil the United Kingdoms obligations under article 4.3 TEU (or to give effect to any EU right) subject only to the restrictions in Schedule 2.
It is confined because any such provision must be for the purpose of implementing, or dealing with a matter arising from or related to, such an obligation or right.
Some conclusions can fairly readily be drawn.
Consistently with a view taken, I understand, by all members of the court in Oakley, it is clear, that, where a Directive is in general terms leaving member states freedom to decide on the precise means for its implementation, provisions which the United Kingdom makes within the scope of such freedom will on the face of it fall within section 2(2)(a), as being for the purpose of implementing or enabling the implementation of the Directive.
Second, where a Directive confers a choice of specific alternatives, as Directive 98/59/EC did in article 1(1)(a) (see para 7 above) a provision selecting one or other alternative will also fall within section 2(2)(a).
Where a Directive gives member states a specific option to derogate from its provisions in a particular respect in Oakley as regards design applications made prior to the date of domestic implementation of the Directive and as regards resulting registrations then I again agree with the court in Oakley that the exercise of this option can be regarded as falling within section 2(2)(a), and, further, that if that were not so, then it would, in any event, be related to the implementation of the United Kingdoms EU obligation within section 2(2)(b).
At the other end of a spectrum is a situation such as Lord Hope considered in Risk Management, para 24 (para 22 above).
That is where a Directive, such as Directive 2004/18/EC in that case, (i) addresses an internal market competition issue, by introducing procedures for the award of public works, supply and service contracts, but does not cover a situation where (ii) public authorities contract inter se, or where (iii) a local authority exercises over the other contracting party a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities: see Teckal (Case C 107/98) [1999] ECR I 8121, para 50.
In that context, Lord Hope, with whose judgment three other members of the court agreed, considered that it would not be a permitted use of the power conferred by section 2(2) to apply the public procurement rules to relationships [such as those in (ii) and (iii)] that fell outside the regime provided for by the Directive: para 22 above.
In agreement with Lord Hope, I consider that, where a Directive is based on an internal market competence and as a result limited in impact to internal market situations, its domestic extension to situations outside the internal market cannot be regarded as being within either section 2(2)(a) or (b) of the 1972 Act.
This is so whether it is so limited by implication or expressly.
More difficult are intermediate situations where a Directive is limited to, or specifically excludes, a particular area of the internal market.
An example of a Directive limited to a particular area of the internal market is Directive 2002/47/EC which was in issue in Cukurova [2009] EuLR 317.
Directive 98/59/EC in issue in the present case is an example of a Directive with both limitations and specific exclusions which appear to fall within the internal market: It is limited by article 1(1)(a) to collective redundancies.
It excludes in article 1(2)(a) limited period contracts, which might affect the functioning of the internal market competition.
I say nothing on the question whether the exclusion in article 1(2)(c) of the crews of seagoing vessels operates in an area which might affect the internal market or was because this was seen as a situation, like that covered by article 1(2)(b), where the internal market was not affected.
In my view, provisions extending an EU regime domestically into areas not covered by or specifically excluded from the EU regime contemplated by a Directive may well fall outside both paragraphs of section 2(2).
Each case would have to be considered on its own merits.
Some adjustments to situations in which a Directive operates may be regarded as necessary or appropriate for the purpose of implementing or enabling the implementation of a Directive, or as being related to the relevant EU obligation in the sense already discussed.
Pothecary [2010] ICR 1008 is an example of a case where the Secretary of State used section 2(2)(b) to provide for a reverse burden of proof in section 63A of the Sex Discrimination Act 1975 (as inserted by regulation 5 of the Indirect Discrimination and Burden of Proof) Regulations 2001 (SI 2001/2660) in cases of alleged victimisation.
There was no obligation under European law to have a reverse burden in such cases.
There was under the Burden of Proof Directive 97/80/EC an obligation to have a reverse burden in cases of alleged unequal treatment, but the Employment Appeal Tribunal concluded that the right not to be victimised did not form part of the principle of equal treatment, but was an ancillary right accorded by EU law to render that principle properly enforceable.
On that basis, it held, unsurprisingly, that introducing a reverse burden in respect of a right which European law treated as ancillary to its prohibition of discrimination was dealing with a matter related to an EU obligation, within section 2(2)(b).
In Cukurova Directive 2002/47/EC was expressly limited to transactions between certain institutions, but the Financial Collateral Arrangements (No 2) Regulations 2003 (SI 2003/3226) issued by HM Treasury implementing it extended the range of the regime to cover other institutions.
Moses LJ was concerned with a question whether Cukurova should be allowed an extension of time within which to challenge the vires of the Regulations.
Ultimately, all he did was express such considerable doubts about Cukurovas prospects of success in its challenge as to lead him to a conclusion that justice did not demand an extension of time.
Nonetheless, it is worth looking at the case more closely, because in my view Moses LJ greatly underestimated the force of Cukurovas challenge.
Article 1(1) of Directive 2002/47/EC stated that it lays down a Community regime applicable to financial collateral arrangements [defined by article 2.1(a) as meaning a title transfer financial or a security financial collateral arrangement] which satisfy the requirements set out in paragraphs 2 and 5 and to financial collateral in accordance with the conditions set out in paragraphs 4 and 5.
Paragraph 2 stated that The collateral taker and the collateral provider must each belong to one of the following categories.
These included a wide range of (a) public authorities or bodies, (b) central or development banks, (c) financial institutions subject to prudential supervisions and (d) central counterparties, settlement agents or clearing houses as well as (e) a person other than a natural person, including unincorporated firms and partnerships, provided that the other party is an institution as defined in points (a) to (d).
By these categories, the Directive notably did not cover hedge funds.
Paragraph 3 permitted member states to exclude from the scope of this Directive financial collateral arrangements where one of the parties is a person mentioned in paragraph 2(e).
Recital 22 stated the objective of the Directive to be to create a minimum regime relating to the use of financial collateral, this being an objective which, it went on, cannot be sufficiently achieved by the member states and can therefore be better achieved at Community level .
In place of the carefully delineated categories of institution and concern covered by the Directive, the 2003 Regulations put in place a regime covering title transfer financial collateral arrangements and security financial collateral arrangements where the collateral provider and the collateral taker are both non natural persons: regulation 3.
I find it difficult to see how this could be regarded as having been for the purpose of implementing or enabling the implementation of the EU Directive.
Equally, the extension did not arise out of the obligations in the Directive and was not related to them.
It was on its face the product of a decision by HM Treasury that it would be good policy domestically to have a more extensive regime operate within the United Kingdom.
That is something which was of course open to the United Kingdom under European law, since the Directive was a measure of minimum harmonisation.
But it was under the United Kingdom constitution and the 1972 Act a matter which was not for the executive to decide, but for Parliament to consider and, it if thought fit, to agree as a matter of primary legislation.
Returning to the present case, it falls in my view even more clearly within the category which Lord Hope was considering in Risk Management.
It also concerns a Directive issued by the European legislature under its internal market competence, which in the present case specifically excludes by article 1(2)(b) situations outside that competence.
The express liberty in article 5 for member states to make provisions more favourable to workers does not in my view lead or point to a contrary view.
It cannot have been directed to matters which would be outside the European Unions internal market competence.
Even in relation to matters within the Unions internal market competence, an article of this nature does no more on its face than confirm that the Directive is a minimum harmonisation measure, which leaves member states free to introduce more favourable provisions as a matter of domestic law.
This does not mean that such provisions are necessarily to be regarded as dealing with matters related to any EU obligation or rights.
It follows that, had the provisions of TULCRA in its unamended form been the product of subordinate legislation under section 2(2) of the 1972, they would, on Lord Hopes analysis, have been ultra vires at least in so far as they purported to extend the required procedure for dismissals involving redundancies to situations falling within article 1(2)(b) of Directive 98/59/EC.
However, TULCRA in its unamended form was actually a piece of primary legislation.
So far as Parliament chose by TULCRA in its unamended form to extend the required procedure for dismissals involving redundancies, it was fully entitled to do so.
Parliament has no need to show any particular competence base for primary legislation.
It can legislate at will and at the same time achieve both European Union aims and domestic aims, as long as the latter are not positively inconsistent with the former.
But TULCRA in its unamended form was confined to situations where the relevant employees had trade union representation.
When the executive chose to rectify this by using section 2(2) of the 1972 Act to cover situations where there was no trade union representation, it did so across the whole width of the previous legislation so as to affect not only situations within the internal market scope of Directive 98/59/EC, but also the domestic situations to which Parliament had also extended the required procedure for dismissals.
If Lord Hopes analysis is correct, does this mean that the amendments to TULCRA by the 1995 Regulations must to that extent be regarded as ultra vires?
I have found this a difficult and borderline question to answer.
Ultimately, I have come to the conclusion that it can and should be answered in the negative.
TULCRA in its unamended form represented a unified domestic regime.
The Court of Justice in 1994 identified a flaw in the protection provided, in that it did not cater for non trade union situations.
It is entirely unsurprising that the 1995 Regulations did not distinguish between parts of TULCRA which were and were not within the internal market competence or within article 1(2)(b) of the Directive.
I think that, in these unusual circumstances, Parliament can, by enacting TULCRA in its unamended form, be regarded as having created, for the future domestic purposes of the 1972 Act, a relationship between the EU obligation (which it was a primary object of Part IV Chapter II of TULCRA in its unamended form to implement) and the categories of public employment falling within article 1(2)(b) of Directive 98/59/EC (which Parliament decided without any EU obligation to do so to cover by TULCRA in its unamended form).
That relationship having been established by TULCRA in its unamended form, it seems to me that the executive was entitled to take it into account and to continue it by and in the 1995 Regulations.
Conclusion
For all these reasons, I would dismiss the appellants appeal on all three points, and affirm the judgments of the courts below.
The case should as a result be remitted to the Court of Appeal for determination, so far as necessary, of the UK Coal/Fujitsu issue referred to in paras 3 and 10 11 of this judgment.
LORD CARNWATH: (dissenting)
Overview
This case has an unfortunate procedural background, which has been described by Lord Mance.
Among other grounds raised by the appellants (which in agreement with my colleagues I would dismiss), it raises two difficult issues at the interface between European and domestic law: first, the extent of the power conferred by section 2(2)(b) of the European Communities Act 1972 to legislate in the UK by statutory instrument on matters arising out of or related to obligations under European law; secondly, the approach of the domestic court to an issue of European law (the Fujitsu issue see below) which arises under a UK statute modelled on a European Directive, but which has been held to be outside the competence of the European court.
As will be seen, the two are in my view linked.
Unfortunately, only the first is before this court on the present appeal.
The second will have to be determined by the Court of Appeal if the present appeal fails, and may return here at a later date.
There is the further difficulty that neither of the parties to the appeal has more than a limited interest in the resolution of either issue as a matter of law.
The United States of America, as appellant, has no direct interest in the resolution of issues of English or European law.
It is only before the court because it failed at an early stage (for understandable reasons at the time) to claim sovereign state immunity. (It is common ground that if a claim to state immunity had been made at the outset it would have succeeded.) Mrs Nolan, the nominal respondent, has not contested the appeal, either in the Court of Appeal or in this court.
The UK government, which might be thought to have a substantial interest in both issues has chosen not to intervene, though informed of the appeal.
In these unusual circumstances we are more than usually grateful for the assistance of Mr Beloff QC and Miss Wilkinson as advocates to the court.
However, it is no reflection on them that we have been unable to explore in any detail the wider implications of this case for the transposition of European law in this country more generally.
For this reason, had my colleagues agreed with my firm provisional view that the appeal should be allowed on this issue, I would have been reluctant to reach a final conclusion without allowing the UK government a further opportunity to submit representations.
The conclusions set out below are to that extent provisional.
I adopt gratefully Lord Mances exposition of the facts and the relevant statutory provisions.
Procedural history
Lord Mance has summarised the procedural history, but some expansion may be helpful in setting the scene for discussion of the issue on which we are divided.
As he has noted, an important event was the decision of the Employment Appeal Tribunal, in UK Coal Mining Ltd v National Union of Mineworkers [2008] ICR 163), given in September 2007.
To explain its importance I can refer to Underhill LJs summary [2014] ICR 685, para 9: The trend of English authority until comparatively recently was to the effect that the collective redundancy provisions, even when read with the Directive, did not oblige an employer to consult about, or therefore disclose the reasons for, the underlying business decision which gave rise to a proposed collective redundancy the paradigm case being the closure of a workplace but only about the consequences of that decision.
However, the decision of the ECJ in Junk v Khnel (Case C 188/03) [2005] ECR I 885, raised a serious question whether that approach was compatible with EU law.
In UK Coal Mining , the Employment Appeal Tribunal (Elias J, President, presiding) declined explicitly to depart from the established approach (while expressing some reservations about it); but it nevertheless held that in a case where a decision to close a workplace and the consequent decision to make redundancies were inextricably interlinked the obligation to consult about the reasons for the latter necessarily involved an obligation to consult about the reasons for the former and thus required the employer to initiate consultations prior to the closure decision.
The CJEU revisited this issue in Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy (Case C 44/08) [2010] ICR 444; [2009] ECR I 8163 (the Fujitsu decision); but unfortunately the effect of its reasoning is, to put it no higher, not entirely clear.
As Underhill LJ explained (para 10), this change of understanding had important implications for the present case, in particular in the context of the USAs failure to rely before the tribunal on sovereign immunity: On the approach which it had initially taken, which involved acceptance of an obligation to consult only about the consequences for employees of the closure of the base, there had been no need for the USA to take any point on its status as a sovereign state.
But the approach espoused in the UK Coal case was unacceptable to it: it did not believe that it should or could be under any legal obligation to consult with employees about a decision to close a military base, which is an act done jure imperii.
It was not until the remedy hearing that the USA sought for the first time to invoke state immunity; but the tribunal held that it had already submitted to the jurisdiction.
That conclusion is not now in issue.
Before the EAT Mr John Cavanagh QC, who represented the USA, argued, as he has before us, that as a matter of construction, and in order to avoid absurdity, section 188 should be read as excluding any obligation by a sovereign state employer to consult about a decision made jure imperii.
That submission was rejected by both the EAT and the Court of Appeal.
In the Court of Appeal he further submitted that in the light of the Fujitsu decision, the reasoning in UK Coal [2008] ICR 163 should not be supported, with the consequence that consultation on the business decision to close the base had not been required.
In the course of a detailed review of the reasoning of the Advocate General and the CJEU in the Fujitsu case, Rimer LJ (giving the judgment of the court) [2010] EWCA Civ 1223 sought an answer to what he identified as the critical question: does the ECJ explain whether the consultation obligation arises (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only when that decision has actually been made and he is then proposing consequential redundancies? (para 57) He inclined to the view that the Advocate General had favoured option (ii) (para 53).
But he was unwilling to venture a concluded view on the position of the court, which he considered unclear (para 59), and which could be only resolved by the CJEU itself.
Notwithstanding the USAs express unwillingness to support a reference, he saw it as important not just to the disposition of this litigation but also to industrial practice generally (para 62).
Before the CJEU, as Lord Mance has noted, the case took an unexpected turn.
Prompted by observations of the Commission, the court invited submissions on whether, having regard to the exclusion for public administrative bodies in article 1(2)(b), the dismissal was outside the scope of the Directive, with the result that the court would have no jurisdiction to decide the question.
Its answer (in its judgment of 18 October 2012, (Case C 583/10), [2013] ICR 193) was no (for reasons to which I shall return below).
Accordingly, when the appeal came back to the Court of Appeal, the issue had to be considered as one of domestic law only.
At the second Court of Appeal hearing, the primary submission for the USA was that, in order to achieve conformity with the Directive, words should be read into section 188 to exclude its operation to a foreign state engaged in the exercise of public powers.
This was rejected by Underhill LJ (with whom the other members of the court agreed).
The draftsman had made a deliberate decision not to extend the exclusion to all public administrative bodies.
This was unsurprising, given that the concept of a special employment regime for public employees recognised in some civil law countries has no equivalent in the common law, and it made sense for Parliament to have settled for a touchstone for exclusion which used common law concepts and would be (comparatively) easy to apply in the United Kingdom.
He added that the Labour Government in 1975 may have had policy reasons to extend the collective redundancy provisions to public administrative bodies, such as local authorities, given the influence at the time of public sector trade unions (para 24).
Having rejected the argument that amendments made under the European Communities Act 1972 had been outside the powers conferred by the Act, he concluded that there would need to be a further hearing to determine the Fujitsu issue.
It was regrettable but unavoidable that an issue which will in almost all other cases albeit not in this depend on EU law will have to be decided without the guidance of the CJEU (para 33) It was further ordered that in the event of an appeal to the Supreme Court, the further hearing on the Fujitsu issue should await the outcome of the appeal.
The reasoning of the CJEU
The European court held that the armed forces fell clearly within the exception for public administration or equivalent bodies under article 1(2)(b).
This was also supported by the objectives of the Directive, concerned with improving the protection of workers and the functioning of the internal market (para 39): 41.
Whilst the size and functioning of the armed forces does have an influence on the employment situation in a given member state, considerations concerning the internal market or competition between undertakings do not apply to them.
As the Court of Justice has already held, activities which, like national defence, fall within the exercise of public powers are in principle excluded from classification as economic activity It followed that dismissal of staff of a military base did not fall within the scope of the Directive, irrespective of whether or not it is a military base belonging to a non member state. (para 43)
The court also considered an argument that, even if the case fell outside the Directive, it was able to give a preliminary ruling, following cases in which the court had accepted jurisdiction where EU law had been rendered applicable by reference in domestic law.
The court explained the limits of that principle: 46.
The court has already held that where, in regulating situations outside the scope of the EU measure concerned, national legislation seeks to adopt the same solutions as those adopted in that measure, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, provisions taken from that measure should be interpreted uniformly 47.
Thus, an interpretation by the court of provisions of EU law in situations outside its scope is justified where those provisions have been made applicable to such situations by national law in a direct and unconditional way in order to ensure that internal situations and situations governed by EU
law are treated in the same way
However, the court noted, in paras 49 and 50, that the USA had had the opportunity in the tribunal to rely on state immunity, or on special circumstances under section 188(7).
It followed that the court did not have sufficiently precise indications that the national law made the solutions adopted by the Directive automatically applicable in such a case (para 51), so as to make the provisions of the Directive applicable in a direct and unconditional way (para 52).
The court continued: 53.
It is true that it is in the interests of the Union to safeguard the uniformity of the interpretations of a provision of an EU measure and those of national law which transpose it and make it applicable outside the scope of that measure. 54.
However, such is not the case where, as in the case in the main proceedings, an EU measure expressly provides a case of exclusion from its scope. 55.
If the EU legislature states unequivocally that the measure which it has adopted does not apply to a precise area, it renounces, at least until the adoption of possible new EU rules, the objective seeking uniform interpretation and application of the rules of law in that excluded area. 56.
Therefore, it cannot be stated or presumed that there was an interest of the Union that, in an area excluded by the EU legislature from the scope of the measure which it adopted, there should be a uniform interpretation of the provisions of that measure.
The vires issue
The arguments
The scope of section 2(2)(b) was considered by the Court of Appeal in Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337.
The Registered Design Regulations 2001 were made under section 2(2) in order to implement Directive 98/71/EC, concerning the approximation of laws relating to registered designs.
Article 11(8) was a transitional provision which granted member states the option of retaining their old laws in relation to designs that were already registered.
The Court of Appeal rejected an argument that the transitional provisions in the Regulations went further than permitted by the Directive.
Of section 2(2)(b) Waller LJ said that the words arising out of and related to should be read in the context of section 2 itself, the primary purpose of which was to give effect to the laws which under the EU Treaties the United Kingdom had agreed to make part of its own laws.
He observed: It seems to me that section 2(2)(b) from its position in section 2, from the fact that it adds something to both subsections (1) and (2), and from its very wording is a subsection to enable further measures to be taken which naturally arise from or closely relate to the primary purpose being achieved. (para 39) (emphasis added) May LJ contrasted sections 2(2)(a) and (b): There is a distinction between providing something which, although it is a choice, is a choice which the implementation of the Directive requires you to make, and one which is not so required, but which has the effect of tidying things up or making closely related original choices which the Directive does not necessarily require.
Section 2(2)(b) is confined by its words and context . (para 47) (emphasis added)
In the present case the Court of Appeal accepted that the 1995 Regulations were not within the scope of section 2(2)(a) of the 1972 Act, but held that they were authorised by section 2(2)(b).
Underhill LJ said: The decision to go beyond the requirements of the Directive by extending the employee representative rights to employees in PABs (except those in Crown employment) may, as a matter of strict analysis, reflect a substantive policy choice made by the Secretary of State; but, as the judgments in the Oakley Inc case make clear, that is not in itself objectionable.
In fact all that he was doing was plugging the rights created by the Regulations in cases where no trade union was recognised into the pre existing scheme of the Act and thereby reproducing, in the case of this late discovered lacuna in the implementation of the Directive, the selfsame decision as Parliament had already made in enacting the primary legislation in 1975 and 1992.
It would indeed have been an extraordinary anomaly if the kinds of employment where the obligation to consult arose differed as between cases where a trade union was recognised and cases where it was not; and it was not only natural but right for the Secretary of State in making the 1995 Regulations to ensure that the position was the same in both cases.
In my judgment this is precisely the kind of closely related original choice which the Directive does not require but which has the effect of tidying things up that May LJ identifies in his judgment in Oakley Inc case. (para 32)
In this court, Mr Beloff QC supports the reasoning of the Court of Appeal.
Article 5 of the Directive made clear that the Directive sought to achieve minimum harmonisation only.
Member states were free to enact laws more favourable to workers than those required by the Directive.
Section 188, as applied to public administrative bodies, arose out of the obligations under the Directive in the sense of extending them further, as the UK was entitled to do by article 5, or alternatively it related to those because the subject matter (the right to consultation) was identical to the right to be consulted in the Directive.
By the same token, the 1995 Regulations, in filling a gap in the UK legislation identified by the European court in Commission of the European Communities v United Kingdom (Case C 383/92) [1994] ICR 664 fell squarely within the scope of section 2(2)(b) of the 1972 Act under which they were made.
This reasoning is challenged by Mr Cavanagh QC.
Mrs Nolans employment by the public employers such as the USA was not within the scope of the 1992 Act as enacted by Parliament.
It was brought within it solely by the amendments made by the 1995 Regulations.
The Court of Appeal were right to find that the Regulations were outside the scope of section 2(2)(a), but were wrong to find that they were within section 2(2)(b) as matters arising out of or related to a community obligation.
The CJEU judgment in the present case has made clear that decisions relating to the closure of foreign military bases are within an area excluded by the EU legislature from the scope of the measure which it adopted (judgment para 56).
It follows that, in so far as the 1995 Regulations purported to extend the application of section 188 to employee representatives in such cases, they had nothing to do with this countrys Community obligations, but arose solely from domestic policy considerations.
They were not dealing with matters arising out of or related to EU obligations in any relevant sense.
Discussion
I start from the words of Lord Hope in R (Risk Management Partners Ltd)
Brent London Borough Council [2011] 2 AC 34, para 24: It is true that section 2(2) of the European Communities Act 1972 is in wide terms.
It does not confine any measures made under it to doing the minimum necessary to give effect to a Directive.
But, if it is to be within the powers of the subsection, the measure has to arise out of or be related to an EU obligation.
As Waller LJ said in Oakley Inc v Animal Ltd , the primary objective of any secondary legislation under section 2(2) must be to bring into force laws which, under the Treaties, the United
Kingdom has agreed to make part of its laws
The words related to in section 2(2)(b) taken out of context are so wide as to be almost meaningless.
A relationship may be very close or very distant without distortion of the word.
In one sense, as Mr Beloff QC appeared to suggest, any provision dealing with employees rights to consultation could be said to be related to the subject matter of this Directive, and hence within the scope of the section.
More specifically, it may be said in the present context, Parliament has in the 1992 Act established a clear and direct relationship, as a matter of domestic law, between the employments covered by the Directive, and the extension to equivalent employments under public administrative bodies.
If that were sufficient, then it would no doubt follow that, when legislative action was required to fill gaps in the transposition of the Directive into domestic law, the same relationship would cover the decision to take equivalent action in respect of the extension.
In Oakley the Court of Appeal sought to avoid an unduly broad interpretation by introducing additional qualifications: naturally arising, closely related, tidying up.
Such glosses are not justified by normal rules of interpretation, and may beg as many questions as they solve.
Thus in the present case, it may be said that extending the 1995 Regulations to public administrative bodies is closely related to to the main purpose of the amendments, or (as Underhill LJ thought) simply a matter of tidying up the 1992 Act in the light of the European courts decision.
Such language provides no answer to the underlying problem that the relationship is one created entirely by a domestic statute, and has no obvious relevance to the purpose of the 1972 Act.
Some limitation is necessary to ensure that the power to legislate outside the normal Parliamentary process is kept within bounds.
The key, as Lord Hope said, at [2011] 2 AC 34, para 25, must lie in the context.
The relationship must be one relevant to the purpose of the legislation, that is to give effect to the UKs obligations in European law.
In other words it must be a relationship derived in some way from European law, not one dictated solely by considerations of domestic law.
On the other hand, as the language makes clear, the power is not confined to matters which arise directly from the European obligation the minimum necessary in Lord Hopes words, at para 24.
Related to implies the possibility of a less direct connection.
The interpretation of the 1972 Act is of course a matter ultimately for the domestic, not the European courts.
However, the reasoning of the CJEU in the present case suggests the basis for a principled and workable distinction, corresponding to the limits of its own jurisdiction.
This would have the additional advantage of avoiding the problem, noted by Underhill LJ, of a European question of general importance (the Fujitsu issue) having to be decided without the possibility of recourse to the European court.
The court saw its jurisdiction as extending to cases where European provisions are made applicable by national law in a direct and unconditional way to internal situations outside their direct scope.
A relationship adequate to give jurisdiction to the European court might be thought an adequate relationship also for the purpose of the 1972 Act.
However, that solution is not available in this case.
The effect of article 1(2)(b), as found by the court, is to exclude public administrative bodies entirely from the scope of the Directive, and to renounce any European interest in that excluded area.
I note with respect the different view taken by Lord Mance on what he describes as a difficult and borderline question.
As I understand his judgment (para 71), he might have reached a different conclusion, if TULCRA in its amended form had been the product of subordinate rather than primary legislation.
I would only comment that I find it difficult to understand why the status of the original legislation should impinge materially on the relationship required by section 2(2)(b) to support the 1995 Regulations.
Mr Beloff QC relies on article 5 of the Directive by which member states are permitted to introduce laws or other measures which are more favourable to workers .
Although the CJEU did not refer in terms to article 5, its reasoning makes it difficult to see the present extension as coming within its scope.
That allows terms more favourable to workers as defined in the Directive.
But by article 1.2(b), as interpreted by the CJEU, the Directive has no application to workers in public administrative bodies, who are outside its scope altogether and hence outside the reach of article 5.
The power of the national legislature to extend similar protection to such workers is a matter purely of domestic competence, and owes nothing to the Directive.
I should add that the same reasoning does not necessarily apply to time limited contracts, which, as already noted, are excluded by article 1(2)(a) of the Directive, but not from the domestic legislation.
Employees under such contracts may still be workers for the purposes of the Directive, and therefore potentially within the scope of article 5.
Conclusion
I find it difficult therefore to avoid the conclusion that the extension of the 1995 Regulations to public administrative bodies, such as the appellants, was not within the power conferred by the 1972 Act, and that the appeal should be allowed on this ground.
I reach this position with some diffidence, given that the wider implications of this interpretation of the 1972 Act have not been explored, and we have had no submissions from the UK government which is primarily interested in those issues.
As already indicated, before reaching a final decision, I would have wished to invite the UK government to make representations on this issue.
That will not now be necessary, in view of the opposite conclusion reached by Lord Mance, with the agreement of the rest of the court.
I regret that, because of the narrow basis on which the appeal has come before us, we have not been able to provide any assistance on the resolution, as a matter now of domestic law, of the difficult Fujitsu issue, which, unless the parties otherwise agree, will have to revert to the Court of Appeal.
For these reasons, I would have allowed the appeal on the vires issue, but dismissed all the other grounds of appeal.
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In 2006 the United States of America (USA) closed a watercraft repair centre (the Base) which it maintained in Hampshire.
Mrs Nolan was employed at the Base by the appellant and was dismissed for redundancy the day before it closed.
Mrs Nolan complained that the appellant had failed to consult with any employee representative when proposing to dismiss her.
The appellant denies any such duty.
Mrs Nolan brought Employment Tribunal proceedings under Part IV Chapter II of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCRA) as amended by The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587) (the 1995 Regulations).
TULCRA as originally enacted by Parliament went beyond the requirements of European law under Council Directive 77/187/EEC (or now under Council Directive 98/59/EEC) in extending a right to be consulted prior to redundancies to employees of public administrative bodies, such as those at the Base.
But it fell short of European law in that it was confined to circumstances where employees enjoyed union representation recognised by the employer.
In 1994 the Court of Justice identified this failure, and in consequence the Secretary of State relying on the power to make secondary legislation conferred by section 2(2) of the European Communities Act 1972 (the 1972 Act) made the 1995 Regulations which amended TULCRA to require employee representatives to be designated for consultation purposes in all situations covered by TULCRA.
On the basis of TULCRA as amended, Mrs Nolan succeeded before the Employment Tribunal and was granted an order for remuneration for a one month period.
This Employment Appeal Tribunal upheld the order.
The Court of Appeal referred to the Court of Justice the question whether the obligation to consult arose on a proposal or only on a decision to close the base (the UK Coal Mining and Fujitsu issue: see [2008] ICR 163 and Case C 44/08; [2009] ECR I 8163).
The Court of Justice declined jurisdiction, holding that (i) Directive 98/59/EEC being an internal market measure covering economic activities, national defence and the dismissal of staff at a military base are outside its scope; and (ii) it was not appropriate to rule on a question relating to a public administrative establishment to which the Directive did not apply.
The Court of Appeal ordered a further hearing of the UK Coal Mining/Fujitsu issues.
The USA appeals to the Supreme Court on three grounds: (1) TULCRA should in the light of the Court of Justices ruling be construed as not applying to employment by a public administrative establishment, at least as regards non commercial (jure imperii) activity such as closure of a military base decided at the highest level in Washington;
(2) the same result should be reached in the light of principles of international law and EU law; (3) In any event, the Secretary of State exceeded the powers conferred by s.2 of the 1972 Act when making the 1995 Regulations, in so far as these went further than EU law requires by protecting workers without trade union representation employed by public administrative establishments.
The Supreme Court dismisses the USAs appeal by a majority of 4:1.
The case is remitted to the Court of Appeal for determination, as necessary, of the UK Coal/ Fujitsu issues.
Lord Mance gives the lead judgment, with which Lord Neuberger, Lady Hale and Lord Reed agree.
Lord Carnwath dissents.
Ground (1): That the present situation might not have been foreseen by the legislature is not a reason for reading into clear legislation a specific exemption which would not reflect the scope of any exemption in EU law, especially when the foreign state could have invoked state immunity but did not do so in time [24, 25].
The USAs first submission is rejected [26].
Ground (2): Jurisdiction is primarily territorial in both international and domestic law [29 30].
TULCRA regulates the procedures for dismissal on the grounds of redundancy of employees at institutions in England, Wales and Scotland.
The UK is not legislating extra territorially when it covers proposals or decisions about domestic redundancies developed or taken abroad [31].
TULCRA contains no exception for such cases.
The USAs submission would render largely otiose the procedures and time for a plea of state immunity.
State immunity is an adjudicative bar separate from a foreign states underlying responsibility.
The USAs case elides two distinct principles. [35 38].
This appeal concerns situations covered by TULCRA but falling outside EU law, so the USA cannot rely on EU law as entitling it to protection from discrimination [45].
Further EU law does not protect third country nationals from discrimination or therefore non member states [46 47].
The USAs second submission is therefore also rejected [47].
Ground (3): The power conferred under s.2(2) of the 1972 Act to make delegated legislation for the purpose of dealing with matters related to any obligation of the United Kingdom under EU law envisages a close link between the content of any such legislation and the relevant obligation [61].
While each case must be considered on its merits, the domestic extension of an EU regime into areas outside or specifically excluded from that regime may well fall outside s.2(2) [66].
In the present case, however, Parliament had by its original enactment of TULCRA established a unified domestic regime drawing no distinction between different parts of TULCRA within or outside the EUs internal market competence.
In these unusual circumstances, Parliament could be taken to have created for the domestic purposes of s.2(2) of the 1972 Act a relationship which the Secretary of State was entitled to take into account and continue by and in the 1995 Regulations [72].
The submission that the 1995 Regulations went beyond the Secretary of States powers in protecting employees of public administrative establishments without trade union representation would therefore also be rejected [77 73].
Lord Carnwath (dissenting) considers that the relationship between TULCRA and the Directive created by domestic statute has no obvious relevance to the purpose of the 1972 Act [94 95].
Some limitation is necessary to ensure that the power to legislate outside the normal parliamentary process is kept within bounds [96].
Lord Carnwath would dismiss the appeals on the first two issues, but allow the appeal on the third issue [100 101].
the Courts decision.
It does not form part of the reasons for the decision.
The full judgment of the Court is the only authoritative document.
Judgments are public documents and are available at: http://supremecourt.uk/decided cases/index.html
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This appeal raises an issue as to the applicability of the equitable doctrine of marshalling.
Lord Hoffmann explained the doctrine in characteristically pithy terms in In re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, 230 231 as: [A] principle for doing equity between two or more creditors, each of whom are owed debts by the same debtor, but one of whom can enforce his claim against more than one security or fund and the other can resort to only one.
It gives the latter an equity to require that the first creditor satisfy himself (or be treated as having satisfied himself) so far as possible out of the security or fund to which the latter has no claim.
It is perhaps also worth setting out how Rose LJ explained the doctrine in
the same case in the Court of Appeal [1996] Ch 245, 271: The doctrine of marshalling applies where there are two creditors of the same debtor, each owed a different debt, one creditor (A) having two or more securities for the debt due to him and the other (B) having only one.
B has the right to have the two securities marshalled so that both he and A are paid so far as possible.
Thus if a debtor has two estates (Blackacre and Whiteacre) and mortgages both to A and afterwards mortgages Whiteacre only to B, B can have the two mortgages marshalled so that Blackacre can be made available to him if A chooses to enforce his security against Whiteacre.
For the doctrine to apply there must be two debts owed by the same debtor to two different creditors.
The question in the present case is whether it is open to the respondent, the Serious Organised Crime Agency (SOCA), to invoke the doctrine so as to marshal a charge granted to the Royal Bank of Scotland (RBS) over the home of Mrs Szepietowski and an investment property she owned, with a later charge granted to SOCA over the investment property alone, thereby enabling SOCA to look to Mrs Szepietowskis home to satisfy the sum secured by the second charge. (Pursuant to the Crime and Courts Act 2013, SOCA was replaced by the National Crime Agency with effect from 7 October 2013, but it is more convenient to retain the nomenclature used in the parties argument and most of the documentation in these proceedings).
The facts giving rise to the issue
The Settlement Deed
In 1999, Mr Szepietowski was one of two partners in a firm of solicitors which received a transfer of some US $2.5m which was alleged to represent the proceeds of drug trafficking (although it is right to record that neither Mr Szepietowski nor his wife has ever been charged with any offence, and they both deny any wrongdoing).
In July 2005, the Assets Recovery Agency (ARA, whose staff, assets and functions were transferred to SOCA in March 2008 pursuant to the Serious Crime Act 2007) obtained an interim receiving order over certain assets acquired with the US $2.5m.
Three months later, the receiving order was extended to a number of other properties, which had allegedly been acquired with proceeds of mortgage fraud and with income concealed from Her Majestys Revenue and Customs (HMRC).
In November 2006, the ARA began civil proceedings against Mr and Mrs Szepietowski seeking to confiscate the various properties on the basis that the proceeds of crime could be followed into them, and they accordingly constituted recoverable property within the meaning of section 266 of the Proceeds of Crime Act 2002 (the 2002 Act).
There were 20 properties in total, and they included (i) Ashford House, Weybridge (Ashford House), which was Mr and Mrs Szepietowskis home, (ii) 2 and 2a Thames Street, Walton on Thames (Thames Street), (iii) 3 and 5 Church Street, Esher (Church Street), (iv) 2, 4, and 6 Torrington Close, Claygate, and (v) 109 Hare Lane, Claygate (together Claygate).
All these five properties were registered in the name of Mrs Szepietowski, and each of them was subject to an all monies charge in favour of RBS.
The parties have treated RBS as having a single charge over the five properties (the RBS Charge), and I will do the same.
Mr and Mrs Szepietowski and the ARA settled the proceedings on terms contained in a consent order dated 16 January 2008, which stayed the ARAs claim save for the purpose of enforcing the terms of settlement.
Those terms were contained in documents attached to the consent order.
Most of the terms were in a Deed of Settlement (the Settlement Deed) dated 15 January 2008, which included a schedule which had three annexes.
Annexe A listed the 20 properties, and recorded the secured creditor of, the value of, the amount charged on, and the equity in, each property.
Annexe B listed 13, and Annexe C a further two, of those 20 properties, with identical details plus the identity of the registered proprietor. (The figures in the Annexes were in fact somewhat historic, but nothing hangs on that for present purposes).
The general scheme of the arrangement embodied in the Settlement Deed was that the 13 properties in Annexe B were vested in the Trustee for Civil Recovery (the Trustee) on behalf of the ARA, the Trustee was also to have the two properties in Annexe C vested in him, and the balance of the properties in Annexe A were to remain with their registered proprietors free of the receiving order.
Any property so vested or retained was to be subject to any existing charges.
Clause 2.1 of the Settlement Deed provided that it was made in full and final settlement of all of the [ARAs] claims against Mr and Mrs Szepietowski in relation to the properties and the other assets listed in Annexe A and in relation to their tax liabilities.
One of the properties listed in Annexe A (but not in Annexe B or C) was Ashford House, which was accordingly to revert to Mrs Szepietowski free of the receiving order.
In Annexe A, Ashford House was recorded as having a value of 2.3m, and charged to The Mortgage Business plc (TMB) and RBS for about 1.46m, but it is clear that this was only the amount outstanding to TMB.
Ashford House was not in Annexe B or C.
By clause 3.1 of the Settlement Deed, Mr and Mrs Szepietowski agreed to vest in the Trustee the 13 Transfer Properties listed in Annexe B, and the two Additional Properties listed in Annexe C.
The Transfer Properties included Thames Street and Church Street.
They were recorded as valued at 570,000 and 785,000 respectively, and (together with the Additional Properties) as (i) charged to RBS for a debt of about 3.225m and (ii) having equity of about 1.6m.
Annexe C contained the two Claygate properties, at Torrington Close and Hare Lane, which were recorded as valued at 2.67m and 800,000 respectively, and, together with Thames Street and Church Street, as charged to RBS for a debt of about 3.225m, and having equity of about 1.6m.
The valuations of the Additional Properties, ie of Claygate, in Annexe C suggested that the liability to RBS could be fully met from their sale, and indeed the parties anticipated that the ARA would, in effect, be able to realise the Transfer Properties free of any liability to RBS.
They recorded at the end of Annexe B that this would have enabled the ARA to recover just over 5.4m from the sale of the Transfer Properties after clearing all mortgages thereon.
At the time of the settlement, Mrs Szepietowski was negotiating to sell the Additional, Claygate, Properties, and clauses 4.1 4.3 of the Settlement Deed enabled and required her to proceed with the proposed sale.
If she had not bindingly agreed to dispose of Claygate within six months, then, by clause 4.4, she had to elect whether Claygate should remain vested in the Trustee, who would be free to dispose of them, or be transferred to her by the Trustee.
Clause 4.5 of the Settlement Deed is of some importance for present purposes, and it was in these terms (with paragraphs added for convenience): (i) If the Trustee wishes to sell [Thames Street and Church Street] (the Remaining RBS properties) before the Additional [Claygate] Properties are sold then [Mr and Mrs Szepietowski] agree that, if [RBS] consent, the [RBS Charge] over these properties and the Additional Properties in favour of [RBS] shall be transferred to the Additional Properties only. (ii) If [RBS] does not so consent then [Mrs] Szepietowski will grant a charge to the Trustee for the sums paid by the Trustee to [RBS] from the sale proceeds of the Remaining RBS properties.
Clause 4.6 of the Settlement Deed contained an agreement that the total funds from the sale of the Additional Properties [would] be used in priority to the funds from the sale of the Remaining RBS Properties [ie Thames Street and Church Street] in satisfaction of the [RBS] Charge.
Clause 4.7 provided that, on the sale of Claygate, the proceeds would be used to pay off what was owing under the RBS Charge insofar as it was registered against those properties, and any balance would be fully accounted for by the Trustee to [Mrs] Szepietowski without deduction or set off.
The Settlement Deed contained a number of other provisions (including, in clause 13.4 an obligation on Mr and Mrs Szepietowski each to pay HMRC 687,500 in respect of back tax and national insurance payments in respect of the 14 tax years ending 2006/2007), but it is unnecessary to refer to them for present purposes.
Subsequent events
Towards the end of January 2008, Church Street, Thames Street and Claygate were duly vested in the Trustee, subject to the RBS Charge.
However, the sale of Claygate did not proceed as anticipated.
The Trustee implemented clause 4.5(i) of the Settlement Deed, and marketed Church Street and Thames Street, which were sold in April 2008 for 715,000 and 560,000 respectively.
RBS declined to release them from the RBS charge, and consequently the proceeds of sale were paid over to RBS.
It was becoming clear that the sum likely to be realised on the sale of Claygate (when added to the proceeds of sale of Church Street and Thames Street) would scarcely be sufficient to clear the RBS Charge.
This state of affairs was in marked contrast to the common expectation of the parties at the time of the settlement, when they had anticipated that the proceeds of sale of Claygate alone (estimated in Annexes A and C to be worth around 3.54m) would be sufficient to clear the debt to RBS (recorded in the Annexes as being about 3.225m).
A dispute then arose as to the properties over which Mrs Szepietowski was obliged to grant SOCA (who had by now replaced the ARA and the Trustee) a charge pursuant to clause 4.5(ii) of the Settlement Deed.
In March 2009, Henderson J decided that the charge was to be over Claygate as Mrs Szepietowski contended, and not over Ashford House as well, as SOCA argued: [2009] EWHC 655 (Ch).
At that hearing, Mrs Szepietowski made it clear that she wished Claygate to be vested in her pursuant to her obligation to elect in clause 4.4 of the Settlement Deed see para 35 of the judgment.
Accordingly, as he recorded in the following paragraph, Henderson J ordered that Claygate be re transferred by the Trustee to Mrs Szepietowski, and that she grant a charge over them to SOCA.
Claygate was duly revested in Mrs Szepietowski on 4 September 2009, and on the same day she granted a charge over Claygate to SOCA (the 2009 Charge).
Clause 1 of the 2009 Charge was concerned with interpretation, and included a definition of Secured Amount as being just over 1.24m, together with any sums due to SOCA under its terms.
The figure of 1.24m was equal to the net proceeds of sale of Thames Street and Church Street, which had been paid in full to RBS under the RBS Charge, but which SOCA and the Szepietowskis had hoped would be paid to SOCA under clause 4.5(i) of the Settlement Deed.
Clause 2 of the 2009 Charge was headed Covenants, and clause 2.1 was a covenant by Mrs Szepietowski that on completion of any sale of the Charged Property effected by her, after paying the costs of sale, she would apply the proceeds of sale in settlement of the Secured Amount.
Clause 2 also contained provisions which sought to ensure that any such sale would be effected at the best price.
Clause 3 of the 2009 Charge was headed Charges, and, under it, Mrs Szepietowski charged the Charged Property and the proceeds of sale thereof by way of legal mortgage to SOCA as continuing security for the settlement of the Secured Amount.
Clause 7.1 provided that the Secured Amount shall become due and the security conferred by this Charge will become immediately enforceable and the power of sale and other powers conferred by section 101 of the Law of Property Act 1925 will be immediately exercisable after four months or, if earlier, on any breach of the 2009 Charge by Mrs Szepietowski, or her death or insolvency.
Clause 7.2 provided that for the avoidance of doubt, clause 7.1 did not constitute a covenant by [Mrs Szepietowski] to pay the Secured Amount to [SOCA].
Around December 2009, Mrs Szepietowski sold Claygate for a total of 2.33m, substantially less than had been anticipated two years earlier.
The 2009 Charge was, of course, a second charge over Claygate, as it was still subject to the RBS Charge, and when the net proceeds of sale of Claygate were used to pay off RBS pursuant to the RBS charge, the relatively derisory figure of 1,324.16 was all that was left to satisfy SOCAs rights under the 2009 Charge.
SOCAs marshalling claim
The competing contentions
SOCAs case is that the classic requirements of marshalling are satisfied in the present case in light of the facts that: i) ii) Claygate and Ashford House were both owned by Mrs Szepietowski, Claygate and Ashford House were both subject to the RBS charge, which secured the moneys owing to RBS by Mr and Mrs Szepietowski, iii) Claygate, but not Ashford House, was subject to the later 2009 Charge in favour of SOCA, which was a second mortgage which secured some 1.24m, iv) RBS was repaid the debt owing to it out of the sale proceeds of Claygate, while Ashford House remains unsold, and The 1.24m secured by the 2009 Charge remains unpaid (save to a minimal extent) despite the sale of Claygate. v) Accordingly, SOCA contends that, as second mortgagee of Claygate, which was subject to a first mortgage, together with Ashford House, in favour of RBS, it is entitled to look to Ashford House in order to obtain payment of the sum which was secured by the 2009 Charge on Claygate, as the proceeds of sale of Claygate were used to pay off what was due to RBS.
Mrs Szepietowskis argument to the contrary has two strands.
The first strand raises the contention that, in the light of the terms of the Settlement Deed and the 2009 Charge, SOCAs marshalling claim cannot be maintained.
The second strand is that, even if marshalling could otherwise be justified, it cannot succeed, as the property against which SOCAs marshalling claim is focussed, namely Ashford House, is and was the home of Mrs Szepietowski, the mortgagor, whereas the property against which the RBS Charge was enforced is not and was never her home.
The decisions of the courts below
Henderson J held that SOCAs marshalling claim was well founded and the Court of Appeal (Arden, Sullivan and Patten LJJ) agreed with him: see [2010] EWHC 2570 (Ch) and [2011] EWCA Civ 856 respectively.
The judgments in both courts concentrated on the first strand of Mrs Szepietowskis argument, and did not consider the second (because it was not raised).
Henderson J had held in his 2009 judgment [2009] EWHC 655 (Ch), that Ashford House was excluded from the ambit of the charge envisaged by clause 4.5(ii) of the Settlement Deed, in the light of the terms of the Settlement Deed, and in particular clauses 4.5 and 4.6.
However, in his subsequent judgment, he concluded that there was nothing in the Settlement Deed or the 2009 Charge which expressly provided, or necessarily implied, that SOCAs right to marshal was to be excluded: see [2010] EWHC 2570 (Ch), paras 27 and 37.
In particular, he did not consider that clauses 4.5 and 4.6 of the Settlement Deed or the fact that there was no debt due to SOCA from Mrs Szepietowski under the 2009 Charge, precluded marshalling.
He held that a debt due to SOCA arose from the creation of the charge, if not earlier, albeit one limited to satisfaction from the proceeds of the sale of Claygate para 46.
He also held that there was no other reason to deprive SOCA of its prima facie right to marshal para 49.
The Court of Appeal, in a judgment given by Patten LJ, agreed, and approved the reasoning, as well as the conclusion, of the Judge, although, as is frequently the position, they did not focus on all the same arguments as the Judge.
In particular, they concluded that clause 2.1 of the Settlement Deed did not preclude marshalling: (see [2011] EWCA Civ 856, para 48), and that marshalling was not precluded by the fact that it was SOCA and Mrs Szepietowski, rather than RBS, who decided to sell the Claygate properties, Thames Street and Church Street: (see at para 52).
Nor did the Court of Appeal consider that marshalling was precluded by the limited nature of the charge which Mrs Szepietowski gave, and the absence of any underlying obligation to pay the Secured Amount; that was treated as merely going to the discretion whether to exercise the equitable power to marshal: (see at para 54).
Mrs Szepietowski now appeals to this court.
Marshalling: the principles
As Paul Ali explains in his monograph, Marshalling of Securities: Equity and the Priority Ranking of Secured Debt (1999), p 12, para 2.02, the earliest surviving references to marshalling appear to be in two late 17th century cases, Bovey v Skipwith (l671) 1 Ch Cas 201 and Povyes Case (1680) 2 Free 51.
The principle was then considered in a number of 18th century cases, which Ali lists in footnote 6 on p 13.
A relatively early exposition of the law of marshalling may be found in the judgment of Lord Hardwicke LC in Lanoy v Duke & Duchess of Atholl (1742) 2 Atk 444, 446: Is it not then the constant equity of this court that if a creditor has two funds, he shall take his satisfaction out of that fund upon which another creditor has no lien .
Suppose a person, who has two real estates, mortgages both to one person, and afterwards only one estate to a second mortgagee, who had no notice of the first; the court, in order to relieve the second mortgagee, have directed the first to take his satisfaction out of that estate only which is not in mortgage to the second mortgagee, if that is sufficient to satisfy the first mortgage, in order to make room for the second mortgagee, even though the estates descended to two different persons .
It is also worth referring to the judgment of Lord Eldon LC in Aldrich v
Cooper (1803) 8 Ves Jun 382, 395, where he postulated a case where: two estates [were] mortgaged to A; and one of them mortgaged to B. He has no claim under the deed upon the other estate.
It may be so constructed that he could not affect that estate after the death of the mortgagor.
But it is the ordinary case to say a person having two funds shall not by his election disappoint the party having only one fund; and equity, to satisfy both, will throw him, who has two funds, upon that, which can be affected by him only; to the intent that the only fund, to which the other has access, may remain clear to him.
Marshalling has thus been allowed to a creditor, in a case where (i) his debt is secured by a second mortgage over property (the common property), (ii) the first mortgagee of the common property is also a creditor of the debtor, (iii) the first mortgagee also has security for his debt in the form of another property (the other property) (iv) the first mortgagee has been repaid from the proceeds of sale of the common property, (v) the second mortgagees debt remains unpaid, and (vi) the proceeds of sale of the other property are not needed (at least in full) to repay the first mortgagees debt.
In such a case, the second mortgagee can look to the other property to satisfy the debt owed to him.
Consider a case where the mortgagor owes 2m to the first mortgagee and 2m to the second mortgagee, the common property and the other property are each worth 3m, and the common property is sold, resulting in repayment in full of the first mortgagee and a reduction of 1m in the debt of the second mortgagee.
The mortgagor still owes 1m to the second mortgagee, whether or not the second mortgagee can marshal.
The only effect of the second mortgagee being able to marshal would be that it could directly enforce its outstanding 1m debt against the other property rather than falling back on the status of unsecured creditor.
This emphasises the point that marshalling only really comes into its own where the mortgagor/debtor is insolvent: marshalling improves the position of the second mortgagee as against the unsecured creditors of the debtor, not as against the debtor herself.
Of course, the fact that the second mortgagee could proceed directly against the other property, without the need for a judgment and a charging order, is a minor disadvantage to the mortgagor of the second mortgagee being able to marshal.
But Ali is correct in his statement (op cit para 4.48) that, at least in the cases where it has been held to apply, Marshalling is neutral in its impact upon the residue available to the debtor following the discharge of its creditors claims.
At one time judges expressed themselves in a way which suggested that a second mortgagee with the right to marshal could compel the first mortgagee to sell the other property to pay off the debt he was owed before having recourse to the common property.
Indeed, Lord Eldon LC referred to the second mortgagee ha[ving] a right in equity to compel the first mortgagee to resort to the other in Aldrich v Cooper 8 Ves Jr 382, 388.
However, it soon became well established that the first mortgagee had the right to have recourse to any of his securities which first come to hand and to realis[e] his securities in such manner and order as he thinks fit: per Wood V C in Wallis v Woodyear (1855) 2 Jur (NS) 179, 180, and Parker J in Manks v Whiteley [1911] 2 Ch 448, 466 respectively.
The principle behind the doctrine of marshalling has been identified by Story in his Commentaries on Equity Jurisprudence, 2nd ed (1892), pp 416 417, in these rather broad terms: The reason is obvious . [By] compelling [the first creditor with the two securities] to take satisfaction out of one of the funds no injustice is done to him .
But it is the only way by which [the second creditor with one security] can receive payment.
And natural justice requires, that one man should not be permitted from wantonness, or caprice, or rashness, to do an injury to another.
In short we may here apply the common civil maxim: Sic utero tuo ut non alienum laedas; and still more emphatically, the Christian maxim, Do unto others as you would they should do unto you.
As I see it, there are also good practical reasons for equity adopting the doctrine, namely the unattractive and adventitious benefit which would otherwise be accorded to the first mortgagee.
If marshalling was not available to the second mortgagee, the first mortgagees free right to choose the property against which he enforced could have substantial value.
In effect, he could auction that right as between the second mortgagee (who would be prepared to pay him to enforce against the other property) and the unsecured creditors of the mortgagor (who, especially where the mortgagor was actually or potentially insolvent, would be prepared to pay him to enforce against the common property).
Further, it appears to be somewhat arbitrary that, if he could not marshal, a second mortgagee who had sufficient resources and was prepared to take any associated risk, could redeem the first mortgage (on the basis of redeem up foreclose down see Megarry & Wade, The Law of Real Property, 8th ed, paras 25 110 to 113), and then protect its position as second mortgagee by selling the other property to redeem the first mortgage, before selling the common property.
So far as the limits of the applicability of the doctrine of marshalling are concerned, there are a number of cases where it has been held not to be applicable eg because there is no common debtor or where a third party mortgagee may be prejudiced.
However, we were taken to no case of specific relevance to the first strand of Mrs Szepietowskis argument.
Guidance of a very general nature may, however, be found in what Lord Eldon LC said in Ex p Kendall (1811) 17 Ves 514, 527: The equity is clear upon the authorities, that, if two funds of the debtor are liable to one creditor, and only one fund to another, the former shall be thrown upon that fund, to which the other cannot resort; in order that he may avail himself of his only security: where that can be done without injustice to the debtor or the creditor: but that principle has never been pressed to the effect of injustice to the
common debtor
On the second strand of Mrs Szepietowskis argument, there is Australian authority to support the proposition that marshalling is not available to a second mortgagee where the first mortgagee is contractually bound to look first to the other property to satisfy the debt due to him see In re Holland (1928) 28 SR (NSW) 369 and Miles v Official Receiver (1963) 109 CLR 501.
This seems to me to be correct, at least where the contract is with the mortgagor or with someone else with an interest in the other property, because the basis of the right to marshal is the arbitrariness of allowing the first mortgagees decision as to which asset to enforce against to affect the second mortgagees rights.
It also seems to me that the Australian cases accord with the approach of the Court of Appeal in Webb v Smith (1885) 30 Ch D 192.
The first strand of Mrs Szepietowskis argument
As the oral argument developed, it became apparent that the first strand of Mrs Szepietowskis argument as to why SOCA should be held to be unable to marshal involved two somewhat different contentions.
Her first contention is that the simple fact that the 2009 Charge does not secure a debt from her to SOCA, or indeed any debt at all, means that there is no right in SOCA to marshal as it seeks to do.
Alternatively, she contends that the provisions of the Settlement Deed and the 2009 Charge, coupled with the circumstances in which they were executed, demonstrate that marshalling is precluded.
I shall take those two contentions in turn.
The absence of an underlying debt from Mrs Szepietowski to SOCA
The first contention raises a point on which we were told by both counsel that there is no authority.
In all the cases (save in the so called surety exception discussed by Ali, op cit, chapter 8) where marshalling has been allowed, both the first mortgagee and the second mortgagee have been creditors of the same debtor/mortgagor.
However, in this case, at least according to her argument, Mrs Szepietowski never owed any money to SOCA other than such sum, if any, as was payable to SOCA out of the proceeds of sale of Claygate after payment of all prior claims, and that sum has been paid to SOCA; indeed, according to her case, the 2009 Charge does not secure a debt from anybody, other than that contingent sum.
Although that proposition was challenged by SOCA, I consider that it is correct.
The terms of the Settlement Deed are concerned with the ownership of, and rights over, property, and not with creating or acknowledging debts (other than Mr and Mrs Szepietowskis debts to HMRC).
And the 2009 Charge is notable for the absence of any provision which creates or acknowledges an obligation on Mrs Szepietowski, the mortgagor, to pay the Secured Amount.
All that she is obliged to do in relation to that sum under clause 2 is to use the proceeds of sale of Claygate towards settling it, after any prior obligations have been met.
It is true that clause 7.1 refers to the Secured Amount becom[ing] due, but it does not say from whom, and its language is readily explained by the terms of section 101 of the Law of Property Act 1925, to which it refers.
In any event, SOCAs contention that the 2009 Charge secured a debt due from Mrs Szepietowski is given its quietus by the unambiguous terms of clause 7.2.
It therefore appears clear to me that the 2009 Charge did not create, or acknowledge the existence of, any debt from Mrs Szepietowski, or anyone else, to SOCA, save that it rendered her liable for a contingent debt, in that she was bound to pay SOCA an amount of up to 1.24m out of such sum, if any, as remained from the proceeds of sale of Claygate after the RBS Charge was paid off.
The notion that the 2009 Charge did not impose or acknowledge an obligation to pay the Secured Amount on the part of Mrs Szepietowski is also supported by (i) the fact that the Settlement Deed, from which it originates, did not impose such a duty, (ii) the terms of clause 4.5 of that Deed which provides for the 2009 Charge (a point dealt with more fully in para 69 below), and (iii) the fact that both the Settlement Deed and the 2009 Charge originated from proceedings under the 2002 Act, whose purpose is to recover specific properties not to recover a sum of money.
The fact that the 2009 Charge involved giving SOCA security over Claygate without an underlying debt being owed by the mortgagor (or anyone else), save the contingent debt identified in para 42 above, throws up an intriguing problem in relation to the right to marshal.
There is plainly a difference between marshalling in the normal case, where the mortgage to the second mortgagee is security for a debt due from the mortgagor to the second mortgagee, and marshalling in a case such as the present, where there is no underlying debt from the mortgagor (or anyone else) to the second mortgagee (other than a contingent liability to pay a sum out of the net proceeds of sale of the common property).
As explained in paras 32 33 above, in the normal case, marshalling does not result in the liabilities of the mortgagor being increased after the sale of the common property.
However, if the second mortgagee can marshal in a case such as this, where there is no underlying debt due to it from the mortgagor, the mortgagors liabilities would be increased at least once the common property has been sold by the first mortgagee.
Thus, (i) if SOCA can marshal in this case, Ashford House would effectively be subject to a second mortgage (ranking after TMBs first mortgage see para 8 above) securing just under 1.24m, and Mrs Szepietowski would have to pay that sum to SOCA or lose her home, whereas (ii) if SOCA cannot marshal, then Ashford House would be free of any second mortgage, and Mrs Szepietowski would be free of any further liability to SOCA.
We are therefore called on to decide whether, in a case where there is no underlying debt from the mortgagor to support the second mortgage (save the contingent debt described at the end of para 42 above), (i) the second mortgagee can invoke the doctrine of marshalling because the basis for its application, as described in paras 35 and 36 above, exists, or (ii) the second mortgagee should not be able to marshal as there is no underlying debt from the mortgagor to the second mortgagee after the sale of the common property and the distribution of its proceeds of sale, and there is a fundamental, if unspoken, requirement for the doctrine to be applicable that there is a debt owing to the second mortgagee at the time when he seeks to marshal.
I refer to the alleged requirement being unspoken, as there is no judgment
which deals with this question, although many of the explanations of marshalling assume that the second mortgagee is owed an underlying debt by the mortgagor (for instance, the passages quoted from Lord Hoffmann and Rose LJ in paras 1 and 2 above refer to a debt owing to the second mortgagor), and other definitions do not (see per Lord Hardwicke LC and Lord Eldon LC in paras 29 and 30 above respectively).
In the end, I do not find any these observations of assistance on this issue because they were all made in the context of cases where there was an underlying debt due from the mortgagor which was secured by the second mortgage.
The judges concerned were simply not addressing their minds to the point at issue in this case.
I accept that it can fairly be said that the justification for marshalling,
namely that the extent or value of the second mortgagees rights should not depend on which of the first mortgagees securities is realised first, and that the underlying reasons for marshalling identified in paras 35 and 36 above, apply in the present case.
I also accept that the only difference between the result of marshalling in the cases where it has been permitted and in the present case is the identity of the party who is prejudiced by the marshalling (namely the unsecured creditors in the previous cases, as against the debtor in the present case).
Accordingly, I acknowledge the force of Lord Carnwaths reasoning in paras 101 104 below.
Nonetheless, despite Miss Harmans attractively developed argument to the contrary, I have concluded that as a matter of principle, marshalling is not available to a second mortgagee where, as here, the common property does not secure a debt due from the mortgagor, but is merely available as security for what the second mortgagee can extract from that property.
My reasoning can be put in a number of different ways, but in the end they amount to much the same thing, namely that, in such a case, there is simply nothing, in particular no debt due from the mortgagor, from which the right to marshal can arise, once the common property has been sold and the proceeds of sale distributed in accordance with the legal priorities.
As already explained, the only debt which can be said to be due from the mortgagor to the second mortgagee in a case such as this is the sum (if any) which is left from the proceeds of sale of the common property after the costs of sale and the debt due to the first mortgagee have been paid off: see clause 2.1 (supported by clause 7.2) of the 2009 Charge.
Once that (admittedly derisory) sum was paid to SOCA, there was nothing due from Mrs Szepietowski (or anyone else) to SOCA, so it is difficult to see on what basis SOCA can say that it is entitled to enforce a right to be paid out of another property owned by Mrs Szepietowski.
It is one thing for a second mortgagee, who was a secured creditor of the mortgagor and has not been paid in full (or at all) from the sale of the secured property, to be able to look to other property of the debtor to discharge a debt which remains outstanding.
It is quite another for a second mortgagee with no outstanding debt due from the mortgagor to be able to look to another property of the mortgagor to realise what it hoped to raise from the sale of the secured property.
In my judgment, once there is no debt due from the mortgagor to the second mortgagee, the second mortgagee has no right to marshal.
In this case, therefore, it follows that SOCA can have no right to marshal.
My conclusion receives support if one considers the position where the mortgagor is insolvent.
As explained in paras 32 33 above, a second mortgagee, whose mortgage secured a debt due to him from the mortgagor would (if he could marshal) either be treated as a secured creditor whose security for the debt was the other property to the detriment of her unsecured creditors, or (if he could not marshal) would join the ranks of the unsecured creditors of the mortgagors estate in respect of his debt.
If a second mortgagee with no underlying debt from the mortgagor could in principle marshal, then, were the mortgagor to be insolvent, the second mortgagee would either be treated, in effect, as a secured creditor whose security was the other property, whereas, if the second mortgagee could not marshal in such a case, it would have no claim at all against the mortgagors estate.
There would be nothing surprising about the latter possibility, whereas it would be surprising if marshalling could create what for all intents and purposes was a secured debt, when, in the absence of marshalling, there would be no debt at all.
My conclusion is also supported if the right to marshal is an incident of the second mortgage when it is granted, which appears to me to be logical and in accordance with the Judges approach: see [2010] EWHC 2570 (Ch), paras 27 and 37, as summarised in para 25 above.
It is normally easy to imply a common intention on the part of the parties to the second mortgage (the mortgagor and the second mortgagee) that there should be a right to marshal where the second mortgage secures a debt due from the mortgagor, because such a right is to the manifest advantage of the second mortgagee and of no significance either way to the mortgagor (see paras 32 33 above).
However, where there is no underlying debt due from the mortgagor (other than what the second mortgagee can extract from the common property), it would be plainly contrary to the mortgagors interest that the second mortgagee should be able to marshal; accordingly, normal principle would suggest that, at least in the absence of special facts, there should be no right to marshal in such a case.
I should briefly revert to the notion that the absence of an underlying debt should be a factor which goes to the discretion of the judge when deciding whether to permit the second mortgagee to marshal, as suggested by the Court of Appeal at para 54 of its judgment.
Not only does that seem to me to be wrong in principle, as already explained.
It also appears to involve a recipe for uncertainty.
Marshalling is an equitable right (or remedy), but that does not mean that its exercise should depend too readily on the individual merits of the case.
It should, so far as possible, be governed by clear principles so mortgagors and mortgagees know where they stand.
Accordingly, I conclude that, where the second mortgage does not secure a debt owing from the mortgagor to the second mortgagee, the right to marshal should not normally exist once the common property is sold by the first mortgagee and the proceeds of sale distributed, because there would be no surviving debt owing from the mortgagor to the second mortgagee.
In such a case, equity should proceed on the basis that the second mortgagee normally takes the risk that the first mortgagee will realise his debt through the sale of the common property rather than the sale of the other property.
I draw some support from the observation of Lord Eldon LC in Kendall 17
Ves 514, 527 that the doctrine of marshalling has never been pressed to the effect of injustice to the common debtor.
Of course, this can be said to beg the question in the sense that it may be a matter of debate as to whether it would wreak an injustice on the mortgagor in a case such as this to permit marshalling.
However, if one bears in mind that marshalling, as it has been understood normally, involves no net increase in the liability of the debtor/mortgagor when the second mortgagees right of marshalling arises, I consider that the observation tends to support the notion that the doctrine of marshalling does not normally apply where the second mortgagee does not secure a debt from the mortgagor.
Finally on this aspect, I have intentionally used the word normally in paras 56 57 above, because marshalling is an equitable remedy.
Accordingly, whether it is available in any particular case may depend on the circumstances, just as it may depend on the circumstances of a case where it would prima facie apply, whether it actually does apply.
Notwithstanding what I have said in para 55, it would be wrong to rule out the possibility of an exceptional case, where the generalisations in para 56 or para 57 would not apply, although absent express words which permit or envisage marshalling, I find it hard to conceive of such a case.
As I understand it, if, as I have concluded, marshalling is not normally open to a second mortgagee where there is no underlying debt, SOCA does not contend that this is an exceptional case where it would be open to it.
Therefore Mrs Szepietowskis remaining two contentions need not be addressed.
However, it is right to express a view upon them, as they were fully argued and may be of some significance in future marshalling disputes.
The terms of the Settlement Deed and the 2009 Charge
If, contrary to the above conclusion, marshalling should be available to a
second mortgagee where there is no underlying debt from the mortgagor in the same way as where there is such an underlying debt, I would still have allowed Mrs Szepietowskis appeal on the basis of the other contention advanced as part of the first strand of her argument.
As explained in para 25 above, the courts below approached the issue on the basis that marshalling should not be excluded unless the parties expressly agreed that it should be, or unless its exclusion was necessarily implied by the terms of the 2009 Charge.
Marshalling is an equitable remedy or right, and it should not therefore be available to a second mortgagee in circumstances where it would be inequitable to allow it.
While there is considerable overlap between the test applied by the courts below and inequitability, and while, as is reflected in para 55 above, any court must be careful to avoid an approach to equity which is too open textured or subjective, I consider that the approach of the courts below involved setting too high and too rigid a hurdle for a party seeking to mount a case against marshalling.
In my view, the correct approach is to ask whether, in the perception of an
objective reasonable bystander at the date of the grant of the second mortgage, taking into account, in very summary terms, (i) the terms of the second mortgage, (ii) any contract or other arrangement which gave rise to it, (iii) what passed between the parties prior to its execution, and (iv) all the admissible surrounding facts, it is reasonable to conclude that the second mortgagee was not intended to be able to marshal on the occurrence of the facts which would otherwise potentially give rise to the right to marshal.
It is true that the possibility of marshalling can only arise some time after
the mortgage is granted (and indeed that it may never arise), and it is true that facts could arise after the second mortgage which render it inequitable that the second mortgagee should have (or should not have) the right to marshal.
However, it seems to me that the starting point for deciding whether there should be a right to marshal must be when the second mortgage is created.
In the absence of relevant subsequent developments, the question must be judged as at that date.
Furthermore, it appears to me to accord with principle that the question must be judged objectively, based on what passed between, was known to, and would consequently have been reasonably understood by, the parties.
In my view, a combination of factors in this case establish that, even if, given the facts summarised in para 22 above, the normal presumption would be that SOCA, as the second mortgagee, should be entitled to marshal, it should not be able to do so in this case.
First, the 2009 Charge was entered into to give effect to a claim under the 2002 Act.
As Lord Carnwath points out in his judgment, ARAs (and now SOCAs) rights and powers are purely statutory in nature.
For present purposes, its task under the 2002 Act was to identify, to claim and, through a court order, to obtain recoverable property see sections 243, 266, 276 and 304 310.
SOCAs rights under the 2002 Act were thus against specific assets of a respondent, and there could have been no question of a debt being created in favour of the ARA against a person such as Mrs Szepietowski, unless, of course, she had agreed to it, which, as explained above, she had not.
Accordingly, it seems unlikely that the parties to the 2009 Charge could have intended SOCA to have a claim against a property which was not recoverable under the 2002 Act.
Secondly, there is the point that it would potentially be to the disadvantage of one of the parties to the 2009 Charge, namely Mrs Szepietowski, if the other party, SOCA, had the right to marshal.
Of itself, this cannot be decisive, but, because there is no underlying debt from the mortgagor, this would make the normal presumption in favour of marshalling less strong than it would be in the normal case where there is an underlying debt due from the mortgagor. (This is not inconsistent with the point made in para 55 above, because, for present purposes, I am assuming, contrary to my earlier conclusion, that the absence of an underlying debt does not vitiate the right to marshal).
Thirdly, as explained in paras 7 and 8 above, Ashford House was included in Annexe A, but not in Annexe B or C, to the Settlement Deed, so it is clear that the parties intended it to remain with Mrs Szepietowski, unencumbered by any liability to SOCA.
It would therefore be somewhat curious if the effect of the 2009 Charge, which was executed pursuant to the Settlement Deed, should have the result of encumbering Ashford House with a liability to SOCA.
Fourthly, in the Annexes, the parties did not treat Ashford House as subject to the RBS Charge, unlike Church Street, Thames Street and Claygate (see paras 8 and 9 above).
Given that it is fundamental to SOCAs marshalling claim that Ashford House was subject to the RBS Charge, it is again somewhat curious that this claim arises out of a charge executed pursuant to a contract which plainly proceeds on the assumption that it was not.
Fifthly, particularly in the context of these three points, the fact that the Settlement Deed is expressed to be in full and final settlement of all claims SOCA may have relating to the properties in Annexe A (see para 8 above) is not entirely easy to reconcile with a subsequent marshalling claim by SOCA against Ashford House.
Sixthly, the effect of clauses 4.4 and 4.5 of the Settlement Deed, as explained in paras 11 and 12 above, is that Mrs Szepietowski would only have had to grant a charge over Claygate if three separate conditions were satisfied, namely (i) under clause 4.5(i), SOCA decided it wanted Thames Street and Church Street sold, (ii) under clause 4.5(ii), RBS refused to release those properties from the RBS Charge, and (iii) under clause 4.4, Mrs Szepietowski decided to have Claygate vested back in herself (as she could scarcely have granted SOCA a charge over a property it owned).
If any of these three requirements had been unsatisfied, there would have been no 2009 Charge, and, of course, without that charge there would have been no possibility of marshalling, and therefore no possibility of SOCA claiming that any sum was secured in its favour over Ashford House.
It seems particularly unlikely that SOCAs ability to mount such a claim would have been intended to depend on conditions (i) or (iii).
Seventhly, over and above these points on the contractual documentation, there is the point that Ashford House was Mrs Szepietowskis home.
Common sense suggests that it was one of the relatively few properties in Annexe A which was not vested in the Trustee, because of that fact.
The Settlement Deed represented a compromise which left Mr and Mrs Szepietowski with some properties, and it seems very likely that they would have been particularly keen to keep their home, and that SOCA accepted this in the Settlement Deed.
That does not fit comfortably with the idea that SOCA and Mrs Szepietowski can have intended that a document subsequently executed pursuant to that Deed should lead to a substantial potential charge over that home.
In my view, the combination of these various factors establishes that, even if a second mortgagee whose mortgage secures no underlying debt from the mortgagor is entitled to marshal, the contractual documentation and background facts in this case establish that it would be inequitable for SOCA to be permitted to marshal against Ashford House.
To permit SOCA to marshal would involve flying in the face of the understanding of both parties to the mortgage said to give rise to the right, namely the 2009 Charge, as revealed in the 2009 Charge itself, and the Settlement Deed from which it originates and indeed to which it refers in its preamble.
The second strand of Mrs Szepietowskis argument
Mrs Szepietowski contends that the fact that Ashford House is her home means that RBS would not, in reality, have been able to enforce its rights under the RBS Charge against Ashford House before it could have enforced its rights against Claygate.
Accordingly, in reliance on the principle described in para 38 above and the Australian decisions there cited, In re Holland 28 SR (NSW) 369 and Miles v Official Receiver 109 CLR 501, she contends that marshalling would not, in any event, be available to SOCA.
This argument relies on two separate legal points.
The first is the protection given by section 36 of the Administration of Justice Act 1970 (section 36) to defaulting mortgagors of dwelling houses where the mortgagee is claiming possession.
The second point is the respect which is afforded to an individuals home under article 8 of the European Convention on Human Rights (article 8).
In my view, there is nothing in either of these points.
The only thing which can be made of the fact that the marshalling claim relates to Mrs Szepietowskis home is the point made in para 71 above.
Assuming in Mrs Szepietowskis favour that section 36 and/or Article 8 would have rendered it more difficult for RBS to enforce the RBS Charge against Ashford House than against Claygate, that would be wholly insufficient to prevent SOCA being able to marshal, if it was otherwise entitled to do so.
Where the requirements of the right to marshal are otherwise present, it would require a contractually enforceable obligation, or something close thereto, on the first mortgagee to enforce against the common property in priority to the other property for the second mortgagee to lose his right to marshal. (The words or something close thereto are added out of an abundance of caution, based on an acceptance that nobody can foresee every possibility: I find it very hard to think of an arrangement short of a binding estoppel which would do).
It would be wrong, both in principle and in practice, if it were otherwise.
The right to marshal is based on a simple principle, and there is no reason to dilute it in the way contended for on behalf of Mrs Szepietowski.
After all, the right to marshal is not based on the proposition that the first mortgagee is under an obligation to sell the other property first see para 34 above.
Further, if Mrs Szepietowskis contention were accepted, one can readily imagine all sorts of arguments as to whether one property is more difficult to sell than another, and whether the extent or nature of the difficulty is such as qualifies for the purposes of the contention.
Mr Tager QC suggested that if RBS had proceeded against Ashford House, the court would have stayed the proceedings on the basis that it should go against Claygate.
I am by no means convinced that that is right.
However, even if it was, I do not consider that would disqualify SOCA from seeking to marshal if it was otherwise able to do so.
Conclusion
In these circumstances, I would allow this appeal, and hold that SOCA does not have the right to marshal as it contends.
I should add that, since preparing this judgment I have seen in draft the judgment of Lord Reed and the brief judgment of Lord Sumption, with both of which I agree.
LORD SUMPTION
I agree with the order proposed by Lord Neuberger for all the reasons that he gives.
In particular I agree that subject to any contrary provision in the parties agreement, the charge must secure one or more underlying debts (or other personal liabilities) of the chargor to the chargee before the latter can require it to be marshalled with other securities given to other chargees.
The reason is that a charge to secure a liability of the chargor to the chargee is a secondary benefit.
It is available only for the purpose of enforcing the primary benefit, namely the underlying personal liability which the chargor owes him The right to marshall is an equity designed to ensure that the choices made by another chargee do not frustrate the enforcement of the underlying personal liability.
If there is no underlying personal liability, then the sole effect of the transaction is to confer a contingent interest in the charged asset, not as the means to the recovery of any liability but as itself constituting the primary benefit.
If the asset is subject to a prior charge in favour of someone else, the benefit thus conferred may not be worth very much.
But that is the risk that the chargee necessarily accepts by taking no right of recourse against the chargor personally but only a potentially flawed interest in a specific asset.
Once the chargee has enforced the charge against the asset in question, his claims against the chargor are exhausted.
There is no possible equity that could entitle him to more.
In this situation if the chargee can have the securities marshalled and proceed in addition against a different asset which was never charged to him, then the effect is to increase the chargors financial exposure.
Since this would conflict with the whole basis on which equity developed the right to marshall, I cannot accept that it represents the law.
I agree that the appeal should be allowed, for the reasons given by Lord
LORD REED
Neuberger and Lord Sumption.
In view of the infrequency with which cases on this topic arise, and the application of the Proceeds of Crime Act 2002 throughout the United Kingdom, there may be some value in my adding some observations about the equivalent Scottish doctrine of catholic securities, described succinctly by Lord Adam in Nicols Trustees v Hill (1889) 16 R 416, 421: That doctrine is that when a prior creditor has one way of working out his preference which is less injurious to the postponed creditor than another, the prior creditor is bound either to adopt that course, or by assignation to put the postponed creditor into his right.
The equitable basis of the doctrine, as Lord Adam described it, was explained by Lord President McNeill in Littlejohn v Black (1855) 18 D 207, 212: In the ordinary case of a catholic creditor ie, a creditor holding security over two subjects, which for the sake of simplicity I shall suppose to be heritable subjects and another creditor holding a postponed security over one of them, there can be no doubt that the catholic creditor is entitled to operate payment out of the two subjects as he best can for his own interest, but he is not entitled arbitrarily or nimiously to proceed in such a manner as to injure the secondary creditor without benefiting himself as, for instance, capriciously to take his payment entirely out of the subjects over which there is a second security, and thereby to exhaust that subject, to the detriment of the second creditor, leaving the other subject of his own security unaffected or unexhausted.
The second creditor will be protected against a proceeding so contrary to equity, and the primary creditor will be compelled either to take his payment in the first instance out of that one of the subjects in which no other creditor holds a special interest, or to assign his right to the second creditor, from whom he has wrested the only subject of his security.
Securities are neutral in their effect upon the debtor.
Their effect is to strengthen the position of the secured creditor at the expense of unsecured creditors, since the holder of a security holds a right, accessory in nature, which he can exercise to secure the payment of the debt that is distinct from, and additional to, the right of action and execution which any creditor can exercise to enforce the performance of the debtors personal obligation.
The doctrine of catholic securities can therefore operate to the prejudice of unsecured creditors, but it cannot affect the interests of the debtor.
As the Lord President stated (ibid): The interest ie the legitimate interest of the primary creditor goes no farther than to get payment of his debt, and that is secured to him.
The interest of the secondary creditor is to realize the value of his postponed security, and that is secured to him, in so far as is compatible with payment of the prior debt due to the primary creditor.
The interest of the common debtor is truly nothing, or rather it is, or at least it ought to be, to allow both his creditors to receive full payment out of the subjects he had pledged to them.
The ideas underlying the Scottish doctrine evidently have much in common with those underlying the English principle of marshalling, as explained in the authorities cited by Lord Neuberger.
Lord President McNeills explanation that the Scottish doctrine protects the interests of the secondary creditor, but does not affect the interests of the debtor, appears to me to be equally true of the English principle, and to be particularly relevant to the present case.
As Lord Neuberger has explained, the debt which was owed to SOCA and secured by the 2009 Charge was contingent upon a number of eventualities, one of which was whether any amount (and if so, how much) was left over after prior claims had been met out of the net proceeds of sale of Claygate: something which depended upon RBSs decision as to the order in which it should realise its securities.
It follows that the short answer to SOCAs claim that it should be entitled to the benefit of RBSs security over Ashford House in order to secure the payment of the balance of the debt owed to it is that there is no such balance: it received, out of the sale proceeds of Claygate, all that it was entitled to receive.
SOCAs argument to the contrary assumes, contrary to clause 7.2 of the 2009 Charge, that there was a debt owed to SOCA which was ascertainable independently of RBSs election.
Another way of putting the point is to say that there is no scope for marshalling of securities, as SOCA is no longer a creditor of Mrs Szepietowski, and there is therefore no longer any personal liability which is secured by the 2009 Charge.
It is because of the debts being contingent upon (amongst other things) RBSs decision as to the order in which to realise its securities that SOCAs argument is inconsistent with the principle that marshalling is neutral in its effect upon the debtor.
If SOCA were entitled to treat the balance of the Secured Amount (as it was somewhat confusingly described in the 2009 Charge) as being secured over Ashford House, the effect would be to increase the amount which Mrs Szepietowski had to pay: in the light of clause 7.2, it cannot be argued that, absent marshalling, SOCA would be a creditor for the balance of the Secured Amount.
That in itself demonstrates that SOCAs claim is not a proper application of the principle of marshalling.
LORD CARNWATH
I agree that the appeal should be allowed, but on narrower grounds than those favoured by Lord Neuberger.
In my view the solution is to be found, not in the general law of marshalling, but in the interpretation of a particular contract against its unusual statutory and factual background.
On that aspect, I agree with the conclusion and much of the reasoning of Lord Neuberger under the heading The terms of the Settlement Deed and the 2009 Charge (paras 60 71), but with a rather different emphasis.
The starting point to my mind is the statutory jurisdiction under which SOCA was operating, and under which the compromise was agreed.
SOCAs jurisdiction under this part of the 2002 Act is asset based, rather than financial.
Its task is to identify and claim recoverable property, that is property acquired through unlawful conduct as provided for in the Act.
The essential purpose of the settlement deed was to resolve a dispute between SOCA and the appellant as to the properties to be treated as falling within that category.
It was consistent with that scheme that the appellant did not undertake a personal obligation to pay any sum of money as such, beyond the value of her interest in the properties specified.
SOCA started with a potential claim to 20 items of recoverable property (listed in annexe A) but they agreed to accept the 13 transfer properties listed in annex B in full and final settlement of their claims in relation to all the properties in annexe A (cl 2.1), they being expected at the time to realise some 5.4m.
Her home, Ashford House, was specifically excluded.
As I understand the arrangement, the two additional properties in annexe C (Claygate) were needed solely to deal with the complication of the RBS charge over two of the transfer properties (Thames Street and Church Street).
If RBS had agreed to the transfer of their charge to Claygate (under cl 4.5(i)), there would have been no such complication, the additional properties could have dropped out of the picture (cl 4.4), and no question of marshalling could have arisen.
As it was, the trustees rights to Thames Street and Church Street were, on their sale, converted into another property right, a charge over Claygate for the amount (1.24m) of their sale proceeds as paid to RBS (cl 4.5(ii), 2009 charge cl 1).
Consistently with the scheme of the settlement, clause 2 of the charge defined the appellants obligation on sale of that property as being to apply the proceeds of sale. , in settlement of the secured amount.
In this statutory context, and taken with clause 7.2, I read this wording as not only excluding any personal liability on the part of the appellant, but as also impliedly excluding recourse to any source for payment other than those identified.
If SOCA had wished to include Ashford House as potentially recoverable property, they should have done so specifically, rather than hope to bring it in later by an equitable backdoor.
In the result, I agree with Lord Neubergers conclusion at paragraph 72, not so much on the basis that it would be inequitable to allow marshalling against Ashford House, but that on the proper interpretation of the agreement in its statutory context that possibility is excluded.
This conclusion accords with that provisionally reached by Henderson J in his first judgment ([2009] EWHC 655 (Ch) para 31).
In his later judgment on the present issues ([[2010] EWHC 2570 (Ch) paras 35 36) he changed his mind.
He thought that clause 2.1 could not be read as extending to future claims against or relating to the released properties.
He took account of some words of Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, para 19 (the BCCI case), when holding that the general release arrived at in a settlement agreement in that case did not extend to future claims for stigma damages by BCCI employees who had been made redundant in 1990.
In the Court of Appeal, Patten LJ agreed.
He said: The claim to be subrogated to the RBS charge against Ashford House is not a claim against Mrs Szepietowski in the proceedings or even a claim against her at all.
It is a claim to enforce the subsisting clause 4.5 charge by invoking the courts equitable jurisdiction to marshal the available security between existing creditors.
Clause 2.1 is not directed to that issue which arises as a result of rights granted to SOCA under the deed. (para 47)
With respect to both courts, I think that Henderson Js first thoughts were correct.
The marshalling claim is sufficiently linked to the subject matter of the agreement to fall within the words of clause 2.1, in the context of an agreement which, as I have said, was intended to define the limits of SOCAs property claims arising out of these particular allegations of unlawful conduct, and in relation to these properties.
This is a very long way from the facts of the BCCI case.
As the judge acknowledged, and as is apparent from Lord Binghams words quoted by him, that was a case in which the parties, at the time of the release, could never have had in contemplation at all the type of claims subsequently advanced.
Furthermore, with respect to Patten LJ, to focus on whether the marshalling claim is one against Mrs Szepietowski herself is to disregard the whole purpose of the agreement, which as I have said was not to define personal claims, but to fix the limits of SOCAs property claims under the Act.
The addition in clause 2.1 of the words (claims) in relation to the properties listed seems to me quite sufficient, if necessary, to make that clear.
I would have been content to stop at that point.
But in view of the attention given to the issue of marshalling in the courts below, and since I have reservations about Lord Neubergers reasoning on this topic, I think it right to add my own comments.
The courts below struggled with the concept of a charge without an underlying debt, which the judge described as a contradiction in terms (para 45).
He referred to Lord Hoffmanns statement that an interest provided by way of security entitles the holder to resort to the property only for the purpose of satisfying some liability due to him (whether from the person providing the security or a third party) (In re Bank of Credit and Commerce International SA (No 8) [1998] AC 214, 226 (the BCCI (No 8) Case)).
This discussion arose in the context of what he called the two debts condition (para 47).
This, as I understand it, he took from the statement of Rose LJ in the Court of Appeal decision in the BCCI (No 8) Case [1996] Ch 245, 271 (in the passage already quoted by Neuberger LJ para 2) that for the [marshalling] doctrine to apply there must be two debts owed by the same debtor to two different creditors.
It was argued that since there was no debt due to SOCA, marshalling could not be invoked.
The judge concluded that this condition was satisfied, even if the appellant could not be sued personally: That there was a debt owed by her to SOCA is in my judgment undeniable, even if it was a debt that could be enforced only by sale of the Claygate Properties (para 46).
In the Court of Appeal, Patten LJ (paras 53 54) recorded that there had been no challenge to the judges finding that a debt was created by the charge.
Nor was this issue as such reopened by the appellants printed case in this court (see para 154).
Notwithstanding that formal position, the majority of this court have as I understand it thought it appropriate to re examine the no debt issue, in order to avoid the law being developed on a false basis.
I do not dissent from that approach, although I am not convinced that the issue is one of any general importance.
On any view, the concept of a charge without an underlying personal debt seems sufficiently unusual for it to be difficult to consider outside the particular factual context in which it may arise.
As to the principle, I agree with Lord Neuberger (para 48) that Rose LJs words were not directed to the issue which arises in this case.
They cannot in my view be read as sufficient in themselves to establish a general two debts rule.
I do not find it so easy, however, to discount the words used in the 18th and 19th century authorities, since it is they which explain the basis on which the principle was developed.
Those cases make clear to my mind, as Miss Harman submits, that it is a remedy which operates primarily between security holders, not between them and the common debtor or chargor.
In the words of Lord Eldon LC in Aldrich v Cooper 8 Ves Jun 382, 395 (quoted by Lord Neuberger at para 30) a person having [access to] two funds shall not by his election disappoint the party having only one fund; or as Professor Story put it (quoted at para 35) it is a matter of natural justice between the two creditors.
To achieve this, the second charge holder has an equity to require that the first creditor satisfy himself (or be treated as having satisfied himself) so far as possible out of the security or fund to which the latter has no claim (per Lord Hoffmann in the BCCI (No 8) Case [1998] AC 214, 231, quoted at para 1).
The Scottish cases, to which Lord Reed refers, are to the same effect.
With regard to the interests of the common debtor or chargor, the only qualification to be found in those judgments is in Lord Eldon LCs observation in Ex P Kendall 17 Ves 514, 527 that the principle has never been pressed to the effect of injustice to the common debtor (quoted by Lord Neuberger at para 37).
However, it is not clear what form of injustice he had in mind.
In the normal case, the common debtor will have accepted the risk of enforcement of the two charged sums in full against both securities.
There is no injustice to him if that risk becomes fact.
That position, as it seems to me, is unaffected by whether or not the charger is also subject to a personal liability.
In either case, he has accepted the risk of enforcement against both properties, contingent only on the choice of the first chargee.
Lord Neubergers view to the contrary depends as I understand it on looking at the position after the common property has been sold by the first chargee (paras 46 47).
However, that seems to me with respect to look at the position from the wrong end.
What matters is not how things turn out, but whether that result is within the scope of the risk which the chargor has undertaken at the time the charges were granted.
Clearly, once the common property is sold, assuming the chargor is solvent and there is no personal liability, he will be worse off if marshalling is allowed than if it is not.
Instead of enforcement being limited to what can be extracted from the second property, it will extend to the remaining value of both properties.
However, there is no injustice in that result if it is within the scope of the risk which he has voluntarily accepted.
On the wider issue, therefore, I agree with Miss Harmans submissions.
Assuming that, at least in theory, there might be other circumstances (outside the present statutory context) in which a charge would be granted without an underlying personal liability, I see no reason in principle why the remedy of marshalling should be excluded.
However, for the reasons already given, I would uphold the appeal on the issue of construction.
LORD HUGHES
I entirely agree that this appeal should be allowed and that on the facts of this transaction SOCA does not have the right to marshal against Ashford House.
With a single exception, I do so for all the reasons given by Lord Neuberger.
The single exception concerns the general proposition that before marshalling can be claimed the security held by the second chargee must secure an underlying personal debt of his to the chargor.
It seems to me, as it does to Lord Carnwath, that the essence of marshalling lies in the existence of concurrent securities, rather than in the nature of the liability which they secure.
Clearly there will always be some liability by the chargee to the chargor.
It will normally, no doubt, be a personal debt from the chargee to the chargor.
But it may occasionally be something different, as for example if the chargor is prepared to underwrite the debt of another to the extent of putting up security but is not prepared to enter into an unlimited personal guarantee.
If, in such a situation, the security offered is a second charge on some asset (Blackacre) already charged to a prior chargee and if that prior chargee also has additional security (Whiteacre) for whatever liability the chargor has to him, the occasion for the second chargee to seek to marshal may arise if the prior chargee opts to enforce the common security (Blackacre) rather than his additional security (Whiteacre).
There may be something in the particular transaction, as there is here, which demonstrates that marshalling would be inconsistent with its nature.
But as a general proposition it seems to me that there is no obstacle in the situation described to the second chargee marshalling against Whiteacre up to the amount which would have been available to him in Blackacre if the prior chargee had opted to enforce first against Whiteacre.
True it is that the second chargee has always known that he ranks second to the prior chargee and that accordingly he has always faced the risk that Blackacre may be used up by the prior chargee.
But that is true equally where there is also a personal liability.
The function of marshalling is to avoid his losing his security simply because the prior chargee opts to enforce against Blackacre rather than against his additional security, Whiteacre.
The existence or non existence of a personal liability in the chargor makes no difference.
Next, it is certainly true that it is of the essence of marshalling that it is neutral so far as the chargor/debtor is concerned, in the sense that he ends up paying in total out of the two securities no more than he was always liable to pay.
However, it does not seem to me that the chargors total exposure is impermissibly beyond what it was always likely to be by marshalling in the situation described.
It will still be the same as it would have been if either (a) the prior chargee had enforced first against Whiteacre or (b) the liability to the prior chargee had otherwise been discharged, both of which events were always on the cards.
For these reasons, although the occasion for the distinction to bite will no doubt be rare, I prefer Lord Carnwaths conclusion on this narrow point.
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In 2005, the Assets Recovery Agency (ARA) obtained an interim receiving order over certain properties acquired by Mrs Szepietowskis husband with money allegedly obtained through drug trafficking, mortgage fraud and concealment from the Revenue.
In November 2006, the ARA began civil proceedings against Mr and Mrs Szepietowski (the Szepietowskis), seeking to confiscate 20 properties on the basis that they constituted recoverable property within section 266 of the Proceeds of Crime Act 2002 (the 2002 Act).
These properties included Ashford House (the Szepietowskis home), two properties known as Thames Street, two properties known as Church Street, and two properties known as Claygate.
These properties were all registered in the name of Mrs Szepietowski and had been charged to RBS for a debt of about 3.225m (the RBS debt).
On 16 January 2008, the Szepietowskis and the ARA settled the proceedings on terms contained in documents attached to a consent order (including a Settlement Deed).
Pursuant to the terms of the Settlement Deed, (a) Thames Street and Church Street were sold and the proceeds paid over in part satisfaction of the RBS debt, and (b) in September 2009, Mrs Szepietowski granted a charge over Claygate (the 2009 Charge) to the Serious Organised Crime Agency (SOCA, as the ARA had by this point become) entitling SOCA to recover a sum of up to 1.24m from the proceeds of sale of Claygate.
The 2009 Charge (a) was a second charge over Claygate as it was subject to the RBS debt, and (b) contained various provisions including a statement that Mrs Szepietowski had no personal liability to pay any money to SOCA.
In late 2009, Mrs Szepietowski sold Claygate for 2.44m and, once the net proceeds of sale of Claygate had been used to pay off the RBS debt, all that was left to satisfy SOCAs rights under the 2009 Charge was 1,324.16.
SOCA then sought to invoke the right to marshal against Ashford House.
The right to marshal classically applies when there are two or more creditors, each of whom is owed a debt by the same debtor, but one of whom has security in the form of a charge on more than one property (the first mortgagee), whilst the other has security in the form of an inferior charge on only one of those properties (the second mortgagee).
If the first mortgagee chooses to enforce his charge against the property which secures both debts (the common property), the second mortgagee is able to enforce his charge against the property which only secured the first mortgagees debt (the other property).
SOCA argued that, as the proceeds of sale of Claygate (the common property, which was subject to the charge in favour of RBS and the 2009 Charge in favour of SOCA) were used to pay off what was due to RBS, it was entitled under the marshalling principle to look to Ashford House (the other property, which was only subject to the charge in favour of RBS), in order to obtain payment of the sum which it would have obtained on the sale of Claygate if RBS had sold Ashford House and used the proceeds of sale to clear the RBS debt.
Mrs Szepietowski argued that SOCA should not be allowed to marshal because (a) the 2009 Charge did not secure a debt from her to SOCA and/or (b) the provisions of the Settlement Deed
and the 2009 Charge, coupled with the circumstances in which they were executed, demonstrated that marshalling was precluded.
Henderson J held that SOCAs marshalling claim was well founded ([2010] EWHC 2570 (Ch)) and the Court of Appeal agreed ([2011] EWCA Civ 856).
The Supreme Court unanimously allows the appeal by Mrs Szepietowski.
Lord Neuberger, with whom Lord Sumption and Lord Reed agree, holds that the 2009 Charge did not create, or acknowledge the existence of, any debt from Mrs Szepietowski, or anyone else, to SOCA, save that under its terms, she was bound to pay SOCA an amount of up to 1.24m out of such sum if any, as remained from the proceeds of sale of Claygate after any prior claim had been met [40 43].
As a matter of principle, marshalling is not available to a second mortgagee where the common property does not secure a debt due from the mortgagor, but is merely available as security for whatever amount the second mortgagee can extract from that property.
In such a case, there is nothing from which the right to marshal against the other property can arise [46 50].
Not least because marshalling is an equitable remedy, whether it is available in any particular case may depend on the circumstances.
However, where there is no surviving debt due from the mortgagor to the second mortgagee after the sale and distribution of proceeds of sale of the common property, in the absence of express words which permit or envisage marshalling, it is hard to conceive how marshalling would be available [56 58].
If, contrary to this conclusion, marshalling is in principle available to a second mortgagee where there is no underlying debt, Mrs Szepietowskis appeal would still have been allowed.
Where facts arise which potentially give rise to the right to marshal, the correct approach is to ask whether, in the perception of an objective reasonable bystander at the date of the grant of the second mortgage, taking into account (i) the terms of the second mortgage, (ii) any contract or other arrangement which gave rise to it, (iii) what passed between the parties prior to its execution, and (iv) all the admissible surrounding facts, it is reasonable to conclude that the second mortgagee was nonetheless not intended to be able to marshal [60 62].
The statutory background to, and the terms of, the 2009 Charge and of the Settlement Deed, coupled with all the surrounding circumstances demonstrate that the parties did not intend SOCA to have the right to marshal [64 72].
The fact that Ashford House was Mrs Szepietowskis home is one of the relevant background facts for that purpose, but it was insufficient on its own to prevent a right to marshal if such a right otherwise existed.
Where the requirements of the right to marshal are otherwise present, it would require a contractually enforceable obligation, or something close thereto, on the first mortgagee to enforce against the common property in priority to the other property, for the second mortgagee to lose the right to marshal [73 77].
Lord Carnwath and Lord Hughes would allow the appeal on the narrower basis, namely that, read against the statutory background provided by the 2002 Act, and the fact that the 2009 Charge excluded any personal liability on the part of Mrs Szepietowski, that Charge impliedly excluded recourse to any source for payment other than those identified, and in particular excluded the right to marshal.
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The contest in this case is about who should bear the costs and expenses of a receiver appointed under an order which ought not to have been made.
The appellant, who is a former partner in a well known firm of accountants, was appointed to act as management receiver of the assets of a group of companies referred to as Eastenders (the companies) on the application of the Crown Prosecution Service (CPS).
The order was made under section 48 of the Proceeds of Crime Act 2002 (POCA) but was quashed on appeal.
The receivers costs and expenses are put at 772,547.
Who should bear those costs? There are three possible answers: the companies, the receiver or the CPS.
The question has been considered by four judges who have arrived at three different answers.
The receiver applied to the Crown Court, after the order had been quashed,
for permission to draw his remuneration and expenses from the assets of the companies.
The application was refused by Underhill J (now Underhill LJ) in a judgment given on 4 April 2012.
He held that to grant the application would infringe the companies rights under article 1 of the First Protocol to the European Convention on Human Rights (A1P1).
This provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions.
No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law 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.
In his judgment Underhill J held that in principle the liability for the receivers remuneration and expenses should be borne by the CPS, but at that stage there was no such application before him.
After a further hearing on 8 May 2012 he made an order including the following terms: i) The CPS was to pay the receivers remuneration and disbursements, subject to an assessment by the taxing authority of the Crown Court under the Criminal Procedure Rules. ii) The CPS was to pay the legal costs incurred by the receiver in the exercise of his functions as receiver. iii) The parties were to lodge further evidence and submissions as to whether sums previously retained by the receiver should be repaid to the companies. (There is a potential argument that some of the expenses incurred by the receiver in the course of running the companies would have been incurred by them in any event, but on this appeal the court has not been concerned with points of that kind.) iv) The CPS was to pay the companies litigation costs in respect of the various applications relating to the receivership order.
In making that order Underhill J held that it was possible to interpret POCA as giving the court the right, in circumstances such as those of the present case, to order that the receivers remuneration and expenses be paid by the CPS and not by the companies.
The CPS appealed to the Court of Appeal Criminal Division.
The majority
(Mitting and Edwards Stuart JJ) upheld Underhill Js decision that the companies rights under A1P1 would be infringed by an order permitting the receivers costs and expenses to be taken out of their assets.
Laws LJ, dissenting, would have held that there was no such breach and that the receiver was entitled to recover those costs out of the companies assets under the order made in the Crown Court.
The court was unanimous that Underhill J was wrong in deciding that POCA could be interpreted as giving him power to order the CPS to pay the receivers costs.
The result of the majoritys decision was to leave the receiver unable to
recover his costs either from the companies assets or from the CPS.
They acknowledged that the outcome of the appeal would be clearly unsatisfactory to a receiver who has undertaken work and incurred expenses in the expectation that he would be both rewarded and recompensed out of assets identified for him by the CPS, and they added that their judgment did not exclude the possibility that he may have a common law remedy against those who sought his appointment, but they said no more about what it might be, presumably because the matter had not been argued.
The receiver now appeals to this court.
The principal argument advanced on his behalf by Mr David Perry QC was that Laws LJ was right and that the costs of the receivership should be borne by the companies.
If that submission was rejected, his alternative submission was that Underhill J was correct to order that the costs be borne by the CPS.
Mr Perry submitted powerfully that it could not be a just solution that the receiver, an officer appointed by the court, should be left without payment for acting as the court directed.
Mr Geraint Jones QC submitted on behalf of the companies that those
judges (Underhill, Mitting and Edwards Stuart JJ) who had concluded that to take the receivers costs out of the companies assets would be a breach of their rights under A1P1 were right.
He also suggested that it was highly arguable that the contractual arrangements between the receiver and the CPS would entitle the receiver to remuneration by the CPS, but that was a matter between the receiver and the CPS.
Mr Michael Parroy QC on behalf of the CPS joined forces with Mr Perry in arguing that Laws LJ was right.
If, however, the effect of A1P1 was to preclude recovery of the receivers costs out of the companies assets, Mr Parroy submitted that the Court of Appeal was right in its unanimous decision that POCA did not afford any basis for holding the CPS liable to the receiver.
He also submitted that there was no substance in the argument that the receiver would have a contractual remedy against the CPS.
Issues
The first question is whether the companies rights under A1P1 would be infringed by having their assets taken to pay the receivers remuneration and expenses.
If Laws LJ was right in his view that this would not involve an infringement of their A1P1 rights, no further question arises.
But if the companies are right about that issue, the second question that arises is whether the receiver is entitled to look to the CPS for reimbursement.
When granting permission to appeal to this court, the leave panel asked the parties to address the additional issue whether there are any powers which could be exercised to prevent this situation arising whatever the outcome of the appeal.
It will be necessary to consider that too.
On 6 December 2010 the CPS applied ex parte to HH Judge Hawkins QC at the Central Criminal Court for restraint and receivership orders under sections 41 and 48 of POCA.
The judge was in the course of trying a murder case and his time for hearing the application was limited.
After a 40 minute hearing the judge signed the orders which he was asked to make.
The evidence before the judge consisted of two witness statements made by Mr Alan Brown, a financial investigator employed by HM Revenue & Customs (HMRC), and their exhibits.
In summary, he stated that HMRC was conducting a covert investigation into the activities of a serious organised criminal group which was believed to be responsible for evading excise duty and VAT on a large scale and laundering the proceeds.
The suspected fraud involved alcohol products, which had been imported into the UK duty free, being released from bonded warehouses into the UK market without payment of duty in such a way that the true facts were concealed from HMRC by the use of buffer companies and bogus documents.
The subjects under investigation included Mr Alexander Windsor and Mr Kulwant Singh Hare, referred to as the defendants in Mr Browns statements.
Company searches and other records showed that the defendants were the joint beneficial owners of the Eastenders Group parent company, which held between 50% and 100% of the shares in the other group companies.
The parent company was a holding company and the trading companies were cash and carry outlets.
Mr Brown suggested that the companies were a wholesale and retail arm of the criminal group responsible for the alleged fraud.
Mr Brown described the case as the most complex restraint and receivership case that he had ever managed in more than 20 years experience of such work.
He estimated the public loss at 23 million.
Mr Brown invited the court to lift the corporate veil of the companies, to treat their assets as assets in which the defendants had an interest and to restrain them and the companies from dealing with those assets.
He also asked the court to appoint a management receiver to run the companies.
He described their activities in this way: It is through these companies that the non duty and non VAT paid alcohol is sold onto the legitimate market.
It is probable that these companies also conduct legitimate trade, in the sense that they buy and sell duty and VAT paid goods as well.
However I do not know the ratio of legitimate to illegitimate activity.
In these circumstances Mr Brown invited the court to conclude that a receivership order would be the only effective means of ensuring that the defendants assets could be properly managed.
Terms for the receivers appointment had been agreed with the receiver in correspondence which was exhibited to Mr Browns statements.
He said that he was unable to give a realistic estimate of the likely costs of the receivership, having regard to the nature of the assets involved.
The judge made orders in relation to each defendant.
They were in materially identical terms and I will refer to them as a single order.
The order restrained the defendant from disposing of, dealing with or diminishing the value of any of his assets, which were expressed to include the assets of the companies.
It imposed a similar direct restraint on the companies, and it appointed the receiver to act as management receiver of all the assets and property identified in the order, including the business and undertakings of the companies.
The imposition of the restraint and receivership order on the companies necessarily depended on the court having proper reason to regard the assets of the companies as the personal assets of the defendants.
The order gave the receiver a wide range of standard powers, including the power to realise so much of the receivership property as is necessary to meet the receivers remuneration and expenses.
As to his remuneration and expenses, the order provided: The remuneration and expenses of the Receiver shall be paid out of the Receivership Property and in accordance with the letter of agreement as exhibited to the witness statement of Alan Brown made on 3 December 2010.
The letter referred to was a letter from the CPS to the receiver dated 29 November 2010.
Under the heading Re Kulwant Singh Hare and Alexander Thomas Windsor the letter began: We are writing to enquire whether you would be prepared to act as a management receiver pursuant to section 48 of the Proceeds of Crime Act 2010 in the above case of which the Crown Prosecution Service has conduct.
You will appreciate that your appointment is dependent on an order being made by the Crown Court.
This letter sets out the terms upon which we propose to seek your appointment.
These terms will form part of the order for your appointment.
In addition, your appointment is subject to the Framework Agreement between the Crown Prosecution Service and the panel of approved receivers, to the provisions of Part 60 of the Criminal Procedure Rules and to the Capewell Guidelines laid down by the Court of Appeal in Capewell v Customs & Excise Commissioners [2005] 1 All ER 900.
In a brief summary of the background the letter explained that HMRC was
conducting an investigation into the commission of offences by the named defendants involving the evasion of VAT and excise duty on a massive scale.
The letter said: It is alleged that much of the fraudulent activity has been facilitated through a company known as Eastenders Cash and Carry plc and various subsidiary companies in Slough, Barking, Croydon, Birmingham and Coventry.
Clearly, the effective management of these companies and their stock is an urgent priority if you are appointedThe extent to which the companies can be allowed to be allowed to continue trading will clearly be of fundamental importancegiven the urgent necessity to prevent any further fraudulent trading and loss to the Exchequer.
The letter set out proposed terms of the appointment, including the
following term as to the receivers remuneration: Your remuneration costs and expenses are to be drawn from the assets of the defendants under your management in accordance with section 49(2)(d) of the Proceeds of Crime Act and the decision of the House of Lords in Capewell v HM Revenue & Customs [2007] UKHL 2.
You are reminded that you will have a lien over the defendants assets for payment of your fees and that the Crown Prosecution Service does not undertake to indemnify you in relation to your fees in the event that there are insufficient assets within the defendants estate.
Your remuneration, costs and expenses are to be paid in accordance with the Framework Agreement referred to above and any deviation must be agreed in writing with the Crown Prosecution Service.
Clause 12.5 of the Framework Agreement provided: In the case of Management and Enforcement Receivers in criminal confiscation cases, the Receiver will be remunerated from the sums that they may realise from the sale of the assets over which they are appointed [subject to an immaterial exception].
To the extent [that] there is any shortfall, the Contracting Bodies will not agree to grant indemnities either in full or in part.
Although the receivership order covered all assets of the defendants, including properties and money in bank accounts, its central purpose was to put the companies under the control of the receiver.
But for the fact that the companies were trading entities, there would have been no need for a receivership order.
The restraint order would have been sufficient to freeze the defendants bank accounts and to prevent any disposal of their personal properties.
The companies had around 120 employees and an aggregate turnover in the region of 150 million.
In order to comply with section 49(8) of POCA (set out below), the order provided that the receivers powers of management, and power to realise property to meet his remuneration and expenses, were not to be exercised until further order of the court.
This was in order to give the companies a reasonable opportunity to make representations.
The matter was further considered by the judge in a brief hearing, on 14 December 2010 at the end of his normal sitting day.
On the eve of that hearing the companies put in substantial evidence, but the court did not have time to consider the merits or hear detailed argument.
The judge activated the receivers powers.
It was then the busiest time of the trading year, only 11 days before Christmas.
The judge activated the receivers management powers in order that their continued trading should be under the receivers control.
The judge considered the companies objections to the receivership order on 23 December 2010 at an inter partes hearing but refused to discharge it.
The matter came before the Court of Appeal (Hooper LJ, Openshaw J and Sir Geoffrey Grigson) on 25 January 2011.
According to the judgment delivered by Hooper LJ, the appeal occupied the time of the court for 1 days following 2 days preparation for the hearing.
The court quashed the restraint and receivership orders but took time for the delivery of its reasons in a judgment handed down on 8 February 2011 (neutral citation [2011] EWCA Crim 143).
The case is reported in abbreviated form at [2011] 1 WLR 159 but in full at [2011] 2 Cr App R 71.
The court expressed considerable sympathy for the judge who had been given responsibility to decide at short notice whether to grant restraint and receivership orders at a time when he was occupied with the conduct of a complex jury trial.
Having had a much better opportunity to analyse the evidence, it considered that Mr Browns statements consisted largely of broad and unsupported assertions.
Careful analysis of the evidence in the appendices to his statement about particular transactions exposed serious gaps.
The court held that the judge had been wrong on 6 December to find on the material before him that there was reasonable cause to believe that the defendants had benefited from the alleged criminal conduct.
It postponed the drawing up of a final order in relation to the defendants (as distinct from the companies) in order to give the CPS an opportunity to adduce further evidence.
The CPS subsequently made a renewed application to Mackay J, which he refused.
As to the companies, the Court of Appeal held that there was no good arguable case for regarding their assets as the assets of the defendants and it quashed the order in so far as it affected the companies with immediate effect.
In his judgment refusing to discharge the order, the judge had concluded that there was a good arguable case that the defendants had attempted to shelter behind a corporate faade, or veil, to hide their crimes and their benefits from it; and that the business structures constituted a device, or cloak or sham intended to disguise the true nature of what was going on.
The Court of Appeal referred to Mr Browns statement that it was probable that the companies conducted legitimate trade and that he did not know the ratio of legitimate to illegitimate activity.
It observed that by the time of the application to set aside a good deal of evidence had been filed by the companies, from which they asserted that 95% of the business was demonstrably legitimate, and HMRC had been driven to concede that they were not in a position to dispute this.
The court concluded that on the material before the judge, at the time of the ex parte hearing, there may have been some force in the argument put forward by the CPS; but that on the application to discharge the orders there was insufficient evidence to support the judges conclusion that there was reasonable cause to believe that the companies were just a front, sham or device behind which the defendants were sheltering in order to conceal fraud.
The court said that, on the contrary, the evidence before it suggested that the vast bulk of the companies business was legitimate.
That evidence was before the court at the time when the judge made his order on 14 December activating the receivers management powers, although the judge had not then had the opportunity of digesting it.
The effective period of the receivership therefore lasted from 14 December 2010 (when the receivers management powers were activated) to 26 January 2011 (when the order was set aside by the Court of Appeal).
A witness statement by the receivers solicitor explains in broad outline how the sum claimed by the receiver is made up.
The largest items were 248,220 for chargeable time recorded and 229,399 for providing manned security at the companies sites.
The reason for the latter figure being so large was that the receiver had information that many of the operatives at the sites were either unlicensed workers from overseas (some with criminal records) or had family connections to the defendants.
The receiver therefore instructed professional security staff to protect the sites and the stock.
A further significant item was the cost of the receiver obtaining legal advice and representation.
This amounted to 143,044.
It included counsels fees for appearance at the hearings before the judge on 14 and 23 December 2010 and at the hearing before the Court of Appeal.
On the hearing of the present appeal the court was informed that no criminal charges had yet been brought in connection with the investigation but that the investigation is continuing.
Statutory Framework
The purpose of POCA is to prevent criminals form benefiting from their criminal conduct.
The Act provides various means for achieving this aim.
Part 2 provides a scheme for making confiscation orders in criminal proceedings.
Sections 40 to 49 make provision for protective measures by way of restraint orders and receivership orders in order to preserve the realisable assets of a defendant or prospective defendant against whom there is a reasonable likelihood of a confiscation order being made.
The conditions for making a restraint order are set out in section 40.
Among other things, the court must be satisfied that there is reasonable cause to believe that the alleged defendant has benefited from his criminal conduct.
It is not necessary that criminal proceedings should have been instituted, but a criminal investigation must have begun.
If the necessary conditions are satisfied, the court may make an order under section 41 prohibiting any specified person from dealing with any realisable property held by him.
Realisable property is defined in section 83 as any free property held by the defendant (or by the recipient of a tainted gift).
Under section 82, property is free for this purpose unless it is already the subject of a forfeiture or deprivation order made under another statute such as the Terrorism Act 2000.
A restraint order may be made subject to exceptions and the court may make such other order as it believes is appropriate for the purpose of ensuring that the restraint order is effective.
A disclosure order is a common example.
Section 42 provides for applications to vary or discharge a restraint order, and section 43 provides for an appeal to the Court of Appeal by a person affected by the decision on such an application.
As a supplement to a restraint order, section 48(2) provides that the Crown Court may appoint a receiver in respect of any realisable property to which the restraint order applies.
Since the appointment of a management receiver is by its nature an interim measure before any criminal proceedings have been determined, when appointing a receiver under section 48 the court does not have to make a final determination that the relevant property is realisable property within the meaning of the Act.
It is enough that on the documents a good arguable case arises for treating the relevant assets as the realisable property of the defendant: Crown Prosecution Service v Compton [2002] EWCA Civ 1720.
Section 49 provides so far as material: 1) If the court appoints a receiver under section 48 it may act under this section on the application of the person who applied for the restraint order. 2) The court may by order confer on the receiver the following powers in relation to any realisable property to which the restraint order applies a) power to take possession of the property; b) power to manage or otherwise deal with the property; c) power to start, carry on or defend any legal proceedings in respect of the property; d) power to realise so much of the property as is necessary to meet the receivers remuneration and expenses. 4) The court may by order authorise the receiver to do any of the following for the purpose of the exercise of his functions a) hold property; b) enter into contracts; c) sue and be sued; d) employ agents; e) execute powers of attorney, deeds or other instruments; f) take any other steps the court thinks appropriate. 5) The court may order any person who has possession of realisable property to which the restraint order applies to give possession of it to the receiver. 8) The court must not a) b) confer the power mentioned in subsection (2) (b) or (d) in respect of property, or exercise the power conferred on it by subsection (6) in respect of property. unless it gives persons holding interests in the property a reasonable opportunity to make representations to it. 9) The court may order that a power conferred by an order under this section is subject to such conditions and exceptions as it specifies.
Section 61 provides: If a receiver appointed under section 48 a) takes action in relation to property which is not realisable property, b) would be entitled to take the action if it were realisable property, and c) believes on reasonable grounds that he is entitled to take the action, he is not liable to any person in respect of any loss or damage resulting from the action, except so far as the loss or damage is caused by his negligence.
Section 63 provides that any person affected by a receivership order may
apply to the Crown Court to vary or discharge the order.
Section 65 provides for appeal to the Court of Appeal against decisions under various sections including 48, 49 and 63.
Section 66 provides: (1) An appeal lies to the Supreme Court from a decision of the Court of Appeal on an appeal under section 65. (2) An appeal under this section lies at the instance of any person who was a party to the proceedings before the Court of Appeal. (3) On an appeal under this section the Supreme Court may i. confirm the decision of the Court of Appeal, or ii. make such order as it believes is appropriate.
Section 72 gives power to the Crown Court to order payment of such compensation as it believes is just in cases where an order has been made under the part of the Act which includes receivership orders, but there are a number of conditions.
There must have been serious default by, among others, a member of the CPS.
The default must have been such that the investigation would not have continued if it had not occurred (or, where criminal proceedings were instituted, that the proceedings would not have started or continued).
Moreover, under section 72(6) the application must be made by a person who held realisable property and has suffered loss in consequence of something done in relation to it by or in pursuance of the order.
Section 72(6) presents a drafting problem because section 83 confines the meaning of realisable property to property of the defendant or a tainted gift.
If construed literally, it would therefore not extend to property of a third party which was wrongly made the subject of a receivership order.
This could present an obstacle for a person in the position of the companies in this case, but it is not necessary to try to resolve that problem for present purposes.
The Act does not contain any provisions about the application of funds obtained by a management receiver (other than section 49(2)(d) which empowers the court to give power to the receiver to realise so much of the property as is necessary to meet his remuneration and expenses), but that is explicable because of the interim nature of a management receivership.
The task of the management receiver is essentially to hold and protect the assets.
Where criminal proceedings result in the making of a confiscation order, the court may appoint an enforcement receiver under section 50.
For collection purposes, a confiscation order is treated in the same way as a fine; payment is made thorough the magistrates court.
Section 55 contains provisions about how the justices chief executive is to deal with sums received on account of the amount payable under a confiscation order.
They must be applied first in the payment of expenses properly payable to an insolvency practitioner and next in the payment of the remuneration and expenses of a receiver appointed under section 48, to the extent that they have not been met by the exercise of a power conferred under section 49(2)(d) (that is, to the extent that they have not been met by the receiver selling assets in order to meet his own remuneration and expenses).
Under analogous provisions of the Criminal Justice Act 1988, which POCA replaced, section 88(2) contained a long stop provision in the following terms: Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be applied in payment of it under section 81 (5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are not instituted, by the person on whose application the receiver was appointed.
By contrast, POCA contains no provision for payment of the receivers remuneration and expenses by the prosecutor or applicant for the receivership order.
The Criminal Procedure Rules include a part dealing with receivership orders.
Rule 60.6 provides: (1) This rule applies where the Crown Court appoints a receiver under section 48 or 50 of the Proceeds of Crime Act 2002 (2) The receiver may only charge for his services if the Crown Court a) b) so directs; and specifies the basis on which the receiver is to be remunerated. (4) The Crown Court may refer the determination of a receivers remuneration to be ascertained by the taxing authority of the Crown Court (5) A receiver appointed under section 48 of the 2002 Act is to receive his remuneration by realising property in respect of which he is appointed, in accordance with section 49(2)(d) of the 2002 Act. (6) A receiver appointed under section 50 of the 2002 Act is to receive his remuneration by applying to the magistrates court officer for payment under section 55(4)(b) of the 2002 Act.
Domestic Case Law
At common law it is an established general principle of receivership that a court appointed receiver is entitled to look for payment of his proper expenses and remuneration to the assets placed by the court in his control, and that the receiver has a lien over these assets for that purpose.
It is also established that this principle applies as much to a receiver appointed under a statutory scheme as to any other court appointed receiver, unless the statute otherwise provides: Capewell v Revenue and Customs Commissioners [2007] UKHL 2, [2007] 1 WLR 386, especially paras 18 21.
This is the first case in which this court has had to consider the compatibility of the application of that general principle with A1P1, in circumstances where the relevant assets were not the property of the defendant (or prospective defendant) and ought never to have been put into the hands of the receiver.
In In re Andrews [1999] 1 WLR 1236 a father and son were prosecuted for VAT fraud.
In the course of the proceedings restraint and receivership orders were made against them under the Criminal Justice Act 1988.
The son was convicted but the father was acquitted.
The receiver used some of the proceeds of the fathers assets to cover his legal costs and expenses.
The father claimed to recover this sum from the receiver by way of costs but, as Aldous LJ observed, the claim was really a claim for compensation dressed up as an application for an award of costs.
The Court of Appeal held that the receiver was entitled to charge his costs and expenses against the assets in receivership but added that no argument had been addressed to the court about possible breach of A1P1.
An argument based on A1P1 was raised in Hughes v Customs & Excise Commissioners [2002] EWCA Civ 734, [2003] 1 WLR 177.
Nicholas Hughes was charged with VAT fraud.
Nicholas was the joint owner of a company with his brother Timothy, each holding 50% of the shares.
Timothy was never charged.
A restraint and receivership order was made against Nicholas, preventing the company from dealing in any way with its assets.
Nicholas was acquitted but the assets of the company were used to meet the receivers costs and expenses.
The Court of Appeal held that there was no breach of A1P1.
Simon Brown LJ said: 55.
I entirely accept that an acquitted (or indeed unconvicted) defendant must for these purposes be treated as an innocent person I cannot accept, however, that for this reason it must be regarded as disproportionate, still less arbitrary (another contention advanced by the respondents), to leave the defendant, against whom restraint and receivership orders have been made, uncompensated for such loss as they may have caused him unless, of course, by establishing some serious fault on the prosecutors part he can bring himself within the strict requirements of section 89. 56.
It is common ground that acquitted defendants are not, save in the most exceptional circumstances, entitled to compensation for being deprived of their liberty whilst on remand or indeed for any other heads of loss suffered through being prosecuted.
In my judgment it is no more unfair, disproportionate or arbitrary that they should be uncompensated too for any adverse effects that restraint and receivership orders may have had upon their assets.
As to the position of Timothy, Simon Brown LJ said at para 58 that the court should be astute, wherever possible, to protect the rights and interests of third parties, but that it was difficult to regard this legislation as riding roughshod over the rights of innocent third parties.
In that case Timothys interest in the company was inextricably tied up with that of his brother and there was no suggestion that the order was not properly made.
Hughes was cited with approval in Capewell, but not on this point because in Capewell there was no argument about A1P1.
In Capewell, a receivership order was properly made against the defendant under section 77(8) of the Criminal Justice Act 1988.
The known assets of the defendant comprised some properties, some cars, some bank accounts and an unincorporated financial services business.
The order provided for the receivers remuneration and expenses to be taken from the receivership assets.
The receivership order was made on 30 January 2003.
After about a year an application was made by the defendant for the discharge of the receiver.
The application was heard by Lindsay J in April 2004 and was dismissed.
The defendant appealed against that decision.
While the case was pending in the Court of Appeal, a fresh application was made for the discharge of the receivership, which on this occasion was not opposed by the receiver.
On 13 October 2004 Davis J ordered that the receiver be discharged on the pragmatic grounds that all the parties agreed that the expenditure and sums involved mean it simply does not make sense for the receiver to continue in office.
The defendant continued with his appeal against the dismissal of his earlier application, and the Court of Appeal held that Lindsay J had misdirected himself in his approach to that application.
The court found it difficult to assess how matters would have proceeded if the judge had asked himself the correct questions but it inferred that the date of discharge would have been likely to have been brought forward and, doing the best it could, it estimated that the likely date of discharge would have been 1 June 2004.
The defendant submitted that the Revenue and Customs (who had obtained the order) should be responsible for the receivers remuneration and expenses for the period of four and a half months from 1 June 2004 to the date when the receivership order was discharged.
The Court of Appeal considered that this would be just, and that it had power to make such an order under a recently introduced provision of the Civil Procedure Rules.
The issue before the House of Lords was whether the relevant rule, CPR r 69.7, gave the court such power.
The House of Lords held that the new rule did not introduce a fundamental change in the general law of receivership or in the position of receiverships under the 1998 Act or other comparable statute powers.
As a further reason for reversing the Court of Appeals decision, Lord Walker observed at para 27 that a receiver takes on heavy responsibilities when he accepts appointment, and he is entitled to the security of knowing that the terms of his appointment will not be changed retrospectively, even if an appellate court later decides that the receivership should have been terminated at an earlier date.
The issue for the House of Lords was therefore narrow.
It was not disputed that the assets had been properly put into the hands of the receiver and there was no suggestion of a possible violation of A1P1.
In Sinclair v Glatt [2009] EWCA Civ 176, [2009] 1 WLR 1845 the defendant was convicted of money laundering offences.
In the course of the proceedings a restraint and receivership order was made against him relating to assets including properties of which he was the legal owner.
The defendants former wife intervened claiming to be the beneficial owner of certain property and her claim was upheld.
The receivership order was held to have been properly made, because the defendant was the legal owner of the property, and the Court of Appeal upheld the receivers claim to be entitled to a lien over it for his remuneration, costs and expenses.
There was no argument about A1P1, but Elias LJ said obiter at para 42 that, given the potential injustice of the operation of the principle that the receivers can recover their costs and expenses from the receivership assets, he would not rule out the possibility that in an appropriate case A1P1 could limit the costs and expenses recoverable from an innocent third party.
He added that he did not read the judgment of the Court of Appeal in Hughes as excluding that possibility.
European Case Law
Mr Perry relied on a number of cases in which the Strasbourg Court held that interim restraints imposed on a defendants liberty or use of his property in the course of criminal proceedings did not contravene the Convention or A1P1.
Mr Jones submitted that these decisions were distinguishable and he referred to other decisions of the court about the general interpretation of A1P1 in support of his case.
In Sporrong and Lonnroth v Sweden (1982) 5 EHRR 35 the Strasbourg Court was sharply divided over the proper interpretation of A1P1.
A forceful minority judgment favoured holding that the second paragraph (beginning The preceding provisions shall not, however, in any way impair the right of a State. ) qualified the whole of the first paragraph.
The majority held that A1P1 contains three separate and distinct rules.
The first rule, expressed in the first sentence, is a rule of general application which recognises every persons right to peaceful enjoyment of his possessions.
The second rule, in the second sentence, deals with measures which deprive a person of his possessions.
Deprivation is permissible if, but only if, it is in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The third rule deals with the states power to enforce laws controlling the use by a person of his property but is not relevant to cases of deprivation of property, which are governed by a combination of rules 1 and 2.
The court also stressed, at para 69, that for the purpose of deciding whether there has been a breach of the first rule, the Court must determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights.
The search for this balance is inherent in the whole of the Convention and is also reflected in the structure of article 1.
In James v United Kingdom (1986) 8 EHRR 123, para 37, the court clarified what it meant by A1P1 comprising three distinct rules.
The court said that the three rules were not distinct in the sense of being unconnected.
The second and third rules were concerned with particular instances of interference with the right to peaceful enjoyment of property and were therefore to be construed in the light of the general principle clearly enunciated in the first rule.
The court rejected an argument that the public interest test in the deprivation rule is satisfied only if the property is taken for the use or benefit of the public at large.
It held that a taking of property effected in pursuance of legitimate social, economic or other policies may be in the public interest; that the margin of appreciation open to a national legislature in implementing social and economic policies is a wide one; and that the court will respect its judgment as to what is in the public interest unless that judgment is manifestly without reasonable foundation (paras 39 to 45).
However, in order for a taking of private property to be compliant with A1P1, not only must the measure under which the property is taken pursue a legitimate aim in the public interest, but there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised.
The court in James repeated its statement in Sporrong 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, and it added that the requisite balance will not be found if the person concerned has had to bear an individual and excessive burden (para 50).
The court held that the requirement in the deprivation rule that the taking must be in accordance with the general principles of international law does not apply to a taking by a state of the property of its own nationals (para 66).
However, the court stated that the requirement that any taking shall be subject to the conditions provided for by law refers not merely to municipal law but relates also to the quality of the law, requiring it to be compatible with the rule of law and not arbitrary (para 67).
In Lithgow v United Kingdom (1986) EHRR 329 the court held that the phrase
subject to the conditions provided for by law requires the existence of and compliance with adequately accessible and sufficiently precise domestic legal provisions (para 110).
As to the need for a reasonable relationship of proportionality between the means employed and the aim sought to be realised, and the requirement that a balance must be struck between the general interest to the community and protection of the individuals fundamental rights, it said that the taking of property without reasonable compensation would normally constitute a disproportionate interference (paras 121 to 151).
The cases of Sporrong, James and Lithgow contain important statements of general principle (as this court recognised in AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868), but they were not cases of property being taken for purposes connected with criminal proceedings.
In that context I come next to the cases on which the receiver and the CPS rely.
In Raimondo v Italy (1994) 18 EHRR 237 the applicant was arrested and placed under house arrest on charges relating to his association with the Mafia.
As an interim measure some of his property was seized.
The proceedings ended in his acquittal.
He claimed that the seizure of his property was a violation of his rights under A1P1 but his complaint was dismissed.
The court held that the seizure, as a provisional measure intended to ensure that property which appeared to be the fruit of unlawful activities carried out to the detriment of the community could subsequently be confiscated if necessary, was justified by the general interest.
In view of the extremely dangerous economic power of an organisation like the Mafia, it could not be said that taking the step of seizing the property at an early stage of the proceedings was disproportionate to the aim pursued.
There was an additional complaint that the property was not only seized but confiscated.
However, the confiscation order was rescindable and had in fact been rescinded.
In practical terms it entailed no additional restriction to the seizure, and therefore the respondent state was held not to have overstepped the margin of appreciation available to it.
The acquitted defendant in Andrews (referred to in para 45) took his case to Strasbourg: Application No 49584/99, 26 September 2002.
He complained that the use of his assets to cover the receivers legal costs and expenses was a breach of his rights under A1P1 but his complaint was dismissed as manifestly ill founded.
The court observed that the applicant had not argued that there was insufficient evidence on which to base the charges made against him; that he had specifically referred to his close involvement with the transport company when declaring his assets; that the proper administration of the affairs of the company was obviously in the applicants own interest; and that he was consulted by the receiver in the monitoring of the company.
The court said: Having regard to these considerations, the Court is not persuaded that the applicant was required to bear an individual and excessive burden through having to fund the costs and expenses incurred by the receiver .
It is true that the applicant was ultimately acquitted of the charges brought against him.
However, it is equally true that at the time of the execution of the Restraint and Receivership Orders there was a case against him which required to be answered, and necessary steps had to be taken to preserve assets in respect of which he had more than a peripheral interest.
In these circumstances, and having regard also to the absence of any arbitrariness in the impugned decisions, the Court does not consider that the authorities can be said to have failed to strike a fair balance between the applicants property right and the general interests of the community.
The government in Andrews accepted that there had been an interference with the applicants right to the peaceful enjoyment of his property.
The applicant argued that there had been a deprivation of his property within the meaning of the second sentence of A1P1.
The court considered that the initial seizure had been an exercise of control over the use of the property, in order to ensure that it would be available for payment of revenue owed by him in the event of his conviction, and that payment of the receivers costs out of the property should be regarded as part of the exercise by the state of the rights reserved to it under the second paragraph of A1P1 and therefore served a legitimate aim.
I have no difficulty with the courts view that there was a legitimate aim, but that is different from the question whether there was a deprivation of assets.
The court seems to have regarded the payment of the receiver as money spent on the preservation of the applicants property and therefore not a deprivation; in other words, expenditure of funds for the benefit of the property was not to be regarded as a deprivation.
That would account for the courts emphasis on the fact that the proper administration of the affairs of the company was obviously in the applicants own interest and that he was consulted by the receiver in the monitoring of the company.
If so, that was a conclusion on the particular facts of that case, rather than a principle of law of general application, and its relevance was to the courts judgment about whether the applicant was required to bear an individual and excessive burden.
In Benham v United Kingdom (1996) 22 EHRR 293 the applicant was
committed to prison by a magistrates court for non payment of a community charge.
The Divisional Court held on appeal that the magistrates had been wrong to do so.
The applicant complained that his imprisonment was a violation of his rights under article 5 and that he had an enforceable right to compensation under article 5(5).
The Strasbourg Court rejected his complaints.
It held that his detention had been lawful within the meaning of article 5 because it was carried out pursuant to a court order.
The subsequent finding that the court had erred under domestic law in making that order did not retrospectively affect the validity of his period of detention.
His detention had not been arbitrary.
There was no suggestion that the magistrates had acted in bad faith or that they had not attempted to apply the relevant legislation correctly.
The law which the magistrates had to apply was not straightforward.
Their decision had been erroneous but they had acted, albeit mistakenly, within their lawful jurisdiction.
By contrast, in Frizen v Russia (2005) 42 EHRR 388 the Court held that a confiscation order made by a Russian criminal court was unlawful and involved a violation of the applicants rights under A1P1.
The husband was convicted of fraud.
She was not herself charged with any criminal offence.
After his conviction the court made a confiscation order in respect of her husbands property and it included in the confiscation order a vehicle which the applicant maintained had been bought from money which she had borrowed and belonged to her.
However, it failed to identify any legal basis justifying the confiscation.
Judgment of Underhill J
Quoting from the judgment of Simon Brown LJ in Hughes, Underhill J said that the essential questions arising under A1P1 were whether the measures taken were (i) in the public interest, (ii) appropriate for achieving their aim, (iii) proportionate and (iv) achieved a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals rights.
He concluded that it would be a breach of the companies rights under A1P1 if they had ultimately to bear the burden of the receivers costs and expenses.
Underhill J distinguished Hughes on the grounds that in that case the order had been properly made, notwithstanding the eventual acquittal (or non prosecution) of the alleged defender, and the adverse affects on the third party were the consequence of his having the misfortune to share an interest in property with someone reasonably suspected of involvement in serious crime.
Underhill J continued: But the situation seems to me fundamentally different where the adverse effect on the third party is the result not of his sharing property rights with the alleged offender but of his property being treated, wrongly and without sufficient evidence, as property in which the alleged offender has an interest.
It does not seem to me that the public interest justification endorsed in Hughes has any application to such a case: the third partys assets are simply confiscated to fund the execution of an order that should not have been made in the first place.
Underhill J referred to some remarks in Sinclair v Glatt which could be taken as suggesting that an adverse impact on a third party might be disproportionate in the case of a stranger but justifiable where the parties were sufficiently closely associated.
He noted that in the present case there was a close connection between the companies and the alleged offenders, and that it might be the case (as yet unproved) that the companies had been used to some extent in carrying out the alleged offences.
He accepted that where the third party and the alleged offender shared an interest in property the nature of their association might be relevant in deciding whether the third party should bear the resulting cost of the receivership, but he regarded the case as different where the third partys property was unequivocally his own and there was no basis for a receiver being appointed over it.
If there was sufficient ground for believing that the companies themselves were not innocent in relation to the alleged offending, the right course in his view was for the companies to be treated as alleged offenders in their own right.
Underhill J went on to consider the position of the receiver and the CPS.
He observed that to deny the receiver his remuneration would be an unacceptable way of vindicating the companies rights and would involve remedying one injustice only by creating another.
The receiver took charge of the companies assets as an officer of the court, and incurred expenditure and liabilities on the faith of a court order which was valid and effective until discharged by the Court of Appeal.
He had no responsibility for the fact that the order was wrongly made and it would be intolerable that he should not be entitled to be paid, from one source or another, his proper fees and expenses.
Underhill J considered that section 3 of the Human Rights Act 1998 enabled him to interpret POCA as giving the court the right, in circumstances such as those of the present case, to order that the receivers remuneration and expenses be paid by the CPS.
On that basis he ordered the CPS to pay the receivers remuneration and legal costs (subject to an assessment by the taxing authority of the Crown Court).
Judgment of Mitting and Edwards Stuart JJ
The majority of the Court of Appeal began by noting that it was settled law at Strasbourg that A1P1 comprises three distinct rules (Sporrong).
Since the receivers application to use the assets of the company to meet his remuneration and expenses involved a taking and not merely an interference with the use of the companies property, the relevant rule was the second rule, contained in the second sentence of A1P1.
The majority correctly noted that the general principles of international law were irrelevant for present purposes.
The question was whether depriving the companies of their assets for the purpose of paying the receiver would meet the requirements of being in the public interest and subject to the conditions provided for by law.
The majority concluded that the proposed taking of the companies assets would not comply with the conditions required by law.
Their reasoning process was as follows: 1) Before assets could properly be made the subject of a receivership order, there must be reasonable cause to believe that the alleged offender had benefited from his criminal conduct (section 40(2)(b) of POCA) and there must be a good arguable case for treating particular assets as the realisable property of the defendant (CPS v Compton). 2) The first condition was not satisfied on either 6 or 23 December 2010 and the second was not satisfied on 23 December 2010. 3) It was true that deprivation of the companies property to pay the remuneration and expenses of the receiver was authorised by law in a superficial sense, in that it is a settled principle of receivership law that a receiver is entitled to be paid his remuneration and assets out of the assets he is appointed to receive and manage. 4) However, that proposition was subject to an important caveat: the conditions upon which a restraint order may be made and a receiver appointed must first be satisfied.
If they are not, there is no lawful basis for the appointment of a receiver in respect of property belonging to an alleged offender, still less property belonging to a third person. 5) In order to determine the issue of lawfulness for the purpose of the second rule under A1P1, the court must look to the underlying lawfulness of the receivers appointment. 6) The bare fact that the receiver had been appointed by order of a court was not sufficient to authorise the deprivation: Frizen v Russia.
The majority held, in agreement with Laws LJ, that Underhill J had been wrong to hold that POCA could be interpreted in such a way as to give the court power to order the receivers remuneration and expenses to be paid by the CPS.
They recognised the unsatisfactoriness of the outcome, since the receiver had been appointed by the court, on the application of the CPS, had undertaken work and incurred expenses in the legitimate understanding that he would be rewarded and recompensed out of assets identified by the CPS.
Their judgment left open the possibility that the receiver might have a common law remedy, but they did not elaborate on this, presumably because the point had not been developed in argument.
Judgment of Laws LJ
Laws LJs analysis began logically with domestic law.
The setting aside of the receivership order by the Court of Appeal did not render the order under which the receiver was appointed a nullity ab initio.
The Crown Court order had the force of law until it was set aside and the setting aside of the order did not retrospectively deprive the receiver of his right to remuneration under it.
As Laws LJ pithily put it, The Crown Courts order is therefore good until set aside; and this is so whatever the basis on which it is set aside.
The terms of the receivers appointment and his remuneration, costs and expenses were within the courts power to order (under section 49(2)(d) and the criminal procedure rules), and they entitled the receiver to recover his proper remuneration and expenses out of the companies assets.
Laws LJ disagreed with the majoritys interpretation of the conditions provided for by law under A1P1.
The conditions provided for by law were soundly constituted by (i) the material provisions of POCA, (ii) the order made by the Crown Court on 6 December 2010, (iii) the common law rule that the orders of a superior court of record are good until set aside and (iv) the common law rule that a receiver is entitled to be paid his remuneration and expenses out of the assets he is appointed to receive and manage, which gave a long standing historic context to the orders effect and vindicated the principle of legal certainty.
Laws LJ went on to consider the requirement of proportionality.
He cited Raimondo as an authority showing that statutory regimes of seizure and confiscation by the state may well be justified under A1P1 for the prevention of crime and that the Strasbourg Court will allow a margin of appreciation to the state.
There could be no argument as to the POCA regimes legitimate aim, which was to preserve property for the satisfaction of confiscation orders made to strip criminals of the fruits of their crime.
The Act constituted the judgment of Parliament as to how a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals right should be struck in this area.
Parliaments judgment leant heavily towards the general interest, although there are careful, but limited, protections for the individual (notably in sections 61 and 72).
Given the respect owed by domestic courts, and the Strasbourg Court, to Parliaments judgment as to how the balance between general interest and private right was to be struck, Laws LJ considered that A1P1 would only very rarely be violated on proportionality grounds by the effects of a receivership order.
This was not in his judgment such a case.
On Laws LJs approach to A1P1, the question of the courts power to order recovery of the receivers remuneration and expenses against the CPS would not have arisen, but he addressed it in view of the decision of the majority on the A1P1 issue.
He noted that no express provision of POCA gave the court any such power.
The question was whether section 3 of the Human Rights Act allowed the court to interpret or read down the statute so as to find such a power.
There was no provision in the Act which might be amenable to that process of interpretation, and the policy of the statute was that the receivers right to recover his expenses from the receivership properly applied in every instance (unless different arrangements were made by contract).
In those circumstances he concluded that there was no power in the court to make an order against the CPS.
A1P1: discussion
Since the present case involves deprivation of the companies assets, and not merely control of their use, the Court of Appeal identified the second of Sporrongs three rules as the key provision: 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].
As the court recognised, the reference to international law is irrelevant in the case of a taking by a state of the property of its own nationals.
The critical questions are those addressed by Laws LJ: (1) whether the proposed taking is in accordance with conditions provided for by law; (2) if so, whether the measure relied upon to justify the taking has a legitimate aim; (3) if the first and second conditions are each satisfied, whether the taking strikes a fair balance between the general interest of the community and the requirements of the protection of the companies right to peaceful enjoyment of their possessions.
On the question of lawfulness, Mr Jones submitted that the majority of the Court of Appeal were right in their analysis (summarised in para 71 above).
Mr Perry and Mr Parroy submitted that the majority were wrong and that Laws LJ was correct in his analysis (summarised at paras 73 to 75 above).
On this issue I agree with Laws LJ for the reasons given by him and I cannot improve on his analysis.
Mr Jones sought to uphold the approach of the majority by reference to the observations of the Strasbourg Court in James at para 67 (referred to at para 58 above) to the effect that the expression the conditions provided for by law in A1P1 refers not merely to municipal law but also to the quality of the law.
The point which the Strasbourg Court was making was that the relevant conditions must comply with the rule of law in terms of clarity, accessibility and lack of arbitrariness.
The relevant provisions of POCA together with the common law of receivership (the Criminal Procedure Rules) amply satisfy the requirements of the rule of law.
Frizen v Russia, on which Mitting and Edwards Stuart JJ placed some reliance, was not a comparable case because the state in that case was unable to identify any provision of domestic law under which the order had been made.
Laws LJ was plainly right that as a matter of domestic law the appointment of the receiver was valid until the Court of Appeal set aside the order appointing him.
Under domestic law the Crown Court had power to order that the receivers remuneration and expenses should be taken from the assets placed in his control.
The setting aside of the receivers appointment did not retrospectively affect his entitlement to be paid out of those assets for his proper remuneration and expenses during the period of the receivership.
Next, Mr Jones submitted that the measure relied on to justify payment of the receivers remuneration and expenses out of the assets of the companies was not in the public interest because it lacked a legitimate aim.
Its aim, he submitted, was to enable the state to place the cost of an order which ought never to have been made on to the person against whom it was made, and that this was not a legitimate purpose.
However, that is to start at the wrong end.
It is to deduce the aim by reference to the result rather than to look at the measure itself in order to see what is its true aim.
The safety valve against a measure with a legitimate aim being relied upon to produce an unjustifiable result is the separate requirement of proportionality.
The Strasbourg Court has adopted a generous approach to the public interest test, allowing a wide measure of appreciation to a national legislature in determining what it considers to be in the public interest (see James, referred to at para 56 above).
The aim of the legislature in enabling the court to appoint an interim receiver under section 48 was to preserve property pending the conclusion of criminal proceedings and the possible making of a confiscation order.
A professional receiver would have to be paid, and the purpose of allowing the court to apply the usual common law principle as to the payment of receivers was to enable the receivership to operate like any other.
I agree with Laws LJ it was open to Parliament to form the judgment that this would serve the legitimate public interest in combatting crime by making it unprofitable.
The critical question is whether in the circumstances of the present case an order that the receivers costs and expenses should be met out of the companies assets is disproportionate, in that it would not achieve a fair balance between the interest of the community and protection of the companies right to their own property.
I start from the position that the taking of property without compensation will
normally be a disproportionate interference with a persons A1P1 rights.
Although this was said in a case about compulsory purchase, it is a general principle, but it is only a starting point.
To give an obvious example, a confiscation order under POCA is a taking of property without compensation, but it is done for the salutary purpose of depriving a criminal of the proceeds of his crime.
A restraint order and receivership order may also be proportionate if reasonably ancillary to that process.
In Andrews the Strasbourg Court judged that it was not disproportionate that the costs of a receivership should be taken from the assets of the defendant notwithstanding his ultimate acquittal.
However, in its reasoning the Court highlighted the fact that there was a case against the applicant, which required to be answered, and that necessary steps had to be taken to preserve assets in which he had more than a peripheral interest.
Sometimes too it may happen that an innocent third partys affairs are so intermingled with the defendants as to give reasonable cause to believe the defendant to be the owner of assets which are ultimately found to belong to a third party, but that is not the present case.
In this case, the companies were neither defendants nor was there reasonable cause for regarding their assets as the assets of the defendants on the evidence before the court at the time when the receivership order against them was made effective (14 December 2010).
Whilst those facts did not make the receivership order legally invalid under domestic law during the period until it was set aside, they are the cornerstone of the companies argument that it would be disproportionate and unfair to require them to pay the costs of the receivership.
Mr Perry and Mr Parroy submitted that although it must now be accepted that the receivership order ought never to have been made, the court should adopt a similar approach to that of the Strasbourg Court in Benham (referred to in para 62 above).
In that case the applicant was imprisoned under an order which ought not to have been made, but the matter was complex and the magistrates acted in good faith.
It was held that there was therefore no breach of article 5.
By parity of reasoning it was argued that the court should conclude that to require the companies to bear the costs of the receivership would not infringe A1P1, because (as is true) the order under which the receiver seeks to recover his remuneration and expenses from the companies was made by the Crown Court in good faith and the matter was complicated.
Simon Brown LJ drew a similar analogy between article 5 and A1P1 in Hughes, referred to at para 46 above, when he said that it was no more unfair, disproportionate or arbitrary that an acquitted defendant should be uncompensated for any adverse effects of a restraint or a receivership order than that he should be uncompensated for loss of liberty whilst on remand.
I am not persuaded that the analogy is apt.
It is true that a remand in custody and the appointment of a management receiver are both forms of interim restraint and both may cause the individual to suffer financial loss as a side effect, but it is not right simply to lump together different forms of loss and assume that the Convention applies in the same way to them all.
If the companies were claiming to recover trading losses resulting from the impact of their business being put into the hands of the receiver, it would be a claim for loss by interference with their property, to which the third rule in Sporrong would apply.
It could be said that there would be an analogy between a claim for that kind of loss and a claim for loss resulting from the interim detention of the individual.
I see the argument that it would be strange that a person who is remanded in custody and whose property is made the subject of a restraint and receivership order should be disentitled to claim for the loss of earnings resulting from his personal detention but might be entitled to claim for loss of trading opportunities resulting from the restraint on his property.
I see also the argument that it might have a chilling effect on prosecutors if they faced the prospect of possibly having to make good trading losses during the period of a receivership, which might be considerable but would be hard to estimate and over which the prosecution would have no control.
However, the court is not considering a claim of that kind.
The companies are resisting an application by the receiver to take his expenses and remuneration out of their companies assets.
It is quite different from a claim for compensation for a period of remand in custody.
If one wanted to find an analogy with a defendant remanded in custody, the nearest equivalent would be if the assets of the defendant were sought to be used to defray the costs of detaining him and the legal proceedings.
The important point for present purposes is that whereas incidental loss (such as trading loss) which a person may suffer as a by product of an interim restraint would come under the third rule in Sporrong, as loss resulting from the states interference with the property, the Court of Appeal were right to identify the second rule as the relevant rule in this case because it concerns a proposed taking of the companies assets.
In support of their argument for regarding the taking as a proportionate measure, Mr Perry and Mr Parroy drew attention to the protections for the individual which are built into the relevant part of POCA, including particularly section 49(8), set out in para 34 above.
Under that subsection the court must not activate any power given to the receiver to manage the property, or realise assets for the purpose of meeting his remuneration and expenses, until any person holding an interest in the property has had a reasonable opportunity to make representations.
That provision is designed to minimise the risk of the court making a wrongful order such as was made in this case, but I do not see that a taking is rendered proportionate by the existence of a protective provision which failed to operate as it should.
Indeed the opposite could be argued.
This case is distinguishable from Raimondo, Andrews, Hughes, Capewell and Sinclair v Glatt, because all those cases were decided on the premise that the original receivership order was rightly made.
In Sinclair v Glatt the applicant was not the defendant, but the relevant property was in the defendants legal ownership and was therefore held to be properly included in the receivership order.
In the present case, however, not only were the companies not defendants, but at the time when the receivers powers were activated there was no reasonable cause to believe that their assets were assets of the defendants.
The question is whether on those facts it strikes a fair balance between the general interest of the community and the protection of the companies rights to the peaceful enjoyment of their property that the companies assets should be taken to pay for the costs and remuneration of the receiver.
At this point I part company with Laws LJ and agree with Underhill J that this would not be a fair balance.
As Lord Reed observed in AXA General Insurance Ltd v HM Advocate at para 128, the assessment of proportionality requires careful consideration of the particular facts.
In this instance there was no good arguable case for assimilating the companies assets with those of the defendants, and Underhill J aptly described it as simply a confiscation of a third partys assets to fund the execution of an order that should not have been made in the first place.
In Capewell Lord Walker at para 25 described the relationship between the general law of receivership and the detailed provisions of the Criminal Justice Act 1988 (for which one must now substitute POCA) as somewhat opaque.
Section 49(2)(d) empowers the court to authorise the receiver to realise so much of the property as is necessary to meet his remuneration and expenses in accordance with the ordinary law of receivership.
However, the court as a public authority must not exercise its power in such a way as to breach the companies rights under A1P1.
At the same time a real difficulty arises from my conclusion that the companies rights would be violated if the receivers application to use their assets to meet his remuneration and expenses were granted (and similarly if he were permitted to retain money already taken by him, subject to any further evidence and submissions for which Underhill J gave permission in his order referred to in para 4(iii) above).
Nobody on the hearing of this appeal has disputed the courts jurisdiction not only to set aside the receivership order (as has happened) but to refuse the receivers application, if it concludes as I do that it would involve a violation of the companies A1P1 rights, but Underhill J correctly recognised that simply to refuse the application would replace one injustice with another.
As Lord Walker said in Capewell, a receiver who accepts appointment by a court is entitled to know that the terms of his appointment will not be changed retrospectively.
Moreover it is an ordinary part of receivership law that a receiver has a lien for his proper remuneration and expenses over the receivership property.
To take away that right without compensating him would violate the receivers rights under A1P1.
Unless it is within the power of the court to ensure that the receiver receives his recompense for which the lien is a security by some other means, the court will be left in the invidious position of violating the companies A1P1 rights if the receivers application is allowed and violating the receivers A1P1 rights if it is refused.
That leads to the question whether the court has power to order that the receivers proper remuneration and expenses should be paid by the CPS.
Relationship between the receiver and the CPS
I agree with the Court of Appeal that it is not possible to locate within POCA a power to order the CPS to pay the receivers remuneration and expenses.
Underhill J did not identify how this might be done and Mr Perry was not able to do so.
Adopting an alternative approach suggested by the court, Mr Perry argued that the receiver was induced to accept his appointment on the promise or expectation of being able to recoup his expenses and remuneration from the property over which he was appointed to act, although the receiver accepted the financial risk that those assets might be of insufficient value.
The terms on which the CPS asked the receiver to agree to act were set out in the letter to which I have referred.
The relevant provisions are set out in paras 19 and 20.
The letter included the statement that the receiver would have a lien over the defendants assets and that the CPS did not undertake to indemnify him if those assets were insufficient.
The appointment by the court was made on the terms of the agreement between the CPS and the receiver, and the receivership assets included the assets of the company which were expressly included in the terms of the court order.
The effect of my conclusion on A1P1 is that the lien is unenforceable.
There is an argument that the statement you will have a lien over the defendants assets for payment of your fees should be interpreted as a promise that the receiver would have a legally enforceable lien over the receivership property, whatever its value might be, but to resort to that solution would involve a strained and artificial construction of the letter.
The alternative is that the CPS made no such promise to the receiver, but that this was their mutual expectation and was the premise on which the receiver agreed to act.
If the latter is the preferable analysis, does the receiver have a remedy against the CPS under the law of restitution or unjust enrichment?
The current preference among scholars of the subject is to call it unjust enrichment rather than restitution.
An example is the renaming of Goff and Jones seminal textbook.
The first seven editions were entitled The Law of Restitution but the title of the eight edition (2011) has been changed to The Law of Unjust Enrichment.
What matters is the content, and the words unjust and enrichment are both in some respects terms of article
Enrichment requires the obtaining of a benefit, which may include the provision of services, as correctly stated by Professor Andrew Burrows in his Restatement of the English Law of Unjust Enrichment, 2012, at p 7.
The CPS plainly perceived that there would be benefit to the public in the companies assets being removed from their control and placed in the hands of an independent receiver while its criminal investigation was proceeding.
As to the unjust element in an unjust enrichment claim, I agree with the following overview in the current edition of Goff and Jones at para 1 08: the unjust element in unjust enrichment is simply a generalisation of all the factors which the law recognises as calling for restitution [a citation from the judgment of Campbell J in Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987 at [16], quoting Mason & Carter, Restitution Law in Australia (1995), 59 60].
In other words, unjust enrichment is not an abstract moral principle to which the courts must refer when deciding cases; it is an organising concept that groups decided authorities on the basis that they share a set of common features, namely that in all of them the defendant has been enriched by the receipt of a benefit that is gained at the claimants expense in circumstances that the law deems to be unjust.
The reasons why the courts have held a defendants enrichment to be unjust vary from one set of cases to another, and in this respect the law of unjust enrichment more closely resembles the law of torts (recognising a variety of reasons why a defendant must compensate a claimant for harm) than it does the law of contract (embodying the single principle that expectations engendered by binding promises must be fulfilled).
An important part of this branch of law is concerned with cases where money is paid or benefits are conferred for a consideration which has failed.
Burrows Restatement at p 86, accommodates this within the concept of unjust enrichment by stating that a defendants enrichment is unjust if the claimant has enriched the defendant on the basis of a consideration that fails.
Confusion is sometimes caused by the fact that the term consideration, when used in the phrase failure of consideration as a reason for a restitutionary claim, does not mean the same thing as it does when considering whether there is sufficient consideration to support the formation of a valid contract.
Viscount Simon LC explained this in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 48: In English law, an enforceable contract may be formed by an exchange of a promise for a promise, or by the exchange of a promise for an act . but when one is considering the law of failure of consideration and of the quasi contractual right to recover money on that ground, it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise.
To avoid this confusion, Goff and Jones suggest, at paras 12 10 to 12 15, that the expression failure of basis is preferable to failure of consideration because it accurately identifies the essence of the claim being pursued.
Whichever terminology is used, the legal content is the same.
The attraction of failure of basis is that it is more apt, but failure of consideration is more familiar.
Failure of basis, or failure of consideration as it has been generally called, does not necessarily require failure of a promised counter performance; it may consist of the failure of a state of affairs on which the agreement was premised.
A succinct summary of the meaning of failure of consideration was given by Professor Birks in his An Introduction to the Law of Restitution (1989), p 223 (cited with approval by the Court of Appeal in Sharma v Simposh Ltd [2011] EWCA Civ 1383, [2013] Ch 23, para 24): Failure of the consideration for a payment . means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself.
In the present case the receiver has lost his lien.
Professor Birks reference to failure of the consideration for a payment would apply equally to failure of the consideration for the provision of services.
The present case involves both; the receiver made payments for the protection of the receivership property (in particular by the employment of security guards) and also provided professional services for which he seeks remuneration.
The point that a failure of consideration may consist of the failure of a non promissory event or state of affairs is reiterated in Burrows Restatement at pp 86 87.
He states that consideration which fails may have been an event or a state of affairs that was not promised, and he cites the decision of the High Court of Australia in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 as an example of a failure of a non promissory condition as to the future.
Rothmans were licensed to act as wholesalers of tobacco products under a New South Wales statute.
They sold products to retailers for a price including licence fees, which were in reality a form of indirect taxation, payable by Rothmans to the New South Wales government.
The Act imposing that liability on Rothmans was held by the High Court to be unconstitutional.
The retailers then sued Rothmans to recover the amounts which they had paid in respect of the tax which had until then been unlawfully imposed on Rothmans.
The retailers argued unsuccessfully that there was an implied agreement under which they could claim repayment of any unpaid tax.
This argument was described in the leading judgment of Gleeson CJ, Gaudron and Hayne JJ, as artificial and unconvincing (para 20).
However, the retailers succeeded in restitution.
Gleeson CJ, Gaudron and Hayne JJ, stated at para 16 that Failure of consideration is not limited to non performance of a contractual obligation, although it may include that.
They also rejected Rothmans argument that the restitution claims failed because there had not been a total failure of consideration, by interpreting the consideration for the total payments made by the retailers as containing severable parts.
Gummow J (concurring), in a passage at para 72 with which I agree, advocated caution in judicial acceptance of any all embracing theory of restitutionary rights and remedies founded upon a notion of unjust enrichment.
To the lawyer whose mind has been moulded by civilian influences, the theory may come first, and the source of the theory may be the writing of jurists not the decisions of judges.
However, that is not the way in which a system based on case law develops; over time, general principle is derived from judicial decisions upon particular instances, not the other way around.
After reviewing the authorities Gummow J held, at paras 101 to 102, that failure of consideration in this area of law may include the collapse of a bargain, which need not be contractual in nature.
He held at para 104 that there had been no failure in the performance by Rothmans of any promise made by them, but that there had been a failure of consideration in the failure to sustain itself of the state of affairs contemplated as a basis for the payments the appellants seek to recover.
Similarly, in the present case the receiver agreed to accept the burden of management of the companies on the basis that he would be entitled to take his remuneration and expenses from the companies assets, and that state of affairs which was fundamental to the agreement has failed to sustain itself.
It might nevertheless be argued that there has not been a total failure of consideration, because the restraint and receivership order included assets of the defendants other than the assets of the companies.
There is a lively academic debate whether it is an accurate statement of law today that failure of consideration cannot found a claim in restitution or unjust enrichment unless the failure is total, but that point has not been fully argued and it is unnecessary to decide it in this case.
Modern authorities show that the courts are prepared, where it reflects commercial reality, to treat consideration as severable.
Rothmans itself is an example.
Another example cited by Burrows is the decision of the Court of Appeal in D O Ferguson & Associates v M Sohl (1992) 62 BLR 1995.
That case involved a building contract which was repudiated by the builders at a time when the works had been partly completed.
The contract price was approximately 32,000.
At the time when the builders abandoned the site they had been paid over 26,000 and the value of work done by them was about 22,000.
It was held that the owner was entitled to claim in restitution for the sum of 4,673, representing the amount by which the sums paid to the builders exceeded the value of the work done.
The builders objected that there had not been a total failure of consideration under the contract, since most of the building work had been done, but the court held that there had been a total failure of consideration for the amount by which the builders had been overpaid.
In the present case there was a total failure of consideration in relation to the receivers rights over the companies assets, which was fundamental to the basis on which the receiver was requested by the CPS and agreed to act.
I use the expression fundamental to the basis because it should not be thought that mere failure of an expectation which motivated a party to enter into a contract may give rise to a restitutionary claim.
Most contracts are entered into with intentions or expectations which may not be fulfilled, and the allocation of the risk of their non fulfilment is a function of the contract.
But in the present case the expectation that the receiver would have a legal right to recover his remuneration and expenses was not just a motivating factor.
Nobody envisaged that the receiver should provide his services in managing the companies as a volunteer; those services were to be in return for his right to recover his remuneration and expenses from the assets of the companies, such as they might be.
The agreement between the CPS and the receiver so provided, and that provision was incorporated into the order of the court.
I would hold that the CPS fulfilled its contractual obligations to the receiver by ensuring that the order appointing him conformed with the terms of the underlying agreement between them, but that the receiver is entitled to recover his proper remuneration and expenses from the CPS because the work done and expenses incurred by the receiver were at the request of the CPS and there has been a failure of the basis on which the receiver was asked and agreed to do so.
Disposal
I would uphold the Court of Appeals decision dismissing the CPSs appeal from the refusal by Underhill J to make an order permitting the taking of the companies assets to meet his remuneration and expenses, essentially for the reasons given by Underhill J.
I would allow the receivers appeal against the Court of Appeals decision in relation to the CPS and reinstate the order of Underhill J referred to at para 4 above (but for different reasoning).
Lessons for the future
In the judgment of the Court of Appeal referred to at para 24 above, Hooper LJ deplored the fact that the original application was made at short notice to a judge who was in the middle of conducting a heavy trial and with only a limited time available for considering it.
It should be axiomatic that, as he said, an application of this complexity should be listed before a judge with sufficient time to read and absorb the papers and with sufficient time to conduct a proper hearing.
The problem was compounded in this case by the lack of proper opportunity which the judge had to consider the evidence lodged by the companies before he made the critical decision to implement the receivers powers.
When the CPS is proposing to seek a restraint order, and particularly a restraint order coupled with a receivership order, it should give as much advance notice to the listing office as it reasonably can, together with a properly considered estimate of the time likely to be required for pre reading and for the hearing of the application.
If other trials are not to be interrupted, the listing office will need proper time to make the necessary arrangements under the supervision of the resident judge, who may well need to consult the presiding judge and should certainly do so in complex cases, which may merit being heard by a High Court judge.
The fact that such applications are made ex parte, and the potential seriousness of the consequences for defendants (at this stage presumed to be innocent) and for potential third parties, mean that there is a special burden both on the prosecution and on the court.
Hughes LJ spelt this out plainly and emphatically in In re Stanford International Bank Ltd [2010] EWCA Civ 137, [2011] 1 Ch 33, para 191, in a passage (cited in An Informer v A Chief Constable [2012] EWCA Civ 197, [2013] QB 579, para 71) which I would again repeat and endorse: it is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with.
It is not limited to an obligation not to misrepresent.
It consists in a duty to consider what any other interested party would, if present, wish to adduce by way of fact, or to say in answer to the application, and to place that material before the judge.
That duty applies to an applicant for a restraint order under POCA in exactly the same way as to any other applicant for an order without notice.
Even in relatively small value cases, the potential of a restraint order to disrupt other commercial or personal dealings is considerable.
The prosecutor may believe that the defendant is a criminal, and he may turn out to be right, but that has yet to be proved.
An application for a restraint order is emphatically not a routine matter of form, with the expectation that it will routinely be granted.
The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge to deal with it, is a yet further reason for the obligation of disclosure to be taken very seriously.
In effect the prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge.
I would qualify that only by saying that it is not acceptable that such an application should be forced into a busy list, with very limited time for the judge to deal with it, except in the comparatively rare case of a true emergency application where there is literally no opportunity for the prosecution to give the court sufficient notice for any other arrangement to be made.
In that case, the judge will need to consider what is the minimum required in order to preserve the situation until such time as the court has had an adequate opportunity to consider the evidence.
A material failure to observe the duty of candour as explained above may well be regarded as serious default within the meaning of section 72 of the Act because of its potential to cause serious harm.
Before making an application order for a restraint order, with or without a receivership order, the prosecutor must consider carefully the statutory conditions for making such order.
There must be reasonable cause to believe that the prospective defendant has benefited from criminal conduct (section 40(2)(b)) and there must be a good arguable case that the assets which it is sought to restrain must be realisable property held by him.
Both conditions require careful thought about who is alleged to have been party to the criminal conduct under investigation.
Careful thought must also be given to the potential adverse effect on others who are not alleged to be party to the criminal conduct and possible means of avoiding or limiting it.
A judge to whom such an application is made must look at it carefully and with a critical eye.
The power to impose restraint and receivership orders is an important weapon in the battle against crime but if used when the evidence on objective analysis is tenuous or speculative, it is capable of causing harm rather than preventing it.
Where third parties are likely to be affected, even if the statutory conditions for making the order are satisfied, the court must still consider carefully the potential adverse consequences to them before deciding whether on balance the order should be made and, if so, on what conditions.
A judge who is in doubt may always ask for further information and require it to be properly vouched.
It is important to remember that under section 49(9) a receivership order may be made subject to such conditions and exceptions as the court specifies.
The conditions attached to receivership orders appear to have become largely standard, but the making of a receivership order should never be a rubber stamping exercise.
The court has a responsibility to consider what conditions it should contain.
In In re Piggott [2010] EWCA Civ 285, para 54, Rix LJ referred to a suggestion made by Wilson LJ in the course of argument that in an appropriate case a management receivership order might be made subject to a special term that, if it should be shown in due course that the property subject to the order was not realisable property of the defendant but wholly in the legal and beneficial ownership of a third party, then the costs of the management receivership should be borne, not by the property, but, in the absence of any other source, by the prosecutor.
I attach as an appendix to this judgment a possible form of Piggott condition, for which I am grateful to Lord Wilson.
In my view there may indeed be cases in which such a condition would be appropriate, particularly cases in which the court can see the possibility that payment of the receivers expenses and remuneration out of the relevant assets might infringe a persons A1P1 rights.
APPENDIX THE PIGOTT CONDITION Order made under s 49(2)(d) of POCA and Crim.
PR 60.6(5) (1) Subject to the condition set out in (2) below, the receiver shall, in relation to any property to which the above receivership order is expressed to apply, have powers to realise so much of it as is necessary to meet his or her remuneration and expenses and to recover them out of the proceeds of its realisation.
Order made under s 49(9) of POCA (2) The condition referred to in (1) above is that, in the event that it is hereafter determined, whether on appeal or by way of application for variation or discharge of this order, that any property to which the above receivership order is expressed to apply is not arguably held by the defendant and so should not have been made subject to the above receivership order, the powers in (1) above shall not extend to such property and, to the extent that in consequence the said powers do not enable the receiver to recover his remuneration and expenses in full or in part, the applicant for this order do pay him in respect of them.
LORD HUGHES
I agree that the receivers appeal against the decision of the Court of Appeal should be dismissed, and that he should not, in this case, be entitled to recover his expenses from the third party assets belonging to the companies.
I also agree that the receivers appeal should succeed against the CPS.
I gratefully adopt the reasons given in Lord Toulsons comprehensive judgment and add only a very few words on the topic of the application of A1P1 to the particular case of receivership orders made under section 48 of POCA as ancillary to a restraint order under section 41.
As Lord Toulson explains, an order for the receiver to recover his expenses in the usual way from the assets which he is directed to administer cannot be disproportionate for the reasons held by the majority of the Court of Appeal.
The mere fact that an order is set aside on appeal does not mean that it violates the principle of legality; if it did, there would be a breach of one or other of the qualified articles of the ECHR wherever they were engaged and there was a successful appeal.
Nor, generally, will there be any question of a restraint or receivership order being disproportionate when made against the assets of a defendant (in which term POCA includes for this purpose an alleged offender under a criminal investigation: see section 40(9)), providing that there is reasonable cause to believe that he has benefited from criminal conduct.
When it comes to assets which turn out to belong to a third party, the question whether an order for the receiver to recover his expenses from them is or is not disproportionate will depend on the circumstances.
A restraint order under section 41, and thus a receivership order under section 48, must be made against realisable property.
Such property is defined in section 83; it consists of free property held by the defendant, or by the recipient of a tainted gift.
At the interim stage of an application for either form of order, the true ownership of assets may not be known, especially (but not only) where a defendant has taken steps to obscure the true position.
So the test is that a good arguable case exists for believing that the defendant has an interest in them: Crown Prosecution Service v Compton [2002] EWCA Civ 1720.
On the findings of the Court of Appeal in February 2011, which were not in question before this court, the present is a strong case of disproportion.
There was simply never any proper basis advanced for the contention that the assets of these trading companies were the property of the controlling directors, who were the alleged offenders.
The inclusion of the company assets in the restraint and receivership orders was based on nothing more than a bald request to lift the corporate veil.
But no proper basis for doing so was advanced.
It was not being contended that the companies were suspected of being parties to the crimes under investigation, in which event they would themselves have been alleged offenders and their assets might have been apt for restraint if there were grounds for believing that they had benefited from criminal conduct.
The companies were, on the prosecutions own case, businesses with substantial legitimate trading, so there could be no suggestion that they were sham entities concealing true ownership of their apparent assets by the suspected directors.
It does not seem to have been suggested that the companies were used to evade the legal responsibility of the directors for any crimes suspected.
Nor, on the findings of the Court of Appeal, was there any arguable case that they were being used by the directors to channel the benefits of crime to themselves.
Other cases of assets which turn out to belong to third parties must be decided on their own facts.
If the original order was made when there was indeed a good arguable case for believing that the defendant under investigation had an interest in them, then the fact that it later turns out that he had none will not normally mean that the usual route for a receiver to recover his expenses is disproportionate to the legitimate aim of confiscation legislation to preserve assets which may be needed to satisfy a confiscation order if conviction ensues.
If an order was thus made, it does not seem likely that its subsequent setting aside on grounds such as that ownership turns out to be other than it appeared, or that the expense of receivership is not, on closer inspection, justified, would lead to a finding of disproportion.
Underhill Js remarks about the closeness of the connection between the defendant and the third party are, on proper analysis, not independent tests of when an order can be made, but reflect a factor which may well be highly relevant to whether there is a good arguable case for believing that the assets are ones in which the defendant has an interest.
I respectfully endorse Lord Toulsons remarks at para 122.
Restraint (and occasionally receivership) orders may be very valuable in promoting the aims of POCA, which may otherwise all too easily be evaded by alleged offenders once they know that they are under investigation.
But such orders are also capable of causing considerable loss to the holders of assets.
Applicant prosecutors, and judges asked to make such orders, need to think constructively and critically about what is being alleged and who is said to be a party to it, and also about the balance between the benefits and the costs of the orders sought.
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On 6 December 2010 the Crown Prosecution Service applied to the Crown Court for restraint orders under section 41 of the Proceeds of Crime Act 2002 (POCA) against two individuals, and restraint and receivership orders (under section 48 POCA) against Eastenders Group.
Eastenders Group, of which the individuals were the joint owners, was a holding company for a number of trading cash and carry retail outlets.
These orders were sought because the CPS was conducting a covert investigation into a suspected fraud on HMRC, allegedly carried out through Eastenders Group companies.
A POCA restraint order prevents named persons from dealing with their own assets until the order is discharged.
A receivership order appoints a receiver to manage the assets of the company subject to the restraint order.
The CPS sought to have Mr Barnes, a partner in a well known firm of accountants, appointed as Eastenders Groups receiver under a letter of agreement between the CPS and Mr Barnes.
The letter of agreement suggested that Mr Barnes would be remunerated from Eastenders Group property.
The restraint and receivership orders were made by the Crown Court judge after a short hearing.
Mr Barnes was appointed and began to manage the Group.
On 23 December 2010, the Eastenders Group sought to have its orders discharged, but the judge refused.
The Group appealed to the Court of Appeal, heard on 25 January 2011.
On 26 January 2011 the Court of Appeal quashed the orders over the Group.
They held that the orders should never have been made: there was no good arguable case that the Group assets should be regarded as the individuals assets, and 95% of the business of the Group was demonstrably legitimate.
However, during the period of the receivership, the receiver had incurred costs and expenses of 772,547.
This included significant sums for site security, legal expenses and the receivers fees.
The receiver applied to the Crown Court for permission to draw his remuneration and expenses from Eastenders Group assets.
The application was refused by Underhill J, who held that requiring the companies to pay would breach the Groups right to peaceful enjoyment of its possessions under Article 1 of Protocol 1 to the European Convention on Human Rights (A1P1), and so would be unlawful under section 6 Human Rights Act 1998 (section 3 HRA 1998).
He went on to hold that it was possible to interpret POCA (by section 3 HRA 1998) to give the court the power to require the CPS to pay the receivers remuneration and expenses.
The CPS appealed to the Court of Appeal.
The majority of the Court of Appeal upheld Underhill Js decision that the Groups rights under A1P1 would be infringed by an order entitling the receiver to draw his remuneration from its assets on the basis that the order was insufficiently foreseeable.
Laws LJ, dissenting on that point, would have allowed the receiver to draw his remuneration from Eastenders assets.
The Court was unanimous that there was no basis under POCA or the HRA 1998 for the CPS to be required to pay the receivers remuneration and expenses.
The receiver appealed to the Supreme Court.
The Supreme Court unanimously allows the receivers appeal (only) against the Court of Appeals refusal to have the CPS to pay the receivers remuneration and expenses.
Lord Toulson gives the leading judgment, with a short concurrence by Lord Hughes dealing with the practical application of the courts decision.
It is a general principle of the law of receivership that a court appointed receiver is entitled to remuneration from the assets of the administered company.
That law is clear and foreseeable.
However, where the administered company is not itself a defendant, nor at the time of the order was there any reasonable cause to regard its assets as the defendants, it would be a disproportionate interference with the companys A1P1 rights for the receivers remuneration to be drawn from the companys assets.
However, to leave the receiver without a remedy would be to substitute one injustice for another and violate the receivers A1P1 rights.
In this case the receiver and the CPS acted on a common assumption, fundamental to the agreement, that the receiver would be able to claim his remuneration and expenses from the Eastenders Group.
That assumption failed: the receiver accordingly has a valid right to restitution from the CPS.
It is an established principle of the common law of receivership that a court appointed receiver may draw his remuneration and expenses to the assets placed by the court in his/her control.
The receiver has a lien over those assets for that purpose [44].
That common law, together with the provisions of POCA and the Criminal Procedure Rules, provide amply clear and foreseeable authority for the making of such order, and Laws LJ was correct so to hold [83].
The critical question in this case is not foreseeability, but proportionality.
Would it be disproportionate to order that the Receivers expenses be drawn from the companies? [87].
The taking of property without compensation is, in general, a disproportionate interference with A1P1 [88].
In this case the Group were neither defendants nor (as the Court of Appeal found) was there any reasonable cause for regarding the Group assets as those of the defendants at the time when it was made [89], [125 130].
Divesting the Group of its assets in that situation is disproportionate [94].
It is as if the assets of an innocent defendant were sought to be used to cover the costs of detaining and prosecuting him or her [92].
The Receivers application to recover his expenses from Eastenders Group therefore fails [96].
However, that conclusion would leave the court in an invidious position, since to leave the Receiver without recompense would violate his A1P1 rights [96].
The Receiver had, however, entered on his receivership pursuant to a letter of agreement with the CPS [98].
It was the mutual expectation of both the Receiver and the CPS that the Receiver would have a legally enforceable lien over the receivership property [99].
Unjust enrichment may cover a variety of situations.
Failure of services at the request of another is capable of being regarded as enrichment, and it would be unjust if the receiver were not paid for the services which he provided [100 117].
Hence the receiver has a claim in unjust enrichment against the CPS [117].
The restraint and receivership orders were made in this case on an application at short notice.
Applications by the CPS for such orders should be made as early as possible, with proper time estimates and reading lists, enabling the court to consider the necessary arrangements [118 119].
The fact that such applications are made ex parte places a special burden of candour on the CPS and considerable responsibility upon the court [120].
Failure to discharge the duty of candour could well be considered serious misconduct [121].
The court should always consider such applications carefully: making such orders should never be a rubber stamping exercise.
In certain cases, it could be appropriate to attach a Piggott condition to a receivership order providing that if property was shown not to be realisable property, the receivers costs should fall on the CPS [124].
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In this country, we are wary of giving too much power to the police.
We believe that we should be free to be out and about in public without being subjected to compulsory powers of the police, at least unless and until they have reasonable grounds to suspect that we are up to no good.
We have so far resisted suggestions that we should all have to carry identity cards that the police can demand to see whenever they want.
We have unhappy memories of police powers to stop and search suspected persons even with reasonable grounds.
We are even more suspicious of police powers to stop and search without having reasonable grounds to suspect that we are committing or going to commit a crime.
Nevertheless, there are a few instances in which our Parliament has decided that such suspicionless stop and search powers are necessary for the protection of the public from terrorism or serious crime.
The court can examine whether such a law is itself compatible with the rights set out in Schedule 1 to the Human Rights Act 1998.
However, if it finds that it is not, the most the court can do is to make a declaration of incompatibility under section 4 of the Human Rights Act, leaving it to Parliament to decide what, if anything, to do about it.
This is the primary remedy sought by Mr Southey QC on behalf of the claimant in this case.
But, under section 6 of the Human Rights Act, even a compatible law has to be operated compatibly with the Convention rights in any individual case.
There are many laws which are capable of being operated both compatibly and incompatibly, depending upon the facts of the particular case.
The compatibility of the law itself has therefore to be judged in conjunction with the duty of the police to operate it in a compatible manner.
The law in question is contained in section 60 of the Criminal Justice and Public Order Act 1994.
It is now common ground that the power of suspicionless stop and search which it contains is an interference with the right to respect for private life, protected by article 8 of the European Convention on Human Rights, although perhaps not at the gravest end of such interferences.
It is also common ground that the power pursues one of the legitimate aims which is capable of justifying such interferences under article 8(2), namely the prevention of disorder or crime.
The argument is about whether it is in accordance with the law as is also required by article 8(2).
In one sense, of course it is, because it is contained in an Act of the United Kingdom Parliament.
But the Convention concept of legality entails more than mere compliance with the domestic law.
It requires that the law be compatible with the rule of law.
This means that it must be sufficiently accessible and foreseeable for the individual to regulate his conduct accordingly.
More importantly in this case, there must be sufficient safeguards against the risk that it will be used in an arbitrary or discriminatory manner.
As Lord Kerr put it in Beghal v Director of Public Prosecutions (Secretary of State for the Home Department and others intervening) [2015] UKSC 49; [2015] 3 WLR 344, at para 93, The opportunity to exercise a coercive power in an arbitrary or discriminatory fashion is antithetical to its legality in this sense.
Section 60
offensive weapons in a particular locality at a particular time.
It provides: (l) If a police officer of or above the rank of inspector reasonably believes Section 60 is directed towards the risk of violence involving knives and other that incidents involving serious violence may (a) take place in any locality in his police area, and that it is expedient to give an authorisation under this section to prevent their occurrence, (aa) that (i) an incident involving serious violence has taken place in England and Wales in his police area; (ii) a dangerous instrument or offensive weapon used in the incident is being carried in any locality in his police area by a person; and it is expedient to give an authorisation (iii) under this section to find the instrument or weapon; or (b) that persons are carrying dangerous instruments or offensive weapons in any locality in his police area without good reason, he may give an authorisation that the powers conferred by this section are to be exercisable at any place within that locality for a specified period not exceeding 24 hours. (3) If it appears to an officer of or above the rank of superintendent that it is expedient to do so, having regard to offences which have, or are reasonably suspected to have, been committed in connection with any activity falling within the authorisation, he may direct that the authorisation shall continue in being for a further 24 hours. (3A) If an inspector gives an authorisation under subsection (1) he must, as soon as it is practicable to do so, cause an officer of or above the rank of superintendent to be informed. (4) This section confers on any constable in uniform power to stop any pedestrian and search him or anything (a) carried by him for offensive weapons or dangerous instruments; (b) to stop any vehicle and search the vehicle, its driver and any passenger for offensive weapons or dangerous instruments. (5) A constable may, in the exercise of the powers conferred by subsection (4) above, stop any person or vehicle and make any search he thinks fit whether or not he has any grounds for suspecting that the person or vehicle is carrying weapons or articles of that kind.
Dangerous instruments are defined in section 60(11) as instruments which have a blade or are sharply pointed.
Offensive weapons have the same meaning as in section 1(9) of the Police and Criminal Evidence Act 1984 (PACE), that is, any article (a) made or adapted for use for causing injury to persons; or (b) intended by the person having it with him for such use by him or by some other person.
If an incident of serious violence has already taken place (as contemplated by section 60(1)(aa)), it includes any article used in the incident to cause or threaten injury to any person or otherwise to intimidate .
Thus it will be seen that the individual police officers powers in section 60(4) and (5) depend upon a general authorisation (a) given by an officer of the rank of inspector or above, (b) for a period of up to 24 hours, although renewable for one further period of 24 hours, (c) within a particular locality, and (d) where the senior police officer reasonably believes that one or more of the three grounds set out in section 60(1) exists.
Section 60(5) makes it clear that the individual police officer operating under such an authorisation does not have to have any grounds for suspecting that the person or vehicle stopped and searched is carrying offensive weapons or dangerous instruments.
But section 60(4) makes it clear that his or her purpose must be to search for such things.
The exercise of the powers set out in section 60 is subject to a number of safeguards and restrictions, including those contained in section 2 of PACE and in the Code of Practice for the exercise of such powers, issued under section 66 of that Act.
In the Metropolitan Police area, it is also subject to the Metropolitan Police Services published Standard Operating Procedures, both on the general Principles for Stop and Search and on Section 60 of the Criminal Justice and Public Order Act 1994 in particular.
It is well established that failure to comply with published policy will render the exercise of compulsory powers which interfere with individual freedom unlawful: R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245.
It is also likely to expose the individual officer to disciplinary action.
It will therefore be necessary to return to these additional constraints in some detail later.
The facts
The events which gave rise to these proceedings took place on 9 September 2010.
There was then a significant problem of gang related violence in the London Borough of Haringey, resulting from tensions between two rival gangs, and the risk that gangs from outside the borough would come to their aid.
Between 1 and 9 September there were many police intelligence reports relating to violent crime and the use of firearms, knives and other offensive weapons.
There was an attempted murder and a stabbing on 4 September and another stabbing on 5 September.
On 8 September there were intelligence reports about the use or storage or movement of firearms.
These indicated a risk of further violence on the afternoon, evening and night of 9 September.
In the morning of 9 September, Superintendent Barclay, Superintendent (Operations) in the Borough of Haringey, formed the belief (under section 60(1)(a)) that further incidents of serious violence were likely to take place that day and also (under section 60(1)(aa)) that people would be travelling to Haringey in possession of weapons that had been used in the incidents which had already taken place.
Accordingly at 11.20 am he completed Form 5096, which constituted the authorisation.
This authorised searches between 1.00 pm on 9 September 2010 and 6.00 am on 10 September in the whole Borough of Haringey apart from the wards of Fortis Green, Highgate, Bounds Green, Alexandra, Muswell Hill and Woodside.
Under Grounds he checked the boxes corresponding to section 60(1)(a) and (aa).
Under Additional notes was stated There are increasing tensions at present between gangs in this borough and boroughs beyond those neighbouring ours.
A section 60 in the terms requested would support the aims of the tasked resources [to tackle Most Serious Violence, Serious Youth Violence and Knife Enabled Crime] and be a visible presence to deter the commission of offences in this borough.
There followed details of the numerous intelligence reports, many to do with rivalry between the Wood Green Mob and the Grey Gang, which had led to this belief.
The form concluded that In respect of the Human Rights Act 1998 Authorisation is Proportionate, Legal, Accountable and Necessary, in order to protect members of the public from being involved/surrounded by serious unlawful violence between opposing gang members.
There is a history of violence between rival gangs on the borough which has previously resulted in serious assaults and criminal damage.
Officers on duty were notified of the authorisation either in their daily briefing packs or over their radios.
At the time of these events, Mrs Roberts was 37 years old, and working as a support worker providing in class support for young people with disabilities and learning difficulties.
She had no convictions or cautions for criminal offences.
She is of African Caribbean heritage.
On 9 September 2010, shortly after 1.00 pm, she was travelling on the No 149 bus in Tottenham.
She had not paid her fare.
A ticket inspector read her Oyster card and found that, not only had it not been validated for that journey, but also that it did not have enough funds on it to pay the fare.
When questioned, Mrs Roberts gave a false name and address and also falsely stated that she did not have any identification with her.
The police were called and Police Constable Jacqui Reid attended.
Mrs Roberts again denied having any identification with her.
She appeared nervous and was keeping a tight hold upon her bag.
PC Reid considered that she was holding her bag in a suspicious manner and might have an offensive weapon inside it.
It was not uncommon for women of a similar age to carry weapons for other people.
Earlier that day PC Reid had been involved in the search of such a woman who had been found to be in possession of a firearm and an offensive weapon and arrested.
PC Reid explained her powers under section 60 of the 1994 Act and that she would search Mrs Roberts bag.
Mrs Roberts said that she would prefer to be searched in a police station.
PC Reid said that this was unnecessary and she would do it there and then.
As she went to take Mrs Roberts bag, Mrs Roberts kept tight hold of it and began to walk away.
She was restrained and handcuffed but continued to walk away.
Eventually the police succeeded in restraining her.
PC Reid searched her bag and Mrs Roberts gave her correct name and address.
Inside the bag were bank cards in Mrs Roberts name and in two other names.
She was arrested on suspicion of handling stolen goods, but no further action on that matter was taken once it was confirmed that the cards were indeed her own, in her maiden name, and her sons.
PC Reid completed Form 5090, which recorded when and where the search had taken place, and gave the following reasons: Area is a hot spot for gang violence and people in possession of knives.
Subject kept holding tightly onto her bag and appeared nervous and as if trying to conceal something she didnt want police to find.
Mrs Roberts was handed a copy of this form after she was arrested and interviewed at the police station for the offence of obstructing the search.
She was later cautioned for that offence but the caution was quashed by consent following the institution of these proceedings.
Mrs Roberts explains that she did not want to be searched on the street because she was concerned that some of the young people with whom she worked might see it.
But it is now conceded that PC Reid acted in accordance with section 60 of the 1994 Act, and indeed that the interference with Mrs Roberts article 8 rights was proportionate to the legitimate aim of the prevention of crime.
Mrs Roberts brought judicial review proceedings alleging breaches of article 5 and of article 8 and of article 14.
Both the Divisional Court ([2012] EWHC 1977 (Admin)) and the Court of Appeal ([2014] EWCA Civ 69; [2014] 1 WLR 3299) held that there was no deprivation of liberty within the meaning of article 5 (and there is no appeal against that).
Both courts rejected the claim that the section 60 power was used in a manner which discriminated on grounds of race, contrary to article 14 (and there is no appeal against that).
Both courts held that there was an interference with the right to respect for Mrs Roberts private life in article 8, but that it was in accordance with the law.
That is the issue in this appeal.
The case law
As it is admitted that the interference with Mrs Roberts rights was, in the circumstances, proportionate to the legitimate aim of preventing crime, her claim can only succeed if the power under which it was done is in itself incompatible with the Convention rights because it does not have the character of law as required by the Convention.
As Lord Reed explained in R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, at para 114, for the interference to be in accordance with the law, there must be safeguards which have the effect of enabling the proportionality of the interference to be adequately examined.
Whether the interference in a given case was in fact proportionate is a separate question.
The T case, as Lord Hughes explained in Beghal, at para 31, was concerned with a rigid rule which did not have the flexibility to ensure that interferences with article 8 rights were proportionate.
In Beghal, as in this case, on the other hand, the court was concerned with the reverse situation, where safeguards may be required to guard against a broad discretion being used in an arbitrary, and thus disproportionate manner.
This is the first case in which the power in section 60 has come before this court or before the European Court of Human Rights in Strasbourg.
But two other powers of stop and search have come before this court or its predecessor, the appellate committee of the House of Lords, and one of those cases has gone to the Strasbourg court.
We will deal with these, and another relevant Strasbourg decision, in chronological order.
R (Gillan) v Commissioner of Police of the Metropolis [2006] UKHL 12; [2006] 2 AC 307, concerned the powers in sections 44 to 46 of the Terrorism Act 2000.
Section 44(4) empowered a police officer of at least the rank of assistant chief constable to grant an authorisation for a renewable period of up to 28 days covering a specified area or place, which could be the whole of a police area.
The practice was to grant successive 28 days authorisations covering the whole Metropolitan Police area.
Under section 46(3) to (7), authorisations were subject to confirmation by the Home Secretary within 48 hours, failing which they ceased to have effect.
But such confirmation had never been refused.
Under section 44(3), authorisations can be given only if the person giving it considers it expedient for the prevention of acts of terrorism, a very broad ground.
Terrorism is widely defined in section 1 of the 2000 Act.
Under section 44(1) and (2) an authorisation allowed any uniformed police officer to stop a vehicle in the area and search it, the driver and any passenger, and to stop a pedestrian in the area and search the pedestrian and anything carried by him.
Under section 45(1), the power could be exercised only for the purpose of searching for articles of a kind which could be used in connection with terrorism, but whether or not the constable has grounds for suspecting the presence of articles of that kind.
Under section 45(4), he could detain the person or vehicle for such time as is reasonably required to permit the search to be carried out at or near the place where the person or vehicle is stopped.
Two people, a student and a journalist, who had been stopped and searched on their way to a demonstration, complained of breaches of several Convention rights, including article 8.
rights in question, Lord Bingham said this, at para 34: In considering the Convention requirement of legality common to all the The lawfulness requirement in the Convention addresses supremely important features of the rule of law.
The exercise of power by public officials, as it affects members of the public, must be governed by clear and publicly accessible rules of law.
The public must not be vulnerable to interference by public officials acting on any personal whim, caprice, malice, predilection or purpose other than that for which the power was conferred.
This is what, in this context, is meant by arbitrariness, which is the antithesis of legality.
This is the test which any interference with or derogation from a Convention right must meet if a violation is to be avoided.
He went on to hold, at para 35, that the power in question did meet these requirements.
That the constable need have no suspicion cannot, realistically, be interpreted as a warrant to stop and search people who are obviously not terrorist suspects, which would be futile and time wasting.
It is to ensure that a constable is not deterred from stopping and searching a person whom he does suspect as a potential terrorist by the fear that he could not show reasonable grounds for his suspicion.
He had earlier, at para 14, when rejecting the argument that expedient must be read down to necessary identified 11 constraints on the abuse of the power.
The other members of the committee agreed with him on this point, while adding observations of their own, in particular that race or ethnicity could never be the sole ground for choosing a person to stop and search.
In Gillan v United Kingdom (2010) 50 EHRR 1105, the Strasbourg court took a different view.
The authorisation could be given for reasons of expediency rather than necessity.
Once given, it was renewable indefinitely.
The temporal and geographical restrictions were no real check.
Above all, the court was concerned at the breadth of the discretion given to the individual police officer, the lack of any need to show reasonable suspicion, or even subjectively to suspect anything about the person stopped and searched, and the risks of discriminatory use and of misuse against demonstrators and protesters in breach of article 10 or 11 of the Convention.
In particular, in the absence of any obligation on the part of the officer to show a reasonable suspicion, it is likely to be difficult if not impossible to prove that the power was improperly exercised (para 86).
Hence the applicants article 8 rights had been violated.
Despite this, it cannot be concluded from Gillan that the Strasbourg court would regard every suspicionless power to stop and search as failing the Convention requirement of lawfulness.
In Colon v The Netherlands (2012) 55 EHRR SE45, it declared inadmissible a complaint about a Dutch power which in some respects was more comparable to the power at issue in this case than was the power in Gillan.
Acting under the Municipalities Act, with the authority of a byelaw passed by the local council, the Burgomaster of Amsterdam designated most of the old centre of Amsterdam as a security risk area for a period of six months and again for a further period of 12 months.
Under the Arms and Ammunition Act, this enabled a public prosecutor to order that, for a randomly selected period of 12 hours, any person within the designated area might be searched for the presence of weapons.
The prosecutor had to give reasons for the order by reference to recent reports.
The applicant refused to submit to a search when stopped and was arrested and prosecuted for failing to obey a lawful order.
The applicants complaint that this interference with his article 8 rights was not in accordance with the law was limited to the ineffectiveness of the judicial remedies available, in particular that no prior judicial authorisation for the order was necessary (para 74).
The court pointed out that the Burgomasters designation had to be based on a byelaw adopted by an elected representative body, which also had powers to investigate the Burgomasters use of the power.
There was also an objection and appeal mechanism.
The criminal courts could then examine the lawfulness of the use made of it.
Hence the power was in accordance with the law (paras 75 79).
The court went on to find that the interference was necessary in a democratic society.
The legal framework involved both the Burgomaster and the prosecutor, hence no single executive officer could alone order a preventive search operation.
These preventive searches were having their intended effect of helping to reduce violent crime in Amsterdam.
These reasons were sufficient to justify the unpleasantness and inconvenience to the applicant.
Mr Southey suggests that the reference, in the Dutch governments observations, to the individual police officers being given no latitude in deciding when to exercise their powers (para 68) must mean that they had to stop everyone in the designated area during the 12 hours in question and that therefore there was no risk of arbitrary decision making.
That cannot be right.
Old Amsterdam is a sizeable area frequented by many people both for business and for pleasure purposes.
His better point is that the applicant limited his complaint to the lack of prior judicial sanction.
The fact remains that the Strasbourg court held that particular suspicionless stop and search power compatible with article 8.
More recently, in Beghal, the Supreme Court has considered a rather different power, under Schedule 7 to the Terrorism Act 2000.
This allows a police or immigration officer to question a person at a port or in the border area whom he believes to be entering or leaving the United Kingdom or travelling by air within it.
It also applies to a person on board a ship or aircraft which has arrived anywhere in the United Kingdom.
The object of the questioning is to determine whether the person appears to be a terrorist within the meaning of that part of the Act.
But the officer does not have to have grounds for suspecting that he does.
This core power is supplemented by additional powers to stop, search and detain the person for a short time, and to require the production of documents.
The claimant was stopped and questioned for an hour and three quarters on returning to this country from a visit to her husband in France where he was in custody in relation to terrorist offences.
She was prosecuted for refusing to answer some of the questions.
By a majority, Lord Kerr dissenting, the Supreme Court declined to hold that the prosecution was an unjustified interference with her Convention rights.
Lord Hughes (with whom Lord Hodge agreed) pointed out that there is a distinction between port controls and street searches.
The former are a lesser intrusion than the latter.
We expect people to be searched at airports, for the safety of all.
He listed, at para 43, a number of effective safeguards which he considered sufficient to meet the requirement of legality: They include: (i) the restriction to those passing into and out of the country; (ii) the restriction to the statutory purpose; (iii) the restriction to specially trained and accredited police officers; (iv) the restrictions on the duration of questioning; (v) the restrictions on the type of search; (vi) the requirement to give explanatory notice to those questioned ; (vii) the requirement to permit consultation with a solicitor and the notification of a third party; (viii) the requirement for records to be kept; (ix) the availability of judicial review if bad faith or collateral purpose is alleged, and also via the principle of legitimate expectation where a breach of the code of practice or of the several restrictions listed above is in issue;
Lord Neuberger and Lord Dyson agreed, adding that in considering whether the legality principle was satisfied, one must look not only at the provisions of the statute or other relevant instrument which gives rise to the system in question but also at how that system actually works in practice (para 86).
The differences from the system in Gillan showed that these powers were more foreseeable and less arbitrary (para 87).
They could only be exercised (i) at ports and airports; (ii) against those passing through the UKs borders; (iii) for a limited purpose (para 88).
Unlike the powers in Gillan, they were not extraordinary; they were used against a tiny proportion of passengers; and they yielded useful results.
Nor could they be used against demonstrators and protesters (para 89).
They also pointed out that it was important to the effectiveness of these powers that they be exercised randomly and therefore unpredictably.
If this were not permissible the valuable power would either have to be abandoned or exercised in a far more invasive and extensive way, by questioning everyone passing through ports and airports (para 91).
Mr Southey points out that there are other ways of securing the benefit of random and thus unpredictable searches than leaving the choice of whom to search to individual police officers.
He himself has experienced a system in Mexico where passengers were randomly given a red or a green light: those given a red light were searched, those given a green light were not.
It is, however, rather hard to see how this would work with searches conducted on the street or even on the No 149 bus.
The other constraints
In addition to the limited scope of the power in section 60 itself, it is necessary to take into account the other constraints upon the exercise of these powers.
Those constraints arise both from the legal protection of the citizen from the misuse of police powers, and from the mechanisms designed to ensure that the police are accountable for their actions.
In relation to legal protection, we have mentioned section 6 of the Human Rights Act, to which it will be necessary to return.
In the event of a breach of that section, the victim of the unlawful act is entitled to seek a judicial remedy under section 8, which might in an appropriate case include an award of damages (as, for example, in H v Commissioner of Police of the Metropolis (Liberty and another intervening) [2013] EWCA Civ 69; [2013] 1 WLR 3021).
But the legal protection of the citizen pre dates the Human Rights Act.
In relation to searches, the starting point is the common law, under which it is contrary to constitutional principle and illegal to search someone to establish whether there are grounds for an arrest (Jackson v Stevenson (1897) 2 Adam 255).
Powers of stop and search therefore require Parliamentary authority.
The 1994 Act is one of a number of statutes which provide such authority.
Like other aspects of the relationship between the citizen and the police, however, the exercise of the powers conferred by the 1994 Act is subject to detailed statutory regulation by PACE.
Where there is a failure to comply with PACE, rendering the search unlawful, the victim can in principle bring an action for damages against the chief constable (or, in the case of the Metropolitan Police, the Commissioner), who is vicariously liable for the unlawful acts committed by his or her officers (as, for example, in OLoughlin v Chief Constable of Essex [1998] 1 WLR 374 and Abraham v Commissioner of Police of the Metropolis [2001] 1 WLR 1257).
Legal remedies before the courts are not, however, the only mechanism for protecting citizens against the misuse of police powers and ensuring the accountability of police officers.
At a national level, a variety of powers are possessed by the Home Secretary, including the power to issue Codes of Practice under section 66 of PACE, and the power to appoint Her Majestys Inspectors of Constabulary and to direct them to carry out inspections and report to her, under section 54 of the Police Act 1996.
A wide range of policing matters, including operational decisions by chief constables, are also examined in Parliament by the Home Affairs Select Committee.
At a local level, police and crime commissioners, directly elected by the communities they serve and subject to scrutiny by local police and crime panels, are responsible for holding the chief constable of their area to account for the way in which he or she, and the people under his or her direction and control, exercise their functions: Police Reform and Social Responsibility Act 2011, section 1(7).
In relation to the Metropolitan Police, the equivalent function is performed by the Mayors Office for Policing and Crime, an office occupied by the Mayor of London: section 3(7) of the 2011 Act.
At the time of the events with which this appeal is concerned, a broadly similar function was performed by police authorities established under the Police and Magistrates Courts Act 1994, and, in relation to the Metropolitan Police, by the Metropolitan Police Authority established under the Greater London Authority Act 1999.
In individual cases, complaints about the misuse of police powers can be made to the chief constable (or, in the case of the Metropolitan Police, to the Commissioner), to the police and crime commissioner (or, in the case of the Metropolitan Police, to the Mayors Office for Policing and Crime), or to the Independent Police Complaints Commission, an independent body established under the Police Reform Act 2002.
Provision is made under that Act for the determination of complaints and for a system of appeals.
That general explanation forms the background to the constraints and safeguards applying specifically to the powers with which this appeal is concerned.
First there are the requirements of sections 2 and 3 of PACE, which apply to most stop and search powers, including those under section 60 of the 1994 Act.
Under section 2, before the officer begins the search, he must take reasonable steps to tell the person being searched his name, the station to which he is attached, the object of the search and the grounds for making it, and that the person can only be detained for the time reasonably required to carry out the search.
Breach of section 2 would render the search unlawful (Osman v Director of Public Prosecutions (1999) 163 JP 725).
Section 3 requires the officer to make a record in writing unless this is not practicable, either as part of the custody record if the person is arrested and taken to a police station or on the spot or as soon as practicable after the search if he is not.
The person searched is entitled to a copy of the record if he asks for one within three months.
This was the Form 5090 handed over to Mrs Roberts after her arrest (see para 12 above).
Next there are the statutory Codes of Practice, issued under section 66 of PACE.
Code A relates to the exercise by police officers of statutory powers of stop and search.
This governs both the authorisation and the search itself.
It is not practicable to cite all the relevant paragraphs of the 2009 version in force at the time of this encounter.
But the flavour may be gleaned from para 1.1: Powers to stop and search must be used fairly, responsibly, with respect for people being searched and without unlawful discrimination.
The Race Relations (Amendment) Act 2000 makes it unlawful for police officers to discriminate on the grounds of race, colour, ethnic origin, nationality or national origins when using their powers.
Mr Southey complains that this does not in terms tell police officers that they must not select people on grounds of race or ethnicity alone.
But that is what discrimination means.
If anything, this paragraph is clearer than the one in the current (2015) version, which has been updated to refer to all the characteristics now protected by the Equality Act 2010, without listing them.
The current Code does contain a helpful paragraph, para 2.14A, which was not present in the earlier version: The selection of persons and vehicles under section 60 to be stopped and, if appropriate, searched should reflect an objective assessment of the nature of the incident or weapon in question and the individuals and vehicles thought likely to be associated with that incident or those weapons.
The powers must not be used to stop and search persons and vehicles for reasons unconnected with the purpose of the authorisation.
When selecting persons and vehicles to be stopped in response to a specific threat or incident, officers must take care not to discriminate unlawfully against anyone on the grounds of any of the protected characteristics set out in the Equality Act 2010 (see para 1.1).
Nevertheless, the earlier Code explains and stresses the importance of explaining and recording the reasons for the stop (paras 3.8 3.11 and section 4).
Supervising officers must monitor the use of stop and search powers and should consider in particular whether there is any evidence that they are being exercised on the basis of stereotyped images or inappropriate generalisations (para 5.1).
They must keep comprehensive statistical records so as to identify disproportionate use either by particular officers or against particular sections of the community (para 5.3).
As to the authorisation, both the period of time and the geographical area defined in the authorisation must be the minimum necessary to achieve the legislative aim (para 2.13 and Notes for Guidance, para 13).
Thus the authorisation in this case was for less than the maximum 24 hours permitted and the area, although substantial, excluded quite large areas of the borough of Haringey.
The Notes for Guidance, at para 10, stress that: The powers under section 60 are separate from and additional to the normal stop and search powers which require reasonable grounds to suspect an individual of carrying an offensive weapon (or other article).
Their overall purpose is to prevent serious violence and the widespread carrying of weapons which might lead to persons being seriously injured by disarming potential offenders in circumstances where other powers would not be sufficient.
They should not therefore be used to replace or circumvent the normal powers for dealing with routine crime problems.
Paragraph 11 points out that authorisations require a reasonable belief that must have an objective basis, of which examples are given.
Then there are the applicable policies and instructions of the police force in question, in this case, the Metropolitan Police.
The Metropolitan Police Standard Operating Procedures are published on their website.
These largely repeat the requirements of the legislation and the Code, but with some additional features.
They are designed to be relatively simple to use and easy to remember.
The Principles for Stops and Searches, current at the time, contains a section on the Race Relations (Amendment) Act 2000, which extended the duties in the Race Relations Act 1976 to public authorities including the police.
This reminds officers of their general duty to have due regard to eliminating unlawful discrimination.
More to the point, it states that Officers must be aware that to go beyond their powers and search somebody solely on grounds of race, colour, or otherwise treat someone unfavourably on such grounds is unlawful and the individual officer, in addition to the Commissioner, may face legal or disciplinary proceedings.
The Principles also contain a section on Human Rights, instructing officers to apply the PLAN B checklist to all their decision making.
Their actions must be Proportionate, have a Legal power or purpose, Accountable (through record keeping and scrutiny), Necessary in the circumstances and use the Best information available.
The specific Standard Operating Procedures on Section 60 Criminal Justice and Public Order Act, current at the time, instructed senior officers giving the authorisation that these must be justified on the basis that the exercise of the power is, in all circumstances a proportionate and necessary response for achieving the purpose for which Parliament provided the power.
It reminds officers that they must have a reasonable belief in the grounds and that there must be an objective basis in intelligence or relevant information.
It suggests that the use of section 60 should be considered where there has been a significant increase in knife point robberies in a limited area and also, for example, for gang related violence or disorder, football related violence and events such as demonstrations and music concerts that typically include a large scale gathering of people which, combined with other factors, indicate a likelihood of violence or the commission of offences.
It stresses the importance of engagement with local community groups and of feedback.
Briefings should be the rule, if practicable.
For individual officers carrying out the stop and search, it provides guidance on filling out Form 5090 and about the encounter.
The mnemonic GOWISELY (Grounds, Object, Warrant, Station, Entitlement to a copy, Legal power, and tell the person You are being detained) applies, with some additional guidance.
These instructions are regularly reviewed.
Since the encounter in question they have been updated to take account of the Best Use of Stop and Search Scheme (BUSS), issued by the Home Secretary and College of Policing in April 2014 following reports prepared by Her Majestys Inspectors of Constabulary, under the direction of the Home Secretary, on the use of stop and search powers.
Announcing this to Parliament, the Home Secretary explained that she had long been concerned about the use of stop and search by the police.
Although an important police power, when misused it could be counter productive.
It was an enormous waste of police time.
And when innocent people were stopped and searched for no good reason it was hugely damaging to the relationship between the police and the public.
Nevertheless, adopting the scheme was not compulsory.
Police forces in this country are not subject to direction from the government.
They are operationally independent.
But in fact all of them have adopted it, including the Metropolitan Police.
BUSS covers all kinds of stop and search powers, but in relation to section 60 it specifically provides: (i) that Forces in the scheme will raise the level of authorisation to Assistant Chief Constable (or the equivalent in the Metropolitan Police and City of London Police); (ii) that authorisations must only be given when the officer believes it necessary, rather than merely expedient, for any of the statutory purposes; (iii) that in relation to future serious violence, the officer must reasonably believe that it will, rather than may, take place; (iv) that authorisations should be for no more than 15 hours in the first instance; and (v) that Forces must communicate with the public in the area in advance where practicable and afterwards.
Mr Southey argues that these improvements show that section 60 as enacted does not contain sufficient safeguards.
On behalf of the Secretary of State, Lord Keen QC argues that BUSS is irrelevant.
The Home Secretarys determination to seek improvements in the operation of all stop and search powers in order to promote better community relations does not prove that the previous use of the power was not in accordance with the law.
However, it is worth bearing in mind that there has been a very significant reduction in the use of these powers in recent years.
Discussion
Any random suspicionless power of stop and search carries with it the risk that it will be used in an arbitrary or discriminatory manner in individual cases.
There are, however, great benefits to the public in such a power, as was pointed out both by Lord Neuberger and Lord Dyson in Beghal and by Moses LJ in this case.
It is the randomness and therefore the unpredictability of the search which has the deterrent effect and also increases the chance that weapons will be detected.
The purpose of this is to reduce the risk of serious violence where knives and other offensive weapons are used, especially that associated with gangs and large crowds.
It must be borne in mind that many of these gangs are largely composed of young people from black and minority ethnic groups.
While there is a concern that members of these groups should not be disproportionately targeted, it is members of these groups who will benefit most from the reduction in violence, serious injury and death that may result from the use of such powers.
Put bluntly, it is mostly young black lives that will be saved if there is less gang violence in London and some other cities.
It cannot be too often stressed that, whatever the scope of the power in question, it must be operated in a lawful manner.
It is not enough simply to look at the content of the power.
It has to be read in conjunction with section 6(1) of the Human Rights Act 1998, which makes it unlawful for a police officer to act in a manner which is incompatible with the Convention rights of any individual.
It has also to be read in conjunction with the Equality Act 2010, which makes it unlawful for a police officer to discriminate on racial grounds in the exercise of his powers.
It might be thought that these two additional legal restraints were sufficient safeguard in themselves.
The result of breaching either will be legal liability and probably disciplinary sanctions as well.
It is said that, without the need to have reasonable grounds for suspecting the person or vehicle stopped to be carrying a weapon, it is hard to judge the proportionality of the stop.
However, that is to leave out of account all the other features, contained in a mixture of the Act itself, PACE and the Force Standard Operating Procedures, which guard against the risk that the officer will not, in fact, have good reasons for the decision.
The result of breaching these will in many cases be to render the stop and search itself unlawful and to expose the officers concerned to disciplinary action.
First, as to the authorisation itself: (i) the officer has reasonably to believe that the grounds for making an authorisation exist; (ii) those grounds are much more tightly framed than the grounds in Gillan; (iii) the officers belief clearly has to be based on evidence; (iv) he has to record in writing, not only what his grounds are, but the evidence on which his belief is based; (v) he has expressly to consider whether the action is necessary and proportionate to the danger contemplated; (vi) that is why, in reality, he has to believe that an authorisation is necessary rather than merely expedient; (vii) the authorisation can only be for a very limited period of time; (viii) it can only be renewed once for a limited period of time; rolling renewals are not possible; (ix) it can only cover a limited geographical area; (x) it is subject to review.
Second, as to the operation itself: (i) there should be prior briefing if possible and certainly de briefing afterwards; (ii) there should be prior community engagement if possible and certainly afterwards; (iii) where the authorisation is given by an officer below the rank of superintendent, it is subject to review by a superintendent; (iv) after the authorisation is over, the operation should be evaluated, in terms of whether its objectives were met, numbers of searches, number of arrests, number of weapons seized, disproportionality etc, and community confidence and reassurance.
Third, as to the actual encounter on the street: (i) the officer must be in uniform and identify himself by name and police station to the person stopped; (ii) the officer must explain the power under which he is acting, the object of the search and why he is doing it; (iii) the officer must record this in writing; (iv) the person searched is entitled to a copy of the form; (v) the purpose is limited to searching for offensive weapons or dangerous implements.
All of these requirements, in particular to give reasons both for the authorisation and for the stop, should make it possible to judge whether the action was necessary in a democratic society for the prevention of disorder or crime.
No system of safeguards in the world can guarantee that no one will ever act unlawfully or contrary to orders.
If they do so act, the individual will have a remedy.
The law itself is not to blame for individual shortcomings which it does its best to prevent.
It is not incompatible with the Convention rights.
It would not, therefore, be right to make a declaration of incompatibility in this case.
Neither would it be appropriate to make a declaration that the Guidance current at the time, or now, was inadequate or that this particular search was not in accordance with the law.
We would dismiss this appeal.
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This appeal involves a challenge to the compatibility of the police power contained in s 60 Criminal Justice and Public Order Act 1994 (s 60), with the right to respect for private life protected by article 8 of the European Convention on Human Rights (ECHR).
S 60 permits a police officer to stop and search any person or vehicle for offensive weapons or dangerous instruments, whether or not he has any grounds for suspecting that the person or vehicle is carrying them, when an authorisation from a senior police officer, which must be limited in time and place, is in force.
On 9 September 2010, in response to a period of gang related violence in Haringey, Superintendent Barclay authorised the carrying out of searches under s 60 for 17 hours in parts of the borough, concluding that it was a proportionate response to protect members of the public from serious violence.
That day, Police Constable Jacqui Reid was called to an incident in Tottenham involving a passenger who had not paid her fare on the no. 149 bus.
The passenger was the appellant, Mrs Roberts.
She had denied having identification with her and kept a tight hold on her bag.
PC Reid used the power under s 60 to search her bag, which enabled Mrs Roberts name to be established from a bank card.
Mrs Roberts brought judicial review proceedings against the police alleging breaches of a number of her rights under the ECHR.
Both the High Court and Court of Appeal rejected her claims.
The only claim pursued in her appeal to the Supreme Court was the alleged breach of article 8.
She sought a declaration of incompatibility under s 4 Human Rights Act 1998 on the ground that the power is not in accordance with the law.
Article 8 requires the law to be sufficiently accessible and foreseeable for an individual to regulate his conduct accordingly and to have sufficient safeguards against the risk that it will be used in an arbitrary or discriminatory manner
The Supreme Court unanimously dismisses Mrs Roberts appeal, holding that the safeguards attending the use of the s 60 power, in particular the requirements to give reasons both for the authorisation and for the stop and search, make it possible to judge whether the power has been exercised lawfully.
Both the power and the particular search of Mrs Roberts were in accordance with the law.
Lady Hale and Lord Reed give the only substantive judgment with which the other justices agree.
The power found in s 60 is one of the few instances where Parliament has decided that stop and search powers without reasonable grounds to suspect the commission of an offence are necessary for the protection of the public from terrorism or serious crime.
It was common ground in the appeal that the power interferes with the right to respect for private life but that it pursues a legitimate aim which is capable of justification under article 8(2).
The issue was whether it also satisfied article 8(2) by being in accordance with the law [3].
S 60 is directed towards the risk of violence involving knives and other offensive weapons in a particular locality.
It depends on an authorisation by an officer of the rank of inspector or above, who reasonably believes that incidents involving serious violence may take place in any locality in his police area, and that an authorisation of up to 24 hours (renewable once) is expedient to prevent their occurrence by allowing stops and searches in order to discover offensive weapons.
The exercise of the powers is subject to numerous safeguards and restrictions in the Police and Criminal Evidence Act 1984, the Code of Practice and the Standard Operating Procedures of the Metropolitan Police.
Failure to comply with these safeguards renders the exercise of compulsory powers which interfere with individual freedom unlawful [7, 28 37].
The authorisation made on 9 September 2010 followed police intelligence reports indicating a risk of further violence in connection with rival gangs.
When PC Reid attended the incident she considered that the appellant was holding her bag in a suspicious manner, and her experience was that it was not uncommon for women of a similar age to carry weapons for other people.
She therefore conducted a search of the appellants bag exercising the s 60 power, and provided the appellant with a form explaining these reasons [10 13].
This is the first challenge to the s 60 power to come before the court.
Previous case law concerning similar stop and search powers establishes that some but not every suspicion less power would fail the requirement of lawfulness under the ECHR.
It is often important to the effectiveness of the powers that they be exercised randomly and unpredictably.
The question is whether the legal framework permits the court to examine the propriety of the exercise of the power [15 26].
Whatever the scope of the power, it must be operated in a manner which is compatible with the ECHR rights of any individual and be free of discrimination [42].
These constraints, together with disciplinary sanctions against police officers, guard against the risk that the s 60 power will be exercised when the officer does not in fact have good reasons for the decision [43].
The requirements attaching to the authorisation [44], the operation [45] and the actual encounter on the street [46], in particular the requirement to give reasons, should make it possible to judge whether the action was necessary in a democratic society for the prevention of disorder or crime.
The law itself is not incompatible with article 8 [47].
Accordingly, a declaration under the Human Rights Act should not be made.
Nor should there be a declaration that the guidance current at the time was inadequate or that the particular search of the appellant was not in accordance with the law [48].
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This appeal raises a short question of construction of shipbuilders refund guarantees given pursuant to six shipbuilding contracts (the Contracts).
The Contracts, which were all dated 11 May 2007, were between each of the first to sixth claimants (the Buyers) and Jinse Shipbuilding Co Ltd (the Builder).
Under the Contracts the Builder agreed to build and sell one vessel to each of the Buyers.
The price of each vessel was US$33,300,000, payable in five equal instalments of US$6,660,000 due at specified points of time, with the final instalment payable on delivery.1 By Article X.8 of the Contracts it was a condition precedent to payment by the Buyers of the first instalment that the Builder would deliver to the Buyers refund guarantees relating to the first and subsequent instalments in a form acceptable to the Buyers financiers.
As envisaged by Article X.8, by letter dated 22 August 2007 the respondent, Kookmin Bank (the Bank), issued six materially identical Advance Payment Bonds (the Bonds), one to each of the Buyers.
The seventh claimant (the Assignee) is the assignee of the benefit of the Bonds.
On 29 August 2007, the Buyers each paid the first instalment of US$6,660,000 due under the Contracts.
On 29 September 2007, the first claimant paid the second instalment of US$6,660,000 under the contract to which it is a party.
In 2008 the Builder experienced financial difficulties and in late January 2009 it entered into and/or became subject to a debt workout procedure under the Korean Corporate Restructuring Promotion Law 2007.
On 25 February 2009 the Buyers wrote to the Builder notifying it that this development triggered Article XII.3 of the Contracts and demanding an immediate refund of all the instalments paid, together with interest at 7% per annum.
The Builder refused to make any refund on the ground that Article XII.3 of the Contracts had not been triggered as alleged.
The dispute between the Buyers and the Builder has been submitted to arbitration pursuant to Article XIV.3 of the Contracts. 1 There was subsequently a small reduction in the overall price and a corresponding reduction in the final instalment for each vessel but that is immaterial to the issues in the appeal.
On 23 April 2009, the Buyers wrote to the Bank demanding repayment under the Bonds of the instalments paid under the Contracts.
The Bank refused to pay.
It did so initially on the ground that it was not obliged to pay pending resolution of the dispute between the Buyers and the Builder.
That argument was subsequently rejected by Simon J (the Judge) and there was no appeal to the Court of Appeal against that part of his order: [2009] EWHC Civ 2624 (Comm).
The Bank subsequently raised a separate, and logically prior, argument that, on their true construction, the Bonds did not cover refunds to which the Buyers were entitled pursuant to Article XII.3 of the Contracts.
That argument was also rejected by the Judge, who gave summary judgment for the Assignee, but succeeded in the Court of Appeal, which gave summary judgment for the Bank against the Buyers and the Assignee.
In the Court of Appeal Sir Simon Tuckey agreed with the Judge but the majority, comprising Thorpe and Patten LJJ, held the Banks argument to be correct: [2010] EWCA Civ 582.
The orders of the Judge and the Court of Appeal were made on 29 October 2009 and 27 May 2010 respectively.
The Court of Appeal refused permission to appeal.
The Buyers appeal to this Court pursuant to permission granted by the Court.
The issue is whether, on the true construction of paragraph 3 of the Bonds, the Buyers are entitled to payment under the Bonds in respect of refunds to which they are entitled under Article XII.3 of the Contracts.
No one suggested that the successful parties should not have summary judgment in their favour.
The Bonds
I begin with the Bonds because it was common ground that all depends upon the true construction of the Bonds and that the terms and meaning of the Contracts are only relevant to the extent that they inform the true construction of the Bonds.
The paragraphs in the letter comprising the Bonds were not numbered but both the Judge and the Court of Appeal referred to them by number for convenience of reference and I will do the same.
As so numbered the relevant parts of each Bond were these: [1] We refer to the Contract entered into between the Builder and yourselves for the construction and delivery of the Vessel to be delivered before [31 July 2009].
Other terms and expressions used in this Bond shall have the same meaning as in the Contract, a copy of which has been provided to us. [2] Pursuant to the terms of the Contract, you are entitled, upon your rejection of the Vessel in accordance with the terms of the Contract, your termination, cancellation or rescission of the Contract or upon a Total Loss of the Vessel, to repayment of the pre delivery instalments of the Contract Price paid by you prior to such termination or a Total Loss of the Vessel (as the case may be) and the value of the Buyer's Supplies delivered to the Shipyard (if any) together with interest thereon at the rate of . (7%) per annum (or . (10%) per annum in the case of a Total Loss of the Vessel) from the respective dates of payment by you of such instalments to the date of remittance by telegraphic transfer of such refund. [3] In consideration of your agreement to make the pre delivery instalments under the Contract and for other good and valuable consideration (the receipt and adequacy of which is hereby acknowledged), we hereby, as primary obligor, irrevocably and unconditionally undertake to pay to you, your successors and assigns, on your first written demand, all such sums due to you under the Contract (or such sums which would have been due to you but for any irregularity, illegality, invalidity or unenforceability in whole or in part of the Contract) PROVIDED THAT the total amount recoverable by you under this Bond shall not exceed US $[26,640,000] . plus interest thereon at the rate of . (7%) per annum (or . (10%) per annum in the case of a Total Loss of the Vessel) from the respective dates of payment by you of such instalments to the date of remittance by telegraphic transfer of such refund. [4] Payment by us under this Bond shall be made without any deduction or withholding, and promptly on receipt by us of a written demand (substantially in the form attached) signed by two of your directors stating that the Builder has failed to fulfil the terms and conditions of the Contract and as a result of such failure, the amount claimed is due to you and specifying in what respects the Builder has so failed and the amount claimed.
Such claim and statement shall be accepted by us as evidence for the purposes of this Bond alone that this amount claimed is due to you under this Bond. [5] Our liability under this Bond shall not be affected by (v) any insolvency, re organisation or dissolution of the Builder, or (vi) any other matter or thing which may operate to discharge or reduce our liability hereunder.
The Bonds further provided that they were assignable, that they were governed by English law and that all disputes arising out of them were to be determined by the Commercial Court.
The resolution of the issue between the parties depends upon the true construction of paragraph [3].
The Bank promised to pay on demand all such sums due to you under the Contract.
The question is what was meant by such sums.
Only two possibilities were suggested.
The Buyers said (and the Judge and Sir Simon Tuckey held) that the expression such sums referred back to the pre delivery instalments in the first line.
They said that the purpose of the Bond was to guarantee the refund of pre delivery instalments and that the promise was therefore to refund pre delivery instalments.
By contrast the Bank said (and Thorpe and Patten LJJ held) that the expression such sums was a reference back to the sums referred to in paragraph [2], namely the repayment of the pre delivery instalments paid prior to a termination of the Contract or a Total Loss of the vessel and the value of the Buyers Supplies in the case of a Total Loss.
On the Buyers analysis the Bond guaranteed pre delivery instalments which were repayable under Article XII.3 in the case of any insolvency event, whereas on the Banks analysis it did not.
The Contracts
It is common ground that the terms of the Contracts are relevant to the true construction of the Bonds.
They are referred to in the Bonds and provide the immediate context in which the Bonds were entered into.
They are thus plainly an important aid to the meaning of the Bonds.
Article X of the Contracts provided, so far as material as follows: ARTICLE X: PAYMENT 5.
REFUND BY THE BUILDER The payments made by the Buyer to the Builder prior to delivery of the Vessel shall constitute advances to the Builder.
If the Vessel is rejected by the Buyer in accordance with the terms of this Contract, or if the Buyer terminates, cancels or rescinds this Contract pursuant to any of the provisions of this Contract specifically permitting the Buyer to do so, the Builder shall forthwith refund to the Buyer in US dollars, the full amount of total sums paid by the Buyer to the Builder in advance of delivery together with interest thereon as herein provided within thirty (30) banking days of acceptance of rejection.
The interest rate of the refund shall be seven per cent (7%) per annum If the Builder is required to refund to the Buyer the installments paid by the Buyer to the Builder as provided in this Paragraph, the Builder shall return to the Buyer all of the Buyer's Supplies as stipulated in Article XIII which were not incorporated into the Vessel and pay to the Buyer an amount equal to the cost to the Buyer of those Buyer's Supplies incorporated into the Vessel. 6.
TOTAL LOSS If there is a total loss or a constructive total loss of the Vessel prior to delivery thereof, the Builder shall proceed according to the mutual agreement of the parties hereto either: (a) to build another vessel in place of the Vessel so lost . provided that the parties hereto shall have agreed in writing to a reasonable cost and time for the construction or (b) to refund to the Buyer the full amount of the total sums paid by the Buyer to the Builder under the provisions of Paragraph 2 of this Article and the value of Buyer's Supplies delivered to the Shipyard, if any, together with interest thereon at the rate of ten percent (10%) per annum .
If the parties hereto fail to reach such agreement within two (2) months after the Vessel is determined to be a total loss or constructive total loss, the provisions of (b) hereinabove shall be applied. 8.
The Builder shall as a condition precedent to payment by the Buyer of the first installment deliver to the Buyer an assignable letter of guarantee issued by a first class Korean Bank . to Buyer's Financiers for the refund of the first installment, and at the same time, together with the letter of guarantee relating to the first installment, Builder shall also deliver to the Buyer an assignable letter of guarantee issued by a first class Korean Bank . for the refund of the respective installments following the way of the payment stipulated in this Article.
The refund guarantees by the Builder to the Buyer shall be indicated pre delivery installments plus interest as aforesaid to the Buyer under or pursuant to paragraph 5 above in the form annexed hereto as Exhibit A which is yet to be agreed In the event that the Refund Guarantees, for all installments, have not been provided to the Buyer in a form acceptable to the Buyers financiers and have not been issued by an entity acceptable to REFUND GUARANTEE Buyers financiers, by the 31st of August 2007 then the Buyer may cancel this Contract without penalty on either side.
It is common ground that no form of guarantee was in fact annexed to the Contracts.
Article XII provided, so far as relevant: ARTICLE XII: BUILDERS DEFAULT 3.
If the Builder shall apply for or consent to the appointment of a receiver, trustee or liquidator, shall be adjudicated insolvent, shall apply to the courts for protection from its creditors, file a voluntary petition in bankruptcy or take advantage of any insolvency law, or any action shall be taken by the Builder having an effect similar to any of the foregoing or the equivalent thereof in any jurisdiction, the Buyer may by notice in writing to the Builder require the Builder to refund immediately to the Buyer the full amount of all sums paid by the Buyer to the Builder on account of the Vessel and interest thereon at seven percent (7%) per annum on the amount to be refunded to the Buyer, computed from the respective date such sums were paid by the Buyer to the date of remittance of the refundable amount to the Buyer and immediately upon receipt of such notice the Builder shall refund such amount to the Buyer.
Following such refund the Builder may, but shall not be obliged to, by notice in writing to the Buyer given within ten (10) business days terminate this contract.
If the Builder does not so terminate the Contract the Buyer's obligation to pay further installments prior to delivery of the Vessel under Article X 2(a),(b),(c) and (d) shall be suspended and the full Contract price shall be paid to the Builder upon delivery of the Vessel in the manner contemplated by Article X paragraph 2(e).
The Contracts contained a number of provisions which entitled the Buyer to cancel the contract, namely Articles III.1 and XII.1 (delay) and Article III.2(b), 3(c), 4(d) and 5(d) (insufficient speed, excessive fuel consumption, deficient deadweight or cargo capacity).
Some of those provisions specifically entitled the Buyer to a refund of all advance payments following cancellation.
Others did not, although in such cases Article X.5 would apply and have the same effect.
The Contracts also contained in Article XIII further detailed provisions relating to Buyers Supplies.
The correct approach to construction
For the most part, the correct approach to construction of the Bonds, as in the case of any contract, was not in dispute.
The principles have been discussed in many cases, notably of course, as Lord Neuberger MR said in Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429; [2011] 1 WLR 770 at para 17, by Lord Hoffmann in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, passim, in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912F 913G and in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, paras 21 26.
I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant.
As Lord Hoffmann made clear in the first of the principles he summarised in the Investors Compensation Scheme case at page 912H, the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
The issue between the parties in this appeal is the role to be played by considerations of business common sense in determining what the parties meant.
Sir Simon Tuckey said at para 19 of his judgment that there was no dispute about the principles of construction and the Bank so submitted in its skeleton argument.
However, I do not think that is quite correct.
At para 18 Sir Simon identified the question of construction substantially as set out in para 9 above and said at para 19: There is no dispute about the principles of construction to be applied in order to answer this question.
The court must first look at the words which the parties have used in the bond itself.
The shipbuilding contract is of course the context and cause for the bond but is nevertheless a separate contract between different parties.
If the language of the bond leads clearly to a conclusion that one or other of the constructions contended for is the correct one, the Court must give effect to it, however surprising or unreasonable the result might be.
But if there are two possible constructions, the Court is entitled to reject the one which is unreasonable and, in a commercial context, the one which flouts business common sense.
This follows from the House of Lords decisions in Wickman Machine Tools Sales Limited v Schuler AG [1974] AC 235, where at 251 Lord Reid said: The fact that a particular construction leads to a very unreasonable result must be a relevant consideration.
The more unreasonable the result, the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. and The Antaios [1984] AC 191, where at 201 Lord Diplock said: If detailed and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense it must yield to business common sense.
As I read his judgment, Patten LJ did not put the question in quite the same way.
This can be seen from paras 35 to 44 of his judgment.
At para 35 he referred to Sir Simon Tuckeys approach at para 19 (as quoted above).
He also referred to para 18(iii) of the Judges judgment, where the Judge described the Banks construction of the Bond as having the surprising and uncommercial result of the guarantee not being available to meet the Builders repayment obligations in the event of insolvency.
Patten LJ noted that the Judge appeared to have taken that into account as a factor in favour of the Buyers construction of paragraph [3] of the Bonds.
Patten LJ added that the Judges approach was the same as that of Sir Simon Tuckey.
Patten LJ then referred to the cases mentioned above and expressed his conclusion in principle thus at para 42: In this case (as in most others) the Court is not privy to the negotiations between the parties or to the commercial and other pressures which may have dictated the balance of interests which the contract strikes.
Unless the most natural meaning of the words produces a result which is so extreme as to suggest that it was unintended, the Court has no alternative but to give effect it its terms.
To do otherwise would be to risk imposing obligations on one or other party which they were never willing to assume and in circumstances which amount to no more than guesswork on the part of the Court.
Finally, at paras 43 and 44, Patten LJ quoted from the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381, 1384 5 and of Lord Hoffmann in Chartbrook at para 20, where they discussed the reason for the rule excluding evidence of pre contractual negotiations.
In particular they stressed the irrelevance of the parties subjective intentions and noted that the mere fact that a term in the contract appears to be particularly unfavourable to one party or the other is irrelevant.
As Lord Hoffmann put it, the term may have been agreed in exchange for some concession made elsewhere in the transaction or it may simply have been a bad bargain.
I entirely accept those caveats.
However, it seems to me to be clear that the principle stated by Patten LJ in para 42 is different from that stated by the Judge in his para 18(iii) and by Sir Simon Tuckey in para 19.
It is not in my judgment necessary to conclude that, unless the most natural meaning of the words produces a result so extreme as to suggest that it was unintended, the court must give effect to that meaning.
The language used by the parties will often have more than one potential meaning.
I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant.
In doing so, the court must have regard to all the relevant surrounding circumstances.
If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.
This conclusion appears to me to be supported by Lord Reids approach in Wickman quoted by Sir Simon Tuckey and set out above.
I am of course aware that, in considering statements of general principle in a particular case, the court must have regard to the fact that the precise formulation of the proposition may be affected by the facts of the case.
Nevertheless, there is a consistent body of opinion, largely collated by the Buyers in an appendix to their case, which supports the approach of the Judge and Sir Simon Tuckey.
Where the parties have used unambiguous language, the court must apply it.
This can be seen from the decision of the Court of Appeal in Co operative Wholesale Society Ltd vs National Westminster Bank plc [1995] 1 EGLR 97.
The court was considering the true construction of rent review clauses in a number of different cases.
The underlying result which the landlords sought in each case was the same.
The court regarded it as a most improbable commercial result.
Where the result, though improbable, flowed from the unambiguous language of the clause, the landlords succeeded, whereas where it did not, they failed.
The court held that ordinary principles of construction applied to rent review clauses and applied the principles in The Antaios (Antaios Compania Naviera SA v Salen Rederierna AB) [1985] AC 191.
After quoting the passage from the speech of Lord Diplock cited above, Hoffmann LJ said, at p 98: This robust declaration does not, however, mean that one can rewrite the language which the parties have used in order to make the contract conform to business common sense.
But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.
The court also comprised Leggatt and Simon Brown LJJ.
Simon Brown LJ at p 101 said that, having regard to the improbable result for which the landlords contended, only the most unambiguous of such clauses could properly be found to bear the landlords construction and that in the case of only one of the leases did the clause unambiguously achieve the improbable result for which the landlords contend.
The case is of interest because Simon Brown LJ considered that, of the other three cases, one unambiguously failed to achieve the result sought by the landlords, whereas, of the other two, he said this at p 102: For my part, I would accept that the more obvious reading of both favours the landlords construction.
I am persuaded, however, that they are capable of being, and therefore, for the reasons already given, should be, construed differently.
That case is therefore an example of the adoption and application of the principle endorsed by the Judge and by Sir Simon Tuckey.
See also International Fina Services AG v Katrina Shipping Ltd, The Fina Samco [1995] 2 Lloyd's Rep. 344, where Neill LJ said at page 350 it was necessary when construing a commercial document to strive to attribute to it a meaning which accords with business common sense.
In 1997, writing extra judicially (Contract Law: Fulfilling the reasonable expectations of honest men) in 113 LQR 433, 441 Lord Steyn expressed the principle thus: Often there is no obvious or ordinary meaning of the language under consideration.
There are competing interpretations to be considered.
In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears.
And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language.
And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties.
I agree.
He said much the same judicially in Society of Lloyds v Robinson [1999] 1 All ER (Comm) 545, 551: Loyalty to the text of a commercial contract, instrument, or document read in its contextual setting is the paramount principle of interpretation.
But in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction.
The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties.
Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them.
And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language.
Similar assistance is at hand nearer at home.
In Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd [2001] CLC 1103, 1118 1119; [2011] EWCA Civ 1047; [2001] 2 All ER (Comm) 299, Mance LJ said: 13.
Construction, as Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396 at p 1400 is thus a composite exercise, neither uncompromisingly literal nor unswervingly purposive.
To para (5), one may add as a coda words of Lord Bridge in Mitsui Construction Co Ltd v A G of Hong Kong (1986) 33 BLR 14, cited in my judgment in Sinochem International Oil (London) Ltd v Mobil Sales and Supply Corp [2000] CLC 878 at p 885.
Speaking of a poorly drafted and ambiguous contract, Lord Bridge said that poor drafting itself provides: no reason to depart from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language that they have used interpreted in the light of the relevant factual situation in which the contract was made.
But the poorer the quality of the drafting, the less willing the court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike 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. 16 . in my judgment the subclause has no very natural meaning and is, at the least, open to two possible meanings or interpretations one the judge's, the other that it addresses two separate subject matters.
In these circumstances, it is especially important to undertake the exercise on which the judge declined to embark, that is to consider the implications of each interpretation.
In my opinion, a court when construing any document should always have an eye to the consequences of a particular construction, even if they often only serve as a check on an obvious meaning or a restraint upon adoption of a conceivable but unbusinesslike meaning.
In intermediate situations, as Professor Guest wisely observes in Chitty on Contracts (28th edn) vol 1, para. 12 049, a balance has to be struck through the exercise of sound judicial discretion.
More generally, in Homburg Houtimport BV v Agrosin Private Ltd: The Starsin [2004] 1 AC 715, para 10 Lord Bingham referred to the rule to which Lord Halsbury LC alluded in Glynn v Margetson & Co [1893] AC 351, 359, that a business sense will be given to business documents.
The business sense is that which businessmen, in the course of their ordinary dealings, would give the document.
Three other cases merit brief reference.
The same approach was adopted by Arden LJ in In the Matter of Golden Key Ltd (In Receivership) [2009] EWCA Civ 636, paras 29 and 42 and by this Court in In Re Sigma Finance Corporation (in administrative receivership) [2009] UKSC 2; [2010] 1 All ER 571, where Lord Mance said at para 12 that the resolution of an issue of interpretation in a case like the present was an iterative process, involving checking each of the rival meanings against other provisions of the document and investigating its commercial consequences.
Finally, it is worth setting out two extracts from the judgment of Longmore LJ in Barclays Bank plc v HHY Luxembourg SARL [2010] EWCA Civ 1248; [2011] 1 BCLC 336, paras 25 and 26: 25.
The matter does not of course rest there because when alternative constructions are available one has to consider which is the more commercially sensible.
On this aspect of the matter Mr Zacaroli has all the cards. 26.
The judge said that it did not flout common sense to say that the clause provided for a very limited level of release, but that, with respect, is not quite the way to look at the matter.
If a clause is capable of two meanings, as on any view this clause is, it is quite possible that neither meaning will flout common sense.
In such circumstances, it is much more appropriate to adopt the more, rather than the less, commercial construction.
In my opinion Longmore LJ has there neatly summarised the correct approach to the problem.
That approach is now supported by a significant body of authority.
As stated in a little more detail in para 21 above, it is in essence that, where a term of a contract is open to more than one interpretation, it is generally appropriate to adopt the interpretation which is most consistent with business common sense.
For these reasons I prefer the approach of the Judge and Sir Simon Tuckey to that of Patten LJ, which is to my mind significantly different on this point.
Application to the facts
As indicated above, two possible interpretations of paragraph [3] of the Bonds were advanced.
It was conceded on behalf of the Bank in the Court of Appeal that both constructions were arguable.
I did not understand Mr Guy Philipps QC to resile from that position on behalf of the Bank in this Court.
In any event, in my judgment there are indeed two possible interpretations.
The strength of the Banks interpretation is that it is not easy to see the point of paragraph [2] of the Bonds if the Buyers interpretation of paragraph [3] is correct.
On the other hand, the Buyers interpretation is straightforward.
It is that, reduced to its essentials, the Banks promise in paragraph [3] was that in consideration of your [ie the Buyers] agreement to make the pre delivery instalments we hereby, as primary obligor, promise to pay to you, your successors and assigns, on your first written demand, all such sums due to you under the Contract .
In the absence of paragraph [2] there could be no doubt that the reference to such sums was a reference to the pre delivery instalments at the beginning of paragraph [3].
That makes perfect sense because one would naturally expect the parties to agree (and the Buyers financiers to insist) that, in the event, for example, of the insolvency of the Builders, the Buyers should have security for the repayment of the pre delivery instalments which they had paid.
The question is whether the presence of paragraph [2] leads to a different conclusion.
It was submitted with force by Mr Philipps on behalf of the Bank that it did.
He correctly submitted that paragraph [3] must be construed in its context and that part of the context was paragraph [2], which was of course the immediately preceding paragraph.
He submitted that the only purpose there can have been for including paragraph [2] in the Bonds was to identify the scope of paragraph [3].
He further submitted that no other sensible explanation for the inclusion of paragraph [2] had been advanced on behalf of the Buyers.
I accept the submission that no very good reason was advanced on behalf of the Buyers for the inclusion of paragraph [2] in the Bonds.
The best they could do was to say that it was a preamble to the operative provision in paragraph [3], that it simply set out some of the Buyers rights under the Contracts and that it was not intended to identify the scope of the Banks liability under the Bonds.
Patten LJ accepted at para 50 that the Buyers construction was arguable but said that, in his view, it was not the meaning that the document would convey to a reasonable person reading it with knowledge of the terms of the Contracts.
This must I think mean that he took the view that, although it was arguable that it had that effect, it did not in fact do so.
Otherwise the Buyers construction could not in any relevant sense have been said to be arguable and Patten LJ would surely not have described it as such.
Patten LJ made this clear in para 51 (quoted below), where he described the alternative constructions as not being in any way evenly balanced.
The position is thus that, although he regarded both constructions as arguable in the sense that the Bonds might convey either construction to a reasonable person reading the Bonds with knowledge of the terms of the Contracts, in his view the Banks construction was plainly to be preferred.
If Patten LJ went further later in para 51, where he said that the fact that cover for the insolvency of the Builder was desirable did not justify a departure from what would otherwise be the natural and obvious construction of the bond, I respectfully disagree because I do not regard the Banks construction as being the natural and ordinary meaning of the Bonds.
I have considered the competing arguments for myself and have concluded that they are much more finely balanced than suggested by Patten LJ and the Bank.
In para 48 Patten LJ expressed the view that paragraph [2] of the Bonds reproduced the terms of Article X.5 and Article X.6 of the Contracts and therefore complied with Article X.8.
In para 49 he concluded that the obvious purpose of paragraph [2] was to give the addressee of the Bonds a clear statement of the Builders obligations under the Contracts which are to be covered by the guarantee and one which is consistent with the terms of the Builders obligations to provide the bond under Article X.8 of the contract.
For my part, I would not entirely accept that analysis.
Paragraph [2] of the Bonds did reproduce the terms of Article X.5 and Article X.6 of the Contracts but it does not seem to me that it complied with the requirements of Article X.8.
As I see it, Article X.8 did not provide for the terms in which the Bonds were to be issued.
It provided that two letters of guarantee were to be provided, the first by a first class Korean Bank or Guarantee Insurance Company for the refund of the first instalment and the second issued by a first class Korean Bank or Guarantee Insurance Company acceptable to the Buyers financiers for the refund of the respective installments following the way of the payment stipulated in this Article.
The first paragraph of Article X.8 included this: The refund guarantees by the Builder to the Buyer shall be indicated pre delivery instalments plus interest as aforesaid to the Buyer under or pursuant to paragraph 5 above in the form annexed hereto as Exhibit A which is yet to be agreed.
In fact there was no form annexed to the Contracts, so it is far from clear what was meant by the sentence of the first paragraph of Article X.8 just quoted.
As I see it, it was left that the parties would agree the final form of the Bonds referable to the second and subsequent instalments.
Moreover both the identity of the issuer of the Bonds and the form of the Bonds were to be acceptable to the Buyers financiers.
That was made clear by the second paragraph of Article X.8 which is quoted in para 11 above.
I would accept the submission made on behalf of the Buyers that it is clear that neither Article X.5 nor Article X.8 was intended to set out all the circumstances in which the refund guarantees should operate.
For example, there was no cross reference in Article X.8 to the Builders obligation under Article X.6 of the Contracts to refund the instalments paid in the event of actual or constructive total loss, although it is common ground that the Bonds did cover that obligation.
In short, Article X.8 did not purport to dictate the final scope of the Bonds.
In particular, it did not require that the guarantees should cover refund obligations only under Article X.5 and Article X.6 of the Contracts.
There is a further curiosity in paragraph [2] of the Bonds.
In describing the Buyers rights under the Contracts, it did not limit their rights to a refund of the pre delivery instalments of the price.
It extended them to the case where the Buyers were entitled to the value of the Buyers Supplies delivered to the Shipyard (if any), although in so doing it failed accurately to reflect the contractual position in relation to termination as opposed to total loss, since under Article X.5 of the Contracts the obligation on termination was to return the Supplies, and only to (re)pay their value insofar as already incorporated into the Vessel.
It would seem to follow from the Banks submission that para [2] defined the scope of the Banks obligations under para [3] that the expression all such sums due to you under the Contract included both the obligations to refund identified in para [2] and the obligation to pay the value of the Buyers Supplies (whatever that might cover).
That was indeed the submission advanced in the Banks skeleton argument in the Court of Appeal.
It is however a submission that is no longer advanced by either party.
That is no doubt because the difficulty with it is that the Bonds were described as Advance Payment Bonds and the amount of each bond was US$26,640,000, which was the total amount of the second and subsequent instalments of the price, and because interest was only payable under para [3] of the Bonds from the respective dates of payment by [the Buyers] of such instalments, thus leaving no room for a right to payment of the value of Buyers Supplies under the Bonds.
Sir Simon Tuckey took a different view of the construction of the critical clauses of the Bonds from that of Patten and Thorpe LJJ.
He did so in para 28, where he was considering whether in the particular circumstances of the case the Judge should have had regard to considerations of commercial and business common sense.
He said this: But should the judge's approach in this case have been more restricted as Mr Philipps contends? I do not think so.
The title to Article X as a whole is "Payment" but it contains an assortment of different terms.
Article X.8 is drafted on the basis that the form of guarantee which the parties contemplated would be annexed to the agreement.
That would be the document to look at if one was trying to discover from the contract what the Buyer was looking for, not the reference back to Article X.5.
This reference back is poorly drafted and quite capable of referring simply to the opening sentence of paragraph 5.
It is difficult to construe it in a way which restricts the refund obligations which the bond was to cover, not least because there is no reference to the Article X.6 obligation to a refund following total or constructive loss of the vessel which both parties agree was to be covered by the bond.
By the same token, no significance should be attached to the omission of the Article XII.3 refund obligation.
Nor do I think there is anything in Mr Philipps' further point.
On the happening of an Article XII.3 event the Buyer was entitled to a refund of its advance payments immediately.
If that did not happen the contract was in a state of limbo: neither party could terminate at that stage.
If the Builder did not proceed with the construction of the vessel, as would be extremely likely if it was insolvent, the Buyer could terminate for delay under Article XII.l but, under the terms of this article, only after 90 days plus 14 days notice.
Only then could it call on the Bond.
I cannot see how any Buyer (or its financiers) could possibly be satisfied with this as a remedy in the situation where the Builder was insolvent or nearly so.
I agree with Sir Simon Tuckey and prefer his approach to that of the majority in the Court of Appeal.
In all these circumstances, because of the difficulties in construing para [2] as setting out the sums due under the Bond, if I were focusing only on the language of the clause, I would be inclined to prefer the Buyers construction to that of the Bank.
I note in passing in this regard that the construction advanced by the Bank was something of an afterthought.
However, I recognize that, on the Buyers construction, it is not easy to see why paragraph [2] was included in the Bond at all, and that the Banks construction is arguable.
This case is therefore a good example of the kind of case referred to in the authorities to which I have referred.
Since the language of paragraph [3] is capable of two meanings it is appropriate for the court to have regard to considerations of commercial common sense in resolving the question what a reasonable person would have understood the parties to have meant.
As noted at para 17 above, at his para 18(iii) the Judge described the Banks construction of the Bonds as having what he called the surprising and uncommercial result that the Buyers would not be able to call on the Bonds on the happening of the event, namely insolvency of the Builder, which would be most likely to require the first class security.
I agree with Sir Simon Tuckey that an appellate court is entitled to take account of the fact that an experienced judge of the Commercial Court reached that conclusion.
In any event, Sir Simon Tuckey expressed essentially the same view in strong terms at para 30: On the Bank's construction the Bonds covered each of the situations in which the Buyers were entitled to a return or refund of the advance payments which they had made under the contracts apart from the insolvency of the Builder.
No credible commercial reason has been advanced as to why the parties (or the Buyers' financiers) should have agreed to this.
On the contrary, it makes no commercial sense.
As the judge said, insolvency of the Builder was the situation for which the security of an advance payment bond was most likely to be needed.
The importance attached in these contracts to the obligation to refund in the event of insolvency can be seen from the fact that they required the refund to be made immediately.
It defies commercial common sense to think that this, among all other such obligations, was the only one which the parties intended should not be secured.
Had the parties intended this surprising result I would have expected the contracts and the bonds to have spelt this out clearly but they do not do so.
I agree.
Patten LJs view to the contrary is summarised at para 51: For the reasons which I have given, I do not regard the alternative constructions of paragraph (3) advanced on this appeal as being in any way evenly balanced.
I also agree with Mr Philipps that it is impermissible to speculate on the reasons for omitting repayments in the event of insolvency from the bond.
Although the judge is right to say that cover for such event was, objectively speaking, desirable, that is not sufficient in itself to justify a departure from what would otherwise be the natural and obvious construction of the bond.
There may be any number of reasons why the Builder was unable or unwilling to provide bank cover in the event of its insolvency and why the Buyer was prepared to take the risk.
This is not a case in which the construction contended for would produce an absurd or irrational result in the sense described in the cases I have referred to and merely to say that no credible commercial reason has been advanced for the limited scope of the bond does, in my view, put us in real danger of substituting our own judgment of the commerciality of the transaction for that of those who were actually party to it.
As Hoffmann LJ put it, after quoting from Lord Diplocks speech in The Antaios [1985] AC 191, if the language is capable of more than one construction, it is not necessary to conclude that a particular construction would produce an absurd or irrational result before having regard to the commercial purpose of the agreement.
See, for example, per Hoffmann LJ quoted at para 23 above, where he said: But language is a very flexible instrument and, if it is capable of more than one construction, one chooses that which seems most likely to give effect to the commercial purpose of the agreement.
See also the quotation from Longmore LJ at para 29 above, where he said that, if a clause is capable of two meanings, it is quite possible that neither meaning will flout common sense, but that, in such a case, it is much more appropriate to adopt the more, rather than the less, commercial construction.
In para 51 Patten LJ appears to have accepted that no credible commercial reasons were advanced for the limited scope of the Bonds being advanced by the Bank.
Mr Philipps submitted that it was not necessary for the Bank to address the question but I have no doubt that if he or the Bank had been able to think of a credible reason for excluding repayments in the event of the Builders insolvency, such a reason would have been at the forefront of the Banks case.
In these circumstances I would, if necessary, go so far as to say that the omission of the obligation to make such re payments from the Bonds would flout common sense but it is not necessary to go so far.
I agree with the Judge and Sir Simon Tuckey that, of the two arguable constructions of paragraph [3] of the Bonds, the Buyers construction is to be preferred because it is consistent with the commercial purpose of the Bonds in a way in which the Banks construction is not.
I note that Thorpe LJ was initially inclined to agree with the conclusions of the Judge but, in the event, agreed with Patten LJ without giving any independent reasons of his own.
CONCLUSION
For these reasons I would allow the appeal and restore the order of the Judge.
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This case concerns the correct construction of refund guarantees issued by the Respondent bank in relation to six shipbuilding contracts.
In May 2007 the first to sixth claimants (the Buyers) entered into shipbuilding contracts (the Contracts) with Jinse Shipbuilding Co Ltd (the Builder).
Under the Contracts the Builder agreed to build and sell one vessel to each of the six Buyers.
The price of each vessel was US$33.3m, which was to be paid in five equal instalments.
Article X.8 of the Contracts stated that payment of the first instalment was conditional upon the Builder providing the Buyer with a satisfactory refund guarantee from a first class Korean bank.
Article X.5 gave the Buyer a right to a full refund in the event that the Buyer exercised their right to reject the vessel or to terminate, cancel or rescind the Contract.
Article XII.3 of the Contracts then gave the Buyers further rights to repayment of instalments paid in the event of a default by the Builder.
In particular, Article XII.3 stated that if the Builder became subject to certain insolvency proceedings, the Buyer may by notice in writing to the Builder require the Builder to refund immediately to the Buyer the full amount of all sums paid by the Buyer to the Builder.
As envisaged by Article X.8 of the Contracts, in August 2007 the Respondent bank issued each of the Buyers with materially identical Advanced Payment Bonds (the Bonds).
Paragraph 2 of the Bonds stated that, under the terms of the Buyers Contract with the Builder, the Buyer was entitled to a refund in the event that they exercised their right to reject the vessel or to terminate, cancel or rescind the Contract.
The Respondents guarantee obligation was then set out in paragraph 3, which stated that the Respondent promised to pay the Buyer all such sums due to you under the Contract.
The first line of paragraph 3 explained that this promise was given [i]n consideration of your agreement to make the pre delivery instalments under the Contract.
Paragraph 4 stated that payment would be made upon receipt of a written demand from the Buyer stating that the Builder had failed to fulfil the terms of the Contract and specifying the amount claimed.
Paragraph 5(v) stated that the Respondents liability under the Bonds would not be affected by any insolvency, re organisation or dissolution of the Builder.
Each of the Buyers duly paid the first instalment of US$6.66m due under the Contracts.
One of the Buyers also subsequently paid a second instalment in the same amount.
In 2008 the Builder experienced financial difficulties and in January 2009 it became subject to a formal debt workout procedure under the Korean Corporate Restructuring Promotion Law 2007.
In April 2009 the Buyers wrote to the Respondent demanding repayment under the Bonds of the instalments that had been paid to the Builder under the Contracts.
The Respondent rejected the Buyers demands on the basis that, on the true construction of the Bonds, the Respondent had not undertaken to guarantee payment of refunds arising under Article XII.3 of the Contracts.
In the High Court the judge ruled in favour of the Buyers construction of the Bonds and entered summary judgment against the Respondent.
On appeal, the majority of the Court of Appeal (Thorpe
and Patten LJJ) overturned the High Courts ruling and entered summary judgment in favour of the Respondent.
Sir Simon Tuckey gave a dissenting judgment in which he explained his reasons for preferring the High Court judges construction of the Bonds.
The Supreme Court granted the Appellants leave to appeal to the Supreme Court.
The Supreme Court unanimously allows the appeal and restores the order of the High Court.
Lord Clarke gives the sole judgment, with which Lords Phillips, Mance, Kerr and Wilson agree.
The issue at the heart of this appeal is whether, on the true construction of paragraph 3 of the Bonds, the Buyers are entitled to payment from the Respondent in respect of refunds that they are entitled to from the Builder under Article XII.3 of the Contracts [6].
It was common ground that everything depends upon the true construction of the Bonds and that the terms and meaning of the Contracts are only relevant to the extent that they inform the true construction of the Bonds [7],[10].
Under paragraph 3 of the Bonds the Respondent promised to pay the Buyers all such sums due to you under the Contract.
The question is therefore what was meant by such sums.
On this point, neither Article X.5 nor Article X.8 was intended to set out all the circumstances in which the refund guarantee should operate [37].
The Buyers said that the expression covered the pre delivery instalments referred to in the first line of paragraph 3 in other words, the phrase referred to all pre delivery instalments paid by the Buyers.
The Respondent, on the other hand, contended that the expression such sums was limited to the sums that were referred to in paragraph 2 of the Bonds.
Since paragraph 2 did not include any reference to the Buyers rights under Article XII.3 of the Contracts to repayment upon the Builders insolvency, the Respondent was under no obligation to make any payment to the Buyers in the present case.
On the face of it, the correct approach to the construction of the Bonds is not in dispute.
The cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used.
This process involves ascertaining what a reasonable person would have understood the parties to have meant.
A reasonable person, for these purposes, is one who has all the background knowledge that would reasonably have been available to the parties in the situation in which they were at the time of the contract [14].
The issue between the parties is the role to be played by considerations of business common sense in determining what the parties meant [15].
Where the parties have used unambiguous language, the court must apply it [23].
However if there are two possible constructions, it is generally appropriate to adopt the interpretation that is most consistent with business common sense and to reject the other [21], [29].
It is not necessary to conclude that a particular construction would produce an absurd or irrational result before proceeding to have regard to the commercial purpose of the agreement [43].
In the present case, since the language of paragraph 3 is capable of two meanings, it is appropriate for the court to have regard to considerations of commercial commonsense [40].
Although the Buyers are unable to provide any very good reason why paragraph 2 was included in the Bonds [34], a construction of paragraph 3 which excluded the Builders insolvency from the situations that trigger the Respondents obligation to refund advance payments made by the Buyers would make no commercial sense [41].
Accordingly, of the two arguable constructions of paragraph 3 of the Bonds, the Buyers construction is to be preferred because it is consistent with the commercial purpose of the Bonds in a way that the Respondents construction is not [45].
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The Director of Public Prosecutions (the Director) has power to take over a private prosecution and thereupon to discontinue it.
In determining whether to do so, it is his policy to apply certain criteria.
This appeal concerns his first criterion, which relates to the strength of the evidence in support of the prosecution.
Prior to 2009 the Director asked himself whether the evidence clearly failed to disclose a case sufficient for the defendant to be called upon to answer it.
If his conclusion was that it clearly failed to do so, he took over the prosecution and discontinued it; otherwise, and subject to the application of further criteria, he declined to take it over.
But in 2009 he changed his policy in relation to the evidential criterion.
It became his policy to take over a private prosecution and to discontinue it unless the evidence was such as to render the prosecution more likely to result in a conviction than not to do so.
Although one could refer to it as the 51% chance test or the greater than even chance test, I will refer to the current criterion as the reasonable prospect test.
The central issue in this appeal surrounds the lawfulness of the Directors current policy.
Mr Gujra, the appellant, instituted two private prosecutions.
The Director, acting by the Crown Prosecution Service (the CPS), concluded that the evidence in support of them was not such as to satisfy the reasonable prospect test.
So, applying his current policy, he took them over and thereupon discontinued them.
It is agreed that, had he applied his previous policy, he would not have done so.
The appellant applied for judicial review of his decision to do so and, specifically, for an order that it be quashed.
On 9 March 2011 the Divisional Court of the Queens Bench Division (Richards LJ and Edwards Stuart J) dismissed the application: [2011] EWHC 472 (Admin), [2012] 1 WLR 254.
In this appeal the appellants central contention is that the Directors current policy is unlawful because it improperly restricts the statutory right of a citizen to bring a private prosecution.
The first of the appellants private prosecutions was instituted by his laying an information before the Southampton Magistrates Court against two brothers, Mr Imran Mirza and Mr Tamoor Mirza, which led, on 18 August 2010, to the courts issue of a summons against them.
By his information, the appellant alleged that on 17 May 2010 the brothers had jointly perpetrated a common assault upon him.
His case was and is that he was sitting outside a caf with two friends; that the brothers drove up and got out of the car; that one of them punched him, as a result of which he fell to the ground; and that both of them kicked him.
There is no doubt that the police were called; that he complained to them that the brothers had assaulted him; and that the police noticed that he had sustained injuries, albeit that they considered them to be very minor.
The second of the appellants private prosecutions was instituted in the same way, before the same court and on the same day, against a third brother, Mr Wajeed Mirza.
By his information, the appellant alleged that on 24 May 2010 the third brother had, with intent, used threatening words towards him, thereby causing him alarm, contrary to section 4A of the Public Order Act 1986.
His case was and is that the brother approached him while he was sitting in his car; called him a dirty grass and, in reference to his caste, a dirty patra; and threatened to kill him.
The appellant promptly consulted solicitors about a possible private prosecution referable to both these alleged incidents; but the police also launched an investigation into the alleged assault.
Late in May 2010 the appellant made statements both to his solicitors and to the police.
Although to the officer at the scene they had denied having witnessed the alleged assault, his two friends also made statements to his solicitors and to the police, in which they claimed to have witnessed it and, broadly, confirmed the accuracy of his account of it.
The appellant referred to the later incident in his statement to his solicitors but not in his statement to the police, who learnt of it only when they received a copy of the former statement.
He did not suggest that anyone had witnessed the later incident.
In his statements the appellant explained that he had sworn an affidavit in support of a claim in civil proceedings brought by a third party against Mr Imran Mirza and Mr Wajeed Mirza; and he suggested that the incidents had been by way of revenge.
Late in July 2010 the police arrested and interviewed the brothers who had allegedly assaulted the appellant.
They made no comment and were bailed.
Then the police sent the file to the CPS for a decision whether to institute prosecutions.
When, on 18 August 2010, the appellant instituted the prosecutions, he and his solicitors were aware that the CPS was still in the course of considering whether itself to institute them.
When the CPS learnt of their institution, the focus of its review became whether to take over their conduct in order either to continue or to discontinue them.
The review was entrusted to Mr Massey, a senior officer in the Complex Casework Unit of the Wessex CPS.
On 22 October 2010 Mr Massey signed a 15 page review of the appellants allegations, together with a further allegation made against all three defendants by one of the appellants two witnesses.
In his review Mr Massey set out in detail his reasons for concluding that the evidence in support of each of the two private prosecutions failed to satisfy the reasonable prospect test.
In accordance with the current policy of the CPS when taking over a private prosecution, Mr Masseys review was submitted to Miss Levitt QC, its Principal Legal Adviser, who, on 9 November 2010, endorsed his conclusion.
The Chief Crown Prosecutor for Hampshire thereupon directed that conduct of the prosecutions should be taken over in order that they should be discontinued.
On 16 November 2010 the CPS duly notified the magistrates court pursuant to section 23(3) of the Prosecution of Offences Act 1985 (the 1985 Act) that the Director did not want the prosecutions to continue; and they were thereby discontinued.
It also notified the appellant and the three defendants, by their respective solicitors, of the discontinuance.
HISTORY
The manner in which, over the centuries, public authorities have come to assume responsibility for the vast majority of criminal prosecutions in England and Wales has been characteristically haphazard.
Until late in the 19th century prosecutions were brought almost entirely by the victims of the alleged crimes or, if they were dead, by their kinsmen.
Local parish constables, not organised on any national or even regional basis and not even paid, sometimes helped the victims to prosecute.
By about 1730, if they could afford it, prosecutors and defendants sometimes engaged lawyers to represent them.
At around the same time associations of people with a common, sectional, interest in prosecuting particular felonies sprang up in order to conduct prosecutions on behalf of their members.
But, as late as 1816, Chitty, in A Practical Treatise on The Criminal Law 1st ed (1816), vol 1, p1 wrote: Criminal Prosecutions are carried on in the name of the King, and have for their principal object the security and happiness of the people in general, and not mere private redress.
But as offences, for the most part, more immediately affect a particular individual, it is not usual for any other person to interfere.
The Attorney General intervened to conduct only a few prosecutions in very serious or notorious cases.
He also had a long standing prerogative power to halt any prosecution in a court of record by entering a nolle prosequi, of which, in modern times, he makes rare use, indeed usually only when he considers that the defendant is unfit to plead.
In 1829 came the first step towards putting the police on a statutory, albeit only regional, footing.
It was the Metropolitan Police Act of that year (10 Geo 4, c 44) and it established the London Metropolitan Police.
It was followed in 1856 by the County and Borough Police Act (19 & 20 Vict, c 69), which required every county and borough to have its own constabulary.
This improvement in the organisation of the police seems to have been the spur to their assumption of responsibility for most prosecutions.
Technically, however, the prosecuting police officer was just another private prosecutor.
From about 1830 onwards there were calls for the introduction of a system of public prosecutions in England and Wales such as had long been established in Scotland and elsewhere.
But the Prosecution of Offences Act 1879 (42 & 43 Vict c 22) went only a small way towards it.
It established the role of the Director, under the direction of the Attorney General, but in effect it provided for him to institute prosecutions only in cases of importance or difficulty.
Part of section 7 provided: Nothing in this Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding.
But the Prosecution of Offences Act 1908 (8 Edw 7, c 3) repealed that part of section 7 and, by section 2(3), instead provided: Nothing in the Prosecution of Offences Acts 1879 and 1884, or in this Act, shall preclude any person from instituting or carrying on any criminal proceedings, but the Director of Public Prosecutions may undertake at any stage the conduct of those proceedings if he thinks fit.
It is well established, and unchallenged in this appeal, that the power of the Director, first conferred in 1908, to undertake the conduct of a prosecution instituted by a private prosecutor comprises a power to undertake its conduct in order not only to continue it but also to discontinue it.
In Gouriet v Attorney General [1978] AC 435, 487, 521 both Viscount Dilhorne and Lord Fraser of Tullybelton referred to his power to discontinue it; and it was formally held to exist in two cases decided shortly thereafter, namely in Turner v Director of Public Prosecutions (1978) 68 Cr App R 70 and in Raymond v Attorney General [1982] QB 839.
In January 1981 a Royal Commission on Criminal Procedure, of which the chairman was Sir Cyril Philips, produced a report (Cmnd 8092).
Its central recommendation was that there should be a statutory prosecution service for all 43 police force areas in England and Wales, based locally but with national co ordinating features; and that the police should conduct the prosecution (and its preliminaries) only to the point of charge or of the issue of the summons, whereafter the prosecution service should decide whether to proceed and, if so, should assume conduct of the prosecution.
There was, so the Commission observed at paras 6.5 and 6.6 of the report, a lack of pattern in the existing prosecuting system in that it was not uniformly organised and administered across the 43 areas, with the result that the arrangements were characterised by variety and haphazardness.
Two further recommendations of the Royal Commission deserve note.
The first is its recommendation about the minimum strength of the evidence which should justify a prosecution.
It noted, at para 8.8, that, where it fell to the Director to decide whether to prosecute, he applied the test whether or not there is a reasonable prospect of conviction; in other words, whether it seems more likely that there will be a conviction than an acquittal.
It approved this test and, at para 8.9, recommended that it should be extended to all cases, and applied by all who make the decisions that bring a case to court.
Someone should not be put on trial, observed the Commission, if it can be predicted, with some confidence, that he is more likely than not to be acquitted, since it is both unfair to the accused and a waste of the restricted resources of the criminal justice system.
The second is the Commissions recommendation for reform of the arrangements for private prosecutions realistically so called, ie prosecutions by private citizens.
It recorded at para 7.47, albeit without any clear endorsement of the argument on its part, that the great majority of our witnesses. argue in one way or another that the private prosecution is one of the fundamental rights of the citizen in this country and that it is the ultimate safeguard for the citizen against inaction on the part of the authorities.
It recommended, at para 7.50, that: (a) before even instituting a prosecution, a private citizen should ask the prosecution service to undertake it and that, by application of the criteria which it would apply to any other prosecution, the service should decide whether to do so; (b) were it to decline to do so, the citizen should be able to apply to a magistrates court for leave to prosecute it himself; and (c) were the court to grant leave (the criteria for the determination of which the Commission did not identify), the costs of the private prosecution should be paid out of public funds.
Subject to its preference for a strong national direction of the proposed new service, the government accepted the central recommendation of the Royal Commission.
The result was Parliaments enactment of the 1985 Act, section 1 of which established the CPS under the overall leadership of the Director and the regional leadership of Crown Prosecutors.
Section 10 provided that: (1) The Director shall issue a Code for Crown Prosecutors giving guidance on general principles to be applied by them (a) in determining, in any case (i) whether proceedings for an offence should be instituted or, where proceedings have been instituted, whether they should be discontinued;.
But the government did not accept the Commissions recommendation for reform of the arrangements for private prosecutions.
By then section 2(3) of the 1908 Act had been replaced, in almost identical terms, by section 4 of the Prosecution of Offences Act 1979.
The latter was replaced by section 6 of the 1985 Act, being the section central to this appeal and still in force today.
It provides as follows: (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. (2) Where criminal proceedings are instituted in circumstances in which the Director is not under a duty to take over their conduct, he may nevertheless do so at any stage.
The references to the Directors duty to take over the conduct of proceedings are to section 3(2) of the Act, in which the various types of proceedings to which his duty applies are identified.
In particular they include almost all criminal proceedings instituted on behalf of a police force.
In July 1998 the Law Commission, under the chairmanship of Dame Mary Arden, published a paper entitled Consents to Prosecution (Law Com No 255), in which, at para 5.8, it analysed section 6 as giving the private prosecutor in effect an unlimited right to institute a prosecution but as limiting his right to continue it by reference both to the Directors duty to take it over in the circumstances identified in section 3(2) and to his power to do so in all other circumstances, conferred by subsection (2) of section 6 itself.
I agree with the analysis.
Pursuant to section 10 of the 1985 Act the Director issued a Code for Crown Prosecutors (the Code).
The first edition was published in 1986.
The current edition is the sixth, published in February 2010.
Importantly, it provides, at para 2.3: Although each case must be considered on its own facts and on its own merits, there are general principles that apply to the way in which prosecutors must approach every case.
As in all earlier editions, the Code then provides, at para 3.4, that, subject to an irrelevant exception, prosecutors should start or continue a prosecution only when the case has passed both stages of the Full Code Test, which, at para 4.1, are identified as the evidential stage and the public interest stage.
Paras 4.5 and 4.6 provide that the evidential stage is passed if the evidence is sufficient to provide a realistic prospect of conviction, namely that the court is more likely than not to convict the defendant.
In relation to the public interest stage, para 4.12 provides that a prosecution will usually take place unless the prosecutor is sure that public interest factors tending against prosecution outweigh those tending in favour; and examples of factors which tend in each direction are given at paras 4.16 and 4.17.
The appellant submits that the terms of section 10 of the 1985 Act are not wide enough to entitle the Director to include in the Code reference to the principles which he himself will apply in deciding whether to exercise his power under section 6(2) to take over the conduct of a private prosecution in order to discontinue it.
Strictly speaking, the submission may be valid; but there is no point in dwelling on it because the Director has not included any such reference in the Code.
His policy in this respect has been articulated separately.
The best exposition of the policy of the Director in this respect, as it stood prior to 23 June 2009, is contained in a letter written on his behalf dated 27 July 1998 which was quoted by Laws LJ in giving judgment in the Divisional Court of the Queens Bench Division, in R v Director of Public Prosecutions Ex p Duckenfield [2000] 1 WLR 55, 63: [W]here we have been asked . to take over the prosecution in order to discontinue it, we would do so if one (or more) of the following circumstances applies: there is clearly no case to answer.
A private prosecution commenced in these circumstances would be unfounded, and would therefore be an abuse of the right to bring a prosecution; the public interest factors tending against prosecution clearly outweigh those factors tending in favour; the prosecution is clearly likely to damage the interests of justice.
The CPS would then regard itself as having to act in accordance with our policy.
If none of the above apply there would be no need for the CPS to become involved and we would not interfere with the private prosecution.
Clearly there is a distinction between the realistic prospect of conviction test in the Code . and the clearly no case to answer test mentioned above.
Accordingly we recognise that there will be some cases which do not meet the CPS Code tests where nevertheless we will not intervene.
It has been considered that to apply the Code tests to private prosecutions would unfairly limit the right of individuals to bring their own cases.
But on 23 June 2009 the Director performed a volte face.
He introduced the very policy which, in the letter quoted, he had described as unfairly limiting the rights of private prosecutors.
In guidance issued on his behalf to CPS prosecutors entitled Private Prosecutions, published on that date, he wrote: You should take over and continue with the prosecution if the papers clearly show that: the evidential sufficiency stage of the Full Code Test is met; and the public interest stage of the Full Code Test is met; and there is a particular need for the CPS to take over the prosecution.
A private prosecution should be taken over and stopped if, upon review of the case papers, either the evidential sufficiency stage or the public interest stage of the Full Code Test is not met.
However, even if the Full Code Test is met, it may be necessary to take over and stop the prosecution on behalf of the public where there is a particular need to do so, such as where the prosecution is likely to damage the interests of justice.
You should not take over a private prosecution if the papers clearly show that: the evidential sufficiency stage of the Full Code Test is met; and the public interest stage of the Full Code Test is met; and there is no particular need for the CPS to take over the prosecution (either to stop or continue with the prosecution).
DISCUSSION
The value to our modern society of the right to bring a private prosecution is the subject of lively debate.
The Gouriet case [1978] AC 435 concerned the ability of a private citizen to secure an injunction restraining a threatened refusal by post office workers to handle mail to South Africa in breach of the criminal law.
Members of the appellate committee of the House of Lords considered, in passing, his right to bring a private prosecution in the hypothetical event that the workers had proceeded to commit such an offence.
Lord Wilberforce said, at p 477: This historical right which goes right back to the earliest days of our legal system, though rarely exercised in relation to indictable offences, and though ultimately liable to be controlled by the Attorney General (by taking over the prosecution and, if he thinks fit, entering a nolle prosequi) remains a valuable constitutional safeguard against inertia or partiality on the part of authority.
Lord Diplock observed, at p 498, that the need for private prosecutions to be undertaken had largely disappeared but that the right to undertake them still existed and was a useful constitutional safeguard against capricious, corrupt or biased failure or refusal of those authorities to prosecute offenders against the criminal law.
Can one confidently say that the later advent of the CPS has banished all the concerns articulated in the Gouriet case, particularly in relation to inertia, or (to adopt what may be the fairer word used by the witnesses to the Royal Commission: see para 19 above) inaction, on the part of the public authority?
In Jones v Whalley [2007] 1 AC 63 the police administered a formal caution to the perpetrator of an assault and explained to him that, as a result, he would not be brought before a criminal court in respect of it.
Thereupon his victim instituted a private prosecution against him in respect of it.
The House of Lords held that the magistrates had been correct to stay the proceedings as an abuse of their process.
General observations were made about the value of the right of private prosecution.
Lord Bingham said, at para 9: There are . respected commentators who are of opinion that with the establishment of an independent, professional prosecuting service, with consent required to prosecute in some more serious classes of case, with the prosecution of some cases reserved to the Director, and with power in the Director to take over and discontinue private prosecutions, the surviving right is one of little, or even no, value. [Counsel for the victim] is entitled to insist that the right of private prosecution continues to exist in England and Wales, and may have a continuing role.
But it is hard to regard it as an important constitutional safeguard when, as I understand, private prosecutions are all but unknown in Scotland.
Lord Bingham added, at para 16, that the surviving right of private prosecution was of questionable value and could be exercised in a way damaging to the public interest.
By contrast, Lord Mance suggested, at para 39, that the rarity of a private prosecution in Scotland did not undermine the traditional English view that the right to institute it was an important safeguard; and, at para 43, that, as Lord Wilberforce and Lord Diplock had suggested in the Gouriet case, it was a safeguard against the wrongful refusal or failure by prosecuting authorities to institute proceedings.
With respect, I consider that there is much to be said in favour of the views thus expressed by Lord Mance.
In any event, however, the fact is, that, by section 6 of the 1985 Act, Parliament chose, albeit in qualified terms, to reaffirm the right of private prosecution; and the conduct of the CPS must conform to its reaffirmation.
In Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 Parliament had invested the Minister with a discretion to refer to a committee any complaint made to him about the operation of any scheme which he administered.
Farmers in the South East of England complained to him about the price paid to them for milk which they were required to sell to the Milk Marketing Board.
The House of Lords held that, in refusing to refer their complaint to the committee, the Minister had exercised his discretion unlawfully.
Lord Reid explained, at p1030, that Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act and, at pp1032 1033, that it is the Ministers duty not to act so as to frustrate the policy and objects of the Act.
So the question becomes: in applying the reasonable prospect test, as well as the two other tests, to his decision whether to intervene in a private prosecution in order to discontinue it, does the Director frustrate the policy and objects which underpin section 6 of the 1985 Act? Such is a focussed question; and, in my view, energetic, albeit (as I have indicated) controversial, assertions about the continuing constitutional importance of the right of private prosecution make little contribution to its answer.
No greater contribution to an answer to the focussed question is made by the decision in Scopelight Ltd v Chief Constable of Northumbria Police Force [2009] EWCA Civ 1156, [2010] QB 438.
There the Court of Appeal addressed the right of the police to continue to retain seized property under section 22 of the Police and Criminal Evidence Act 1984 once the CPS had decided, on grounds of public interest, not to prosecute the claimants for infringement of copyright but while a trade body formed to counter such infringements was determining whether to prosecute them.
Although the relevant events took place prior to 23 June 2009, no change was then made to the Directors approach to the public interest in determining whether to intervene in a private prosecution in order to discontinue it.
There was no suggestion in that case that, pursuant to his policy, the Director should intervene in the private prosecution, which the trade body had proceeded to institute, in order to discontinue it.
That was because the CPS had decided not that it would be contrary to the public interest for the claimants to be prosecuted at all but only that it would be contrary to the public interest for a prosecution to be conducted by itself: see the judgment of Leveson LJ (with which Ward LJ and I agreed) at paras 12, 39 and 51.
In suggesting a negative answer to the focussed question the CPS contends that both the earlier and the current tests which it was and is the policy of the Director to apply to the evidence in support of a private prosecution represent lawful approaches to the exercise of his discretion under section 6(2) of the Act; but that the current test is preferable for reasons to which, in part, I will refer in paras 34 to 38 below.
The appellant does not go so far as to contend that the Directors current policy eliminates the private prosecution.
Such prosecutions are still frequently instituted.
The great majority survive his three current tests for intervention and discontinuance; they therefore proceed as private prosecutions or, occasionally, as prosecutions which he takes over and continues.
Other public bodies, such as the Office of Fair Trading which prosecutes those who practise wrongful forms of selling, and Transport for London which prosecutes evaders of fares, apply the reasonable prospect test.
So does the Royal Society for the Prevention of Cruelty to Animals, a private registered charity, the target of whose prosecutions is self evident.
Retail companies often prosecute shop lifters and, although there is no firm evidence before this court as to the evidential test which they apply in determining whether to do so, the CPS seems not to intervene and, indeed, to be more than content thus to be spared entry into that sphere of prosecution.
Other private bodies who sometimes conduct private prosecutions are identified in an illuminating article by Dr LH Leigh entitled Private prosecutions and diversionary justice in the Criminal Law Review: [2007] Crim LR 289, 293 294.
Then there is the residue of prosecutions brought by individual citizens, often (as in this case) for alleged assaults upon them, which survive the CPS tests or of which, indeed, the CPS never comes to learn.
In the Duckenfield case [2000] 1 WLR 55 police officers who had been made defendants to private prosecutions for manslaughter and other offences in connection with the Hillsborough disaster applied for judicial review of the Directors decision to decline to take over conduct of the prosecutions in order to discontinue them.
By way of application of his old policy, the Director had declined to conclude that there was clearly no case for the officers to answer.
Save in one irrelevant respect, their applications for judicial review failed.
The Divisional Court rejected their contention that, in determining whether to intervene, the Director had appraised the evidence by reference to criteria which were insufficiently stringent or had applied them too rigidly.
The officers did not go so far as to submit that the only lawful course open to the Director would have been to apply the criteria in the Code.
But in his judgment, with which the other members of the court agreed, Laws LJ made observations about any such submission, upon which, in support of the present appeal, the strongest reliance is placed.
Laws LJ said, at p 68: In truth, however, it could not be right for the DPP to apply across the board the same tests, in particular the reasonable prospect of conviction test. , in considering whether to take over and discontinue a private prosecution as the Code enjoins Crown Prosecutors to follow in deciding whether to institute or proceed with a prosecution themselves; the consequence would be that the DPP would stop a private prosecution merely on the ground that the case is not one which he would himself proceed with.
But that, in my judgment, would amount to an emasculation of section 6(1) and itself be an unlawful policy; and in fairness [counsel for the officers] made it clear that he did not submit so much.
The very premise of section 6(1) must be that some cases will go to trial which the DPP himself chooses not to prosecute.
If, as the last sentence suggests, it was the preliminary view of Laws LJ in relation to this unargued point that the effect of applying the reasonable prospect test would be to eliminate private prosecutions, he was, as will be apparent from what I have said above, much mistaken.
But there is another interesting feature of his judgment.
For, at p 69 (reiterated in slightly different terms at p 71), he said: I see no reason why quite aside from the evidential test of no case to answer the DPP should not within his policy as presently formulated, have in mind the likelihood or otherwise of conviction when considering where the public interest lies.
Therein lies, in my view, some dilution of the force of the judges earlier remarks.
But, with respect to him, I have no appetite for thus blurring the distinction between the evidential test and the public interest test.
The appellant argues that, within the policy previously applied by the Director to his determination whether to intervene and discontinue, there was a logical coherence wholly lacking within the current policy.
The coherence lay, so it is said, in the fact that, subject of course to the difference between a survey of the written evidence and that of the oral evidence, the Director formerly asked himself in effect precisely the same question as the court would ask itself in ruling on a submission at the close of the prosecution case: is there a case for the defendant to answer? This argument, which finds favour in the judgment of Lord Mance at paras 98, 99 and 114 below, makes limited appeal to me.
Much more relevant to the aptness of a prosecution than whether it is likely to survive a submission of no case to answer is whether it is likely to result in a conviction.
In focussing, as his current policy does, on the prospects of a private prosecution in that regard, the Director in my view poses to himself a much more relevant question.
I discern four additional reasons which help to justify the Directors current policy and which make it extremely difficult for the appellant to contend that it must be taken to frustrate the policy and objects which underpin Parliaments reaffirmation of the right of private prosecution in section 6(1) of the 1985 Act.
They are as follows: (a) Parliament did not choose expressly to confine the discretion which, by subsection (2), it conferred upon the Director to take over the conduct of a private prosecution. (b) The object behind the main innovation of the 1985 Act, namely the establishment of the CPS, reflected the conclusion of the Royal Commission referred to above that there was a lack of consistency between local decisions whether to prosecute and, if so, how to conduct them.
In moving the second reading of the Bill in the House of Lords Lord Elton, Minister of State at the Home Office, said (Hansard (HL Debates) 29 November 1984, cols 1014 1015) that what was needed was a prosecution service that avoided rigid uniformity yet applied consistent standards throughout the country.
He was not there speaking of interventions in private prosecutions but it is hard to imagine that this central thread in the policy behind the Act was not long enough to extend to them. (c) A prosecution which lacks a reasonable prospect of success draws inappropriately upon the resources of the court. (d) A defendant would have a legitimate grievance about subjection to criminal prosecution at the instance of a private prosecutor in circumstances in which, by application of lawful criteria to the strength of the evidence against him, there would be no public prosecution.
Furthermore, as in general terms he acknowledges in para 2.3 of the Code set out at para 22 above, the Director would act unlawfully if he were to adopt a rigid approach to the application of his policy in determining whether to institute prosecutions (and, by necessary extension, whether to intervene in order to discontinue them): British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625 (Lord Reid).
Indeed, as this case and the Duckenfield case [2000] 1 WLR 55 demonstrate, the lawfulness both of a determination to intervene in order to discontinue and of a determination not to do so is amenable to judicial review in which the determination will be scrutinised for compliance with, among others, the principle enunciated in the British Oxygen case.
In Australia the Director of Public Prosecutions decides whether to institute a prosecution by applying, among others, a policy that a prosecution should not proceed if there is no reasonable prospect of a conviction being secured: Prosecution Policy of the Commonwealth, November 2008, para 2.5.
His policy is to intervene in a private prosecution in order to discontinue it if, similarly, there is no reasonable prospect of a conviction being secured on the available evidence: para 4.10(a).
It may be that the negative formulation in Australia of the reasonable prospect test renders it marginally less demanding than its positive formulation in England and Wales.
But, for present purposes, the point is that the Director of Public Prosecutions in Australia applies the evidential test used in relation to all other prosecutions in determining whether to intervene in order to discontinue a private prosecution; and that, so far as this court is aware, there has been no challenge to the lawfulness of his so doing.
In summary I find myself wholly unable to subscribe to the view that, in reaffirming, in qualified terms, the right to maintain a private prosecution in section 6 of the 1985 Act, Parliament must be taken to have intended that the Director should decline to exercise his discretion so as to intervene and discontinue it even if it lacks a reasonable prospect of success.
In other words I discern nothing in the policy and objects underpinning the section to justify a conclusion that, by application of his current policy towards intervention and discontinuance, the Director frustrates them.
Accordingly I would reject the appellants central contention in this appeal.
In these circumstances the appellant falls back on two further, alternative, contentions.
His first further contention is founded on a concession made on behalf of the CPS before the Divisional Court, namely that, although the Director had (so it was said) reasonably concluded that the prosecutions stood no reasonable prospect of resulting in convictions, the contrary conclusion would also be reasonable.
From the foot of this concession the appellant contends that the only lawful application of a reasonable prospect test would be for the Director to ask not whether he concludes that there is a reasonable prospect of conviction but whether a reasonable prosecutor might so conclude.
Efficacy, so the appellant argues, should in that way be given to such reasonable conclusion about the strength of the evidence as the private prosecutor may have reached.
The CPS itself reminds the court that in deciding whether a prosecution is required in the public interest, prosecutors should take into account any views expressed by the victim regarding the impact that the offence has had: the Code, para 4.18; and the appellant thus argues for loosely analogous consideration of the views of the victim in relation to the evidential stage of the Directors inquiry.
I discern nothing inherent in section 6 of the 1985 Act to mandate the Directors adoption of this different approach to the evidential test, being a type of approach the like of which I cannot readily recall in any other area of executive decision making.
I regard the approach suggested by the appellant as unfounded in law and pregnant with intricate dispute.
It is the CPS which contributes the expert, impartial, appraisal of the strength of the evidence; and, as Lord Neuberger explains in para 69 below, most victims are ill equipped to make a different contribution of significant value in this particular respect.
The appellants second further contention is that, even if the Director was entitled to decide for himself whether there was a reasonable prospect of convictions, his negative conclusion was irrational.
In an effort to substantiate this bold contention, the appellant makes detailed reference to aspects of the evidence.
Like the first further contention, it was rejected by the Divisional Court and, had it been free standing, it would not have been permitted to be the subject of an appeal to this court.
It would be wrong to prolong this judgment by descent into the detail of the evidence.
I trust that my treatment of the second further contention will not be considered inappropriately high handed if I say only as I do that I reject it for the reasons given in paras 31 to 42 of the judgment of Richards LJ in the Divisional Court [2012] 1 WLR 245.
RESULT
So I would dismiss the appeal.
LORD NEUBERGER
The principal issue on this appeal is whether the current policy of the Director of Public Prosecutions (the Director) relating to taking over and discontinuing private prosecutions is, as the Divisional Court held, lawful.
I agree with that conclusion for the reasons given by Lord Wilson, but, in the light of the division of opinion in this court, I propose to set out my thinking.
The validity of the 2009 policy must be assessed in accordance with normal legal principles applicable to any policy promulgated by the Executive.
In particular, it must be assessed against the current relevant statutory provisions, which are to be found in the Prosecution of Offences Act 1985 (the 1985 Act), of which the most important is section 6 (section 6).
Ignoring classes of proceedings which the Director was obliged to take over by the 1985 Act, two relevant points emerge clearly from section 6.
First, subsection (1) demonstrates that the long established right of individuals to institute and to conduct private prosecutions is, subject to subsection (2), to remain intact.
Secondly, subsection (2) gives the Director the right, which is, at least in terms of the language of the subsection, wholly unfettered, to take over any prosecution initiated privately.
As Lord Wilson says, the central issue on this appeal is whether the 2009 policy can fairly be said to frustrate the policy and objects which underpin section 6.
Mr Fitzgerald put the issue slightly differently, namely, as reflected in Lord Mances judgment, whether the 2009 policy emasculated (or, to use Mr Fitzgeralds words, unlawfully attenuated, restricted or diminished) the right to conduct private prosecutions.
In my view, a policy which emasculated the right would indeed frustrate the policy and objects of section 6, so I consider that there is, in principle and in practice, no real difference between the approach of Lord Wilson and that of Lord Mance.
The Directors policy with regard to prosecutions which he is contemplating bringing and continuing is set out in his current Code for Crown Prosecutors (the Code), which is described by Lord Wilson in para 22 and by Lord Mance in paras 97 and 98.
It is right to record that, when asked, Mr Fitzgerald QC, for the appellant, did not accept that that policy was necessarily lawful, even with regard to prosecutions which the Director is considering or conducting.
However, I consider that, in the absence of any argument in this court or below to the contrary, we must proceed on the basis that the policy is lawful.
Quite apart from the presumption of legality, it seems to me hard to quarrel with a policy that a prosecution will not be initiated or conducted by the Director unless the two requirements, set out and explained in the Code, are met, namely (i) there is a better than evens prospect of securing a conviction, and (ii) it would be in the public interest to proceed with the prosecution.
The justification for the second requirement is self evident.
While I am far from suggesting that the better than evens standard is the only one which the Director could adopt, there are several reasons for the first requirement. (i) It could be said to be oppressive on potential defendants to require them to face criminal proceedings unless there was a good chance of securing a conviction. (ii) Court time should not normally be taken up dealing with speculative prosecutions. (iii) Public money on prosecuting, and defending, criminal proceedings should generally be devoted to cases which are likely to be successful.
And, perhaps more arguably, (iv) a low conviction rate may undermine confidence in the criminal justice system.
I also note that the Royal Commission on Criminal Procedure (Cmnd 8092), chaired by Sir Cyril Philips in 1981 and the Law Commission in 1998 (Consents to Prosecution (Law Com No 255)) both considered the better than evens standard applied by the Director, and did not express any concerns about it.
However, the mere fact that the better than evens standard is lawfully adopted by the Director for prosecutions which he is considering initiating and then conducts, does not ineluctably mean that it is a lawful standard for him to adopt when deciding whether to take over private prosecutions for the purpose of discontinuing them.
However, there are four factors which seem to me to provide support for the contention that the Director is justified in adopting the same better than evens standard for private prosecutions as he applies under the Code to his own prosecutions.
First, one of the primary purposes of the 1985 Act in expanding the Directors functions and duties was to introduce a degree of consistency in the approach to instituting and conducting prosecutions throughout England and Wales.
Accordingly, at least on the face of it, it would seem hard to say that for him to adopt a consistent approach to public and private prosecutions was contrary to what was contemplated by the 1985 Act.
Secondly, it is worth considering a case where the Director has taken over a private prosecution without the intention of discontinuing at the time, but subsequently decides (eg because of new evidence, or a change in the law) that the prospect of securing a conviction is less than evens.
In such a case, it seems to me that he would be entitled to apply the Code to the case, and discontinue, particularly given that there is a continuing obligation on the Director under the Code to review any prosecution.
If that is right, there is obvious logic in his applying the same standard when considering a private prosecution, given his power to take over its conduct in order to discontinue it.
Thirdly, many of the factors which can be said to justify the better than evens standard in public prosecutions apply to private prosecutions. (i) Unfairness to defendants and (ii) use of court time apply to the same extent. (iii) Costs implications substantially apply to a similar extent, although unsuccessful private prosecutors will not always be reimbursed out of public funds. (iv) Confidence in the justice system may be rather less relevant, because the Directors record will not be affected, but, given the applicability of the other three factors, it still applies to a significant extent.
Fourthly, as Lord Wilson has explained, the better than evens standard was approved in para 8.9 of the 1981 report of the Royal Commission, chaired by Sir Cyril Philips, not merely for prosecutions brought by the Director, but for all prosecutions.
As mentioned above, Mr Fitzgeralds grounds for attacking the 2009 policy are based more on the contention that the 2009 policy emasculates the right of an individual to conduct a private prosecution.
His case in this connection is that, while private prosecutions would not be wiped out by the 2009 policy, the right to conduct such prosecutions would be so substantially reduced as to be emasculated.
He reinforced that argument by pointing out that it has to be judged bearing in mind that the right to bring a private prosecution is an aspect of a fundamental common law right, namely the right of every citizen to enjoy access to the courts.
I have some sympathy with that argument, but in the end, I would reject it.
The 1985 Act and the 2009 policy leave untouched the right of an individual to institute a private prosecution.
Accordingly, in any case where the Director has not got round to deciding whether to prosecute, or has considered the facts and has decided not to prosecute, a private prosecution could be initiated.
If that prosecution comes to the Directors attention, he will then have to assess, or, if he has already done so, to reassess, whether there is a better than evens prospect of the prosecution succeeding, and whether it is in the public interest that it proceed: if both those tests are satisfied, the prosecution will be permitted to proceed (either because the Director takes it over or as a private prosecution).
That, of itself, gives the right to initiate private prosecutions an undoubted, indeed a virtually unlimited, function.
As to the conduct of private prosecutions, it is clear that there will be some prosecutions which the Director will take over in order to discontinue, and some which he will take over in order to conduct them himself.
However, it is also apparent from the 2009 policy that there will be prosecutions which the Director will not take over, and will allow to proceed as private prosecutions, even if one ignores the prosecutions which the Director effectively leaves to large concerns as described by Lord Wilson at para 33.
After explaining that the Director has to be satisfied that the better than evens and public policy requirements are met if he is not to take over a private prosecution in order to discontinue it, the 2009 policy goes on to state that he should only take over and continue with the prosecution if the papers clearly show that there is a particular need for the CPS to take over the prosecution.
Thus, any private prosecution which is found to have a better than evens chance of success and is not contrary to the public interest, will be permitted to continue as a private prosecution save where there is a particular need for it to be taken over by the Director.
The examples of types of case where the private prosecution should be taken over in order to be pursued by the CPS suggest that there will be a significant proportion of private prosecutions which, if they satisfy the better than evens standard and the public policy requirement, will be allowed to proceed as private prosecutions.
Albeit by way of non exhaustive, and non conclusive, examples, the 2009 policy suggests that private prosecutions should normally be taken over by the Director if the offence is serious, if there are detailed disclosure issues to resolve, or if the prosecution would involve the disclosure of highly sensitive material or applications for special measures or for witness anonymity.
I unhesitatingly accept that no court should be relaxed about a code, or other set of rules or guidelines promulgated by any branch of the Executive, which has the effect of cutting down individuals rights of access to the courts.
However, the right to institute and conduct a private prosecution is not in quite the same category of rights as a right to seek a remedy or compensation for a wrong by bringing a claim in the civil courts.
The right to conduct a private prosecution has always been subject to being curtailed by the power of the Attorney General to stop the prosecution through issuing a nolle prosequi an executive power which, unsurprisingly, has no equivalent in the civil jurisdiction.
Further, the most recent observations in the House of Lords about the right to bring private prosecutions are not universally enthusiastic contrast Lord Bingham of Cornhill (who described it as being of questionable value in a speech with which Lord Rodger of Earlsferry, Lord Carswell, and Lord Brown of Eaton under Heywood agreed), with Lord Mance (who described it as a safeguard against wrongful refusal or failure by public prosecuting authorities), in Jones v Whalley [2006] UKHL 41, [2007] 1 AC 63, paras 16 and 43 respectively.
It is true that more enthusiasm was expressed about the right by Lord Wilberforce and Lord Diplock in Gouriet v Union of Post Office Workers [1978] AC 435, 477 and 498 respectively.
However, that decision predated the 1985 Act; furthermore, both Lord Wilberforce and Lord Diplock accepted that the need for prosecutions to be undertaken (and paid for) by private individuals has largely disappeared (to quote Lord Diplock, at p 498), and Lord Wilberforce emphasised, at p 477, that the right was subject to the Attorney Generals power to enter a nolle prosequi a point also made by Lord Fraser of Tullybelton, at pp 520 521.
It is also plain that the ability to bring private prosecutions does not rank as some sort of internationally recognised right, as Mr Fitzgerald fairly conceded.
Lord Bingham pointed out in Jones [2007] 1 AC 63, at para 16, that it is primarily for the public authorities to prosecute criminals, and, according to Ms Montgomery QC, it is essentially for this reason that private prosecutions are not permitted in most courts of the United States.
It is also true that, as Lord Mance says in para 105, a former Director and a former Attorney General, have spoken about the importance of retaining the right of individuals to bring private prosecutions.
However, given my conclusion that the right to bring private prosecutions is not emasculated by the 2009 policy, it seems to me that such statements do not take matters much further.
In any event, the fact that, in 1980, many informed people would have thought that a policy such as the 2009 policy was too restrictive does not mean that it would have been unlawful then, let alone that it is unlawful now, particularly following the passing of the 1985 Act.
There is no doubt that the right to bring private prosecutions is still firmly part of English law, and that the right can fairly be seen as a valuable protection against an oversight (or worse) on the part of the public prosecution authorities, as Lord Wilson acknowledges at paras 28 and 29, and Lord Mance says at para 115.
However, that does not really impinge on the lawfulness of the Director applying a better than evens test to private prosecutions.
Once one accepts that the Director is entitled to apply that test to his own prosecutions, it is hard, as a matter of logic, to see how applying the same test to private prosecutions inhibits the valuable protection afforded by the right to bring such prosecutions.
I am also not impressed by the point that an individual who was in some way directly involved in, or who witnessed, the commission of the alleged crime, is in a better position than the Director to assess the prospects of obtaining a conviction.
An objective, expert, and experienced assessment of the prospects appears to me to be generally more reliable than the assessment of a person who will normally be (probably wholly) inexperienced in the criminal justice system, and (often, as in this case) involved, frequently as a victim, and therefore far from dispassionate.
Given that the Director has been given statutory power to take over and discontinue a private prosecution, it seems to me hard therefore to say that the 2009 policy undermines the principle that the right to conduct private prosecutions should in principle survive.
The interests of private prosecutors and of potential defendants, as the two groups with the greatest interest in the policy, should be taken into account, as should the public interest, which includes the efficient use of court time and public money, and confidence in the criminal justice system.
I find it hard to see what is wrong with a policy that a private prosecution should be allowed to proceed as such, only if (i) it has a greater than evens chance of success, (ii) it is not contrary to the public interest, and (iii) there is no special reason why it should be conducted by the Director.
I have no difficulty in accepting that many people might reasonably think that the 2009 policy is too restrictive of the rights of those individuals who wish to bring and conduct private prosecutions.
However, that is a long way from saying that the policy is unacceptably restrictive as a matter of law.
In my view, the arguments mounted by Mr Fitzgerald fall some way short of establishing such a proposition.
Lord Wilson in para 34, and Lord Mance in paras 103 and 104 have referred to the observations of Laws LJ in R v Director of Public Prosecutions, Ex p Duckenfield [2000] 1 WLR 55, 68 69, which were understandably relied on by Mr Fitzgerald.
There is no doubt that, in those observations, Laws LJ was addressing the very question which we have to decide, and that he answered that question, in characteristically trenchant terms, by indicating that a policy such as that contained in the 2009 policy would in his view be unlawful.
Particularly coming from that source, the observations are entitled to great respect.
However, they were not merely obiter: the issue had not been argued; indeed, it had actually been conceded on behalf of the then Director.
There is a considerable difference in the weight to be attached to judicial observations in relation to a point which has been fully argued, as against those in relation to a point which has been conceded, often, no doubt, for good forensic reasons.
Now that the point has been fully argued, I am satisfied, for the reasons given by Lord Wilson, that the 2009 policy, so far as it concerns the Directors approach to taking over private prosecutions with a view to discontinuing them, is lawful.
As to the other issues, there is nothing which I can usefully add to what Lord Wilson has said at paras 42 44.
Accordingly, I would dismiss this appeal.
LORD KERR
For the reasons given by Lord Neuberger and Lord Wilson, with which I agree, I too would dismiss this appeal.
Section 6(2) of the Prosecution of Offenders Act 1985 gives the Director of Public Prosecutions (the Director) the power to take over the conduct of a private prosecution.
Ancillary to this is the power to discontinue such a prosecution.
The use of these powers involves the exercise of discretion.
A person or agency who is exercising discretion as to how to use a statutory power may devise a policy to guide him in its use.
He may formulate a policy or make a limiting rule as to the future exercise of his discretion, if he thinks that good administration requires it, provided that he listens to any applicant who has something new to say: British Oxygen Co Ltd v Board of Trade [1971] AC 610, 624G 625E.
He must also ensure that the terms of the policy are readily available to those who are likely to be affected by its application.
Beyond this, however, the only constraint on the exercise of his discretion is that it must not defeat or frustrate the policy of the Act from which it is derived: Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997.
The policy should be used to promote the policy and objects of the Act: per Lord Reid, at p 1030.
It has not been suggested that the Directors current policy is applied too rigidly in the British Oxygen sense or that its terms have not been sufficiently publicised.
It has not been argued nor could it have been that the Director is not entitled to change his policy.
The central plank of the appellants challenge has been as it had to be on its incompatibility with the policy and the objects of the Act.
There is nothing in the language of section 6(2) (nor of the Act generally) to suggest that the policy of the enactment was to permit private prosecutions to continue unless they failed to meet a standard of raising a prima facie case against the proposed defendant.
Nothing in the 1985 Act could be said to indicate a policy that the availability of the right to privately prosecute should continue as it had previously existed.
There was, for instance, no provision such as is found in section 7 of the Prosecution of Offenders Act 1879 to the effect that nothing in the 1985 Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding.
Indeed section 6(1) is expressly stated to be subject to the Directors power to take over the conduct of a private prosecution at any stage: section 6(2).
If one is to find that the underlying policy objective of the 1985 Act was to preserve the right not to have ones private prosecution taken over and discontinued by the Director unless it did not disclose a case for a defendant to answer, one must look elsewhere.
Lord Mance has said (in para 93) that the original stated purpose for which the Director was given the right to take over the conduct of proceedings in the enactments that preceded the 1985 Act was to ensure that cases which ought in the public interest to be pursued were not abandoned or inefficiently conducted because of lack of means on the part of the prosecutor or inertia.
That may well be so.
But, by the time that the 1985 Act came to be enacted, it was clear, not least because of the decision in Raymond v Attorney General [1982] QB 839, that the power of the Director to take over a prosecution with the object of aborting it in the public interest was not considered to be inimical to the purpose of the earlier enactments.
If not in the language of the 1985 Act itself, where is the mooted right to be permitted to continue a private prosecution (provided it surmounts the prima facie case hurdle) to be found? Lord Mance suggests that it derives from an access to justice principle, rooted in fundamental constitutional theory.
Lady Hale says that this is a centuries old right of access to a court to prosecute an alleged offender: para 123.
But it is clear that the right, however venerable, has been modified by successive enactments.
The very institution of the office of Director of Public Prosecutions impinged on the right.
Prosecution of offenders was no longer exclusively in the domain of private individuals.
Adjustment to the content of the right was therefore inevitable.
The Director was given the power to stop private prosecutions.
On whatever basis that power was exercised previously, the right to privately prosecute was affected.
Moreover, access to justice is not, in any event, always an unqualified right of the citizen.
In judicial review, for instance, the leave of the court to take proceedings is required.
And it is undeniable that private prosecutions may still be and are regularly taken.
As Lord Neuberger has pointed out, Mr Fitzgerald QC for the appellant accepted that for the Director to stop a private prosecution on the ground that the case is not one which he would himself proceed with would not, in the words of Laws LJ in R v Director of Public Prosecutions Ex p Duckenfield [2000] 1 WLR 55, 68, amount to an emasculation of section 6(1) of the 1985 Act, in the sense of extinguishing it.
The change of policy has, of course, attenuated the right that had previously existed, as Mr Fitzgerald correctly contended.
But this would not be the first instance of its attenuation.
Access of the citizen to justice in the field of private prosecution is therefore not denied by the Directors change of policy.
It is adjusted certainly.
The essential question, however, is whether this adjustment is out of keeping with the underlying policy and objects of the 1985 Act.
Various policy considerations have been examined in the judgments of the other members of the court.
I do not consider it necessary for me to say anything about those beyond observing that the question whether it is lawful for the Director to change his policy is not necessarily answered by asking whether Parliament intended, by the 1985 Act, to curtail the right of the citizen to institute private prosecutions.
It is clear that Parliament intended that the Director should have power to take over a private prosecution with a view to discontinuing it.
Parliaments intention must be viewed against the background of the historical adjustment to the right to privately prosecute.
That adjustment occurred because the Director was given the power to take over private prosecutions and because of the way in which he decided to exercise that power.
Parliaments intention in 1985 was clearly to preserve the power and, it seems to me, its intention must also have contemplated that the policy by which the power might be exercised could be subject to change.
Parliament may not have intended positively to restrict the right of citizens to institute private prosecutions but that does not mean that it had reached a settled intention that that right should remain precisely in the condition that, as a result of the then current policy of the Director, it then was.
The conferring of a power on the Director to take over the conduct of a private prosecution, without prescription as to when and in what circumstances that power might be exercised, can only be regarded as consistent with a Parliamentary intention that the power could be exercised so as to assimilate the test for private prosecutions with that which the Director applied to the conduct of public prosecutions.
After all, Parliament leaves to the Director the choice of the test as to when a public prosecution should proceed or be discontinued.
Why should it be thought that the 1985 Act intended to preserve in aspic the test that had been in use at that particular time in respect of private prosecutions? There was, at least, lively debate about the value of the right to privately prosecute at the time of the passing of the 1985 Act.
If Parliament had intended that the right to conduct private prosecutions or, more accurately, the right to prevent their being taken over by the Director in order to discontinue them should be maintained in the condition that it was permitted to exist by the then current policy of the Director, it would surely have been necessary to make this unequivocally clear.
The right to instigate and continue private prosecutions had been subject to change before the 1985 Act.
Most importantly, it had been subject to the policy of the Director that the prosecution evidence be sufficient to sustain a prima facie case.
There was no reason to suppose that this policy would remain in an inviolate and immutable condition.
I find it impossible to conclude therefore that there is anything about the discernible policy and object of the 1985 Act which would be undermined by the change to the policy in relation to private prosecutions which the Director has adopted.
I have nothing to say on the subsidiary arguments advanced by the appellant beyond that I agree with Lord Wilsons and Lord Neubergers observations on them.
LORD MANCE
This appeal concerns the legitimacy, under section 6(2) of the Prosecution of Offences Act 1985, of a policy adopted by the Director of Public Prosecutions in 2009.
The policy was to take over and discontinue any private prosecution coming to his notice which did not in his assessment meet an evidential test that it was more likely than not to lead to a conviction.
Section 6(1) of the 1985 Act recognises the right to institute private prosecutions, but section 6(2) provides that the Director may take over their conduct.
Lord Wilson has set out the section in para 21.
Traditionally, all prosecutions in England and Wales could be described as private, even though brought in the name of the Crown.
James Fitzjames Stephen said in his History of the Criminal Law of England, Vol I (1883), p 493: In England the prosecution of offences is left entirely to private persons, or to public officers who act in their capacity of private persons and who have hardly any legal powers beyond those which belong to private persons.
In a lively and educative study, The Law Officers of the Crown (1964), by Professor J Edwards of the Middle Temple and University of Toronto, the then Director of Public Prosecutions, Sir Theobald Mathew, is quoted (p 335) as stating in 1950 that there are no public prosecutions in the ordinary sense of that term.
Professor Edwards noted (p 401) the unreality of this analysis in relation to prosecutions by the Director or Treasury Counsel.
The Directors office went back to the 1870s, but the Director had very few staff and undertook very few prosecutions prior to 1985.
The vast majority of cases were prosecuted by the police, acting, Sir Theobald Mathew also said, as in effect, private citizens paid by their fellow citizens to carry out these duties on their behalf. (p 335).
Quite apart from police prosecutions, however, a not inconsiderable number of bodies and some individuals have to this day continued to institute and pursue truly private prosecutions, as noted by Associate Professor Douglas Hay in Controlling the English Prosecutor (1983) 21 Osgoode Hall L J 165, 180 182, by Watkins LJ in R v Stafford Justices, Ex p Customs and Excise Comrs [1991] 2 QB 339, 350 351, by myself in Jones v Whalley [2006] UKHL 41, [2007] 1 AC 63, para 38 and by Dr L H Leigh, formerly Professor of Criminal Law at the London School of Economics, in Private prosecutions and diversionary justice [2007] Crim LR 289, 293 294.
A research study for the Royal Commission on Criminal Procedure (Cmnd 8092) whose Report in 1981 preceded the 1985 Act is quoted by Hay (pp 180 181) as recording that less than 3% of all prosecutions were purely private, with about 9% of other prosecutions being for shoplifting by retail stores; roughly one quarter of adult prosecutions for non traffic offences were being brought by the police, more than one half of these originating with other official bodies.
In The Law Officers of the Crown, Professor Edwards noted that the English and Welsh system had not been copied elsewhere, although describing it as a fundamental principle which was basic . in our constitution (p 336). Lord Simon of Glaisdale, speaking extra judicially on the second reading of the bill leading to the 1985 Act (Hansard (HL Debates), 29 November 1984, col 1068) described the right of private prosecution as founded on the fundamental constitutional principle of individual liberty based on the rule of law, and in Gouriet v Attorney General [1978] AC 435, 477, 498 Lord Wilberforce said that the right remained a valuable constitutional safeguard against inertia or partiality on the part of authority, and Lord Diplock spoke of a useful constitutional safeguard against capricious, corrupt or biased failure or refusal of authorities to prosecute offenders.
Prior to the 1985 Act, the Directors office existed under and was governed by Prosecution of Offences Acts passed in successively 1879, 1884, 1908 and 1979.
Section 7 of the 1879 Act (42 & 43 Vict c 22) stated that Nothing in this Act shall interfere with the right of any person to institute, undertake, or carry on any criminal proceeding.
Under section 2 of the Act, regulations were to provide for the Director to institute, undertake or carry on proceedings in cases which appear to be of importance or difficulty, or in which special circumstances, or the refusal or failure of a person to proceed with a prosecution, appear to render the action of such Director necessary to secure the due prosecution of an offender; and regulations were duly made to that effect (see Edwards, p 379).
Under section 6, where the Director had instituted or undertaken any proceeding, private persons might apply to a High Court judge for leave to continue such proceedings, if the Director had abandoned them or neglected to carry them on.
The 1908 and 1979 Acts contained precursors to section 6 of the 1985 Act, which Lord Wilson has set out in para 14.
However, these Acts contained no equivalent of section 6 of the 1879 Act.
The original stated purpose for which the Director was given this right to take over the conduct of proceedings was thus to ensure that cases which ought in the public interest to be pursued were not abandoned or inefficiently conducted, whether through lack of means, inertia or any other reason.
The Report of the Select Committee appointed to inquire into the Office of Public Prosecutor, 1884 (The Harcourt Committee) advocated that, in order to fulfil this aim, the police in every borough should transmit to the Director a list of all indictable offences committed in their district (see Edwards, p 376).
However, this necessary adjunct to any comprehensive approach was and never has been implemented.
While this was the original stated purpose, in practice, and modelling himself no doubt on the Attorney Generals right to enter a nolle prosequi (rarely exercised though that is, and then usually when he considers the defendant unfit to plead), the Director used also to take over cases with a view to discontinuing their prosecution.
This practice was challenged but upheld at first instance in Turner v DPP (1978) 68 Cr App R 70 and on appeal in Raymond v Attorney General [1982] QB 839, where Sir Sebag Shaw said, at pp 846 847: The word conduct appears to us to be wider than the phrase carry on and suggests to our minds that when the Director intervenes in a prosecution which has been privately instituted he may do so not exclusively for the purpose of pursuing it by carrying it on, but also with the object of aborting it; that is to say, he may conduct the proceedings in whatever manner may appear expedient in the public interest.
The Director will thus intervene in a private prosecution where the issues in the public interest are so grave that the expertise and the resources of the Director's office should be brought to bear in order to ensure that the proceedings are properly conducted from the point of view of the prosecution.
On the other hand there may be what appear to the Director substantial reasons in the public interest for not pursuing a prosecution privately commenced.
What may emerge from those proceedings might have an adverse effect upon a pending prosecution involving far more serious issues.
The Director, in such a case, is called upon to make a value judgment.
Unless his decision is manifestly such that it could not be honestly and reasonably arrived at it cannot, in our opinion, be impugned.
Both Turner and Raymond were classic cases of abuse of process by private prosecutors, who had laid charges against persons who were Crown witnesses against them in separate proceedings.
Our modern professionalised public prosecution system at the national level dates from the Prosecution of Offences Act 1985.
This introduced for the first time a professional prosecuting service, of which the Director of Public Prosecutions was made head.
He was given the duty under section 3(2): (a) to take over the conduct of all criminal proceedings instituted on behalf of a police force ; (b) to institute and have the conduct of criminal proceedings in any case where it appears to him that (i) the importance or difficulty of the case makes it appropriate that proceedings should be instituted by him; or (ii) it is otherwise appropriate for proceedings to be instituted by him;
Under section 10, he was also bound to issue a Code for Crown Prosecutors giving guidance on general principles to be applied by them (a) in determining, in any case (i) whether proceedings for an offence should be instituted or, where proceedings have been instituted, whether they should be discontinued; or (ii) what charges should be preferred; and (b) in considering, in any case, representations to be made by them to any magistrates' court about the mode of trial suitable for that case.
Section 10 did not require the Code to give guidance with regard to the situations in which the Director might under section 6(2) take over the conduct of a private prosecution.
As Miss Clare Montgomery QC for the CPS accepted, the relevant version of the Code, issued in February 2010, therefore confines itself to addressing situations in which Crown prosecutors are faced with a decision whether to institute a prosecution; and, further, the Code imposes in this regard a Full Code Test with two limbs or stages: the first the evidential stage, the second the public interest stage.
The first stage, derived from the Royal Commission Report 1981 which preceded the 1985 Act, involves considering whether there is a realistic prospect of success.
That is a phrase familiar in other areas of the law and it sounds as if it should be beyond controversy until one appreciates that it is defined in this area to require a conclusion, before any prosecution, that an objective, impartial and reasonable jury or bench of magistrates or judge hearing a case alone, properly directed and acting in accordance with the law, is more likely than not to convict the defendant of the charge alleged (Code, para 4.6).
This stage therefore imposes a substantially higher threshold for public prosecution than any criminal court would apply.
This is mitigated only to some extent if the CPS eschews a purely predictive approach based on past experience of similar cases (the bookmakers approach) see R (B) v Director of Public Prosecutions (Equality and Human Rights Commission intervening) [2009] EWHC 106, [2009] 1 WLR 2072, para 50, per Toulson LJ and recognises the force of the reference to a reasonable jury, bench or judge, either by asking whether it itself (as a reasonable authority) considers the evidence to be on balance sufficient to merit a conviction by a reasonable jury, bench or judge or (putting the same point in a different way) by recognising explicitly that in certain areas actual statistics regarding convictions may not be a reliable guide to what ought reasonably to happen.
Lady Hale makes this point compellingly in her paras 126 and 128 to 129, with which I agree.
A criminal court would only refuse to allow a charge to proceed if it was one on which no jury, bench or judge properly directed could properly convict or was otherwise an abuse of process.
In the leading authority, R v Galbraith [1981] 1 WLR 1039, 1041 Lord Lane CJ endorsed the earlier decision in R v Barker (Note) (1975) 65 Cr App R 287, 288, where Lord Widgery CJ said: It cannot be too clearly stated that the judge's obligation to stop the case is an obligation which is concerned primarily with those cases where the necessary minimum evidence to establish the facts of the crime has not been called.
It is not the judge's job to weigh the evidenceto do that is to usurp the function of the jury.
In essence the same principle was endorsed in R v Galbraith: Where however the prosecution evidence is such that its strength or weakness depends on the view to be taken of a witness's reliability, or other matters which are generally speaking within the province of the jury and where on one possible view of the facts there is evidence upon which a jury could properly come to the conclusion that the defendant is guilty, then the judge should allow the matter to be tried by the jury (emphasis added).
A similar caution about any interference with the right of access to court applies in civil proceedings, In Raymond [1982] QB 839, 846 Sir Sebag Shaw quoted a passage from the judgment of Fletcher Moulton LJ in Dyson v Attorney General [1911] 1 KB 410, 418, which stressed, in relation to the power to strike out as disclosing no reasonable cause of action, the gulf that lies between the summary dismissal of actions as, on the one hand, baseless and, on the other, because the judge does not think they will be successful in the end and said that: the courts have properly considered that this power of arresting an action and deciding it without trial is one to be very sparingly used, and rarely, if ever, excepting in cases where the action is an abuse of legal procedure. (p 418)
The second stage of the Full Code Test involves identification, analysis and weighing of a potentially wide variety of factors which may count in favour of or against prosecution being in the public interest in any particular case.
The Code is careful to stress that, at the second stage, each case must be considered on its own facts and merits (para 4.15).
Until 2009 the taking over of a private prosecution with a view to discontinuance was governed by a policy which, as confirmed by the CPSs evidence in this case, identified the evidential threshold at which the CPS would intervene in a private prosecution to take it over and stop it in these terms: You should take over and discontinue the prosecution if one (or more) of the following circumstances applies: There is clearly no case to answer.
A private prosecution commenced in these circumstances would be unfounded, and would, therefore, be an abuse of the right to bring a prosecution.
Note that this is a more rigorous test than the evidential sufficiency stage of the Full Code Test.
The policy, although not apparently published as such, was well known.
In R v Director of Public Prosecutions, Ex p Duckenfield [2000] 1 WLR 55, it was explained on behalf of the DPP in the passage set out by Lord Wilson in para 24.
Giving the lead judgment in Duckenfield Laws LJ endorsed this approach, saying (p 68C E), in a passage cited by Lord Wilson in para 34, that, for the Director to stop a private prosecution merely on the ground that the case is not one which he would himself proceed with .would amount to an emasculation of section 6(1) and itself be an unlawful policy.
Laws LJ adopted a parallel view of the Directors power to intervene in the light of public interest factors, saying (p 69C E): I see no reason why quite aside from the evidential test of no case to answer the DPP should not within his policy as presently formulated, have in mind the likelihood or otherwise of conviction when considering where the public interest lies.
And I see no basis for the suggestion that the law should compel the DPP to reverse the effect of the public interest factors so as to favour discontinuance unless in his judgment they clearly point in the other direction.
The test as presently formulated seems to me designed to allow proper scope for the operation of the right of private prosecution.
The private prosecutor is very likely to take a different view as to where the public interest lies than does the DPP, and section 6(1), I think, implies that he is entitled to do so.
The approach urged by Mr Harrison would in effect require the private prosecutor to persuade the DPP that his view of the public interest is plainly right.
I consider it strongly arguable that that would place an illegitimate constraint upon the right of private prosecution; but it is enough to hold, as I would, that the present public interest policy is perfectly consistent with the objects of the statute and thus well within the proper discretion of the DPP.
The approach taken by the Director and Laws LJ in Duckenfield was firmly based in history.
The 1985 Act followed upon the work of the Royal Commission on Criminal Procedure 1981 to which the then Director gave evidence that: I and my predecessors have always considered that taking over a private prosecution with a view to offering no evidence would be an improper exercise of the power to intervene, save in the exceptional circumstances of a case like Turner v Director of Public Prosecutions (1978) 68 Cr App R 70.
The protection against unjustified prosecution lies, in my view, with the courts.
If process is granted to a private prosecutor, the case should, in my view, be allowed to proceed subject to the normal rules of evidence and procedure.
The then Attorney General, Sir Michael Havers, also stated to the Commission that he did not think it right that any attempt to control generally the private prosecutor should be made through the Directors' powers to take over a case and offer no evidence or my power to enter a nolle prosequi.
Both would smack of interference by the Executive in the citizen's right of free access to the Courts; it is better that the control be by judicial process. (21 Osgoode Hall LJ 181)
I note in parenthesis that the Commission itself, at para 7.47, had noted the position of the great majority of our witnesses who argue that the private prosecution is one of the fundamental rights of the citizen in this country and that it is the ultimate safeguard for the citizen against inaction on the part of the authorities, although questioning whether the very rare incidence of prosecutions by private citizens seemed a sufficient basis for this position.
It had recommended that a private prosecution should only be brought after application to a Crown prosecutor, who would apply the same criteria as he would apply to any other prosecution in deciding whether to take the case on, and that, if the Crown prosecutor decided not to take it on, the private person should be able to apply to a magistrates court for leave to commence proceedings.
This recommendation for automatic notification was not adopted, either then or when effectively repeated by the Law Commission in paragraph 13 of its 1998 report, Consents to Prosecution, Instead, the basic right to institute a private prosecution was re enacted and remains in section 6(1).
The views expressed to the Commission and by the Director and by Laws LJ in Duckenfield, on the inter relationship between private prosecution and the power to intervene and take over the conduct of proceedings, have a sound basis in constitutional principle.
That is the right of access to justice, a right which is granted by section 6(1) and which section 6(2) cannot have been intended to make ineffective or subvert.
It is well recognised that a right of access to a court can, as Mr Fitzgerald QC submitted, only be removed by clear and specific words.
In R v Lord Chancellor, ex p Witham [1998] QB 575, Laws J rightly identified access to a court as a right given special weight by the common law, and continued, at p 585: It has been described as a constitutional right, though the cases do not explain what that means.
In this whole argument, nothing to my mind has been shown to displace the proposition that the executive cannot in law abrogate the right of access to justice, unless it is specifically so permitted by Parliament; and this is the meaning of the constitutional right.
That approach follows from general principle.
Parliament legislates against the background of rights which the common law treats as fundamental or constitutional.
Legislation is to be construed as displacing such rights only so far as it contains clear and specific provision to this effect: see eg R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 587C G and 591E F.
The principle is very relevant when considering the extent to which the general power to take over [the] conduct of a private prosecution conferred by section 6(2) of the 1985 Act embraces the power to take over proceedings for which there is a proper evidential basis and to which no public policy objection can be raised, not in order to pursue them but in order to bring them to an end, simply because, in the Directors own paper assessment, the proceedings are more likely than not to fail, applying the test set out in para 106 above.
Its relevance is heightened by (a) the inherent limitations of any evidential assessment on paper of the prospects of criminal conviction, (b) the fact that in another persons equally reasonable assessment the proceedings may well be more likely than not to succeed and (c) the role of private prosecutions, as a type of democratic long stop or safety valve, in enabling complainants whose case is that they know that they have been victims of serious offending to bring the matter before a criminal court, in circumstance where public prosecutors have on balance assessed their case as lacking sufficient evidential strength.
The new policy adopted for the first time in 2009 assimilates public and private prosecutions for the purposes of both limbs of the Full Code Test.
First, when (and if) the CPS finds out about a private prosecution, it should take over and continue with the prosecution if both limbs are clearly shown and there is a particular need for the CPS to take over the prosecution.
Secondly, a private prosecution should be taken over and stopped if, upon review of the case papers, either the evidential sufficiency stage or the public interest stage of the Full Code Test is not met, and, even then, it may be necessary to do this where there is a particular need to do so, such as where the prosecution is likely to damage the interests of justice.
One would have thought that this last situation and the examples given (which include situations such as that where the prosecution interferes with the investigation or prosecution of another criminal charge or is vexatious) would all lead to failure at the second, public interest stage of the Full Code Test, but that is presently unimportant.
Finally, a private prosecution should not be taken over if the papers clearly show that both stages of the Full Code Test are met, and there is no particular need for the CPS to take over the prosecution.
Under the language of the Code, as Miss Montgomery accepted, the CPS is obliged to prosecute all cases satisfying the two stages of the Full Code Test.
The policy adopted in 2009 therefore leaves no room for private prosecutions, except in cases where a private prosecutor starts proceedings before the CPS does, and the CPS decides to allow the private prosecutor to continue.
The only value in the right to institute a private prosecution would, on this basis, consist in the fact that it would avoid having to take other means (eg judicial review) to stimulate the CPS into action and would, perhaps, in a few specific situations prevent a time limit for bringing a criminal charge from passing, before the CPS could be stimulated into action.
Further, a considerable number of statutes expressly require that the consent of the Director of Public Prosecutions to any prosecution brought under their provisions.
The statutes range alphabetically from The Agricultural Land (Removal of Surface Soil) Act 1953, section 3 to the Wildlife and Countryside Act 1981, section 28.
Such consent may be given by any Crown Prosecutor on the Directors behalf: Prosecution of Offenders Act 1985, section 1(7).
Under para 3.7 of the Code, the DPP or prosecutors acting on his behalf apply the Code in deciding whether to give consent to a prosecution.
A justification traditionally advanced for such consent requirements is the prevention of inappropriate prosecutions: see The Law Commission Report on Consents to Prosecution 1998 (LC 255), paras 3.17 to 3.22.
The Directors new policy relating to private prosecutions in effect equates all private prosecutions with prosecutions which are by statute specifically made subject to his consent.
The difference is that consent has to be given in advance where a statute specifically requires consent, whereas in relation to other private prosecutions it is given only retrospectively as and when the Director (or CPS) learns of such a prosecution and acquiesces in its continuation.
Miss Montgomery went so far as to submit that the suggested assimilation was a purpose of the 1985 Act.
If so, it is particularly surprising that this went unnoticed by Directors of Public Prosecutions for the 24 years from 1985 to 2009.
Further, on this analysis, not only Laws LJs dicta in Duckenfield but also the Court of Appeal decision in Scopelight Ltd v Chief Constable of Northumbria Police Force [2009] EWCA Civ 1156, [2010] QB 438 must be wrong.
The issue in Scopelight was whether the police could retain seized material required in the context of a private prosecution, in circumstances where the CPS had decided that the second stage of the Full Code Test was not satisfied.
The court (Ward, Wilson and Leveson LJJ), in a judgment given by Leveson LJ, a highly experienced criminal judge, concluded that they could.
In so doing, the Court held that the CPSs view of the public interest was not determinative: there are, or at least may be, circumstances in which it is perfectly consistent for the DPP to decide not to prosecute, yet for him to decline to decide that a private prosecution is not in the public interest so as to justify his interference with it: in other words, he does not consider himself (or, in less significant cases, the CPS) the sole arbiter of the public interest and neither does the court. (para 36) and In my judgment, there is no basis either in the statutory framework, the authorities or policy to justify the proposition that a decision by the CPS not to prosecute conclusively determines that a prosecution is not in the public interest. (para 39)
In these circumstances, Miss Montgomery developed in her oral submissions an alternative (and inconsistent) case.
This was that, while assimilation was intended and appropriate in relation to the evidential test, it was not called for in relation to public policy; and, on this basis, there could be circumstances in which a private prosecutor could institute and pursue proceedings which the CPS would not regard as being in the public interest.
This alternative hybrid finds no support in the actual language of the Code and the 2009 policy.
It is as regards public policy consistent with Scopelight, but as regards the evidential test inconsistent with Duckenfield.
It involves the strange proposition that a private prosecutor is free to take a different view from the Director and CPS on matters of public policy, but not free to take a different view on the effect of the available evidence.
I note in parenthesis that it is also inconsistent with the Scottish position indicated in X v Sweeney 1982 JC 70, where the Lord Advocate had declined (and foregone the right) to prosecute on grounds of evidential weakness (the mental state of a claimed victim of rape), but a later date the victim, having recovered, petitioned for leave to bring a private prosecution.
Lord Elmslie in the Inner House said: The rights of a private prosecutor in our system of criminal jurisprudence have grown up alongside those of the Lord Advocate and indeed, historically, they bulked larger in earlier times than those of the King's Advocate.
These rights still exist and there seems to be no good reason in principle for saying that they should not be available in any case in which the Lord Advocate has, for any reason, declined to prosecute an offender to a conclusion.
I do not accept that the scope of the right to institute, and by necessary implication once instituted pursue, a private prosecution preserved by section 6(1) can have been intended to be emasculated in the manner indicated by the Code and 2009 policy and by both of Miss Montgomerys primary and alternative cases.
Laws LJs words at pp 68 69 in Duckenfield is in my opinion appropriate.
Emasculate does not mean eliminate.
The 1985 Act must be construed in the light of the long standing constitutional significance attaching to the right of private prosecution and the long standing understanding of the scope of the Directors right to intervene stated by the then Director as well as the Attorney General to the Royal Commission which reported in 1981 and reflected in the subsequent practice which was explained in Duckenfield and continued up to 2009.
Nowhere, until 2009, is there any suggestion that the Director could or should exercise the power to take over and discontinue on the simple basis of evidential weakness, and certainly not evidential weakness not amounting to abuse of process by the pursuit of a hopeless case on which no reasonable tribunal could convict.
The fact that the discretion conferred by section 6(2) is in general words carries the matter nowhere.
Parliament must, as Lord Reid put it in a parallel context in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, 1030C 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 1985 Act cannot have been intended to undermine the right, long recognised as fundamental, of private prosecution in the manner which the Directors new policy would do.
The power to take over the conduct of cases came into existence to enable the Director to carry on privately instituted cases which called for public prosecution.
Despite the unspecific nature of the words of section 6(2), this subsection was accepted as including a power to take over and discontinue cases on general public policy grounds.
The Director could be expected to be a good judge of these, which may (as where harm to national interests is involved or where the defendant has already suffered regulatory, civil or social consequences) be non justiciable.
But evidential weakness, without more, is a matter on which the courts have developed their own clear policy and is a quite different matter.
Litigants are not to be shut out from access to justice to pursue cases which they are otherwise on the face of it entitled to pursue unless such cases cannot reasonably hope to succeed.
That is the test which the Director, like all his predecessors, applied until 2009.
In my opinion, he exceeded his properly interpreted power under section 6(2) when in 2009 he departed from that long standing policy.
An evidential test of balance of likelihood may be very appropriate as a test which the Director applies to CPS prosecutions.
It is quite a different thing to impose it on private prosecutions.
The Law Commission in its 1998 report, Consents to Prosecution, noted that private prosecutions were likely to be instituted which failed one or other of the evidential and public interest tests applied by the CPS (para 5.19), but also noted that it was regarded as an important safeguard for some members of society who believed that an individual prosecutor had misjudged the evidence in a case (para 5.4).
It did not regard the fundamental right to institute a private prosecution as undermined by the harm that might result from an unsuccessful prosecution of an innocent defendant or from any prosecution not in the public interest, for three reasons (para 5.22), which I set out in Jones v Whalley [2007] 1 AC 63, para 42.
They were (1) a risk that an individual Crown prosecutor will either misapply the Code or more likely, given the width of the Code tests apply a personal interpretation to the tests which, although not wrong, might differ from that of other prosecutors, (2) the perception in the eyes of some that the code may fail to achieve a proper balance and then this significant reason: (3) It should not be assumed that if it is wrong to bring a public prosecution then it is also wrong to bring a private prosecution.
If, for example, a case is turned down by the CPS because it fails the evidential sufficiency test, but only just; if the private prosecutor knows that the defendant is guilty (because, say, he or she was the victim and can identify the offender); and if the case is a serious one, then a private prosecution might be thought desirable."
These three reasons all inter relate.
Private prosecution is, and I think always has been, a safeguard against the feelings of injustice that can arise when, in the eyes of the public, public authorities do not pursue criminal investigations and proceedings in a manner which leads to culprits being brought before a criminal court.
The impunity which offenders appear to enjoy can be socially detrimental.
This is, as the Law Commission rightly said, particularly so in those cases where a victim actually knows that the offence has been committed but finds that a CPS prosecutor does not think on a balance of likelihood that his evidence, if given orally in court, will be accepted.
The feeling of injustice will be particularly acute, if (as is accepted, but is in any event clear, on the facts of the present case) the CPS prosecutors decision was a fine one, and the alleged victims or another prosecutor might equally reasonably have concluded that the case was one in which the evidential test was satisfied.
All these considerations underline the sharp distinction between, on the one hand, the Directors power in the Code to set his own standards for publicly funded and pursued prosecutions and, on the other hand, his power to take over and discontinue a private prosecution.
They underline the radical nature of the change purported to be introduced on a blanket basis by the policy issued in 2009.
I am prepared to assume, though there is no evidence for this in the policy itself or the papers (and little support for it under the Code in the general words of clause 2.3 which Lord Wilson cites in para 22), that the CPS would recognise that it should be prepared to depart from that policy in particular exceptional cases (see British Oxygen Co Ltd v Board of Trade [1971] AC 610, 625C F).
Even so, I regard a pure evidential test as outside the scope of section 6(2).
The evidence filed on behalf of the Director in this case does not indicate that any investigation or analysis was undertaken of the actual incidence of, still less of any actual problems or unfairness created by, private prosecutions before the change of policy in 2009.
It does however set out in general terms a number of considerations as the rationale for the change.
These included the costs to society and those involved of a failed trial procedure and a suggested obvious need to ensure that cases were not brought where there is insufficient evidence and little prospect of conviction (witness statement of Alex Solomon, of the CPSs Strategy and Policy Directorate).
But these are all considerations inherent in the right of access to a court, which the court controls only by eliminating cases that could not reasonably lead to conviction.
The obvious need to eliminate cases where a reasonable jury, bench or judge could reasonably convict is not one which has ever occurred to courts, or which occurred to the Director, whose policy was the exact opposite until 2009.
The Directors evidence also suggests that it is axiomatically wrong to have different tests for, or for a defendant to be exposed differently, in the context of private and public prosecutions.
As an assertion, this begs the question, particularly in the light of decades, if not centuries, during which the distinction has been accepted as natural.
For the reasons I have given and as confirmed by the authorities to this day, there are significant differences between private and public prosecutions.
The differences are of principle and they arise from the constitutional status of the right to institute a private prosecution and of the right of access to the courts for that purpose.
Private prosecutions cannot axiomatically be submitted, or taken over in order to be submitted, to whatever the Director may adopt as the appropriate evidential and public policy tests for the purposes of prosecutions which he himself initiates.
It is not relevant on this appeal to consider the special case (probably very unusual) of a prosecution taken over by the Director on public policy grounds with the intention of pursuing it to trial, but in relation to which the CPS later concluded in the light of newly discovered material that the evidential test was no longer met.
That special case does not arise here.
Assuming that the Director would in such a case be entitled to apply his own evidential test, that does not throw any light on the scope of the Directors power to take over a private prosecution with a view to discontinuance.
Finally, though as a lesser consideration, at a practical level there also appears to me to be a considerable difference between the pursuit by the CPS at public expense of a prosecution and the pursuit by a private person of a prosecution at his own cost in terms of time, as well as at his own expense subject to the courts power under section 17 of the 1985 Act to order reasonable compensation in respect of any expenses properly incurred in respect of proceedings for an indictable offence or in respect of a summary offence before a Divisional Court or the Supreme Court.
Mr Fitzgerald had as an alternative submission the proposition that, even if the Director could otherwise take over and discontinue cases which did not meet the evidential test, he could not do so in cases where the private prosecutor could and did, equally reasonably, conclude that the evidential test was met, eg because he firmly believed that his oral testimony, if allowed to be presented before a court, would be believed.
In the light of what I have already said, the possibility of two reasonable views is a strong reason why the right of private prosecution remains a valuable constitutional right, which is not to be taken as affected by a heightened evidential test well in excess of any that a criminal court would apply, in the absence of specific statutory authority.
But, if what I have already said is to be rejected (as is I understand the view of the majority in this court), then I would align myself emphatically with Lady Hales further observations in her paras 131 to 133.
Whatever else Parliament may be taken to have embraced by section 6(2), I see no reason at all to suppose that it included situations in which the alleged victim, who knows the facts, has commenced a private prosecution on the basis of his or her reasonably held conclusion that the test set out in para 98 above is met.
Mr Fitzgerald had a yet further string to his bow, in case he had failed in his first two submissions.
That is that the judgment formed by the CPS prosecutor in this case was Wednesbury unreasonable (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223).
I have considerable sympathy with the view that the CPSs assessment in this case was a harsh judgment, picking up small points and supposed but barely significant discrepancies in relation to charges which would ultimately have depended on an overall judgment on credibility, and would have been supported to a large extent by hard evidence, including in some measure injuries difficult to attribute to anything other than deliberate actions by the alleged offenders who were clearly identified by three persons as being at the scene and responsible for assault on 17 May 2010 and made no comment when interviewed under caution.
I should add that I am not entirely convinced that the CPS applied even its own test correctly, in the sense which Lady Hale identifies in paras 126, 128 and 129 and which I have identified in para 98 above; although the relevant CPS review starts by setting out that test in full (para 6), it later describes it as a more likely than not to convict test (paras 7.1) and thereafter refers simply to the question as being whether there is a realistic prospect of conviction and to the court being unlikely [to] be satisfied of guilt (paras 7.4, 8 and 10).
However, having regard to the views I have already expressed and which others hold, it is unnecessary for me to say more on these aspects.
I would allow the appeal.
LADY HALE
I agree entirely with the judgment of Lord Mance and, like him, I would allow this appeal.
For the reasons he gives, I cannot accept that it was the intention of Parliament, when setting up the Crown Prosecution Service in 1985, to allow the Director to reduce the centuries old right of private prosecution almost to vanishing point: in effect, to a right to pursue those prosecutions which the CPS are content to have pursued but would prefer to have pursued by some one else.
Like him, I consider that the right of access to a court to prosecute an alleged offender is as much a constitutional right as a right of access to a court to bring a civil claim.
The power to cut down that right in such a drastic manner could only be conferred by clear words and not by the repetition of very general words, especially when those very general words had previously been thought by all concerned to do no such thing.
I add only a few words because the issue is of such fundamental importance for the protection of all victims of crime, but in particular of those most vulnerable victims, those who have traditionally had such difficulty in getting their voices heard or, if heard, believed.
At the very least, in my view, this court should have acceded to the alternative case advanced by Mr Fitzgerald on the claimants behalf.
The essential difference between the evidential tests applied by the courts and by the CPS relates to the likelihood of a witness being believed.
The courts ask themselves: Is the evidence capable of being believed? If it is, and the jury or magistrates believe it, is it sufficient to prove the case? Is there, in other words, a case to answer? It is for the jury, judge or magistrates to decide whether they do in fact believe the witness.
The CPS, on the other hand, ask themselves how likely it is that the witness will be believed.
At least, that is what it looked as though the prosecutor was doing in this case.
However, it is not quite as straightforward as that.
There is more than one view of how the evidential stage of the CPS test is supposed to work.
As Lord Mance explains in paragraph 98 a realistic prospect of success is defined in the Code as where an objective, impartial and reasonable jury, bench of magistrates or judge, properly directed and acting in accordance with the law, is more likely than not to convict the defendant of the charge alleged.
Presumably, therefore, the reference to a reasonable jury is designed to allow certain types of case to proceed even though it is well known that juries find it difficult to convict.
With all due respect to Lord Neuberger, it cannot be a simple better than evens or is a conviction more likely than not? test.
As Toulson LJ pointed out in R (B) v Director of Public Prosecutions (Equality and Human Rights Commission intervening) [2009] EWHC 106 (Admin), [2009] 1 WLR 2072, para 50, if a prosecutor were to adopt this so called bookmakers approach then few allegations of so called date rape would be allowed to proceed.
The same could be said of complaints brought by children or mentally ill or disabled people.
It was suggested in that case that the prosecutor should imagine himself to be the fact finder and ask himself whether, on balance, the evidence was sufficient to merit a conviction taking into account what he knew about the defence case: para 49.
That suggests a test of is it more likely than not that I would convict, knowing what I do about the case?
However, the reference to a reasonable jury, judge or magistrate must contemplate that there are at least some cases in which different courts could reasonably take different views of the evidence in the same case.
So the reasonable prosecutor should ask himself what a reasonable court might do, not necessarily what he himself would do.
Due allowance should also be made for the fact that it is only when the matter actually comes on for trial that it will be possible to decide whom to believe.
We all know that the evidence can come out very differently in court from how it comes over on the page: sometimes it is fatally undermined by cross examination but sometimes it is strengthened.
But if the test does contemplate that different courts could reach different views, I have grave difficulty in understanding how the CPS could possibly have decided to stop the prosecution in this case on evidential grounds.
It is admitted that there were two reasonable views of the evidence in this case, that a reasonable prosecutor could have formed the view that it was indeed more likely than not that a court would convict.
That is scarcely surprising.
The time when and place where the claimant suffered injuries are not in doubt.
The injuries are consistent with an assault having taken place.
Nor is the presence of the accused at the scene seriously disputed.
As yet they have offered no alternative explanation of events.
So if there are admittedly two reasonable views of the CPS defined realistic prospect of success in this case, I cannot understand how it was not allowed to proceed, unless the CPS test in fact means something rather different.
Perhaps, in effect, it means, do I, as a reasonable prosecutor, think that it is more likely than not that, when this case gets to court, there will be a conviction? But if that is the test, we are back to a simple better than evens test, which contemplates that juries may indeed be unreasonable and prejudiced, and many cases which are in fact prosecuted now would not be taken forward.
These nuances may seem overly technical, but they matter hugely to the protection of vulnerable people from all forms of neglect and abuse, whether physical or sexual.
The requirement of corroboration was abolished two decades ago.
But one has only to listen to the radio or read the newspapers, especially at present, to know that apparently credible complaints have not been taken further because of so called lack of evidence.
This was presumably not because of a formal requirement of corroboration but because of the difficulty of securing convictions without some independent evidence which confirms the complainants account.
Despite this reluctance, we have made great strides in recent years in understanding that vulnerable witnesses are capable of being believed and in helping them to give the best evidence that they can.
A commendable willingness to prosecute in the face of considerable odds has been part of this advance.
For my part, therefore, I consider that Mr Fitzgeralds alternative case is unanswerable.
How can it possibly have been Parliaments intention to allow the CPS to take over and prevent a private prosecution where a reasonable prosecutor could take the view that a reasonable court is likely to convict? This is to leave the victim (who, as Lord Mance points out, knows whether or not she is the victim of crime) to the chance of which among many no doubt entirely reasonable prosecutors handles her case.
The fact that this is done on paper without any face to face contact with the witnesses only increases the possibility that reasonable prosecutors can take different views.
The possibility of judicial review of the prosecutors decision is not a good enough safeguard, as this case demonstrates only too clearly.
Just as a reasonable prosecutor could take the view that the case should proceed, a reasonable prosecutor could take the view that it should not.
The possibility of bringing a private prosecution, however remote to most people, is a much more effective safeguard.
Now that the new policy has effectively removed it, the victims of crime will have little prospect of challenging the prosecutors decisions.
This is likely to increase, rather than decrease, the risk of inertia or partiality on the part of authority (see Gouriet v Union of Post Office Workers [1978] AC 435, 477).
That risk is already considerable in the sort of problematic cases about which I am most concerned.
Nor am I the only person to be concerned about such cases.
They are likely to involve a violation of the victims rights under article 8 or, in extreme cases, article 3 of the European Convention on Human Rights.
Under both articles, the state has a positive obligation to provide an effective deterrent, in the shape of the criminal law: see, for example, X and Y v The Netherlands (1985) 8 EHRR 235.
That obligation is not fulfilled if a private prosecution, which a reasonable prosecutor could consider more likely than not to succeed before a reasonable court, can be prevented because another prosecutor takes a different view.
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Section 6(1) of the Prosecution of Offences Act 1985 (the 1985 Act) recognises the right of a private person to institute and conduct a private prosecution where the duty of the Director of Public Prosecutions (the DPP) to take over them does not apply.
But the right is subject to s.6(2) of the 1985 Act which confers upon the DPP a power, even when not under a duty to take over the proceedings, nevertheless to do so at any stage.
In determining whether to do so, it is his policy to apply certain criteria, including in particular a criterion relating to the strength of the evidence in support of the prosecution.
Prior to 23 June 2009, the DPP asked himself whether there was clearly no case for the defendant to answer.
If such was his conclusion, he took over the prosecution and discontinued it; otherwise, subject to the application of further criteria, he declined to take it over.
However, on 23 June 2009 he changed his policy in relation to the evidential criterion.
In that regard it became his policy to take over and discontinue a private prosecution unless the prosecution was more likely than not to result in a conviction (the reasonable prospect test).
In August 2010 the Appellant instituted two private prosecutions.
On 16 November 2010 the DPP, acting by the Crown Prosecution Service (the CPS), took over and discontinued the prosecutions.
The Appellant applied for judicial review of the decision to do so.
His case was that the reasonable prospect test, adopted by the DPP on 23 June 2009, is unlawful.
It is common ground that the application of the DPPs former evidential criterion would not have led to him to take over and discontinue the prosecutions.
The Divisional Court of the Queens Bench Division of the High Court dismissed the application and the Appellant now appeals.
The Supreme Court, by a majority of 3:2 (Lord Mance and Lady Hale dissenting), dismisses the appeal.
Lord Wilson gives the lead judgment for the majority.
The critical question for Lord Wilson is not the constitutional importance of the right to private prosecutions, which he recognises [27 29].
It is whether, in applying the reasonable prospect test, the DPP frustrates the policy and objects which underpin s.6 of the 1985 Act. [30, 49] In reaffirming, in qualified terms, the right to maintain a private prosecution in s.6, Parliament could not be taken to have intended that the DPP should decline to exercise his discretion so as to intervene and discontinue a prosecution even if it lacks a reasonable prospect of success. [39] The new tests focus on the likelihood of conviction was a more relevant question than the previous no case to answer test. [34] Lord Wilson gives illustrations of private prosecutions which survive the current test [33], and four further reasons to support his conclusions [36]: (1) Parliament did not expressly confine the discretion
in s.6(2). (2) The main object behind the 1985 Act, reflected in the report of the Royal Commission in 1981, was to establish a nationwide CPS and to achieve consistent standards in instituting and conducting prosecutions.
The reasonable prospect standard was also approved in the Royal Commission report for all prosecutions. [58] (3) A prosecution lacking a reasonable prospect of success draws inappropriately on court resources. (4) A defendant would have a legitimate grievance about being subjected to private prosecution when, by the application of lawful criteria as to the strength of the evidence against him, there would be no public prosecution.
Furthermore, as acknowledged in general terms in paragraph 2.3 of the 2009 Code for Crown Prosecutors, the DPP acts unlawfully if he adopts too rigid an approach in applying his policy towards interventions with a view to discontinuance, which would be amenable to judicial review. [37] Lord Neuberger adds that many of the factors justifying the reasonable prospect test in public prosecutions unfairness to a defendant, costs, use of court time and confidence in the justice system apply to private prosecutions. [57] The right to initiate a private prosecution remains virtually unlimited and those meeting the evidential and public interest tests are allowed to continue save where there is a particular need for the DPP to take over. [60 1] Whilst mindful of cutting down individuals right of access to the courts, the right to conduct a private prosecution has always been subject to being curtailed by the Attorney General through issuing a nolle prosequi [64].
Lord Kerr observes that the right has been modified by successive enactments over time, including the establishment of the office of the DPP itself. [80] There is nothing to suggest that the policy prior to 2009 was immutable or inviolable. [84] The new policy might restrict private prosecutions, but it is not unacceptable as a matter of law. [71] Lord Mance however emphasises the strong historical and constitutional basis for private prosecutions [88 90, 94, 99, 100, 105 6].
He approves the words of Laws LJ in R v Director of Public Prosecutions, Ex Parte Duckenfield [2000] 1 WLR 55, at 68 9, that a reasonable prospect test would emasculate the right afforded by s.6(1). [113] The right of access to justice granted in s.6(1) was not intended to be made ineffective or subverted by s.6(2), which can only be removed by clear words. [107] The unspecified nature of the words in s.6(2) were aimed at public policy not new evidential grounds [114].
The fundamental right in s.6(1) was not undermined by the potential harm resulting from an unsuccessful prosecution.
It provides an important safeguard when an individual prosecutor might have misjudged the evidence. [115] There is no justification for such a radical change of policy. [117 118] Lady Hale expresses doubts over the reasonable prospect test as there could be, as in this case, two reasonable but different views on whether a reasonable court would convict. [126 131] This leaves a victim dependent on which prosecutor handles the case, exacerbated by the fact the exercise is done on the papers without examination of witnesses. [131] The possibility of judicial review is not a sufficient safeguard and the test could raise issues under the European Convention of Human Rights. [132 3]
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This is a case concerning the application of EU rules regarding food hygiene in relation to meat and poultry to certain chicken and pork products manufactured by the appellant, Newby Foods Ltd (Newby).
Newby contends that these products should not be classified as mechanically separated meat (MSM) within point 1.14 of Annex I to EU regulation no (EC) 853/2004 of the European Parliament and of the Council laying down specific hygiene rules for food of animal origin (the Regulation).
Factual and procedural background
Nowadays the butchering of animal carcases in the food industry across the EU is carried out in many instances not by traditional hand butchering but by machines.
These can do the job more economically, but they are less accurate than skilled human butchers.
The machines often leave a significant amount of meat on the bone.
For chickens, breast meat is usually removed by a somewhat different mechanical process, described below, leaving other meat on the carcase.
With a view to making use of this residual meat on animal and poultry carcases, in the 1970s machines were developed that would crush the carcase bones and residual meat together under high pressure to produce, after filtering, what looks like a pure.
The product of this high pressure process is one form of MSM for the purposes of the Regulation (high pressure MSM).
Use of high pressure MSM for the production of food is subject to specific hygiene requirements set out in paragraph 4 of Chapter III of Section V of Annex III to the Regulation.
Other processes have been developed to remove residual meat from the carcase bones under lower pressure, leaving the bones intact.
The product of such low pressure processes is another form of MSM for the purposes of the Regulation (low pressure MSM).
Use of this kind of MSM for the production of food is subject to different hygiene requirements, as set out in paragraph 3 of Chapter III of Section V of Annex III to the Regulation.
The requirements in paragraph 3 apply to the production and use of MSM produced using techniques that do not alter the structure of the bones used in the production of MSM and the calcium content of which is not significantly higher than that of minced meat.
Newby has developed a machine to remove residual meat from carcase bones.
This has been used by Newby to process residual meat on beef, lamb and pork bones after the initial boning of the animal carcases (that is, after the mechanical butchery to remove the main meat from those animal carcases has taken place) and on chicken carcases after the breasts have first been removed by other mechanical processes.
The Newby process has two stages.
In the first stage, meat bearing bones are forced into contact with each other so that meat is removed from the bones by shearing forces.
In a second stage the meat removed in this way is then passed through another machine, which is effectively a mincer, producing a product which looks like minced meat.
This meat product was previously known in the United Kingdom as desinewed meat (DSM), and was regarded by many, including at one stage the Food Standards Agency (FSA), as distinct from MSM.
DSM is not a category of product recognised in EU law.
Under EU law important consequences flow from the classification of different products derived from meat.
In particular, MSM cannot be counted towards the meat content of food and must be produced under stricter hygiene conditions, as laid down in Annex III to the Regulation.
Special rules apply to the labelling of MSM under Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the member states relating to the labelling, presentation and advertising of foodstuffs (as amended by Commission Directive 2001/101/EC of 26 November 2001) (the Labelling Directive).
Furthermore, the sale of MSM produced from lamb and beef bones is prohibited entirely in order to minimise the risk of the spread of Transmissible Spongiform Encephalopathies (TSE), by virtue of regulation (EC) 999/2001 of the European Parliament and of the Council of 22 May 2001 laying down rules for the prevention, control and eradication of certain transmissible encephalopathies (as amended by Commission regulation (EC) 722/2007 of 25 June 2007) (the TSE Regulation).
The commercial value of MSM is less than other forms of fresh meat products, including minced meat.
The issue before the court is how DSM produced using the Newby process should be classified within the scheme of this EU legislation, and in particular under the Regulation.
The European Commission (the Commission) maintains that DSM should be classified as MSM.
It criticised the stance originally taken by the FSA that DSM products should not be classified as MSM and threatened to take action against the United Kingdom if DSM continued to be produced and sold without regard to the restrictions imposed upon MSM.
This action could have involved safeguard measures restricting the export of UK meat products to the rest of the EU.
Notwithstanding the fact that it disagreed with the Commissions classification of DSM as MSM, on 4 April 2012 the FSA issued a moratorium to reflect the Commissions view regarding the effect of the relevant EU legislation (the moratorium).
The moratorium had the result that DSM could no longer be produced from residual meat on beef and lamb bones and could only be produced from residual meat on chicken and pork bones if it were classified and labelled as MSM and not counted towards the meat content of products in which it was present.
Newby brought judicial review proceedings challenging the moratorium, contending that it was based upon an error of law as to the definition of MSM in point 1.14 of Annex I to the Regulation (point 1.14).
On 16 July 2013 Edwards Stuart J made a preliminary reference to the Court of Justice of the European Union (CJEU).
He gave an extended judgment to explain the background to the case: [2013] EWHC 1966 (Admin) (the reference judgment).
(Case C 453/13) judgment dated 16 October 2014 its ECLI:EU:C:2014:2297 (the CJEU judgment), the Tenth Chamber (Judges A Rosas, E Juhsz and D vby (Rapporteur)) of the CJEU made a ruling in the following terms: In Points 1.14 and 1.15 of Annex I to regulation (EC) no 853/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific hygiene rules for food of animal origin must be interpreted as meaning that the product obtained by the mechanical removal of meat from flesh bearing bones after boning or from poultry carcases must be classified as mechanically separated meat within the meaning of that point 1.14, since the process used results in a loss or modification of the muscle fibre structure which is greater than that which is strictly confined to the cutting point, irrespective of the fact that the technique used does not alter the structure of the bones used.
Such a product cannot be classified as a meat preparation within the meaning of that point 1.15.
After this ruling, Newby abandoned its challenge to the moratorium so far as concerned the prohibition against producing DSM from residual meat on lamb and beef carcases.
It is relevant to note here that sheep and cows are ruminant animals, which is a significant category for the purposes of the TSE Regulation: see below.
However, Newby continued its challenge to the moratorium as regards the requirement that DSM produced from residual meat on pork and chicken carcases should be treated as MSM and labelled as such.
In the resumed proceedings before the national court, Newby filed further evidence in support of its case that the pork and chicken DSM it produces should not be categorised as MSM.
In a judgment of 23 March 2016 [2016] EWHC 408 (Admin) (the main judgment) Edwards Stuart J concluded that the pork and chicken meat products resulting from the first stage of the Newby process are not MSM.
On this view, under the EU legislation pork and chicken DSM could be counted towards the meat content of a product, did not have to be labelled as MSM and was not subject to the special hygiene regime in paragraph 3 of Chapter III of Section V of Annex III to the Regulation.
The judge also found that such DSM was not a product derived from bone scrapings, which is another category of meat product under the EU legislation.
The judge granted the FSA permission to appeal to the Court of Appeal on limited grounds.
On the appeal, the FSA submitted that in the main judgment the judge had erred in departing from what the FSA argued was the clear ruling in the CJEU judgment that the pork and chicken products of Newbys process are, like the lamb and beef products of that process, properly to be classified as MSM within the meaning of point 1.14.
The Court of Appeal [2017] EWCA Civ 400 allowed the appeal and dismissed the challenge to the moratorium.
The Court of Appeal also found that Edwards Stuart J had been entitled to find that pork and chicken DSM is not a product derived from bone scrapings for the purposes of the EU legislation.
Newby now appeals to this court in relation to the decision of the Court of Appeal regarding the proper interpretation of point 1.14.
Regulation no 853/2004
The recitals to the Regulation include the following: Whereas: (2) Certain foodstuffs may present specific hazards to human health, requiring the setting of specific hygiene rules.
This is particularly the case for food of animal origin, in which microbiological and chemical hazards have frequently been reported. (9) The principal objectives of the recasting are to secure a high level of consumer protection with regard to food safety, in
particular by making food business operators throughout the
Article 2(3) of the Regulation provides that the definitions in Annex I to the Regulation shall apply.
Paragraph 1 of Annex I is headed Meat and sets out various definitions relevant to that topic, including as follows: Community subject to the same rules, and to ensure the proper functioning of the internal market in products of animal origin, thus contributing to the achievement of the objectives of the common agricultural policy. (20) The definition of mechanically separated meat (MSM) should be a generic one covering all methods of mechanical separation.
Rapid technological developments in this area mean that a flexible definition is appropriate.
The technical requirements for MSM should differ, however, depending on a risk assessment of the product resulting from different methods. 1.1 Meat means edible parts of the animals referred to in points 1.2 to 1.8, including blood. [cows, sheep and pigs fall within the scope of point 1.2 and farmed chickens are poultry within the scope of point 1.3] 1.9 and dressing. 1.10 Fresh meat means meat that has not undergone any preserving process other than chilling, freezing or quick freezing, including meat that is vacuum wrapped or wrapped in a controlled atmosphere.
Carcase means the body of an animal after slaughter 1.13 Minced meat means boned meat that has been minced into fragments and contains less than 1% salt. 1.14 Mechanically separated meat or MSM means the product obtained by removing meat from flesh bearing bones after boning or from poultry carcases, using mechanical means resulting in the loss or modification of the muscle fibre structure. 1.15 Meat preparations means fresh meat, including meat that has been reduced to fragments, which has had foodstuffs, seasonings or additives added to it or which has undergone processes insufficient to modify the internal muscle fibre structure of the meat and thus to eliminate the characteristics of fresh meat.
In the EU legislation, no definition is given of boning in relation to cow, pig and sheep carcases.
It is common ground that this term refers to the initial process of removal of meat from a carcase.
As regards the carcases of cows, pigs and sheep, the definition of MSM in point 1.14 refers to removal of the meat left on the bones of those animals after the initial phase of butchering has taken place (typically, as described above, this initial butchering is by mechanical means): ie what I have called the residual meat.
As regards the carcases of poultry, the definition of MSM in point 1.14 simply refers to removal of meat from those carcases (ie from the whole body of the bird: see point 1.9), without referring to any previous process of boning or removal of meat from the bird.
The reference judgment
In his judgment accompanying the reference to the CJEU, Edwards Stuart J set out relevant findings and expressed his provisional conclusions.
He emphasised that the DSM produced by Newbys process was very different in texture and appearance from high pressure MSM, which is nothing like fresh meat.
However, he was satisfied that the muscle fibre structure of that DSM underwent some modification during the process.
Accordingly, therefore, as he put it, if it is sufficient for it to be classified as MSM that there has been any modification of the muscle fibre structure, then it is MSM (para 60, emphasis in original).
The position of the FSA, reflecting the view of the Commission, was that any such modification was sufficient to mean that the residual meat removed by the Newby process is MSM.
The submission of Newby was that something more, in the form of significant modification of the muscle fibre structure of the meat so removed, was required before the product of that process fell to be classified as MSM.
Newby relied on analysis by microscopy by experts to maintain that the modification of muscle fibre in the residual meat removed by stage one of its process was not at a significant level such that it became MSM, and submitted that stage two of the process was simply equivalent to mincing of the meat so recovered.
The judge referred, at para 61, to the wording of point 1.15 of Annex I to the Regulation.
In his view the words and thus to in that provision indicated that there had to be a causal link between the loss or modification of the muscle fibre structure and the elimination of the characteristics of fresh meat.
Furthermore, he did not consider that this wording could be construed to mean that any diminution, however minor, of those characteristics amounts to elimination of those characteristics.
It seemed to the judge that there had to be at least a significant diminution in those characteristics before they could be said to be eliminated.
He considered that in this context the relevant characteristics of fresh meat are its organoleptic properties including its taste, smell and texture.
The judge also referred, at paras 62 63, to an alleged inconsistency in the approach to the application of the Regulation by the Commission and by the FSA in its moratorium, as regards the treatment of chicken breasts removed from poultry carcases.
According to Newbys submission, as recorded by the judge, chicken breasts are commonly removed from the carcass by mechanical means and this inevitably causes some modification of the muscle fibre structure at the point where the meat is cut, which on the approach of the Commission and the FSA to point 1.14 would appear to mean that meat removed by that process would fall within the definition of MSM; yet according to the position of the Commission in its dealings with national authorities, chicken breast meat produced in this way was properly to be categorised as fresh meat for the purposes of the Regulation, and not as MSM.
Newby cited this as an example of the absurd consequences that it maintained would follow if any damage to the muscle fibre structure were to lead to the meat product in question being classified as MSM.
In the alternative, Newby submitted that it demonstrated an inconsistency of the application of the Regulation.
The judge stated, at para 64, that he was satisfied on the evidence before him that the product of Newbys two stage process had not resulted in the elimination of the characteristics of fresh meat.
Furthermore, he did not consider that there had been a sufficient diminution of those characteristics to prevent the product falling within the definition of meat preparations in point 1.15 of Annex I. Accordingly, the judges provisional conclusion was that the DSM produced by Newbys process did not fall to be classified as MSM.
However, the position was not acte clair, so the judge made a preliminary reference to the CJEU, asking the following questions: i) Do the words loss or modification of the muscle fibre structure in point 1.14 of Annex I to regulation no 853/2004 mean any loss or modification of the muscle fibre structure that is visible using standard techniques of microscopy? ii) Can a meat product be classified as a meat preparation within point 1.15 of Annex I where there has been some loss or modification of its muscle fibre structure that is visible using standard techniques of microscopy? iii) If the answer to [the first question] is no and the answer to [the second question] is yes, is the degree of loss or modification of the muscle fibre structure that is sufficient to require each product to be classified as MSM within point 1.14 of Annex I the same as that required to eliminate the characteristics of fresh meat within point 1.15 of that annex? iv) To what extent must the characteristics of fresh meat have been diminished before they can be said to have been eliminated within the meaning of point 1.15? v) If the answer to [the first question] is no, but the answer to [the third question] is also no, what degree of modification to the muscle fibre structure is required in order for the product in question to be classified as MSM? vi) On the same assumption, what criteria should be used by national courts in determining whether or not the muscle fibre structure of the meat has been modified by that degree?
The CJEU judgment
The CJEU proceeded to a judgment without the benefit of an Advocate Generals opinion or, despite an application by Newby, an oral hearing.
It delivered its judgment on 16 October 2014.
The CJEU set out the following factual account, which is not controversial: 21.
The referring court states that Newby Foods has developed a machine which is capable of removing the residual meat attached to the bones after the main part of the meat had been removed from them, without crushing those bones or liquefying the residual tissues.
That machine, which operates essentially by means of shearing, can be distinguished from those operating at high pressure, which turn the residual tissues into a viscous paste.
The resulting product, which, at the end of the first production stage, passes through a perforated plate with 10mm diameter apertures, is then processed in another machine which minces it by making it pass through a filter with 3mm diameter apertures.
This product, which looks like ordinary minced meat, is marketed in the United Kingdom as desinewed meat.
As regards its appearance, that product is clearly distinguishable from mechanically separated meat obtained at high pressure.
According to the applicant in the main proceedings, no one would classify the product obtained by means of its machine as anything other than meat. 22.
Also according to the applicant in the main proceedings, the desinewed meat which it produces contains only very rarely particles of bones, bone skin or bone marrow; however, the presence of occasional shards of bone cannot be excluded.
In the proceedings before the CJEU, Newby was supported by the United Kingdom government (presenting the view of the FSA) in its submissions against the view of the Commission regarding the proper interpretation of point 1.14.
The CJEU summarised the key submission of Newby, as supported by the FSA, at para 23 as follows: According to the applicant in the main proceedings and the FSA, by reference to the documents mentioned in paras 18 and 19 of the present judgment, the product obtained by means of that process does not correspond to the definition of mechanically separated meat within the meaning of regulation no 853/2004, in the absence of significant loss or modification of the muscle fibre structure, that is to say, in the absence of a change which is sufficient to eliminate the characteristics of fresh meat.
That product should rather be classified as meat preparations within the meaning of point 1.15 of Annex I to that regulation.
The CJEU reformulated the questions referred, at para 40: By its questions, which it is appropriate to examine together,
the referring court is essentially asking whether points 1.14 and
The CJEU addressed the reformulated questions in the following way at paras 41 to 43: 1.15 of Annex I to regulation no 853/2004, which contain the definitions of the concepts of mechanically separated meat and meat preparations respectively, must be interpreted as meaning that the product obtained by the mechanical removal of meat from flesh bearing bones after boning or from poultry carcases must be classified as mechanically separated meat within the meaning of that point 1.14 only where the process used results in a loss or modification of the muscle fibre structure which is significant, while the classification as meat preparations within the meaning of point 1.15 must be chosen where that loss or modification is not significant.
Secondarily, in the event that that interpretation should prevail, the referring court seeks to ascertain what degree of modification or loss is required for that modification or loss to have to be regarded as significant and what process should be used in order to determine whether the degree thus required has been attained. 41.
It must be stated at the outset that the definition of the concept of mechanically separated meat set out in point 1.14 of Annex I to regulation no 853/2004 is based on three cumulative criteria which must be read in conjunction with one another, namely (i) the use of bones from which the intact muscles have already been detached, or of poultry carcases, to which meat remains attached, (ii) the use of methods of mechanical separation to recover that meat, and (iii) the loss or modification of the muscle fibre structure of the meat thus recovered by reason of the use of those processes.
In particular, that definition does not make any distinction as regards the degree of loss or modification of the muscle fibre structure, with the result that any loss or modification of that structure is taken into consideration within the context of that definition. 42.
Consequently, any meat product which satisfies those three criteria must be classified as mechanically separated meat, irrespective of the degree of loss or modification of the muscle fibre structure, in so far as, by reason of the process used, that loss or modification is greater than that which is strictly confined to the cutting point. 43.
In the case of use of mechanical processes, that third criterion allows mechanically separated meat within the meaning of point 1.14 of Annex I to regulation no 853/2004 to be distinguished from the product obtained by cutting intact muscles; the latter product does not show a more general loss or modification of the muscle fibre structure, but reveals a loss or modification of the muscle fibre structure which is strictly confined to the cutting point.
Consequently, chicken breasts which are detached from the carcase of the animal by mechanically operated cutting rightly do not constitute mechanically separated meat.
At paras 44 to 48 the CJEU stated that, as regards the products which meet the criteria for MSM, the Regulation did not make any distinction other than that stemming from paragraphs 3 and 4 of Chapter III of Section V of Annex III to the Regulation, which drew the distinction between low pressure MSM and high pressure MSM referred to above.
At para 46, referring to low pressure MSM, the CJEU said: This type of product, which corresponds to mechanically separated meat obtained at low pressure, like the product at issue in the main proceedings, may, by way of exception, be used in certain meat preparations within the meaning of point 1.15 of Annex I to regulation no 853/2004, namely those intended to undergo heat treatment prior to consumption, whereas, in accordance with the definition given in point 1.15, meat preparations may in principle be obtained only from fresh meat, possibly minced into fragments that is to say, meat deriving from intact muscles to the exclusion of bone scrapings.
The same type of product may also be used in all of the meat products within the meaning of point 7.1 of that annex.
Having referred, by way of contrast, to high pressure MSM at para 47, the CJEU stated at para 48 that the distinction between different types of MSM made in paragraphs 3 and 4 of Chapter III of Section V of Annex III was reflected in the definition of MSM in point 1.14, with the word modification being intended to refer to MSM produced by use of methods of mechanical separation operating at low pressure.
The CJEU went on: 49.
That scheme, which consists in the arrangement of all mechanically separated meat into a single category subdivided into two subcategories of products which present different health risks and may consequently be intended for different uses, is explained in recital 20 in the preamble to regulation no 853/2004, which was also inserted at the same stage of the drafting of that Regulation.
That recital announces, for that category of products, (i) a generic definition stated in flexible terms in such a way as to cover all methods of mechanical separation and to remain appropriate notwithstanding the rapid technological developments in that area, and (ii) technical requirements which differ depending on a risk assessment of the product resulting from different methods. 50.
That recital, which clarifies perfectly the EU legislatures intentions, adequately demonstrates that the EU legislature took into consideration from the outset the possibility that new low pressure methods for the production of mechanically separated meat might be developed, such as, as the case may be, that used by the applicant in the main proceedings, assuming that that process demonstrates some innovation vis vis methods using techniques which do not alter the structure of the bones used, of which the EU legislature was aware at the time when regulation no 853/2004 was drafted.
At paras 51 to 54 of its judgment the CJEU compared and contrasted the definition of MSM in point 1.14 and meat preparation in point 1.15 of Annex I to the Regulation.
At para 52 it said that classification as meat preparations within point 1.15 of products which, like that at issue in the main proceedings, satisfy the criteria for [MSM] is excluded by the definition there set out.
At para 53 it noted that the production of MSM involved neither of the processes referred to in point 1.15, namely the addition of foodstuffs, seasoning or additives or processing within the meaning of article 2(1)(m) of regulation no 852/2004; it stated that: on the contrary, a product such as that at issue in the main proceedings corresponds to the notion of an unprocessed product within the meaning of article 2(1)(n) of that Regulation.
The CJEU further noted that the concept of meat preparations has a direct link not with MSM but, rather, with the concepts of fresh meat and minced meat which are, in principle, the only usable raw material, and secondly, with the concept of meat products within point 7.1 of Annex I to the Regulation.
It then stated: 55.
In addition, as the French Government suggests, a classification of products, such as that at issue in the main proceedings, as fresh meat within the meaning of point 1.10 of Annex I to regulation no 853/2004 is also excluded.
Disregarding their other characteristics, such products consisting in fragmented meat would be capable of coming only within the concept of minced meat within the meaning of point 1.13 of that annex, a concept from which they must, however, be excluded by reason of point 1(c)(iv) of Chapter II of Section V of Annex III to that Regulation as products obtained from bone scrapings.
At paras 56 and following the CJEU pointed out, further, that a classification of products as MSM had significant consequences with reference to the TSE Regulation and the Labelling Directive.
As regards the TSE Regulation, at paras 57 to 59 the CJEU noted that according to that Regulation an industrial method which produces MSM within the meaning of point 1.14 cannot be used for the processing of bovine, ovine and caprine raw material; that Contrary to the view advanced in this regard by the applicant in the main proceedings, the application of that classification [ie as MSM] to products such as that at issue in the main proceedings in order to conclude that their production from raw material obtained from ruminants is prohibited follows from the implementation of the intention expressed in clear terms by the EU legislature within the context of the measures adopted with a view to combatting those diseases (para 58); that it is apparent from recital 11b to the TSE Regulation that the EU legislature had particularly in mind the fact that MSM could contain portions of bones and of the periosteum; and that it followed from the reference judgment that the same applies in the case of a product such as that produced by [Newby] (para 59).
As regards the Labelling Directive, at paras 60 to 66 the CJEU noted that in accordance with Annex I to that directive the classification of a product as MSM within the meaning of point 1.14 implies a prohibition on labelling the product as meat rather than as MSM; an important objective of that directive is to ensure that labelling should not be such as could mislead a purchaser; the provisions of that directive and recitals 1 and 7 to Directive 2001/101 indicate that MSM, which differs significantly from meat as perceived by consumers, must be excluded from the scope of that concept for the purposes of labelling and presentation; those recitals express the findings that although MSM is technically fit for human consumption in so far as it is not obtained from ruminants, it is none the less a product of inferior quality because it consists of residual meat, fat and connective tissue which remain attached to the bones after the main part of the meat has been removed (para 63); and that to interpret the EU legislation so as to allow a product such as [Newby] produces, having an appearance comparable to minced meat, such that it could not easily be differentiated by consumers from minced meat derived from better quality meat, would defeat this intended objective of the Labelling Directive and another of its objectives, namely to prevent differences in the labelling of foodstuffs which might impede the free circulation of those products and lead to unequal conditions of competition.
The CJEU expressed its conclusion at para 67 in terms reflected in the dispositif set out at para 9 above.
The main judgment in the national court
As set out above, when the case returned to the national court for further hearing, Newby dropped its challenge to the moratorium in so far as it covered the products of its process as applied to lamb and beef carcases.
Newby maintained its challenge to the moratorium as regards its application to its process as applied to pork and chicken carcases.
The further hearing took place on 9 and 10 February 2016.
Newby filed additional evidence for this hearing.
According to the evidence before the judge, the Newby process was applied to pork meat left on bones after the initial stage of butchery of the carcase (ie after the de boning phase) and to chicken meat left on chicken carcases after an initial stage of removal of the chicken breasts by a different mechanical process, involving scraping the chicken breasts cleanly from the breast bone.
The further evidence about treatment of chicken carcases also indicated that before chicken breasts were removed in this way, the wishbone would be cut out of the meat.
There was some evidence to suggest that certain methods of butchering pork carcases might leave some fully intact muscles in place after the initial phase of cutting meat from the carcase.
In his main judgment, handed down on 23 March 2016, Edwards Stuart J correctly observed that it was clear from the judgment of the CJEU that it considered that the product of the first stage of Newbys process should be classified as MSM.
However, Newby submitted that in the light of the CJEUs interpretation of point 1.14 this was not an available conclusion on the facts, and that it was for the national court to establish the facts and apply the guidance given by the CJEU to those facts.
The judge rejected a submission on behalf of Newby that since what is fed into Newbys machine consists of bones with a fairly substantial amount of meat attached it does not consist of bones from which the intact muscles have been detached and accordingly did not satisfy the first criterion for MSM formulated by the CJEU at para 41 of its judgment.
The judge observed that if this submission were correct even a high pressure process of crushing the meat and bones to a slurry would not be capable of producing MSM.
Newby now accepts that the judge was right about this and that the first criterion for MSM set out by the CJEU is satisfied in relation to the products of its process.
It was and is common ground that the second criterion for MSM, namely the use of mechanical separation to recover the residual meat left on the bones or poultry carcases, is satisfied in relation to the products of Newbys process.
There is an extended discussion in the main judgment at paras 66 to 85 regarding the third criterion for MSM set out in para 41 of the judgment of the CJEU and the discussion at paras 42 and 43 concerning the cutting point.
The judge correctly recognised that the CJEU in its judgment had interpreted the EU legislation with a view to achieving clarity in the application of point 1.14 rather than making it depend on case by case assessment by microscopic examination of muscle fibres, but said that by introducing the cutting point explanation in doing so, it may have thrown the baby out with the bath water.
The CJEU had provided no elaboration of what was meant by the cutting point in the context of Newbys process.
Cutting in this context must mean severance or separation (at para 66).
The judge identified two principal possible readings of what the CJEU meant by cutting point: (i) on a narrower reading, it refers to the cutting of intact muscles, or (ii) on a more expansive reading, it refers to the points at which the meat has been severed or separated during the process of recovering it.
The FSA, in line with the position of the Commission, submitted that the narrower reading at (i) is correct, and that since the meat recovered by the Newby process was taken after the original cutting of intact muscles during the initial de boning phase (in relation to pork) or after the initial phase of removal of chicken breasts in the case of chicken carcases, it followed that this recovered meat should be categorised as MSM.
Newby, on the other hand, submitted that the more expansive reading at (ii) is correct; that microscopic examination of the strips of meat produced after the first stage of its process showed that the muscle fibre structure was only affected at the points where they had been removed from the bones or separated from other pieces of meat in the initial phase of removal of meat from a carcase or in the shearing involved in Newbys process; that therefore modification of the muscle fibre structure was strictly confined to the cutting points as so understood; and that accordingly this recovered meat did not meet the third criterion for MSM as laid down by the CJEU at para 41 of its judgment, as explained at paras 42 and 43.
As the domestic court had further and better evidence regarding the state of the meat strips produced in the first stage of the Newby process than had been available to the CJEU, the domestic court should interpret the CJEUs judgment and apply it to the facts as appeared from that evidence.
The judge accepted the submission by Newby, holding that the expansive reading of the notion of the cutting edge at (ii) above is correct.
According to him, the cutting point of the muscle fibre produced by the first stage of the Newby process refers to every severed edge of the pieces of flesh that emerge from that process: para 85.
Since, on the evidence before him, it was only at the cutting points in this sense that there was modification of the muscle fibre structure of the strips of meat produced at the first stage of the Newby process, this meat did not fall to be categorised as MSM.
This appeared to mean that the product of this stage of the Newby process could be used in the second stage of that process to prepare what could be classified under the Regulation as minced meat and labelled and sold as such, although the judge expressed no final positive view to that effect: see paras 86 94.
In the course of his discussion the judge found on the evidence that the product of the first stage of the Newby process could not be regarded as bone scrapings, contrary to the view of the CJEU at para 55 of its judgment.
In due course, the Court of Appeal held that this was a legitimate finding which was open to him to make, and there is no cross appeal to this court regarding this point.
In reaching his view regarding the interpretation of the notion of the cutting point, as used by the CJEU, the judge accepted the submission of Mr Mercer that he should have regard to article 11 of the Treaty on the Functioning of the European Union (TFEU).
Article 11 TFEU provides that environmental protection requirements must be integrated into the definition and implementation of the EUs policies and activities, in particular with a view to promoting sustainable development.
The judge agreed that he should interpret point 1.14 and paras 41 and 42 of the CJEUs judgment in a manner which promotes environmental protection rather than undermines it.
According to the judge, on Newbys proposed interpretation of the CJEUs judgment there would be less wastage of meat suitable for human consumption and so fewer pigs would have to be raised and slaughtered.
The judge also referred to the further evidence regarding removal of wishbones before chicken breasts were scraped from chicken carcases by mechanical processes, which Mr Mercer submitted meant that chicken breasts were not intact muscles at the point they were removed from chicken carcases: para 76.
The judge said that he was not in a position to find whether or not Mr Mercers assertions about the process of removal of the wishbone were correct, but observed that it would be an absurdity if the prior removal of the wishbone section of the breast condemned the remainder of the breast to being classed as MSM, which would be avoided on his preferred reading of what the CJEU meant by the cutting edge: para 77.
The judge did not make further mention here of the fact that, as noted by him in the reference judgment, the Commission took the view that mechanically removed chicken breasts do not fall to be categorised as MSM, but as fresh meat.
As appears from correspondence in evidence, that does in fact continue to be the Commissions view.
The judgment of the Court of Appeal
The Court of Appeal allowed the appeal by the FSA in relation to the question whether the product of the first stage of Newbys process should be categorised as MSM.
The court held that the judgment of the CJEU made it clear that it should be so categorised.
The court therefore dismissed Newbys judicial review challenge to the moratorium, as it applied in relation to the application of its process to produce pork and chicken meat.
The lead judgment was delivered by Lloyd Jones LJ (as he then was), with whom Beatson and Moylan LJJ agreed.
Lloyd Jones LJ subjected paras 41 to 43 of the judgment of the CJEU to careful analysis.
At para 41 the CJEU had given a clear answer adverse to Newbys principal submission on the reference.
In his view, the qualification to the category of MSM as defined in point 1.14 introduced by the CJEU in paras 42 and 43 of its judgment by reference to the notion of the cutting point was directed to answering the argument of Newby that the mechanical removal of chicken breasts from a chicken carcase would necessarily involve a loss or modification of muscle fibre structure at the point where the breast was cut away with the result that, on the Commissions interpretation of point 1.14, all mechanically separated chicken breasts would have to be classified as MSM.
On Lloyd Jones LJs reading of the CJEUs judgment, that qualification is limited to the cutting of intact muscles: para 39.
He set out his reasoning as follows: 40.
First, this is apparent from other passages in the judgment.
At para 41 the courts paraphrase of [point] 1.14 emphasises in the case of the first criterion the use of bones from which the intact muscles have already been cut.
At para 43 the court states in terms that the third criterion allows MSM to be distinguished from the product obtained by cutting intact muscles, explaining that the latter product reveals a loss or modification of the muscle fibre structure which is strictly confined to the cutting point.
It then goes on to state in terms that chicken breasts detached from the carcase by mechanically operated cutting rightly do not constitute MSM.
There is a further reference to the removal of intact muscles from bones at para 45.
Secondly, if the cutting point exception were given the wide reading for which Newby contends it would exclude from classification as MSM products made by repeated mechanical cutting of meat left on bones or carcases from which intact muscles had previously been removed.
The only loss or modification of the muscle fibre structure in such a case would be at the cutting points, however numerous they were.
That would, in my view, defeat the purpose of the classification.
Thirdly, the paragraphs of the judgment of the CJEU in which it applies the principle to the particular facts of this case demonstrate that the court cannot have intended the cutting point exception to bear such a wide meaning.
I am, therefore, unable to agree with the judges broad 41. interpretation of the qualification as referring to every severed edge of the pieces of flesh that emerge from the Newby process.
The qualification relates to cutting intact muscles from the animal.
In the case of the Newby process, the product is not obtained by cutting intact muscles but by cutting or otherwise removing the meat left on the carcase after the intact muscle has been removed.
Mechanical separation of residual meat from bones produces separation, shearing or cutting and hence modification to the muscle fibre structure at other points in addition to the point from which the intact muscles have been removed.
The CJEU concluded as a matter of principle that meat which is mechanically separated from bones from which the intact muscles have already been detached shows a more general loss or modification of muscle fibre structure beyond the cutting point. 42.
I have referred earlier to the fact that when the matter returned to the referring court it was submitted on behalf of Newby that since the bones fed into the machine for the first stage of the Newby process had substantial amounts of meat attached, the Newby process did not satisfy the first of the criteria identified by the CJEU ie it was said that it did not involve the use of bones from which the intact muscles have already been detached or poultry carcases, to which meat remains attached.
The judge rejected that argument, correctly in my view, on the ground that if that were correct even a high pressure process of crushing such meat and bones to a slurry would be incapable of producing MSM.
As Mr Coppel points out, it must follow that the product of Newbys process is not obtained by cutting intact muscles.
The intact muscles have already been detached from the bones.
In the case of chicken carcases the requirement that intact muscles have already been detached does not apply.
It seems to me that this explains why the CJEU had to address the question of the cutting point in the context of the three limbs of the definition of MSM.
I should add that to the extent that there may be an intact muscle left on a chicken carcase after removal of the breast or on a pork bone after the removal of the prime cuts of pork, it may well be that the process would involve the cutting of intact muscles within the qualification created by the CJEU.
However, the product of the first stage of the Newby process would still in part comprise MSM and the entire product would have to be classified as MSM. 43.
In coming to his conclusion the judge referred to the need to have regard to article 11 TFEU and to interpret point 1.14 of the Regulation and paras 41 and 42 of the judgment of the CJEU in a manner that promotes environmental protection rather than undermines it.
He thought this a powerful point.
He considered that to treat DSM produced by Newby as MSM was to waste a product that the informed observer would regard as meat, albeit not of the best quality.
He stated that there was an environmental cost for treating this product as MSM.
More pigs would have to be raised, slaughtered and butchered in order to make up the shortfall.
He considered this contrary to the objective of promoting sustainable development.
While this might be an appropriate factor to take into account in interpreting an EU measure in other circumstances, there is no scope for such an approach here.
The CJEU was made aware of the argument that classifying Newbys products as MSM was a waste of good meat.
Nevertheless it attached no weight to that consideration.
The intention of the CJEU is clear.
Moreover, the preamble to the Regulation (recital 9) makes clear that the principal objective of the classification is to secure a high level of consumer protection with regard to food safety.
The reading favoured by the judge would undermine that objective.
Lloyd Jones LJ recognised that in a case involving a reference to the CJEU on a point of interpretation of EU law it is for the national court to find the relevant facts and to apply the law as stated by the CJEU to those facts once found, as explained in Revenue and Customs Comrs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15; [2013] 2 CMLR 51, para 54 per Lord Reed.
However, Lloyd Jones LJ did not accept that there had been any material change in the factual picture given by the further evidence adduced by Newby as compared to that available to the CJEU when it delivered its judgment; according to him, the statement of law set out in paras 41 to 43 of the judgment of the CJEU was conclusive of the dispute regarding the lawfulness of the FSAs moratorium and left no scope for argument as to the application of the law to the facts: para 50.
Although Lloyd Jones LJ noted at para 30 the observations of Edwards Stuart J at paras 76 77 in the main judgment regarding Mr Mercers submissions about the significance of the cutting of wishbones from chicken carcases before the removal of chicken breasts, the Lord Justice did not revert to this point in his analysis when allowing the FSAs appeal.
The appeal to this court
For the appeal to the Supreme Court, the court gave permission for interventions by way of written submissions on behalf of the National Farmers Union and also on behalf of the Association of Independent Meat Suppliers, the British Meat Processors Association and the British Poultry Council.
They all supported the case for Newby.
In their application to intervene, dated 14 August 2018, the last three interveners also indicated that they wished to adduce further evidence, but did not file such evidence with their application.
The question of the admission of such further evidence was postponed to the hearing of the appeal.
The further evidence which was eventually filed and served comprised witness statements from a representative of each of those organisations, being a statement of Norman Bagley dated 5 January 2019, a statement of Nicholas Allen dated 4 January 2019 and a statement of Richard Griffiths dated 4 January 2019, respectively.
The statements of Mr Bagley and Mr Allen provided additional information regarding pork production and current trends regarding automation in meat production and canvassed concerns of members of the meat industry regarding possible implications of the judgment of the Court of Appeal for that industry.
The statement of Mr Griffiths provided an overview of poultry production and additional detail regarding the processes by which meat is removed from chicken carcases.
The FSA objected to the admission of this further evidence so late in the day.
The court read the new witness statements in advance of the hearing on a de bene esse basis and viewed certain video material referred to in the statements on the same basis.
Having heard the application to adduce this new evidence and the opposing submissions, the court refuses permission to admit it in the appeal.
It would be unfair to the FSA for the evidence to be admitted so late in the day.
The way in which the Second to Fourth Interveners went about attempting to introduce the further evidence on the appeal to this court was very unsatisfactory.
They should have made the fresh evidence available at the time of their application to intervene and to adduce further evidence (that is, in August 2018), in good time before the hearing and the filing of printed cases by the parties to the appeal.
In that way the court could have determined well in advance of the preparation of printed cases by the parties to the appeal and well before the hearing whether fresh evidence was or was not to be admitted for consideration on the hearing of the appeal.
Instead, the Second to Fourth Interveners only filed the fresh evidence after Newbys printed case was filed on 19 December 2018 and just days before the FSA filed its printed case on 9 January 2019.
The FSA did not have a fair opportunity to take this fresh evidence into account in preparing its printed case, let alone to respond to it by seeking to file further evidence itself.
Furthermore, now that the appeal has been heard, it is clear that it turns on issues of law and that the fresh evidence could have no relevant bearing on the outcome of the proceedings.
I turn to the merits of the appeal.
In my judgment the appeal should be dismissed, essentially for the reasons given by the Court of Appeal.
The Court of Appeal has correctly understood the judgment of the CJEU and was right to adopt the narrow reading it did of the notion of the cutting point as used by the CJEU.
On this appeal the focus has been on the proper characterisation of the products of the Newby process after stage one, which take the form of strips of meat removed from bones.
It is now common ground that these products meet the first two criteria for categorisation of MSM for the purposes of point 1.14 as set out by the CJEU at para 41 of its judgment.
The issue, therefore, is whether these products meet the third criterion (ie are characterised by the loss or modification of the muscle fibre structure of the meat recovered by use of methods of mechanical separation), in light of the qualification regarding that criterion introduced by the CJEU in paras 42 and 43.
In my view, Newbys products satisfy the third criterion for classification as MSM, as the Court of Appeal correctly held.
This is clear from the answer the CJEU gave at para 41 to the referred questions as summarised in para 40; from the language which it used in its discussion of the cutting point qualification and elsewhere in its judgment; from the clear and repeated statements it made that Newbys products should be categorised as MSM; and from the wider contextual factors derived from other parts of the EU legislative regime on which the CJEU relied as supporting its interpretation of point 1.14.
To begin with, the way in which the CJEU formulated the first criterion for classification as MSM in para 41 of its judgment is significant: the use of bones from which the intact muscles have already been detached, or of poultry carcases, to which meat remains attached.
This is the CJEUs paraphrase of the following words in point 1.14: removing meat from flesh bearing bones after boning or from poultry carcases.
As regards animals other than poultry, according to point 1.14, the first criterion for MSM is only satisfied after the carcases have been through a process of boning.
This is not a term used in relation to poultry carcases.
In its formulation, however, the CJEU has given its interpretation of the concept of boning as the detachment of intact muscles from the carcase, which is to say in the initial act of removal of meat from the carcase.
This is also reflected in its description in para 63 of the meat used for MSM as residual meat, fat and connective tissue which remain attached to the bones after the main part of the meat has been removed.
This notion of residual meat after the main part of the meat has been removed from a carcase appears equally apt in respect of chicken carcases after the removal of the breasts by the usual simple mechanical processes used in the industry.
The CJEUs formulation of the first criterion indicates that this is its view.
It speaks of meat remaining attached to poultry carcases, rather than simply referring to poultry carcases, which would include all the meat on the carcase.
In other words, by its formulation of the first criterion, the CJEU had already commenced the analysis, amplified in paras 42 and 43 of its judgment, by which it equates the initial removal of meat from animal carcases with the initial removal of chicken breasts from chicken carcases.
Functionally, they are equivalent processes and the CJEU treats them as such.
This reading of the CJEUs judgment is not compatible with Newbys submissions as to what the CJEU meant.
In the last sentence of para 41 of its judgment, the CJEU gave a clear answer to the principal issue raised by the national court by its questions in the reference judgment.
The concept of mechanically separated meat does not depend upon it being established that the process referred to in point 1.14 results in a loss or modification of the muscle fibre structure which is significant (see the terms of the question posed on the reference as formulated by the CJEU in para 40).
This was, of course, an outright rejection of Newbys submission as to the proper interpretation of point 1.14.
In para 42 the CJEU reiterated the point that the definition of MSM does not depend upon an analysis of the degree of loss or modification of the muscle fibre structure removed by the Newby process or equivalent processes.
Instead, the CJEU held that a much clearer line of demarcation applies.
Meat removed from a carcase will not be MSM if it is removed by mechanical means in the first phase of cutting meat from the whole carcase, but will generally be MSM if it is removed by mechanical means thereafter.
For animals other than poultry, this is explained by the focus on the prior detachment of the intact muscles as the critical aspect of the first criterion for MSM in para 41, together with the CJEUs emphasis in para 42 that to escape categorisation as MSM any loss or modification of muscle fibre structure must be strictly confined to the cutting point.
It is straightforward to know whether a carcase has gone through the initial phase of having meat cut from it, and there is no requirement for refined processes of microscopic investigation to be applied.
In the first sentence of para 43 of its judgment, the CJEU emphasised that this is the proper interpretation of point 1.14.
Again, it explains that on its interpretation of point 1.14 there is a clear distinction to be drawn between the product obtained by cutting intact muscles, which involves loss or modification of the muscle fibre structure which is strictly confined to the cutting point, and MSM.
This is the context for the courts statement, Consequently, chicken breasts which are detached from the carcase of the animal by mechanically operated cutting rightly do not constitute mechanically separated meat.
It is clear that initial removal of chicken breasts from chicken carcases is, in the CJEUs analysis, equated with the initial removal of meat by mechanically operated cutting in relation to other animal carcases.
That is all that the CJEU meant to say.
The point of this statement about chicken breasts in para 43 was, as the Court of Appeal rightly observed, to deal with the argument by Newby (referred to at para 37 of the CJEUs judgment) that the Commissions position in opposition to Newbys case was inconsistent, because the Commission treated chicken breasts removed by mechanical means as falling outside the definition of MSM.
In giving the explanation in para 43, the CJEU was clearly not intending to undermine the clear and unequivocal answer it had given in para 41 to the referred questions, which answer has the consequence that the products of Newbys process have to be classified as MSM.
Contrary to the view of Edwards Stuart J, the CJEU was not throwing the baby out with the bathwater by stating an exception to the clear general rule it had declared in para 41, which exception would have the effect of wholly undermining that rule.
With respect to the judge, that is not a plausible interpretation of the CJEUs judgment.
In describing what happens with the mechanical removal of chicken breasts the CJEU used the word cutting, whereas the later evidence adduced by Newby for the resumed proceedings in the national court shows that what happens is a combination of cutting at the edge of the chicken breasts before they are scraped as whole muscles from the breast bone.
However, this is not a significant point.
The CJEU used the term cutting because that was how Newby described the process in its submissions to the CJEU (as summarised at para 37 of the CJEUs judgment) and the way in which the national court described the process in the reference judgment at para 62.
On any view the process for removal of chicken breasts by mechanical means is very different from Newbys process for removing residual meat from animal bones and chicken carcases, as the CJEU correctly understood.
The fuller evidence now available regarding the details of the mechanical process for removal of chicken breasts does not undermine or otherwise call in question the interpretation of point 1.14 given by the CJEU, which is a matter of law.
Mr Mercer pointed out that, according to the evidence, it occasionally happens that chicken carcases will be subjected to Newbys process without the breasts first being removed.
However, this does not affect the legal analysis.
Newbys process is different from, and very much less targeted than, the mechanical processes used to remove breasts from chicken carcases.
It does not remove them as whole muscles, but subjects them to chopping through the use of shearing forces.
Mr Mercer also pointed to evidence adduced in the resumed proceedings before the national court that, in the process of removing chicken breasts whole by mechanical means, the wishbone is usually cut out of the breast meat before such removal.
He sought to suggest that this evidence undermined the CJEUs analysis in paras 41 to 43 of its judgment, since the breast muscle of a chicken will have been subjected to cutting before it is removed from the carcase by mechanical means and so should be classified as MSM according to the CJEUs interpretation of point 1.14.
This would be contrary to the CJEUs statement in para 43 that chicken breasts removed by mechanical means do not constitute MSM.
Again, however, this evidence regarding what happens in the case of mechanical removal of chicken breasts does not undermine or otherwise call in question the clear answer given by the CJEU as a matter of law in respect of the application of point 1.14 as regards the products of Newbys process.
Furthermore, no legal dispute has arisen regarding the categorisation of chicken breasts removed by mechanical means.
Neither the Commission nor the FSA has sought to categorise them as MSM.
Mr Mercer says that there are ways of removing meat from a pork carcase at the initial stage which leave intact muscles on the carcase which are removed at a later stage.
The Court of Appeal referred to this possibility at para 42 of its judgment.
Once again, this does not affect the interpretation of point 1.14 given by the CJEU, which clearly does cover the products of Newbys process.
It may be that the boning of a pork carcase, as that term is used in point 1.14, covers both these stages of removal of meat, so that the product of each stage does not fall to be categorised as MSM.
But this court is not in a position to state any definitive view about that.
As with the wishbone point, no relevant findings of fact, based on full evidence, have been made by the courts below and no legal proceedings have been issued in respect of this issue.
I do not accept the submission of Mr Mercer that the reading of the CJEUs judgment as given by the Court of Appeal renders the third criterion in para 41 superfluous.
On the contrary, the third criterion informs the first criterion, making it clear that it is not necessarily the case that all the meat on a poultry carcase which is removed by use of methods of mechanical separation has to be classified as MSM.
It also informs the first criterion by giving some guidance regarding the concept of boning in point 1.14, thereby allowing for the possibility that the products of each of the two stages of removal of intact muscles from a pork carcase as referred to above might all fall outside the definition of MSM in that provision.
As the CJEU said at para 41 of its judgment, the three cumulative criteria in point 1.14 must be read in conjunction with one other.
In its judgment the CJEU made it explicit at many points that in its view on application of the definition in point 1.14 the products of Newbys process fall to be categorised as MSM.
In its analysis the court made repeated direct references to Newbys process and the products of it, indicating explicitly that those products fell lIndustrie, within the category of low pressure MSM according to the courts interpretation of point 1.14: see paras 46, 50, 52, 53, 58, 59 and 64.
The court could not have been clearer about this.
Mr Mercer seeks to meet this aspect of the CJEUs judgment with the submission that the CJEUs role on a reference is to give an authoritative ruling on the interpretation of EU law, whereas it is the role of the national court to apply such a ruling to the facts of the case.
Moreover, he points out that there are cases in which the CJEU has given a ruling on the interpretation of EU law and has also indicated how that law applies to the facts in a particular case, where the national court later reaches a different conclusion regarding the application of the law as interpreted by the CJEU to the facts of the case: the decision of this court in Revenue and Customs Comrs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15; [2013] 2 CMLR 51 is a prime example of this.
Mr Mercer gave as another example the decision of the French Conseil dtat in De Groot en Slot Allium BV v Ministre de lconomie, des Finances et de judgment of 11 December 2006 ECLI:FR:CEASS:2006:23456020061211, following a judgment of the CJEU on a reference in those proceedings in (Case C 147/04) [2006] ECR I 261.
So, contends Mr Mercer, it was open to Edwards Stuart J sitting in the national court when the proceedings resumed there after the reference, to examine the facts of the case and come to a conclusion opposite to that of the CJEU regarding the application of point 1.14 to Newbys products.
The first part of Mr Mercers submission, as regards the division of responsibility between the CJEU and the national court making a reference under article 267 TFEU, is correct.
It reflects a well established principle of EU law: see para 54 in the judgment of Lord Reed in the Aimia case.
However, it is by no means unusual for the CJEU, consistently with that principle, to say itself how EU law should be applied to the facts of a particular case which is before it when it considers that the answer is clear.
By way of example, Mr Coppel QC for the FSA referred us to Medical Imaging Systems GmbH (MIS) v Hauptzolloamt Mnchen (Case C 288/15) ECLI:EU:C:2016:424, at para 34; Kreyenhop & Kluge GmbH & Co KG v Hauptzollamt Hannover (Case C 471/17) ECLI:EU:C:2018:681, at para 47; Agenzia delle Dogane e dei Monopoli v Pilato SpA (Case C 445/17) ECLI:EU:C:2018:609, at para 41; and Mitnitsa Varna v SAKSA OOD (Case C 185/17) ECLI:EU:C:2018:108, at para 43; see also the discussion in M Broberg and N Fenger, Preliminary References to the European Court of Justice, 2nd ed (2014), at para 3.1 in Chapter 11.
The CJEU proceeds in this way when it considers that the application of EU law, according to the interpretation the court has given it, is clear on the facts of the case.
In the present case, the CJEUs conclusion that Newbys products fell to be categorised as MSM within point 1.14 simply reflected its ruling in para 41 of its judgment regarding the clarity of the test laid down in that provision, which had the obvious consequence that Newbys products fell to be so categorised according to that test.
Indeed, the CJEU spelled this out at para 51 of its judgment.
There is nothing untoward in the CJEU proceeding in this way and expressing its view regarding the application of EU law to the facts in an appropriate case.
The Aimia case does not assist Mr Mercer.
In that case, the CJEU gave an authoritative ruling regarding the proper interpretation of EU law and stated its conclusion regarding the application of that law to the facts of the case, as they had been set out in the reference.
However, when the matter returned to the national court, that court was not bound by the statement of the facts as set out in the reference and instead made other, different findings of fact.
The national court then applied the CJEUs authoritative guidance regarding EU law to the different facts of the case as determined by further examination of the relevant evidence at the national level, leading to a different conclusion as regards the application of EU law to the facts of the case: see the Aimia case at paras 46 52 and 56 per Lord Reed and at para 103 per Lord Hope.
But in the present case there is no doubt that the CJEU understood very well the factual position as regards the operation of Newbys process and the products of it.
This had all been clearly explained in the reference judgment and in the full evidence before the national court which was sent to the CJEU with the reference.
The CJEU accurately summarised the position at paras 21 and 22 of its judgment.
Even if there were any doubt regarding the CJEUs understanding of the different process by which breasts are removed from chicken carcases, that would not call into question the CJEUs understanding of the relevant facts in the case, which are those which concern Newbys process.
Nor would that call into question the authoritative ruling of law by the CJEU regarding the proper interpretation of point 1.14 and the clear guidance it gave as to the application of that provision in relation to the products of Newbys process.
Similar points fall to be made regarding the De Groot case on which Mr Mercer relied.
That case concerned the compatibility with EU law of French legislation in respect of the labelling of shallots according to which only shallots derived in a traditional way from vegetative propagation by bulbs could be offered for sale under the name shallots, whereas varieties of shallots derived from seed as developed by De Groot and others could not be.
The CJEU understood the reference to be founded on a common view between the parties in relation to the factual position regarding the differences between traditional shallots and seedling shallots, namely that those differences related essentially only to the method of reproduction.
On that basis, the CJEU held that the French legislation was incompatible with EU law, as it would be sufficient to protect the interests of consumers if seedling shallots were marketed under the name shallots with a neutral additional statement that they were seedling shallots: paras 76 to 80 of the CJEUs judgment.
However, as in the Aimia case, the Conseil dtat was not bound by that view of the facts and on further examination of the facts it found that there were other grounds for differentiation of the two sorts of shallot to do with their taste.
The Conseil dtat therefore did not simply accept the conclusion of the CJEU, but carried out its own analysis of the position, applying the principles of EU law as laid down by the CJEU (in fact, as a result of that analysis, the Conseil dtat came to the same conclusion regarding the compatibility of the French legislation with EU law).
For the reasons given above in relation to the Aimia case, this authority does not assist Mr Mercer.
Returning to the judgment of CJEU in the present proceedings, the court gave further reasons at paras 56 and following for its interpretation of point 1.14 by reference to the general scheme of EU law in relation to the safety and labelling of meat products as set out in the TSE Regulation and in the Labelling Directive.
This part of the reasoning of the court again makes it clear that the products of Newbys process fall to be categorised as MSM within the meaning of point 1.14.
Mr Mercer had no good answer regarding the significance of these points for the proper interpretation of the CJEUs judgment in these proceedings.
The definition of MSM in point 1.14 in Annex I to the Regulation is applicable both in respect of meat removed from the bones of ruminant animals such as cows and sheep and in respect of meat removed from the bones of non ruminant animals such as pigs and chickens.
The definition in point 1.14 is also relevant for the purposes of the TSE Regulation, which together with the Regulation forms part of the EU regime governing the production of food from animals.
The TSE Regulation lays down strict rules in relation to the production of meat from ruminant animals, to prevent the spread of transmissible spongiform encephalopathies associated with such animals.
To that end, as noted above, it forbids the production of MSM from residual meat on the bones of such animals.
The CJEU noted at para 22 of its judgment that the Newby process does not preclude the presence of occasional shards of bone in its products (this reflects para 23 of the reference judgment).
On that basis, a reading of point 1.14 in the context of and having regard to the purpose of the TSE Regulation leads to the conclusion that Newbys products must be categorised as MSM under point 1.14: see paras 57 to 59 of the CJEUs judgment.
That interpretation is necessary to secure the protection against the spread of transmissible spongiform encephalopathies associated with ruminant animals which is the primary object of the TSE Regulation.
Since the meaning of point 1.14 is clear in relation to ruminant animals, it is also clear in relation to non ruminant animals.
The CJEU also explained in paras 60 to 66 of its judgment why the same wide interpretation of point 1.14, covering the products of Newbys process, is necessary to secure primary objectives of the Labelling Directive.
That is required so as to ensure that consumers are not misled as to the quality of products on sale and to ensure the free circulation of products in a context in which there is no unequal competition.
This passage in the CJEUs judgment is, again, only consistent with the reading of the courts interpretation of point 1.14 given by the Court of Appeal.
Finally, Mr Mercer sought to pray in aid article 11 TFEU in support of his proposed reading of the CJEUs judgment.
I do not consider that this provision helps him.
Article 11 TFEU sets out a general principle which informs the interpretation of EU legislation; it does not separately inform the reading to be given to a clear judgment of the CJEU.
In the present case, the CJEU was well aware of the argument that a narrow interpretation of point 1.14 was appropriate so as to avoid unnecessary wastage of meat removed from animal carcases.
The reference judgment referred to evidence that a large amount of meat, sometimes up to 80%, could be left on bones after the initial boning phase.
The written observations of both the UK Government (representing the position of the FSA at that time) and Newby on the reference emphasised the desirability of an interpretation of point 1.14 which would avoid the wastage of meat suitable for human consumption which might occur if the products of Newbys process were categorised as MSM.
There is no warrant for the suggestion that the CJEU overlooked this point when considering the proper interpretation of point 1.14.
None of Newby, the UK Government, the Commission and the other member states which submitted written observations on the reference referred to article 11 TFEU, so it is not surprising that the CJEU did not find it necessary to refer to it.
In any event, the CJEU has given a clear authoritative ruling regarding the proper interpretation of point 1.14 and reference to article 11 TFEU does not permit us to go behind that.
I endorse what Lloyd Jones LJ said about article 11 TFEU in the Court of Appeal at para 43, set out above.
This appeal turns on the proper interpretation of the CJEUs judgment, as it applies in relation to the products of Newbys process.
On the proper interpretation of that judgment, the answer is clear that those products fall to be categorised as MSM within point 1.14.
The position is acte clair and no further reference to the CJEU is required.
For the reasons given above, I would dismiss this appeal.
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This case is about the application of EU food hygiene rules to certain chicken and pork products manufactured by the appellant, Newby Foods Ltd (Newby).
Specifically, the appeal concerns whether these products should be classified as mechanically separated meat (MSM) within point 1.14 of Annex I to EU Regulation No 853/2004 (the Regulation).
Newby argues they should not be classified as MSM.
The Food Standards Agency (FSA) contends that they should be so classified.
It is now common for the butchering of animal carcases in the food industry across the EU to be carried out by machines.
These often leave a significant amount of meat on the bone.
Under the Regulation, there are two types of MSM: (1) high pressure MSM and (2) low pressure MSM.
The specific hygiene requirements for both are set by paragraphs 3 4, Chapter III, Section V, Annex III in the Regulation.
Further, MSM cannot count towards food meat content and attracts specific labelling requirements.
MSM produced from lamb and beef bones is prohibited entirely under EU law.
Consequently, the commercial value of MSM is much lower than that of other fresh meat products.
Newby has developed a machine to remove residual meat from carcase bones.
It uses this to process residual meat on beef, lamb and pork bones after the initial boning of the animal carcases and on chicken carcases after the breasts have first been removed by other mechanical processes.
The Newby process has two stages: (1) meat bearing bones are forced into contact to remove meat by shearing and (2) meat so removed is then passed through a machine producing a product similar to minced meat.
Newbys meat product was previously known in the UK as desinewed meat (DSM).
It was widely regarded as distinct from MSM, including by the FSA.
DSM is not a category recognised in EU law.
On 4 April 2012, following criticism by the Commission, the FSA issued a moratorium with the result that DSM could (1) no longer be produced from residual meat on beef and lamb bones and (2) only be produced from residual meat on chicken and pork bones if classified and labelled as MSM.
Newby brought judicial review proceedings challenging the moratorium.
On 16 July 2013, Edwards Stuart J in the High Court made a preliminary reference to the Court of Justice of the European Union (CJEU) on the definition of MSM in point 1.14 of Annex I of the Regulation (point 1.14).
The CJEU made a preliminary ruling on 16 October 2014 (the CJEU judgment).
After the CJEU judgment, Newby abandoned its challenge to the moratorium as to lamb and beef carcases, but not pork and chicken.
On 23 March 2016, Edwards Stuart J concluded that the pork and chicken meat products resulting from stage (1) of Newbys process are not MSM.
He also found that such DSM was not a product derived from bone scrapings.
The Court of Appeal allowed the appeal and dismissed the challenge to the moratorium, but upheld the judges finding as to bone scrapings.
Newby now appeals to the Supreme Court on the proper interpretation of point 1.14 in light of the CJEU judgment.
The Supreme Court unanimously dismisses the appeal.
Lord Sales gives the lead judgment, with which all members of the Court agree.
The proper interpretation of point 1.14 requires a correct application of the guidance provided in the CJEU judgment [51].
In its preliminary ruling, the CJEU identified three cumulative criteria in defining MSM for the purposes of point 1.14: (1) the use of bones from which the intact muscles have already been detached, or of poultry carcases, to which meat remains attached; (2) the use of methods of mechanical separation to recover that meat; and (3) the loss or modification of the muscle fibre structure of the meat recovered through the use of those processes [26].
The CJEU added that any meat product which satisfies those three criteria must be classified as MSM, irrespective of the degree of loss or modification of the muscle fibre structure, provided the loss or modification is greater than that which is strictly confined to the cutting point (the cutting point qualification) [26].
In the Supreme Court, it was common ground between the parties that Newbys pork and chicken products meet the first two criteria for categorisation of MSM within point 1.14 [52].
The appeal thus turns on whether Newbys products meet criterion (3), in light of the cutting point qualification [52].
As identified in the courts below, there are two main possible readings of what the CJEU meant by cutting point: (1) on a narrower reading, it refers to the cutting of intact muscles, or (2) on a more expansive reading, it refers to the points at which the meat has been severed or separated during the process of recovering it [39].
Edwards Stuart J favoured the more expansive reading [42 43], while the Court of Appeal preferred the narrower reading [45 46].
This Court finds that, on the proper interpretation of the CJEU judgment, the narrower reading is correct [51].
First, the way in which the CJEU formulated criterion (1) reflects the words removing meat from flesh bearing bones after boning or from poultry carcases in point 1.14 [54].
The CJEUs formulation speaks of meat remaining attached to poultry carcases, rather than simply referring to poultry carcases, which would include all (not merely some of) the meat on the carcase [55].
Secondly, the CJEU clearly held that the concept of MSM does not depend on it being shown that the process referred to in point 1.14 results in a loss or modification of the muscle fibre structure which is significant, rejecting outright Newbys case [56].
On the CJEUs approach, the dividing line is much clearer.
Meat removed from a carcase will not be MSM if it is removed by mechanical means in the first phase of cutting meat from the whole carcase, but will generally be MSM if it is later removed by mechanical means [57].
This clear distinction avoids the need for microscopic investigation [57].
Thirdly, the legal analysis is not affected by evidence (1) that chicken carcases will occasionally be subjected to Newbys process without the breasts first being removed or (2) that the wishbone is usually cut out of the breast meat before mechanical removal of whole chicken breasts [61 63].
Lastly and importantly, the CJEU judgment made it explicit that, applying the definition in point 1.14, Newbys products fall to be categorised as MSM [66].
The CJEU was entitled to express its view on the application of point 1.14 to this case and there is nothing to call into question its analysis [69 75].
After the CJEU judgment, the position is acte clair and no further reference to the CJEU is needed [76].
The Court reaches the above conclusions having seen, but not relied on, further evidence submitted by three of the four interveners [49 50].
The Court refuses permission to admit this further evidence due to unfairness to the FSA and, in any event, this evidence is not considered to affect the outcome [50].
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The question at issue on this appeal is: in what circumstances is it permissible to sue an unnamed defendant? It arises in a rather special context in which the problem is not uncommon.
On 26 May 2013 Ms Bianca Cameron was injured when her car collided with a Nissan Micra.
It is common ground that the incident was due to the negligence of the driver of the Micra.
The registration number of the Micra was recorded, but the driver made off without stopping or reporting the accident to the police and has not been heard of since.
The registered keeper of the Micra was Mr Naveed Hussain, who was not the driver but has declined to identify the driver and has been convicted of failing to do so.
The car was insured under a policy issued by Liverpool Victoria Insurance Co Ltd to a Mr Nissar Bahadur, whom the company believes to be a fictitious person.
Neither Mr Hussain nor the driver was insured under the policy to drive the car.
The statutory framework
The United Kingdom was the first country in the world to introduce compulsory motor insurance.
It originated with the Road Traffic Act 1930, which was part of a package of measures to protect accident victims, including the Third Parties (Rights Against Insurers) Act 1930.
The latter Act entitled a person to claim directly against the insurer where an insured tortfeasor was insolvent.
But it was shortly superseded as regards motor accidents by the Road Traffic Act 1934, which required motor insurers to satisfy any judgment against their insured and restricted the right of insurers to rely as against third parties on certain categories of policy exception or on the right of avoidance for non disclosure or misrepresentation.
The statutory regime has become more elaborate and more comprehensive since 1934, but the basic framework has not changed.
The current legislation is Part VI of the Road Traffic Act 1988.
As originally enacted, it sought to give effect to the first three EEC Motor Insurance Directives, 72/166/EEC, 84/5/EEC and 90/232/EEC.
It was subsequently amended by statutory instruments under the European Communities Act 1972 to reflect the terms of the Fourth, Fifth and Sixth Motor Insurance Directives 2000/26/EC, 2005/14/EC and 2009/103/EC.
The object of the current legislation is to enable the victims of negligently caused road accidents to recover, if not from the tortfeasor then from his insurer or, failing that, from a fund operated by the motor insurance industry.
Under section 143 of the Act of 1988 it is an offence to use or to cause or permit any other person to use a motor vehicle on a road or other public place unless there is in force a policy of insurance against third party risks in relation to the use of the vehicle by the particular driver (I disregard the statutory provision for the giving of security in lieu of insurance).
Section 145 requires the policy to cover specified risks, including bodily injury and damage to property.
Section 151(5) requires the insurer, subject to certain conditions, to satisfy any judgment falling within subsection (2).
This means (omitting words irrelevant to this appeal) judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either (a) it is a liability covered by the terms of the policy or security , and the judgment is obtained against any person who is insured by the policy or it is a liability which would be so covered if (b) the policy insured all persons , and the judgment is obtained against any person other than one who is insured by the policy The effect of the latter subsection is that an insurer who has issued a policy in respect of the use of a vehicle is liable on a judgment, even where it was obtained against a person such as the driver of the Micra in this case who was not insured to drive it.
The statutory liability of the insurer to satisfy judgments is subject to an exception under section 152 where it is entitled to avoid the policy for non disclosure or misrepresentation and has obtained a declaration to that effect in proceedings begun within a prescribed time period.
But the operation of section 152 is currently under review in the light of recent decisions of the Court of Justice of the European Union.
Under section 145(2), the policy must have been issued by an authorised insurer.
This means a member of the Motor Insurers Bureau: see sections 95(2) and 145(5).
The Bureau has an important place in the statutory scheme for protecting the victims of road accidents in the United Kingdom.
Following a recommendation of the Cassell Committee, which reported in 1937 (Cmnd 5528/1937), the Bureau was created in 1946 to manage a fund for compensating victims of uninsured motorists.
It is a private company owned and funded by all insurers authorised to write motor business in the United Kingdom.
It has entered into agreements with the Secretary of State to compensate third party victims of road accidents who fall through the compulsory insurance net even under the enlarged coverage provided by section 151(2)(b).
This means victims suffering personal injury or property damage caused by (i) vehicles in respect of which no policy of insurance has been issued; and (ii) drivers who cannot be traced.
These categories are covered by two agreements with the Secretary of State, the Uninsured Drivers Agreement and the Untraced Drivers Agreement respectively.
The relevant agreement covering Ms Camerons case was the 2003 Untraced Drivers Agreement.
It applied to persons suffering death, bodily injury or property damage arising out of the use of a motor vehicle in cases where it is not possible to identify the person who is or appears to be liable: see clause 4(d).
The measure of indemnity under this agreement is not always total.
Under clause 10, there is a limit to the Bureaus liability for legal costs; and under clause 8 the indemnity for property damage is subject to a modest excess (at the relevant time 300) and a maximum limit corresponding to the minimum level of compulsory insurance (at the relevant time 1,000,000).
The Bureau assumes liability under the Uninsured Drivers Agreement in cases where the insurer has a defence under the provisions governing avoided policies in section 152.
But under article 75 of the Bureaus articles of association, each insurer binds itself to meet the Bureaus liability to satisfy a judgment in favour of the third party in such cases.
In 2017, there were 17,700 concluded applications to the Motor Insurers Bureau by victims of untraced drivers.
It is a fundamental feature of the statutory scheme of compulsory insurance in the United Kingdom that it confers on the victim of a road accident no direct right against an insurer in respect of the underlying liability of the driver.
The only direct right against the insurer is the right to require it to satisfy a judgment against the driver, once the latters liability has been established in legal proceedings.
This reflects a number of features of motor insurance in the United Kingdom which originated well before the relevant European legislation bound the United Kingdom, and which differentiate it from many continental systems.
In the first place, policies of motor insurance in the United Kingdom normally cover drivers rather than vehicles.
Section 151(2)(b) of the Act (quoted above) produces a close but not complete approximation to the continental position.
Secondly, the rule of English insurance law is that an insurer is liable to no one but its insured, even when the risks insured include liabilities owed by the insured to third parties.
Subject to limited statutory exceptions, the third party has no direct right against the insurer.
Thirdly, even the insured cannot claim against his liability insurer unless and until his liability has been ascertained in legal proceedings or by agreement or admission.
The Untraced Drivers Agreement assumes that judgment cannot be obtained against the driver if he cannot be identified, and therefore that no liability will attach to the insurer in that case.
This is why it is accepted as a liability of the Motor Insurance Bureau.
On the present appeal, Ms Cameron seeks to challenge that assumption.
Such a challenge is usually unnecessary.
It is cheaper and quicker to claim against the Bureau.
But for reasons which remain unclear, in spite of her counsels attempt to explain them, Ms Cameron has elected not to do that.
The proceedings
Ms Cameron initially sued Mr Hussain for damages.
The proceedings were then amended to add a claim against Liverpool Victoria Insurance for a declaration that it would be liable to meet any judgment obtained against Mr Hussain.
The insurer served a defence which denied liability on the ground that there was no right to obtain a judgment against Mr Hussain, because there was no evidence that he was the driver at the relevant time.
Ms Camerons response was to apply in the Liverpool Civil and Family Court to amend her claim form and particulars of claim so as to substitute for Mr Hussain the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013.
District Judge Wright dismissed that application and entered summary judgment for the insurer.
Judge Parker dismissed Ms Camerons appeal.
But a further appeal to the Court of Appeal was allowed by a majority (Gloster and Lloyd Jones LJJ, Sir Ross Cranston dissenting): [2018] 1 WLR 657.
Gloster LJ delivered the leading judgment.
She held that the policy of the legislation was to ensure that the third party victims of negligent drivers received compensation from insurers whenever a policy had been issued in respect of the vehicle, irrespective of who the driver was.
In her judgment, the court had a discretion to permit an unknown person to be sued whenever justice required it.
Justice required it when the driver could not be identified, because otherwise it would not be possible to obtain a judgment which the issuer of a policy in respect of the car would be bound to satisfy.
The majority considered it to be irrelevant that Ms Cameron had an alternative right against the Motor Insurance Bureau.
She had a right against the driver and, upon getting judgment against him, against the insurer.
In principle she was entitled to choose between remedies.
Sir Ross Cranston dissented.
He agreed that there was a discretion, but he did not consider that justice required an action to be allowed against the unknown driver when compensation was available from the Motor Insurance Bureau.
Accordingly, the Court of Appeal (i) gave Ms Cameron permission to amend the claim form so as to sue the driver under the above description; (ii) directed under CPR 6.15 that service on the insurer should constitute service on the driver and that further service on the driver should be dispensed with; and (iii) gave judgment against the driver, as described, recording in their order that the insurer accepted that it was liable to satisfy that judgment.
Suing unnamed persons
Before the Common Law Procedure Act 1852 abolished the practice, it was common to constitute actions for trespass with fictional parties, generally John (or Jane) Doe or Roe, in order to avoid the restrictions imposed on possession proceedings by the forms of action.
Placeholders such as these were also occasionally named as parties where the identity of the real party was unknown, a practice which subsists in the United States and Canada.
After the disappearance of this practice in England, the extent of any right to sue unnamed persons was governed by rules of court.
The basic rule before 1999 was laid down by the Court of Appeal in 1926 in Friern Barnet Urban District Council v Adams [1927] 2 Ch 25.
The Friern Barnet District Council had a statutory right to recover the cost of making up Alexandra Road from the proprietors of the adjoining lands, but in the days before registered title reached Friern Barnet it had no way of discovering who they were.
It therefore began proceedings against a named individual who was not concerned and the owners of certain lands adjoining Alexandra Road, whose names and addresses are not known to the plaintiffs.
The judge struck out these words and declined to order substituted service by affixing copies of the writ to posts on the relevant land.
The Court of Appeal dismissed the appeal.
They held that there was no power to issue a writ in this form because the prescribed form of writ required it to be directed to C D of, etc in the County of (p 30).
When the Civil Procedure Rules were introduced in 1999, the function of prescribing the manner in which proceedings should be commenced was taken over by CPR Part 7.
The general rule remains that proceedings may not be brought against unnamed parties.
This is implicit in the limited exceptions contemplated by the Rules.
CPR 8.2A provides that a practice direction may set out circumstances in which a claim form may be issued under this Part without naming a defendant.
It is envisaged that permission will be required, but that the notice of application for permission need not be served on any other person.
However, no such practice direction has been made.
The only express provision made for proceedings against an unnamed defendant, other than representative actions, is CPR 55.3(4), which permits a claim for possession of property to be brought against trespassers whose names are unknown.
This is the successor to RSC Order 113, which was introduced in order to provide a means of obtaining injunctions against unidentifiable squatters, following the decision of Stamp J in In re Wykeham Terrace, Brighton, Sussex, Ex p Territorial Auxiliary and Volunteer Reserve Association for the South East [1971] Ch 204, that they could not be sued if they could not be named.
In addition, there are specific statutory exceptions to broadly the same effect, such as the exception for proceedings for an injunction to restrain any actual or apprehended breach of planning controls under section 187B of the Town and Country Planning Act 1990.
Section 187B(3) provides that rules of court may provide for such an injunction to be issued against a person whose identity is unknown.
The Rules are supplemented by a practice direction which deals with the administrative steps involved.
CPR 7A PD4.1 provides that a claim form must be headed with the title of the proceedings, which should state, among other things, the full name of each party.
English judges have allowed some exceptions.
They have permitted representative actions where the representative can be named but some or all of the class cannot.
They have allowed actions and orders against unnamed wrongdoers where some of the wrongdoers were known so they could be sued both personally and as representing their unidentified associates.
This technique has been used, for example, in actions against copyright pirates: see EMI Records Ltd v Kudhail [1985] FSR 35.
But the possibility of a much wider jurisdiction was first opened up by the decision of Sir Andrew Morritt V C in Bloomsbury Publishing Group Plc v News Group Newspapers Ltd [2003] 1 WLR 1633.
The claimant in that case was the publisher of the Harry Potter novels.
Copies of the latest book in the series had been stolen from the printers before publication and offered to the press by unnamed persons.
An injunction was granted in proceedings against the person or persons who have offered the publishers of The Sun, the Daily Mail and the Daily Mirror newspapers a copy of the book Harry Potter and the Order of the Phoenix by J K Rowling or any part thereof and the person or persons who has or have physical possession of a copy of the said book or any part thereof without the consent of the claimants.
The real object of the injunction was to deter newspapers minded to publish parts of the text, who would expose themselves to proceedings for contempt of court by dealing with the thieves with notice of the order.
The Vice Chancellor held that the decision in Friern Barnet Urban District Council v Adams had no application under the Civil Procedure Rules; that the decision of Stamp J in In re Wykeham Terrace was wrong; and that the words should state in CPR 7A PD4.1 were not mandatory, but imported a discretion to depart from the practice in appropriate cases.
In his view, a person could be sued by a description, provided that the description was sufficiently certain as to identify both those who are included and those who are not (para 21).
Since this decision, the jurisdiction has regularly been invoked.
Judging by the reported cases, there has recently been a significant increase in its use.
The main contexts for its exercise have been abuse of the internet, that powerful tool for anonymous wrongdoing; and trespasses and other torts committed by protesters, demonstrators and paparazzi.
Cases in the former context include Brett Wilson LLP v Persons Unknown [2016] 4 WLR 69 and Smith v Unknown Defendant Pseudonym Likeicare [2016] EWHC 1775 (QB) (defamation); Middleton v Person Unknown [2016] EWHC 2354 (QB) (theft of information by hackers); PML v Persons Unknown [2018] EWHC 703 (QB) (hacking and blackmail); CMOC v Persons Unknown [2017] EWHC 3599 (Comm) (hacking and theft of funds).
Cases decided in the second context include Hampshire Waste Services Ltd v Intending Trespassers upon Chineham Incinerator Site [2004] Env LR 9; Ineos Upstream Ltd v Persons Unknown [2017] EWHC 2945 (Ch); UK Oil and Gas Investments Plc v Persons Unknown [2018] EWHC 2253 (Ch).
In some of these cases, proceedings against persons unknown were allowed in support of an application for a quia timet injunction, where the defendants could be identified only as those persons who might in future commit the relevant acts.
The majority of the Court of Appeal followed this body of case law in deciding that an action was permissible against the unknown driver of the Micra who injured Ms Cameron.
This is the first occasion on which the basis and extent of the jurisdiction has been considered by the Supreme Court or the House of Lords.
The Civil Procedure Rules neither expressly authorise nor expressly prohibit exceptions to the general rule that actions against unnamed parties are permissible only against trespassers.
The prescribed forms include a space in which to designate the claimant and the defendant, a format which is equally consistent with their being designated by name or by description.
The only requirement for a name is contained in a practice direction.
But unlike the Civil Procedure Rules, which are made under statutory powers, a practice direction is no more than guidance on matters of practice issued under the authority of the heads of division.
As to those matters, it is binding on judges sitting in the jurisdiction with which it is concerned: Bovale Ltd v Secretary of State for Communities and Local Government [2009] 1 WLR 2274.
But it has no statutory force, and cannot alter the general law.
Whether or not the requirement of CPR 7A PD4.1 that the claim form should state the defendants full name admits of a discretion on the point, is not therefore the critical question.
The critical question is what, as a matter of law, is the basis of the courts jurisdiction over parties, and in what (if any) circumstances can jurisdiction be exercised on that basis against persons who cannot be named.
In approaching this question, it is necessary to distinguish between two kinds of case in which the defendant cannot be named, to which different considerations apply.
The first category comprises anonymous defendants who are identifiable but whose names are unknown.
Squatters occupying a property are, for example, identifiable by their location, although they cannot be named.
The second category comprises defendants, such as most hit and run drivers, who are not only anonymous but cannot even be identified.
The distinction is that in the first category the defendant is described in a way that makes it possible in principle to locate or communicate with him and to know without further inquiry whether he is the same as the person described in the claim form, whereas in the second category it is not.
This appeal is primarily concerned with the issue or amendment of the claim form.
It is not directly concerned with its service, which occurs under the rules up to four months after issue, subject to extension by order of the court.
There is no doubt that a claim form may be issued against a named defendant, although it is not yet known where or how or indeed whether he can in practice be served.
But the legitimacy of issuing or amending a claim form so as to sue an unnamed defendant can properly be tested by asking whether it is conceptually (not just practically) possible to serve it.
The court generally acts in personam.
Although an action is completely constituted on the issue of the claim form, for example for the purpose of stopping the running of a limitation period, the general rule is that service of originating process is the act by which the defendant is subjected to the courts jurisdiction: Barton v Wright Hassall LLP [2018] 1 WLR 1119, para 8.
The court may grant interim relief before the proceedings have been served or even issued, but that is an emergency jurisdiction which is both provisional and strictly conditional.
In Dresser UK Ltd v Falcongate Freight Management Ltd [1992] QB 502, the Court of Appeal held that, for the purposes of the Brussels Convention (the relevant provisions of the Brussels Regulation are different), an English court was seised of an action when the writ was served, not when it was issued.
This was because of the legal status of an unserved writ in English law.
Bingham LJ described that status, at p 523, as follows: it is in my judgment artificial, far fetched and wrong to hold that the English court is seised of proceedings, or that proceedings are decisively, conclusively, finally or definitively pending before it, upon mere issue of proceedings, when at that stage (1) the courts involvement has been confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve the proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiffs claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve the writ or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiffs claim in any way, and not entitled to do so save by calling on the plaintiff to serve or discontinue; (6) the court cannot exercise any powers which, on appropriate facts, it could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the court.
The case was decided under the Rules of the Supreme Court.
But Bingham LJs statement would be equally true (mechanics and terminology apart) of an unserved claim form under the Civil Procedure Rules.
An identifiable but anonymous defendant can be served with the claim form or other originating process, if necessary by alternative service under CPR 6.15.
This is because it is possible to locate or communicate with the defendant and to identify him as the person described in the claim form.
Thus, in proceedings against anonymous trespassers under CPR 55.3(4), service must be effected in accordance with CPR 55.6 by attaching copies of the documents to the main door or placing them in some other prominent place on the land where the trespassers are to be found, and posting them if practical through the letter box.
In Brett Wilson LLP v Persons Unknown, supra, alternative service was effected by email to a website which had published defamatory matter, Warby J observing (para 11) that the relevant procedural safeguards must of course be applied.
In Smith v Unknown Defendant Pseudonym Likeicare, supra, Green J made the same observation (para 11) in another case of internet defamation where service was effected in the same way.
Where an interim injunction is granted and can be specifically enforced against some property or by notice to third parties who would necessarily be involved in any contempt, the process of enforcing it will sometimes be enough to bring the proceedings to the defendants attention.
In Bloomsbury Publishing Group, for example, the unnamed defendants would have had to identify themselves as the persons in physical possession of copies of the book if they had sought to do the prohibited act, namely disclose it to people (such as newspapers) who had been notified of the injunction.
The Court of Appeal has held that where proceedings were brought against unnamed persons and interim relief was granted to restrain specified acts, a person became both a defendant and a person to whom the injunction was addressed by doing one of those acts: South Cambridgeshire District Council v Gammell [2006] 1 WLR 658, para 32.
In the case of anonymous but identifiable defendants, these procedures for service are now well established, and there is no reason to doubt their juridical basis.
One does not, however, identify an unknown person simply by referring to something that he has done in the past.
The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013, does not identify anyone.
It does not enable one to know whether any particular person is the one referred to.
Nor is there any specific interim relief such as an injunction which can be enforced in a way that will bring the proceedings to his attention.
The impossibility of service in such a case is due not just to the fact that the defendant cannot be found but to the fact that it is not known who the defendant is.
The problem is conceptual, and not just practical.
It is true that the publicity attending the proceedings may sometimes make it possible to speculate that the wrongdoer knows about them.
But service is an act of the court, or of the claimant acting under rules of court.
It cannot be enough that the wrongdoer himself knows who he is.
This is, in my view, a more serious problem than the courts, in their more recent decisions, have recognised.
Justice in legal proceedings must be available to both sides.
It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard.
The principle is perhaps self evident.
The clearest statements are to be found in the case law about the enforcement of foreign judgments at common law.
The English courts will not enforce or recognise a foreign judgment, even if it has been given by a court of competent jurisdiction, if the judgment debtor had no sufficient notice of the proceedings.
The reason is that such a judgment will have been obtained in breach of the rules of natural justice according to English notions.
In his celebrated judgment in Jacobson v Frachon (1927) 138 LT 386, 392, Atkin LJ, after referring to the principles of natural justice put the point in this way: Those principles seem to me to involve this, first of all that the court being a court of competent jurisdiction, has given notice to the litigant that they are about to proceed to determine the rights between him and the other litigant; the other is that having given him that notice, it does afford him an opportunity of substantially presenting his case before the court.
Lord Atkins principle is reflected in the statutory provisions for the recognition of foreign judgments in section 9(2)(c) of the Administration of Justice Act 1920 and section 8(1) and (2) of the Foreign Judgments (Reciprocal Enforcement) Act 1933, as well as in article 45(1)(b) of the Brussels I Regulation (Recast), Regulation (EU) No 1215/2012.
It would be ironic if the English courts were to disregard in their own proceedings a principle which they regard as fundamental to natural justice as applied to the proceedings of others.
In fact, the principle is equally central to domestic litigation procedure.
Service of originating process was required by the practice of the common law courts long before statutory rules of procedure were introduced following the Judicature Acts of 1873 and 1875.
The first edition of the Rules of the Supreme Court, which was promulgated in 1883, required personal service unless an order was made for what was then called substituted (now alternative) service.
Subsequent editions of the rules allowed for certain other modes of service without a special order of the court, notably in the case of corporations, but every mode of service had the common object of bringing the proceedings to the attention of the defendant.
In Porter v Freudenberg [1915] 1 KB 857 a specially constituted Court of Appeal, comprising the Lord Chief Justice, the Master of the Rolls and all five Lords Justices of the time, held that substituted service served the same function as personal service and therefore had to be such as could be expected to bring the proceedings to the defendants attention.
The defendants in that case were enemy aliens resident in Germany during the First World War.
Lord Reading CJ, delivering the judgment of the court, said at p 883: Once the conclusion is reached that the alien enemy can be sued, it follows that he can appear and be heard in his defence and may take all such steps as may be deemed necessary for the proper presentment of his defence.
If he is brought at the suit of a party before a court of justice he must have the right of submitting his answer to the court.
To deny him that right would be to deny him justice and would be quite contrary to the basic principles guiding the Kings courts in the administration of justice.
It followed, as he went on to observe at pp 887 888, that the court must take into account the position of the defendant the alien enemy, who is, according to the fundamental principles of English law, entitled to effective notice of the proceedings against him.
In order that substituted service may be permitted, it must be clearly shown that the plaintiff is in fact unable to effect personal service and that the writ is likely to reach the defendant or to come to his knowledge if the method of substituted service which is asked for by the plaintiff is adopted.
The principle stated in Porter v Freudenberg was incorporated in the Rules of the Supreme Court in the revision of 1962 as RSC Order 67, rule 4(3).
This provided: Substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as the court may direct to bring the document to the notice of the person to be served.
This provision subsequently became RSC Order 65, rule 4(3), and continued to appear in subsequent iterations of the Rules until they were superseded by the Civil Procedure Rules in 1999.
The treatment of the principle in the more recent authorities is, unfortunately, neither consistent nor satisfactory.
The history may be summarised as follows: (1) Murfin v Ashbridge [1941] 1 All ER 231 arose out of a road accident caused by the alleged negligence of a driver who was identified but could not be found.
The case is authority for the proposition that while an insurer may be authorised by the policy to defend an action on behalf of his assured, he was not a party in that capacity and could not take any step in his own name.
In the course of considering that point, Goddard LJ suggested at p 235 that possibly service on the driver might have been effected by substituted service on the insurers.
Porter v Freudenberg was cited, but the point does not appear to have been argued. (2) In Gurtner v Circuit [1968] 2 QB 587, the driver alleged to have been responsible for a road accident had emigrated and could not be traced.
He was thought to have been insured, but it was impossible to identify his insurer.
The plaintiff was held not to be entitled to an order for substituted service on another insurer who had no relationship with the driver.
Lord Denning MR thought (pp 596 597) that the affidavit in support of the application was defective because it failed to state that the writ, if served on a non insurer, was likely to reach the defendant.
But he suggested that substituted service might have been effected on the real insurer if it had been identified.
Diplock LJ thought (p 605) that it might have been effected on the Motor Insurers Bureau.
Porter v Freudenberg was not cited, and the point does not appear to have been argued.
In Clarke v Vedel [1979] RTR 26, the question was fully argued by (3) reference to all the relevant authorities in the context of the Road Traffic Acts.
A person had stolen a motor cycle, collided with the plaintiffs, given a fictitious name and address and then disappeared.
He was sued under the fictitious name he had given, and an application was made for substituted service on the Motor Insurance Bureau.
The affidavit in support understandably failed to state that that mode of service could be expected to reach the driver.
The Court of Appeal proceeded on the assumption (p 32) that there was no more reason to suppose that [the writ] will come to his notice or knowledge by being served on the Motor Insurance Bureau than by being served on any one else in the wide world.
But it declined to treat the dicta in the above cases as stating the law.
Stephenson LJ considered (p 36), on the strength of the dicta in Murfin v Ashbridge and Gurtner v Circuit, that there may be cases where a defendant, who cannot be traced and, therefore, is unlikely to be reached by any form of substituted service, can nevertheless be ordered to be served at the address of insurers or the Bureau in a road accident case.
The existence of insurers and of the Bureau and of these various agreements does create a special position which enables a plaintiff to avoid the strictness of the general rule and obtain such an order for substituted service in some cases.
But he held (p 37) that This is a case in which, on the face of it, substituted service under the rule is not permissible and the affidavit supporting the application for it is insufficient.
This fictitious, or, at any rate, partly fictitious defendant cannot be served, so Mr Crowther is right in saying that he cannot be sued I do not think that Lord Denning MR or Diplock LJ or Salmon LJ or Goddard LJ had anything like the facts of this case in mind; and whatever the cases in which the exception to the general rule should be applied, in my judgment this is not one of them.
In his concurring judgment, Roskill LJ (pp 38 39) approved the statement in the then current edition of the Supreme Court Practice that [t]he steps which the court may direct in making an order for substituted service must be taken to bring the document to the notice of the person to be served, citing Porter v Freudenberg in support of it. (4) 20 years later, another division of the Court of Appeal reached the opposite conclusion in Abbey National Plc v Frost (Solicitors Indemnity Fund Ltd intervening) [1999] 1 WLR 1080.
The issue was the same, except that the defendant was a solicitor insured by the Solicitors Indemnity Fund pursuant to a scheme managed by the Law Society under the compulsory insurance provisions of the Solicitors Act 1974.
The claimant sued his solicitor, who had absconded and could not be found.
The Court of Appeal made an order for substituted service on the Fund.
Nourse LJ (with whom Henry LJ and Robert Walker LJ agreed) distinguished Porter v Freudenberg on the ground that it was based on the practice of the masters of the Supreme Court recorded in the White Book at the time; and Clarke v Vedel on the ground that the policy of the statutory solicitors indemnity rules required a right of substituted service on an absconding solicitor.
RSC Order 65, rule 4(3) was held to be purely directory and not to limit the discretion of the court as to whether or in what circumstances to order substituted service.
Nourse LJ held that RSC Order 65 did not require that the order should be likely to result in the proceedings coming to the defendants attention.
The current position is set out in Part 6 of the Civil Procedure Rules.
CPR 6.3 provides for service by the court unless the claimant elects to effect service himself.
It considerably broadens the permissible modes of service along lines recommended by Lord Woolfs reports on civil justice.
But the object of all the permitted modes of service, as his final report made clear, was the same, namely to enable the court to be satisfied that the method used either had put the recipient in a position to ascertain its contents or was reasonably likely to enable him to do so within any relevant time period: see Access to Justice, Final Report (1996), Ch 12, para 25.
CPR 6.15, which makes provision for alternative service, provides, so far as relevant: 6.15(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place. (2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.
CPR 6.15 does not include the provision formerly at RSC Order 65, rule 4(3).
But it treats alternative service as a mode of service, which is defined in the indicative glossary appended to the Civil Procedure Rules as steps required by rules of court to bring documents used in court proceedings to a persons attention.
Moreover, sub paragraph (2) of the rule, which is in effect a form of retrospective alternative service, envisages in terms that the mode of service adopted will have had that effect.
Applying CPR 6.15 in Abela v Baadarani [2013] 1 WLR 2043 Lord Clarke of Stone cum Ebony (with whom the rest of this court agreed) held (para 37) that the whole purpose of service is to inform the defendant of the contents of the claim form and the nature of the claimants case.
The Court of Appeal appears to have had no regard to these principles in ordering alternative service of the insurer in the present case.
In my opinion, subject to any statutory provision to the contrary, it is an essential requirement for any form of alternative service that the mode of service should be such as can reasonably be expected to bring the proceedings to the attention of the defendant.
Porter v Freudenberg was not based on the niceties of practice in the masters corridor.
It gave effect to a basic principle of natural justice which had been the foundation of English litigation procedure for centuries, and still is.
So far as the Court of Appeal intended to state the law generally when it observed in Abbey National Plc v Frost that service need not be such as to bring the proceedings to the defendants attention, I consider that they were wrong.
An alternative view of that case is that that observation was intended to apply only to claims under schemes such as the solicitors compulsory insurance scheme, where it was possible to discern a statutory policy that the public should be protected against defaulting solicitors.
If so, the reasoning would apply equally to the compulsory insurance of motorists under the Road Traffic Acts, as indeed the Court of Appeal held in the present case.
That would involve a narrower exception to the principle of natural justice to which I have referred, and I do not rule out the possibility that such an exception might be required by other statutory schemes.
But I do not think that it can be justified in the case of the scheme presently before us.
In the first place, the Road Traffic Act scheme is expressly based on the principle that as a general rule there is no direct liability on the insurer, except for its liability to meet a judgment against the motorist once it has been obtained.
To that extent, Parliaments intention that the victims of negligent motorists should be compensated by the insurer is qualified.
No doubt Parliament assumed, when qualifying it in this way, that other arrangements would be made which would fill the compensation gap, as indeed they have been.
But those arrangements involve the provision of compensation not by the insurer but by the Motor Insurers Bureau.
The availability of compensation from the Bureau makes it unnecessary to suppose that some way must be found of making the insurer liable for the underlying wrong when his liability is limited by statute to satisfying judgments.
Secondly, ordinary service on the insurer would not constitute service on the driver, unless the insurer had contractual authority to accept service on the drivers behalf or to appoint solicitors to do so.
Such provisions are common in liability policies.
I am prepared to assume that the policy in this case conferred such authority on the insurer, although we have not been shown it.
But it could only have conferred authority on behalf of the policy holder (if he existed), and it is agreed that the driver of the Micra was not the policy holder.
Given its contingent liability under section 151 of the Road Traffic Act 1988, the insurer no doubt has a sufficient interest to have itself joined to the proceedings in its own right, if it wishes to be.
That would authorise the insurer to make submissions in its own interest, including submissions to the effect that the driver was not liable.
But it would not authorise it to conduct the defence on the drivers behalf.
The driver, if sued in these proceedings, is entitled to be heard in his own right.
Thirdly, it is plain that alternative service on the insurer could not be expected to reach the driver of the Micra.
It would be tantamount to no service at all, and should not therefore have been ordered unless the circumstances were such that it would be appropriate to dispense with service altogether.
There is a power under CPR 6.16 to dispense with service of a claim form in exceptional circumstances.
It has been exercised on a number of occasions and considered on many more.
In general, these have been cases in which the claimant has sought to invoke CPR 6.16 in order to escape the consequences of some procedural mishap in the course of attempting to serve the claim form by one of the specified methods, or to confer priority on the English court over another forum for the purpose of the Brussels Regulation, or to affect the operation of a relevant limitation period.
In all of them, the defendant or his agents was in fact aware of the proceedings, generally because of a previous attempt by the claimant to serve them in a manner not authorised by the Rules.
As Mummery LJ observed, delivering the judgment of the Court of Appeal in Anderton v Clwyd County Council (No 2) [2002] 1 WLR 3174, para 58, service was dispensed with because there was no point in requiring him to go through the motions of a second attempt to complete in law what he has already achieved in fact.
In addition, I would accept that it may be appropriate to dispense with service, even where no attempt has been made to effect it in whatever manner, if the defendant has deliberately evaded service and cannot be reached by way of alternative service under CPR 6.15.
This would include cases where the defendant is unidentifiable but has concealed his identity in order to evade service.
However, a person cannot be said to evade service unless, at a minimum, he actually knows that proceedings have been or are likely to be brought against him.
A court would have to be satisfied of that before it could dispense with service on that basis.
An inference to that effect may be easier to draw in the case of hit and run drivers, because by statute drivers involved in road accidents causing personal injury or damage to another vehicle must either stop and, if required to do so by any person having reasonable grounds for so requiring, give his name and address and also the name and address of the owner and the identification marks of the vehicle, or else report the incident later.
But the mere fact of breach of this duty will not necessarily be enough, for the driver may be unaware of his duty or of the personal injury or damage or of his potential liability.
No submission was made to us that we should treat this as a case of evasion of service, and there are no findings which would enable us to do so.
I would not wish arbitrarily to limit the discretion which CPR 6.16 confers on the court, but I find it hard to envisage any circumstances in which it could be right to dispense with service of the claim form in circumstances where there was no reason to believe that the defendant was aware that proceedings had been or were likely to be brought.
That would expose him to a default judgment without having had the opportunity to be heard or otherwise to defend his interests.
It is no answer to this difficulty to say that the defendant has no reason to care because the insurer is bound to satisfy a judgment against him.
If, like the driver of the Micra, the motorist was not insured under the policy, he will be liable to indemnify the insurer under section 151(8) of the Road Traffic Act.
It must be inherently improbable that he will ever be found or, if found, will be worth pursuing.
But the court cannot deny him an opportunity to be heard simply because it thinks it inherently improbable that he would take advantage of it.
I conclude that a person, such as the driver of the Micra in the present case, who is not just anonymous but cannot be identified with any particular person, cannot be sued under a pseudonym or description, unless the circumstances are such that the service of the claim form can be effected or properly dispensed with.
The European law issue
Mr Williams QC, who appeared for Ms Cameron, submitted that this result was inconsistent with the Sixth Motor Insurance Directive 2009/103/EC, and that the Road Traffic Act 1988 should be read down so as to conform with it.
The submission was pressed with much elaboration, but it really boils down to two points.
First, Mr Williams submits that the Directive requires a direct right against the insurer on the drivers underlying liability, and not simply a requirement to have the insurer satisfy a judgment against the driver.
Secondly, he submits that recourse to the Motor Insurers Bureau is not treated by the Directive as an adequate substitute.
Neither point appears to have been raised before the Court of Appeal, for there is no trace of them in the judgments.
Before us, they emerged as Mr Williams main arguments.
I propose, however, to deal with them quite shortly, because I think it clear that no point on the Directive arises.
Article 3 of the Directive requires member states to ensure that civil liability in respect of the use of vehicles is covered by insurance, and article 9 lays down minimum amounts to be insured.
Recital 30 states: The right to invoke the insurance contract and to claim against the insurance undertaking directly is of great importance for the protection of victims of motor vehicle accidents In order to facilitate an efficient and speedy settlement of claims and to avoid as far as possible costly legal proceedings, a right of direct action against the insurance undertaking covering the person responsible against civil liability should be extended to victims of any motor vehicle accident.
Effect is given to this objective by article 18, which provides: Article 18 Direct Right of Action Member states shall ensure that any party injured as a result of an accident caused by a vehicle covered by insurance as referred to in article 3 enjoys a direct right of action against the insurance undertaking covering the person responsible against civil liability.
I assume (without deciding) that article 18 requires a direct right of action against the insurer in respect of the underlying wrong of the person responsible and not just a liability to satisfy judgments entered against that person.
It is a plausible construction in the light of the recital and the reference to Directive 2000/26/EC.
However, Ms Cameron is not trying in these proceedings to assert a direct right against the insurer for the underlying wrong.
Her claim against the insurer is for a declaration that it is liable to meet any judgment against the driver of the Micra.
Her claim against the driver is for damages.
But the right that she asserts against him on this appeal is a right to sue him without identifying him or observing rules of court designed to ensure that he is aware of the proceedings.
Nothing in the Directive requires the United Kingdom to recognise a right of that kind.
Indeed, it is questionable whether it would be consistent with article 47 of the Charter of Fundamental Rights regarding the fairness of legal proceedings.
Mr Williams second point is in reality a reiteration of the first.
It is based on article 10 of the Directive, which requires member states to ensure that there is a national bureau charged to pay compensation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in article 3 has not been satisfied.
The submission is that the Directive requires that recourse to the Bureau, as the relevant body in the United Kingdom, should be unnecessary in a case like this, because the Micra was identified.
It was only the driver who was unidentified.
This is in effect a complaint that the indemnity available from the Motor Insurers Bureau under the Untraced Drivers Agreement, which extends to untraced drivers whether or not the vehicle is identified, is wider than the Directive requires.
In reality, the complaint is not about the extent of the Bureaus coverage, which unquestionably extends to this case.
The complaint is that it is the Bureau which is involved and not the insurer.
But that is because the insurer is liable only to satisfy judgments, which is Mr Williams first point.
It is true that the measure of the Bureaus indemnity is slightly smaller than that of the insurer (because of the excess for property damage and the limited provision for costs).
But in that respect it is consistent with the Directive.
Disposal
I would allow the appeal, set aside the order of the Court of Appeal, and reinstate that of District Judge Wright.
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On 26 May 2013, the respondent, Ms Bianca Cameron, was injured when her car collided with a Nissan Micra.
It is not in dispute that the incident was due to the negligence of the driver of the Micra.
The registration number of the Micra was recorded, but the driver made off without stopping or reporting the accident to the police and has not been heard of since.
Mr Naveed Hussain, the registered keeper, was not the driver and has declined to identify the driver.
He has been convicted of failing to disclose the drivers identity.
The car was insured under a policy issued by the appellant, Liverpool Victoria Insurance Co Ltd, to a Mr Nissar Bahadur, whom the company believes to be a fictitious person.
Neither Mr Hussain nor the driver was insured under the policy to drive the car.
Ms Cameron initially sued Mr Hussain for damages.
The proceedings were amended to add a claim against Liverpool Victoria Insurance for a declaration that it would be liable to meet any judgment against him.
The insurer served a defence, denying liability on the ground that there was no right to obtain a judgment against him as there was no evidence that he was the driver.
Ms Cameron then applied to amend her claim form and particulars of claim.
She sought to substitute for Mr Hussain, as defendant, the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013.
District Judge Wright dismissed that application and entered summary judgment for the insurer.
HHJ Parker dismissed Ms Camerons appeal.
On further appeal, the Court of Appeal allowed the appeal by a majority (Gloster and Lloyd Jones LJJ, Sir Ross Cranston dissenting).
The majority considered that the court had a discretion to permit an unknown person to be sued whenever justice required it and that an alternative right of claim against the Motor Insurance Bureau (MIB) was irrelevant.
Sir Ross Cranston would have dismissed the appeal in light of the alternative right to an MIB claim.
Liverpool Victoria Insurance appealed to the Supreme Court in relation to two issues: (1) the power to issue or amend the claim form and (2) the compatibility of the Road Traffic Act 1988 (the 1988 Act) with the Sixth Motor Insurance Directive (2009/103/EC).
The Supreme Court allows the appeal.
The Court of Appeals order is set aside and that of District Judge Wright is reinstated.
Lord Sumption gives the lead judgment, with which all the Justices agree.
Part VI of the Road Traffic Act 1988 applies in this appeal.
Section 145 requires there to be an insurance policy against third party risks in relation to the use of the vehicle by the particular driver, while section 151(5) requires the insurer to satisfy any judgment falling within section 151(2), subject to
certain conditions.
Under section 151(2)(b), an insurer who has issued a policy in relation to the use of a vehicle is liable on a judgment, even where it was obtained against an uninsured driver. [3] The MIB has entered into agreements with the Secretary of State to compensate third party victims of road accidents not even covered by section 151(2)(b).
This means victims suffering personal injury or property damage caused by (1) uninsured vehicles and (2) drivers who cannot be traced.
Clause 4(d) of the 2003 Untraced Drivers Agreement (the 2003 Agreement) is applicable in Ms Camerons case. [4] It is a fundamental feature of the statutory scheme of compulsory insurance in the UK that it does not confer on victims a direct right of recovery against an insurer for the underlying liability of the driver.
The only direct right against the insurer is the right to require it to satisfy a judgment against the driver, under section 151, once the drivers liability has been established in legal proceedings.
Consistent with this approach, the 2003 Agreement assumes that judgment cannot be obtained against the driver if he cannot be identified, and therefore the only recourse is against the MIB, not the insurer. [5, 22] The general rule remains that proceedings may not be brought against unnamed parties, as is implicit in the limited exceptions contemplated by the Civil Procedure Rules (CPR) [9].
The main exceptions are: (1) possession actions against trespassers, (2) actions and orders where some of the wrongdoers were known so they could be sued both personally and as representing their unidentified associates and (3) the wider jurisdiction recognised in Bloomsbury Publishing Group Plc v News Group Newspapers Ltd [2003] 1 WLR 1633 (Ch) [10].
The key distinction is between two classes of unnamed defendant cases: (1) anonymous defendants who are identifiable but whose names are unknown and (2) defendants, such as in most hit and run drivers, who are not only anonymous but cannot even be identified.
In category (1), defendants are described in such a way that it is at least possible to locate or communicate with them, and to determine whether they are the person described in the claim form.
In category (2), this is not possible. [13] This appeal is not directly concerned with service it is about the issue or amendment of the claim form but the legitimacy of issuing or amending can be tested against the possibility of service [14].
An identifiable but anonymous defendant can be served, if necessary by CPR r.6.15 alternative service [15].
Interim injunction cases can fall in category (1), because the process of enforcing the injunction will sometimes be enough to bring the proceedings to the defendants attention, as in Bloomsbury [15].
However, an unknown person is not identified simply by referring to past actions [16].
Proceedings against such a person (in category (2)) offend the fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable a fair hearing [17 18].
While CPR r.6.15 permits alternative service, the mode of service should be such as can reasonably be expected to bring the proceedings to the defendants attention [20 21].
Applying these principles to the present appeal, alternative service against an unidentifiable person referred to in the proceedings only by a pseudonym or description cannot be justified.
In particular, ordinary service on the insurer would not constitute service on the driver, and alternative service could not be expected to reach the driver of the Micra.
Nor would it be appropriate to dispense with service under CPR r.6.16 in a case where it could not be shown that the defendant knew of the proceedings. [21 26] As to the EU law issue on the Sixth Motor Insurance Directive, the Supreme Court considers no point on the Directive arises because: (1) Ms Cameron is not trying to assert a direct right against the insurer for the underlying wrong (her claim is for damages from the driver) and (2) it is consistent with the Directive to require a claim against the MIB, not the insurer, in this class of case [27 30].
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The question at issue on this appeal is whether two provisions of the State Immunity Act 1978 are consistent with the European Convention on Human Rights and the European Union Charter of Fundamental Rights.
The two provisions are section 4(2)(b) and section 16(1)(a).
I shall set out both below, but in summary the effect of section 4(2)(b) is that a state is immune as respects proceedings relating to a contract of employment between a state and a person who at the time of the contract is neither a national of the United Kingdom nor resident there; and the effect of section 16(1)(a) is that a state is immune as respects proceedings concerning the employment of members of a diplomatic mission, including its administrative, technical and domestic staff.
It is common ground that the answer depends in both cases on whether these provisions have any basis in customary international law although, as I shall explain, there is an issue about what kind of basis it must have.
Ms Minah Janah, the Respondent to this appeal, is a Moroccan national.
In 2005, when she was resident in Libya, she was recruited to work for the Libyan government as a domestic worker at its embassy in London.
She entered the United Kingdom on a visa which recorded her status as Domestic Worker (Diplomatic), and continued to work for the embassy until she was dismissed in 2012.
During that time, she worked successively in a number of Libyan diplomatic households, and latterly in the residence of the ambassador.
Her duties were cooking, cleaning, laundry, shopping and serving at meals.
In April 2012, she began proceedings against Libya in the Employment Tribunal in support of a claim for failure to pay her the National Minimum Wage, breaches of the Working Time Regulations, failure to provide her with payslips or a contract of employment, unfair dismissal, discrimination and harassment.
At all material times since her arrival in the United Kingdom, Ms Janah has been resident, but not permanently resident here.
Ms Fatimah Benkharbouche is also a Moroccan national.
In 2000, when she was working for the Sudanese government in Iraq, she agreed to move to the United Kingdom to work for its embassy in London as a housekeeper and cook to the ambassador.
Her employment by the London embassy began on 16 May 2000 and continued until the autumn of 2001.
She then returned for some years to Iraq, before being re engaged to work for the London embassy in the same role as before.
Her second term of employment began on 28 January 2005 and continued until she was dismissed on 27 November 2010.
She subsequently began proceedings in the Employment Tribunal in support of claims for unfair dismissal, failure to pay her the National Minimum Wage, unpaid wages and holiday pay, and breaches of the Working Time Regulations.
By the time of her dismissal, she was permanently resident in the United Kingdom, having been granted indefinite leave to remain with effect from 25 January 2010.
It is common ground that under the terms of the State Immunity Act 1978, Libya is entitled to state immunity in respect of Ms Janahs claim and Sudan in respect of Ms Benkharbouches.
In Ms Janahs case, this is because she has never been a Libyan national and was not a national or permanent resident of the United Kingdom at the time when her contract was made.
Both section 4(2)(b) and section 16(1)(a) therefore apply to her.
In Ms Benkharbouches case, it is because section 16(1)(a) applies to her.
There are as yet no findings about whether the facts of her case bring her within section 4(2)(b).
Both claims were dismissed by different judges in the Employment Tribunal on the ground that the employer was immune.
In the Employment Appeal Tribunal the two cases were heard together.
The EAT declared that sections 4(2)(b) and 16(1)(a) of the Act should be disapplied so far as they prevented Ms Janah from bringing claims based on EU law, on the ground that they were contrary to the right of access to a court guaranteed by article 47 of the EU Charter.
The claims based on discrimination and harassment and breaches of the Working Time Regulations were accordingly allowed to proceed.
Leave to appeal to the Court of Appeal was granted, inter alia, in order to enable it to consider whether to make a declaration of incompatibility under section 4 of the Human Rights Act 1998.
This led to the joinder of the Secretary of State under section 5 of the Human Rights Act 1998 so as to participate in the appeal.
The Court of Appeal affirmed the judgment of the EAT, disapplying the relevant provisions so far as they applied to the EU law claims.
It also made a declaration of incompatibility affecting all the claims, whether founded on domestic or EU law.
Sudan elected not to participate in the proceedings before the Court of Appeal and has not appealed to this court.
Ms Benkharbouche was represented in the Court of Appeal but has not appeared before us.
Libya participated in the proceedings in the Court of Appeal, but although it was granted permission to appeal to this court, it has not been permitted to pursue the appeal because it has failed to comply with an order of this court for security for costs.
In those circumstances, the effective participants in the appeal to this court have been the Secretary of State, who appeals in both cases, and Ms Janah.
We have also received written and oral submissions on behalf of the AIRE centre, and written submissions on behalf of 4A Law.
It is agreed that Ms Janahs appeal raises all of the issues in either case, but I shall refer from time to time to Ms Benkharbouches position also.
I propose first to examine the provisions of the State Immunity Act and then the requirements of the Human Rights Convention, before turning to the relationship between the Act and the international law of state immunity.
The State Immunity Act 1978
Before 1978, state immunity was governed in the United Kingdom by the common law.
Properly speaking, it comprised two immunities whose boundaries were not necessarily the same: an immunity from the adjudicative jurisdiction of the courts of the forum, and a distinct immunity from process against its property in the forum state.
During the second half of the nineteenth century, the common law had adopted the doctrine of absolute immunity in relation to both.
The classic statement was that of Lord Atkin in Compania Naviera Vascongada v S S Cristina (The Cristina) [1938] AC 485, 490: The courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages.
By 1978, however, the position at common law had changed as a result of the decisions of the Privy Council in The Philippine Admiral [1977] AC 373 and the Court of Appeal in Trendtex Trading Corpn v Central Bank of Nigeria [1977] QB 529.
These decisions marked the adoption by the common law of the restrictive doctrine of sovereign immunity already accepted by the United States and much of Europe.
The restrictive doctrine recognised state immunity only in respect of acts done by a state in the exercise of sovereign authority (jure imperii), as opposed to acts of a private law nature (jure gestionis).
Moreover, and importantly, the classification of the relevant act was taken to depend on its juridical character and not on the states purpose in doing it save in cases where that purpose threw light on its juridical character: Playa Larga (Owners of Cargo Lately Laden on Board) v I Congreso del Partido (Owners) [1983] 1 AC 244.
Before the adoption of the restrictive doctrine at common law, the United Kingdom had signed a number of treaties limiting the scope of state immunity in particular respects.
It was a signatory to the International Convention for the Unification of Certain Rules concerning the Immunity of State owned Ships (Brussels, 1926), which restricted the immunity of state owned trading vessels.
It had also signed the European Convention on State Immunity (Basle, 1972), a regional treaty drawn up under the auspices of the Council of Europe which identified specified categories of acts done by foreign states in the territory of the forum state which would not attract immunity.
These treaties were concerned mainly with acts of a kind which would generally not attract immunity under the restrictive doctrine.
But neither of them sought to codify the law of state immunity or to apply the restrictive doctrine generally.
In addition, they have attracted limited international support.
The Brussels Convention of 1926 has attracted 31 ratifications to date.
The Basle Convention of 1972 has to date been ratified by only eight of the 47 countries of the Council of Europe.
One purpose of the State Immunity Act 1978 was to give effect to the Brussels and Basle Conventions, and thereby enable the United Kingdom to ratify them.
It did this in both cases in 1979.
But by this time, the conventions had been largely superseded by the adoption of the restrictive doctrine of state immunity at common law.
The Act therefore dealt more broadly with state immunity, by providing in section 1 for a state to be immune from the jurisdiction of the courts of the United Kingdom except as provided in the following sections of Part I.
The exceptions relate to a broad range of acts conceived to be of a private law character, including widely defined categories of commercial transactions and commercial activities, as well as contracts of employment and enforcement against state owned property used or intended for use for commercial purposes.
In Alcom Ltd v Republic of Colombia [1984] AC 580, 597 598, Lord Diplock, with whom the rest of the Appellate Committee agreed, observed that given the background against which it was enacted, the provisions of the Act fall to be construed against the background of those principles of public international law as are generally recognised by the family of nations.
The principle of international law that is most relevant to the subject matter of the Act is the distinction that has come to be drawn between claims arising out of those activities which a state undertakes jure imperii, ie, in the exercise of sovereign authority, and those arising out of activities which it undertakes jure gestionis, ie transactions of the kind which might appropriately be undertaken by private individuals instead of sovereign states.
For present purposes, the relevant provisions of the State Immunity Act are sections 1, 3, 4 and 16.
So far as they bear on the points at issue, they provide as follows: Immunity from jurisdiction 1.(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this part of this Act. 3.(1) A State is not immune as respects proceedings relating to (3) a commercial transaction entered into by the (a) State; an obligation of the State which by virtue of a (b) contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.
In this section commercial transaction means any contract for the supply of goods or services; (a) (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority; but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual. 4.(1) A State is not immune as respects proceedings relating to a contract of employment between the State and an individual where the contract was made in the United Kingdom or the work is to be wholly or partly performed there. (2) Subject to subsections (3) and (4) below, this section does not apply if at the time when the proceedings are brought the (a) individual is a national of the State concerned; or (b) at the time when the contract was made the individual was neither a national of the United Kingdom nor habitually resident there; or (c) in writing. the parties to the contract have otherwise agreed 16.(1) This Part of this Act does not affect any immunity or privilege conferred by the Diplomatic Privileges Act 1964 or the Consular Relations Act 1968; and (a) section 4 above does not apply to proceedings concerning the employment of the members of a mission within the meaning of the Convention scheduled to the said Act of 1964 or of the members of a consular post within the meaning of the Convention scheduled to the said Act of 1968.
The Convention scheduled to the Diplomatic Privileges Act of 1964 is the Vienna Convention on Diplomatic Relations (1961).
Article 1 of that Convention defines members of a mission as including the staff of the mission in the domestic service of the mission.
It follows that section 16(1)(a) covers employees in the position of Ms Janah and Ms Benkharbouche.
Since the passing of the State Immunity Act, the United Kingdom has signed, but not ratified, a further treaty, the United Nations Convention on Jurisdictional Immunities of States and their Property (2004).
The Convention is the result of the long drawn out labours of the United Nations International Law Commission between 1979 and 2004.
For the most part, it is consistent with the United Kingdom Act, which indeed was one of the models used by the draftsmen.
But there are differences, in particular relating to contracts of employment, which would require the Act to be amended before the United Kingdom could ratify it.
To date, however, the United Nations Convention has attracted limited support.
Twenty eight states have signed it, including the United Kingdom.
Of these, 21 have ratified it, not including the United Kingdom.
Libya and Sudan have neither signed nor ratified it.
It will not come into force until it has been ratified by 30 states.
The European Convention on Human Rights
The respondents case is that sections 4(2)(b) and 16(1)(a) of the State Immunity Act 1978 are incompatible with article 6 of the Convention, because they unjustifiably bar access to a court to determine their claims.
Article 4(2)(b) is also said to be incompatible with article 14 read in conjunction with article 6, because it unjustifiably discriminates on grounds of nationality.
For the moment I shall put the case on discrimination to one side, to return to it later.
The main point argued before us was based on article 6.
Article 6 of the Human Rights Convention provides 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.
Two points are well established, and uncontroversial in this appeal.
The first is that article 6 implicitly confers a right of access to a court to determine a dispute and not just a right to have it tried fairly: Golder v United Kingdom (1975) 1 EHRR 524.
The right to a court corresponds to a right which the common law has recognised for more than two centuries.
As early as the 1760s, Blackstone wrote in his Commentaries, 4th ed (1876), 111: A right of every [man] is that of applying to the courts of justice for redress of injuries.
Since the law is in England the supreme arbiter of every mans life, liberty and property, courts of justice must at all times be open to the subject and the law be duly administered therein.
The second uncontroversial point is that although there is no express qualification to a litigants rights under article 6 (except in relation to the public character of the hearing), the right to a court is not absolute under the Convention any more than it is at common law.
It is an aspect of the rule of law, which may justify restrictions if they pursue a legitimate objective by proportionate means and do not impair the essence of the claimants right: Ashingdane v United Kingdom (1985) 7 EHRR 528, para 57.
One of the perennial problems posed by the right to a court is that article 6 is concerned with the judicial processes of Convention states, and not with the content of their substantive law.
When the Duke of Westminster complained in James v United Kingdom (1986) 8 EHRR 123 that the Leasehold Reform Act 1967 allowed qualifying leaseholders to enfranchise their properties without providing any grounds on which the freeholder could object, he was met with the answer (para 81) that article 6 does not in itself guarantee any particular content for (civil) rights and obligations in the substantive law of the Contracting States.
In Fayed v United Kingdom (1994) 18 EHRR 393, the Court explained (para 65) that it was not at liberty to create through the interpretation of article 6(1) a substantive civil right which has no legal basis in the state concerned, but that it would be inconsistent with the rule of law if the state were to confer immunities from civil liability on large groups or categories of persons.
These statements have been repeated in much of the subsequent case law of the Strasbourg Court.
It is not always easy to distinguish between cases in which the petitioners problem arose from some difficulty in accessing the adjudicative jurisdiction of the court, and cases where it arose from the rules of law which fell to be applied when he got there.
The jurisprudence of the Strasbourg court establishes that, as a general rule, the question whether such cases amount to the creation of immunities engaging article 6 depends on whether the rule which prevents the litigant from succeeding is procedural or substantive: see, among other cases, Fayed v United Kingdom, at para 67; Al Adsani v United Kingdom (2002) 34 EHRR 11, para 47; Fogarty v United Kingdom (2001) 34 EHRR 12, para 25; Roche v United Kingdom (2005) 42 EHRR 30, paras 118 119; Markovic v Italy (2006) 44 EHRR 52, para 94.
The dichotomy between procedural and substantive rules is not always as straightforward as it sounds, partly because the categories are not wholly distinct and partly because they do not exhaust the field.
There may be rules of law, such as limitation, which are procedural in the sense that they bar the remedy, not the right, but which operate as a defence.
There may be rules of law which require proceedings to be dismissed without consideration of the merits.
These may be substantive rules, such as the foreign act of state doctrine, or procedural rules such as state immunity.
There may be rules, whether substantive or procedural, which limit the territorial or subject matter jurisdiction of the domestic courts, and which they have no discretion to transgress.
Or the claimants right may be circumscribed by a substantive defence, such as privilege in the law of defamation.
Or he may simply have no legal right to assert under the domestic law, for example because the law is that no relevant duty is owed by a particular class of defendants although it would be by defendants generally.
But these are not refinements with which the Strasbourg court has traditionally been concerned.
What the Strasbourg court means by a procedural rule is a rule which, whether technically procedural or substantive in character, has the effect of barring a claim for reasons which do not go to its legal merits; that is to say, rules which do not define the existence or extent of any legal obligation.
State immunity in the jurisprudence of the European Court of Human Rights
State immunity is a mandatory rule of customary international law which defines the limits of a domestic courts jurisdiction.
Unlike diplomatic immunity, which the modern law treats as serving an essentially functional purpose, state immunity does not derive from the need to protect the integrity of a foreign states governmental functions or the proper conduct of inter state relations.
It derives from the sovereign equality of states.
Par in parem non habet imperium.
In the modern law the immunity does not extend to acts of a private law character.
In respect of these, the state is subject to the territorial jurisdiction of the forum in the same way as any non state party.
In Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, at para 59, the International Court of Justice observed that the rule occupies an important place in international law and international relations.
It derives from the principle of sovereign equality of States, which, as article 2, para 1, of the Charter of the United Nations makes clear, is one of the fundamental principles of the international legal order.
The rule, where it applies, is that a state may not be impleaded in a domestic court against its will.
State immunity may be waived.
But waiver does not dispense with the rule.
It is inherent in the rule.
It is a voluntary submission to the forum courts jurisdiction, which constitutes the consent that has always qualified the rule.
The International Court of Justice has characterised state immunity as procedural: Democratic Republic of the Congo v Belgium (Arrest Warrant of 11 April 2000) [2002] ICJ Rep 3, paras 59 61; Germany v Italy: Greece Intervening (Jurisdictional Immunities of the State) [2012] ICJ Rep 99, at paras 92 97.
This is correct, but state immunity is not procedural in the sense that the organisation and practices of the courts are procedural.
It is procedural in the same sense as that concept has been used in the case law of the European Court of Human Rights.
In other words, it requires the court to dismiss the claim without determining its merits.
But it leaves intact the claimants legal rights and any relevant defences, which remain available, for example, to be adjudicated upon in the courts of the state itself.
This gives rise to difficulty in a case where the rule goes to the courts jurisdiction.
Proceedings brought against a state entitled to immunity are not a nullity.
But the courts jurisdiction to entertain the proceedings is limited to examining the basis on which immunity is asserted and determining whether it applies.
As the International Court of Justice put it in Jurisdictional Immunities of the State (para 60), the question whether the acts relied upon are such as to attract immunity must be determined before that jurisdiction can be exercised, whereas the legality or illegality of the act is something which can be determined only in the exercise of that jurisdiction.
The impleaded state may consent to the proceedings.
Where, however, it does not consent, there is no jurisdiction to proceed to the adjudicatory stage.
The court must dismiss the claim.
As Lord Bingham observed in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270, at para 14, article 6 cannot confer on a court a jurisdiction which it does not have, and a state cannot be said to deny access to its courts if it has no access to give.
In Holland v Lampen Wolfe [2000] 1 WLR 1573, Lord Millett had put the matter in this way, at p 1588: Article 6 requires contracting states to maintain fair and public judicial processes and forbids them to deny individuals access to those processes for the determination of their civil rights.
It presupposes that the contracting states have the powers of adjudication necessary to resolve the issues in dispute.
But it does not confer on contracting states adjudicative powers which they do not possess.
State immunity, as I have explained, is a creature of customary international law and derives from the equality of sovereign states.
It is not a self imposed restriction on the jurisdiction of its courts which the United Kingdom has chosen to adopt.
It is a limitation imposed from without upon the sovereignty of the United Kingdom itself.
The immunity in question in the present case belongs to the United States.
The United States has not waived its immunity.
It is not a party to the Convention.
The Convention derives its binding force from the consent of the contracting states.
The United Kingdom cannot, by its own act of acceding to the Convention and without the consent of the United States, obtain a power of adjudication over the United States which international law denies it.
The Strasbourg court has dealt with many cases involving claims to state immunity since it first grappled with these matters in Waite and Kennedy v Germany (2000) 30 EHRR 261.
Although the reasoning has been somewhat modified over the years, its position has remained constant.
Notwithstanding the difficulty pointed out in the preceding paragraph, it has always treated article 6 as being engaged by a successful claim to state immunity.
But it has applied the Convention in the light of article 31(3) of the Vienna Convention of the Law of Treaties, which requires an international treaty to be interpreted in the light of (inter alia) any relevant rules of international law.
Against that background, it has always held that the proper application of the rule of state immunity was justifiable because it was derived from a fundamental principle of international law.
The only cases in which it has ever held article 6 to have been violated are those in which it has found that a claim to state immunity was unfounded in international law.
It is convenient to start with three judgments delivered on the same day by a similarly constituted Grand Chamber: Al Adsani v United Kingdom (2001) 34 EHRR 11, McElhinney v Ireland (2001) 34 EHRR 13 and Fogarty v United Kingdom (2001) 34 EHRR 12.
In Al Adsani, the applicant had been barred by state immunity from proceeding in England against the government of Kuwait in an action claiming damages for torture.
The Court held (para 48) that article 6 was engaged, because the grant of immunity is seen not as qualifying a substantive right but as a procedural bar on the national courts power to determine the right.
It rejected the submission of the British government (para 44) that article 6 could not extend to matters which under international law lay outside the jurisdiction of the state.
However, it held that the bar was justifiable, for reasons stated at paras 54 56: 54.
The Court must first examine whether the limitation pursued a legitimate aim.
It notes in this connection that sovereign immunity is a concept of international law, developed out of the principle par in parem non habet imperium, by virtue of which one State shall not be subject to the jurisdiction of another State.
The Court considers that the grant of sovereign immunity to a State in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between States through the respect of another States sovereignty. 55.
The Court must next assess whether the restriction was proportionate to the aim pursued.
It recalls that the Convention has to be interpreted in the light of the rules set out in the Vienna Convention of 23 May 1969 on the Law of Treaties, and that article 31(3)(c) of that treaty indicates that account is to be taken of any relevant rules of international law applicable in the relations between the parties.
The Convention, in including article 6, cannot be interpreted in a vacuum.
The Court must be mindful of the Conventions special character as a human rights treaty, and it must also take the relevant rules of international law into account.
The Convention should so far as possible be interpreted in harmony with other rules of international law of which it forms part, including those relating to the grant of State immunity.
It follows that measures taken by a High Contracting 56.
Party which reflect generally recognised rules of public international law on State immunity cannot in principle be regarded as imposing a disproportionate restriction on the right of access to court as embodied in article 6(1).
Just as the right of access to court is an inherent part of the fair trial guarantee in that article, so some restrictions on access must likewise be regarded as inherent, an example being those limitations generally accepted by the community of nations as part of the doctrine of State immunity.
McElhinney v Ireland (2001) 34 EHRR 13 arose out of a claim against the British government in the courts of Ireland for psychological injury arising from an incident at the border with Northern Ireland.
The Court rejected the allegation that by upholding the assertion of immunity the Irish court had violated article 6, in language substantially identical to that employed in Al Adsani.
Fogarty v United Kingdom (2001) 34 EHRR 12 was the first of a number of cases to come before the Strasbourg court involving employment disputes between a state and non diplomatic staff at one of its embassies.
It concerned a sex discrimination claim brought in England against the United States by a secretary employed at US embassy in London.
Once again, the Court held in substantially identical language that article 6(1) was engaged but not violated.
The importance of the decision for present purposes lies in the additional observations which the Court addressed specifically to diplomatic employment disputes.
The Court said at para 37 that: on the material before it, there appears to be a trend in international and comparative law towards limiting State immunity in respect of employment related disputes.
However, where the proceedings relate to employment in a foreign mission or embassy, international practice is divided on the question whether State immunity continues to apply and, if it does so apply, whether it covers disputes relating to the contracts of all staff or only more senior members of the mission.
Certainly, it cannot be said that the United Kingdom is alone in holding that immunity attaches to suits by employees at diplomatic missions or that, in affording such immunity, the United Kingdom falls outside any currently accepted international standards.
That being so the Court concluded (para 39) that in conferring immunity on the United States in the present case by virtue of the provisions of the 1978 Act, the United Kingdom cannot be said to have exceeded the margin of appreciation allowed to States in limiting an individual's access to court.
These observations are consistent with the view that in the absence of a recognised rule of customary international law, article 6 is satisfied if the rule applied by a Convention state lies within the range of possible rules consistent with current international standards.
The first case in which the European Court of Human Rights held that the recognition of state immunity violated article 6(1) of the Convention was Cudak v Lithuania (2010) 51 EHRR 15.
The applicant was a secretary and switchboard operator employed in the Polish embassy in Vilnius, Lithuania.
The Supreme Court of Lithuanias decision appears to have been closely based on the Strasbourg courts decision in Fogarty.
It had upheld Polands claim to state immunity on the ground that: there was no uniform international practice of states whereby the members of staff of foreign states diplomatic missions who participated in the exercise of the public authority of the states they represented could be distinguished from other members of staff.
As there were no legally binding international rules, it was for each state to take its own decisions in such matters. (para 24) The European Court of Human Rights reiterated the general principles governing the application of article 6 in such cases, which they had previously laid down in Fogarty.
They held that although that had been a complaint about the employers recruitment practices, the same principles applied to claims arising out of a subsisting employment relationship.
However, they held that the Lithuanian courts had exceeded the margin of appreciation available to them.
The reason was that there were now binding international rules on contracts of employment.
The court found these rules in article 11 of the International Law Commissions draft articles of 1991 on Jurisdictional Immunities of States and their Property.
The draft articles were part of the travaux preparatoires for what ultimately became, 13 years later, the United Nations Convention.
Draft article 11(1) provided that there was no immunity in respect of contracts of employment to be performed in the forum state, save in five cases specified in draft article 11(2).
The five cases were: (a) the employee has been recruited to perform functions closely related to the exercise of governmental authority; the subject of the proceeding is the recruitment, renewal (b) of employment or reinstatement of an individual; (c) the employee was neither a national nor a habitual resident of the State of the forum at the time when the contract of employment was concluded; (d) time when the proceeding is instituted; or (e) the employer State and the employee have otherwise agreed in writing, subject to any considerations of public policy conferring on the courts of the State of the forum exclusive jurisdiction by reason of the subject matter of the proceeding. the employee is a national of the employer State at the The Strasbourg court recognised that the draft articles were not a treaty and that Lithuania had not ratified the Convention ultimately adopted.
But it held that article 11 was nevertheless binding on the state because it reflected customary international law: see paras 64 67.
The court considered that none of the five exceptions in draft article 11(2) applied.
In particular, exception (a) did not apply.
It then reviewed the Lithuanian Supreme Courts findings of fact and concluded that it had given inadequate reasons for regarding the applicants employment as being related to the exercise of governmental authority: 70.
The Court observes in particular that the applicant was a switchboard operator at the Polish Embassy whose main duties were: recording international conversations, typing, sending and receiving faxes, photocopying documents, providing information and assisting with the organisation of certain events.
Neither the Lithuanian Supreme Court nor the respondent Government have shown how these duties could objectively have been related to the sovereign interests of the Polish Government.
Whilst the schedule to the employment contract stated that the applicant could have been called upon to do other work at the request of the head of mission, it does not appear from the case file nor has the Government provided any details in this connection that she actually performed any functions related to the exercise of sovereignty by the Polish State.
In its judgment of June 25, 2001 the Supreme Court 71. stated that, in order to determine whether or not it had jurisdiction to hear employment disputes involving a foreign mission or embassy, it was necessary to establish in each case whether the employment relationship in question was one of a public law nature (acta jure imperii) or of a private law nature (acta jure gestionis).
In the present case, however, the Supreme Court found that it had been unable to obtain any information allowing it to establish the scope of the applicant's actual duties.
It therefore referred solely to the title of her position, and to the fact that Poland had invoked immunity from jurisdiction, in concluding that the duties entrusted to her had facilitated, to a certain degree, the exercise by the Republic of Poland of its sovereign functions.
Some further explanation is called for concerning the Strasbourg Courts treatment of the ILCs draft articles of 1991, since it is criticised by Ms Karen Steyn QC, for the Secretary of State on grounds that I think misunderstand it.
The Court began its observations on this question by noting (para 64) that the application of absolute state immunity has, for many years, clearly been eroded.
This is a reference to the progressive adoption of the restrictive doctrine.
The court treated draft article 11 as reflecting the adoption of the restrictive doctrine in the domain of employment.
As regards the critical parts of draft article 11, this is plainly correct.
The exceptions which were relevant in Ms Cudaks case were (a) and (b).
Of these, (a) directly imported the classic distinction between acts jure imperii and acts jure gestionis.
As to (b), the International Law Commissions commentary on the draft articles suggested that it confirmed the existing practice of states by which state immunity extended to the recruitment, renewal of employment and reinstatement of an employee, these being dependent on policy considerations lying within a states discretionary power and likely to have been determined as an exercise of governmental authority.
A substantial body of domestic case law from various jurisdictions is cited in support of this statement: see Report of the International Law Commission on the work of its forty third session, 29 April 19 July 1991 [A/46/10], pp 43 44, para (10).
The Strasbourg court presumably based its reasoning on the draft articles of 1991 rather than the final text of the Convention because the relevant proceedings in Lithuania occurred in 2000 and 2001, before the final text of the Convention was adopted.
But although the final text of article 11 differs in significant respects from the draft article, exception (a) is substantially the same in the final version, and exception (b) (renumbered (c)) is identical.
The Court was therefore right to regard these provisions of draft article 11 as applying the restrictive doctrine of state immunity to contracts of employment, and as foreshadowing, in that respect, the terms of the Convention.
I do not read the Strasbourg Court as having assumed that everything else in draft article 11 was declaratory of existing customary international law.
It did not need to, because the other exceptions in article 11(2) did not affect the issue.
Ms Cudak appears to have been a national of or habitually resident in Lithuania, and there was no contractual submission to the local forum.
Exceptions (c), (d) and (e) therefore did not arise.
Sabeh El Leil v France (2011) 54 EHRR 14 arose out of another unfair dismissal claim, this time brought in the French courts by the head of the accounts department of the Kuwaiti embassy in Paris.
In this case, the final decision of the French courts barring the claim on grounds of state immunity was handed down after the adoption of the United Nations Convention.
After reiterating the principle on which the Strasbourg court had always held article 6 to be engaged in such cases, the Grand Chamber summarised its case law as follows (paras 51 52): 51.
Therefore, in cases where the application of the rule of state immunity from jurisdiction restricts the exercise of the right of access to a court, the Court must ascertain whether the circumstances of the case justified such restriction. 52.
The Court further reiterates that such limitation must pursue a legitimate aim and that state immunity was developed in international law out of the principle par in parem non habet imperium, by virtue of which one state could not be subject to the jurisdiction of another.
It has taken the view that the grant of immunity to a state in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between states through the respect of another state's sovereignty.
The Court then restated the view which it had taken in Cudak, that article 11 of the ILCs draft articles of 1991, as now enshrined in the 2004 Convention represented customary international law binding as such even on those states (such as France) which had not ratified it at the relevant time.
In saying this, the Court must have had in mind exceptions (a) and (b) in draft article 11(2), since these are the only potentially relevant exceptions subsequently enshrined in the Convention.
The rest of article 11(2) in the final version is very different from the draft.
The Court found that article 6 had been violated because the Cour de Cassation had not had regard to customary international law as embodied in article 11 of the United Nations Convention and had not given adequate reasons for finding that some of the applicants duties involved participating in exercises of governmental authority.
The reasoning in Cudak and Sabeh el Leil was subsequently applied by the Strasbourg court in Wallishauser v Austria (Application 156/04, Judgment of 19 Nov 2012) and Radunovi v Montenegro (Applications 45197/13, 53000/13 and 73404/13, Judgment 25 Oct 2016), all of them cases involving technical and administrative staff of a foreign embassy.
The Court of Appeal in the present cases thought that it was questionable whether article 11 of the draft articles was in fact a definitive statement of customary international law in embassy employment disputes.
For my part, I would agree that some of the Strasbourg courts observations about article 11 have simply served to sow confusion.
Article 11 codifies customary international law so far as it applies the restrictive doctrine to contracts of employment.
That would have been enough for Ms Cudaks and Mr El Leils purposes.
So far as article 11 goes beyond the application of the restrictive doctrine, its status is uncertain.
I shall expand on this point below.
It would perhaps have been better if the Strasbourg court had simply said that employment disputes should be dealt with in accordance with the restrictive doctrine instead of in accordance with an article of a treaty which is not in force and which a large majority of states have neither signed nor ratified.
But this is a point of presentation, not of substance.
The Threshold Issue: Jurisdiction
Ms Steyn for the Secretary of State has raised a threshold issue.
She contends that a decision of a domestic court that a state is entitled to immunity does not engage article 6 at all, because its effect is that there is no jurisdiction capable of being exercised and no access to a court capable of being withheld.
As I have pointed out, this is a point which was powerfully made in the House of Lords in Holland v Lampen Wolfe [2000] 1 WLR 1573 and Jones v Saudi Arabia [2007] 1 AC 270, but was rejected by the Grand Chamber in Al Adsani.
In Jones v United Kingdom (2014) 59 EHRR 1, a chamber of the European Court of Human Rights was invited to depart from Al Adsani on this point, but it declined to do so, adhering to its long standing distinction between procedural and substantive bars to the exercise of jurisdiction.
Ms Steyn now invites us to resolve this issue in accordance with the views of the House of Lords.
In my view, there may well come a time when this court has to choose between the view of the House of Lords and that of the European Court of Human Rights on this fundamental question.
But the premise on which the question arises is that there is a rule of international law which denies the English court jurisdiction in the instant case.
In both Jones and Lampen Wolfe, the Appellate Committee had satisfied itself that there was.
I would not be willing to decide which of the competing views about the implications of a want of jurisdiction is correct, unless the question actually arose.
So the first question which I shall address is what is the relevant rule of international law.
Identifying Customary International Law
To identify a rule of customary international law, it is necessary to establish that there is a widespread, representative and consistent practice of states on the point in question, which is accepted by them on the footing that it is a legal obligation (opinio juris): see Conclusions 8 and 9 of the International Law Commissions Draft Conclusions on Identification of Customary International Law (2016) [A/71/10].
There has never been any clearly defined rule about what degree of consensus is required.
The editors of Brownlies Principles of Public International Law, 8th ed (2012), 24, suggest that complete uniformity of practice is not required, but substantial uniformity is.
This accords with all the authorities.
In the words of the International Court of Justice The Court does not consider that, for a rule to be established as customary, the corresponding practice must be in absolutely rigorous conformity with the rule.
In order to deduce the existence of customary rules, the Court deems it sufficient that the conduct of States should, in general, be consistent with such rules, and that instances of State conduct inconsistent with a given rule should generally have been treated as breaches of that rule, not as indications of the recognition of a new rule: Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America), (1986) ICJ Rep, 14, at para 186.
What is clear is that substantial differences of practice and opinion within the international community upon a given principle are not consistent with that principle being law: Fisheries Case (United Kingdom v Norway), (1951) ICJ Rep 116, 131.
In view of the emphasis placed by the European Court of Human Rights on the United Nations Convention and its antecedent drafts, it is right to point out that a treaty may have no effect qua treaty but nevertheless represent customary international law and as such bind non party states.
The International Law Commissions Draft Conclusions on Identification of Customary International Law (2016) [A/71/10], propose as Conclusion 11(1): A rule set forth in a treaty may reflect a rule of customary international law if it is established that the treaty rule: (a) codified a rule of customary international law existing at the time when the treaty was concluded; (b) has led to the crystallization of a rule of customary international law that had started to emerge prior to the conclusion of the treaty; or (c) has given rise to a general practice that is accepted as law (opinio juris) thus generating a new rule of customary international law.
It would be difficult to say that a treaty such as the United Nations Convention which has never entered into force had led to the crystallisation of a rule of customary international law that had started to emerge before it was concluded.
For the same reason, it is unlikely that such a treaty could have given rise to a general practice that is accepted as law.
These difficulties are greatly increased in the case of the United Nations Convention by the consideration that in the 13 years which have passed since it was adopted and opened for signature it has received so few accessions.
The real significance of the Convention is as a codification of customary international law.
In Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2007] 1 AC 270, Lord Bingham described it (para 26) as the most authoritative statement available on the current international understanding of the limits of state immunity in civil cases.
However, it is not to be assumed that every part of the Convention restates customary international law.
As its preamble recites, it was expected to contribute to the codification and development of international law and the harmonisation of practice in this area.
Like most multilateral conventions, its provisions are based partly on existing customary rules of general acceptance and partly on the resolution of points on which practice and opinion had previously been diverse.
It is therefore necessary to distinguish between those provisions of the Convention which were essentially declaratory and those which were legislative in the sense that they sought to resolve differences rather than to recognise existing consensus.
That exercise would inevitably require one to ascertain how customary law stood before the treaty.
The margin of appreciation: a tenable view
The Secretary of States case is that there is no sufficient consensus on the application of state immunity to a contract for the employment of non diplomatic staff of a foreign diplomatic mission, to found any rule of customary international law on the point.
He submits that two consequences follow from this.
The first is that article 6 of the Human Rights Convention is satisfied if the rule of the forum state reflects generally recognised principles of international law.
For this purpose, it is enough for the forum state to apply a tenable view of what international law is, or at any rate that its domestic law applies a solution that is not outside the currently accepted international standards treated as a benchmark in Fogarty.
He submits that it is not necessary to show that international law requires the foreign state to be treated as immune.
The second consequence is said to be that in the absence of a rule of customary international law justifying some other solution, the state employer is entitled to absolute immunity.
This is because, in the Secretary of States submission, the restrictive doctrine of state immunity operates by grafting exceptions onto the principle of absolute immunity, so that unless and until a relevant exception has achieved the status of customary international law, the immunity remains unqualified.
I can deal quite shortly with the suggested distinction between reflects and requires, for in my opinion it is misconceived.
The argument is based on the observation of the European Court of Human Rights in Al Adsani (para 56) that measures taken by a High Contracting Party which reflect generally recognised rules of public international law are within a states margin of appreciation.
That observation is repeated in most of the subsequent cases: see Fogarty (para 36), Cudak (para 57), Sabeh El Leil (para 49).
But in my view the distinction proposed by the Secretary of State is a purely semantic one.
International law is relevant to the operation of article 6 of the Human Rights Convention because, in accordance with article 31(3)(c) of the Vienna Convention on the Law of Treaties, the Human Rights Convention is interpreted in the light of any relevant rules of international law applicable in the relations between the parties.
It is therefore necessary to ask what is the relevant rule of international law by reference to which article 6 must be interpreted.
The relevant rule is that if the foreign state is immune then, as the International Court of Justice has confirmed in Jurisdictional Immunities of the State, the forum state is not just entitled but bound to give effect to that immunity.
If the foreign state is not immune, there is no relevant rule of international law at all.
What justifies the denial of access to a court is the international law obligation of the forum state to give effect to a justified assertion of immunity.
A mere liberty to treat the foreign state as immune could not have that effect, because in that case the denial of access would be a discretionary choice on the part of the forum state: see Al Jedda v United Kingdom (2011) 53 EHRR 23; Nada v Switzerland (2012) 56 EHRR 593, paras 180, 195; Perincek v Switzerland (2016) 63 EHRR 6, paras 258 259.
To put the same point another way, if the legitimate purpose said to justify denying access to a court is compliance with international law, anything that goes further in that direction than international law requires is necessarily disproportionate.
I conclude that unless international law requires the United Kingdom to treat Libya and Sudan as immune as regards the claims of Ms Janah and Ms Benkharbouche, the denial to them of access to the courts to adjudicate on their claim violates article 6 of the Human Rights Convention.
There are circumstances in which an English court considering the international law obligations of the United Kingdom may properly limit itself to asking whether the United Kingdom has acted on a tenable view of those obligations.
A suggestion to this effect by Sir Philip Sales and Joanne Clement, International law in domestic courts: the developing framework (2008) 124 LQR 388, 405 407 was tentatively endorsed by Lord Brown of Eaton under Heywood in R (Corner House Research) v Serious Fraud Office [2009] 1 AC 756, at para 68.
Thus the court may in principle be reluctant to decide contentious issues of international law if that would impede the executive conduct of foreign relations.
Or the rationality of a public authoritys view on a difficult question of international law may depend on whether its view of international law was tenable, rather than whether it was right.
Both of these points arose in Corner House.
Or the court may be unwilling to pronounce upon an uncertain point of customary international law which only a consensus of states can resolve.
As Lord Hoffmann observed in Jones v Saudi Arabia (para 63), it is not for a national court to develop international law by unilaterally adopting a version of that law which, however desirable, forward looking and reflective of values it may be, is simply not accepted by other states.
But I decline to treat these examples as pointing to a more general rule that the English courts should not determine points of customary international law but only the tenability of some particular view about them.
If it is necessary to decide a point of international law in order to resolve a justiciable issue and there is an ascertainable answer, then the court is bound to supply that answer.
In the present cases, the law requires us to measure sections 4(2)(b) and 16(1)(a) against the requirements of customary international law, something that we cannot do without deciding what those requirements are.
I do not read the Strasbourg court as having said anything very different in Fogarty.
The court considered (para 37) that although there had been a trend in favour of the restrictive doctrine of state immunity, there was too much diversity of state practice in the specific area of embassy staff to enable them to say that the restrictive doctrine applied to them.
In those circumstances they thought it sufficient that the United Kingdom had acted on a view of international law which, although not the only possible one, was within currently accepted international standards.
But this is not the same point as the one made by the Secretary of State, for it applies only if there is no relevant and identifiable rule of international law.
If there is such a rule, the court must identify it and determine whether it justifies the application of state immunity.
That is what the Strasbourg court did in Cudak and Sabeh El Leil, and what it criticised the Lithuanian Supreme Court and the French Court de Cassation for failing to do in those cases.
For reasons which I shall explain, I find the view expressed in Fogarty that there was no relevant and identifiable rule of international law surprising, but that is another matter.
The starting point: absolute or restrictive immunity?
The fundamental difference between the parties to this appeal concerns the starting point.
On the footing that customary international law must require the United Kingdom to treat Libya and Sudan as immune, the Secretary of State submits that it does.
This is because in his submission state immunity is absolute unless the case is brought within an internationally recognised exception to it.
This submission, if it is correct, would considerably broaden the scope of state immunity in customary international law, by extending it to any group of claimants about whom there was a diversity of state practice.
But in my view, it is not correct.
The rule of customary international law is that a state is entitled to immunity only in respect of acts done in the exercise of sovereign authority.
In the absence of a special rule to some different effect applicable to employees in the position of Ms Janah and Ms Benkharbouche, that is the default position.
It is true that the State Immunity Act 1978 adopts the drafting technique of stating a presumptive immunity subject to exceptions.
Section 1 provides that a state is immune except as provided in the following sections of Part I.
The same drafting technique is employed in other national legislation, especially in common law jurisdictions, for example the United States, Canada and Australia.
As applied to international law, the submission is lent a certain superficial plausibility by the fact that the United Nations Convention has adopted the same drafting technique.
Article 5 provides for a general immunity subject to the provisions of this Convention.
In Jones v Saudi Arabia, Lord Bingham relied on the way that the United Nations Convention was drafted as showing that a state was immune in respect of everything that was not the subject of an express exception, and concluded that the immunity extended to torture because torture was not the subject of any express exception: see paras 8 9 (Lord Bingham), and cf para 47 (Lord Hoffmann).
I do not regard these considerations as decisive of the present issue.
No one doubts that as a matter of domestic law, Part I of the State Immunity Act is a complete code.
If the case does not fall within one of the exceptions to section 1, the state is immune.
But the present question is whether the immunity thus conferred is wider than customary international law requires, and that raises different considerations.
In the first place, it is necessary to read the grant of the immunity in article 5 of the United Nations Convention together with the exceptions which follow, as an organic whole.
The exceptions are so fundamental in their character, so consistent in their objective and so broad in their effect as to amount in reality to a qualification of the principle of immunity itself rather than a mere collection of special exceptions.
Secondly, it is important when doing this to distinguish between a drafting technique and a principle of law.
The travaux prparatoires of the United Nations Convention show that the technique of stating a general rule of immunity subject to exceptions, was highly contentious.
This was partly because it might be taken as an implicit recognition that absolute immunity was the basic rule, something which many states did not accept; and partly because it was thought that it would lead to undue rigidity and thereby impede the future development of customary international law.
These differences are summarised in the Report of the International Law Commission on the Work of its thirty eighth session [A/41/10] ILC Yearbook (1986), ii(2), 16, and in the valuable commentary of OKeefe and Tams (ed), The United Nations Convention of Jurisdictional Immunities of States and their Property (2013), 99 101.
It is clear that the draftsmans objective was to remain neutral as between the competing doctrines said to represent the current state of international law.
Various proposals were made with a view to achieving this and avoiding undue rigidity.
In particular, it was proposed that what became article 5 should provide that a state was immune subject to the provisions of the present articles [and the relevant rules of general international law applicable in the matter].
This provoked much discord, and the bracketed words were ultimately dropped on the ground that they made no difference.
In its commentary on the draft articles of 1991, the International Law Commission explained that this was because it was considered that any immunity or exception to immunity accorded under the present articles would have no effect on general international law and would not prejudice the future development of State practice Article 5 is also to be understood as the statement of the principle of State immunity forming the basis of the present draft articles and does not prejudge the question of the extent to which the articles, including article 5, should be regarded as codifying the rules of existing international law.
Draft articles on Jurisdictional Immunities of States and their Property, with commentaries (1991), 23 (para (3) under article 5) Thirdly, as I have already observed, the United Nations Convention has for the time being no binding effect qua treaty.
All that can be said about it is that so far as it seeks to codify existing customary international law, it is evidence of what that law is.
But even where it is declaratory, it can never be definitive, if only in order to allow for the future development of state practice.
Hence the fifth recital in its preamble (Affirming that the rules of customary law continue to govern matters not regulated by the provisions of the present Convention), which was inserted in the course of the debates about article 11 to which I have referred.
Fourthly, the House of Lords in Jones v Saudi Arabia was not concerned with the question whether the starting point was absolute or restrictive immunity.
It was concerned with the question whether torture and other breaches of peremptory norms of international law constituted an implied additional limitation upon an immunity which was unquestionably recognised by international law.
Without an implied limitation of this kind, a state would have been immune in international law as regards an allegation of torture under either the absolute or the restrictive doctrine because, as the House of Lords held, torture is by definition a governmental act: see paras 16, 19 (Lord Bingham), and 83 85 (Lord Hoffmann).
The main difficulty about the Secretary of States submission is a more fundamental one, namely that it is not consistent with the way that the law of state immunity has developed.
Unlike diplomatic immunity, which is based mainly on an international consensus established by writers and governmental practice over many centuries, state immunity was developed during the nineteenth and twentieth centuries primarily by municipal courts.
In the words of the Special Rapporteur of the International Law Commission, presenting in 1980 the first draft of what became the United Nations Convention, their decisions constituted a great and divergent volume of municipal jurisprudence: [A/35/10] ILC Yearbook (1980), ii(2), 143.
Before the age of state trading organisations, there were few occasions for testing the limits of state immunity.
States rarely did acts in peacetime within the territory of other states, other than conduct diplomatic relations, and that was the subject of a distinct and far older international law immunity.
Leaving aside the rather special case of the immunity of personal sovereigns visiting the forum state, the only other acts which a sovereign performed in the territory of another state involved the presence of state owned ships in its ports or the placing of public procurement contracts.
The latter were generally for military or diplomatic purposes, and were therefore closely related to the inherently governmental acts of the state, even if they were strictly speaking acts of a private law character.
The earliest notable landmark was the judgment of the Supreme Court of the United States in The Schooner Exchange v McFaddon 11 US 116 (1812), delivered by Chief Justice Marshall.
The Exchange was a trading vessel belonging to two American merchants, which was captured at sea by French ships of war, converted into an armed cruiser and incorporated into the French navy.
When the ship put in to the port of Philadelphia, its former owners claimed possession.
The Supreme Court held that a ship of war in the possession of a foreign state was immune from any proceedings in rem.
Marshall CJ founded the rule on an implied exception to the territorial sovereignty of states for certain classes of act done there by a foreign state, which was based on the usages and received obligations of the civilised world.
At pp 144 145, he drew a distinction between trading vessels and ships of war.
It may safely be affirmed that there is a manifest distinction between the private property of the person who happens to be a prince and that military force which supports the sovereign power and maintains the dignity and the independence of a nation.
A prince, by acquiring private property in a foreign country, may possibly be considered as subjecting that property to the territorial jurisdiction; he may be considered as so far laying down the prince and assuming the character of a private individual, but this he cannot be presumed to do with respect to any portion of that armed force which upholds his Crown and the nation he is entrusted to govern.
The Exchange was a decision on the immunity of the property of a foreign state, a context in which the immunities recognised by international law have generally been wider than those available in actions for breach of duty.
But it will be seen even in that context, at its origins the immunity was not conceived to be absolute.
It was assumed to extend only to property employed for public or governmental purposes.
The same assumption was made in the earliest English cases.
In Duke of Brunswick v King of Hanover (1848) 2 HL Cas 1 the House of Lords held, in the words of Lord Chancellor Cottenham (p 17), that a foreign Sovereign, coming into this country, cannot be made responsible here for an act done in his sovereign character in his own country; whether it be an act right or wrong, whether according to the constitution of that country or not, the Courts of this country cannot sit in judgment upon an act of a Sovereign, effected by virtue of his Sovereign authority abroad.
In De Haber v Queen of Portugal (1851) 7 QB 196, 207 Lord Campbell CJ gave it as his opinion that an action cannot be maintained in any English Court against a foreign potentate, for anything done or omitted to be done by him in his public capacity as representative of the nation of which he is the head; and that no English Court has jurisdiction to entertain any complaints against him in that capacity.
The question whether a corresponding immunity applied to a sovereigns non sovereign acts arose for the first time in England in The Charkieh (1872 5) LR 4 A & E 59, a collision action brought against a ship which belonged to the Khedive of Egypt and flew the flag of the Ottoman navy, but was employed for ordinary commercial purposes and at the time was under charter to a British trading house.
Sir Robert Phillimore, sitting in the Admiralty Court, held that the vessel was not immune because the Khedive was not a sovereign but an officer of the Ottoman Porte.
However, he went on to hold that there would have been no immunity in any event, because the use of state property for trading purposes was an implicit waiver of any immunity attaching to the state.
At pp 99 100, he stated that no principle of international law, and no decided case, and no dictum of jurists of which I am aware, has gone so far as to authorize a sovereign prince to assume the character of a trader, when it is for his benefit; and when he incurs an obligation to a private subject to throw off, if I may so speak, his disguise, and appear as a sovereign, claiming for his own benefit, and to the injury of a private person, for the first time, all the attributes of his character.
Six years later, Sir Robert had to deal with the same issue in The Parlement Belge (1879) 4 PD 129, another collision action brought against a ship belonging to the Belgian state, which was employed as a mail packet but also carried some passengers and freight.
He followed his own judgment in The Charkieh, holding that any immunity would not include a vessel engaged in commerce, whose owner is (to use the expression of Bynkershoek, De Leg Mercatore) strenue mercatorem agens.
The Court of Appeal overruled this decision.
The judgment of the court (delivered by Brett LJ) was authority for two points.
The first, which was technically obiter dictum, was that by extension from the personal immunity of an ambassador, which at that time was absolute, the courts could not exercise any jurisdiction in personam against a sovereign.
The second, which was the ratio of the decision, was that immunity extended to proceedings in rem against the public property of any state which is destined to public use.
The ground on which the appeal was allowed was that the vessel was employed substantially for public purposes as a mail packet.
The court declined to decide whether it would have been immune if it had been used wholly or substantially for ordinary trading.
It was enough that the incidental carriage of passengers and freight did not deprive Belgium of the immunity to which the substantially public purpose of its operations entitled it.
Cf the analysis of the decision by Lord Cross of Chelsea, delivering the advice of the Privy Council in The Philippine Admiral [1977] AC 377, 391 392.
Nonetheless, the Parlement Belge was for many years regarded as authority for the absolute immunity of state property.
The extreme point of this tendency was reached with the decision of the Court of Appeal in The Porto Alexandre [1920] P 30.
In that case there was no suggestion that the vessel was in use for any public purpose.
She was engaged in ordinary trading operations.
But the Parlement Belge was treated as warranting the absolute immunity of state owned ships from actions in rem.
The decision provoked controversy well before the Privy Council held in The Philippine Admiral [1977] AC 373 that it had been wrongly decided.
In Compania Naviera Vascongada v Steamship Cristina (The Cristina) [1938] AC 485, a Spanish trading ship had been requisitioned by the Spanish government while on the high seas in order to assist the republican government of Spain to put down the nationalist rebellion.
Possession of her had then been taken in the port of Cardiff by the Spanish consul there.
The speeches need to be read in conjunction with the fuller account of the facts and arguments which are reported at (1938) 60 Lloyds Rep 147.
It was not in doubt that the Spanish consul had taken possession of it for public purposes.
The real issues were whether an action in rem against a state owned ship impleaded the foreign state; and whether the English courts should recognise an extraterritorial decree of the Spanish state.
The House of Lords rejected the argument about the extraterritorial operation of the decree, and dismissed the action on the ground (i) that an action in rem against a state owned ship indirectly impleaded the state, or indeed (per Lord Wright, at p 505) directly impleaded it; and (ii) that however she had previously been employed by her owners, she was intended for public purposes in the hands of the Spanish government.
An action for possession could not therefore proceed.
The interest of the case for present purposes lies in the divergence of views about the Porto Alexandre.
Lord Atkin and Lord Wright considered that the immunity of states was absolute and applied irrespective of the purpose for which a ship was in the states possession.
But the other members of the Appellate Committee doubted this, primarily on the ground that it could be correct only if there was a sufficient international consensus to that effect.
However, no attempt had been made in the earlier cases to establish that there was.
Lord Thankerton observed (pp 495 496) that it may be argued that the judgment of Brett LJ in the Parlement Belge did not authorise the extension of state immunity to property in commercial use since proceedings against such property were not to be regarded as inconsistent with the independence and equality of the state represented by such owner.
He pointed out that the Court of Appeal in the Porto Alexandre had made no inquiry as to whether such an exemption was generally agreed to by the nations, and it seems to be common knowledge that they have not so agreed.
Lord Macmillan shared these doubts, remarking at p 498: I confess that I should hesitate to lay down that it is part of the law of England that an ordinary foreign trading vessel is immune from civil process within this realm by reason merely of the fact that it is owned by a foreign State, for such a principle must be an importation from international law and there is no proved consensus of international opinion or practice to this effect.
On the contrary the subject is one on which divergent views exist and have been expressed among the nations.
When the doctrine of the immunity of the person and property of foreign sovereigns from the jurisdiction of the Courts of this country was first formulated and accepted it was a concession to the dignity, equality and independence of foreign sovereigns which the comity of nations enjoined.
It is only in modern times that sovereign States have so far condescended to lay aside their dignity as to enter the competitive markets of commerce, and it is easy to see that different views may be taken as to whether an immunity conceded in one set of circumstances should to the same extent be enjoyed in totally different circumstances.
Lord Maugham said (pp 519 520): My Lords, I cannot myself doubt that, if the Parlement Belge had been used solely for trading purposes, the decision would have been the other way.
Almost every line of the judgment would have been otiose if the view of the Court had been that all ships belonging to a foreign Government even if used purely for commerce were entitled to immunity The judgments in The Porto Alexandre seem to me to have omitted any consideration of what I deem to be a vital point namely, the fact that other countries while they admit the immunity as regards ships of war and other public ships have not been at all agreed that the same immunity ought to be granted to ships and cargoes engaged in ordinary trading voyages.
In this uncertain state of English law, Lord Simon, delivering the advice of the Privy Council in Sultan of Johore v Abubakar Tunku Aris Bendahar [1952] AC 318, 343, observed: Their Lordships do not consider that there has been finally established in England any absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances.
It seems desirable to say this much having regard to inferences that might be drawn from some parts of the Court of Appeals judgment in The Parlement Belge, and from the speech of Lord Atkin in The Cristina.
The doubts expressed in The Cristina by Lord Thankerton, Lord Macmillan and Lord Maugham about the international law basis for a rule of absolute immunity were justified, as a review of pre 1945 decisions in different jurisdictions demonstrates.
For what follows, I am indebted to the extensive reviews of this large body of material by Sir Hersch Lauterpacht in his influential article The Problem of Jurisdictional Immunities of Foreign States, 28 BYIL (1951), 220, 250 272, by the German Bundesverfassungsgericht in Claim against the Empire of Iran (1963), Entscheidungen des Bundesverfassungsgerichts, 16 (1964), 27 (partially translated in 45 ILR 257), and by Fox, The Law of State Immunity, 3rd ed (2013), Ch 6, and Dunbar, Controversial Aspects of Sovereign Immunity in the Case law of some States, (1971) 132 Recueil des Cours, 197.
Broadly speaking, these show that states which adopted the absolute doctrine of state immunity generally did so on one or other of two grounds.
One was that the sovereign equality of states implied an entire absence of jurisdiction by the courts on one state over another.
The other was that while there was in principle a distinction between the public and private acts of a state, the distinction should depend on the states purpose in doing the relevant act and not on its juridical character, so that even trading activities were immune if they were carried on in the public interest.
The two approaches are very different but in practice they lead to the same result, except perhaps in the case of the private acts of personal sovereigns.
As far as the common law world is concerned, the English courts, after a period of hesitation, finally opted for the first analysis.
In British dependencies and dominions, the absolute doctrine of state immunity was generally adopted in line with what was assumed to have been laid down in The Parlement Belge.
In the United States, the absolute doctrine had a more chequered history, but it ultimately adopted the second analysis.
The State Departments traditional approach to the question of state owned ships was described in a communication addressed by the Secretary of State to the Attorney General in 1918, stating that where [state owned] vessels were engaged in commercial pursuits, they should be subject to the obligations and restrictions of trade, if they were to enjoy the benefits and profits.
Instructions to this effect were given to United States diplomatic and consular officers abroad: see Hackworth, Digest of International Law, ii (1941), 429, 439 440.
This only changed with the decision of the United States Supreme Court in Berizzi Brothers Co v Steamship Pesaro, 271 US 562 (1926), an action in rem in support of a cargo claim against a trading vessel owned by the Italian state.
The State Department had refused, in accordance with its traditional practice, to certify that the ship was immune, on the ground that vessels owned by a state and engaged in commerce are not entitled, within the territorial waters of another state, to the immunity accorded to vessels of war, and that notwithstanding such ownership these vessels are subject to the local jurisdiction to the same extent as other merchant vessels: Hackworth, op cit, ii, 437.
But the Supreme Court upheld the claim to immunity.
The Court adopted The Parlement Belge, as it had been interpreted in subsequent English case law, including The Porto Alexandre.
It accepted in principle the distinction between ships operated for public and private purposes which dated back to The Schooner Exchange v McFaddon.
But it largely emptied it of substance by applying it according to the states purpose in doing the act.
As Van Devanter J put it, at p 574, when, for the purpose of advancing the trade of its people or providing revenue for its treasury, a government acquires, mans, and operates ships in the carrying trade, they are public ships in the same sense that war ships are.
We know of no international usage which regards the maintenance and advancement of the economic welfare of a people in time of peace of any less a public purpose than the maintenance and training of a naval force.
This settled the position for some twenty years as far as claims for state immunity in the United States courts were concerned.
But, as the State Department recorded in the Tate Letter of 1952 ((1952) 26 Department of State Bulletin, 984 985), it maintained its long standing practice of not asserting immunity in foreign courts in proceedings alleging ordinary contractual or tortious liability against the United States.
The position in civil law countries was highly diverse.
In France, the absolute doctrine was endorsed by the Cour de Cassation in its celebrated decision in Lambge et Pujol v Etat dEspagne, 22 Jan 1849, Dalloz (1849), i, 5.
But the principle was not consistently applied in its absolute form, and a series of decisions in the first half of the 20th century appeared to recognise a distinction between the public and private law functions of states: see Dunbar, art cit, 212 218.
The absolute doctrine was consistently applied until recent times in Spain, Portugal and Japan, but less consistently in Germany and the Netherlands and not at all in Switzerland.
It has never been recognised in Italy or Belgium, whose highest courts were among the first to adopt the restrictive doctrine in a recognisably modern form.
As early as 1886, the Italian Corte di Cassazione justified its position by observing: No one can deny that the foundation of international law is the sovereignty and independence of states; and that in consequence of this principle each state, in the exercise of its powers, is exempted from the jurisdiction of other states.
But the fallacy consists in considering the state exclusively and always as a body politic, although its activity as a civil entity cannot be gainsaid when it performs acts acquiring rights and assuming obligations in private relationships, like any other physical or juristic person being capable of exercising civil rights.
Typaldos, Console di Grecia v Manicmio di Aversa, Giurisprundenzia Italiana (1886), I, 228, 229.
The Belgian Cour de Cassation, after some three decades in which the restrictive doctrine had been applied by the lower courts, adopted it in SA des Chemins de Fer Ligeois Luxembourgeois v Etat Nerlandais, Pasicrisie Belge (1903), ii, 294, 301 302 for very similar reasons.
Looking at the position in the years immediately following the second world war, Sir Hersch Lauterpacht concluded that the common assumption that the majority of states were wedded to the doctrine of absolute state immunity was inaccurate.
On the contrary, in the great majority of states in which there is an articulate practice on the subject, courts have declined to follow the principle of absolute immunity (pp 250 251).
It followed, that so far as the actual practice of states may be said to be evidence of customary international law, there is no doubt that the principle of absolute immunity forms no part of international custom (p 221).
Thirty five years later the International Law Commission, reporting to the United Nations General Assembly on the difficulties which it had encountered in formulating a basic principle of state immunity, expressed the same view: There is common agreement that, for acts performed in the exercise of the prerogatives de la puissance publique or sovereign authority of the State, there is undisputed immunity.
Beyond or around that hard core of immunity, however, there appears to be a grey zone in which opinions and existing case law, and indeed legislations, still vary.
Report of the International Law Commission on the Work of its thirty eighth session [A/41/10] ILC Yearbook (1986), ii(2), 16.
The story of the progressive adoption of the restrictive doctrine of state immunity in the past 70 years is well known and can be shortly summarised.
The main impetus for this was the growing significance of state trading organisations in international trade.
The critical moment was the formal adoption (or readoption) of the restrictive doctrine by the United States government in the Tate Letter, addressed by the legal adviser to the State Department to the Acting Attorney General on 19 May 1952.
After reciting the adoption of the restrictive doctrine by a growing number of states, it stated the intention of the executive to act on it.
The widespread and increasing practice on the part of governments of engaging in commercial activities, it observed, makes necessary a practice which will enable persons doing business with them to have their rights determined in the courts: loc cit, 985.
Following the Tate Letter, the restrictive doctrine was generally adopted by Federal Courts, a development which was ultimately approved by the Supreme Court in Alfred Dunhill of London Inc v Republic of Cuba, 425 US 682, 701 703 (1976).
In Europe, the main landmark was the adoption by the German Bundesverfassungsgericht of the restrictive theory in 1963, and its acceptance that the distinction between acts jure imperii and jure gestionis depended on the juridical character of the act, not the purpose of the state in doing it: Claim against the Empire of Iran (1963) 45 ILR 257.
The courts of the United Kingdom, followed suit in the 1970s.
Today, the international consensus in favour of the restrictive doctrine is almost complete.
While there are a few states whose domestic position is unclear, with the legislative adoption of the restrictive doctrine by Russia in 2015, the only notable state still to adhere to the absolute doctrine is China.
Three points can be derived from this history.
The first is that there has probably never been a sufficient international consensus in favour of the absolute doctrine of immunity to warrant treating it as a rule of customary international law.
All that can be said is that during certain periods, a substantial number of states, but not necessarily a majority, have adopted the absolute doctrine as part of their domestic law.
Some of them have done so on the assumption that it represented international law, but without any real investigation of the rule recognised in other states.
Secondly, while there has for at least two centuries been a consensus among nations in favour of some form of state immunity, the only consensus that there has ever been about the scope of that immunity is the consensus in favour of the restrictive doctrine.
Thirdly, the adoption of the restrictive doctrine has not proceeded by accumulating exceptions to the absolute doctrine.
What has happened is that governments, courts and writers of authority have been prompted by the widening scope of state operations and their extension into commerce and industry, to re examine the true basis of a doctrine originally formulated at a time when states by and large confined their operations in other countries to the classic exercises of sovereign authority.
The true basis of the doctrine was and is the equality of sovereigns, and that never did warrant immunity extending beyond what sovereigns did in their capacity as such.
As Lord Wilberforce put it in The I Congreso del Partido [1983] 1 AC 244, 262, It is necessary to start from first principle.
The basis upon which one state is considered to be immune from the territorial jurisdiction of the courts of another state is that of par in parem, which effectively means that the sovereign or governmental acts of one state are not matters upon which the courts of other states will adjudicate.
Application to contracts of employment
As a matter of customary international law, if an employment claim arises out of an inherently sovereign or governmental act of the foreign state, the latter is immune.
It is not always easy to determine which aspects of the facts giving rise to the claim are decisive of its correct categorisation, and the courts have understandably avoided over precise prescription.
The most satisfactory general statement is that of Lord Wilberforce in The I Congreso del Partido, at 267: The conclusion which emerges is that in considering, under the restrictive theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.
In the great majority of cases arising from contract, including employment cases, the categorisation will depend on the nature of the relationship between the parties to which the contract gives rise.
This will in turn depend on the functions which the employee is employed to perform.
The Vienna Convention on Diplomatic Relations divides the staff of a diplomatic mission into three broad categories: (i) diplomatic agents, ie the head of mission and the diplomatic staff; (ii) administrative and technical staff; and (iii) staff in the domestic service of the mission.
Diplomatic agents participate in the functions of a diplomatic mission defined in article 3, principally representing the sending state, protecting the interests of the sending state and its nationals, negotiating with the government of the receiving state, ascertaining and reporting on developments in the receiving state and promoting friendly relations with the receiving state.
These functions are inherently governmental.
They are exercises of sovereign authority.
Every aspect of the employment of a diplomatic agent is therefore likely to be an exercise of sovereign authority.
The role of technical and administrative staff is by comparison essentially ancillary and supportive.
It may well be that the employment of some of them might also be exercises of sovereign authority if their functions are sufficiently close to the governmental functions of the mission.
Cypher clerks might arguably be an example.
Certain confidential secretarial staff might be another: see Governor of Pitcairn v Sutton (1994) 104 ILR 508 (New Zealand Court of Appeal).
However, I find it difficult to conceive of cases where the employment of purely domestic staff of a diplomatic mission could be anything other than an act jure gestionis.
The employment of such staff is not inherently governmental.
It is an act of a private law character such as anyone with the necessary resources might do.
This approach is supported by the case law of the European Court of Human Rights, which I have already summarised.
In Cudak, Sabeh El Leil, Wallishauser and Radunovi, all cases concerning the administrative and technical staff of diplomatic missions, the test applied by the Strasbourg Court was whether the functions for which the applicant was employed called for a personal involvement in the diplomatic or political operations of the mission, or only in such activities as might be carried on by private persons.
In Mahamdia v Peoples Democratic Republic of Algeria (Case C 154/11) [2013] ICR 1, para 55 57, the Court of Justice of the European Union applied the same test, holding that the state is not immune where the functions carried out by the employee do not fall within the exercise of public powers.
The United States decisions are particularly instructive, because the Foreign State Immunity Act of the United States has no special provisions for contracts of employment.
They therefore fall to be dealt with under the general provisions relating to commercial transactions, which have been interpreted as confining state immunity to exercises of sovereign authority: see Saudi Arabia v Nelson 507 US 349, 360 (1993).
The principle now applied in all circuits that have addressed the question is that a state is immune as regards proceedings relating to a contract of employment only if the act of employing the plaintiff is to be regarded as an exercise of sovereign authority having regard to his or her participation in the diplomatic functions of the mission: Segni v Commercial Office of Spain 835 F 2d 160, 165 (7th Cir, 1987), Holden v Canadian Consulate 92 F 3d 918 (9th Cir, 1996).
Although a foreign state may in practice be more likely to employ its nationals in those functions, nationality is in itself irrelevant to the characterisation: El Hadad v United Arab Emirates 216 F 3d 29 (DC Cir, 2000), at 4, 5.
In Park v Shin 313 F 3d 1138 (9th Cir, 2002), paras 12 14, it was held that the act of hiring a domestic servant is not an inherently public act that only a government could perform, even if her functions include serving at diplomatic entertainments.
A very similar principle has been consistently applied in recent decisions of the French Cour de Cassation: Barrandon v United States of America, 116 ILR 622 (1998), Coco v Argentina 113 ILR 491 (1996), Saignie v Embassy of Japan 113 ILR 492 (1997).
In the last named case, at p 493, the court observed that the employee, a caretaker at the premises of the mission, had not had any special responsibility for the performance of the public service of the embassy.
I would, however, wish to guard against the suggestion that the character of the employment is always and necessarily decisive.
Two points should be made, albeit briefly since neither is critical to this appeal.
The first is that a states immunity under the restrictive doctrine may extend to some aspects of its treatment of its employees or potential employees which engage the states sovereign interests, even if the contract of employment itself was not entered into in the exercise of sovereign authority.
Examples include claims arising out of an employees dismissal for reasons of state security.
They may also include claims arising out of a states recruitment policy for civil servants or diplomatic or military employees, or claims for specific reinstatement after a dismissal, which in the nature of things impinge on the states recruitment policy.
These particular examples are all reflected in the United Nations Convention and were extensively discussed in the preparatory sessions of the International Law Commission.
They are certainly not exhaustive.
In re Canada Labour Code [1992] 2 SCR 50, concerned the employment of civilian tradesmen at a US military base in Canada.
The Supreme Court of Canada held that while a contract of employment for work not involving participation in the sovereign functions of the state was in principle a contract of a private law nature, particular aspects of the employment relationship might be immune as arising from inherently governmental considerations, for example the introduction of a no strike clause deemed to be essential to the military efficiency of the base.
In these cases, it can be difficult to distinguish between the purpose and the legal character of the relevant acts of the foreign state.
But as La Forest J pointed out (p 70), in this context the states purpose in doing the act may be relevant, not in itself, but as an indication of the acts juridical character.
The second point to be made is that the territorial connections between the claimant on the one hand and the foreign or forum state on the other can never be entirely irrelevant, even though they have no bearing on the classic distinction between acts done jure imperii and jure gestionis.
This is because the core principle of international law is that sovereignty is territorial and state immunity is an exception to that principle.
As the International Court of Justice observed in Jurisdictional Immunities of the State, at para 57, the principle of state immunity has to be viewed together with the principle that each State possesses sovereignty over its own territory and that there flows from that sovereignty the jurisdiction of the State over events and persons within that territory.
Exceptions to the immunity of the State represent a departure from the principle of sovereign equality.
Immunity may represent a departure from the principle of territorial sovereignty and the jurisdiction which flows from it.
The whole subject of the territorial connections of a non state contracting party with the foreign or the forum state raises questions of exceptional sensitivity in the context of employment disputes.
There is a substantial body of international opinion to the effect that the immunity should extend to a states contracts with its own nationals irrespective of their status or functions even if the work falls to be performed in the forum state; and correspondingly that it should not extend to staff recruited from the local labour force in whose protection the forum state has a governmental interest of its own.
Both propositions received substantial support in the preparatory sessions leading to the United Nations Convention and were reflected in the final text of article 11.
Both receive a measure of recognition in the Vienna Convention on Diplomatic Relations which carefully distinguishes between the measure of immunity accorded to the staff of a diplomatic mission according to whether they are nationals of the foreign state or nationals or permanent residents of the forum state: see articles, 33.2, 37, 38, 39.4 and 44.
In a practical sense, it might be thought reasonable that a contract between a state and one of its own nationals should have to be litigated in the courts of that state under its laws, but unreasonable that the same should apply to locally recruited staff.
There is, however, only limited international consensus on where the boundaries lie between the respective territorial responsibilities of the foreign and the forum state, and on how far the territorial principle can displace the rule which confers immunity on acts jure imperii but not on acts jure gestionis.
I shall expand on this point below, in the context of section 4 of the State Immunity Act, which is largely based on the territorial principle.
Section 4(2)
At the time when the State Immunity Act was enacted, the application of state immunity to contracts of employment had only lately emerged as a potential problem.
States had traditionally recruited the staff of diplomatic and representative missions at home.
The employment of locally recruited staff in significant numbers was a recent development.
The European Convention on State Immunity was one of the first international instruments to make special provision for contracts of employment, which would otherwise have fallen to be dealt with under the general principles of customary international law relating to state immunity.
There was, however, no consistency of state practice capable of founding a special rule of customary international law governing employment.
This was recognised during the preparatory sessions of the International Law Commission relating to jurisdictional immunities of states.
The working group reviewing the Commissions draft articles of 1991 observed in 1999: 96.
Although it has been argued that there are no universally accepted international law principles regulating the position of employees of foreign States, relevant case law has often considered a contract of employment as merely a special type of commercial/private law contract. 97.
In this regard, it is important to distinguish between those States whose law on sovereign immunities makes a specific provision for contracts of employment and those States where it does not or which have no statute on the subject.
In the latter cases, it is necessary to analyse the contract of employment as a commercial or private law contract, whereas in the former case, the only question is whether the contract of employment falls within the relevant provisions. 98.
A key concern has been to balance the sovereignty of States with the interests of justice involved when an individual enters into a transaction with a State.
One way of achieving this balance has been to stress a distinction between acts that are sovereign, public or governmental in character as against acts that are commercial or private in character 99.
Immunity has generally been granted in respect of the employment of persons at diplomatic or consular posts whose work involves the exercise of governmental authority. 100.
The cases examined indicate a tendency for courts to find that they have the jurisdiction to hear disputes relating to employment contracts, where the employment mirrors employment in the private sector.
However, there has also been recognition that some employment based on such contracts involves governmental activities by the employees and, in such circumstances, courts have been prepared to grant immunity.
ILC Yearbook (1999), ii(2), 166.
The travaux leading to article 11 of the United Nations Convention contain no suggestion that existing state practice supported a special rule of international law concerning employment claims, extending beyond the immunity attaching to sovereign acts.
On the contrary, it is clear from both the travaux themselves and the impressive body of legal materials assembled by the parties to this appeal that, while many states assert a special jurisdiction over employment disputes extending to the employees of foreign states, there is considerable diversity in this area.
The ILCs Special Rapporteur reported in 1983 (ILC Yearbook (1983), ii(1), 34 8 [A/CN.4/363]) that: the current practice of States with regard to contracts of employment can offer no greater comfort nor absolute proof approaching a universal or uniform State practice.
It only indicates a deeper intrusion into a darker or greyer zone of greater controversy. (para 39) The most that could be said was that All things considered, an emerging trend appears to favour the application of local labour law in regard to recruitment of the available labour force within a country, and consequently to encourage the exercise of territorial jurisdiction at the expense of jurisdictional immunities of foreign States. (para 60)
The result is that the State Immunity Act 1978 can be regarded as giving effect to customary international law only so far as it distinguishes between exercises of sovereign authority and acts of a private law character, and requires immunity to be conferred on the former but not the latter.
There is no basis in customary international law for the application of state immunity in an employment context to acts of a private law character.
Under the terms of the Act, contracts of employment are excluded from the ambit of section 3, which applies the distinction between sovereign acts and acts of a private law character to other contracts for the supply of services.
Section 4 by comparison identifies those contracts of employment which attract immunity by reference to the respective connections between the contract or the employee and the two states concerned.
In principle, immunity does not attach to employment in the local labour market, ie where the contract was made in the United Kingdom or the work fell to be performed there: see section 4(1).
However, this is subject to sections 4(2)(a) and (b), which are concerned with the employees connections by nationality or residence with the foreign state (section 4(2)(a)) or the forum state (section 4(2)(b)).
Section 4(2)(a) extends the immunity to claims against the employing state by its own nationals.
As I have said, this may have a sound basis in customary international law, but does not arise here.
Section 4(2)(b) extends it to claims brought by nationals or habitual residents of third countries.
Both subsections apply irrespective of the sovereign character of the relevant act of the foreign state.
Sections 4(2)(a) and (b) are derived from article 5.2(a) and (b) of the European Convention on State Immunity.
Like section 4 of the Act, article 5 of the Convention deals with contracts of employment without reference to the distinction between acts jure imperii and jure gestionis which are the basis of the restrictive doctrine of immunity.
Contractual submission apart, the availability of state immunity in answer to employment claims is made to depend entirely on the location of the work and the respective territorial connections between the employee on the one hand and the foreign state or the forum state on the other.
The explanatory report submitted to the Committee of Ministers of the Council of Europe justified this on the ground that the links between the employee and the employing State (in whose courts the employee may always bring proceedings), are generally closer than those between the employee and the State of the forum.
The United Kingdom is not unique in applying this principle.
Seven other European countries are party to the European Convention on State Immunity and six other countries have enacted legislation containing provisions similar to section 4(2) of the United Kingdom Act.
But this is hardly a sufficient basis on which to identify a widespread, representative and consistent practice of states, let alone to establish that such a practice is accepted on the footing that it is an international obligation.
The considerable body of comparative law material before us suggests that unless constrained by a statutory rule the general practice of states is to apply the classic distinction between acts jure imperii and jure gestionis, irrespective of the nationality or residence of the claimant.
Indeed, the courts of a significant number of jurisdictions have refused to apply the immunity as between states which are not I conclude that section 4(2)(b) of the State Immunity Act 1978 is not justified both party to the Convention, unless they performed functions directly related to the exercise of the states sovereign authority, on the ground that the requirements of general international law differed on this point from those of the Convention: see French Consular Employee Claim (1989) 86 ILR 583 (Supreme Court, Austria); British Consulate General in Naples v Toglia (1989) 101 ILR 379, 383 384 (Corte de Cassazione, Italy); De Queiroz v State of Portugal, 115 ILR 430 (1992) (Brussels Labour Court, Belgium, 4th Chamber); M v Arab Republic of Egypt (1994) 116 ILR 656 (Federal Tribunal, Switzerland); Muller v United States of America 114 ILR 512, 517 (1998) (Regional Labour Court, Hesse); X v Saudi School in Paris and Kingdom of Saudi Arabia, 127 ILR 163 (2003) (Cour de Cassation, France note the observations of the Advocate General at p 165); A v B Oxf Rep Int L (ILDC 23) (2004) (Supreme Court, Norway); Kingdom of Morocco v HA Yearbook of International Law (2008), 392 (Court of Appeal of the Hague, Netherlands).
by any binding principle of international law.
The Secretary of State has an alternative argument to the effect that section 4(2)(b) may be justifiable as an application of purely domestic policy, on the ground that the United Kingdoms interest in asserting the jurisdiction of its own courts over the employment of the local labour force does not extend to nationals or residents of third countries.
I reject this argument.
On the footing that international law does not require a state to be given immunity, I do not see how the absence of British nationality or residence at the time of the contract can be a proper ground for denying an employee access to the courts in respect of their employment in the United Kingdom.
They have no territorial connection with their employer, other than that which is implicit in the employment relationship itself.
The fact that they may have had no connection with the United Kingdom either before they came to work here does not prevent them from being part of the domestic labour force afterwards.
Nor do I accept that the only relevant interest for this purpose is that of the United Kingdom state.
The forum state has duties as well as rights, and as a matter of domestic policy they extend to the protection of those lawfully living and employed in the United Kingdom.
Section 16(1)(a)
Since section 16(1)(a) extends state immunity to the claims of any employee of a diplomatic mission, irrespective of the sovereign character of the employment or the acts of the state complained of, it is plain that it cannot be justified by reference to any general principle of immunity based on the restrictive doctrine.
It could be justified only if there were a special rule, in effect an absolute immunity, applicable to embassy staff.
I have already pointed out, in the context of section 4(2)(b), that in jurisdictions where the courts determine claims to immunity by reference to customary international law, the test is whether the relevant acts of the state were exercises of sovereign authority.
The analysis need not be repeated here.
It is inconsistent with any suggestion that immunity can attach to all embassy staff as such.
The Secretary of State submits that there is indeed a special rule applicable to embassy staff.
He says that such a rule is implicit in the international obligations of the United Kingdom under the Vienna Convention on Diplomatic Relations, the European Convention on State Immunity, and the state of customary international law reflected in the United Nations Convention.
The Vienna Convention on Diplomatic Relations has been ratified by almost every state in the world and may for practical purposes be taken to represent a universally binding standard in international law.
Article 7 provides that a sending state may freely appoint members of the staff of a diplomatic mission.
The staff referred to include the technical, administrative and domestic staff as well as the diplomatic staff: see article 1.
The argument is that the freedom to appoint embassy staff must imply a freedom to dismiss them.
Article 32 of the European Convention on State Immunity and article 3.1 of the United Nations Convention both provide that they are not to prejudice the privileges and immunities of a state in relation to the exercise of the functions of its diplomatic missions and persons connected with them.
In my opinion, however, article 7 of the Vienna Convention has only a limited bearing on the application of state immunity to employment claims by embassy staff.
I would accept that the right freely to appoint embassy staff means that a court of the forum state may not make an order which determines who is to be employed by the diplomatic mission of a foreign state.
Therefore, it may not specifically enforce a contract of employment with a foreign embassy or make a reinstatement order in favour of an employee who has been dismissed.
But a claim for damages for wrongful dismissal does not require the foreign state to employ any one.
It merely adjusts the financial consequences of dismissal.
No right of the foreign state under the Vienna Convention is infringed by the assertion of jurisdiction in the forum state to carry out that adjustment.
Therefore, no right under the Vienna Convention would be prejudiced by the refusal of the forum state to recognise the immunity of the foreign state as regards a claim for damages.
The closest that any international instrument has come to providing for a general immunity of states as regards claims by embassy staff is article 11.2(b) of the United Nations Convention.
The article provides, so far as relevant: 1.
Unless otherwise agreed between the States concerned, a State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding Article 11 which relates to a contract of employment between the State and an individual for work performed or to be performed, in whole or in part, in the territory of that other State. 2.
Paragraph 1 does not apply if: (a) the employee has been recruited to perform particular functions in the exercise of governmental authority; (b) the employee is: (i) a diplomatic agent, as defined in the Vienna Convention on Diplomatic Relations of 1961; (ii) a consular officer, as defined in the Vienna Convention on Consular Relations of 1963; (iii) a member of the diplomatic staff of a permanent mission international organization or of a special mission, or is recruited to represent a State at an international conference; or (iv) any other person enjoying diplomatic immunity. (c) the subject matter of the proceeding is the recruitment, renewal of employment or reinstatement of an individual; (d) the subject matter of the proceeding is the dismissal or termination of employment of an individual and, as determined by the head of State, the head of Government or the Minister for Foreign Affairs of the employer State, such a proceeding would interfere with the security interests of that State; to an (e) the employee is a national of the employer State at the time when the proceeding is instituted, unless this person has the permanent residence in the State of the forum; (f) the employer State and the employee have otherwise agreed to any in writing, subject considerations of public policy conferring on the courts of the State of the forum exclusive jurisdiction by reason of the subject matter of the proceeding.
In general, article 11 adheres to the restrictive doctrine, confining the immunity in employment disputes to cases where the making of the contract or the acts giving rise to the complaint were exercises of sovereign authority, or the dispute is between a state and one of its own nationals.
Article 11.2(b) of the United Nations Convention lists four categories of employee whose claims will attract immunity.
The first three categories are diplomatic or consular staff whose functions would normally be regarded as inherently governmental.
But the fourth category comprises any other person enjoying diplomatic immunity.
Under the Vienna Convention on Diplomatic Relations, all members of the staff of a mission who are not nationals of or permanently resident in the receiving state enjoy diplomatic immunity, including (in respect of acts performed in the course of their duties) domestic staff: see article 37(3).
On the face of it, therefore, this provision applies state immunity to all claims by embassy staff at whatever level and irrespective of the juridical character of the acts giving rise to the dispute.
The Court of Appeal, adopting a suggestion in OKeefe and Tams (ed), The United Nations Convention of Jurisdictional Immunities of States and their Property.
A Commentary (2013), 201 2, have held that it could not have meant this in the light of the travaux preparatoires.
These do not explain how article 11.2(b) came to assume its final form.
But they do show that the working groups and committees of the International Law Commission intended to limit the immunity to the employment of diplomatic agents.
It was suggested to us that sub paragraph (iv) might also have been intended to cover diplomats at international conferences, and there are passages in the travaux which support that view: see, in particular, Report of the ILC Working Group on Jurisdictional Immunities of States, ILC Yearbook (1999), ii(2), para 105.
But since both of these categories are already covered by article 11(2)(b)(i) and (iii), and the language of (iv) is unequivocal, I doubt whether these suggestions can be supported.
It is, however, unnecessary to decide the point, because it is in my view clear that if article 11(2)(b)(iv) means what it says, it is legislative rather than declaratory of existing international law.
It may one day bind states qua treaty.
It may come to represent customary international law if and when the Convention attracts sufficient support.
But it does not do either of these things as matters presently stand.
There are judicial decisions in which the court, while limiting the immunity to exercises of sovereign authority, has taken an expansive view of the range of acts relating to an embassy employee which can be so described.
Sengupta v Republic of India [1983] ICR 221 was a decision of the Employment Appeal Tribunal under the common law in force before the passing of the State Immunity Act 1978.
The Tribunal held that state immunity attached to a claim for the unfair dismissal of an employee of the Indian High Commission in London.
He was employed at what Browne Wilkinson J, delivering the judgment of the court, described (p 223) as the lowest clerical level.
He was essentially responsible for collating press cuttings.
The tribunals reasons appear from pp 228 229 of the judgment: When one looks to see what is involved in the performance of the applicants contract, it is clear that the performance of the contract is part of the discharge by the foreign state of its sovereign functions in which the applicant himself, at however lowly a level, is under the terms of his contract of employment necessarily engaged.
One of the classic forms of sovereign acts by a foreign state is the representation of that state in a receiving state A contract to work at a diplomatic mission in the work of that mission is a contract to participate in the public acts of the foreign sovereign.
The dismissal of the applicant was an act done in pursuance of that public function, ie the running of the mission.
As a consequence, the fairness of any dismissal from such employment is very likely to involve an investigation by the industrial tribunal into the internal management of the diplomatic representation in the United Kingdom of the Republic of India, an investigation wholly inconsistent with the dignity of the foreign state and an interference with its sovereign functions.
A very similar view was taken in Government of Canada v Employment Appeals Tribunal and Burke (1992) 95 ILR 467, 500 where the Irish Supreme Court, applying the common law in the absence of any domestic legislation in Ireland, held that the services of a chauffeur employed by the Canadian embassy in Dublin were sufficiently related to the diplomatic functions of the embassy to make Canada immune from suit.
OFlaherty J, delivering the judgment of the majority, said (p 500) that prima facie anything to do with the embassy is within the public domain of the government in question.
There have been occasional decisions to the same effect in other jurisdictions: see, for example, Heusala v Turkey (1993) Oxf Rep Int L (ILDC 576) (Supreme Court, Finland); A v B (2004) Oxf Rep Int L (ILDC 23) (Supreme Court, Norway).
These decisions amount to saying that the employment of embassy staff is inherently governmental notwithstanding the non governmental character of the particular employees functions or of the relevant acts of the employer.
Sengupta was decided at an early stage of the development of the law in this area and, in my opinion, the test applied by the Employment Appeal Tribunal was far too wide.
I agree with the criticism of the decision in Fox, The Law of State Immunity, 3rd ed (2013), 199n, that the reasoning had more regard to the purpose than to the juridical character of the claimants employment.
It is not for this court to review the domestic case law of the other jurisdictions cited, least of all when they are based on the categorisation of the particular facts.
For my part, however, I doubt whether an English court applying customary international law could properly have categorised the facts of these cases as involving exercises of sovereign authority.
The way in which the restrictive doctrine has been applied by the European Court of Human Rights, the federal courts of the United States and the French Cour de Cassation appears to me to be more consistent with the underlying principle.
What is, however, clear beyond argument is that there is no international consensus on this point sufficient to found a rule of customary international law corresponding to section 16(1)(a) of the State Immunity Act 1978.
I have already pointed out that in treating article 11 as expressing customary international law, the European Court of Human Rights had in mind those parts of article 11 which reflected the restrictive doctrine.
In all of the cases in which it has held the recognition of immunity to violate article 6 of the Human Rights Convention, the applicant appears to have been a national or permanently resident in the forum state.
The applicant did not therefore enjoy diplomatic immunity and neither article 11(2)(b)(iv) nor article 11(2)(e) arose for consideration.
Application to the present cases
Since I have concluded that no principle of international law deprived the Employment Tribunal of jurisdiction in these cases, it follows that the United Kingdom had jurisdiction over Libya and Sudan as a matter of international law, and article 6 is engaged by its refusal to exercise it.
The jurisdictional issue raised by Lord Millett in Holland v Lampen Wolfe and by Lord Bingham and Lord Hoffmann in Jones v Saudi Arabia does not arise.
The employment of Ms Janah and Ms Benkharbouche were clearly not exercises of sovereign authority, and nothing about their alleged treatment engaged the sovereign interests of their employers.
Nor are they seeking reinstatement in a way that would restrict the right of their employers to decide who is to be employed in their diplomatic missions.
As a matter of customary international law, therefore, their employers are not entitled to immunity as regards these claims.
It follows that so far as sections 4(2)(b) or 16(1)(a) of the State Immunity Act confer immunity, they are incompatible with article 6 of the Human Rights Convention.
Discrimination
Ms Janahs case that the discriminatory character of section 4(2)(b) of the Act is a violation of article 14 of the Human Rights Convention, read in conjunction with article 6, adds nothing to her case based on article 6 alone.
Section 4(2)(b) unquestionably discriminates on grounds of nationality.
The only question is whether the discrimination is justifiable by reference to international law.
If state immunity is no answer to the claim under article 6 alone, then it is no answer to the claim under the combination of article 6 and article 14.
In my view, the denial of access to the courts to persons in her position is unjustifiable whether it is discriminatory or not.
Article 47 of the EU Charter of Fundamental Rights
Article 47 provides, so far as relevant, that: everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this article.
The scope of article 47 of the Charter is not identical to that of article 6 of the Human Rights Convention, but the Secretary of State accepts that on the facts of this case if the Convention is violated, so is the Charter.
A claim to state immunity which is justified in international law, would be an answer in both cases: Mahamdia v Peoples Democratic Republic of Algeria (Case C 154/11) [2013] ICR 1, Advocate General at paras 17 23, endorsed by the Court at para 55.
It follows that there is no separate issue as to article 47 of the Charter.
The only difference that it makes is that a conflict between EU law and English domestic law must be resolved in favour of the former, and the latter must be disapplied; whereas the remedy in the case of inconsistency with article 6 of the Human Rights Convention is a declaration of incompatibility.
Conclusion
I would dismiss the Secretary of States appeal and affirm the order of the Court of Appeal.
The result is that sections 4(2)(b) and 16(1)(a) of the State Immunity Act 1978 will not apply to the claims derived from EU law for discrimination, harassment and breach of the Working Time Regulations.
Subject to any question as to the application of section 4(2)(b) to the particular circumstances of Ms Benkharbouche, the other claims (failure to provide payslips or a contract of employment, unpaid wages, failure to pay the national minimum wage and unfair dismissal) are barred by those sections of the Act.
But to that extent they are incompatible with article 6 of the Human Rights Convention, and also, in the case of section 4(2)(b) with article 6 read with article 14 of the Convention.
Both cases must be remitted to the Employment Tribunal to determine the claims based on EU law on their merits.
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Ms Janah is a Moroccan national who was recruited in Libya to work as a domestic worker for the Libyan government at its London embassy.
Ms Benkharbouche is a Moroccan national who was recruited in Iraq to work for Sudan at its London embassy.
Both were dismissed from their employment and then issued claims in the Employment Tribunal against Libya and Sudan respectively.
Some of their claims were based on EU law.
Others were based on breach of contract or on purely domestic statutes of the United Kingdom.
In both actions the Employment Tribunal dismissed the claims on the basis that Libya and Sudan were entitled to state immunity under the State Immunity Act 1978 (1978 Act).
The Employment Appeal Tribunal (EAT) heard Ms Janahs and Ms Benkharbouches appeals together.
The EAT allowed the appeals and held that those sections were incompatible with article 47 of the EU Charter of Fundamental Rights and Freedoms (EU Charter) which reflects the right in EU law to a remedy before a tribunal.
The EAT consequently disapplied sections 4(2)(b) and 16(1)(a) of the 1978 Act insofar as those sections barred the claims which were based on EU law.
The Court of Appeal affirmed the judgment of the EAT and declared those sections of the 1978 Act to be incompatible with the right to access a court, under article 6 of the European Convention on Human Rights (ECHR).
The Secretary of State appeals in both cases.
The Supreme Court unanimously dismisses the appeal.
Lord Sumption gives the judgment, with which Lord Neuberger, Lady Hale, Lord Clarke and Lord Wilson agree.
The 1978 Act renders a foreign state immune from the jurisdiction of a UK court in a claim based on the foreign states employment of the claimant, where the claimant either: (i) at the time of the contract, was neither a UK national nor UK resident; or (ii) works for the foreign states diplomatic mission.
Section 4(2)(b) confers immunity in the first category; section 16(1)(a) confers immunity in the second [1, 11].
Article 6 of the ECHR confers a right of access to a court to determine disputes, although that right is not absolute [14].
The Claimants argued that the relevant provisions of the 1978 Act were incompatible with EU law and with Article 6 of the ECHR, because they prevented access to a court in circumstances where this result was not required by international law.
The Secretary of State argued (i) that a courts recognition of state immunity can never amount to an infringement of article 6, because it only reflects the courts lack of jurisdiction over a foreign state, but (ii) that in any event the relevant
provisions of the Act were consistent with international law or at least with a tenable view of international law. [29 30, 34 35].
The test was whether the relevant provisions of the Act were consistent with international law, not whether there was a tenable view to that effect.
These provisions were not consistent with international law.
A court may identify a rule of customary international law only if enough states follow a consistent practice, on the footing that it is a legal obligation [31].
The Secretary of State argued that although states now recognise a more restrictive doctrine of state immunity, the immunity is still absolute unless there is sufficient international consensus to show that Libya and Sudan fall into any established exception to that absolute immunity [33].
This Court rejects those arguments, which mischaracterise the historical development of the restrictive doctrine of immunity.
Specifically: (i) while there is a long standing consensus of states in favour of immunity there has probably never been sufficient international consensus for an absolute rule of state immunity in customary international law; (ii) the only consensus that there has ever been about the scope of state immunity is the relatively recent consensus in favour of the restrictive doctrine; (iii) that restrictive doctrine emerged after a re examination of the true basis of the doctrine, rather than by creating exceptions to any general rule of absolute immunity [40 52].
In customary international law, a foreign state is immune where a claim is based on sovereign acts.
Whether a foreign states employment of a claimant constitutes a sovereign act depends on the nature of that employer employee relationship.
That will, in turn, depend primarily on the functions which the employee is employed to perform.
The employment of purely domestic staff in a diplomatic mission is a private act, rather than an inherently sovereign act.
That approach is supported by the reasoning in case law from the United States, France, and the European Court of Human Rights [53 56].
Under section 4(2)(b) of the Act, whether a foreign state is immune depends entirely on the nationality and residence of the claimant at the date of the employment contract.
That section draws no distinction between acts of a private nature and acts of a sovereign nature.
That approach to state immunity is followed by some states but lacks any basis in customary international law [64 66].
A persons nationality and residence at the date of the employment contract are not proper grounds for denying a person access to the courts in respect of their employment in this country [67].
Section 16(1)(a) extends state immunity to the employment of all members of a diplomatic mission.
The Court rejects the Secretary of States argument that a state is entitled in international law to absolute immunity in respect of the employment of embassy staff.
Although article 7 of the Vienna Convention on Diplomatic Relations 1961 indicates that a court may not order a foreign state to employ a specific person in its embassy, this issue does not arise where the claimant only seeks damages (rather than reinstatement in his or her previous position) [68 69].
Nor is there any corresponding rule of customary international law to extend absolute state immunity to the employment of embassy staff [70 72].
As a matter of customary international law, therefore, neither Sudan nor Libya are entitled to immunity in respect of these claims.
Sections 4(2)(b) and 16(1)(a) of the 1978 Act, which confer immunity in English law, are consequently incompatible with article 6 of the ECHR [74 75].
In light of that, the Secretary of State accepted that those sections were also incompatible with article 47 of the EU Charter [77].
The Court also accepts Ms Janahs argument that section 16(1)(a) of the 1978 Act discriminated unjustifiably on the grounds of nationality, but in the circumstances that adds nothing [76].
EU law prevails over English law in the event of a conflict, so those sections of the 1978 Act cannot bar the claims which are based on EU law [77].
Those EU law claims are remitted to the Employment Tribunal, to be determined at trial.
The other claims remain barred by the 1978 Act, notwithstanding that the Court of Appeal properly made a declaration of incompatibility with the ECHR in respect of them [78].
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This case concerns the enforcement of confiscation orders made by the Crown Court upon conviction.
As well as various statutory mechanisms for enforcement via the appointment of receivers, successive confiscation statutes have adopted the scheme of making confiscation orders enforceable as if they were fines imposed by the Crown Court.
That involves using the powers of the Magistrates Court, which is the court which can, if payment is not made, issue a warrant committing the non paying defendant to prison.
When making the confiscation order (as when imposing a fine), the Crown Court is required by statute to fix a default term of imprisonment to be served if the defendant does not pay.
In a simple case of non payment, the magistrates will usually issue a warrant committing the defendant to prison for the period which the Crown Court fixed as the default term, and that term has to be served consecutively to any sentence passed for the substantive offences which led to the making of the confiscation order.
There are, however, two possible adjustments which may have to be considered.
The first is interest.
The second is part payment.
The present appeal concerns how these two adjustments fall to be made when they coincide.
Because the confiscation order made in this case, and the enforcement action taken in consequence, happened some time ago, this case falls to be decided upon legislation now repealed and replaced.
It is not, however, of merely historical interest.
Although the drafting of later legislation has not been identical, the issue raised by this appeal arises in much the same way under the current legislation, the Proceeds of Crime Act 2002.
Put shortly, the issue is this.
If between the making of the confiscation order by the Crown Court and the issue of a warrant by the magistrates committing the defendant to prison, part payment has been made, but also interest has accrued, what does the statutory scheme say about how credit is to be given for the part payment? Is the term of imprisonment ordered by the magistrates to be reduced, by reason of the part payment, by reference to the total net sum outstanding (including interest), or is reduction for part payment to be calculated by reference only to the principal sum payable under the confiscation order? It is trite, but important, to say at the outset that the question is not what scheme might be thought desirable, but rather what the convoluted statutes actually mean.
It is also relevant to note that although the issue makes a difference of 11 days in the present case, in the context of a defendant sentenced originally to a term of 25 years for his substantive offences, it will apply to a large number of prisoners, and may fall for decision not only by courts, but also by prison governors who have to determine release dates.
The facts
Mr Gibson was convicted of drug trafficking offences on 21 May 1999 and sentenced to 25 years imprisonment.
On 29 March 2000 at the confiscation hearing, he was ordered to pay a little over 5.4m; that meant that it had been determined by the judge that his benefit was not less than that sum and that he had assets from which that sum might be realised.
He was given 12 months to pay, and the judge fixed the term of six years imprisonment in default of payment.
Interest therefore ran from the expiry of the 12 months to pay.
He paid nothing until 4 May 2007, when 12,500 was paid, it would appear via a receiver appointed to realise his assets.
A month later, he appeared before the magistrates for consideration of a warrant of commitment.
The magistrates deducted seven days from the six year term in default, to take account of the recent part payment.
As at that time, interest had lifted the net sum outstanding, allowing for the part payment, to 8.1m.
Subsequently, later in 2007 and in 2011, two further realisations were achieved by his receiver, which produced payments of 12,500 and 65,370.
The prison authorities, and through them the Secretary of State for Justice, calculated the reduction in the six year default term on the basis of the proportion which these payments bore to the 8.1m outstanding at the time of his committal.
That produced reductions of three days and 21 days, totalling 24 days.
If the arithmetic had been applied instead to an outstanding figure confined to the original 5.4m, something like 11 extra days reduction would have been made.
The issue in the present appeal is whether he was entitled to those 11 extra days.
Interest on confiscation orders
Uniquely amongst orders for payment of money made by criminal courts, confiscation orders carry interest.
They have done so since the early 1990s: see section 15 of the Criminal Justice (International Co operation) Act 1990 and section 9 of the Proceeds of Crime Act 1995, which introduced the rule respectively in relation to drugs offences and to other forms of crime.
Interest has been set, by successive statutes, at the same rate as is prescribed from time to time for civil judgment debts under section 17 of the Judgments Act 1838.
The interest provisions relevant to the present case were contained in section 10 of the Drug Trafficking Act 1994 (the Drug Trafficking Act), as in force at the relevant time: 10.
Interest on sums unpaid under confiscation orders. (1) If any sum required to be paid by a person under a confiscation order is not paid when it is required to be paid (whether forthwith on the making of the order or at a time specified under section 139(1) of the Powers of Criminal Courts (Sentencing) Act 2000) that person shall be liable to pay interest on that sum for the period for which it remains unpaid; and the amount of the interest shall for the purposes of enforcement be treated as part of the amount to be recovered from him under the confiscation order. (2) The Crown Court may, on the application of the prosecutor, increase the term of imprisonment or detention fixed in respect of the confiscation order under subsection (2) of section 139 of the 2000 Act (as it has effect by virtue of section 9 of this Act) if the effect of subsection (1) above is to increase the maximum period applicable in relation to the order under subsection (4) of that section. (3) The rate of interest under subsection (1) above shall be the same rate as that specified in section 17 of the Judgments Act 1838 (interest on civil judgment debts).
For present purposes, the key provisions are: (1) the concluding words of section 10(1), by which the interest is to be treated for the purposes of enforcement as part of the amount to be recovered under the confiscation order; and section 10(2), which enables a Crown Court judge to re fix, and (2) increase, the default term if the addition of accrued interest takes the sum outstanding into a higher bracket in the relevant schedule of permissible default terms.
If the statutory scheme had stopped at this point, there would no doubt have been a powerful argument for saying that for all enforcement purposes interest is simply added to the original confiscation order.
But this apparently fairly simple provision has to be considered in its place in the much more complex statutory scheme under which the magistrates powers of commitment to prison are made applicable to confiscation orders.
The application of the magistrates powers of commitment
In common with other confiscation statutes, the Drug Trafficking Act referred enforcement by committal to prison to the Magistrates Court.
By the time of the 2007 commitment proceedings in this case, section 9 provided: 9.
Application of procedure for enforcing fines. (1) Where the Crown Court orders the defendant to pay any amount under section 2 of this Act, sections 139(1) to (4) and 140(1) to (3) of the Powers of Criminal Courts (Sentencing) Act 2000 (powers of Crown Court in relation to fines and enforcement of Crown Court fines) shall have effect as if that amount were a fine imposed on him by the Crown Court.
The provisions there referred to in the (essentially consolidating) Powers of Criminal Courts (Sentencing) Act 2000 (the 2000 Sentencing Act) were previously contained in sections 31 and 32 of the Powers of Criminal Courts Act 1973, to which section 9 in its original form referred.
In the courts below all parties, and thus the courts, proceeded on the basis that the 1973 provisions were the relevant ones.
It was common ground before this court that the 2000 Act provisions had become the relevant ones by the time of the commitment proceedings in this case.
The difference does not matter, because although the wording is not identical, it is agreed that the effect of the two sets of provisions is the same.
It follows that section 9 of the Drug Trafficking Act referred one on to sections 139 and 140 of the 2000 Sentencing Act, which are about fines.
So far as material, they provided as follows: 139.
Powers and duties of Crown Court in relation to fines and forfeited recognizances. (1) Subject to the provisions of this section, if the Crown Court imposes a fine on any person or forfeits his recognizance, the court may make an order (a) allowing time for the payment of the amount of the fine or the amount due under the recognizance; (b) directing payment of that amount by instalments of such amounts and on such dates as may be specified in the order; (c) [applicable only to recognizances] (2) Subject to the provisions of this section, if the Crown Court imposes a fine on any person or forfeits his recognizance, the court shall make an order fixing a term of imprisonment or of detention under section 108 above (detention of persons aged 18 to 20 for default) which he is to undergo if any sum which he is liable to pay is not duly paid or recovered. 140.
Enforcement of fines imposed and recognizances forfeited by Crown Court. (1) Subject to subsection (5) below, a fine imposed or a recognizance forfeited by the Crown Court shall be treated for the purposes of collection, enforcement and remission of the fine or other sum as having been imposed or forfeited (a) by a magistrates court specified in an order made by the Crown Court, or if no such order is made, by the magistrates (b) court by which the offender was committed to the Crown Court to be tried or dealt with or by which he was sent to the Crown Court for trial under section 51 or 51A of the Crime and Disorder Act 1998, and, in the case of a fine, as having been so imposed on conviction by the magistrates court in question. (2) Subsection (3) below applies where a magistrates court issues a warrant of commitment on a default in the payment of a fine imposed by the Crown Court; or a sum due under a recognizance forfeited by the (a) (b) Crown Court.
In such a case, the term of imprisonment or detention (3) under section 108 above specified in the warrant of commitment as the term which the offender is liable to serve shall be (a) 139(2) above, or (b) if that term has been reduced under section 79(2) of the Magistrates Courts Act 1980 (part payment) or section 85(2) of that Act (remission), that term as so reduced, the term fixed by the Crown Court under section notwithstanding that that term exceeds the period applicable to the case under section 149(1) of the Customs and Excise Management Act 1979 (maximum periods of imprisonment in default of payment of certain fines).
Subsection (5), referred to in section 140(1), removes from the magistrates the power to remit part of a fine if the fine was imposed by the Crown Court.
A similar stipulation against remission is additionally specifically applied to confiscation orders by section 9(4)(a) of the Drug Trafficking Act.
It follows that the statutory scheme for the enforcement of confiscation orders proceeded then, as it does now, by a process of successive referrals.
First, section 9 of the Drug Trafficking Act makes the confiscation order enforceable as if it were a fine imposed by the Crown Court.
That refers one on to the 2000 Sentencing Act, by which a fine imposed by the Crown Court is by section 140(1) treated for enforcement purposes as if it had been imposed by the magistrates, and thus so is a confiscation order.
But the magistrates general powers in relation to their own fines are not in the 2000 Sentencing Act; they are found in the Magistrates Courts Act 1980, to which one is thus further referred on.
It is in the Magistrates Courts Act 1980 (section 76) that the magistrates power to commit to prison for failure to pay a fine is found, together with an alternative power to issue a warrant of distress (now re named a warrant of control).
And it is in the Magistrates Courts Act 1980 that the only provision dealing with part payments is found.
That is section 79 which at the time material to these magistrates proceedings read as follows: 79.
Release from custody and reduction of detention on payment. (1) Where imprisonment or other detention has been imposed on any person by the order of a magistrates court in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates court or for want of sufficient distress to satisfy such a sum, then, on the payment of the sum, together with the costs and charges, if any, of the commitment and distress, the order shall cease to have effect; and if the person has been committed to custody he shall be released unless he is in custody for some other cause. (2) Where, after a period of imprisonment or other detention has been imposed on any person in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates court or for want of sufficient distress to satisfy such a sum, payment is made in accordance with rules of court of part of the sum, the period of detention shall be reduced by such number of days as bears to the total number of days in that period less one day the same proportion as the amount so paid bears to so much of the said sum, and the costs and charges of any distress levied to satisfy that sum, as was due at the time the period of detention was imposed. (3) In calculating the reduction required under subsection (2) above any fraction of a day shall be left out of account.
The problem of part payments
Many of the difficulties which have beset the present case arise out of the fact that the enforcement of confiscation orders is thus achieved by applying to them statutory provisions which were not designed for them.
In particular, the process of referrals just described has the effect that a confiscation order is treated for enforcement as if it was a fine imposed by the magistrates.
But there is a very important difference in practice as between fines imposed by magistrates and fines (and confiscation orders) imposed by the Crown Court.
In the case of the former, the magistrates do not fix a default term when imposing the fine.
Instead, they approach the matter of imprisonment in default only after default has occurred.
By then, of course, it will be known whether the default is total or partial, and the term imposed under the warrant of commitment can be, and ordinarily is, adjusted accordingly, thus in effect giving credit for part payments made before the commitment process is undertaken.
Section 79(1) and (2) then deal with the situation if whole (subsection (1)) or part (subsection (2)) payment is made after the warrant of commitment is issued.
But in the case of Crown Court fines and confiscation orders, section 139(2) of the 2000 Sentencing Act mandates the fixing of an anticipatory default term at the time the fine or order is imposed.
It follows that something is required to cope with part payments made after the Crown Court order and before the Magistrates proceedings, as well as with payments made after the latter.
This difference of practice led the courts below to analyse section 79(2) as assuming the standard magistrates practice and thus to conclude that the references in that subsection to a period of imprisonment having been imposed in default of payment were references to the act of the magistrates in issuing the warrant of commitment.
That in turn gave rise to the difficulty that, on that basis, section 79(2) would say nothing about how to deal with part payments made in a Crown Court case between the Crown Court order and the later magistrates proceedings, and there was no other provision which filled the gap.
The Court of Appeal understandably concluded that such part payments had to be taken into account, and to give effect to that conclusion it read two additional words into section 79(2) so that it read Where, before or after a period of imprisonment has been imposed : see [2017] 1 WLR 1115, para 51.
On the very helpful further argument which this court has had from counsel on both sides, it is now clear that section 79 does not, when it speaks of a period of imprisonment imposed in default of payment, necessarily refer only to the magistrates proceedings.
That will of course be the position when the default term is imposed in the ordinary case of magistrates deciding whether or not to issue a warrant of commitment some time after default has occurred.
But even then, the magistrates are entitled to issue the warrant and postpone its execution on terms, usually no doubt requiring prompt payment and perhaps by instalments.
Section 77(2) of the Magistrates Courts Act 1980 specifically so provides.
It follows that even in the case of an exclusively magistrates case, there may be a warrant of commitment without immediate imprisonment.
Before this court, the parties were agreed that in the case of a Crown Court confiscation order or fine, the period of imprisonment in default of payment is imposed for the purposes of section 79 when the Crown Court discharges its statutory duty under section 139(2) of the 2000 Sentencing Act and fixes the (anticipatory) term in default.
That is clearly the position where the period of imprisonment in default is imposed by the magistrates court, since section 79(1) specifically says that on full payment the default term ceases to have effect whether or not the person has been committed to prison, thus providing for the case permitted by section 77(2) where a warrant of commitment has been issued, but not yet executed.
It also follows from section 150 of the Magistrates Courts Act, to which the courts below were not referred.
That definition section provides: imprisonment means pass a sentence of impose imprisonment or fix a term of imprisonment for failure to pay any sum of money, or for want of sufficient distress to satisfy any sum of money, or for failure to do or abstain from doing anything required to be done or left undone.
This construction is also necessary to make sense of section 140(3) of the 2000 Sentencing Act, to which the courts below were not referred.
This section is in more expansive form than its predecessor, section 32 of the Powers of Criminal Courts Act 1973.
It makes clear by subsection 140(3)(b) that the default term fixed by the Crown Court may already have been reduced under section 79(2) of the Magistrates Court Act 1980 before the magistrates undertake the assessment of the length of any warrant of commitment.
Lastly, this construction is clearly assumed by the Magistrates Courts Rules 1981 (SI 1981/552), to which the courts below were again not referred.
These rules provide for the persons to whom part or full payment may be made for the purposes of section 79(2).
By rule 55(1)(a) the designated officer of the court may receive such payment unless there has been issued a warrant of commitment, whereas if there is such a warrant, the payment must be made by rule 55(1)(c) or (d) either to a constable holding it (for execution) or the prison governor.
That again demonstrates that payments which fall within section 79(2) can be made before a warrant of commitment is issued, although clearly they can only be made after the default term has been imposed.
Thus the default term in the case of Crown Court orders must be the term that court imposed at the time of making its order.
Does section 79(2) include interest in its starting point?
That leads one to the issue in the present case.
If the court which imposes the default term is, for the purposes of section 79(2), the Crown Court in the case of a confiscation order, which is the correct starting point for the arithmetical giving of proportionate credit for part payment? Is it the sum stated in the order as originally made by the Crown Court, or is it that sum plus any interest which has accrued by the time the exercise is conducted by the magistrates? In the present case, is it 5.4m or is it 8.1m?
For the Secretary of State, Mr Perry QC powerfully submits that it must be the original sum plus interest.
The plain purpose of the various statutory provisions for interest, including section 10 of the Drug Trafficking Act, is, he submits, that interest is treated for any enforcement purpose as added to the confiscation order and is expressly made part of the amount to be recovered from [the defendant] under the confiscation order.
So, it is said, the references in section 79(2) to the term set in default of payment of any sum adjudged to be paid must, by what he refers to as a necessary statutory fiction, be references to the sum fixed by the original confiscation order plus interest.
That is to do no more, he argues, than is already provided for in section 79(2) for the costs and charges of any distress which has been levied, which are expressly added to the principal sum outstanding.
Those also, he submits, will in the case of a Crown Court order, necessarily have been incurred after the default term was fixed by that Court.
He points to the plain intention, gathered from section 10(1), that interest is to be paid, and to the fact that in the case of a criminal who is in default of payment of the principal sum, civil means of enforcement of interest are unlikely to be effective.
He rightly reminds us that a confiscation order is premised on the proposition that the defendant has the means to pay, so that any default is his election.
If circumstances change in a way which reduces his ability to pay, the various confiscation statutes provide a procedure for application for a certificate of inadequacy and consequent downward reduction in the amount of the confiscation order.
Those arguments may well reflect, in a purposive manner, the kind of regime for which the successive statutory referrals might have provided.
The difficulty with them lies in the operative words of section 79(2), which are the only ones which provide for the treatment of part payments.
They say expressly that the days to be deducted are to be the number which bear the same proportion to the total default term imposed (by the Crown Court) as the part payments bear to so much of the said sum as was due at the time the period of detention was imposed.
If the Secretary of States argument is to be accepted, the words at the time the period of detention was imposed have to be done no little violence.
At the time the Crown Court imposed the default term, there was as yet no interest accrued at all.
We have concluded that this straining of the wording of section 79(2) cannot be justified in circumstances where it would adversely impact on the period of imprisonment to which a person would be subject.
Penal legislation is construed strictly, particularly where the penalty involves deprivation of liberty.
The words of section 79(2) do not provide clearly for a period of imprisonment calculated on the basis for which the Secretary of State contends; on the contrary, they suggest the natural construction that the starting point for the arithmetical calculation of reduction in days of imprisonment is the sum outstanding at the time of the Crown Court order.
Nor is the Secretary of States construction warranted by the example of the reference in section 79(2) to the costs and charges of distress, where such have been incurred.
Since section 79(2) was plainly not drafted with confiscation, or for that matter Crown Court fines, in mind, the reference is adequately explained by the orthodox case of the magistrates first issuing a warrant for distress and only subsequently fixing the default term for non payment; in such a case the reference to the sum outstanding at the time the period of detention was imposed makes perfectly good sense.
In any event, the addition of such costs and charges is expressly provided; that does not mean that an equivalent provision can be read in as a consequence of a provision in a different statute, namely section 10(1) of the Drug Trafficking Act.
A scheme under which the period of imprisonment served in default of payment in full of the amount specified in the confiscation order is based on the entire amount outstanding, including interest, may or may not be what the framers of the confiscation legislation might have wished for or intended if the point had been considered.
However, because the means adopted took the form of statutory reference (and re reference) to provisions which were drafted for a different purpose and without confiscation in mind, they have not achieved that effect.
If it is desired that they should do so, express legislation will be needed.
It is also of some relevance that the practical consequences of the Secretary of States proposed construction would, without specific machinery, be difficult to work out.
Interest accrues daily, so the net amount outstanding would also vary daily.
That difficulty may be met by a calculation geared to the particular day (or days) on which any part payment is made.
But additionally, this construction would have the effect of progressively reducing the incentive to make part payment, as interest rises, because the days credited for such part payment would progressively reduce.
Nor would such a scheme provide any consequences at all for the not uncommon defendant who simply makes no payment whatever.
Conclusion
For these reasons we would allow the appeal.
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The appellant was convicted of drug trafficking offences on 21 May 1999 and sentenced to 25 years imprisonment.
On 29 March 2000, he was ordered to pay a little over 5.4 million by way of a confiscation order.
The order required the appellant to pay the amount within 12 months or serve six years imprisonment in default of payment.
On 4 May 2007, a receiver appointed to realise the appellants assets paid 12,500.
The magistrates deducted seven days from the six year term in default, to account for that part payment.
At that time interest had increased the net sum outstanding, allowing for the part payment, to 8.1 million.
Later in 2007 and 2011, the appellants receiver made further payments of 12,500 and 65,370.
The prison authorities calculated the reduction in the six year default term on the basis of the proportion which these payments bore to the 8.1 million at the time of his committal.
That produced a total reduction of 24 days.
Had the arithmetic been applied instead to an outstanding figure confined to the original 5.4m, an extra 11 days reduction would have been made.
The issue in the appeal is whether interest is included in the starting point under s.79(2) Magistrates Courts Act 1980 for the giving of proportionate credit for part payment of a confiscation order.
The Supreme Court unanimously allows the appeal.
Lord Reed and Lord Hughes give a joint judgment with which the other Justices agree.
The key provisions of the Drug Trafficking Act 1994 (DTA), as in force at the relevant time, were s.10(1), which treats interest for the purposes of enforcement as part of the amount to be recovered under the confiscation order and s.10(2) which enables a Crown Court judge to refix and increase the default term if the addition of accrued interest takes the sum outstanding into a higher bracket in the relevant schedule of defaults terms. [7] At the relevant time, s.9 DTA stated that where the Crown Court orders a defendant to pay any amount under s.2 DTA, ss.139(1) (4) and 140(1) (3) of the Powers of Criminal Courts (Sentencing Act) 2000 (the 2000 Sentencing Act) shall have the effect as if that amount were a fine imposed on the defendant by the Crown Court. [9] S.140(1) of the 2000 Sentencing Act treats for enforcement purposes a fine imposed by the Crown Court as if it had been imposed by the magistrates, and thus a confiscation order is treated the same.
S.76 Magistrates Courts Act 1980 contains the magistrates power to commit an individual to prison for failure to pay a fine and an alternative power to issue a warrant of distress (now named a warrant of control).
S.79 Magistrates Courts Act 1980 is the only provision dealing with part payments. [11] The difficulties in this case arise from the fact that the enforcement of confiscation orders is achieved by applying statutory provisions to confiscation orders which were not designed for them.
A confiscation order is thus treated as if it was a fine imposed by the magistrates.
The difference between a magistrates imposed fine and a Crown Court imposed fine is that magistrates do not fix a default term when imposing the fine.
Imprisonment in default is only considered in the event of a default and, at that time, the magistrates will know whether the default is total or partial.
Thus, credit can be given for part payments made before the commitment process is undertaken.
However, s.139(2) of the 2000 Sentencing Act mandates the fixing of an anticipatory default term at the time the fine or order is imposed. [12] The difference in practices led the lower courts to analyse s.79(2) Magistrates Courts Act 1980 as assuming the standard magistrates practice and thus to conclude that the references in that subsection to a period of imprisonment having been imposed in default of payment were references to the act of the magistrates in issuing the warrant of commitment.
This caused the consequential difficulty that s.79(2) would say nothing about how to deal with part payments made in Crown Court cases between the Crown Court making a confiscation order and the later magistrates proceedings.
Hence the Court of Appeal understandably read additional words into s.79(2). [13] The period of imprisonment in default of payment is imposed for the purposes of s.79 when the Crown Court discharges its statutory duty under s.139(2) of the 2000 Sentencing Act and fixes the (anticipatory) term in default.
This construction follows from s.150 Magistrates Courts Act 1980 and is necessary to make sense of s.140(3) of the 2000 Sentencing Act.
It is also assumed by the Magistrates Court Rules.
Thus, the default term in the case of Crown Court orders must be the term that the court imposed at the time of making its order. [15 17] The operative words of s.79(2) expressly say that the days to be deducted are to be the number which bear the same proportion to the total default term imposed (by the Crown Court) as the part payments bear to so much of the said sum as was due at the time the period of detention was imposed.
At the time the Crown Court imposed the default term, there was as yet no interest accrued at all. [20] Straining of the wording of s.79(2) cannot be justified where it would adversely impact on the period of imprisonment to which a person is subject.
Penal legislation, particularly legislation imposing penalties that deprive liberty, is construed strictly.
The natural construction of the section is that the starting point for the arithmetical calculation of reduction in days of imprisonment is the sum outstanding at the time of the Crown Court order. [21] charges of distress do not support the respondents construction.
The reference is explained by the case of magistrates first issuing a warrant for distress and only subsequently fixing the default term for non payment.
The addition of such costs and charges is expressly provided for and that does not mean that an equivalent provision can be read in as a consequence of a provision in different statute (s.10(1) DTA). [22]
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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.
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These proceedings concern three sets of claims which arise out of the deaths of three young British servicemen and the serious injuries of two other young British servicemen in Iraq.
The first set (the Challenger claims) arise from a friendly fire incident involving British tanks which caused the death of Cpl Stephen Allbutt and the serious injury of Lance Cpl Daniel Twiddy and Tpr Andrew Julien.
They are brought in negligence and allege failures by the Ministry of Defence (the MoD) to properly equip the tanks involved and to give soldiers adequate recognition training.
The second set (the Snatch Land Rover claims) arise from the deaths of Pte Phillip Hewett (son of the claimant Susan Smith) and Pte Lee Ellis (father of the claimant Courtney Ellis and brother of the claimant Karla Ellis) by the detonation of improvised explosive devices level with the Snatch Land Rovers in which the soldiers were travelling.
The claimants all claim that the MoD breached the implied positive obligation in article 2 of the European Convention on Human Rights (the Convention) to take preventive measures to protect life in the light of the real and immediate risk to life of soldiers who were required to patrol in Snatch Land Rovers.
The third (the Ellis negligence claim) is brought by Courtney Ellis in negligence and is based on various alleged failures on the part of the MoD [1 12].
The MoD argued that the Snatch Land Rover claims under article 2 of the Convention should be struck out because at the time of their deaths Pte Hewett and Pte Ellis were not within the jurisdiction of the UK for the purposes of the Convention, and because on the facts as pleaded the MoD did not owe a duty to them at the time of their deaths under article 2.
It also argued that the Challenger claims and the Ellis negligence claim should all be struck out (1) on the principle of combat immunity (which operates to exclude liability for negligence in respect of the acts or omissions of those engaged in active operations against the enemy), and (2) because it would not be fair, just or reasonable to impose a duty of care on the MoD in the circumstances of those cases [13].
The High Court and Court of Appeal considered these arguments.
The effect of the Court of Appeals judgment was that: (1) the Snatch Land Rover claims under article 2 of the Convention should be struck out because the deceased were outside the jurisdiction of the UK for the purposes of the Convention and there was no basis for extra territorial jurisdiction; and (2) the Challenger claims and the Ellis negligence claim should proceed to trial [15].
The following issues were before the Supreme Court. (1) In relation to the Snatch Land Rover claims, whether at the time of their deaths Pte Hewett and Pte Ellis were within the jurisdiction of the UK for the purposes of the Convention. (2) If they were, whether and if so, the extent to which article 2 imposes positive obligations on the UK with a view to preventing the deaths of its own soldiers in active operations against the enemy. (3) In relation to the Challenger claims and the Ellis negligence claim, whether the allegations of negligence 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 death or injury in the circumstances [16].
The Court unanimously holds that, in relation to the Snatch Land Rover claims, Pte Hewett and Pte Ellis were within the UKs jurisdiction for the purposes of the Convention at the time of their deaths.
By a majority (Lords Mance, Wilson and Carnwath dissenting), the Court holds that: (i) the Snatch Land Rover claims should not be struck out on the ground that the claims are not within the scope of article 2 of the Convention; and (ii) the Challenger claims and Ellis negligence claim should not be struck out on the ground of combat immunity or on the ground that it would not be fair, just or reasonable to extend the MoDs duty of care to those cases [101].
The effect of the Courts decision is that all three sets of claims may proceed to trial.
Issue 1: Convention jurisdiction: In its judgment of July 2011 in the Al Skeini case, the European Court of Human Rights decided that six Iraqi civilians who had died as a result of the actions of British armed forces in Iraq were within the UKs jurisdiction for the purposes of the Convention.
The judgment does not answer issue 1 directly, but elements can be extracted from it which point clearly to the conclusion that the Court reaches in this case.
It formulates a relatively general principle that extra territorial jurisdiction can exist whenever a state through its agents exercises authority and control over an individual.
It also indicated that Convention rights can be divided and tailored to the particular circumstances of the extra territorial act in question, as opposed to being an indivisible package.
A states extra territorial jurisdiction over local inhabitants exists because of the authority and control that is exercised over them as a result of the authority and control that the state has over its own armed forces.
They are all brought within the states jurisdiction by the application of the same general principle [42 52].
Issue 2: Snatch Land Rover claims under article 2 of the Convention: In this area, the court must fully recognise the wide margin of appreciation to be given to the state and avoid imposing obligations which are unrealistic or disproportionate.
But it must give effect to those obligations where it would be reasonable to expect the individual to be protected by article 2.
Policy decisions made at a high level of command and things done on the battlefield will fall outside the scope of article 2.
But whether claims which are between these two categories are within the scope of article 2 will require the exercise of judgment in the light of the facts of each case [76].
The present claims provide only brief outlines of the claimants cases and they pre date developments in relevant case law on article 2.
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 article 2.
However, given the Courts guidance on the margin of appreciation to be given to the state, it is far from clear that the claimants will be able to demonstrate such a breach [78 81].
Issue 3: Challenger claims and Ellis negligence claim: The doctrine of combat immunity should be construed narrowly and should not be extended beyond its established scope to the planning of and preparation for active operations against the enemy.
The Challenger claims are not within the scope of the doctrine because they relate to decisions which are sufficiently far removed from the pressures and risks of active operations against the enemy.
The Ellis negligence claim is less obviously directed to things done away from the theatre of battle so it is arguably within the doctrine.
It would be premature for these claims to be struck out and the issue should be open to further argument in the light of the evidence [89 96].
The circumstances in which active operations are undertaken by the UKs armed services today vary greatly and cannot all be grouped under a single umbrella as if they were all open to the same risk of judicialising warfare.
However, considerations similar to those affecting the Snatch Land Rover claims under article 2 arise in relation to whether it would be fair, just and reasonable to impose a duty of care on the MoD in this area.
The question whether the negligence claims in this case entail subjecting the MoD to duties that are unrealistic or excessively burdensome cannot properly be determined without hearing evidence [98 100].
Minority judgments: Lord Mance (with whom Lord Wilson agrees) would have struck out all three sets of claims in their entirety, essentially because they are not suitable for resolution by a court [125 137, 146, 150 152].
For the same reasons, Lord Carnwath would have struck out the Challenger claims.
However, he considered that the Snatch Land Rover claims were not necessarily excluded, because major combat operations had ceased by the time of the relevant incidents [156, 186 188].
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The appellant, TRA, who was arrested in the United Kingdom on 1 June 2017, is charged with one count of conspiracy to commit torture (count 1) and seven counts of torture (counts 2 8).
The substantive offence alleged in each case is that of torture contrary to section 134, Criminal Justice Act 1988 (CJA).
The charges relate to events in Liberia in 1990, in the early stages of the first Liberian civil war, when an armed group, the National Patriotic Front of Liberia (NPFL), sought to take control of the country and to depose the then President, Samuel Doe.
The leader of the NPFL was Charles Taylor REDACTED.
The NPFL eventually succeeded in taking control of Liberia and Charles Taylor became President in 1997.
This is an appeal pursuant to section 36, Criminal Procedure and Investigations Act 1996 (CPIA) and section 33(1), Criminal Appeal Act 1968.
It arises out of a ruling on a question of law made within a preparatory hearing under section 32(3) CPIA which was amalgamated into a decision on an application for dismissal under the Crime and Disorder Act 1998, Schedule 3 paragraph 2(2).
The Criminal Division of the Court of Appeal (Lord Burnett CJ, Popplewell and Whipple JJ) has certified the following point of law of general public importance: What is the correct interpretation of the term person acting in an official capacity in section 134(1) of the Criminal Justice Act 1988; in particular does it include someone who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises or purports to exercise the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs?
The prosecution case
REDACTED
The prosecution maintains that at the time and place of the alleged offences, the NPFL was the de facto military government or government authority and that Charles Taylor and those acting for and with him, including the appellant, were acting in an official capacity for, and on behalf of, the NPFL and had effective control of the area where the various alleged offences occurred at the time they occurred.
The prosecutions expert witness acknowledges that identifying a specific date when a particular town fell under NPFL control is difficult.
Territory changed hands quickly during the early months of the war.
Both the NPFL and the government of Liberia made misleading statements regarding which towns were under their control.
During its advance across Nimba County the NPFL did not have a clearly defined military structure, although Charles Taylor was universally recognised as leader of the group during this period.
Commanders moved with the fighting and exercised influence based on the number of soldiers they were able to recruit and train.
The prosecutions expert witness indicates that within days of falling under NPFL control, villages and towns usually received a visit from an NPFL commander and a detachment of fighters, although the NPFL did not maintain a permanent presence in all locations.
Further, he states that his own research suggests that all of Nimba County including the major towns and cities was under NPFL control by early May 1990.
In a memorandum served by the prosecution after the hearing before the Court of Appeal, the prosecutions expert clarifies that his use of the term control refers to military rather than administrative control over the area.
He states that the NPFL offensives in early 1990 caused the Armed Forces of Liberia (AFL) to withdraw from nearly all areas of Nimba County and consolidate their forces in military bases located in strategic towns.
This withdrawal created a situation in which NPFL forces had freedom of movement throughout the County.
As a result, the NPFL was the de facto military authority in the area.
Such military control is said to be very different from administrative control.
He states that before June 1990 the NPFL did not have a sustained presence in much of Nimba County.
It did not assign officials to oversee towns or deploy forces to provide security.
NPFL forces passed through towns and villages on an ad hoc basis; there was no sustained or coordinated occupation.
Much of the population lived in a no mans land, areas without any consistent administrative authority, but with the occasional presence of NPFL fighters.
REDACTED
Following her arrest on 1 June 2017, the appellant denied involvement in the offences.
In her Defence Case Statement, she asserts that at no time did she act in an official capacity for the NPFL and she disputes that the NPFL was the de facto government authority in the relevant locations and at the relevant times.
The proceedings
The appellant made an application to dismiss the charges pursuant to the Crime and Disorder Act 1998, Schedule 3, paragraph 2.
The application came before Sweeney J at the Central Criminal Court in two stages.
The parties agreed that the judge should first hear argument as to the correct legal test of official capacity with the intention that, once that ruling had been delivered, the defence could consider whether to continue with a submission that there was no case to answer.
The application proceeded on the basis that a submission of no case to answer may include the calling of evidence by the prosecution or the defence and that the determination of such a submission would be a matter of law.
The first part of the dismissal application was heard on 26 and 27 March 2018.
In his ruling dated 30 July 2018, Sweeney J concluded that section 134 applies, not only to acting for entities either tolerated by, or acting under the authority of the government of a state, but also, in situations of armed conflict, to individuals who act in a non private capacity and as part of an authority wielding entity.
Following this ruling, the second part of the defendants dismissal application was heard on 4 October 2018.
On 10 October 2018 Sweeney J ruled that there was a case to answer on all counts.
In his reasons given in writing on 29 October 2018 the judge explained that, while the questions whether the appellant was acting in a non official capacity on behalf of the NPFL and whether the NPFL was an authority wielding entity would ultimately be for the jury, the dismissal application turned on whether the evidence, taken at its highest, was sufficient for a jury properly to so conclude.
He held that it was.
The appellant appealed against the ruling dated 30 July 2018, made again within the context of the preliminary hearing on 29 October 2018, to the Court of Appeal which dismissed the appeal on 21 December 2018.
It held that the category of perpetrator defined as a public official or person acting in an official capacity in section 134 CJA is not confined to those acting on behalf of a recognised state but covers any person who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises or purports to exercise the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs.
Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict. (para 69) The Court of Appeal noted that it had expressed its conclusion in slightly different language from that of Sweeney J in his ruling, but it considered that the test he adopted and applied was not materially different on the facts of the case and that his subsequent ruling on the factual submission of no case to answer was not affected by the difference.
Accordingly, the appeal was dismissed.
On 13 February 2019 the Supreme Court (Lady Hale, Lord Reed and Lord Kerr) granted permission to appeal.
The UN Convention against Torture and its implementation
it is alleged that the offences in the indictment were committed.
Section 134 CJA provides in relevant part: It is necessary to identify and apply the law as it existed at the dates on which 134.
Torture (1) A public official or person acting in an official capacity, whatever his nationality, commits the offence of torture if in the United Kingdom or elsewhere he intentionally inflicts severe pain or suffering on another in the performance or purported performance of his official duties. (2) A person not falling within subsection (1) above commits the offence of torture, whatever his nationality, if (a) in the United Kingdom or elsewhere he intentionally inflicts severe pain or suffering on another at the instigation or with the consent or acquiescence of a public official; or (i) (ii) of a person acting in an official capacity; and (b) the official or other person is performing or purporting to perform his official duties when he instigates the commission of the offence or consents to or acquiesces in it. (6) A person who commits the offence of torture shall be liable on conviction on indictment to imprisonment for life.
Section 134 CJA came into effect on 29 September 1988.
It applies to conduct committed after that date.
Section 135 provides that prosecutions under section 134 require the consent of the Attorney General.
Such consent was given in this case on 2 June 2017.
Section 134 CJA implements in domestic law certain obligations of the United Kingdom pursuant to the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, New York, 10 December 1984, (1991) (Cm 1775), 1465 UNTS 85 (UNCAT).
Article 1 defines torture for the purposes of UNCAT: Article 1 1.
For the purposes of this Convention, torture means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions. 2.
This article is without prejudice to any international instrument or national legislation which does or may contain provisions of wider application.
Under UNCAT each State Party is required to take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction (article 2).
No State Party shall expel, return (refouler) or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture (article 3).
Each State Party is required to ensure that all acts of torture are offences under its criminal law (article 4) and to establish its jurisdiction over such offences in cases where the alleged offender is present in any territory under its jurisdiction and it does not extradite him (article 5).
In such cases each State Party is obliged, if it does not extradite the alleged offender, to submit the case to its competent authorities for the purpose of prosecution (article 7).
Each State Party also undertakes to prevent in any territory under its jurisdiction other acts of cruel, inhuman or degrading treatment or punishment which do not amount to torture as defined in article 1, when such acts are committed by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity (article 16).
UNCAT entered into force on 26 June 1987, in accordance with article 27(1).
It currently has 166 State Parties.
Torture in international humanitarian law
Torture for the purposes of UNCAT must be distinguished from discrete concepts of torture in international humanitarian law where torture may form the basis of a war crime or a crime against humanity.
I would draw attention, in particular, to the following matters. (1) Article 3, common to each of the four Geneva Conventions of 1949, prohibits torture in non international armed conflicts and establishes protections for persons who do not or who no longer take an active part in hostilities.
In Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America) (Merits, Judgment) ICJ Rep 1986, 14 at 113 4, para 218, the International Court of Justice held that Common Article 3 establishes minimum guarantees that apply in all armed conflict. (2) The statutes of the ad hoc international tribunals for the former Yugoslavia (ICTY) and Rwanda (ICTR) conferred jurisdiction to try offences of torture committed during armed conflict without defining the offence.
The Tribunals produced their own definitions, based heavily on UNCAT. (3) Under the Rome Statute of the International Criminal Court (ICC), 17 July 1988, torture is capable of constituting (1) a crime against humanity when committed as part of a widespread or systematic attack directed against any civilian population (article 7(1)(f)); (2) a war crime when committed in an armed conflict whether international or not of an international character (articles 8(2)(a)(ii) and 8(2)(c)(i)).
A vital distinction for present purposes between torture under UNCAT and torture in international humanitarian law is that torture under UNCAT is limited to cases where pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
Although the ICTY initially considered that there was a requirement in respect of torture in an armed conflict that at least one of the persons involved in the torture process must be a public official or must at any rate act in a non private capacity, eg as a de facto organ of a State or any other authority wielding entity (Prosecutor v Furundija, Trial Chamber Judgment, 10 December 1998, para 162; see also Appeal Chamber Judgment, 21 July 2000, para 111), it later took the contrary view (Prosecutor v Kunarac, Trial Chamber Judgment, 22 February 2001, para 496; Appeals Chamber Judgment, 12 June 2002, para 148).
It is now established that there is no such requirement in the case of war crimes or crimes against humanity in international humanitarian law.
In particular, there is no such requirement in the case of torture as a war crime or a crime against humanity under the Statute of the ICC.
As a result, it is necessary to exercise caution when referring to materials and authorities on international humanitarian law for the purpose of ascertaining the scope of article 1 of UNCAT.
Torture as a crime against humanity and torture as a war crime, as defined in the Statute of the ICC, are both offences contrary to UK law by virtue of sections 50 and 51, International Criminal Court Act 2001.
As a result, torture committed in certain circumstances may be prosecuted here as a war crime or a crime against humanity.
However, the alleged conduct which gives rise to the current charges against the appellant could not be prosecuted in the United Kingdom on either of these bases, even if the elements of these offences were otherwise established, because section 65A of the International Criminal Court Act 2001, inserted by section 70 of the Coroners and Justice Act 2009, which deals with retrospective application, provides that the relevant sections apply to acts committed on or after 1 January 1991, which is later than the date on which the instant offences are alleged to have been committed.
The submissions of the parties
On behalf of the appellant Mr Steven Powles QC submits that section 134 CJA and the term person acting in an official capacity apply only to those acting for or on behalf of the government of a State.
He submits that this is the ordinary meaning of both section 134 CJA and article 1, UNCAT, in light of the object and purpose of UNCAT, that this is also supported by the travaux preparatoires and that this is further demonstrated by the pronouncements of the UN Committee against Torture.
He submits that, as a result, section 134 CJA does not apply to the conduct of an alleged member of an armed opposition group fighting against or seeking to overthrow the government of a State.
On behalf of the prosecution Mr David Perry QC submits that section 134(1) CJA covers any person who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises the functions of government over the civilian population in the territory which it controls and in which the relevant conduct occurs.
Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict.
He submits that the concept of official capacity in the Convention extends beyond any formal State structure and even beyond actors who had been invested with authority by the State.
It covers all those who exercise a form of public authority over individuals in a manner which might be similar to the authority of a State.
Thus, he submits, it would extend to armed groups who seek to depose the government and to exercise State power and would certainly extend to those who in their quest for authority have displaced the legitimate government in those areas where they operate.
The approach to interpretation of section 134 CJA and article 1, UNCAT
Section 134 CJA was intended to give effect to UNCAT in domestic law.
As a result, the words person acting in an official capacity must bear the same meaning in section 134 as in article 1, UNCAT. (See R v Bow Street Metropolitan Stipendiary Magistrate, Ex p Pinochet Ugarte (No 3) (Pinochet No 3) [2000] 1 AC 147 per Lord Browne Wilkinson at p 200A B.) The principles of international law governing the interpretation of treaties are to be found in articles 31 and 32, Vienna Convention on the Law of Treaties, 23 May 1969, (1980) (Cm 7964), 1155 UNTS 331.
Article 31.
General Rule of Interpretation 1.
A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. 2.
The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: (a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty; (b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. 3.
There shall be taken into account, together with the context: (a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) Any relevant rules of international law applicable in the relations between the parties. 4.
A special meaning shall be given to a term if it is established that the parties so intended.
Article 32.
Supplementary Means of Interpretation Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31: (a) Leaves the meaning ambiguous or obscure; or (b) Leads to a result which is manifestly absurd or unreasonable.
Ordinary meaning
On behalf of the appellant, Mr Powles submits that the ordinary meaning of both article 1, UNCAT and section 134 CJA is such that section 134 applies only to those acting for or on behalf of the government of a State.
He points out, correctly, that while article 1(2) UNCAT is without prejudice to national legislation which does or may contain provisions of wider application, section 134 is not drafted in terms of wider application than article 1.
The offence contrary to section 134(1) can be committed only by a public official or person acting in an official capacity.
He further draws attention to the fact that both subsections 134(1) and (2) provide that the public official or person acting in an official capacity must be acting in the performance or purported performance of their official duties.
He points to the fact that the definition applies to torture both in the United Kingdom and elsewhere and submits that it is hard to envisage that anyone could, in the United Kingdom, commit an act of torture in the performance of their official duties unless they were acting for or on behalf of the State.
Anyone not acting either for or on behalf of the State is, he submits, by definition, acting in a private and individual capacity and such conduct, in the United Kingdom, would fall within the jurisdiction of ordinary domestic criminal law and be prosecuted accordingly.
The difficulty with the appellants approach is that it seeks to impose a gloss on the ordinary meaning of the words of the two provisions.
Those words are apt to describe a person performing official administrative or governmental functions but provide no suggestion that those functions must be performed on behalf of the government of the State concerned.
The dichotomy drawn by the provisions is between official conduct and purely private conduct, not between State and non State activity.
While in most normal circumstances, such as those prevailing in the United Kingdom to which the appellant refers, official conduct will usually be performed on behalf of a State, it is necessary to consider the applicability of the Convention in less stable situations, including those where more than one body may be performing administrative or governmental functions within the territory of the State.
Unhappily, examples of such situations arise not infrequently.
In my view the words used do not support a limitation of the kind proposed.
On the contrary, the words person acting in an official capacity are apt to include someone who holds an official position or acts in an official capacity in an entity exercising governmental control over a civilian population in a territory over which it holds de facto control.
Object and purpose
It is well established that a treaty should be interpreted in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose (Vienna Convention on the Law of Treaties, article 31(1)).
It is necessary, however, to sound a cautionary note at this point.
While the object of UNCAT was undoubtedly, in one sense, to end impunity for perpetrators of what might be termed official torture it does not follow that the reading of the Convention which would best avoid impunity must be adopted in all circumstances.
It is, rather, necessary to give effect to the words used in the light of the object and purpose of the scheme created by the State parties to the Convention.
Similarly, the mere fact that a particular reading may be seen as a desirable development of the law is not of itself a valid reason for adopting it.
It is not for national courts engaged in interpreting a treaty to seek to force the pace of the development of international law, however tempting that may be.
There is an analogy to be drawn here with the consideration by national courts of potential rules of customary international law, addressed by the House of Lords in Jones v Ministry of the Interior of the Kingdom of Saudi Arabia (Secretary of State for Constitutional Affairs intervening) (Jones v Saudi Arabia) [2006] UKHL 26; [2007] 1 AC 270 where Lord Hoffmann observed (at para 63): It is not for a national court to develop international law by unilaterally adopting a version of that law which, however desirable, forward looking and reflective of values it may be, is simply not accepted by other states.
Lord Bingham noted, similarly, (at para 22) that one swallow does not make a rule of international law.
The principal purpose of UNCAT is not to outlaw torture and other cruel, inhuman or degrading treatment or punishment.
On the contrary the Convention is based upon the recognition that such practices are already outlawed under international law and the principal aim of UNCAT is to strengthen the existing prohibition by a number of supportive measures (Burgers and Danelius, The United Nations Convention against Torture A Handbook on the Convention against Torture, (Martinus Nijhoff 1988), p 1).
Thus, Lord Browne Wilkinson observed in Pinochet (No 3) at p 199C: The Torture Convention was agreed not in order to create an international crime which had not previously existed but to provide an international system under which the international criminal the torturer could find no safe haven. (See also Lord Hutton at pp 260F 261B) As Judge Crawford points out, UNCAT, in common with similar treaties relating, for example, to the unlawful seizure of aircraft or the taking of hostages, does not impose criminal responsibility directly upon individuals, but rather requires contracting States to prevent and punish the conduct in question.
The enforcement of such norms occurs at the domestic rather than the international level, as the treaties envisage punishment only by domestic courts.
In addition to obliging states parties to criminalize certain conduct, such treaties generally require them to prosecute or extradite accused persons to other states parties that are willing to prosecute them (aut dedere aut iudicare).
While the enforcement of these norms is dependent on domestic legal systems either prosecuting or extraditing accused persons, various treaty bodies such as the Committee against Torture often play an important role in monitoring the implementation of the treaty norms at the domestic level. (James Crawford, Brownlies Principles of Public International Law, 9th ed (2019), p 663.) It can be seen therefore that the object of UNCAT has been to make torture as defined in article 1 a criminal offence of universal jurisdiction enforceable by domestic courts and, by virtue of very extensive State participation in the Convention, to establish a machinery capable of reducing the likelihood of perpetrators of official torture escaping justice before national courts.
Article 1 of UNCAT therefore defines a criminal offence which contracting States are required to criminalize and punish within their respective legal systems.
The fact that UNCAT is a human rights treaty imposing obligations in international law on the contracting States is not a good reason for limiting the scope of that offence to conduct attributable to the State itself.
It does not follow that the reference in the Convention to public officials and those acting in an official capacity must be taken to refer to State actors as opposed to non State actors.
Travaux preparatoires
We have been referred by the parties to records of the drafting history of article 1, UNCAT and to commentaries on the Convention, including Burgers and Danelius (above) and Nowak and McArthur, Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (OUP, 2008).
Both parties submit that these materials are admissible as a supplementary means of interpretation under article 32, Vienna Convention on the Law of Treaties and support their respective interpretations of the words a public official or other person acting in an official capacity in article 1, UNCAT.
The UN Declaration on the Protection of All Persons from Being Subjected to Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, adopted by General Assembly resolution 3452 (XXX) of 9 December 1975 (the 1975 Declaration) defined torture in article 1 in terms which required that it be inflicted by or at the instigation of a public official.
By Resolution 32/62 of 8 December 1977, the UN General Assembly requested the Commission on Human Rights to draw up a draft convention against torture.
The Commission examined the matter at its 34th session and invited comments on the draft articles from the governments of member states of the United Nations and its specialized agencies in advance of its 35th session.
The comments received are summarised in three documents published by the Commission on Human Rights (E/CN.4/1314, 19 December 1978; E/CN.4/1314/Add 1, 18 January 1979; E/CN.4/1314/Add 2, 31 January 1979).
At that stage, the definition of torture in draft article 1 required that it be inflicted by or at the instigation of a public official.
In its response the Austrian Government proposed that the concept of public official be expanded, for example by using the words persons, acting in an official capacity (E/CN.4/1314, para 43).
The United States proposed that the term public official be defined in order to clarify the breadth of the concept and to make clear that both civil and military officials are included (E/CN.4/1314, para 45).
The United Kingdom proposed that, in order to amplify the definition, the phrase or any other agent of the State be inserted after public official (E/CN.4/1314/Add 1, para 3).
The observation of the Federal Republic of Germany was summarised as follows: in particular, it should be made clear that the term public official contained in paragraph 1 refers not only to persons who, regardless of their legal status, have been assigned public authority by State organs on a permanent basis or in an individual case, but also to persons who, in certain regions or under particular conditions, actually hold and exercise authority over others and whose authority is comparable to governmental authority or be it only temporarily has replaced government authority or whose authority has been derived from the aforementioned persons. (E/CN.4/1314/Add 2, para 2) Clearly, the German proposal was not implemented in terms. (See Boulesbaa, The UN Convention on Torture and the Prospects for Enforcement, (Martinus Nijhoff 1999), pp 27 28; Wendland, A Handbook on State Obligations under the UN Convention against Torture, Association for the Prevention of Torture, (2002), p 29.) Nevertheless, it may have influenced the expansion of the concept of public official.
Nowak and McArthur summarise the matter as follows: 116.
Severe pain or suffering only counts as torture in the understanding of the Convention if it is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
The formulation in the 1975 Declaration and the original Swedish draft (by or at the instigation of a public official) reflects the traditional view that States can only be held accountable for human rights violations committed by State actors.
Since the main purpose of the Convention was to require States parties to use domestic criminal law for the purpose of punishing perpetrators of torture, several governments, such as France, Barbados, Panama and Spain, advocated an extension of the definition covering also private individuals.
Germany did not go as far but wished to include also non State actors who exercise authority over others and whose authority is comparable to government authority.
Since other governments, including the United States, United Kingdom, Morocco and Austria, insisted on a traditional State centred definition, the Working Group finally agreed on a US compromise proposal which extended State responsibility to the consent or acquiescence of a public official.
Since the delegations could not agree on a definition of the term public official, the Austrian proposal to add the phrase or other person acting in an official capacity was adopted. (footnotes excluded) On this basis Mr Powles submits that the compromise was the inclusion of non State actors who act with the consent or acquiescence of a public official and not the expansion of the definition of person acting in an official capacity beyond persons or entities who in fact act for or on behalf of the State.
It seems clear from this account by Nowak and McArthur that, in the result, the intention was at least to exclude from the definition the conduct of private individuals acting in a private capacity.
The question is whether it was intended to go further and to include within the definition acts of de facto authorities exercising governmental functions.
On behalf of the appellant, Mr Powles draws particular attention to the reference by Nowak and McArthur to insistence on a traditional State centred definition and submits that it supports the view that conduct in an official capacity must be attributable to the State.
It is not entirely clear, however, what is meant by this term.
A later passage in Nowak and McArthur, on which the prosecution relies, suggests that it may be intended simply to exclude perpetrators acting entirely in a personal capacity. 118.
The term other person acting in an official capacity goes, however, clearly beyond State officials.
It was inserted on the proposal of Austria in order to meet the concerns of the Federal Republic of Germany that certain non State actors whose authority is comparable to governmental authority should also be held accountable.
These de facto authorities seem to be similar to those political organizations which, according to article 7(2)(i) ICC Statute, can be held accountable for the crime of enforced disappearance before the ICC.
One might think of rebel, guerrilla or insurgent groups who exercise de facto authority in certain regions or of warring factions in so called failing States. 119.
In the case of Elmi v Australia, the Committee had to decide whether the forced return of a Somali national belonging to the Shikal clan to Somalia, where he was at a substantial risk of being subjected to torture by the ruling Hawiye clan, constituted a violation of the prohibition of refoulement pursuant to article 3.
The Committee found a violation of article 3 and explicitly rejected the argument of the Australian Government that the acts of torture the applicant feared he would be subjected to in Somalia would not fall within the definition of torture set out in article 1: (original emphasis, footnotes omitted) Article 7(2)(i), ICC Statute, to which Nowak and McArthur refer, provides: Enforced disappearance of persons means the arrest, detention or abduction of persons by, or with the authorization, support or acquiescence of, a State or a political organization, followed by a refusal to acknowledge that deprivation of freedom or to give information on the fate or whereabouts so those persons, with the intention of removing them from the protection of the law for a prolonged period of time.
On its face, this passage from Nowak and McArthur strongly supports the prosecutions submission.
Mr Powles, however, criticises Nowak and McArthurs statement that the term other person acting in an official capacity was inserted in order to meet the concerns of the Federal Republic of Germany that certain non State actors whose authority is comparable to governmental authority should also be held accountable.
He points to the sequence in which comments were submitted, which seems to show that the Austrian amendment was proposed before the German observation was made.
On the information presently available to us, it can nevertheless be said that the German observation was under consideration by the Working Group before the amendment proposed by Austria was agreed and the sequence does not necessarily mean that the amendment does not reflect Germanys concern. (In this regard, Mr Perry, on behalf of the prosecution, also draws our attention to the fact that section 312a of the Austrian Criminal Code provides that public officials within the meaning of this provision shall also be those who, in the event of the absence or default of the public authorities, are effectively acting as officials.
The significance of this as an aid to interpreting article 1, UNCAT is, however, much reduced by the fact that article 1(2) provides that article 1 is without prejudice to any national legislation which does or may contain provisions of wider application.
In other words, UNCAT does not prohibit gold plating by contracting States.
Furthermore, although Austria ratified UNCAT in 1987 this amendment to the Austrian Criminal Code was not introduced until 2013.) In the result, therefore, the commentary by Nowak and McArthur and the legislative history to which they refer can be said to provide some support for the interpretation for which the prosecution contends.
Mr Powles also relies on passages in Burgers and Danelius concerning the drafting history in support of his reading of article 1.
There were different opinions on the question as to whether or not the definition of torture in the convention should be limited to acts of public officials.
It was pointed out by many States that the purpose of the convention was to provide protection against acts committed on behalf of, or at least tolerated by, the public authorities, whereas the State could normally be expected to take action according to its criminal law against private persons having committed acts of torture against other persons.
However, France considered that the definition of the act of torture should be a definition of the intrinsic nature of the act of torture itself, irrespective of the status of the perpetrator.
Although there was little support for the French view on this matter, most States agreed that the convention should not only be applicable to acts committed by public officials, but also to acts for which the public authorities could otherwise be considered to have some responsibility. (Burgers and Danelius (above) at p 45, original emphasis) In principle, the common element of the purposes referred to in the definition should rather be understood to be the existence of some even remote connection with the interests or policies of the State and its organs.
It is important to note, in this context, that the primary objective of the Convention is to eliminate torture committed by or under the responsibility of public officials for purposes connected with their public functions.
Precisely because the public interest is sometimes seen in such cases as a justification, the authorities may be reluctant to suppress these practices.
The provisions of the Convention are intended to ensure that torture does not occur in such cases or that, if it occurs, action is taken against the offender. (Burgers and Danelius (above), at pp 118 119) In a further passage, Burgers and Danelius state: While these passages may be read as providing some support for the appellants case, it is important to bear in mind that neither was addressing the specific question which arises in these proceedings.
The first was addressing the distinct questions of whether torture under the Convention should include private acts of torture and whether it should extend beyond acts committed by public officials.
The second was addressing the requirement that torture should be committed for a specific purpose connected to the actors public function.
As a result, these passages cast little light on the meaning of the words acting in an official capacity.
The same is true of the following statement by the Chairman Rapporteur, Mr J H Burgers in his report of the Working Group dated 25 March 1983 addressing whether the offence of torture should attract universal jurisdiction: Most speakers were in favour of the principle of universal jurisdiction, holding it to be essential in securing the effectiveness of the Convention.
Territorial jurisdiction would not suffice to punish torture effectively as a State policy, under the definition of article 1. (E/CN.4/1983/63 at para 21)
While these aspects of the travaux preparatoires may be inconclusive as to the meaning of the words public official or other person acting in an official capacity in article 1, they do, however, cast some light on certain objectives of the Convention.
Two points, in particular, emerge with some clarity.
First, it was the intention that the offence defined in article 1 should not include purely private acts of torture with no official character or connection.
While the representatives of some States in the Working Group considered that the offence should not be limited to the conduct of public officials since the purpose of the Convention was to eradicate any and all activities which result in torture, others considered that such purely private acts were not matters of particular interest to the international community and that each State could normally be expected to take action according to its criminal law against private persons who had committed such private acts of torture so that there was no need for its regulation by an international convention.
The prevailing view was that acts of torture committed by or under the responsibility of public officials for purposes connected with their public functions were different in nature from, and inherently more serious than, those inflicted by a private person, and that the elimination of the former category of torture should be the primary target of the Convention. (See Nowak and McArthur, paras 33, 40; Burgers and Danelius, pp 45, 118 120; E/CN.4/1314, 19 December 1978, para 29.) Thus, international action was primarily designed to cover situations where national action was otherwise least likely (E/CN.4/L.170, 12 March 1979, paras 17, 18).
To the extent that the words a public official or other person acting in an official capacity in article 1 were intended to achieve that result, they should not exclude conduct by rebels, outside the authority of the State, exercising governmental functions over the civilian population of territory under its control.
On the contrary, such conduct is properly the concern of the international community and requires international regulation, albeit implemented at national level.
Official torture is as objectionable and of as much concern to the international community when it is committed by a representative of a de facto governmental authority as when it is committed on behalf of the de jure government.
Secondly, there is likely to be reluctance on the part of States to bring to justice perpetrators of torture who have acted in an official capacity, where torture is a State policy, not least because the public interest may be claimed as a justification. (See Burgers and Danelius, pp 45, 118 120; E/CN.4/1982/L.40, para 26; E/CN.4/1983/63, para 21.) As a result, the bringing to justice of perpetrators could not be left to the territorial jurisdiction of the State concerned and a primary objective of the Convention was to establish universal jurisdiction for this reason.
To the extent that the words a public official or other person acting in an official capacity in article 1 were intended to achieve that result, the point can fairly be made on behalf of the appellant that this rationale does not apply to torture perpetrated by rebels acting outside the authority of the State.
While a case for establishing universal jurisdiction may be made out in such circumstances, its basis would be the inability and not the reluctance of the State to act.
Subsequent practice
Article 31(2)(b) Vienna Convention on the Law of Treaties provides that in interpreting a treaty there shall be taken into account, together with the context, any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation.
In this regard, the appellant relies on the report by the Special Rapporteur dated 19 February 1986 and both parties rely on the decisions and General Comments of the UN Committee Against Torture (CAT).
Kooijmans Report, 19 February 1986
UNCAT was adopted on 10 December 1984 and entered into force on 26 June 1987.
In his report of 19 February 1986 (E/CN.4/1986/15) the Special Rapporteur, Mr P Kooijmans, made the following reference to the text of article 1.
Article 1, para 1, of the Convention reads as follows when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
The Convention was again following the Declaration of 1975, but developing it by adding the phrases or with the consent or acquiescence of and or other person acting in an official capacity.
Consequently, State responsibility is apparent even when the authorities resort to the use of private gangs or paramilitary groups in order to inflict severe pain or suffering with the intention and purposes already mentioned.
However, private acts of brutality even the possible sadistic tendencies of particular security officials should not imply State responsibility, since these would usually be ordinary criminal offences under national law. (at para 38) In this passage Mr Kooijmans is focussing on the circumstances in which a State may be responsible for acts of torture.
He emphasises the distinction between official and private acts and the extension of the States responsibility in cases of consent or acquiescence within article 1.
Contrary to the appellants submission, this passage does not support the proposition that a state nexus requirement is inherent in the term official capacity, such that the term only applies to persons acting on behalf of the State.
The relevance of state responsibility to the present issue is considered below.
Committee Against Torture
Part II of UNCAT establishes the CAT which consists of ten experts of high moral standing and recognized competence in the field of human rights, who shall serve in their personal capacity (article 17(1)).
The States Parties are required to submit to the CAT reports on the measures they have taken to give effect to their undertakings under UNCAT and the CAT may make general comments on the reports (article 19).
In addition, a State Party may declare that it recognises the competence of the CAT to receive and consider communications from individuals subject to its jurisdiction who claim to be victims of a violation by a State Party of the provisions of the Convention.
The CAT is required to consider such communications and to forward its views to the State Party and the individual concerned (article 22).
The decisions and General Comments of the CAT are clearly entitled to respect.
However, in considering the work of the CAT as part of subsequent practice in the application of UNCAT it is necessary to bear in mind the particular status of the Committee.
In Jones v Saudi Arabia Lord Bingham observed, at para 23, with regard to a General Comment made by the CAT on the issue of effective measures of redress: [T]he committee is not an exclusively legal and not an adjudicative body; its power under article 19 is to make general comments; the committee did not, in making this recommendation, advance any analysis or interpretation of article 14 of the Convention; and it was no more than a recommendation.
Whatever its value in influencing the trend of thinking, international this recommendation is slight. legal authority of the
General Comments of the CAT
The CAT has published four General Comments on UNCAT.
In these proceedings, particular reliance has been placed on General Comment No 2: Implementation of article 2 by States Parties, 24 January 2008 (CAT/C/GC/2) and General Comment No 4: Implementation of article 3 of the Convention in the context of article 22, 4 September 2018 (CAT/C/GC/4).
The appellant submits that the CAT has consistently defined official capacity according to whether the person or entity is carrying out a public function on behalf of the State.
In this regard, she relies, in particular, on the following passage in General Comment No 2: The Convention imposes obligations on States parties and not on individuals.
States bear international responsibility for the acts and omissions of their officials and others, including agents, private contractors and others acting in an official capacity or acting on behalf of the State, in conjunction with the State, under its direction or control, or otherwise under colour of law. (at para 15) It is, of course, correct that UNCAT is binding on the Contracting States in international law and that it does not itself impose obligations on individuals.
Rather, it imposes on each State party an obligation to create and enforce in its domestic law an offence which conforms with the definition in article 1.
However, it is not possible to derive from this the conclusion that torture within article 1 is limited to conduct attributable to the State as suggested by the appellant.
Furthermore, this passage is not necessarily intended to be an exclusive description of the scope of article 1.
The appellant also relies on the following passage in General Comment No 4 on the implementation of the non refoulment obligation in article 3: States parties should refrain from deporting individuals to another State where there are substantial grounds for believing that they would be in danger of being subjected to torture or other ill treatment at the hands of non State entities, including groups that are unlawfully exercising actions that inflict severe pain or suffering for the purposes prohibited by the Convention, and over which the receiving State has no or only partial de facto control, or whose acts it is unable to prevent or whose impunity it is unable to counter. (at para 30) This passage accurately describes the non refoulment obligation.
However, it does not address the question whether the conduct of such non State entities might constitute torture within article 1 if they are quasi governmental entities performing governmental functions.
More generally, the General Comments do not provide any support for the reading of article 1 for which the appellant contends.
It is also necessary to address a submission on behalf of the prosecution that the General Comments taken as a whole demonstrate that the actions of non State actors can be considered as acts impermissible under UNCAT.
Here it is submitted that if the interpretation of article 1 advanced by the appellant is correct (namely that it only applies to State actors or those acting with the approval or acquiescence of the State) then there would be no obligation on the State to punish acts of torture which violate the Convention committed by non State officials in areas outside the States control (emphasis in original).
The prosecution relies in particular on the following passage in General Comment No 2: 18.
The Committee has made clear that where State authorities or others acting in an official capacity or under colour of law, know or have reasonable grounds to believe that acts of torture or ill treatment are being committed by non State officials or private actors and they fail to exercise due diligence to prevent, investigate, prosecute and punish such non State officials or private actors consistently with the Convention, the State bears responsibility and its officials should be considered as authors, complicit or otherwise responsible under the Convention for consenting to or acquiescing in such impermissible acts.
Since the failure of the State to exercise due diligence to intervene to stop, sanction and provide remedies to victims of torture facilitates and enables non State actors to commit acts impermissible under the Convention with impunity, the States indifference or inaction provides a form of encouragement and/or de facto permission.
The Committee has applied this principle to States parties failure to prevent and protect victims from gender based violence, such as rape, domestic violence, female genital mutilation, and trafficking.
In this regard the prosecution further relies on passages in the CATs initial report on Iraq, 7 September 2015 (CAT/C/IRQ/CO/1, paras 11 12) and its second periodic report on Afghanistan, 12 July 2017 (CAT/C/AFG/2, para 7).
On this basis it submits that it is envisaged that it is not only State agents who should be prosecuted and punished pursuant to the State parties obligations under the Convention but also perpetrators from non State party groups or organisations operating on the territory of the State party.
This submission cannot be accepted.
Although the matter is awkwardly expressed, in General Comment No 2, para 18, the CAT is stating the proposition that a States failure to fulfil its obligation under the Convention to prevent, investigate, prosecute and punish inhuman treatment committed by non State officials or private actors will amount to the States consent to or acquiescence in those acts within the definition in article 1.
It is that consent or acquiescence and not the status of the actor which gives the conduct its official character.
This is a principle familiar in the fields of State responsibility and human rights.
The State is responsible not because the acts of the individuals concerned are attributable to the State but because of its own failure to act in accordance with its obligations under the Convention.
As a result, this passage does not assist the prosecution in establishing that acts of a de facto authority are within the scope of article 1.
Indeed, the submission proves too much for, if correct, it would entirely negate the requirement that the conduct be that of a public official or other person acting in an official capacity.
As a result, I consider that the General Comments of the CAT cast little light on the present issue.
Decisions under article 22(7), UNCAT
A series of decisions of the CAT under article 22(7) UNCAT addresses the obligation on State Parties under article 3 not to expel, return or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture.
In these decisions the statements by the CAT in relation to the present issue are inconsistent.
In SV v Canada (15 May 1996; Communication No 49/1996; UN Doc CAT/C/26/D/49/1996 (2001)) the authors complained that they were at risk of torture by the Sri Lankan authorities, but also complained that they were at risk of torture by the Liberation Tigers of Tamil Eelam (LTTE) a rebel organisation which, the decision recorded, had in 1990 taken control of the Tamil region.
The CAT, having referred to the definition in article 1, rejected the latter complaint.
The Committee considers that the issue of whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention.
Consequently, the issue, on which the authors base part of their claim that they would suffer torture by LTTE or other non governmental entities on return to Sri Lanka, cannot be considered by the Committee. (para 9.5) Similarly, in GRB v Sweden (19 June 1998; CAT/C/20/D/83/1997 at para 6.5) (where the author complained that if returned to Peru she would be at risk of torture both by the State authorities and by Sendero Luminoso) and in MPS v Australia (30 April 2002; CAT/C/28/D/138/1999 at para 7.4) (concerning the risk of torture by the LTTE in Sri Lanka) the CAT repeated this conclusion in almost identical terms.
By contrast, in Elmi v Australia (14 May 1999; CAT/C/22D/120/1998) the author, a Somali national of the Shikal clan, claimed that his forced return to Somalia would constitute a violation of article 3 because he was a risk of torture at the hands of the Hawiye clan.
The CAT concluded: 6.5 The Committee does not share the State partys view that the Convention is not applicable in the present case since, according to the State party, the acts of torture the author fears he would be subjected to in Somalia would not fall within the definition of torture set out in article 1 The Committee notes that for a number of years Somalia has been without a central government, that the international community negotiates with the warring factions and that some of the factions operating in Mogadishu have set up quasi governmental institutions and are negotiating the establishment of a common administration.
It follows then that, de facto, those factions exercise certain prerogatives that are comparable to those normally exercised by legitimate governments.
Accordingly, the members of those factions can fall, for the purposes of the application of the Convention, within the phrase public officials or other persons acting in an official capacity contained in article 1. 6.7 The Committee further notes, on the basis of the information before it, that the area of Mogadishu where the Shikal mainly reside, and where the author is likely to reside if he ever reaches Mogadishu, is under the effective control of the Hawiye clan, which has established quasi governmental institutions and provides a number of public services.
Three years later, however, in HMHI v Australia (1 May 2002; CAT/C/28/D/177/2001) the CAT distinguished Elmi on the ground that in the exceptional circumstance of State authority that was wholly lacking, acts by groups exercising quasi governmental authority could fall within the definition of article 1, and thus call for the application of article 3 (at para 6.4).
It considered that: with three years elapsing since the Elmi decision, Somalia currently possesses a State authority in the form of the Transitional National Government, which has relations with the international community in its capacity as central government, though some doubts may exist as to the reach of its territorial authority and its permanence.
Accordingly, the Committee does not consider this case to fall within the exceptional situation in Elmi and takes the view that acts of such entities as are now in Somalia commonly fall outside the scope of article 3 of the Convention. (at para 6.4)
The CAT has considered the matter more recently still, in SS v The Netherlands (19 May 2003; CAT/C/30/D/191/2001).
The complainant argued that he would be in danger of being tortured by the LTTE if returned to Sri Lanka.
Referring to the definition of torture in article 1, the Netherlands submitted that acts by non State entities such as the LTTE could not, for the purposes of the Convention, be considered to constitute torture (para 4.6).
The CAT rejected that submission, observing that: the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention, unless the non governmental entity occupies and exercises quasi governmental authority over the territory to which the complainant would be returned. (at para 6.4)
The basis on which the CAT sought to distinguish Elmi in HMHI is, with respect, unconvincing.
If acts by rebel groups exercising de facto authority are capable of falling within the definition of torture in article 1 at all, then that should be the case regardless of whether there exists a central government.
Furthermore, the suggestion on behalf of the appellant that once there was a central government, notwithstanding doubts as to the reach of its territorial authority and permanence, the risk of torture fell outside the scope of the Convention, cannot be accepted.
The decision in Elmi did not turn on the notion that refoulement would violate the Convention because there was no effective government in Somalia to protect individuals from non State actors.
Rather, the decision in Elmi made clear that the Hawiye were a quasi governmental institution performing functions comparable to those normally performed by legitimate governments and that it was that de facto status which brought its conduct within the scope of article 1.
By contrast with HMHI, the ruling on this point in SS makes eminent sense.
It reaffirms that acts of a de facto authority are capable of falling within the definition in article 1 and it does so in terms which free it from the unprincipled restriction apparently imposed in HMHI.
Despite its manifest inconsistencies, therefore, this line of authority does provide some support for the view that the conduct of non State actors exercising de facto authority over territory which they occupy can fall within article 1 of UNCAT.
Context of international law
Article 31(2)(c) 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, any relevant rules of international law applicable in the relations between the parties.
In this regard it is necessary to refer to the possible relevance of two matters: State responsibility and recognition of States and governments.
Relevance of State responsibility
Before the Court of Appeal the prosecution sought to rely on principles concerning the responsibility of an insurrectional movement which ultimately succeeds in replacing the government of a State, as the NPFL did in Liberia.
The General Commentary to the International Law Commission Draft Articles on State Responsibility explains that whereas the conduct of an unsuccessful insurrectional movement is not in general attributable to the State, where the movement achieves its aims and installs itself as the new government of the State it would be anomalous if the new regime could avoid responsibility for conduct earlier committed by it.
The continuity which exists between the new organisation of the State and that of the insurrectional movement leads to the attribution to the State of conduct which the insurrectional movement may have committed during the struggle.
As a result, article 10 of the Draft Articles provides for the attribution of the conduct of the successful insurrectional movement to the State (J Crawford, The International Law Commissions Articles on State Responsibility: Introduction, Text and Commentaries, (2002), 117).
This led the prosecution to submit before the Court of Appeal that it would be anomalous if torture committed by a public official of an insurrectional movement exercising governmental functions over territory in which it exercises de facto control should be treated as outside the scope of the Torture Convention, so as to attract no individual responsibility, because the acts were not those of a de jure State, in circumstances where the very same acts would constitute acts of the State for which the State would assume responsibility, if the insurrectional movement was successful and became the de jure government.
This submission was not pursued before the Supreme Court, rightly in my view.
The question of the attribution of conduct to States for the purposes of State responsibility is distinct from the responsibility of individuals whether under international law (article 58 of the Draft ILC Articles) or, as in this case, under national law where it implements an international convention.
It would, moreover, be an unsatisfactory state of affairs if the question whether conduct constituted torture within article 1 of UNCAT were to depend on whether the entity to which the perpetrators belonged subsequently succeeded in replacing the government of the State concerned.
Relevance of recognition of States and Governments
The appellants suggested reading of article 1 gives rise to a number of difficulties and anomalies concerning issues of recognition of States and governments.
First, before the Court of Appeal the appellant submitted that the term person acting in an official capacity is limited to a person acting for or on behalf of a government authority of a recognised State, a submission which was rejected by the Court of Appeal.
At the hearing before the Supreme Court that submission was no longer maintained.
For present purposes it is not necessary to embark on a consideration of the relevance, if any, of recognition to statehood in international law.
It is sufficient to refer to the following observation of Chief Judge Newman in the US Court of Appeals, Second Circuit in Kadic v Karadic 70 F 3d 232 (2d Cir 1995), at 245 with which I respectfully agree.
The customary international law of human rights, such as the proscription of official torture, applies to states without distinction between recognized and unrecognized states It would be anomalous indeed if non recognition by the United States, which typically reflects disfavour with a foreign regime sometimes due to human rights abuses had the perverse effect of shielding officials of the unrecognized regime from liability for those violations of international law norms that apply only to state actors.
This observation applies with equal force to the scope of the offence defined in article 1 of UNCAT.
While in the present case the statehood of Liberia is not in question, the issue nevertheless serves to demonstrate a difficulty inherent in the appellants proposed reading of article 1 which must be capable of uniform application.
As Mr Swaroop QC, on behalf of the intervener, pointed out, it now seems to be accepted on behalf of the appellant that the offence defined in article 1 can apply in the case of a person acting on behalf of a de facto entity which is not recognised as a State.
Secondly, in a situation where two or more entities are competing and are both performing governmental functions within the territory of a State, the appellants suggested reading of article 1 would require a determination as to which of them is, at any given time, to be regarded as constituting the government of the State ie which is to be regarded as the de jure government and which is merely exercising de facto control or authority.
On the appellants suggested reading of the provisions, only a person acting in an official capacity on behalf of the de jure government of the State could commit the offence defined in article 1.
How is such an evaluation to be performed? At the oral hearing before us, Mr Powles stated that he was neutral as to whether recognition of the entity as the de jure government of the State was required and that while it could be relevant in some circumstances it is not relevant in this case.
The practice of States in this regard varies enormously and often turns on policy as opposed to legal considerations.
Whereas the United Kingdom has in the past recognised governments, it no longer does so (HL Debates, vol 48, cols 1121 1122, 28 April 1980; HC Debates, vol 983, Written Answers, cols 277 279, 25 April 1980 and HC Debates, vol 985, Written Answers, col 385, 23 May 1980; Republic of Somalia v Woodhouse Drake & Carey (Suisse) SA [1993] QB 54; C Warbrick, The New British Policy on Recognition of Governments, (1983) 30 ICLQ 568).
Resort to State practice in recognising or not recognising governments is, therefore, incapable of providing a uniform standard by which the Convention can be applied.
Thirdly, Mr Powles accepted that in one situation article 1 does apply to a quasi governmental entity exercising de facto control over territory.
He accepted that the decision of the CAT in Elmi, considered at paras 49 to 52 above, was correct in applying article 1 to a body exercising de facto control over territory in Somalia, but sought to distinguish this as an exceptional situation because in that case there was no central government.
However, it is difficult to see any basis on which this situation can be distinguished from others in which governmental functions are being performed by bodies in de facto control of territory.
As the Court of Appeal observed in the present case (at para 55), once it is accepted that the words person acting in an official capacity are wide enough to cover factions exercising governmental functions in territory over which they exercise de facto control, it is difficult to see why there should be any such limitation to the circumstances of Elmi, either as a matter of principle in international law or as a matter of the language of article 1 of UNCAT.
UK authorities
The appellant draws attention to the following passage in the speech of Lord Millett in Pinochet (No 3) as emphasising the governmental nature of the act of torture in article 1 UNCAT.
The definition of torture, both in the Convention and section 134, is in my opinion entirely inconsistent with the existence of a plea of immunity ratione materiae.
The offence can be committed only by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
The official or governmental nature of the act, which forms the basis of the immunity, is an essential ingredient of the offence.
No rational system of criminal justice can allow an immunity which is coextensive with the offence. (at p 277D E) So much is uncontroversial.
What is more problematical is what constitutes acting in an official capacity, a matter on which, with one exception, the UK authorities provide little assistance.
The appellant relies on a line of authority concerning the relevant definition of torture for the purposes of immigration and asylum detention policy which, it is submitted, reveals a clear understanding that person acting in an official capacity in article 1 UNCAT refers to persons acting on behalf of the State.
In R (EO) v Secretary of State for the Home Department [2013] EWHC 1236 (Admin), ACD 116 Burnett J concluded that torture in rule 35(3), Detention Centre Rules 2001 (SI 2001/238) (DCR) and in certain policy documents had a broader meaning than the UNCAT definition.
It was not confined to acts of public officials or other persons acting in an official capacity or in which they were complicit or acquiesced.
Subsequent to EO, the Secretary of State introduced statutory guidance entitled Adults at Risk in Immigration Detention (AARSG).
The definition of torture for the purposes of rule 35 of DCR and the AARSG is set out in Detention Services Order, DSO 09/2016 which sets out the definition in article 1 UNCAT but adds: It includes such acts carried out by terrorist groups exploiting instability or civil war to hold territory.
In R (Medical Justice) v Secretary of State for the Home Department [2017] EWHC 2461 (Admin); [2017] 4 WLR 198, Ouseley J set out the history of these provisions and noted that: The reference to acts carried out by terrorist groups is not part of the UNCAT definition, but was added following discussions between the SSHD and an NGO, Freedom from Torture; it was suggested by Sir Keir Starmer MP. (at para 33) This, it is said on behalf of the appellant, demonstrates that the courts and the parties to these cases, including the Secretary of State, clearly understood that person acting in an official capacity for the purposes of article 1, UNCAT applies only to a person acting for or on behalf of a State.
While this might, at first sight, appear to support the appellants case, I am unable to attach any great weight to it.
The precise question in issue here was not under consideration.
Moreover, in the particular context of immigration detention it was clearly desirable to include such an express provision for the benefit of persons who, because of their history, should not be detained.
We were informed that this is only the third occasion on which a prosecution has been brought in the United Kingdom pursuant to section 134, CJA.
In R v Lama [2014] EWCA Crim 1729; [2017] QB 1171 the present issue did not arise.
However, in my view considerable assistance is to be found in the first instance decision of Treacy J in R v Zardad, Case No T2203 7676, 7 April 2004.
Zardad was charged with a conspiracy to torture in Afghanistan in circumstances where the substantive charge would have been that contrary to section 134, CJA.
The case concerned the period between 1992 and 1996 when the Hezb I Islami faction was in control of Laghman Province.
During that period Zardad was a chief commander of Hezb I Islami and the military controller of the area of Sarobi.
Zardad maintained that he was not a public official since there was a recognised government in Afghanistan at the relevant time and the group to which he belonged was not a part of that government and was actively opposed to it.
The prosecution maintained that he was either a public official de jure or a person acting in an official capacity de facto.
At a preparatory hearing pursuant to section 29, Criminal Procedure and Investigations Act 1996, Treacy J considered that there was no evidence on which a jury could find that Zardad was a de jure public official.
However, having surveyed the evidence of the degree of control exercised by Hezb I Islami, he continued: It seems to me that what needs to be looked at is the reality of any particular situation.
Is there sufficient evidence that Hezb I Islami had a sufficient degree of organisation, a sufficient degree of actual control of an area and that it exercised the type of functions which a government or governmental organisation would exercise? It seems to me that I have to take care not to impose Western ideas of an appropriate structure for government, but to be sensitive to the fact that in countries such as Afghanistan different types of structure may exist, but which may legitimately come within the ambit of an authority which wields power sufficient to constitute an official body. (at para 33) He rejected a submission, based on Elmi, that the mere fact that there is a central government in existence precludes there being a de facto authority of which a person might be a public official or on whose behalf a person might act in a similar capacity.
He considered that the words person acting in a public capacity included those acting for an entity which had acquired de facto effective control over an area of a country and was exercising governmental or quasi governmental functions in that area.
In his view, there was material on which a jury could conclude that Zardad was such a de facto public official in an area totally controlled by his organisation which exercised, with a degree of permanence, functions which would be functions of a state authority (at paras 34 38).
Mr Powles submits that Zardad is wrongly decided.
However, I find the approach of Treacy J compelling and in conformity with the preponderant weight of material relevant to the interpretation of article 1, UNCAT.
Zardad is also instructive as to which features are indicative of governmental activity.
There, in support of its contention that Zardad should be treated as a public official on a de facto basis, the prosecution maintained that Zardad was akin to a Military Governor in control of a province and that he was, accordingly, to be regarded as a quasi official and amenable to the provisions of section 134 CJA.
Treacy J drew attention, inter alia, to Zardads admission that he was a general within Hekmatyars army (Hekmatyar being the leader of the Hezb I Islami faction), which controlled the Sarobi area, and to the clear command structure within that force.
The judge referred to the fact that prisons within the controlled area were run by Hezb I Islami which was the only law enforcement authority in the area and to the role of Hezb I Islami and Zardad personally in arresting and imprisoning lawbreakers and in mediating and resolving disputes between individuals.
Representatives of international organisations and aid agencies would make representations to Zardad, as opposed to any central government authority, if equipment was seized or delayed at any of the checkpoints for which Zardads force was responsible.
Those who complained of ill treatment, torture and hostage taking regarded Zardad and Hekmatyar as the only official authority in the area which was dominated and controlled by them.
Against this background Treacy J concluded: The material to which I have referred in this judgment leaves it open for a jury to conclude that Mr Zardad was a de facto public official in an area which was totally controlled by Hezb I Islami and controlled by them with a degree of permanence.
There is no evidence to show that at any material time the central government exercised any governmental function over the area controlled by Hezb I Islami.
Such evidence as there is tends to show that Hezb I Islami had total control of the area in question.
There is evidence that the Hezb I Islami faction exercised functions which could be functions of a state authority. (at para 35)
US authorities
The appellant relies on a number of US authorities concerning the Alien Tort Claims Act (ATCA).
First, reliance is placed on certain passages in the judgment of Chief Judge Newman in Kadic v Karadzic (above).
The plaintiffs sought remedies against Karadzic, the president of a three man presidency of the self proclaimed Bosnian Serb Republic of Srpska in respect of alleged atrocities including torture committed in Bosnia Herzegovina.
The complaints alleged that Karadzic acted in an official capacity, either as titular head of Srpska or in collaboration with the government of the recognised nation of the former Yugoslavia.
Subject matter jurisdiction was grounded, inter alia, in ATCA and the Torture Victim Protection Act of 1991 (TVPA).
A motion for dismissal succeeded in the District Court, inter alia, on the ground of lack of subject matter jurisdiction.
The Court of Appeals considered that the requirement of ATCA that the tort be committed in violation of the law of nations was satisfied.
With regard to torture, the Court of Appeals observed, at p 243: However, torture and summary execution when not perpetrated in the course of genocide or war crimes are proscribed by international law only when committed by state officials or under color of law. and then recited the definition in article 1, UNCAT.
In a passage cited earlier in this judgment at para 56 the Court of Appeals held that the proscription of official torture applied without distinction to both recognised and non recognised States and continued, at p 245: Appellants allegations entitle them to prove that Karadzics regime satisfies the criteria for a state, for purposes of those international law violations requiring state action.
Srpska is alleged to control defined territory, control populations within its power, and to have entered into agreements with other governments.
It has a president, a legislature, and its own currency.
These circumstances readily appear to satisfy the criteria for a state in all aspects of international law.
Moreover, it is likely that the state action concept, where applicable for some violations like official torture, requires merely the semblance of official authority.
The inquiry, after all, is whether a person purporting to wield official power has exceeded internationally recognized standards of civilized conduct, not whether statehood in all its formal aspects exists.
On behalf of the appellant it is submitted that the Court of Appeals here placed considerable emphasis on the need for the entity under consideration to possess significant State like qualities.
Moreover, it is said that the State like qualities possessed by Srpska were of a considerably different order from those of NPFL as it existed during the relevant period of 1990 in Liberia.
However, in common with most of the other US authorities relied on by the appellant, Kadic concerns the distinct question of actionability under ATCA.
Furthermore, to the extent that it may be relevant, Kadic, notwithstanding the use of the language of statehood, does not support the appellants reading of article 1, UNCAT.
On the contrary, the Court of Appeals apparently considered that official torture required merely the semblance of official authority and could be committed by a person purporting to wield official power who had exceeded internationally recognised standards of civilised conduct.
In the result, the conduct of a de facto governmental authority was held to constitute official torture.
The same is true of a further US decision on which the appellant relies, Mehinovic v Vuckovic, 198 F Supp 2d 1322 (2002) (US District Court, N D Georgia, Atlanta Division).
The plaintiffs sued a former soldier in the Bosnian Serb Army alleging, inter alia, acts of torture.
The District Court held that it had jurisdiction under both ATCA and TVPA.
With regard to ATCA, it noted that official torture violated obligatory norms of customary international law and, after referring to the definition in article 1, UNCAT observed that the beatings carried out by Vuckovic and his accomplices were clearly perpetrated, instigated, and acquiesced in, by persons acting in an official capacity as part of the police or military forces of Republika Srpska. (at p 1346) The appellant relies in particular on the following passage: Vuckovic clearly committed abuses against plaintiffs under official authority.
In light of the de facto governmental authority of the Republika Srpska, under which Vuckovic served as a soldier, and the control exerted over it by the Serbian government, Vuckovic may be considered also to have been acting under the authority of a foreign nation. (at p 1347) (Emphasis added) In this second passage, the court was considering whether the claim also satisfied the requirement of TVPA that the torture be under actual or apparent authority, or color of law, of any foreign nation.
This does not detract in any way from the courts earlier conclusion that the conduct was that of persons acting in an official capacity.
On the contrary, the courts reasoning supports the view that conduct of a de facto governmental authority can constitute official torture within article 1, UNCAT.
The appellant also relies on further US cases concerning the scope of application of ATCA, in particular the requirement that the tort alleged should have been committed in violation of the law of nations.
Tel Oren v Libyan Arab Republic, 726 F 2d 774, 233 US App DC 384 (1984), a decision which pre dated UNCAT, concerned the murder of civilians in a terrorist attack on a bus in Israel in March 1978.
The three members of the court, for different reasons, provided support for the view that torture claims against non State actors were not within the jurisdictional grant of ATCA.
In particular, Judge Edwards considered that the Palestine Liberation Organisation was not a recognised member of the community of nations and that there was insufficient consensus in 1984 that torture by private actors violated international law.
In Ali Shafi v Palestinian Authority 642 F 3d 1088 (2011), the US Court of Appeals, Second Circuit endorsed this approach concluding, similarly, that in 2011 the appellants in that case had not demonstrated a consensus in the law of nations that torture by private actors violates international law.
These cases were concerned with whether under ATCA there is a cause of action for torture against non State actors.
Neither case was directly concerned with the question whether the conduct of an individual acting on behalf of a quasi governmental entity which is in de facto control of territory may give rise to official torture under UNCAT.
Nor, in my respectful view, does the decision of the US Supreme Court in Sosa v Alvarez Machain 542 US 692 (2004) on the scope of ATCA cast any light on the present issue.
Finally, in this regard, I should refer to United States of America v Belfast (US Court of Appeals, 11th Circuit, 15 July 2010) which concerned a series of constitutional challenges to the Torture Act, 18 USC para 2340 2340A.
In rejecting a challenge brought on the ground that the official conduct requirement of the Act used the phrase under color of law rather than the phrase in an official capacity as found in UNCAT, the Court of Appeals referred to the view of the Senate Executive Committee charged with evaluating UNCAT that there is no distinction between the phrases.
The scope of the Convention is limited to torture inflicted by or at the instigation or with the consent or acquiescence of a public official or other person acting in an official capacity.
Thus, the Convention applies only to torture that occurs in the context of governmental authority, excluding torture that occurs as a wholly private act or, in terms more familiar in US law, it applies to torture inflicted under color of law.
The appellant points to the fact that the Court of Appeals then went on to draw attention to the definition of under color of law in the different context of 42 USC para 1983 ([t]he traditional definition of acting under color of state law requires that the defendant have exercised power possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law: West v Atkins, 487 US 42, 49 (1988) quoting in turn from United States v Classic, 313 US 299, 326 (1941)).
Notwithstanding this equiparation of official conduct under UTCA and acting under color of law in a different context, the statement by the Senate Executive Committee and its adoption by the Court of Appeals makes clear that the distinction both sought to draw was between torture that occurs in a the context of governmental authority and torture that occurs as a wholly private act.
Furthermore, Belfast was concerned solely with conduct which took place in Liberia after Charles Taylor had established himself as President of that State.
Accordingly, it was not directly concerned with the question whether the conduct of a person acting on behalf of a quasi governmental entity which is in de facto control of territory may give rise to official torture.
Academic commentators
We have been referred to academic commentary which tends to support the reading of article 1 for which the prosecution contends.
Thus, for example, Professor Paola Gaeta (When is the Involvement of State Officials a Requirement for the Crime of Torture?, Journal of International Criminal Justice 6 (2008), 183) explains that, whereas criminal law is usually the prerogative of each State, exceptionally international law is used by States for criminal issues as a tool to achieving stronger cooperation in judicial matters, when they want to oppose forms of trans national criminality jeopardizing their collective interests.
This premise, , helps clarify why the Torture Convention sets out the requirement of the involvement of state officials for torture.
The requirement of a state official is therefore needed to avoid that under international law a single conduct although consisting of an infliction of severe mental or physical pain or suffering be considered criminal when it is carried out by private individuals for private purposes.
Such conduct is not of international concern and is therefore not covered by the Convention.
In other words, the state official requirement constitutes what one could term the quid pluris, transforming an ordinary criminal offence into an international crime.
It simply serves the purpose of precluding every single wicked act carried out by private individuals against other private individuals from being elevated to the international level. (at p 190) Similarly, Burgers and Danelius (above) observe (at p 1) that UNCAT does not deal with cases of ill treatment which occur in an exclusively non governmental setting.
It only relates to practices which occur under some sort of responsibility of public officials or other persons acting in an official capacity.
Other writers go further in addressing the particular issue with which we are concerned.
Reference has been made above (at para 31) to the commentary by Nowak and McArthur in which they conclude that the conduct of rebel, guerrilla or insurgent groups which exercise de facto authority in certain regions or of warring factions in so called failing States would fall within the scope of article 1.
Similarly, the editors of Casseses International Criminal Law, 3rd ed (2013) state: Finally, under the UN Torture Convention, the pain and suffering that is a necessary ingredient of torture must be inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
The need for this sort of participation of a de jure or de facto state official stems from: i) the fact that in this case torture is punishable under international rules even when it constitutes a single or sporadic episode; and ii) the consequent necessity to distinguish between torture as a common or ordinary crime (for example, torture of a former intimate partner by a sadist) and torture as an international crime covered by international rules on human rights. (at p 133)
Professor Gaeta returns to this issue in Clapham and Gaeta, Torture by Private Actors and Gold Plating the Offence in National Law, in Guzman et al (eds), Arcs of Global Justice: Essays in Honour of William Schabas, (OUP 2018), Ch 15, which is a dialogue between Professor Gaeta and Professor Andrew Clapham.
While Professor Gaetas contributions largely address the extent to which States may choose to exceed the scope of article 1 UNCAT, Professor Clapham in the following passage is clearly addressing the scope of article 1.
But I would go further than you one does not even need the involvement of a state official under the Convention.
The Convention uses the expression official capacity in contrast to state official.
As you know, in the Zardad case in the UK this was interpreted to cover a person working against the state as part of a rebellion.
One could not say that the state acquiesced in the torture, and yet the defendant was convicted and sentenced to 20 years.
The judge said that in Afghanistan there may be different types of structure which may come within the ambit of an authority which wields power sufficient to constitute an official body.
It seems to me that one can have torture by an authority even where that authority is fighting against the state.
I admit that this is just one case.
But as we know it is more likely that prosecutions will be brought for international crimes against non state actors than against state actors.
I have not found many national prosecutions for torture by state actors. (at p 292, footnotes omitted) The committee stressed in the later HMHI v Australia, in which it distinguished Elmi on the facts, that its finding in Elmi as to groups exercising quasi governmental authority was restricted to the exceptional circumstances of state authority that was wholly lacking.
But notwithstanding what the Committee reiterated was the exceptional situation in Elmi, the Committees view is open to doubt.
Even more doubtful is the ruling in the English criminal case of R v Zardad (Faryadi) that, even where there exists a government within a state, the expression a public official or other person acting in an official capacity in article 1 of the Torture Convention can extend to people who are acting for an entity which has acquired de facto effective control over an area of a country and is exercising governmental or quasi governmental functions in that area. (at para 7.121, footnotes omitted)
The only unequivocal academic statement of the contrary view to which we were referred was that of Professor Roger OKeefe, International Criminal Law, OUP, 2015, Ch 7.
Having referred to the decision of the CAT in Elmi he continued: It is time to draw the threads together.
Unfortunately, however, in the absence of any further explanation it is difficult to understand the basis of the authors objection.
Conclusion
First, I am persuaded that the prosecution is correct in its interpretation of article 1 UNCAT and section 134 CJA.
I consider that the words of those provisions in their ordinary meaning support this reading.
They are sufficiently wide to include conduct by a person acting in an official capacity on behalf of an entity exercising governmental control over a civilian population in a territory over which it exercises de facto control.
In particular, I can see no justification for imposing the limitation on those words for which the appellant contends, which would require the conduct to be on behalf of the government of the State concerned.
On the contrary, the words in their ordinary meaning are apt to include conduct on behalf of a de facto authority which seeks to overthrow the government of the State.
This reading also conforms with the object and purpose of the provisions.
Here I attach particular significance to the purpose of the Convention in seeking to establish a regime for the international regulation of official torture as opposed to private acts of individuals.
Torture perpetrated on behalf of a de facto governmental authority is clearly a matter of proper concern to the international community and within the rationale of the scheme.
In addition, some support for this conclusion can be found in the decisions of the CAT under article 22(7), UNCAT and it is favoured by the preponderant weight of academic comment.
I would express the principle in the following terms.
A person acting in an official capacity in section 134(1) of the Criminal Justice Act 1988 includes a person who acts or purports to act, otherwise than in a private and individual capacity, for or on behalf of an organisation or body which exercises, in the territory controlled by that organisation or body and in which the relevant conduct occurs, functions normally exercised by governments over their civilian populations.
Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict.
Secondly, I would emphasise, that exercise of governmental functions is a core requirement.
It will be noted that the formulation of the principle set out above differs from that of the Court of Appeal, which referred to a person acting for or on behalf of an organisation or body which exercises or purports to exercise the functions of government .
Section 134(1) refers to a person acting in the performance or purported performance of his official duties.
In the Court of Appeals formulation, however, the adjective purported has been transposed so as to refer to the function being exercised by the organisation or body.
This is an error as the functions being exercised by the organisation or body must be governmental in character.
Purporting to exercise such functions would not be sufficient.
Thirdly, the exercise of a governmental function must be distinguished from purely military activity not involving any governmental function.
I note that, in this regard, Treacy J in Zardad distinguished governmental functions from the activities of a rebel faction which has not acquired a sufficient degree of control, permanence, authority or organisation to fulfil criteria sufficient for it to be recognised as an authority wielding official or quasi official powers (at para 36).
However, insurrectional forces engaged in fighting the forces of the central government of a State may nevertheless exercise sufficient governmental authority over territory and persons under their control for acts done on their behalf to be official acts for this purpose.
Thus, in Zardad the area controlled by Hezb I Islami was controlled essentially by military force but the group also exercised governmental functions.
The failure to take account of the distinction between governmental and military activity leads me to the view that the formulation adopted by Sweeney J in the present case in situations of armed conflict, individuals who act in a non private capacity and as part of an authority wielding entity is too broad.
It is also necessary to bear in mind that there are circumstances in which torture might constitute a crime against humanity or a war crime contrary to UK law, whether or not performed by a public official or a person acting in an official capacity.
However, for reasons explained at para 20 above, that is not so with regard to the alleged facts in the present case.
Fourthly, it is necessary to say something about what may be the indicative features of governmental authority in any particular case.
I consider that Treacy J in Zardad correctly identified the required approach when he observed that it is necessary to look at the reality of any particular situation and to consider whether, at the relevant time, the entity in question had a sufficient degree of organisation and actual control over an area and whether it exercised the type of functions which a government or governmental organisation would exercise.
This will require examination of evidence as to the position on the ground.
In doing so it will be necessary to make allowance for the particular conditions which may make administration difficult and for different views of appropriate structures of government.
The question will be whether the entity has established a sufficient degree of control, authority and organisation to become an authority exercising official or quasi official powers, as opposed to a rebel faction or a mere military force.
The one reservation I have about the approach of Treacy J. in Zardad is his view that the entity would be required to establish itself with a degree of permanence.
This, it seems to me, is likely to be a flexible concept and the fact that the long term survival of an entity may be an unlikely prospect should not prevent it from being considered a de facto government provided that it has effectively established itself as such.
Furthermore, it is clear that the continued existence of a central government would not prevent an entity exercising the authority described above from being a de facto government in respect of the territory under its control.
The application of this approach to the particular facts in Zardad has been considered at para 65 above.
Fifthly, if this matter proceeds to trial, the question whether the appellant acted in an official capacity as alleged in the indictment will be a matter for the jury and it will be open to the defence to argue that the evidence does not come up to the mark.
However, this appeal arises out of a ruling at a preparatory hearing under section 31(3) CPIA and the issue for the judge at that hearing was the correct interpretation of the words person acting in an official capacity in section 134 CJA.
The Court of Appeal expressed its conclusion on the legal test in different terms from those of Sweeney J but, nevertheless, considered that the test the judge applied was not materially different on the facts of the case and that his ruling on the factual submission of no case to answer was not affected.
Since the hearing in the Court of Appeal, however, the prosecution has served a further memorandum in which its expert witness clarifies that his use of the term control in his evidence refers to military rather than administrative control over the area.
In particular, he states that NPFL were the de facto military authority but that military control is very different from administrative control. (See para 7, above.) This is a matter of some importance for the reasons expressed at para 79, above.
Furthermore, for the reasons set out in para 77 above, I would modify the test adopted by the Court of Appeal.
Accordingly, in these circumstances, I consider that it is necessary for this matter to be remitted to the judge for him to reconsider it in the light of these further developments and in the light of further expert evidence.
I would, therefore, on this narrow basis, allow the appeal, quash the determination of the Court of Appeal and remit the matter to the judge for further consideration in the light of the new evidence from the prosecution expert and the judgment of this Court.
For this purpose, I would make an order under rule 9.16(5), Criminal Procedure Rules that the appellant be permitted to make, within 28 days from the date on which judgment is given in this appeal, a new application to dismiss.
Lord Reed: (dissenting)
I regret that I am unable to agree with the careful reasoning of Lord Lloyd Jones.
Bearing in mind in particular that this courts decision may be considered in other jurisdictions, it is right that I should indicate briefly the reasons why I find more persuasive the arguments advanced on behalf of the appellant.
First, article 31(1) of the Vienna Convention on the Law of Treaties sets out the general rule of interpretation of treaties: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
Applying that general rule to article 1 of the UN Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (UNCAT), the ordinary meaning of the phrase a public official or other person acting in an official capacity does not in my opinion extend to a member of an insurgent group engaged in armed insurrection against the government of the country.
That point does not admit of much elaboration.
The ordinary meaning of the words a public official is reasonably clear, and would not in my opinion apply to such a person.
The words or other person acting in an official capacity would, in their ordinary meaning, extend to persons who were not public officials but who were acting in a similar capacity, by reason for example of the outsourcing of public functions to private agencies.
The core idea seems to me to be that the person in question is acting on behalf of the state.
I have difficulty in applying the words acting in an official capacity to persons participating in an armed insurrection against the government.
Secondly, article 31(1) of the Vienna Convention requires the terms used in a treaty to be given their ordinary meaning in their context.
The context, so far as UNCAT concerns the position of the state where the torture occurs, includes in the first place the final sentence in article 1, which excludes from the definition of torture pain or suffering arising only from, inherent in or incidental to lawful sanctions.
The reference to lawful sanctions supports the view that article 1 is concerned with conduct for which the state bears responsibility.
It is far from obvious how the exclusion of lawful sanctions is to be applied if the conduct of insurgents controlling an area of territory falls within the scope of article 1.
Are they to be regarded as being in a position to impose lawful sanctions, despite their lack of any lawful authority for their conduct? If so, by what standards is the lawfulness of any sanctions they might impose to be judged? But if not, can no distinction be drawn between punishment which falls within the scope of UNCAT and punishment which does not?
The context also includes article 2(1): Each State Party shall take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction.
The territory under the jurisdiction of a state would ordinarily be understood as being the territory over which it has de jure control.
If torture carried out by insurgents in territory under their de facto control falls within the scope of UNCAT, it follows that article 2(1) imposes an obligation on states with which they cannot comply: they cannot take effective measures in relation to territory which they do not control.
UNCAT cannot sensibly be interpreted in a way which would have the effect of imposing an obligation on states with which they cannot comply: lex non cogit ad impossibilia.
That strongly suggests that article 2(1) cannot have been intended to apply in those circumstances, which in turn implies that the definition of torture in article 1 cannot have been intended to apply to torture committed by insurgent forces, without the consent or acquiescence of the state in question.
Thirdly, article 31(1) of the Vienna Convention requires a treaty to be interpreted in the light of its object and purpose.
UNCAT is intended, as its preamble recites, to make more effective the struggle against torture and other cruel, inhuman or degrading treatment or punishment throughout the world.
Nevertheless, by the time UNCAT was concluded, the prohibition of torture was already recognised as a peremptory norm of international law, enshrined in article 7 of the International Covenant on Civil and Political Rights (ICCPR).
The objective of UNCAT, as appears from its substantive provisions, was more specific: to impose obligations on states actively to prevent and punish torture, including by means of universal jurisdiction.
Thus, as I have explained, article 2 requires states to take effective measures to prevent acts of torture, as defined in article 1, in any territory under their jurisdiction.
Article 3 prohibits states from expelling, returning or extraditing persons to other states where they are liable to be tortured.
Articles 4 to 9 make provision for states to exercise an extra territorial jurisdiction in respect of acts of torture, requiring them to prosecute persons within their jurisdiction who are alleged to be responsible for torture, wherever it occurred, and to punish them if convicted.
It is for the purpose of those obligations that article 1 adopts a definition of torture which is specifically concerned with the conduct of public officials and other persons acting in an official capacity: a definition which is narrower than the concept of torture in the ICCPR (or in other international law instruments, such as common article 3 of the Geneva Conventions, the Rome Statute of the International Criminal Court, or the statutes of the International Criminal Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda).
Articles 4 to 9 of UNCAT, in requiring states to exercise a universal jurisdiction in respect of acts committed in other states and having no connection to themselves, are particularly significant in international law, since they make inroads into national sovereignty.
Two implications follow.
First, if there is a real doubt as to the interpretation of article 1, it is more likely, other things being equal, that the states parties will have intended a narrower rather than a more expansive reading, since they are unlikely to have intended to diminish their sovereignty further than they had made reasonably clear.
Secondly, one would expect there to be a compelling justification for states to accept the presence in an international treaty of provisions having the effect of diminishing their sovereignty.
Such a justification exists if article 1 is understood as applying to persons exercising official functions on behalf of the state, or at least acting with its consent or acquiescence, since states might be reluctant to prosecute such persons for acts committed in the course of their duties.
There would be no reason to apprehend such reluctance, on the other hand, if torture were committed by persons who were unconnected with the state and had neither its authority nor consent, nor even its acquiescence.
That is indeed the explanation given in Burgers and Danelius, The United Nations Convention against Torture A Handbook on the Convention against Torture (1988), p 120: The problem with which the Convention was meant to deal was that of torture in which the authorities of a country were themselves involved and in respect of which the machinery of investigation and prosecution might therefore not function normally.
A typical case is torture inflicted by a policeman or an officer of the investigating or prosecuting authority.
But many variations are conceivable.
It could be that the torturer is not directly connected with any public authority but that the authorities have hired him to help gather information or have at least accepted or tolerated his act.
All such situations where the responsibility of the authorities is somehow engaged are supposed to be covered by the rather wide phrase appearing in article 1: inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity.
The two authors were actively involved in the preparation of UNCAT, Herman Burgers as chairman rapporteur of the Working Group set up to draw up the text of the Convention, and Hans Danelius as the author of the initial draft of the Convention and as an active participant in all sessions of the Working Group.
Other respected experts in this field have also interpreted article 1 as being confined to situations where the responsibility of state authorities is engaged: that is my understanding of what is said, for example, in Boulesbaa, The UN Convention on Torture and the Prospects for Enforcement (1999), pp 27 28; in Gaeta, When is the Involvement of State Officials a Requirement for the Crime of Torture? (2008) 6 JICJ 183, 184 and 190, and in Gaeta and Clapham, Torture by Private Actors and Gold Plating the Offence in National Law: An Exchange of Emails in Honour of William Schabas, in de Guzman and Amann (eds), Arcs of Global Justice: Essays in Honour of William Schabas (2018), p 290; and, perhaps most emphatically, in OKeefe, International Criminal Law (2015), Part Two, para 7.121.
Fourthly, it is apparent that while many states parties, including the United Kingdom, have followed the wording of article 1 when implementing UNCAT in their domestic law, there are also states which have adopted a definition based on the understanding that article 1 is confined to situations where the responsibility of state authorities is engaged.
Examples include Norway (where section 174 of the Penal Code of 2005 imposes liability on any public official, defined as any person in central or local government service, or engaged by central or local government to perform a service or work), Spain (where article 174(1) of the Criminal Code provides that torture is committed by the public authority or officer who, abusing his office ).
Turkey (where article 94(1) of the Criminal Code imposes liability on any civil servant ; article 94(4) imposes an ancillary liability on any other person found to have participated in this offence, who shall be subject to the same punishment as the civil servant).
The implication of the respondents argument is that those states parties have failed to implement UNCAT correctly.
Counsel for the respondent emphasised that Austria, whose representatives had proposed the wording adopted in article 1, provides in the relevant provision of its Criminal Code (section 312a) that public officials within the meaning of this provision shall also be those who, in the event of the absence or default of the public authorities, are effectively acting as officials.
What is of greater interest, however, is that this provision was only introduced in 2013.
Is it to be inferred that, until then, Austria had failed to implement correctly a provision of UNCAT which had been adopted at its own suggestion?
Fifthly, an interpretation of article 1 which confined it to situations where the conduct was the responsibility of the state was consistently adopted by the United Nations Committee Against Torture in its decisions prior to about 2003.
In GRB v Sweden, Communication No 83/1997, 15 May 1998, para 6.5, the Committee stated: The Committee considers that the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention.
The Committee went somewhat further in Elmi v Australia, Communication No 120/98, 14 May 1999, para 6.5, but in circumstances where there was no functioning state: The Committee notes that for a number of years Somalia has been without a central government, that the international community negotiates with the warring factions and that some of the factions operating in Mogadishu have set up quasi governmental institutions and are negotiating the establishment of a common administration.
It follows then that, de facto, those factions exercise certain prerogatives that are comparable to those normally exercised by legitimate governments.
Accordingly, the members of those factions can fall, for the purposes of the application of the Convention, within the phrase public officials or other persons acting in an official capacity contained in article 1.
The following day, in SV v Canada, Communication No 49/1996, 15 May 1999, para 9.5, the Committee reiterated its established position: The Committee considers that the issue of whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention.
That was repeated in MPS v Australia, Communication No 138/1999, 30 April 2002, para 7.4: The Committee recalls its previous jurisprudence that the issue whether the state party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention.
The special nature of the Elmi case was made clear by the Committee in the case of HMHI v Australia, Communication No 177/2001, 1 May 2002, para 6.4: The Committee recalls its jurisprudence that the State partys obligation under article 3 to refrain from forcibly returning a person to another State where there are substantial grounds of a risk of torture, as defined in article 1 of the Convention, which requires actions by a public official or other person acting in an official capacity.
Accordingly, in GRB v Sweden, the Committee considered that allegations of a risk of torture at the hands of Sendero Luminoso, a non state entity controlling significant portions of Peru, fell outside the scope of article 3 of the Convention.
In Elmi v Australia, the Committee considered that, in the exceptional circumstance of State authority that was wholly lacking, acts by groups exercising quasi governmental authority could fall within the definition of article 1, and thus call for the application of article 3.
The Committee considers that, with three years elapsing since the Elmi decision, Somalia currently possesses a State authority in the form of the Transitional National Government, which has relations with the international community in its capacity as central government, though some doubts may exist as to the reach of its territorial authority and its permanence.
Accordingly, the Committee does not consider this case to fall within the exceptional situation in Elmi, and takes the view that acts of such entities as are now in Somalia commonly fall outside the scope of article 3 of the Convention.
A different approach was, however, adopted by the Committee in SS v Netherlands, Communication No 191/2001, 5 May 2003, para 6.4: The Committee observes that the issue whether the State party has an obligation to refrain from expelling a person who might risk pain or suffering inflicted by a non governmental entity, without the consent or acquiescence of the Government, falls outside the scope of article 3 of the Convention, unless the non governmental entity occupies and exercises quasi governmental authority over the territory to which the complainant would be returned.
The Committees change of approach was neither acknowledged nor explained.
On the contrary, the passages quoted above from Elmi v Australia, SV v Canada and MPS v Australia were cited as supporting this approach.
The approach adopted by the Committee more recently in MKM v Australia, Communication No 681/2015, 10 May 2017, was seemingly more orthodox.
It referred at para 8.6 to the failure of the state in question to provide protection from torture by non state actors, and referred in para 8.7 to its General Comment No 2 (2008), discussed below, and to the failure on the part of a state party to exercise due diligence to intervene and stop the abuses [by non state actors] that are impermissible under the Convention, for which it may bear responsibility.
A parallel but slower development to that in SS v Netherlands can be seen in the Committees General Comments.
In its General Comment No 2: Implementation of article 2 by States Parties, 24 January 2008, CAT/C/GC/2, the Committee adopted an approach which treated article 1 of the Convention as not normally applying to the actions of non state actors.
In that regard, it stated at para 15: States bear international responsibility for the acts and omissions of their officials and others, including agents, private contractors, and others acting in official capacity or acting on behalf of the State, in conjunction with the State, under its direction or control, or otherwise under colour of law.
The only situations in which the actions of non state actors would be relevant were where the state consented or acquiesced in them, or failed in its duty under article 2 to take effective measures to prevent them.
In that regard, the Committee stated at para 18: where State authorities or others acting in official capacity or under colour of law, know or have reasonable grounds to believe that acts of torture or ill treatment are being committed by non state officials or private actors and they fail to exercise due diligence to prevent, investigate, prosecute and punish such non state officials or private actors consistently with the Convention, the State bears responsibility and its officials should be considered as authors, complicit or otherwise responsible under the Convention for consenting to or acquiescing in such impermissible acts.
Since the failure of the State to exercise due diligence to intervene to stop, sanction and provide remedies to victims of torture facilitates and enables non State actors to commit acts impermissible under the Convention with impunity, the States indifference or inaction provides a form of encouragement and/or de facto permission.
Following that approach, UNCAT would not normally apply to the conduct of insurgent forces within territory under their control.
Ten years later, however, the Committee adopted a different approach in its General Comment No 4 (2017): Implementation of article 3 of the Convention in the context of article 22, 4 September 2018, CAT/C/GC/4.
Citing Elmi v Australia and MKM v Australia, it stated at para 30: States parties should refrain from deporting individuals to another State where there are substantial grounds for believing that they would be in danger of being subjected to torture or other ill treatment at the hands of non state entities, including groups that are unlawfully exercising actions that inflict severe pain or suffering for purposes prohibited by the Convention, and over which the receiving State has no or only partial de facto control, or whose acts it is unable to prevent or whose impunity it is unable to counter.
There appears, therefore, to have been a development in the Committees interpretation of article 1 in relatively recent times, which may be reflected also in the amendment of Austrian law mentioned earlier.
Indeed, the Committee has in recent years been urging a number of states to amend their domestic law so as to conform to its current interpretation of article 1: see, for example, its Concluding Observations on the sixth periodic report on Austria dated 27 January 2016, CAT/C/AUT/CO/6, para 5(a), and its Concluding Observations on the seventh periodic report on the Netherlands dated 18 December 2018, CAT/C/NLD/CO/7, para 7.
This development may reflect wider changes.
The period since the end of the Cold War has witnessed a proliferation of non international armed conflict.
In that context, the use of torture by non state actors has become an increasingly serious problem.
Against that background, to the extent that the Committees current approach to the interpretation of UNCAT departs from the meaning which might have been envisaged in 1984, that development might perhaps be argued to be an example of evolutionary interpretation.
That there has been a development must however be borne in mind when considering the relevance of the Committees interpretation to the present proceedings, which are concerned with events alleged to have occurred during 1990.
An interpretation of UNCAT which was only adopted by the Commission in relatively recent times, long after the events in question, cannot be applied when assessing the criminality of those events, bearing in mind the fundamental principle, recognised in both international and domestic law, of nulla poena sine lege.
That principle must be respected in relation to section 134 of the Criminal Justice Act 1988, having regard to the Human Rights Act 1998 and the Convention right arising under article 7 of the European Convention on Human Rights (ECHR).
Accordingly, even if article 1 of UNCAT might now be interpreted, consistently with the Committees recent statements, as extending to the actions of non state entities exercising quasi governmental functions over which the state has no control, it does not follow that it should be interpreted in the same way when considering the criminality of actions which took place in 1990.
Finally, it is essential, both under our domestic law and under international law (for example, article 7 of the ECHR and article 15 of the ICCPR), that the principle of legal certainty should be respected, above all in criminal proceedings.
As the law of this country has long recognised, that means that criminal legislation whose meaning is unclear should be given a restrictive rather than an expansive interpretation.
The fact that considerations of policy might be better served by a broad construction do not justify a departure from that principle.
For the foregoing reasons, I would have allowed the appeal.
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The appellant was arrested in the United Kingdom in 2017 and charged with one count of conspiracy to commit torture and seven counts of torture, contrary to section 134 of the Criminal Justice Act 1988 (CJA).
The charges relate to events in the early stages of the first Liberian civil war in 1990 when an armed group, the National Patriotic Front of Liberia (NPFL), took control of parts of Liberia.
Its leader, Charles Taylor, subsequently became President of Liberia in 1997.
The point of law raised in the appeal, and certified by the court below, relates to the correct interpretation of the term person acting in an official capacity in section 134(1) of the CJA.
The prosecution maintained that at the time and place of the alleged offences, the NPFL was the de facto military government with effective control of the relevant area.
Charles Taylor and those acting for and with him, including the appellant, were therefore acting in an official capacity for, and on behalf of, the NPFL.
The appellant denied involvement in the offences and asserted that at no time did she act in an official capacity for the NPFL, nor was the NPFL the de facto government authority in the relevant locations.
The appellant made an application to dismiss the charges.
The judge concluded that section 134 applies not only to entities tolerated by or acting under the authority of a government but also, in situations of armed conflict, to individuals who act in a non private capacity as part of an authority wielding entity.
Accordingly, the judge ruled that there was a case to answer on all counts.
The appellant appealed to the Court of Appeal, which dismissed the appeal, holding that section 134 CJA is not confined to individuals acting on behalf of a State.
It held that section 134 covers any person who acts otherwise than in a private and individual capacity for or on behalf of an organisation or body which exercises or purports to exercise the functions of government over the civilian population, whether in peace time or during armed conflict.
The appellant appealed the decision to the Supreme Court.
By a majority, the Supreme Court substantially agrees with the conclusion of the Court of Appeal, but because of further evidence from the prosecutions expert produced after the judgment of the Court of Appeal, it allows the appeal to the limited extent of remitting the matter to the judge for further consideration in the light of that further evidence and the judgment of this court.
Lord Lloyd Jones gives the majority judgment, with which Lady Hale, Lord Wilson and Lord Hodge agree.
Lord Reed delivers a dissenting judgment.
Section 134 CJA implements in domestic law certain obligations of the United Kingdom pursuant to the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment 1984 (UNCAT) [16].
Accordingly, the wording of section 134 CJA must bear the same meaning as in article 1 UNCAT.
The principles governing the interpretation of treaties are to be found in articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969 (VCLT) [23].
The ordinary meaning of the words describes a person performing official administrative or governmental functions and provides no suggestion that those functions must be performed on behalf of the government of a State [25].
The object of UNCAT was not to outlaw torture but rather to strengthen the prohibition that already exists in international law [27].
The drafting history indicates that torture committed by public officials for purposes connected with their public functions was considered different in nature from, and inherently more serious than, that inflicted by a private person.
The conduct of rebels exercising governmental functions over the civilian population of territory under its control is properly the concern of the international community and falls within this rationale [36].
The appellants suggested reading gives rise to a number of anomalies concerning issues of recognition of States and governments.
The offence applies without distinction between recognised and unrecognised States.
Similarly, resort to State practice in the recognition or non recognition of governments cannot provide a uniform standard by which the Convention can be applied [56 59].
The majority concludes that a person acting in an official capacity in section 134(1) CJA includes a person who acts or purports to act, otherwise than in a private and individual capacity, for or on behalf of an organisation or body which exercises, in the territory controlled by that organisation or body and in which the relevant conduct occurs, functions normally exercised by governments over their civilian populations.
Furthermore, it covers any such person whether acting in peace time or in a situation of armed conflict [76].
The exercise of a governmental function, which is a core requirement, must be distinguished from purely military activity not involving any governmental function [77 78].
It is necessary to look at the reality of any particular situation.
The question is whether the entity has established a sufficient degree of control, authority and organisation to become an authority exercising official or quasi official powers, as opposed to a rebel faction or mere military force [79].
In the light of further evidence from the prosecutions expert witness regarding the nature of the NPFLs control over the relevant territory, it is necessary for this matter to be remitted to the judge to reconsider whether there is sufficient evidence to enable a properly directed jury to conclude that the appellant was acting in an official capacity [80].
Lord Reed dissents from the majoritys reasoning and finds the appellants arguments more persuasive [82].
The ordinary meaning of the phrase does not extend to a member of an insurgent group engaged in armed insurrection against the government of the country.
The core idea is that the person is acting on behalf of the State [83].
The reference to lawful sanctions later in article 1 supports the view that it is concerned with conduct for which the State bears responsibility [84].
If torture carried out by insurgents in territory under their de facto control falls within the scope of article 1, then article 2(1) UNCAT, which requires each State Party to take measures to prevent acts of torture in any territory under its jurisdiction, imposes an obligation with which States cannot comply, since they cannot take effective measures in relation to territory they do not control [85].
The problem which UNCAT was intended to address was the reluctance of states to investigate and prosecute torture in which their authorities were themselves involved [87 88].
A number of States Parties have adopted a definition in their domestic law based on the understanding that article 1 is confined to situations where the responsibility of state authorities is engaged [90].
In relatively recent times, there appears to have been a development in the CATs interpretation of article 1.
Accordingly, even if article 1 might now be interpreted as extending to the actions of non state entities, it does not follow that it should be interpreted in the same way when considering the criminality of actions that took place in 1990 [95 98].
Finally, criminal legislation whose meaning is unclear should be given a restrictive rather than an expansive interpretation [98].
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The law of vicarious liability is on the move.
So Lord Phillips said, in the last judgment which he delivered as President of this court, in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1 (the Christian Brothers case), para 19.
It has not yet come to a stop.
This appeal, and the companion appeal in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11, provide an opportunity to take stock of where it has got to so far.
The scope of vicarious liability depends upon the answers to two questions.
First, what sort of relationship has to exist between an individual and a defendant before the defendant can be made vicariously liable in tort for the conduct of that individual? Secondly, in what manner does the conduct of that individual have to be related to that relationship, in order for vicarious liability to be imposed on the defendant? Although the answers to those questions are inter connected, the present appeal is concerned with the first question, and approaches it principally in the light of the judgment in the Christian Brothers case, where the same issue was considered.
The appeal in the case of Mohamud is concerned with the second question, and approaches it principally in the light of the historical development of this branch of the law.
As will appear, the present judgment also seeks to relate the approach adopted to the first question to ideas which have long been present in the law.
The two judgments are intended to be complementary.
The first question arises in this case in relation to a public authority performing statutory functions for the public benefit, on the one hand, and an individual whose activities form part of the means by which the authority performs its functions, on the other hand.
Specifically, the question is whether the prison service, which is an executive agency of the appellant, the Ministry of Justice, is vicariously liable for the act of a prisoner in the course of his work in a prison kitchen, where the act is negligent and causes injury to a member of the prison staff.
The accident
At the material time the respondent, Mrs Cox, worked as the catering manager at HM Prison Swansea.
She had day to day charge of all aspects of catering at the prison, including the operation of the kitchen, where meals were produced for the prisoners.
She was in charge of four members of staff.
There were also about 20 prisoners who worked in the kitchen and came under her supervision.
On 10 September 2007 Mrs Cox was working in the kitchen with a catering assistant and about 20 prisoners.
Some kitchen supplies were delivered to the ground floor of the prison, and Mrs Cox instructed four prisoners to take them upstairs to the kitchen stores.
During the course of this operation, a sack of rice was dropped by one of the prisoners and burst open.
Mrs Cox bent down to prop it up and prevent spillage.
While she was bent over, another prisoner, Mr Inder, attempted to carry two sacks past her, lost his balance, and dropped one of the sacks on to Mrs Coxs back, causing her injury.
It is accepted that Mr Inder was negligent.
The relevant legislation and practice
Rule 31(1) of the Prison Rules 1999 (SI 1999/728) provides that a convicted prisoner shall be required to do useful work for not more than ten hours a day.
In terms of rule 31(3), no prisoner shall be set to do work not authorised by the Secretary of State.
Those provisions apply to prisoners detained in privately operated prisons as well as to those operated by the prison service.
The Ministrys current policy in relation to prisoners work is explained in the Green Paper, Breaking the Cycle: Effective Punishment, Rehabilitation and Sentencing of Offenders (2010) (Cm 7972).
According to that document, the Ministry wants prisons to use the discipline and routine of regular working hours to instil an ethos of hard work into prisoners.
Prison should be a place where work is central to the regime, and where offenders learn vocational skills in environments organised to replicate, as far as practical and appropriate, real working conditions.
The document speaks of the working prison, where prisoners work a full working week, and education is geared primarily to providing prisoners with skills enabling them to perform work effectively and to get a job on release.
It is said that, in public prisons, 9,000 prisoners are employed in prison workshops, with many more doing essential jobs to help prisons run smoothly.
Work may be provided either by the prison or by external providers in the private, voluntary and community sectors.
Prisoners may work either inside or outside the prison.
In the latter situation, they may undertake voluntary or charitable work, or may undertake paid work for outside employers.
Work within a prison kitchen, in particular, is regarded as providing a good working environment, with regular hours and the ability to gain nationally recognised vocational qualifications.
Prisoners can apply to work in the kitchen, and a selection is made after relevant assessments have been carried out, including a risk assessment considering such matters as the prisoners temperament, potential security implications, any relevant medical or hygiene problems, and the need for any relevant training in relation to such matters as manual lifting or other skills.
At Swansea in particular, prisoners were assessed for their suitability to work in the kitchen by the Inmate Regime Employment Board, a panel which carried out risk assessments and decided where prisoners should work around the prison.
Those selected for work in the kitchen numbered about 20, out of a total of about 400 prisoners.
They received instruction and training in relation to such matters as food hygiene, the safe use of kitchen equipment and other aspects of safety at work.
Each prisoner had a training record to show what instruction he had received.
The prisoners worked alongside civilian catering staff as part of the team comprising the catering department, and were accountable to the catering manager and the other civilian staff.
They were subject to day to day supervision by the catering staff, and could be removed from the catering department in the event that their performance was unsatisfactory.
Mr Inders instructions required him to work a six day week, from 8.30 am to 5 pm each day, with a break for lunch.
Under rule 31(6) of the Prison Rules, prisoners may be paid for their work at rates approved by the Secretary of State.
It is the Ministrys policy, as set out in Prison Service Order No 4460 (the PSO), entitled Prisoners Pay, that all prisoners who participate in purposeful activity must be paid.
The purpose of paying prisoners is explained as being to encourage and reward their constructive participation in the regime of the establishment.
Prisoners doing work in pursuance of prison rules are expressly excluded from the scope of the national minimum wage: National Minimum Wage Act 1998, section 45.
At the time of the accident, Mr Inder was paid 11.55 per week.
If prisoners did not work in the catering department, additional costs would have to be incurred in employing staff or engaging contractors.
The PSO also states that prison governors are legally required to deduct national insurance contributions and income tax from the earnings of prisoners whose wages exceed the thresholds, and to pay employers national insurance contributions.
Notwithstanding the terms of the PSO, it was the Ministrys position in this appeal that there was no liability to tax or national insurance on the earnings of prisoners working within prisons under prison rules.
That was disputed on behalf of Mrs Cox, but it is unnecessary to resolve the issue.
Whether vicarious liability should be imposed does not depend on the classification of the relationship for the purposes of taxation or national insurance.
It is also relevant to note the legislative provisions concerned with the provision of meals in prisons.
In terms of rule 24 of the Prison Rules, no prisoner shall be allowed to have any food other than that ordinarily provided, subject to specified exceptions.
Prisoners therefore depend on the prison service to be fed.
Section 51 of the Prison Act 1952 provides that all expenses incurred in the maintenance of prisoners (an expression which is defined by section 53(2) as including all necessary expenses incurred for food) shall be defrayed out of moneys provided by Parliament.
The history of the proceedings
The claim was heard by His Honour Judge Keyser QC in the Swansea County Court.
In a judgment given on 3 May 2013, he found that the accident occurred because Mr Inder had failed to take reasonable care for Mrs Coxs safety, but dismissed the claim on the basis that the prison service was not vicariously liable for Mr Inders negligence.
On the basis of a careful review of the law on vicarious liability, as stated in particular at paras 35 and 47 of Lord Phillipss judgment in the Christian Brothers case, he focused on the question whether the relationship between the prison service and Mr Inder was akin to that between an employer and an employee.
He concluded that it was not.
Although he accepted that there were some respects in which the prison services relationship with Mr Inder resembled employment, he considered that there was a crucial difference.
Employment was a voluntary relationship, in which each party acted for its own advantage.
The employer employed the employee as the means by which the employers undertaking or enterprise was carried on and furthered.
The position regarding prisoners at work was quite different.
The prison authorities were legally required to offer work to prisoners.
They were required, by the policy set out in the Prison Service Order, to make payment for that work.
Those requirements were not a matter of voluntary enterprise but of penal policy.
The provision of work was a matter of prison discipline, of prisoners rehabilitation, and possibly of discharging the prisoners obligations to the community.
Although the work done by prisoners might contribute to the efficient and economical operation of the prison, the situation was not one in which prisoners were furthering the business undertaking of the prison service.
An appeal against that decision was allowed by the Court of Appeal: [2014] EWCA Civ 132; [2015] QB 107.
McCombe LJ, giving a judgment with which Beatson and Sharp LJJ agreed, focused like the judge on paras 35 and 47 of the Christian Brothers case, and in particular on the five features listed by Lord Phillips in para 35.
He observed that the work performed by prisoners in the kitchen was essential to the functioning of the prison, and if not done by prisoners would have to be done by someone else.
It was therefore done on behalf of the prison service and for its benefit.
It was part of the enterprise or business of the prison service in running the prison.
In short, the prison service took the benefit of this work, and there was no reason why it should not take its burdens.
Although the relationship differed from a normal employment relationship in that the prisoners were bound to the prison service not by contract but by their sentences, and also in that the prisoners wages were nominal, those differences rendered the relationship if anything closer than one of employment: it was founded not on mutuality but on compulsion.
The Christian Brothers case
Vicarious liability in tort is imposed upon a person in respect of the act or omission of another individual, because of his relationship with that individual, and the connection between that relationship and the act or omission in question.
Leaving aside other areas of the law where vicarious liability can operate, such as partnership and agency (with which this judgment is not concerned), the relationship is classically one of employment, and the connection is that the employee committed the act or omission in the course of his employment: that is to say, within the field of activities assigned to him, as Lord Cullen put it in Central Motors (Glasgow) Ltd v Cessnock Garage & Motor Co 1925 SC 796, 802, or, adapting the words of Diplock LJ in Ilkiw v Samuels [1963] 1 WLR 991, 1004, in the course of his job, considered broadly.
That aspect of vicarious liability is fully considered by Lord Toulson in the case of Mohamud.
It has however long been recognised that a relationship can give rise to vicarious liability even in the absence of a contract of employment.
For example, where an employer lends his employee to a third party, the third party may be treated as the employer for the purposes of vicarious liability.
In recent years, the courts have sought to explain more generally the basis on which vicarious liability can arise out of a relationship other than that of employer and employee.
The general approach to be adopted in deciding whether a relationship other than one of employment can give rise to vicarious liability, subject to there being a sufficient connection between that relationship and the tort in question, was explained by this court in the Christian Brothers case, in a judgment given by Lord Phillips with which the other members of the court agreed.
That judgment was intended to bring greater clarity to an area of the law which had been unsettled by a number of recent decisions, including those of the House of Lords in Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215 and Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366.
The case concerned the question whether the Institute of the Brothers of the Christian Schools, an international unincorporated association whose mission was to provide children with a Christian education, was vicariously liable for the sexual abuse of children by members of the institute, otherwise known as brothers, who taught at an approved school.
Another organisation managed the school and employed the brothers as teachers.
It had been held to be vicariously liable for the abuse.
The issue was whether the institute was also vicariously liable.
The Supreme Court held that it was.
Vicarious liability was thus imposed on a body which did not employ the wrongdoers, in circumstances where another body did employ them and was also vicariously liable for the same tort.
At para 35 of his judgment, Lord Phillips stated: The relationship that gives rise to vicarious liability is in the vast majority of cases that of employer and employee under a contract of employment.
The employer will be vicariously liable when the employee commits a tort in the course of his employment.
There is no difficulty in identifying a number of policy reasons that usually make it fair, just and reasonable to impose vicarious liability on the employer when these criteria are satisfied: (i) the employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability; (ii) the tort will have been committed as a result of activity being taken by the employee on behalf of the employer; (iii) the employees activity is likely to be part of the business activity of the employer; (iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; (v) the employee will, to a greater or lesser degree, have been under the control of the employer.
At para 35 above, I have identified those incidents of the relationship between employer and employee that make it fair, just and reasonable to impose vicarious liability on a defendant.
Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee.
At para 47, he added:
The five factors which Lord Phillips mentioned in para 35 are not all equally significant.
The first that the defendant is more likely than the tortfeasor to have the means to compensate the victim, and can be expected to have insured against vicarious liability did not feature in the remainder of the judgment, and is unlikely to be of independent significance in most cases.
It is, of course, true that where an individual is employed under a contract of employment, his employer is likely to have a deeper pocket, and can in any event be expected to have insured against vicarious liability.
Neither of these, however, is a principled justification for imposing vicarious liability.
The mere possession of wealth is not in itself any ground for imposing liability.
As for insurance, employers insure themselves because they are liable: they are not liable because they have insured themselves.
On the other hand, given the infinite variety of circumstances in which the question of vicarious liability might arise, it cannot be ruled out that there might be circumstances in which the absence or unavailability of insurance, or other means of meeting a potential liability, might be a relevant consideration.
The fifth of the factors that the tortfeasor will, to a greater or lesser degree, have been under the control of the defendant no longer has the significance that it was sometimes considered to have in the past, as Lord Phillips immediately made clear.
As he explained at para 36, the ability to direct how an individual did his work was sometimes regarded as an important test of the existence of a relationship of master and servant, and came to be treated at times as the test for the imposition of vicarious liability.
But it is not realistic in modern life to look for a right to direct how an employee should perform his duties as a necessary element in the relationship between employer and employee; nor indeed was it in times gone by, if one thinks for example of the degree of control which the owner of a ship could have exercised over the master while the ship was at sea.
Accordingly, as Lord Phillips stated, the significance of control is that the defendant can direct what the tortfeasor does, not how he does it.
So understood, it is a factor which is unlikely to be of independent significance in most cases.
On the other hand, the absence of even that vestigial degree of control would be liable to negative the imposition of vicarious liability.
The remaining factors listed by Lord Phillips were that (1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant, (2) the tortfeasors activity is likely to be part of the business activity of the defendant, and (3) the defendant, by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor.
These three factors are inter related.
The first has been reflected historically in explanations of the vicarious liability of employers based on deemed authorisation or delegation, as for example in Turberville v Stampe (1698) 1 Ld Raym 264, 265 per Holt CJ and Bartonshill Coal Co v McGuire (1858) 3 Macq 300, 306 per Lord Chelmsford LC.
The second, that the tortfeasors activity is likely to be an integral part of the business activity of the defendant, has long been regarded as a justification for the imposition of vicarious liability on employers, on the basis that, since the employees activities are undertaken as part of the activities of the employer and for its benefit, it is appropriate that the employer should bear the cost of harm wrongfully done by the employee within the field of activities assigned to him: see, for example, Duncan v Findlater (1839) 6 Cl & Fin 894, 909 910; (1839) MacL & Rob 911, 940 per Lord Brougham and Broom v Morgan [1953] 1 QB 597, 607 608 per Denning LJ.
The third factor, that the defendant, by employing the tortfeasor to carry on the activities, will have created the risk of the tort committed by the tortfeasor, is very closely related to the second: since the risk of an individual behaving negligently, or indeed committing an intentional wrong, is a fact of life, anyone who employs others to carry out activities is likely to create the risk of their behaving tortiously within the field of activities assigned to them.
The essential idea is that the defendant should be liable for torts that may fairly be regarded as risks of his business activities, whether they are committed for the purpose of furthering those activities or not.
This idea has been emphasised in recent times in United States and Canadian authorities, sometimes in the context of an economic analysis, but has much older roots, as I have explained.
It was reaffirmed in the cases of Lister and Dubai Aluminium.
In the latter case, Lord Nicholls of Birkenhead said at para 21: The underlying legal policy is based on the recognition that carrying on a business enterprise necessarily involves risks to others.
It involves the risk that others will be harmed by wrongful acts committed by the agents through whom the business is carried on.
When those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged.
Lord Phillipss analysis in the Christian Brothers case wove together these related ideas so as to develop a modern theory of vicarious liability.
The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question.
Lord Phillips illustrated the approach which I have described by considering two earlier cases in the Court of Appeal.
He discussed first its decision in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151; [2006] QB 510.
That case concerned a situation of a kind which commonly arises in modern workplaces.
Employees of the third defendants were supplied to the second defendants on a labour only basis, under a contract between the two companies, and worked under the supervision of a self employed person also working under a contract with the second defendant.
The question was whether the second defendant, as well as the third, was vicariously liable for the negligence of the employees in the course of their employment.
The Court of Appeal agreed that it was, but for different reasons: May LJ considered that the imposition of vicarious liability depended on who had the right to control the employees activities, whereas Rix LJ formulated a test which was based not on control, but on the integration of the employees into the employers business enterprise.
He stated that vicarious liability was imposed because the employer was treated as picking up the burden of an organisational or business relationship which he had undertaken for his own benefit.
Accordingly, what one was looking for was a situation where the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence: p 537.
Lord Phillips endorsed the approach of Rix LJ.
Lord Phillips next considered the decision of the Court of Appeal in E v English Province of Our Lady of Charity [2012] EWCA Civ 938; [2013] QB 722.
In that case, a diocesan trust, treated as being equivalent to the diocesan bishop, was held to be vicariously liable for sexual abuse committed by a Roman Catholic priest when visiting a childrens home in the diocese, on the basis that the relationship between the priest and the Roman Catholic Church was akin to employment.
Lord Phillips summarised Ward LJs approach as asking whether the workman was working on behalf of an enterprise or on his own behalf and, if the former, how central the workmans activities were to the enterprise and whether these activities were integrated into the organisational structure of the enterprise.
Ward LJ found it possible to describe the relationship between the bishop and the priest as being akin to employment, as Lord Phillips put it, by treating the ministry of the Roman Catholic Church as a business carried on by the bishop, by finding that the priest carried on that business under a degree of control by the bishop and by finding that the priest was part and parcel of the organisation of the business and integrated into it: [2013] 2 AC 1, paras 49, 54.
Lord Phillips then considered the facts of the Christian Brothers case itself.
In the context of vicarious liability, the relationship between the institute and the brothers had all the essential elements of the relationship between an employer and employees.
The institute was subdivided into a hierarchical structure and conducted its activities as if it were a corporate body.
The teaching activity of the brothers was undertaken because the local administration of the institute directed the brothers to undertake it.
It was undertaken by the brothers in furtherance of the objective, or mission, of the institute.
The manner in which the brothers were obliged to conduct themselves as teachers was dictated by the institutes rules.
The relationship between the brothers and the institute differed from that between employer and employee in that the brothers were bound to the institute not by contract but by their vows, and in that, far from the institute paying the brothers, the brothers were obliged to transfer all their earnings to the institute.
Neither of these differences was material.
Indeed, they rendered the relationship between the brothers and the institute closer than that of an employer and its employees.
The relationship was therefore sufficiently akin to that of employer and employee to be capable of giving rise to vicarious liability.
The three cases which I have discussed illustrate the general approach set out by Lord Phillips at paras 35 and 47 of the Christian Brothers case.
It may be said that the criteria are insufficiently precise to make their application to borderline cases plain and straightforward: a criticism which might, of course, also be made of other general principles of the law of tort.
As Lord Nicholls observed in Dubai Aluminium at para 26, a lack of precision is inevitable, given the infinite range of circumstances where the issue arises.
The court has to make a judgment, assisted by previous judicial decisions in the same or analogous contexts.
Such decisions may enable the criteria to be refined in particular contexts, as Lord Phillips suggested in the Christian Brothers case at para 83.
It is important, however, to understand that the general approach which Lord Phillips described is not confined to some special category of cases, such as the sexual abuse of children.
It is intended to provide a basis for identifying the circumstances in which vicarious liability may in principle be imposed outside relationships of employment.
By focusing upon the business activities carried on by the defendant and their attendant risks, it directs attention to the issues which are likely to be relevant in the context of modern workplaces, where workers may in reality be part of the workforce of an organisation without having a contract of employment with it, and also reflects prevailing ideas about the responsibility of businesses for the risks which are created by their activities.
It results in an extension of the scope of vicarious liability beyond the responsibility of an employer for the acts and omissions of its employees in the course of their employment, but not to the extent of imposing such liability where a tortfeasors activities are entirely attributable to the conduct of a recognisably independent business of his own or of a third party.
An important consequence of that extension is to enable the law to maintain previous levels of protection for the victims of torts, notwithstanding changes in the legal relationships between enterprises and members of their workforces which may be motivated by factors which have nothing to do with the nature of the enterprises activities or the attendant risks.
It is also important not to be misled by a narrow focus on semantics: for example, by words such as business, benefit, and enterprise.
The defendant need not be carrying on activities of a commercial nature: that is apparent not only from the cases of E and the Christian Brothers, but also from the long established application of vicarious liability to public authorities and hospitals.
It need not therefore be a business or enterprise in any ordinary sense.
Nor need the benefit which it derives from the tortfeasors activities take the form of a profit.
It is sufficient that there is a defendant which is carrying on activities in the furtherance of its own interests.
The individual for whose conduct it may be vicariously liable must carry on activities assigned to him by the defendant as an integral part of its operation and for its benefit.
The defendant must, by assigning those activities to him, have created a risk of his committing the tort.
As the cases of Viasystems, E and the Christian Brothers show, a wide range of circumstances can satisfy those requirements.
The other lesson to be drawn from the cases of Viasystems, E and the Christian Brothers is that defendants cannot avoid vicarious liability on the basis of technical arguments about the employment status of the individual who committed the tort.
As Professor John Bell noted in his article, The Basis of Vicarious Liability [2013] CLJ 17, what weighed with the courts in E and the Christian Brothers case was that the abusers were placed by the organisations in question, as part of their mission, in a position in which they committed a tort whose commission was a risk inherent in the activities assigned to them.
The present case
In the present case, the requirements laid down in the Christian Brothers case are met.
The prison service carries on activities in furtherance of its aims.
The fact that those aims are not commercially motivated, but serve the public interest, is no bar to the imposition of vicarious liability.
Prisoners working in the prison kitchens, such as Mr Inder, are integrated into the operation of the prison, so that the activities assigned to them by the prison service form an integral part of the activities which it carries on in the furtherance of its aims: in particular, the activity of providing meals for prisoners.
They are placed by the prison service in a position where there is a risk that they may commit a variety of negligent acts within the field of activities assigned to them.
That is recognised by the health and safety training which they receive.
Furthermore, they work under the direction of prison staff.
Mrs Cox was injured as a result of negligence by Mr Inder in carrying on the activities assigned to him.
The prison service is therefore vicariously liable to her.
A number of arguments were advanced against that conclusion on behalf of the Ministry.
First and foremost, it was argued, on a number of grounds, that the relationship between the prison service and prisoners working in a prison is fundamentally different from that between a private employer and its employees.
The primary purpose of the prison service, in setting prisoners to work in prison, is not to advance any business or enterprise of the prison, but to support the rehabilitation of the prisoners as an aim of penal policy.
It does not seek to make a profit, but acts in the public interest.
Unlike employees, the prisoners have no interest in furthering the objectives of the prison service.
Even in the Christian Brothers case, the interests of the institute and the brothers were in alignment.
I am unable to accept this argument.
It is true that the prison service seeks to rehabilitate prisoners, and that setting them to work is one of the means by which it attempts to achieve that objective.
Rehabilitation is, however, not its only objective: it has also been an aim of penal policy since at least the nineteenth century to ensure, as it was put in a 1991 White Paper, that convicted prisoners contribute to the cost of their upkeep by helping with the running and maintenance of the prison and by providing goods and services in prison industries and on prison farms: Custody , Care and Justice: The Way Ahead for the Prison Service in England and Wales (1991) (Cm 1647), para 7.22.
More importantly, when prisoners work in the prison kitchen, or in other workplaces such as the gardens or the laundry, they are integrated into the operation of the prison.
The activities assigned to them are not merely of benefit to themselves: a benefit which is, moreover, merely potential and indirect.
Their activities form part of the operation of the prison, and are of direct and immediate benefit to the prison service itself.
As for the other points, I have already explained that it is not essential to the imposition of vicarious liability that the defendant should seek to make a profit.
Nor does vicarious liability depend upon an alignment of the objectives of the defendant and of the individual who committed the act or omission in question.
It would be as nave to imagine that all employees are subjectively committed to the interests of their employer as to imagine that no prisoner working in a prison kitchen derives any satisfaction from doing his job well or from obtaining the vocational qualifications available to him.
The fact that a prisoner is required to serve part of his sentence in prison, and to undertake useful work there for nominal wages, binds him into a closer relationship with the prison service than would be the case for an employee.
It strengthens, rather than weakens, the case for imposing vicarious liability.
Secondly, other aspects of the relationship between the prison service and prisoners were said to differ from the characteristics of an ordinary employment relationship.
The prison service was under a duty to provide useful work for prisoners.
Its choice of workers was restricted to the prisoners who happened to be held there.
In that regard, it was pointed out that the courts had not imposed vicarious liability in respect of compulsory pilotage, where the master of the ship was compelled to surrender the navigation of his vessel to a pilot and had no power of selection.
Furthermore, the prisoners pay was not a commercial wage, but a payment intended to motivate them.
These differences do not lead to the conclusion that vicarious liability should not be imposed, applying the approach approved in the Christian Brothers case.
The fact that the incentive payments made to prisoners are below the level of a commercial wage reflects the context in which prisoners work, but does not entail that vicarious liability should not be imposed.
The Christian Brothers case demonstrates that the payment of a wage is not essential.
The fact that the prison service, and the operators of contracted out prisons, are under a statutory duty to provide prisoners with useful work, is not incompatible with the imposition of vicarious liability.
The legislation does not itself exclude the imposition of vicarious liability.
Nor is it argued that any distinct point arises under section 2(1)(a) of the Crown Proceedings Act 1947, in terms of which the Crown is subject to all those liabilities in tort to which, if it were a private person of full age and capacity, it would be subject in respect of torts committed by its servants or agents.
Authorities concerned with compulsory pilotage are not in point: the prison service is not required to provide particular types of employment, or to allocate particular prisoners to particular activities.
In practice, prisoners can be allocated to a variety of workplaces both inside and outside prisons, having regard to the relevant risks.
More particularly, the prison service is not compelled to employ prisoners in the kitchen, and has a meaningful power of selection in respect of the prisoners it chooses to employ there.
It appears from the evidence that the prison service takes particular care when selecting prisoners who are suitable to work in the kitchen, having regard to the risks involved in that setting.
A restricted pool from which to select a workforce was a feature of the Christian Brothers case, and is not uncommon even in ordinary cases of employment: an employer can only select from those who apply for appointment, and may often have a small pool from which to choose.
Thirdly, it was argued that to hold the prison service vicariously liable for the acts of a prisoner would be a major development of the common law, which should be developed by the courts only cautiously.
It does not appear to me that this case involves a major development of the law.
The conclusion which I have reached follows from the application of the approach laid down in the Christian Brothers case.
Fourthly, it was argued that it was always necessary to ask the broader question whether it would be fair, just and reasonable to impose vicarious liability.
In that regard, reliance was placed on the fact that the prison service acts for the benefit of the public, and on the fact that any liability would have to be met out of scarce public funds.
It was also argued that there was no justification for imposing vicarious liability on the prison service in addition to its common law duty of care towards Mrs Cox, and its various statutory duties.
I do not consider that it is always necessary to ask the broader question.
The criteria for the imposition of vicarious liability listed by Lord Phillips in the Christian Brothers case are designed, as he made clear at paras 34, 35 and 47, to ensure that it is imposed where it is fair, just and reasonable to do so.
That was the whole point of seeking to align the criteria with the various policy justifications for its imposition.
As I have explained, the criteria may be capable of refinement in particular contexts.
But in cases where the criteria are satisfied, it should not generally be necessary to re assess the fairness, justice and reasonableness of the result in the particular case.
Such an exercise, if carried out routinely, would be liable to lead to uncertainty and inconsistency.
At the same time, the criteria are not to be applied mechanically or slavishly.
As Lady Hale rightly observed in Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] AC 537 at para 28, the words used by judges are not to be treated as if they were the words of a statute.
Where a case concerns circumstances which have not previously been the subject of an authoritative judicial decision, it may be valuable to stand back and consider whether the imposition of vicarious liability would be fair, just and reasonable.
The present appeal is such a case.
On considering the matter, however, I do not regard the conclusion which I have reached as unreasonable or unjust.
Those adjectives might more aptly describe a situation in which Mrs Coxs ability to obtain compensation for the injury she suffered at work depended entirely on whether the member of the catering team who dropped the bag of rice on her back happened to be a prisoner or a civilian member of staff.
For the prison service to be liable to compensate a victim of negligence by a member of the prison catering team appears to me to be just and reasonable whether the negligent member of the team is a civilian or a prisoner.
Finally, like the Fat Boy in The Pickwick Papers, counsel sought to make our flesh creep.
It was argued that, if the present claim succeeded, there would be similar claims arising from the other activities undertaken by prisoners with a view to their rehabilitation, such as educational classes or offending behaviour programmes.
There was also a risk of fraudulent claims being made for prisoner on prisoner incidents.
A finding of vicarious liability might lead the prison service to adopt an unduly cautious approach to the type of tasks which prisoners were given the opportunity to do, given the potential impact on scarce financial resources.
I am not persuaded by these apprehensions.
It is true that prisoners who participate in educational classes or offending behaviour programmes contribute towards their own rehabilitation, and in that sense may be said to be acting in furtherance of one of the aims of the prison service.
But there is an intelligible distinction between taking part in activities of that kind and working as an integral part of the operation of the prison and for its benefit.
As for the risk of fraudulent claims, that risk is inherent in the law relating to compensation for personal injuries, and employers, insurers and the courts are all experienced in guarding against it.
As for the risk of an unduly cautious approach being adopted by the prison service, that risk is entirely speculative, and is based on a consideration only of the costs potentially resulting from the imposition of vicarious liability, without taking account of the costs which would result from a decision to cease employing prisoners and instead to employ civilian staff or external contractors at market rates of pay.
I would dismiss this appeal.
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The Respondent, Mrs Cox, worked as the catering manager at HM Prison Swansea.
She was in charge of all aspects of the catering, including the operation of the kitchen producing meals for prisoners.
She supervised prisoners who worked in the kitchen alongside other civilian catering staff.
On 10 September 2007 Mrs Cox instructed some prisoners to take some kitchen supplies to the kitchen stores.
During the course of this operation, one of the prisoners, Mr Inder, accidentally dropped a sack of rice onto Mrs Coxs back, injuring her.
Mrs Cox brought a claim against the Ministry of Justice (MOJ) in the Swansea County Court.
His Honour Judge Keyser QC found that Mr Inder was negligent, but dismissed the claim on the basis that the prison service, which is an executive agency of the Ministry of Justice, was not vicariously liable as the relationship between the prison service and Mr Inder was not akin to that between an employer and an employee.
The Court of Appeal reversed the decision, finding that the prison service was vicariously liable for Mr Inders negligence.
The question on the MOJs appeal to the Supreme Court concerns the sort of relationship which has to exist between an individual and a defendant before the defendant can be made vicariously liable in tort for the conduct of that individual.
This case was heard alongside Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 which addresses the question of how the conduct of the individual has to be related to that relationship, in order for vicarious liability to be imposed on the defendant.
The Supreme Court unanimously dismisses the Ministry of Justices appeal.
Lord Reed gives the lead judgment, with which the other Justices agree.
Lord Reed gives guidance on the sort of relationship which may give rise to vicarious liability.
In Various Claimants v Catholic Child Welfare Society [2012] UKSC 56, (the Christian Brothers case), Lord Phillips mentioned five factors which make it fair, just and reasonable to impose vicarious liability on a defendant, where the defendant and the tortfeasor are not bound by a contract of employment [19].
Lord Reed explains that these five factors are not equally significant.
The first factor, that the defendant is more likely to have the means to compensate the victim and can be expected to have insured against vicarious liability, is unlikely to be of independent significance in most cases [20].
The fifth factor, that the tortfeasor will have been under the control of the defendant, no longer has the significance it was sometimes considered to have.
In modern life, it is not realistic to look for a right to direct how an employee should perform his duties as a necessary element in the employment relationship [21].
The remaining three factors are inter related.
These are (1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant; (2) the tortfeasors activity is likely to be part of the business activity of the defendant; and (3) the defendant,
by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor [22].
A relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the defendants business and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to that individual [24].
The general approach described in Christian Brothers is not confined to a special category of cases, but provides a basis for identifying the circumstances in which vicarious liability may in principle be imposed outside employment relationships.
It extends the scope of vicarious liability beyond the responsibility of an employer for the acts and omissions of its employees in the course of their employment, but not to the extent of imposing such liability where a tortfeasors activities are entirely attributable to the conduct of a recognisably independent business of his own, or of a third party.
This enables the law to maintain previous levels of protection for the victims of torts, despite changes in the legal relationships between enterprises and members of their workforces which may be motivated by factors extraneous to the enterprises activities or attendant risks [29].
The defendant need not be carrying on activities of a commercial nature.
The benefit which it derives from the tortfeasors activities need not take the form of a profit.
It is sufficient that there is a defendant carrying on activities in the furtherance of its own interests.
The individual for whose conduct it may be vicariously liable must carry on activities assigned to him by the defendant as an integral part of its operation and for its benefit.
The defendant must, by assigning those activities to the tortfeasor, have created a risk of his committing the tort [30].
A wide range of circumstances can satisfy those requirements, and defendants cannot avoid vicarious liability on the basis of arguments about the employment status of the tortfeasor [31].
Prisoners working in kitchens are integrated into the operation of the prison.
The activities assigned to them form an integral part of the activities the prison carries on in the furtherance of its aims, in particular the provision of meals to prisoners.
The fact that these aims serve the public interest is not a bar to the imposition of vicarious liability.
The prison service places these prisoners in a position where there is a risk that they may commit a variety of negligent acts in carrying out assigned activities, which is recognised by the provision of health and safety training.
The prisoners work under the direction of prison staff.
Mrs Cox was injured as a result of Mr Inders negligence in carrying on activities assigned to him, and the prison service is therefore vicariously liable to her [32].
The MOJs arguments that requiring prisoners to work serves the purpose of rehabilitation and that the prisoners have no interest in furthering the objectives of the prison service are rejected.
Rehabilitation is not the sole objective.
Penal policy also aims to ensure that convicted prisoners contribute to the cost of their upkeep.
When prisoners work in the prison kitchen they are integrated into the operation of the prison, and their activities are of direct and immediate benefit to the prison service itself [34].
The fact that a prisoner is required to undertake work for nominal wages binds him into a closer relationship with the prison service than would be the case for an employee, and strengthens the case for imposing vicarious liability [35].
Payment of a wage is not essential for the imposition of vicarious liability [37].
Nor is it necessary for the prison to have an unrestricted pool from which to select a workforce.
The prisoners who work in the kitchen are selected with particular care, having regard to the risks involved [38].
In cases where the criteria set out in Christian Brothers are satisfied, it should not generally be necessary to re assess the fairness, justice and reasonableness of the result.
The criteria are designed to ensure that vicarious liability is imposed where it is fair, just and reasonable to do so [41].
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Para 352D of the Immigration Rules provides for the grant of leave to enter to the child of a parent who has been admitted to the UK as a refugee.
The issue in this case is whether the Para extends, or should be treated as extending, to a child for whom a family member has taken parental responsibility under the Islamic procedure known as Kafala (described in the agreed statement of issues as a process of legal guardianship akin to adoption).
The facts are fully set out in the judgment of Davis LJ in the Court of Appeal.
The following is a sufficient summary for present purposes. i) AA was born in Somalia on 21 August 1994.
Her family was torn apart by events in Somalia.
Her father was killed in the mid 1990s. ii) An elder sister, Ms A, married Mohamed on 10 January 2001.
In 2002 she came home to find that he, her daughter Fadima, and her step daughter Amaani had been abducted.
She eventually left Somalia and came to the United Kingdom in October 2002.
She was later granted indefinite leave to remain, on compassionate grounds.
Her husband had in the meantime escaped from his abductors and had gone to live elsewhere in Mogadishu. iii) AA became separated from her mother and other siblings during the fighting.
Around the end of 2002 she went to live with Mohamed, Fadima and Amaani and was accepted as a family member. iv) In October 2007 Mohamed left Somalia, and came to the United Kingdom in November 2007, where he was reunited with Ms A.
He was granted asylum on 21 July 2008.
The three girls AA, Fadima and Amaani were left with a maternal aunt in Mogadishu. v) At the end of 2008 the three girls went to live with neighbours.
Contact with Ms A and Mohamed was renewed in March 2009.
Applications for entry into the UK were made for all three girls.
Entry clearance was granted to Fadima and Amaani, who came to the United Kingdom on 22 January 2010. (I shall refer to them for convenience, and without legal implications, as AAs adoptive siblings.) It was refused for AA, who remained in Addis Ababa pending her appeal. vi) Her appeal was heard in the First tier Tribunal on 3 September 2010.
Expert evidence, accepted by the tribunal, was to the effect that, although adoption as such does not exist under Islamic law, under the legal institution known as Kafala, a person may become a protg and part of the household of an adult; and that this only falls short of a full blown adoption in that such adoptee does not enjoy a right of inheritance under Islamic law (FTT para 21). vii) The tribunal allowed the appeal both under para 352D and article 8 of the European Convention on Human Rights, the former on the basis that AA falls into a specific category of persons who have been taken into guardianship or the care of others under a transfer of responsibility such that Islamic law would recognise the legal status of the appellant in relation to [Ms A and Mohamed] as their child for all purposes and in the circumstances in which the appellant was an orphan. (para 31) viii) On 23 May 2011, the Upper Tribunal (Judge Grubb) allowed the Secretary of States appeal in respect of para 352D, but confirmed the tribunals decision under article 8.
On 14 May 2012 AA was given entry clearance and she arrived in this country on 4 June 2012.
The Court of Appeal accepted that notwithstanding the grant of entry clearance under article 8, the appeal was not academic.
The answer provided is that if entry is permitted under the Immigration Rules the entitlement of AA to remain thereafter will in effect align with the sponsor's entitlement, whereby indefinite leave to remain can be expected to be granted after the expiry of the five year period: whereas grant of leave to remain under article 8 is discretionary and not necessarily so linked to the sponsor's position.
In this court, Mr Gill has provided further details of the differences, legal and practical, between clearance under the rules and discretionary leave to remain (DLR) under article 8.
For example, under policies current at the time a person admitted under article 8 would take longer to reach the point of claiming indefinite leave to remain (ILR) than a person admitted under the rules.
Mr Gill submits that DLR status is not easily understood by employers, educational institutions and others with whom the holder will need to have dealings in ordinary life.
He pointed to other practical disadvantages, such as in relation to travel documents.
Some of his points were contentious.
However, it was not in dispute as I understand it that AAs status, following admission under article 8, might be materially less advantageous than that of someone (such as her adoptive siblings) admitted under Para 352D.
The Rules
The critical provision is Para 352D, in Part 11 of the Immigration Rules which relates to asylum: 352D.
The requirements to be met by a person seeking leave to enter or remain in the United Kingdom in order to join or remain with the parent who is currently a refugee granted status as such under the immigration rules in the United Kingdom are that the applicant: (i) is the child of a parent who is currently a refugee granted status as such under the immigration rules in the United Kingdom; and (ii) is under the age of 18, and (iii) is not leading an independent life, is unmarried and is not a civil partner, and has not formed an independent family unit; and (iv) was part of the family unit of the person granted asylum at the time that the person granted asylum left the country of his habitual residence in order to seek asylum;
The principal issue which arises in AAs case is whether her relationship with her brother in law Mohamed can be regarded as that of the child of a parent (under (i)).
For that it is necessary to turn to the interpretation provision, Para 6, which defines parent as follows: a parent includes: (a) the stepfather of a child whose father is dead and the reference to stepfather includes a relationship arising through civil partnership; (b) the stepmother of a child whose mother is dead and the reference to stepmother includes a relationship arising through civil partnership and; (c) the father as well as the mother of an illegitimate child where he is proved to be the father; (d) an adoptive parent, where a child was adopted in accordance with a decision taken by the competent administrative authority or court in a country whose adoption orders are recognised by the United Kingdom or where a child is the subject of a de facto adoption in accordance with the requirements of Para 309A of these Rules (except that an adopted child or a child who is the subject of a de facto adoption may not make an application for leave to enter or remain in order to accompany, join or remain with an adoptive parent under Paras 297 303); (e) in the case of a child born in the United Kingdom who is not a British citizen, a person to whom there has been a genuine transfer of parental responsibility on the ground of the original parent(s)' inability to care for the child.
Thus an adoptive parent under a de facto adoption is included, but subject to the requirements of Para 309A.
This is underlined in turn by the definition of adoption: adoption unless the contrary intention appears, includes a de facto adoption in accordance with the requirements of Para 309A of these Rules, and adopted and adoptive parent should be construed accordingly.
Para 309A is in Part 8 of the Immigration Rules relating to Family Members (in the particular group relating to children).
Its present form dates from 2003.
It provides so far as relevant: 309A For the purposes of adoption under Paras 310 316C a de facto adoption shall be regarded as having taken place if: (a) at the time immediately preceding the making of the application for entry clearance under these Rules the adoptive parent or parents have been living abroad (in applications involving two parents both must have lived abroad together) for at least a period of time equal to the first period mentioned in sub Para (b)(i) and must have cared for the child for at least a period of time equal to the second period material in that sub Para; and (b) during their time abroad, the adoptive parent or parents have: (i) lived together for a minimum period of 18 months, of which the 12 months immediately preceding the application for entry clearance must have been spent living together with the child; and (ii) have assumed the role of the child's parents, since the beginning of the 18 month period, so that there has been a genuine transfer of parental responsibility.
Paras 310 316C (referred to in the opening words) form a group of Paras under the general heading Adopted Children, dealing with the general requirements for entry as an adopted child, unconnected with circumstances which might lead to an asylum claim.
We were given little information about the thinking behind these rules, either in the present form, or as introduced in 2000.
Before 2000 a more flexible approach had been applied.
In R v Immigration Appeal Tribunal Ex p Tohur Ali [1988] 2 FLR 523, the Court of Appeal considered rule 50 as it then stood, under which parent was defined as including an adoptive parent, where there has been a genuine transfer of parental responsibility on the ground of the original parents inability to care for the child The court, by a majority, held that this expression was not confined to adoption under a legally recognizable adoptive process.
Para 352D was originally introduced in October 2000, at the same time as the Human Rights Act 1998 came into effect.
At that time the relevant part of the definition of parent in Para 6 included an adoptive parent but only where a child was adopted in accordance with a decision taken by a competent administrative authority or court in a country whose adoption orders are recognised by the United Kingdom (except where an application for leave to enter or remain is made under Paras 310 316).
HC 538 of 31 March 2003 altered the definition of parent to its present form and introduced Para 309A.
We were not given any explanation for these changes, but neither side relies on them as throwing any light on the issue we have to decide.
Para 352D was considered by the Court of Appeal in MK (Somalia) v Entry Clearance Officer [2009] Imm AR 386.
It had been argued that, notwithstanding the introduction of the new rule, reliance could be placed on a free standing policy, outside the rules, expressed in a Ministerial Statement dated 17 March 1995, under which following grant of asylum status to a parent reunion of the immediate family would be permitted as a concession outside the rules.
The court held that this policy had been supplanted by the rules in their amended form.
Discussion
As I understand them, Mr Gills submissions, carefully and fully developed in his printed case and in oral argument, have three main strands: i) Construction To make sense of Para 352D in the context of the family of a refugee, the definitions must be interpreted broadly so as to include a child in the position of AA. ii) International obligations Effect must be given to the UKs international obligations relating to the treatment of children, including a broad approach to the recognition of adoptive children. iii) Discrimination Children who are members of a family unit should not be put at a disadvantage because they come from countries which have no formal system of adoption.
Construction
I would accept that the requirements of Para 309A (b)(i) and (ii) seem ill adapted to the purposes of Para 352D.
They assume a degree of stability in the home country which is likely to be wholly inappropriate to those like AA seeking refuge from war torn Somalia, and indeed for most asylum seekers.
Mr Eadie did not argue otherwise, although he suggested some theoretical scenarios in which the requirements might be achievable.
As appears from its introduction the definition seems to have been designed principally to deal with ordinary applications to enter by adopted children, covered by the immediately following Paras.
It finds its way into Para 352D by a somewhat circuitous route, which suggests that careful thought may not have been given to its practical implications.
If there were any way in which we could legitimately rewrite the rule to produce a fairer result, I could see a persuasive case for doing so.
Unfortunately I do not think this possible.
The correct approach to construction of the rules is well settled, as explained by Lord Brown in Mahad v Entry Clearance Officer [2010] 1 WLR 48: The Rules are not to be construed with all the strictness applicable to the construction of a statute or a statutory instrument but, instead, sensibly according to the natural and ordinary meaning of the words used, recognising that they are statements of the Secretary of State's administrative policy the court's task is to discover from the words used in the Rules what the Secretary of State must be taken to have intended that intention is to be discerned objectively from the language used, not divined by reference to supposed policy considerations. (para 10)
Read in accordance with those principles, it is clear to my mind that Para 352D does not cover AAs case, and cannot be rewritten in order to do so.
Whether or not Kafala could be treated as a form of adoption for other purposes, the definition of adoptive parent in Para 6 is more restricted.
It extends to de facto adoption only within the limitations laid down by Para 309A, which do not cover this case.
Although in terms directed to the succeeding provisions, the definition is also incorporated specifically into the general definition of adoptive parent and hence into that of parent in Para 6.
Mr Gill sought to make something, first, of the fact that the definition of parent is expressed as inclusive, and, secondly, of the words unless the contrary intention appears in the definition of adoption.
Neither point assists.
The word includes in the definition of parent is readily explicable, having regard to the fact that the particular Paras do not include a biological parent.
They are rather designed to extend the natural meaning of the term.
The specific treatment of adoption in Para (d) excludes any intention to cover other forms of de facto adoption outside the definition.
Similarly, the reference to contrary intention in the definition of adoption, in context, cannot be read as designed to extend the scope of the definition, but rather to indicate that there may be contexts in which the extension to de facto adoption does not apply.
On this aspect, I cannot usefully add to the reasoning of Davis LJ said in the Court of Appeal.
As he said, the wording of the rules is plain and unambiguous.
International obligations
Mr Gill has referred us to a number of international instruments which call for a broad approach to the protection of the interests of children.
As he rightly says, the best interests principle is now, in appropriate areas of law, recognised both by domestic and international law (see ZH(Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166).
Without in any way detracting from the importance of the principles affirmed in those instruments, I do not find it necessary to review them in any detail.
Taking them at their highest, Mr Gill is unable to point to any specific obligation covering the position of someone in the position of AA in the present case.
LJ concluded: In response to similar submissions in MK (Somalia) (above), Maurice Kay Do these documents establish or evidence an obligation of customary international law that is positively protective of de facto adopted children? In my judgment they do not.
At best they illustrate an increasing awareness of the need for a flexible approach to the concept of family but they do not address in terms the question of de facto adoption which, because of its very lack of formality, presents a receiving state with obvious problems of verification.
There is no material referred to by Mr Pleming which demonstrates a clear international consensus about the particular problem of de facto adoption quite the contrary.
Whilst there is a perceptible concern that the concept of family, in the context of family reunion, should not be resistant to social and cultural change, I do not consider that there is a precise, identifiable obligation of customary international law that is prescriptive of the national approach to de facto adoption. (para 12) I respectfully agree.
Mr Gill also referred us to Secretary of State for Home Department v Abdi [1996] Imm AR 148.
The Court of Appeal noted a Home Office letter dated 17 May 1990 relating to Somali Family Reunion Applications, which included the following: 8.1.1 If the United Kingdom sponsor has been recognised as a refugee here under the terms of the 1951 United Nations Convention relating to the Status of Refugees then, like most countries, we follow the policy on family reunion agreed by the Conference which adopted the Convention.
We will agree to the admission of the spouse and minor children of the refugee.
However given the nature of the Somali family we are prepared to be flexible and if a refugee is able to show that a person not covered by the policy was a dependent member of the refugee's immediate family unit before the refugee came to the United Kingdom, then we would be prepared to consider exceptionally extending the refugee family reunion provision to cover that person.
Although this is a clear recognition of the importance attached internationally to family reunion, it is equally clear that the more flexible approach proposed for Somali applicants is not treated as a matter of legal obligation, but as a matter for exceptional consideration.
In that respect Mr Gill faces a further difficulty.
It is accepted by the Secretary of State that the rules on this issue are not exhaustive of this countrys obligations under international law.
Hence the decision to allow AA entry under article 8 of the European Convention on Human Rights.
Subject to the issue of discrimination, to which I will come, Mr Gill is unable to point to any international obligation which goes further in practical terms than the protection which has been afforded to AA under human rights law.
Discrimination
Mr Gill relies on what he calls the principle of non discrimination as recognised in a number of international instruments, for example: i) UN Convention on the Rights of the Child article 2, under which states parties are required to ensure the rights in the Convention to each child within their jurisdiction without discrimination of any kind ii) The Refugee Convention, the preamble of which reaffirms the principle that human beings shall enjoy fundamental rights and freedoms without discrimination iii) The European Convention on Human Rights article 14, under which the rights set out in the Convention are to be secured without discrimination on any of the grounds there set out.
Mr Gill submits that the discrimination in this case arises on a number of grounds under article 14, including race, religion and nationality, and also (as he puts it in his printed case) other status (the statuses of being a child of a refugee and/or of being a de facto adopted child, ie a child who is not a biological child nor a child adopted in accordance with procedures recognised by the UK.)
I accept that it appears harsh, to put it no higher, that under the rules AA is treated less favourably than her adoptive siblings, largely because of the tragic circumstances in which parental responsibility passed to her brother in law, taken with the lack of any functioning legal system allowing for formal adoption in the country from which she comes.
It is however unnecessary to decide in the context of the present appeal whether or not such treatment could give rise to a claim for unlawful discrimination under article 14 or otherwise.
This is because any rights which AA has in that respect would apply equally to her position in this country, regardless of the basis of her admission.
Mr Gill did not suggest otherwise.
In exercising any discretion in relation to the grant or extension of DLR, the Secretary of State is obliged to act in conformity with the Convention, including article 14.
It is not necessary to reinterpret the rules to achieve that result.
I would add one comment.
As I have made clear, I see great force in Mr Gills criticisms of the use of the Para 309A definition in the context of a rule which is concerned with the treatment of refugees and their dependants.
Mr Eadies only answer, as I understood him, was that clear definitions were needed to establish bright lines.
That answer loses most of its force if the bright lines are drawn so restrictively that they have in practice to be supplemented by the much fuzzier lines drawn by article 8.
In the interests of both applicants and those administering the system, it seems much preferable that the rules should be amended to bring them into line with the practice actually operated by the Secretary of State, including that dictated by her obligations under international law.
Conclusion
For these reasons, which substantially follow those of the Court of Appeal, I would dismiss this appeal.
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The issue in this appeal is whether AA falls within the definition of an adopted child in paragraph 352D of the Immigration Rules.
AA was born in Somalia on 21 August 1994.
Her family were torn apart by events in Somalia and her father was killed in the mid 1990s.
AA became separated from her mother and other siblings during the fighting.
Around the end of 2002, she went to live with her brother in law, Mohamed.
He had a daughter, Fadima and step daughter, Amaani.
Mohamed took AA into his family home under the Islamic procedure known as Kafala (described as a process of legal guardianship akin to adoption).
In October 2007, Mohamed left Somalia and came to the UK in November 2007.
He was granted asylum on 21 July 2008.
The three girls, AA, Fadima and Amaani, were left with a maternal aunt in Mogadishu.
An application for entry into the UK was made for all three girls.
Entry clearance was granted to Fadima and Amaani who came to the UK in January 2010.
It was refused for AA who remained in Addis Ababa pending her appeal.
Her appeal was heard in the First tier Tribunal (FTT) on 3 September 2010.
Exert evidence, accepted by the tribunal, was to the effect that, although adoption as such does not exist under Islamic law, under the legal institution known as Kafala a person may become a protg and a part of the household of an adult; and that this only falls short of a full blown adoption in that such adoptee does not enjoy a right of inheritance under Islamic law.
The FTT allowed the appeal both under paragraph 352D and article 8 ECHR (right to respect for private and family life).
The Secretary of State appealed.
The Upper Tribunal (UT) allowed the Secretary of States appeal in respect of paragraph 352D but confirmed the FTTs decision under article 8.
On 2 May 2012, the Court of Appeal confirmed the UTs decision.
On 14 May 2012, AA was given entry clearance and she arrived in the UK on 4 June 2012.
AA appeals to the Supreme Court in respect of paragraph 352D of the Immigration Rules.
The Supreme Court dismisses the appeal.
Lord Carnwath gives the lead judgment, with which Lady Hale, Lord Wilson, Lord Reed and Lord Hughes agree.
The correct approach to construction of the rules is well settled, as explained by Lord Brown in Mahed v Entry Clearance Officer [2010] 1 WLR 48.
Read in accordance with those principles, it is clear that paragraph 352D does not cover AAs case and cannot be rewritten in order to do so [14 15].
Whether or not Kafala could be treated as a form of adoption for other purposes, the definition of adoptive parent in paragraph 6 is more restricted.
It extends to de facto adoption only within the limitations laid down by paragraph 309A, which does not cover this case [15 16].
A number of international instruments call for a broad approach to the protection of the interests of children.
The best interests principle is now, in appropriate areas of law, recognised both by domestic and international law [17].
However, taking them at their highest, there is no specific obligation covering the position of AA [18].
Subject to the issue of discrimination, there is no international obligation which goes further in practical terms than the protection which has been afforded to AA under human rights law [21].
It appears harsh that under the rules AA is treated less favourably than her adoptive siblings, largely because of the tragic circumstances in which parental responsibility passed to her brother in law, taken with the lack of any functioning legal system allowing for formal adoption in the country from which she comes.
However, it is unnecessary to decide in the context of the present appeal whether or not such treatment could give rise to a claim for unlawful discrimination under article 14 ECHR or otherwise.
This is because any rights which AA has in that respect would apply equally to her position in this country, regardless of the basis of her admission.
In exercising any discretion in relation to the grant or extension of definite leave to remain, the Secretary of State is obliged to act in conformity with the Convention, including article 14.
It is not necessary to reinterpret the rules to achieve that result [24].
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The appellant is a limited partnership formed by Mr Alistair Erskine and his wife as a vehicle for entering into a commercial contract with the respondents.
These proceedings were brought by the appellant on the basis that it was induced to enter into the contract by a misrepresentation which was fraudulent or in any event negligent.
The appellant sought the reduction of the contract and damages.
After proof the Lord Ordinary, Lord Hodge, found that Mr Erskine was the directing mind of the appellant, and that he had decided to enter into the contract in reliance upon a negligent misrepresentation contained in an email sent to him some weeks before the appellant was formed.
The allegation of fraud was found not to have been established: [2010] CSOH 62.
The latter point has not been pursued further.
Nor has the present appeal concerned the question whether the remedy of reduction may be available.
The issue with which we are concerned is whether the appellant was induced to enter into the contract by a negligent misrepresentation and, if so, is in principle entitled to recover damages.
The Lord Ordinary focused upon the legal situation as at the time when the email in question was sent.
He approached the case as one where A (the appellant, through Mr Erskine acting as its agent) had relied upon a representation made by B (the respondents) to C (Mr Erskine acting as an individual), and where the question was whether B had owed a duty of care to A at the time when the representation was made to C.
Applying the principles set out in Caparo Industries plc v Dickman [1990] 2 AC 605, the Lord Ordinary held that the appellant could not recover damages because it had not been in existence at the time when the email was sent.
Although the respondents had owed a duty of care to Mr Erskine, no such duty could in his view have been owed at that time to the appellant, since a non existent entity could not hold any right or be owed any duty.
Both parties appealed against the Lord Ordinarys decision.
Before the Inner House, it was conceded on behalf of the respondents that the Lord Ordinary had erred in considering that the non existence of the appellant at the time when the email was sent was necessarily an insuperable obstacle to the existence of a duty of care: it was accepted that in appropriate circumstances a duty of care could be owed to a class of persons, some of whom might not then be in existence.
In the present case however, it was submitted, at the time when the email was sent there was no one other than Mr Erskine whose reliance upon it could reasonably have been foreseen.
In those circumstances, there had therefore been no proximity between the appellant and the respondents.
It followed, applying Caparo, that no duty of care had been owed by the respondents to the appellant.
Those submissions were accepted by the Second Division: [2011] CSIH 81; 2012 SC 240.
Their discussion of the case again proceeded on the assumption that the relevant question was whether, at the time when the email was sent to Mr Erskine, the respondents had owed a duty of care to the appellant.
Their Lordships did not address the respondents cross appeal, which challenged the Lord Ordinarys finding that a duty of care had been owed to Mr Erskine.
In the present appeal, the issues were identified by the parties as being, first, whether, on the assumption that the respondents owed a duty of care in negligence to Mr Erskine, such a duty of care was owed to the appellant; and secondly, whether the assumption upon which the first issue proceeded was correct.
The case was again approached as one where A had relied upon a representation made by B to C, and where the relevant question was whether B had owed a duty of care to A.
It was again assumed that that question had to be answered as at the time when the email was sent to Mr Erskine.
The authorities relied upon were again Caparo and more recent English and Commonwealth authorities in which the Caparo principles were applied.
The question focused in the printed cases, put shortly, was whether the Caparo principles could be regarded as satisfied as at the time when the email was sent, on the basis that the appellant was the alter ego of Mr Erskine, and the contract between the appellant and the respondents was the same as the contract which the respondents had had in contemplation when they made the statement to Mr Erskine.
There is however a question as to whether the basis upon which the case has been approached by the courts below, and by the parties in their printed cases, is correct.
Is this truly a case in which A relied upon a representation made by B to C? Was the representation made only at the time when the email was sent? Or is this a case where, as was argued before the Lord Ordinary, there was a continuing representation, which was capable of remaining in effect until a contract was concluded? If so, in the circumstances of this case, was the contract concluded between the parties on the basis of a continuing representation made by the respondents to the appellant? If so, did the respondents assume a responsibility towards the appellant for the accuracy of the representation?
If these questions are answered affirmatively, then the case is not concerned with the circumstances in which a third party may sue in damages for economic loss suffered as a result of relying upon a representation of which it was not the addressee, but with the recovery of damages where a party to a contract was induced to enter into it by a negligent misrepresentation made to it by the other party to the contract.
In Scots law, that involves a consideration of section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (the 1985 Act) and of the authorities in which that provision has been discussed.
The questions which I have posed in para 5, and the area of the law which I have mentioned in para 6, were not discussed by the courts below or by the parties in their printed cases, but were raised during the hearing of the present appeal.
Counsel for the respondents accepted that there would be no unfairness in the courts considering these matters; and, in the circumstances, the parties were permitted to make additional submissions in writing.
Before addressing these matters, it is necessary first to consider the relevant facts as found by the Lord Ordinary.
The relevant facts
The respondents are the owners of a grouse moor at Castle Grant, near Grantown on Spey, over which commercial shooting takes place.
Recognising that there required to be substantial investment in the moor in order to increase the number of grouse, and being unwilling to undertake that investment themselves, they sought to attract a tenant.
The matter was taken forward by their employee and chief executive, Mr Sandy Lewis, and by a chartered surveyor, Mr Jonathan Kennedy, who was engaged to advise them.
In May 2006 Mr Erskine learned that a lease of the moor might be available, and entered into discussions with Mr Kennedy.
He was sent the proposed terms of a lease.
He did not however pursue his interest.
The respondents then entered into discussions with another prospective tenant, Mr Paddy McNally.
In the course of those discussions, Mr McNally expressed concern about possible over shooting of the moor during the 2006 season.
In order to reassure Mr McNally that the respondents had considered the capacity of the moor to bear the shooting planned for that season, Mr Lewis sent his adviser an email dated 4 August 2006, in which he gave information about the grouse counts carried out on the moor earlier that year and the estimated grouse population of the moor, extrapolated from the counts.
The areas of the moor in which the counts were carried out were not however representative of the moor as a whole, but were the parts of the moor which were considered to be the most heavily populated by grouse.
As a result, the estimated grouse population, as stated in the email, was well in excess of the actual population.
In the event, Mr McNally decided not to proceed with the transaction.
On Mr McNallys withdrawal, Mr Kennedy contacted Mr Erskine in early September 2006 in order to pursue the possibility of his taking a lease of the moor.
After taking part in a shoot and making a further visit to the moor, Mr Erskine became concerned that the shooting planned for that season would leave an inadequate breeding population on the moor.
He expressed his concern in an email to Mr Kennedy, in which he said that he was not qualified to quantify the damage which the shooting was doing to the grouse stocks but thought that it was not insignificant.
Mr Kennedy forwarded the email to Mr Lewis, stating in his covering message that there was no doubt in his mind that the estate had been overshot, and that this had undoubtedly had an effect on the letting of the moor and might have made it impossible.
Mr Lewis replied by email on 29 September, stating: I have sent a separate email re the grouse programme which you may wish to pass on to Alastair Erskine.
The separate email sent by Mr Lewis to Mr Kennedy, which I will refer to as the critical email, did not form part of the chain of messages initiated by Mr Erskines email, and did not have the appearance of responding to any concern expressed about over shooting.
Its subject was Grouse Bags, and it began by stating: Now that we are well through with the grouse season, I thought it may be appropriate to recap on how we set this years programme for Castle Grant and where we are to date.
The following information was provided to you at the beginning of August.
Mr Lewis then repeated the information which had originally been sent in the email of 4 August 2006.
The email concluded: I am very happy for you to pass this on to Alastair Erskine if you feel this would be helpful to him.
On 2 October 2006 Mr Kennedy forwarded the critical email to Mr Erskine, as Mr Lewis had suggested.
Mr Erskine decided to proceed with the transaction, and instructed his solicitors, Anderson Strathern, to conclude the lease in the name of a limited liability partnership.
On 10 October Anderson Strathern informed the respondents that Mr Erskine intended to use a new limited liability partnership to take the tenancy.
Discussions continued between Mr Erskine and Mr Lewis, who was aware of Mr Erskines intention to incorporate the appellant as a vehicle for the lease.
The appellant was incorporated on 16 November 2006.
The lease was signed on various dates between 8 December 2006 and 18 January 2007.
Mr Erskine subsequently discovered that the counting areas were not representative of the moor as a whole, that the grouse population was smaller than he had believed, and that it would in consequence take longer for the population to recover to the point where shooting could take place at the level which he had intended.
He considered that Mr Lewis had deliberately misled him in the critical email in order to induce him to take on the lease, and brought the present proceedings on that basis.
The Lord Ordinary accepted that the critical email contained a material misrepresentation, namely an implicit representation that the counts were representative of the population of grouse on the moor.
He found that Mr Lewis had acted honestly but negligently.
He had had no basis for making the representation and did not check his facts before doing so.
He had been aware of Mr Erskines concern that there had been overshooting, and of the importance to an incoming tenant of an adequate population on which to build.
The Lord Ordinary stated (paras 104 105): The purpose of the representation was to give reassurance to Mr Kennedy and Mr Erskine that the 2006 shooting programme was justified and that it would leave a substantial surplus of birds on the moor, in order to maintain Mr Erskines interest in entering into the lease The managers of the estate had, or would be perceived to have, access to a much more detailed knowledge of the quality of their moor than any other party.
In response to expressed concerns about the 2006 shooting programme and the availability of a sufficient end of season surplus, Mr Lewis chose to provide reassurance in his representations.
The Lord Ordinary also accepted that the representation had induced Mr Erskine to choose to enter into the lease.
Was the representation of a continuing nature?
The law relating to the effect of representations upon a contract proceeds on the basis that a representation made in the course of pre contractual discussions may produce a misapprehension in the mind of the other party which continues so as to have a causative effect at the time when the contract is concluded.
It is on that basis that a misrepresentation may lead to the setting aside of the contract as being vitiated by error or fraud.
The capacity of a representation to have a continuing effect was noted by Lord Cranworth, when rejecting what he described as a very desperate argument that a representation could not justify the setting aside of a bond because it was made some time before the bond was executed, in Smith v Kay (1859) 7 HL Cas 750, 769: It is a continuing representation.
The representation does not end for ever when the representation is once made; it continues on.
The pleader who drew the bill, or the young man himself, in stating his case, would say, Before I executed the bond I had been led to believe, and I therefore continued to believe .
A similar explanation can be found in the judgment of Lord Wright MR in With v OFlanagan [1936] Ch 575, which was another action for the rescission of a contract.
Under reference both to English authorities concerned with the law of contract, and to a Scottish authority concerned with the law of reparation (the case of Brownlie v Miller (1880) 7 R (HL) 66; Brownlie v Campbell (1880) 5 App Cas 925, which I shall discuss shortly), his Lordship observed at p 584 that a representation made as a matter of inducement to enter into a contract is to be treated as a continuing representation, and added at pp 584 585: This question only occurs when there is an interval of time between the time when the representation is made and when it is acted upon by the party to whom it was made, who either concludes the contract or does some similar decisive act; but the representation remains in effect and it is because that is so, and because the court is satisfied in a proper case on the facts that it remained operative in the mind of the representee, that the court holds that under such circumstances the representee should not be bound.
The law relating to reparation for harm suffered as a result of the conclusion of a contract in reliance upon a misrepresentation made in the course of pre contractual discussions proceeds in this respect upon the same basis.
As Smith J observed in the Australian case of Jones v Dumbrell [1981] VR 199, 203: When a man makes a representation with the object of inducing another to enter into a contract with him, that other will ordinarily understand the representor, by his conduct in continuing the negotiations and concluding the contract, to be asserting, throughout, that the facts remain as they were initially represented to be.
And the representor will ordinarily be well aware that his representation is still operating in this way, or at least will continue to desire that it shall do so.
Commonly, therefore, an inducing representation is a continuing representation, in reality and not merely by construction of law.
As Smith J indicated by his use of the words ordinarily and commonly, whether a representation should be treated as continuing depends upon the facts of the individual case (see also Macquarie Generation v Peabody Resources Ltd [2000] NSWCA 361, paras 3 22, per Mason P).
Where a misrepresentation does not have a continuing effect, for example because it is withdrawn or lapses, or because the other party discovers the true state of affairs before the contract is concluded, it cannot induce the other party to enter into the contract and therefore cannot affect its validity or give rise to a remedy in damages for any loss resulting from its conclusion.
As Lord Brougham observed in Irvine v Kirkpatrick (1850) 7 Bell App (HL) 186, 237 238, in order that the misrepresentation may be of any avail whatever, it must inure to the date of the contract.
If the other party discovers the truth before he signs the contract, the misrepresentation and the concealment go for just absolutely nothing.
Whether the remedy sought is reduction of the contract or damages for the loss suffered as a result of entering into it, in either case a representation may therefore be treated by the law as having a continuing effect, rather than as being an event whose legal consequences are necessarily fixed at the time when the statement in question was made.
The continuing effect of a pre contractual representation is reflected in a continuing responsibility of the representor for its accuracy.
Thus a person who subsequently discovers the falsity of facts which he has innocently misrepresented may be liable in damages if he fails to disclose the inaccuracy of his earlier representation: Brownlie v Miller (1880) 7 R (HL) 66, 79; Brownlie v Campbell (1880) 5 App Cas 925, 950 per Lord Blackburn.
The same continuing responsibility can be seen in the treatment of representations which are true when made, but which become false by the time the contract is entered into: see, for example, Shankland & Co v Robinson & Co 1920 SC (HL) 103, 111 per Lord Dunedin.
The law is thus capable, in appropriate circumstances, of imposing a continuing responsibility upon the maker of a pre contractual representation in situations where there is an interval of time between the making of the representation and the conclusion of a contract in reliance upon it, on the basis that, where the representation has a continuing effect, the representor has a continuing responsibility in respect of its accuracy.
In the present case, the representation contained in the critical email was undoubtedly of a continuing nature so long as Mr Erskine remained the prospective contracting party.
The question then arises whether, in the circumstances of this case, the representation continued after the identity of the prospective contracting party changed, and, if so, whether the respondents assumed a responsibility towards the appellant for the accuracy of the representation.
Did the representation, and responsibility for its accuracy, continue after the identity of the contracting party changed?
In principle, the possibility that a representation may continue to be asserted, and may have a causative effect so as to induce the conclusion of the contract, is not necessarily excluded where, as in the present case, the contracting parties are not the original representor and representee.
In such a case, it is possible that the inference can be drawn from the parties conduct that they proceeded with the negotiation and conclusion of the contract on the basis that the accuracy of the representation continued to be asserted by the representor, implicitly if not expressly, after the identity of the prospective contracting party had changed.
In such circumstances the representation may have continued to have a causative effect, so as to induce the conclusion of the contract.
Where the inference to be drawn is that a representation continued to be made until the contract was concluded, it may also be inferred that the risk of harm being suffered as a result of reliance upon it, in the event that it was inaccurate, continued to be foreseeable.
In such circumstances, the representor may be taken to have assumed responsibility for the accuracy of the representation towards the contracting party who relied upon it, even though that person was not the original representee.
No authority has been cited in which the court has considered the liability of a contracting party for a representation inducing the conclusion of the contract by someone other than the original representee.
The decision of the House of Lords in Briess v Woolley [1954] AC 333 is however relevant.
The case concerned a fraudulent misrepresentation made in the course of pre contractual discussions by a shareholder in a company.
He was subsequently authorised by the other shareholders to continue the negotiations as their agent, and in due course a contract was concluded.
The shareholders were held liable in damages to the other contracting party, notwithstanding that the representation had been made by the shareholder before he began to negotiate on their behalf.
Lord Reid stated at p 349: The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal.
The agent continued to be fraudulent after he was appointed.
It was his duty, having made false representations, to correct them before the other party acted on them to his detriment, but he continued to conceal the true facts.
Lord Tucker added at p 354: the duty of the agent, who has made the misrepresentation, to correct it cannot be regarded as only a personal obligation.
If he has in the meantime been appointed agent with authority to make representations for the purpose of inducing a contract he, in his capacity as agent, is by his conduct repeating the representations previously made by him.
The same principle should also apply in the converse situation, where the representation is made to (rather than by) the agent prior to the commencement of his agency.
In such a situation, depending of course on the facts, the representor can equally be taken to be, by his conduct, implicitly repeating the representation previously made, and can therefore owe a duty in respect of the accuracy of the representation towards the agents principal.
The case of Briess v Woolley concerned a misrepresentation which was fraudulent rather than negligent; and it preceded the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.
Once it is accepted that a negligent misrepresentation can give rise to a remedy in damages, however, there is no reason why the approach adopted in Briess should not apply to negligent as well as to fraudulent misrepresentations which are made in order to induce the representee to enter into a contract.
A negligent misrepresentation is equally capable of having a continuing effect up until the time when the contract is concluded, where the person by whom the representation is made, or to whom it is addressed, becomes the agent of the person by whom the contract is concluded.
In the present case, the change in the identity of the prospective contracting party did not affect the continuing nature of the representation, or the respondents continuing responsibility for its accuracy.
It appears from the Lord Ordinarys findings that the negotiations which had been under way between Mr Erskine and the respondents, in the course of which the critical email was sent, simply continued after it had become apparent that a limited liability partnership was to be used as a vehicle for Mr Erskines investment.
Neither party drew a line under the previous discussions, after the appellant was formed, in order to begin afresh.
Neither party disclaimed what had previously been said in the course of their discussions, or sought assurances that it could be relied upon as between the appellant and the respondents.
The seeking of such an assurance would no doubt have appeared to those involved to be an unnecessary formality.
As the Lord Ordinary found, the representation made in the critical email remained operative in the mind of Mr Erskine after he began to act in the capacity of an agent of the appellant, up until the time when the lease was executed on behalf of the appellant.
The appellant was thus induced to enter into the contract by that representation.
In continuing and concluding the contractual negotiations with the appellant, through its agent Mr Erskine, without having withdrawn the representation earlier made to Mr Erskine as an individual, the respondents by their conduct implicitly asserted to the appellant the accuracy of that representation; and they did so in a situation where it continued to be foreseeable that the representation would induce the other party to the negotiations to enter into a contract.
They therefore assumed a responsibility towards the appellant for the accuracy of the representation.
They therefore owed the appellant a duty of care, which they failed to fulfil.
The recovery of damages where a party to a contract was induced to enter into it
by a negligent misrepresentation
The law in Scotland governing the recovery of damages, where a party to a contract was induced to enter into it by a negligent misrepresentation made by or on behalf of another party to the contract, involves a consideration of section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 and of the authorities in which that provision has been discussed.
Following the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, the Scottish courts accepted the general principle that damages could be recovered for economic loss suffered as a result of reliance upon a negligent misrepresentation, where the relationship between the person making the representation and the person relying upon it was of a kind which gave rise to a duty of care.
The salient feature of that case, and of later analogous cases such as Smith v Eric S Bush [1990] 1 AC 831, which gave rise to such a duty, was identified by Lord Bridge of Harwich in Caparo Industries plc v Dickman [1990] 2 AC 605, 620 621: The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation.
In these circumstances the defendant could clearly be expected, subject always to the effect of any disclaimer of responsibility, specifically to anticipate that the plaintiff would rely on the advice or information given by the defendant for the very purpose for which he did in the event rely on it.
So also the plaintiff, subject again to the effect of any disclaimer, would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the very purpose for which he required it.
Where a representation is made by one person to another in relation to the subject matter of a contract which they are contemplating entering into, the circumstances may plainly be of the kind described by Lord Bridge.
Nevertheless, in a number of decisions at first instance, the Scottish courts treated such cases as an exception to the principle established by Hedley Byrne, on the basis that the doctrine of precedent required them to follow the decision of the Inner House in Manners v Whitehead (1898) 1 F 171.
It had been held in that case, in the words of the headnote, that A person who is induced to enter into a contract by misrepresentations is not entitled to damages from the person making the representations, unless they are fraudulent.
The decision reflected the view of the law then prevailing both in Scotland and in England (see Le Lievre v Gould [1893] 1 QB 491): a view from which the House of Lords departed in Hedley Byrne.
This exception to the Hedley Byrne principle was illogical and unjust.
It resulted in a situation where it was accepted that A could sue B where Bs negligent misrepresentation induced A to enter into a contract with C, provided there was a special relationship between A and B, but not where it induced A to enter into a contract with B himself (see, for example, Twomax Ltd v Dickson, McFarlane & Robinson 1982 SC 113).
The Scottish Law Commission responded by recommending legislative reform.
Its Report on Negligent Misrepresentation (Scot Law Com No 92, 1985) contained a draft Bill, which was enacted as section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985.
Section 10(1) provides: A party to a contract who has been induced to enter into it by negligent misrepresentation made by or on behalf of another party to the contract shall not be disentitled, by reason only that the misrepresentation is not fraudulent, from recovering damages from the other party in respect of any loss or damage he has suffered as a result of the misrepresentation; and any rule of law that such damages cannot be recovered unless fraud is proved shall cease to have effect.
Section 10(1) is drafted in a negative form.
It does not provide that a party to a contract who has been induced to enter into it by negligent misrepresentation made by or on behalf of another party to the contract is entitled to recover damages: it provides that such a person shall not be disentitled by reason only that the misrepresentation is not fraudulent, and that any rule of law that such damages cannot be recovered unless fraud is proved shall cease to have effect.
Whether such a person is entitled to damages therefore depends on the common law, modified by section 10(1) only to the extent that recovery is not excluded by reason of the absence of fraud.
The consequence is that entitlement to damages depends upon establishing the breach of a duty of care, since at common law it is the breach of a duty of care which renders a negligent misrepresentation wrongful.
This approach reflects the Commissions identification of the mischief in the existing law as being the rule in Manners v Whitehead, as it was described: that is to say, the requirement to establish fraud.
It considered, and rejected, the possibility that the Scottish legislation should be modelled upon section 2(1) of the Misrepresentation Act 1967: a complex provision which has the effect of dispensing with the need to establish a duty of care in English law where a person has entered into a contract after a misrepresentation has been made to him by another party to the contract, and as a result has suffered loss.
The Commission considered that, in Scotland, the common law should continue to govern the question whether the circumstances were such as to give rise to a duty of care (para 3.2).
The Commission noted that the relationship between parties in pre contractual discussions was one where the proximity between them, and the foreseeability of reliance upon representations, were particularly apparent (para 2.3), but considered that the existence of a duty of care should continue to be governed by the common law (para 3.2).
There are indeed a variety of circumstances in which a duty of care might be absent: for example, where the representation was accompanied by an effective disclaimer of responsibility, or where the representation was subject to a time limit which had lapsed, or where reliance upon the representation was not reasonably foreseeable, or where the parties by their contract effectively excluded liability for negligent pre contractual representations, or where the contract itself governs the subject matter of the representation.
Section 10(1) does not therefore impose a statutory liability for careless misrepresentations which have induced a party to enter into a contract, but removes the barrier which previously existed to the recovery of damages where a party had been induced to enter into a contract by a misrepresentation made in breach of a duty of care.
This point does not emerge altogether clearly from the two authorities in which section 10(1) has been considered.
In the first, Hamilton v Allied Domecq plc 2001 SC 829, the Lord Ordinary, Lord Carloway, was not assisted by the fact that he was not referred to any Scottish authorities on the subject of negligent misrepresentation but was instead referred to section 2(1) of the Misrepresentation Act 1967.
His Lordship stated at para 17 that, as a result of section 10(1) of the 1985 Act, there was no need to enter into the field of Hedley Byrne type special relationships and whether a duty of care was owed: the statute provided the remedy, and its practical effect was that one contracting party had a duty to the other not to make negligent misrepresentations which induced the other to contract.
That approach was followed by Lord Glennie in BSA International SA v Irvine [2010] CSOH 78.
He stated at para 15 that, as a result of the section, it was enough to found a claim for damages that the representation was negligent: there was no need to import into the relationship of intending contractual parties concepts that had developed in the law of tort and delict to identify other situations in which a party might owe a duty of care to another as regards the accuracy of statements made by him.
Lord Glennie added at para 16 that the issue was likely to be almost entirely academic, since the criteria for the imposition of a duty of care would invariably be satisfied when the misstatement was an operative misrepresentation, in the sense in which that expression had been used by Prof J M Thomson in his article, Misrepresentation, 2001 SLT 279: that is to say, an inaccurate statement of fact made in pre contractual discussions which induced the misrepresentee to enter into the contract and which would have induced a reasonable person to do so.
I sympathise with the view that this issue will often be academic, for the reason given by Prof Thomson and adopted by Lord Glennie.
The law does not impose a general duty of care in the conduct of contractual negotiations, reflecting the fact that each party is entitled, within the limits set by the law, to pursue its own interests.
As the Supreme Court of Canada has observed, the prospect of causing deprivation by economic loss is implicit in the negotiating environment (Martel Building Ltd v Canada [2000] 2 SCR 860, para 51).
It is also possible that a contract entered into between the parties may limit or exclude the scope for finding a duty of care in respect of pre contractual representations.
Nevertheless, it has long been accepted that the relationship between the parties to contractual negotiations may give rise to such a duty in respect of representations which the representor can reasonably foresee are likely to induce the other party to enter into the contract, unless circumstances negativing the existence of such a duty, such as those mentioned in para 38, are present.
It is therefore unnecessary in most cases to go back to the fundamental principles governing the existence of a duty of care, as set out in the tripartite test adopted in Caparo Industries plc v Dickman [1990] 2 AC 605, or to undertake an assessment of whether a special relationship existed.
Questions as to the circumstances in which the relationship between parties negotiating a contract gives rise to a duty of care in respect of representations inducing the contract are not now of such a novel character as normally to require consideration from first principles.
As I have explained, however, that does not mean that liability will necessarily exist where a party to a contract has been induced to enter into it by a negligent misrepresentation made by or on behalf of another party to the contract.
Since section 10(1) does not create a statutory liability, the question whether the misrepresentation was made in breach of a duty of care still has to be answered, even if the answer may sometimes be obvious.
In the present case, it is plain, on the Lord Ordinarys findings of fact, that a duty of care was owed by the respondents to Mr Erskine in respect of the representation contained in the critical email.
For the reasons I have explained, a duty of care was also owed by the respondents to the appellant, when they negotiated and concluded the contract on the basis of the discussions previously held with Mr Erskine.
The respondents acted in breach of that duty of care, and are therefore liable in damages for any loss suffered by the appellant as a result.
The case will therefore have to return to the Court of Session for further procedure.
Conclusion
For these reasons, I would allow the appeal.
LORD TOULSON
I agree with the reasoning and conclusion of Lord Reed.
I add my own shorter judgment because the case is in some respects novel.
However, its solution requires no new principle.
Once properly identified, the application of the relevant principles becomes straightforward, but they were perhaps obscured rather than illuminated by the way in which the case was presented below.
The claim was for the reduction (ie setting aside) of the lease entered into between the claimant Cramaso, acting through the agency of Mr Erskine, as lessee, and the respondent trustees, as lessor, and for repayment of Cramasos associated expenses.
Cramaso was created by Mr Erskine for the purpose of taking the lease, and he was its controller or, as the Lord Ordinary described him, its directing mind.
The ground of Cramasos claim was that it had been induced to enter into the lease by a misrepresentation made either fraudulently or negligently by an agent of the trustees to Mr Erskine.
The representation was made before Cramasos creation.
The Lord Ordinary found that Mr Erskine had been induced to enter into the lease on behalf of Cramaso by a misrepresentation.
He rejected the allegation that the misrepresentation had been made fraudulently, but he found that it had been made negligently.
However, he granted absolvitor (ie dismissed the proceedings) on the ground that Cramaso had not come into the picture at the time when the misrepresentation was made to Mr Erskine.
For that reason he concluded that (a) no duty of care was owed by the trustees to Cramaso at the time when the misrepresentation was made, and (b) Cramaso therefore had no cause of action against the trustees and no right to reduction of the lease.
I part company with the Lord Ordinary, and the Second Division which upheld his judgment, at stage (b).
In the courts below attention was concentrated on the legal position at the time of the representation, and this was regarded as decisive.
In this court Mr Dewar QC refocused the argument in response to questions and comments from the bench.
He switched from focusing on the time of the misrepresentation, and the question whether at that time the trustees duty of care might be defined so as to encompass a category of affected persons capable of including Cramaso on its later formation, to the different issue whether the absence of a duty of care owed to Cramaso at the time of the misrepresentation was fatal to its claim on the facts as found by the Lord Ordinary.
The change of tack took Mr Sandison QC by surprise, but he fairly and properly accepted that there was no injustice in the court addressing the issue.
Logically the first issue to consider is the challenge made by the trustees to the Lord Ordinarys finding that there was a negligent misrepresentation to Mr Erskine.
The question was essentially one of fact on which the Lord Ordinary was entitled to find as he did.
However, Mr Sandison did raise one point of law.
He submitted that it was necessary for Cramaso to show that at the time of Mr Lewiss email dated 29 September 2006 to Mr Kennedy he knew or ought to have known that there was a high degree of probability that Mr Erskine would be sent the email and would rely upon it.
Mr Sandison based that submission on passages in Caparo Industries plc v Dickman [1990] 2 AC 605 from the speeches of Lord Bridge at pp 620 621, Lord Oliver at p 638 and Lord Jauncey at pp 660 661.
The submission is ill founded.
In Caparo the court was considering the familiar situation in which it is alleged that D, the defendant, was negligent in a statement made to C, the claimant, upon which C relied in entering into a transaction with T, a third party.
It is readily understandable that in that type of situation cogent grounds are needed to explain why D ought to have had C in his contemplation as somebody entitled to rely on Ds statement when considering whether to enter into a transaction with T.
The situation where a statement is made during contractual negotiations by one prospective contracting party to another is quite different.
Here, the statement made by Mr Lewis was intended for the attention of Mr Erskine in relation to the very transaction about which they were negotiating.
Since Esso Petroleum Co Ltd v Mardon [1976] QB 801, 820, it has been established that the principle in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is capable of applying to pre contractual representations.
Lord Denning MR stated the principle as follows: if a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another be it advice, information or opinion with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable.
If he negligently gives unsound advice or misleading information or expresses an erroneous opinion, and thereby induces the other side to enter into a contract with him, he is liable in damages.
This is not necessarily an exhaustive statement of the circumstances in which a duty of care may arise in connection with a statement made in a pre contractual context.
However, where the principle in Esso v Marden applies, there is no need for a court to go into issues of the kind discussed in Caparo and the various other authorities relied on by Mr Sandison, including Smith v Eric S Bush [1990] 1 AC 831, White v Jones [1995] 2 AC 207, Al Saudi Banque v Clark Pixley [1990] Ch 313 and Customs & Excise Commissioners v Barclays Bank plc [2007] 1 AC 181.
Those were all cases where C claimed to have entered into a transaction with T in reliance on a representation by D and the courts wrestled with the problem how to determine whether D owed C a duty of care in relation to that transaction.
In particular, the courts struggled with the question how the putative duty was to be defined so as to avoid, in Cardozo CJs memorable expression in Ultramares Corporation v Touche (1931) 174 NE 441, 444 liability in an indeterminate amount for an indeterminate time to an indeterminate class.
No comparable problem arises in considering whether the trustees owed a duty of care to Mr Erskine when making a representation to him about the grouse moor which they were hoping that he would lease.
Even, if Mr Sandisons primary submission on the Caparo point were right, it would in any event be immaterial what Mr Lewis may have considered to be the degree of probability that Mr Kennedy would pass on his email to Mr Erskine, since Mr Lewis invited Mr Kennedy to consider passing it on, which Mr Kennedy unsurprisingly did.
It was marketing information provided by the trustees, through Mr Lewis, to their agent with a view to its being used in the lease negotiations.
I turn to the point on which Cramasos claim foundered in the courts below.
The issue is whether it is fatal to Cramasos claim that the negligent misrepresentation was made before Cramaso was formed or even mentioned.
The formation of Cramaso made no difference to the subject matter of the negotiations or to the people involved in conducting them.
What changed was the role of Mr Erskine.
From being himself the prospective lessee, he became the agent of a company created and controlled by him for the purpose of taking the lease.
The question which arises in these circumstances is whether the earlier misrepresentation is to be regarded as water under the bridge, a matter about which Cramaso could have no cause for complaint albeit that its factual effect was to induce Mr Erskine to go ahead with the transaction which was concluded by the execution of the lease, or whether the misrepresentation is to be regarded as having continued up to the time of the execution of the lease so as to entitle Cramaso to complain of it.
As a matter of general principle, a representation made during contractual negotiations for the purpose of inducing a contract will ordinarily be regarded as continuing until the contract is actually concluded because it will generally be reasonable for the representee to continue to rely on it.
There may be exceptions, for example where there has been a material change of circumstances which would make the representation irrelevant, but I can see no reason to depart from the general principle in the present case.
It is unnecessary for me to refer to all the authorities to which Lord Reed has drawn attention.
However, Briess v Woolley [1954] AC 333 is particularly relevant to the present case because of the part played at the time of the representation by a person who became the agent of one of the parties after the representation was made but before the contract was made.
The plaintiffs entered into a contract to buy the shares of company X as a result of a fraudulent representation by R, who was Xs managing director.
At the time of making the false representation R had no authority to negotiate a sale of the shares.
He was subsequently authorised by Xs shareholders to act on their behalf in the matter.
The plaintiffs sued the sellers.
The plaintiffs won at first instance, lost in the Court of Appeal but won in the House of Lords.
They lost in the Court of Appeal because it was held, at [1953] 2 QB 218, 222, that the misrepresentation had been made once and for all before R became the sellers agent for the purposes of the sale.
The Court of Appeal also held that there was no ratification of Rs earlier conduct.
Its conclusion on the latter point was upheld by the House of Lords, but the appeal succeeded on the basis that the false representation was to be regarded as a continuing representation.
Mr Gerald Gardiner QC on behalf of the plaintiffs presented a simple argument.
He submitted at p 335: If one effects a sale by ones agent, who signs the contract, one cannot ratify the contract and take the money payable under it while at the same time disclaiming the way in which the contract was brought about.
Cramasos argument in the present case is essentially the same, namely that the trustees cannot disclaim the way in which the contract was brought about by their agent.
Mr Gardiners submission was echoed in the speech of Lord Reid at p 349.
He rejected: the contention that a principal can disclaim responsibility for fraudulent misrepresentations made by his agent which, although made before the agency commenced, to the agents knowledge continued to influence the other party after his appointment as agent and finally induced the other party to enter into the contract which the agent had been authorised to make and did make on behalf of his principal.
The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal.
Lord Tucker at pp 353 354 approved the statement of the trial judge that the law regarded the representations as continuing during the whole period between the time the representations were made and the time when they were finally acted upon.
He said: It was contended by counsel for the respondents that when once the representations were made the wrongful act was complete although no action for damages would lie until the representee suffered damage.
He argued that the representations were not continuing but the consequences of the original representation continued, and accordingly, provided that the representor was not the agent of the respondents when the original representation was made, they could not be held responsible because the consequences of that representation took effect at a time when the representor had become their agent.
No authority for this proposition was cited, and it is, in my view, founded upon error.
The tort of fraudulent misrepresentation is not complete when the misrepresentation is made.
It becomes complete when the misrepresentation not having been corrected in the meantime is acted upon by the representee.
Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee the tortious act is complete provided that the representation is false at that date.
If false when made but true when acted upon there is no misrepresentation.
In Spencer Bower on Actionable Misrepresentation, 2nd ed, p 77, article 73, it is stated: It is commonly said that the representation must be shown to have been false when made.
But this is not quite correct.
The only real issue is was it true or false when it was acted upon? In Halsburys Laws of England, 2nd ed, vol XX111, p 29, para 44, it is stated: Where there is an appreciable interval between the two dates above mentioned [ie date when made and date when acted upon], and the representation relates to an existing state of things, the representor is deemed to be repeating his representation at every successive moment during the interval, unless he withdraws or modifies it by timely notice to the representee in the meantime.
I do not think the accuracy of these statements can be challenged.
It is true that there does not appear to be any express authority which can be quoted as an example of the application of this principle to a case of principal and agent where the agency commences after the making of a representation which is allowed by the agent to continue uncorrected with knowledge of its falsity until acted upon.
I agree, however, with Barry J, that the duty of the agent, who has made the misrepresentation, to correct it cannot be regarded as only a personal obligation.
If he has in the meantime been appointed agent with authority to make representations for the purpose of inducing a contract he, in his capacity as agent, is by his conduct repeating the representations previously made by him.
Although that was a case of a fraudulent misrepresentation, I cannot see that it makes a difference to the continuing nature of the representation whether it was fraudulent or negligent.
It is, of course, true that a negligent misrepresentor is unlikely to be aware that he has been negligent, whereas the maker of a deliberately false statement will know what he has done.
However, that does not affect the general proposition stated in Halsburys Laws which Lord Tucker cited with approval, and it is logical that it should not do so.
What matters is the continuing potency of the representation as an inducing factor.
The potency and duration of a representation do not depend on the honesty or dishonesty of its maker.
In Briess v Woolley R was the representor, whereas in the present case Mr Erskine was the representee.
But I do not see why that distinction should make any difference to the principle.
The proper conclusion is that the representation was a continuing representation, which operated as an inducing factor on the mind of Mr Erskine after he became Cramasos agent, and Cramaso was entitled to rely on it, just as Cramaso (on the authority of Briess v Woolley) would have carried responsibility for the ongoing effect of a prior misrepresentation by Mr Erskine to the trustees.
On that reasoning I would hold that the decisions of the lower courts were wrong.
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Lord Reed begins by questioning whether the way the case has been approached by the courts below and in the parties printed cases is correct [5 7].
Instead of viewing the representation as an event whose legal consequences were fixed at the time when the statement was made, Lord Reed concludes that the case in fact concerns a continuing representation capable of remaining in effect until the contract is concluded [31].
The representation contained in the critical email was undoubtedly of a continuing nature so long as Mr Erskine remained the prospective contracting party [24].
In principle, the possibility that a representation may continue to be asserted, and may have a causative effect so as to induce the conclusion of a contract, is not necessarily excluded where, as here, the contracting parties are not the original representor and representee.
The inference can be drawn from the parties conduct that they proceeded with the negotiation and conclusion of the contract on the basis that the accuracy of the representation continued to be asserted by the representor, implicitly if not expressly, after the identity of the prospective contracting party had changed.
In such circumstances, the representation could continue to have a causative effect, so as to induce the conclusion of the contract [25].
Where the inference to be drawn is that a representation continued to be made until the contract was concluded, it may also be inferred that the risk of harm being suffered as a result of reliance upon it, in the event that it was inaccurate, continued to be foreseeable.
In such circumstances, the representor may be taken to have assumed responsibility for the accuracy of the representation towards the contracting party who relied upon it, even where he is not the original representee [26].
Just as a representation may continue up to conclusion of the contract when made by a companys agent prior to the commencement of his agency, it may have the same effect where the person to whom it is addressed becomes the agent of the contracting party [27 28].
In this case, the negotiations simply continued after it became apparent that an LLP was to be used as the vehicle for Mr Erskines investment.
Neither party drew a line under the previous discussions, disclaimed what had previously been said or sought assurance that it could be relied upon as between the contracting parties [30].
In continuing and concluding the contractual negotiations with Cramaso, through its agent Mr Erskine, without having withdrawn the representation earlier made to him as an individual, the respondents by their conduct implicitly asserted to Cramaso the accuracy of that representation.
It continued to be foreseeable that the representation would induce the other party to the negotiations to enter into a contract.
The respondents therefore assumed a responsibility towards Cramaso for the accuracy of the representation and owed it a duty of care, which they failed to fulfil [31].
Cramaso is entitled to recover damages for any loss suffered as a result, under section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 [32 43].
In a concurring judgment, Lord Toulson rejects the respondents argument that it was necessary for Cramaso to show that, at the time of the critical email, Mr Lewis knew or ought to have known that there was a high degree of probability that Mr Erskine would be sent the email and would rely upon it.
The situation where a statement is made by one party to another, who in turn relies upon it in entering a contract with a third party is different to the present situation, where a statement was made during contractual negotiations by one prospective party to another in relation to the very transaction about which they were negotiating [51].
Lord Toulson agrees with Lord Reed that the fact the representation was negligent rather than fraudulent does not affect its continuing nature; what matters is its continuing potency as an inducing factor [63].
The case will have to return to the Court of Session for further procedure in relation to remedies [44].
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In circumstances in which at the time of a divorce a spouse, say a wife, is awarded capital which enables her to purchase a home but later she exhausts the capital by entry into a series of unwise transactions and so develops a need to pay rent, is the court entitled to decline to increase the order for the husband to make periodical payments to her so as to fund payment of all (or perhaps even any) of her rent even if he could afford to do so?
Mr Mills (whom it will be convenient to describe as the husband notwithstanding his divorce from Mrs Mills, the wife, in 2002) appeals against an order for upwards variation of an order for periodical payments against him in favour of the wife.
The order for variation was made by the Court of Appeal (Longmore LJ and Sir Ernest Ryder, Senior President of Tribunals) on 1 February 2017: [2017] EWCA Civ 129.
By that order, the Court of Appeal allowed the wifes appeal against the dismissal of her application to vary the order for periodical payments by Judge Everall QC (the judge) in the Central Family Court in London on 9 June 2015.
The husband and wife are each aged 52.
They were married in 1987.
The wife is a qualified beauty therapist.
In the early years of the marriage she worked, self employed, in that capacity.
The husband built up a surveying business within two companies which he and the wife owned in equal shares.
They had one child, a son, now adult.
In 1996 the wife unfortunately suffered a late miscarriage, which precipitated a long period of painful gynaecological difficulties for her.
In 2000 the husband left the home in Guildford.
On 7 June 2002, in the ensuing divorce proceedings, financial issues were resolved within a consent order.
In addition to provision for their son, who was to continue to make his home with the wife and have contact with the husband, the order provided that: i) the home, vested in the joint names of the parties, should be sold; ii) its net proceeds should be divided in accordance with a formula which in the event yielded 230,000 for the wife in settlement of all her capital claims against the husband and 23,000 for him; the wife should transfer to the husband her interest in policies worth iii) 23,000 and her shares in the surveying companies; and iv) the husband should make periodical payments to her at the annual rate of 13,200 (not index linked) on the open ended basis, namely during their joint lives until her remarriage or further order in the interim.
The wife therefore received the vast preponderance of the parties liquid capital.
The value of the two companies was not identified.
At the time of making the consent order the wife had represented that ill health was disabling her from working and that she would need 350,000 with which to purchase a suitable home for herself and their son.
The husband had conceded that she then had no capacity to raise a mortgage but had suggested, by contrast, that she could purchase a suitable home for 230,000 or less, in other words free of mortgage.
In the event, later in 2002, she proceeded to purchase a house in Weybridge for 345,000 by deploying in effect her entire share of the proceeds of the home and by raising the balance of 125,000 on mortgage.
When he learnt of the wifes purchase, the husband, by solicitors, expressed surprise at its high cost and concern about her ability to service a mortgage, let alone one of such size.
By solicitors, she replied only that she had not been able to secure reasonably priced accommodation in an area in which it would in her opinion be best for their son to grow up.
wife had begun to work again as a beauty therapist, but part time.
In 2006 the wife sold the house in Weybridge at the price for which she had bought it, namely 345,000.
But the sum owing on mortgage had risen by 93,000 to 218,000.
Having received written and oral evidence from the wife, the judge found that she had been unable satisfactorily to explain why the sum owing had increased or in what way the increase had been spent.
Upon the sale of the house in Weybridge the wife bought a flat in Wimbledon for 323,000, with a deposit of 48,000 and a mortgage of 275,000.
The judge therefore calculated that, net of collateral costs of the transactions, about 62,000 of the proceeds of sale had not been used in the purchase of the flat; but he noted that the wife had refurbished it to some extent.
It is clear that, by the time of her purchase of the house in Weybridge, the
In 2007 the wife sold the flat in Wimbledon for 435,000.
The sum then owing on mortgage had risen only marginally, namely to 277,000.
Instead she bought a flat in Battersea for 520,000, with a deposit of 78,000 and a mortgage of 442,000.
The judge therefore calculated that, net of the collateral costs, about 44,000 of the proceeds of sale had not been used in the purchase of the second flat.
It is unclear from his judgment how the wife was able to secure, and then to service, a borrowing as high as 442,000.
In 2009 the wife sold the flat in Battersea for 580,000 and began to rent accommodation.
The judge calculated that, after repaying the mortgage of 442,000 and meeting the collateral costs, the wife received about 120,000 from the proceeds of sale.
Between 2009 and 2015 the wife rented six successive properties in London and Surrey.
By April 2015, when the judge heard the case, the wife had no capital.
On the contrary, she had overdrafts of 4,000, credit card liabilities of 18,000 and a tax liability of about 20,000.
Before the judge were cross applications.
The husband had applied for discharge of the order for periodical payments on his payment to the wife of a modest capital sum, say of 26,000; or for a fixed period to be set on her continued receipt of periodical payments and/or for a downwards variation of their amount.
The wife had cross applied for an upwards variation of their amount.
Both applications were made under section 31(1) of the Matrimonial Causes Act 1973 (the Act).
Section 31(7) provides: In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, [which] shall include any change in any of the matters to which the court was required to have regard when making the order to which the application relates, and (a) in the case of a periodical payments . order made on or after the grant of a decree of divorce . , the court shall consider whether in all the circumstances and after having regard to any such change it would be appropriate to vary the order so that payments under the order are required to be made only for such further period as will in the opinion of the court be sufficient to enable the party in whose favour the order was made to adjust without undue hardship to the termination of those payments; The matters to which the court was required to have regard when making the order in 2002, even though it was made by consent, were those set out in section 25(2) of the Act.
In his judgment, which was reserved, the judge described the wifes oral evidence as not fully satisfactory.
He explained that she had been unable to give him a clear picture of her financial circumstances in the years since 2002; that, apart from her failure to explain the dramatic increase in the size of the mortgage on the house in Weybridge, she had been unable to identify the size of her income from her part time work in the earlier years, first as a beauty therapist and then for an estate agent.
He accepted that between 2004 and 2010 she had undergone no less than seven surgical procedures referable to her gynaecological difficulties and that they had affected her earning capacity at that time.
He found, however, that she had exaggerated the continuing impact, five years later, of those difficulties upon her earning capacity.
In 2010 she had reverted to work as a beauty therapist.
Her accounts for the last available year, namely to April 2014, disclosed an annual income net of tax of about 18,500.
She had then been working about three days each week.
The judge rejected her contention that ill health precluded her from working for a fourth day but accepted that she might not be able to attract the extra clients to occupy it.
He therefore ascribed to her annual net earnings of only 18,500.
The husband contends that it was a somewhat conservative figure; but it is appropriate for an appellate court to adopt it without qualification.
The judge found that the husband, by contrast, gave reliable and truthful evidence in all respects.
He had remarried and was living with his second wife, their nine year old son and an adult step daughter in a house in Guildford in which, subject to a substantial mortgage, he had a half interest.
As in 2002 he had little liquid capital.
The judge studied his earned income from the surveying companies.
They had suffered a reverse in 2012 but had slowly recovered since then and, as the husband frankly conceded at the hearing, they were likely to be thriving by 2025.
The judge ascribed to the husband an existing net annual income of 55,000 inclusive of a small salary which one of the companies chose to pay to his current wife.
It may again have been a somewhat conservative figure; but it is again appropriate for an appellate court to adopt it without qualification.
At the hearing the wifes then counsel put before the judge a breakdown of what he suggested to be the amount of her necessary annual expenditure.
The judge accepted it as very modest.
Exclusive of figures referable to the adult son, the annual total was 35,792, of which 10,200 was for rent.
Following deduction of her earnings of 18,500, the wifes annual need was therefore for 17,292.
But the judges decision was not to vary, whether upwards or downwards, the existing order for periodical payments in the annual sum of 13,200.
In other words he countenanced a shortfall of 4,092 between the wifes annual need and the husbands obligation to meet it.
The answer lies in the judges analysis of the wifes loss of the capital sum which had been awarded to her in 2002.
The judge found that: the award in 2002 would then have enabled the wife to buy a home it had however been reasonable for her to be ambitious and to secure i) free of mortgage; ii) a mortgage for the purchase of the house in Weybridge; iii) thereafter she had not managed her finances wisely; iv) like others at that time, she had committed herself to borrowings which were too high; v) or wanton; vi) but her needs had been augmented by reason of the choices which she had made.
In the light of those findings the judge decided to reject the husbands submission that the wifes need to pay rent of 10,200 should be entirely eliminated from the total annual need which it would be appropriate for him to meet.
Nevertheless it was it would be wrong to describe her approach to finances as profligate fair that the husbands contribution to the wifes needs should not include a full contribution to her housing costs.
If, however arbitrarily, one omits to ascribe any part of the wifes earnings to the payment of rent of 10,200 and treats the rent as entirely subsumed within her residual annual need of 17,292, it is easy to see that the effect of the judges decision to countenance a shortfall from that figure of 4,092 was to oblige the husband to pay 6,108 towards the rent, or 60% of it.
Although the judge had described the wifes schedule of annual needs totalling 35,792 as very modest and indeed as basic, he said that the husbands contribution should do no more than to enable her to meet her bare minimum needs, which, so he therefore implied, were properly to be reflected in an even lower figure.
The wife, he said, will have to adjust her expenditure to live within her means.
The judge found on clear evidence that the husband could afford to continue to make periodical payments in the annual sum of 13,200.
Indeed, although there was no cause for him to make a finding to this effect, it also seems reasonably clear that the husband could have afforded to pay the extra annual sum of 4,092 if it had been otherwise appropriate to order him to do so; it was certainly no part of the judges reasoning that the husband could not have afforded to pay it.
In accordance with his duty the judge then turned to consider the husbands application for him to set a fixed period upon the wifes continued receipt of the periodical payments.
But, applying section 31(7)(a) set out in para 14 above, the judge concluded, unsurprisingly, that he could not identify any fixed period as being sufficient to enable the wife to adjust without undue hardship to their termination.
It followed that the order should continue to require them to be paid on the open ended basis, namely during their joint lives until her remarriage or further order in the interim.
Although the open ended basis does not specify a fixed term for the life of the order, the circumstances which it identifies as bringing it to an end, in particular the potential for a further order ending it at any time, show how misleading (indeed, as the husband himself says, how unattractive) it is for some non lawyers to describe such an order as a meal ticket for life.
Inevitably the judge also concluded that any appropriate capitalisation of periodical payments in that continuing sum and on that continuing basis appeared to be beyond the husbands means.
So the judge dismissed both the husbands application and the wifes cross application.
Both the husband and the wife sought permission from the Court of Appeal to appeal against the respective dismissals of their applications.
The wife secured permission to do so but, in circumstances which rendered him aggrieved but are no longer relevant, the husbands application for permission was not granted likewise but was listed to be heard by the court at the time when it was to hear the wifes substantive appeal.
At the conclusion of the hearing on 1 February 2017 Sir Ernest Ryder gave an impromptu judgment, with which Longmore LJ agreed.
In his judgment Sir Ernest said that i) the judge did not give any reason why any part of the trimmed budget, that is the wifes basic needs budget, should be cut in explanation of why that shortfall should not be met; ii) budget that he, the judge, had accepted in evidence; and iii) his decision that she would have to adjust her expenditure to reduce those needs was a conclusion [which] required reasoning that is not in the judgment.
he did not explain why she should live below the basic needs
So the Court of Appeal allowed the wifes appeal by varying the order for periodical payments upwards from the annual sum of 13,200 to that of 17,292, backdated to the date of the judges judgment.
It refused the husbands application for permission to appeal to it on the ground that his proposed appeal had no prospect of success.
The husband filed a notice of appeal to this court.
He challenged the increase in the order for periodical payments directed by the Court of Appeal.
But he also purported to challenge its refusal to discharge the order for periodical payments; and, alternatively, its refusal to set a fixed period on the wifes continued receipt of them and/or to vary the amount of them downwards.
In these respects he was, however, purporting to challenge the Court of Appeals refusal to permit him to appeal to itself on these grounds and, by section 54(4) of the Access to Justice Act 1999, no appeal can be brought against a refusal of permission.
So the order of this court was to limit its permission for him to appeal to the single ground whether, in light of the fact that provision had already been made for the wifes housing needs in the capital settlement, the Court of Appeal had been entitled to interfere with the judges determination not to make full allowance for her need to pay rent in the continuing order for periodical payments.
Unfortunately the husbands advisers considered that the terms of the limited grant of permission could in some way prove broad enough to enable them to make submissions at the hearing along the wider lines of his impermissible challenge to the Court of Appeals refusal to grant him permission to appeal to it.
So at an early stage of the hearing the court had to re emphasise the limited ambit of its inquiry in this particular case.
With the greatest of respect to the Court of Appeal, and with (I believe) a full appreciation of the heavy work load under which it currently labours, it erred in saying that the judge had given no reason for declining to increase the order for periodical payments so as to enable the wife to meet all her basic needs.
The judge gave a clear reason which is summarised in paras 20 and 21 above.
So the question which the Court of Appeal should have addressed, and which this court should now address, is the question set out in para 1 above.
the Court of Appeal.
First, Pearce v Pearce [2003] EWCA Civ 1054, [2004] 1 WLR 68.
At the time of the original order in 1997 the wife had owned a flat in Chelsea free of mortgage.
Later she sold the flat; depleted the proceeds by an unfortunate speculation in Ireland; and, upon returning to live in London, could only afford to buy a flat in Fulham subject to mortgage.
The original order had also provided for the husband to make periodical payments to the wife; and the subsequent order under appeal in 2003 was to capitalise her entitlement to periodical payments, ie to discharge the order for them upon payment to her by the husband of a lump sum in lieu of them pursuant to section 31(7A) and (7B) of the Act.
The major significance of the decision of the Court of Appeal lies in its approach to the exercise of capitalising an order for periodical payments.
For present purposes, however, its significance lies in its removal of the wifes mortgage repayments from its calculation of the amount of the periodical payments to which, in the absence of capitalisation, she would then have been entitled and therefore of the amount of the lump sum to be paid by the husband in lieu of them.
Thorpe LJ said at para 36 that the judge In addressing the question, the court must consider three earlier decisions of should not have allowed the wife to discharge her mortgage at the husbands expense.
Such an indemnity violates the principle that capital claims compromised in 1997 could not be revisited in 2003.
There is simply no power or discretion to embark on further adjustment of capital to reflect the outcome of unwise or unfortunate investment on one side or prudent or lucky investment on the other.
Second, North v North [2007] EWCA Civ 760, [2007] All ER (D) 386 (Jul).
In 1981 an order by consent had provided the wife with ownership of a mortgage free house in Sheffield and of ground rents which generated a comfortable income for her.
The order had also included provision for the husband to make periodical payments to her in a nominal sum.
In 2000 the wife sold her assets in England and moved to Sydney with relatively disastrous financial consequences, which led her to apply for an upwards variation of the order for periodical payments.
The Court of Appeal set aside an order capitalising her entitlement to them in the sum of 202,000 and, although not visible in the transcript or in the report, apparently substituted a substantially lower figure.
Thorpe LJ said: 32.
In any application under section 31 the Applicants needs are likely to be the dominant or magnetic factor.
But it does not follow that the respondent is inevitably responsible financially for any established needs.
He is not an insurer against all hazards nor, when fairness is the measure, is he necessarily liable for needs created by the applicants financial mismanagement, extravagance or irresponsibility 33.
Thus in the present case the wifes failure to utilise her earning potential, her subsequent abandonment of the secure financial future provided for her by the husband, her choice of a more hazardous future in Australia, together with her lifestyle choices in Australia, were all productive of needs which she had generated and for which the husband should not as a matter of fairness be held responsible in law.
And third, Yates v Yates [2012] EWCA Civ 532, [2013] 2 FLR 1070.
Under a consent order the wife had received a substantial lump sum on the basis that she would use half of it in discharging a mortgage on her home.
In the event she had repaid only part of the mortgage debt and had invested in a non income bearing bond the sum which she had thus elected not to apply to full clearance of the mortgage.
When, later, a judge came to capitalise her right to continuing periodical payments, he included in his calculation of her need the amount of interest payable by her in respect of the residual mortgage debt.
The Court of Appeal held that the inclusion had been wrong.
Thorpe LJ said: Lewison LJ said: 12.
It seems to me little more than common sense that if a recipient of a lump sum twice the size of the mortgage on the final matrimonial home elects to hold back capital made available for the mortgage discharge in order to invest in a bond that bears no income, she cannot look to the payer thereafter for indemnity or contribution to the continuing mortgage interest payments.
That seems to me to be an absolutely self evident point. 21. the need to pay the mortgage at all arose from her own choice not to apply the lump sum in discharging the existing mortgage The financial consequences of her investment choice are her responsibility.
It is wrong in principle for the husband to have to continue to fund the mortgage.
Mr Feehan QC, who, like Ms Dunseath, nobly appears for the wife without fee, seeks to distinguish the mortgage instalments disallowed in the cases of Pearce and Yates from payments of rent.
I see no relevant distinction.
He also submits that, unlike the present case, all three of the decisions concerned the capitalisation of an entitlement to periodical payments and that what was there rightly disallowed was the insinuation into the lump sum thus payable of a sum more reflective of an impermissible second claim for capital provision than of a permissible claim for conversion into capital of an income entitlement.
Mr Feehan relies in particular on the statement of Thorpe LJ in the Pearce case, quoted at para 36 above.
I reject the submission.
As the Court of Appeal valuably established in that case, the first step in the exercise of capitalisation is a calculation of the amount of periodical payments to which, in the absence of capitalisation, the payee would then have been entitled.
It was in the course of making this calculation that in the three decisions the objectionable elements of the claim were disallowed.
Even had there been no capitalisation of the entitlement to periodical payments, those elements would therefore have been disallowed in quantifying the amount of the ongoing order for periodical payments.
The cases of Pearce, North and Yates were correctly decided.
The answer to the question posed in para 1 above is yes.
By its terms that question asks only whether a court would be entitled, rather than obliged, in the circumstances there identified to decline to require the husband to fund payment of the rent.
Its reference to the courts entitlement to do so serves to respect the wide discretion conferred upon it by section 31(1) and (7) of the Act in determining an application for variation of an order for periodical payments.
But, in the passages quoted above, the Court of Appeal has expressed itself in forceful terms; and a court would need to give very good reasons for requiring a spouse to fund payment of the other spouses rent in the circumstances identified by the question.
A spouse may well have an obligation to make provision for the other; but an obligation to duplicate it in such circumstances is most improbable.
The judge was clearly entitled to decline to vary the order for periodical payments so as to require the husband to pay all of the wifes rent.
The order of the Court of Appeal should be set aside and his order restored.
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The Appellant and Respondent are former husband and wife.
They divorced in 2002 after a marriage of approximately fifteen years, and the financial issues in the divorce were resolved by way of a consent order.
Under the terms of that order the wife received 230,000 in settlement of her capital claims against the husband, and it was also agreed that the husband would make periodical payments to her at an annual rate of 13,200.
It was reasonably anticipated by the husband that the wife would use the 230,000 to purchase a suitable home for herself and their son without a mortgage, as the wife had been suffering from ill health which made it difficult for her to work.
In the event, however, the wife did manage to take out a mortgage, and she duly purchased a more expensive home for 345,000.
Between 2002 and 2009 the wife sold and purchased a series of different properties, and with each purchase the amount which she borrowed increased.
In addition, she did not necessarily reinvest all of the sale proceeds from one property into the next and seemingly spent the balance, with the result that the amount of capital she had decreased over time.
Eventually, in 2009 the wife sold her final property and began to rent accommodation.
By April 2015, when the first instance judge heard the case, the wife had no capital, and she had debts of around 42,000.
The hearing before the judge was to determine two cross applications made under s.31(1) of the Matrimonial Causes Act 1973.
The husband had applied for the discharge or downwards variation of the order for periodical payments, whereas the wife had applied for the order for periodical payments to be varied upwards.
In determining the applications the judge noted that there was a shortfall of 4,092 per annum between the wifes current needs and, when coupled with her own earnings, the existing level of the periodical payments.
However, he also held that, although the wifes actions had not been profligate, she had not managed her finances wisely and her current financial needs, in particular her need to pay rent, had been increased by the choices which she had made.
Consequently, the judge considered that it would be unfair to the husband if he had to make a full contribution to the wifes rental costs.
The judge therefore declined to vary the order for periodical payments either upwards or downwards.
This meant that the husband would continue to contribute to around 60% of the wifes rental costs, and the wife would have to adjust her expenditure to accommodate the shortfall.
The wife appealed against this decision to the Court of Appeal, and was successful.
The Court of Appeal considered that the judge had not given sufficient reasons why all of the wifes basic needs should not be met by the periodical payments from the husband, and increased the level of periodical payments to cover her shortfall, i.e. to 17,292.
The husband now appeals against this decision to the Supreme Court.
The Supreme Court unanimously allows the appeal, concluding that the judge was entitled to decline to vary the order for periodical payments so as to require the husband to pay all of the wifes rental costs.
Lord Wilson gives the judgment with which Lady Hale, Lord Carnwath, Lord Hughes and Lord Hodge agree.
The husband was granted permission to appeal to the Supreme Court only on a single ground whether, in light of the fact that provision had already been made for the wifes housing needs in the capital settlement, the Court of Appeal was entitled to interfere with the judges decision not to increase the periodical payments so as to cover all of the wifes current rental costs [32].
The Court of Appeal had erred in saying that the judge had given no reason for declining to increase the order for periodical payments the judge had given a clear reason, namely that the wifes unwise decisions in relation to her capital had increased her basic needs by requiring her to pay rent, and that it was consequently unfair to expect the husband to meet these increased needs in full [33].
The Court of Appeal should have considered the impact of the original capital payment on the wifes current need to pay rent, and this involved a consideration of three earlier Court of Appeal authorities: Pearce v Pearce [2003] EWCA Civ 1054, North v North [2007] EWCA Civ 760, and Yates v Yates [2012] EWCA Civ 532 [34 38].
These cases were correctly decided and in light of this the judge was entitled, although not obliged, to decline to require the husband to fund payment of the rent in full.
This respects the wide discretion conferred upon the court under section 31(1) and (7) of the Matrimonial Causes Act 1973 in determining an application for variation of an order for periodical payments.
Moreover, a court would need to give very good reasons for requiring a spouse to fund payment of the other spouses rent in the circumstances of this case.
A spouse may well be obliged to make provision for the other spouse, but an obligation to duplicate that provision in situations such as this is improbable [40].
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This appeal arises out of the payment of value added tax which was not due, because the supplies in question were exempt from VAT under the relevant EU directive.
At the time of the payment, however, the supplies were treated as taxable by the UKs VAT legislation, which had incorrectly transposed the directive, and were mistakenly believed to be taxable by the customer who paid an amount charged in respect of the tax, the supplier who received that amount, and the Commissioners to whom the supplier accounted for the tax.
As the corollary of the supplies being believed to be taxable, the supplier and the Commissioners also believed that the supplier was entitled to deduct from the tax chargeable on its supplies to customers the tax which it had itself paid on taxable supplies received for the purposes of its business.
It therefore accounted to the Commissioners for the tax chargeable on its supplies during each accounting period on the basis that it could deduct and retain the amount of the tax which it had paid to its own suppliers, and it paid the Commissioners only the remaining surplus, if any.
In that situation, does the customer have a common law claim against the Commissioners for restitution, or is he confined to a claim against the supplier? If he has a claim against the Commissioners, is it for the entire amount which he paid to the supplier, or only for the amount, if any, which the Commissioners received from the supplier? Does it make a difference if any claim for restitution by the supplier against the Commissioners is time barred? Does it make a difference if there is a statutory scheme under which the customer can obtain reimbursement of the amount which the supplier paid to the Commissioners, but not of any amount which was retained by the supplier? Furthermore, if the statutory scheme has the effect of excluding a common law claim by the customer against the Commissioners, is that compatible with EU law? These are the principal issues which the court has to decide.
The factual background
The claimants are investment trust companies (ITCs).
They are closed ended investment funds constituted as limited companies: that is to say, the companies were established with a fixed number of issued shares and a term date when the company would be wound up and the assets distributed to the shareholders.
They have now reached their term dates and are in winding up.
The claims of three of the ITCs (the Lead Claimants) have been taken forward as lead claims while the others are stayed to await the outcome of these proceedings.
The Lead Claimants are Kleinwort Overseas Investment Trust plc, F&C Income Growth Investment Trust plc, and M&G Recovery Investment Trust plc.
They will be referred to respectively as the Kleinwort Trust, the F&C Trust and the M&G Trust.
Between 1992 and 2002 the Lead Claimants received supplies of investment management services from their investment managers (the Managers).
Those were respectively Kleinwort Benson Investment Management Ltd, F&C Asset Management Ltd and M&G Investment Management Ltd. Their services were rendered under contracts which provided for the Managers to be paid fees plus VAT if applicable (or words to similar effect).
Under the provisions of the UK VAT legislation then in force, those services, unlike the other investment management services provided by the Managers, did not qualify for exemption.
The Managers therefore charged VAT on the supplies of their services.
The VAT charges were separately identified on the VAT invoices issued to the Lead Claimants, and the Lead Claimants paid the amounts charged.
The Managers were obliged to account to the Commissioners for the VAT due in respect of their chargeable supplies during each accounting period.
It is relevant to note that the obligation to account for tax arises whether or not tax is charged on the supply or paid by the customer: it is the supplier, rather than the customer, who is under a liability to the Commissioners, and it is the supply, rather than payment by the customer, which triggers the suppliers liability.
The customers liability to pay an amount in respect of the tax rests upon contract.
The Managers obligation to account for the tax due did not, however, mean that they were obliged to pay the Commissioners the whole of, or indeed any part of, the sums they received from the Lead Claimants.
Under general principles of VAT law, they were entitled to deduct from the tax chargeable in respect of any taxable supplies they had made, known as output tax, the tax chargeable in respect of any taxable supplies which they had received for the purpose of their business of making taxable supplies, known as input tax.
It therefore followed from the legislative treatment of the services supplied to the Lead Claimants as taxable, that the Managers were understood to be entitled to pay to the Commissioners only the surplus of their output tax over their input tax, and to retain the balance of the output tax in their own hands.
If the input tax exceeded the output tax, they were entitled to a credit, which could be paid by the Commissioners or carried forward to later accounting periods.
Thus, for example, if a Manager made taxable supplies to an ITC, and the VAT chargeable on those supplies was 100, then the Manager was bound to account to the Commissioners for 100.
If the Manager had purchased taxable supplies during the relevant period on which the VAT was 25, the Manager was entitled to credit for that 25, and was required to pay the Commissioners only the balance of 75.
It was also possible for an ITC to be registered for VAT (if it invested in securities outside the EU), and in that event to recover, as input tax, some of the VAT which it had paid to its Manager.
The F&C Trust and the M&G Trust made no such supplies, but the Kleinwort Trust did, and recovered 58.4% of the VAT charged by its Manager (that being the percentage of its portfolio which was invested outside the EU).
Its claim against the Commissioners has therefore been adjusted to take account of the sums which it has already recovered as input tax: rather than claiming every 100 which it paid to its Manager in respect of VAT, it claims 41.60, being the difference between the 100 and the 58.40 which it recovered as input tax.
The essential pattern was therefore as follows: 1.
The Managers supplied investment management services to the Lead Claimants under contracts providing for the payment of fees plus VAT if applicable. 2.
The Managers charged the Lead Claimants VAT on the supply of those services, and included the VAT charges on the invoices which they issued to the Lead Claimants. 3.
The Lead Claimants paid the invoices.
They might or might not be able to recover some of the VAT as input tax. 4.
The Managers made periodic VAT returns in which they: accounted for the VAT chargeable on their supplies of (i) investment management services as output tax; (ii) deducted as input tax the VAT which they had paid to third parties for supplies received in the course of their business; and (iii) paid the difference between their output tax and input tax to the Commissioners.
It transpired that the supplies of the investment management services were exempt from VAT under article 13B(d)(6) of the Sixth VAT Directive (77/388/EEC).
That was established by the European Court of Justice in JP Morgan Fleming Claverhouse Investment Trust plc v Revenue and Customs Comrs (Case C 363/05) [2007] ECR 1 5517.
Although the UK failed to transpose article 13B(d)(6) correctly into national legislation until 1 October 2008, it had direct effect at all material times.
It is therefore common ground between the parties that the Lead Claimants paid the Managers the amounts they did in respect of VAT, and that the Managers accounted for VAT to the Commissioners, under a mistake of law.
The Managers claims against the Commissioners
In early 2004, when the Claverhouse litigation began and was publicised, the Managers of the F&C Trust and the M&G Trust made claims to the Commissioners under section 80 of the Value Added Tax Act 1994 for refunds in respect of VAT accounting periods from 2001 to 2004.
It will be necessary to return to section 80, the material provisions of which are set out in para 75 below.
Claims were not made in relation to earlier accounting periods because of the three year limitation period imposed by section 80(4).
For the same reason, no claim was made by the Managers of the Kleinwort Trust, which had gone into winding up in 1998.
Following the Claverhouse judgment, the Commissioners allowed the claims and repaid the relevant amounts (as will be explained shortly) to the Managers, with interest.
In accordance with section 80, and regulations made pursuant to section 80A, the Commissioners required the Managers to enter into approved reimbursement arrangements with the Lead Claimants, so that the refunded VAT and interest were passed on by the Managers to them.
Subsequently, the decision of the House of Lords in Fleming (trading as Bodycraft) v Revenue and Customs Comrs [2008] UKHL 2; [2008] 1 WLR 195 established that the retrospective manner in which the three year limitation period had been introduced (by an amendment to the 1994 Act, effected by the Finance Act 1997, which reduced the previous period) was incompatible with EU law, and that the time bar had to be disapplied in respect of rights which had accrued before it came into effect on 4 December 1996.
The Managers then made further claims in respect of accounting periods ending before that date.
These claims were again allowed, with interest, and the appropriate repayments were made to the Managers, who in turn passed them on to the Lead Claimants.
As a result of these arrangements, the Lead Claimants were refunded the VAT which they had paid to the Managers, subject to two exceptions.
First, the Managers were unable to make claims in respect of accounting periods ending on or after 4 December 1996 which were time barred under section 80(4).
In practice, that meant that claims could not be made by the Managers of the Kleinwort Trust in relation to accounting periods ending between 4 December 1996 and 20 March 1998, when the Kleinwort Trust went into liquidation.
The corresponding periods in relation to the F&C Trust and the M&G Trust ended on 6 and 1 April 2001 respectively.
Those periods have been referred to in these proceedings as the dead periods.
It is common ground that the limitation period in section 80(4) is compatible with EU law.
Secondly, the amounts repaid to the Managers were calculated on the basis that, under section 80(2A), it was necessary to set against the output tax for which they had accounted, the amount of the input tax which they had deducted.
It is a matter of agreement that that was the correct approach to the application of section 80.
In the illustrative example given in para 6 above, that means that the Managers were entitled to repayment of the 75 which they had paid to the Commissioners, but not of the 25 which they had retained in their own hands.
It is a matter of agreement that, although the Managers were only entitled under section 80 to reimbursement of the notional 75, the Commissioners could have made the refunds conditional on the Managers undertaking to repay to the Lead Claimants the full amount which they had been mistakenly charged (ie, the notional 100).
It is agreed that the Commissioners did not do so because they accepted the Managers assertion that, if they had known that the input tax was non deductible, they would have passed on that cost to the Lead Claimants by charging a higher price for their services.
In the present proceedings, however, it is accepted that that assertion was erroneous: had the true position been known, the Managers would not have sought to increase the price of their services to the Lead Claimants.
Instead, as Henderson J found after trial, they would have absorbed the input tax as a business expense.
In the event, the notional 25 was later refunded to the Kleinwort Trust and the F&C Trust by their respective Managers, but it was not refunded to the M&G Trust.
The proceedings below
The ITCs brought proceedings against the Commissioners in which they sought payment of the amounts which had been paid by them to their managers, to the extent that they had not been recovered under the statutory scheme established by section 80 or otherwise: in other words, the amounts which the managers could not claim because any claim would be time barred, and the amounts which the managers had not paid to the Commissioners but had retained and set against input tax (unless those amounts had been refunded to the ITC in question by its manager).
The ITCs claims were based on unjust enrichment, or alternatively on EU law.
The claims of the Lead Claimants proceeded to a trial on liability.
After trial, the judge held [2012] EWHC 458 (Ch): 1.
That, using the notional figures referred to above, the Commissioners had been enriched in the full amount of 100, even if only 75 was paid to them by a Manager after deducting 25 in respect of input tax paid to its own suppliers.
In the judges view, although the 25 was not paid to the Commissioners, it was nevertheless used by the Commissioners to give the Managers a credit for that input tax. 2.
That the Commissioners were enriched at the expense of the Lead Claimants because, in economic terms, the person at whose expense the VAT was paid was the customer.
The enrichment was also unjust. 3.
That a cause of action in unjust enrichment was, however, excluded under domestic law by section 80(7) of the 1994 Act, which protects the Commissioners from liability other than as provided in that section. 4.
That the Lead Claimants had a directly effective right to repayment against the Commissioners under EU law, which required a remedy to be made available in respect of the full notional 100, not merely the 75. 5.
That EU law did not, on the other hand, require national law to give the Lead Claimants any remedy in respect of amounts falling within the scope of the time bar imposed by section 80(4).
Any EU based claims would be subject (in effect) to the same limitation period.
In a subsequent judgment [2013] EWHC 665 (Ch), which had been deferred pending the decision of this court in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2012] UKSC 19; [2012] 2 AC 337, and the judgment of the Court of Justice in Littlewoods Retail Ltd v Revenue and Customs Comrs (Case C 591/10) [2012] STC 1714, the judge further held that the Lead Claimants had no Woolwich claim under English law for unlawfully levied tax (ie a claim based on the principle established in Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70), and that EU law required section 80(7) to be disapplied, so as to permit a mistake based restitutionary claim.
It is unnecessary to consider the Woolwich issue further, as the point has not been pursued in the present appeal.
In the light of these conclusions, the judge gave judgment for the M&G Trust in respect of the notional 25 (defined as the difference between the amounts paid by the M&G Trust to its Manager as VAT and the amount of the refunds it received from its Manager, and also as equalling the input tax brought into account by its Manager) for periods outside the dead period, and dismissed the claims in relation to the dead periods (the dead period in relation to each claimant being the period for which its Manager was unable, for reasons of limitation, to make a claim under section 80).
The Lead Claimants appealed against the first judgment on the grounds that the judge was wrong to conclude (i) that a cause of action in unjust enrichment against the Commissioners was excluded by section 80(7) of the 1994 Act, and (ii) that the Lead Claimants had no claim under EU law to VAT paid in respect of the dead periods.
The Commissioners also appealed against the first judgment on the ground that the judge was wrong to conclude that the M&G Trust had a directly effective EU law right to recover from the Commissioners the 25 element of its claim for accounting periods outside the dead period, and they appealed against the second judgment on the ground that the judge had erred in holding that section 80(7) was to be disapplied.
The Court of Appeal (Moore Bick, Patten and Beatson LJJ) [2015] EWCA Civ 82 allowed both parties appeals.
It held: 1.
That the judge had been right to conclude that the Lead Claimants had a direct cause of action in unjust enrichment against the Commissioners for VAT paid under a mistake of law. 2.
That he had been wrong to treat this cause of action as excluded by section 80(7). 3.
That he had been wrong to conclude that the notional 25 retained by the Managers represented the discharge of any subsisting obligation to refund that amount on the part of the Commissioners, and that, accordingly, the Commissioners could not have been enriched by more than the notional 75 for any of the accounting periods in question.
Any domestic claim in unjust enrichment for the notional 25 lay against the Managers alone. 4.
That the Lead Claimants had no direct claim against the Commissioners for the notional 25 under EU law, given the claim they had in that amount against the Managers.
The Court of Appeal therefore allowed the Lead Claimants appeal, to the extent of the notional 75 paid in respect of dead periods, and allowed the Commissioners appeal in respect of the notional 25.
In this appeal by the Commissioners against the decision of the Court of Appeal (in respect of the notional 75 paid in respect of dead periods), and cross appeal by the Lead Claimants (in respect of the notional 25), there are three key questions.
First, did the Lead Claimants have a common law claim against the Commissioners in principle, subject to any statutory exclusion of such a claim? Secondly, if so, did section 80 of the 1994 Act bar such a claim? Thirdly, if the Lead Claimants have no claim against the Commissioners, either because no such claim is recognised at common law or because a common law claim is barred by section 80, is that compatible with EU law?
The common law claim
The Lead Claimants argue that customers who pay undue VAT charged by their supplier have a claim against the Commissioners based on unjust enrichment, unless such a claim is excluded by statute.
The first question is whether that is correct.
If not, that in itself provides an answer to the claims made in these proceedings, subject to any issue arising under EU law.
In answering the question, both parties followed the approach adopted by Lord Steyn in Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221, 227, and asked: (a) Has the defendant been benefited, in the sense of being enriched? (b) Was the enrichment at the claimants expense? (c) Was the enrichment unjust? (d) Are there any defences? Were the Commissioners enriched?
There is no dispute that the Commissioners were enriched to the extent of the notional 75.
What is in dispute is whether they were also enriched to the extent of the notional 25 which they did not receive.
The judge held that they were.
Although the 25 was not paid to the Commissioners by the Managers, it enriched the Commissioners, in his view, by being set against the input tax which the Commissioners would otherwise have been obliged to pay or credit to the Managers: that is to say, the tax which the Managers had paid on the goods and services supplied to them for the purposes of their business of supplying investment services.
The Court of Appeal considered this reasoning to be fallacious on the basis that if the supply of services by the Managers was not taxable, then the Managers had no right to deduct as input tax the VAT which they had paid to their own suppliers.
The Managers retained the notional 25 in satisfaction of what the court regarded as a purported obligation, on the part of the Commissioners, which never existed.
The Commissioners did not, therefore, benefit from the Lead Claimants payment of the notional 25.
An order compelling them to pay that amount to the Lead Claimants would not reverse an enrichment but leave them worse off, having received 75 and made restitution of 100.
Any claim to restitution of the 25 should therefore have been directed against the Managers.
In this appeal, counsel for the Lead Claimants argued that when the 25 was paid to the Managers, the position under the applicable UK legislation was that the Managers were entitled to deduct their input tax in satisfaction of an obligation owed to them by the Commissioners.
They continued to be entitled to account to the Commissioners for VAT, notwithstanding that it was not lawfully due under EU law, and therefore remained entitled to claim reimbursement in respect of input tax, until the position under UK law was changed: Becker v Finanzamt Mnster Innenstadt (Case C 8/81) [1982] ECR 53; VDP Dental Laboratory NV v Staatsecretaris van Financin (Joined Cases C 144/13, C 154/13 and C 160/13) [2015] STC 1133.
The Court of Justice had rejected the argument that a domestic levy which was incompatible with EU law was to be treated as having never existed: Ministero delle Finanze v IN CO GE90 Srl (Joined Cases C 10/97 to C 22/97) [1998] ECR I 6307.
I am unable to accept this argument.
The case of Ministero delle Finanze v IN CO GE90 Srl merely establishes that national legislation which is incompatible with EU law, although inapplicable in so far as it is incompatible, is not a nullity for all purposes.
The case concerned claims for the repayment of a charge which had been levied under Italian legislation which was inconsistent with EU law.
A preliminary issue before the national court was whether the claims fell within its jurisdiction: an issue which turned on whether they were of a fiscal or a civil nature.
The question which troubled the national court was whether, in deciding that issue, it should treat the national legislation as set aside in its entirety, or whether it could have regard to the legislation for the purpose of characterising the nature of the relationship between the parties at the time when the contested amounts were paid.
The Court of Justice held that, subject to compliance with the principles of non discrimination and effectiveness, the detailed rules which applied for the repayment of a charge, and the classification for that purpose of the legal relationship established when the charge was levied, were matters to be determined under national law (para 26).
The cases of Becker and VDP Dental Laboratory are more directly in point.
In the former case, VAT had been levied under domestic law in respect of services which were exempt under the relevant directive, and an issue was raised as to the consequences of granting the exemption retrospectively after the mistake was discovered.
In the course of its judgment, the Court of Justice stated that, by availing themselves of an exemption from VAT, persons entitled to the exemption necessarily waived the right to claim a deduction in respect of input tax (para 44).
An analogous conclusion was reached in the VDP Dental Laboratory case, where an exemption provided for under national law was incompatible with the relevant VAT directive.
The court held that the taxable person was not entitled both to benefit from the exemption and to exercise the right to deduct input tax (para 40).
It follows from these authorities that the Managers could not both claim reimbursement of the output tax which they had paid to the Commissioners, under section 80 of the 1994 Act, on the basis that their supplies were exempt from VAT, and simultaneously assert an entitlement to retain the amounts which they had deducted as input tax, on the basis that their supplies were taxable.
The Commissioners were not, therefore, enriched by the Managers retention of the notional 25, and the Managers have, in principle, no defence to a claim by the Lead Claimants for the restitution of that amount.
That conclusion is as one would expect.
The Lead Claimants claim to restitution against the Commissioners proceeds on the basis that the supplies which they received from the Managers were exempt from VAT.
That being so, it would be surprising if they could present that claim, in relation to the measure of restitution, on a basis which was predicated on the supplies being taxable.
notional 75.
Was the enrichment at the Lead Claimants expense?
There is no doubt that, in economic terms, the Commissioners were enriched at the expense of the Lead Claimants.
On the mistaken premise that the supplies were taxable, the Lead Claimants were charged tax by the Managers, and paid it to them in accordance with their contract.
On the same premise, the Managers were obliged to account to the Commissioners for the tax chargeable on their supplies, and to pay them the output tax in respect of each accounting period, after deducting their input tax.
The net result of the mistake was that the Lead Claimants were worse off by the amount of the Managers output tax, and the Commissioners were better off to the extent that that amount exceeded the Managers input tax.
It follows that the Commissioners enrichment was only to the extent of the
As the judge noted, however, no payment was made by the Lead Claimants to the Commissioners.
Nor were the Managers simply a conduit or, in legal terms, an agent for payment by the Lead Claimants to the Commissioners.
The Lead Claimants owed no money to the Commissioners.
Furthermore, the payment of the tax element of the invoices submitted by the Managers to the Lead Claimants was not the cause of the payment of tax by the Managers to the Commissioners: as explained earlier, the Managers were liable to account for tax to the Commissioners once they had supplied the relevant services.
As the judge found, it could not be said that the tax would not have been paid but for the payments by the Lead Claimants to the Managers.
In these circumstances, it was argued, the Lead Claimants remedy lay against the Managers, as the recipients of the mistaken payments which they had made, leaving it to the Managers to recover from the Commissioners any amount which they had mistakenly paid to them in accordance with the legislation.
After considering the limited guidance provided by the modern English authorities, and English academic opinion, the judge concluded that, as a general rule, a defendant was legally enriched at the expense of the person from whom the benefit in question was directly received.
There were, however, exceptions to that general rule.
Without attempting to be exhaustive, he listed a number of relevant criteria for identifying such exceptions, which he derived from the authorities: put shortly, the need for a close causal connection between the payment (or other provision of a benefit) by the claimant and the enrichment of the defendant, the need to avoid the risk of double recovery, the need to avoid conflict with contracts between the parties, and the need to distinguish between unjust enrichment and compensation or damages.
Applying that approach, he regarded the present case as exceptional.
First, to allow the Lead Claimants to recover from the Commissioners would not, in his view, involve any risk of double recovery, as any claim against the Managers would face a cast iron defence of change of position, since they had accounted to the Commissioners for the entirety of the tax and retained no benefit for themselves (this reasoning mistakenly presumed that the Managers were entitled to retain the notional 25, as deductible input tax, and that the notional 75 was irrecoverable by the Managers from the Commissioners).
Secondly, it would not undermine or conflict with the contract between the Lead Claimants and the Managers, which had provided for the payment of VAT if applicable.
Thirdly, notwithstanding the absence of a strict causal connection between the payments by the Lead Claimants and the enrichment of the Commissioners, the nexus created by the VAT system between the consumer and the Commissioners could, in his view, hardly be closer or stronger as a matter of commercial reality.
In that regard, the judge referred at para 49 to the statements of the Court of Justice in Elida Gibbs Ltd v Customs and Excise Comrs (Case C 317/94) [1996] ECR I 5339; [1997] QB 499, that the basic principle of the VAT system is that it is intended to tax only the final consumer (para 19), and that the taxable persons collect the tax on behalf of the tax authorities and account for it to them (para 22).
In his view, cases concerned with subrogation showed that the at the expense of requirement could be satisfied by reference to the underlying commercial reality of a transaction (para 72).
By the time this case came before the Court of Appeal, the approach adopted by the judge had already been approved by that court in three decisions: Menelaou v Bank of Cyprus UK Ltd [2013] EWCA Civ 1960, [2014] 1 WLR 854; TFL Management Services Ltd v Lloyds TSB Bank plc [2013] EWCA Civ 1415, [2014] 1 WLR 2006; and Relfo Ltd v Varsani (No 2) [2014] EWCA Civ 360; [2015] BCLC 14.
It was also endorsed by the Court of Appeal in the present case.
The court noted that the judge had been mistaken in thinking that the Managers would have a defence to a direct claim by the Lead Claimants, so far as the notional 25 was concerned.
It nevertheless agreed with his conclusion that, in the context of VAT, the final consumer who paid the tax had a sufficient economic connection with the Commissioners to be able to say that they had been enriched at his expense when the tax ought never to have been imposed on the services which were supplied.
General discussion
Decisions concerning the question whether an enrichment was at the expense of the claimant demonstrate uncertainty as to the approach which should be adopted.
Such tests as have been suggested have been too vague to provide clarity.
For example, in Menelaou v Bank of Cyprus UK Ltd [2015] UKSC 66; [2016] AC 176, Lord Clarke of Stone cum Ebony said at para 27, with the agreement of Lord Neuberger of Abbotsbury, Lord Kerr of Tonaghmore and Lord Wilson, that the question in each case is whether there is a sufficient causal connection, in the sense of a sufficient nexus or link, between the loss to the bank and the benefit received by the defendant.
This leaves unanswered the critical question, namely, what connection, nexus or link is sufficient? The same can be said of Arden LJs statement in Relfo that there must be a sufficient link (para 95), Floyd LJs reference in the same case to proximity (para 110), and the Court of Appeals finding in the present case that there was a sufficient economic connection (para 67).
It would be unwise to attempt in this appeal to arrive at a definitive statement of the circumstances in which the enrichment of a defendant can be said to be at the expense of the claimant.
Nevertheless, in view of the uncertainty which has resulted from the use of vague and generalised language, this court has a responsibility to establish more precise criteria.
Some observations of a general nature should therefore be made, before turning to the specific context in which the issue arises in the present case.
It should be said at the outset that these observations are concerned only with personal claims, and not with proprietary claims.
First, it is important, when dealing with personal claims based on unjust enrichment, to bear in mind what was said by Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, 578, when rejecting a submission that, when dealing with a claim to restitution based on unjust enrichment, it was for the court to consider the question of injustice or unfairness on broad grounds, and that it should deny recovery if it thought that it would be unjust or unfair to hold the defendant liable: The recovery of money in restitution is not, as a general rule, a matter of discretion for the court.
A claim to recover money at common law is made as a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle.
As Lord Steyn remarked in Banque Financire, unjust enrichment ranks next to contract and tort as part of the law of obligations (p 227).
A claim based on unjust enrichment does not create a judicial licence to meet the perceived requirements of fairness on a case by case basis: legal rights arising from unjust enrichment should be determined by rules of law which are ascertainable and consistently applied.
Without going as far as Scrutton LJ, who described the legacy of Moses v Macferlan (1760) 2 Burr 1005 as a history of well meaning sloppiness of thought (Holt v Markham [1923] 1 KB 504, 513), McLachlin J rightly cautioned against the tendency to view the action for unjust enrichment as a device for doing whatever may seem fair between the parties: Peter v Beblow (1993) 1 SCR 980, 988.
Secondly, the adoption of the concept of unjust enrichment in the modern law, as a unifying principle underlying a number of different types of claim, does not provide the courts with a tabula rasa, entitling them to disregard or distinguish all authorities pre dating Lipkin Gorman.
The point is illustrated by the judgment of Floyd LJ in TFL, where the decision in Ruabon Steamship Co Ltd v London Assurance [1900] AC 6 was put to one side on the basis that the House of Lords was not looking at the case through the eyes of the modern law of unjust enrichment (para 39).
Although judicial reasoning based on modern theories of unjust enrichment is in some respects relatively novel, there are centuries worth of relevant authorities, whose value should not be underestimated.
The wisdom of our predecessors is a valuable resource, and the doctrine of precedent continues to apply.
The courts should not be reinventing the wheel.
Thirdly, as the judge observed in the present case, in remarks with which Lord Clarke expressed agreement in Menelaou (para 19), Lord Steyns four questions are no more than broad headings for ease of exposition.
They are intended to ensure a structured approach to the analysis of unjust enrichment, by identifying the essential elements in broad terms.
If they are not separately considered and answered, there is a risk that courts will resort to an unstructured approach driven by perceptions of fairness, with consequent uncertainty and unpredictability.
At the same time, the questions are not themselves legal tests, but are signposts towards areas of inquiry involving a number of distinct legal requirements.
In particular, the words at the expense of do not express a legal test; and a test cannot be derived by exegesis of those words, as if they were the words of a statute.
The structured approach provided by the four questions does not, therefore, dispense with the necessity for a careful legal analysis of individual cases.
In carrying out that analysis, it is important to have at the forefront of ones mind the purpose of the law of unjust enrichment.
As was recognised in Menelaou (para 23), it is designed to correct normatively defective transfers of value, usually by restoring the parties to their pre transfer positions.
It reflects an Aristotelian conception of justice as the restoration of a balance or equilibrium which has been disrupted.
That is why restitution is usually the appropriate remedy.
The nature of the various legal requirements indicated by the at the expense of question follows from that principle of corrective justice.
They are designed to ensure that there has been a transfer of value, of a kind which may have been normatively defective: that is to say, defective in a way which is recognised by the law of unjust enrichment (for example, because of a failure of the basis on which the benefit was conferred).
The expression transfer of value is, however, also too general to serve as a legal test.
More precisely, it means in the first place that the defendant has received a benefit from the claimant.
But that is not in itself enough.
The reversal of unjust enrichment, usually by a restitutionary remedy, is premised on the claimants also having suffered a loss through his provision of the benefit.
This was recognised in Menelaou, as was noted in para 37 above.
It was explained more fully by Lord Clyde in Banque Financire, citing a maxim of Pomponius: My Lords, the basis for the appellants claim is to be found in the principle of unjust enrichment, a principle more fully expressed in the Latin formulation, nemo debet locupletari aliena jactura [no one should be enriched by anothers loss] .
Without attempting any comprehensive analysis, it seems to me that the principle 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. (p 237)
It should be emphasised that there need not be a loss in the same sense as in the law of damages: restitution is not a compensatory remedy.
For that reason, some commentators have preferred to use different terms, referring for example to a subtraction from, or diminution in, the claimants wealth, or simply to a transfer of value.
But the word loss is used in the authorities, and it is perfectly apposite, provided it is understood that it does not bear the same meaning as in the law of damages.
The loss to the claimant may, for example, be incurred through the gratuitous provision of services which could otherwise have been provided for reward, where there was no intention of donation.
In such a situation, the claimant has given up something of economic value through the provision of the benefit, and has in that sense incurred a loss.
Direct and indirect provision of a benefit
Situations in which the defendant has received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit, usually arise where the parties have dealt directly with one another, or with one anothers property.
Common examples are the gratuitous payment of money, or provision of goods or services, by the claimant to the defendant, where there was no intention of donation.
In such a situation, if the enrichment of the defendant is unjust if, in other words, the transfer of value is defective in a sense recognised by the law of unjust enrichment then the claimant is prima facie entitled to have the enrichment reversed.
There are, however, situations in which the parties have not dealt directly with one another, or with one anothers property, but in which the defendant has nevertheless received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit.
These are generally situations in which the difference from the direct provision of a benefit by the claimant to the defendant is more apparent than real.
One such situation is where the agent of one of the parties is interposed between them.
In that situation, the agent is the proxy of his principal, by virtue of the law of agency.
The series of transactions between the claimant and the agent, and between the agent and the defendant, is therefore legally equivalent to a transaction directly between the claimant and the defendant.
Similarly, where the right to restitution is assigned, as in Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498; 86 AJLR 296, the claimant stands in the shoes of the assignor, and is therefore treated as if he had been a party to the relevant transaction, and the defendants enrichment had been directly at his expense.
Another situation is where, as in Relfo, an intervening transaction is found to be a sham (para 121).
Since the sham is created precisely in order to conceal the connection between the claimant and the defendant, it is disregarded when deciding whether the latter was enriched at the formers expense.
So, in Relfo, Gloster and Floyd LJJ described the arrangements in question as being equivalent to a direct payment (paras 103 and 115).
There have also been cases, discussed below, in which a set of co ordinated transactions has been treated as forming a single scheme or transaction for the purpose of the at the expense of inquiry, on the basis that to consider each individual transaction separately would be unrealistic.
There are also situations where the defendant receives property from a third party into which the claimant can trace an interest.
Since the property is, in law, the equivalent of the claimants property, the defendant is therefore treated as if he had received the claimants property.
A different type of situation is typified by the case where the claimant discharges a debt owed by the defendant to a third party.
Although it is the third party creditor who receives the payment from the claimant, the defendant is directly enriched, since the payment discharges his debt: the enrichment is not the payment which the third party receives, but the discharge which the defendant receives.
Where the transfer of value is defective, and the enrichment is consequently unjust, the law reverses it, as far as possible, by subrogating the claimant to the rights formerly held by the third party (as was explained, for example, by Walton J in Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648, 1652).
There are many variations on the type of situation where equitable subrogation is an appropriate remedy to reverse or prevent unjust enrichment.
The remedy differs from restitution, in that it does not have the effect of restoring the parties to their pre transfer positions, but it is the most practicable means of reversing or preventing unjust enrichment in the types of situation where it is appropriate.
It has often been suggested that there is a general rule, possibly subject to exceptions, that the claimant must have directly provided a benefit to the defendant.
The situations discussed in the two preceding paragraphs can be reconciled with such a rule, if it is understood as encompassing a number of situations which, for the purposes of the rule, the law treats as equivalent to a direct transfer, in the sense that there is no substantive or real difference.
So understood, the suggested rule is helpful.
It may nevertheless require refinement to accommodate other apparent exceptions, and it would be unwise at this stage of the laws development to exclude the possibility of genuine exceptions, or to rule out other possible approaches.
Where, on the other hand, the defendant has not received a benefit directly from the claimant, no question of agency arises, and the benefit does not consist of property in which the claimant has or can trace an interest, it is generally difficult to maintain that the defendant has been enriched at the claimants expense.
The point is illustrated by the case of MacDonald Dickens & Macklin v Costello [2011] EWCA Civ 930; [2012] QB 244, where the provision of services to a company was held not to enrich its directors and shareholders.
It is also illustrated by the example, discussed in Relfo, of a claimant who makes a mistaken payment to a third party, who in consequence makes a gift to the defendant out of property in which the claimant has no interest, and into which he is unable to trace.
As Arden and Floyd LJJ recognised (paras 78 and 114), the claimant does not have a claim in unjust enrichment against the defendant.
The claimant suffers a loss through making the payment to the third party, who is unjustly enriched at his expense.
A claim in unjust enrichment therefore lies against the third party (subject to any defences available).
But no claim of a personal nature lies at the instance of the claimant against the defendant: the claimant has not incurred any loss through the making of the gift.
Incidental benefits
As explained earlier, the at the expense of requirement is not satisfied merely by the direct receipt of a benefit.
The claimant must also incur a loss through the provision of the benefit.
As Lord Clyde put it in Banque Financire, in the passage cited at para 44 above, the plaintiff should have sustained a loss through the provision of something for the benefit of some other person.
That requirement will not normally be satisfied where the provision of the benefit was merely an incidental or collateral result of his expenditure. (In practice, situations where the defendant has received a benefit merely as an incidental consequence of the claimants pursuit of some other objective are also often situations in which the enrichment of the defendant is not in any event unjust.) In such a situation, the claimant may have received the consideration for which he bargained as the counterpart of his own expenditure, and in that event will not usually have suffered any loss.
Even if he has incurred a loss, it will not normally have arisen through his provision of something for the benefit of the defendant, since the benefit received by the defendant will have been merely incidental or collateral to the reason why the expenditure was incurred.
A but for causal connection between the claimants being worse off and the defendants being better off is not, therefore, sufficient in itself to constitute a transfer of value.
The need for the claimant to suffer a loss through the provision of something for the benefit of the defendant is illustrated by the Ruabon case, which concerned a ship which had been damaged during a voyage covered by a policy of marine insurance.
She was put into dry dock for repairs at the expense of the insurers.
The owners took advantage of her being in dry dock to have her surveyed for the purpose of renewing her Lloyds classification.
There was no consequent increase in dock expenses.
Even if the insurers might be regarded as having provided a benefit to the owners (by enabling them to have the vessel surveyed without themselves incurring the expense of putting her into dry dock), the insurers incurred no loss through the provision of that benefit: their expenses were not increased, and they received the consideration for which they had paid.
The insurers claim for a contribution towards their expenses, on the basis that the owners had benefited from it, was rejected.
Lord Macnaghten put the point in a nutshell: there is no principle of law which requires that a person should contribute to an outlay merely because he has derived a material benefit from it (p 15).
The Earl of Halsbury LC, in a speech with which the other members of the Committee agreed, emphasised the fact that the owners were strangers to the exercise undertaken by the insurers, and the absence in those circumstances of any reason why, in justice, they should contribute towards its cost: [T]his is the first time in which it has been sought to advance that principle [of contribution] where there is nothing in common between the two persons, except that one person has taken advantage of something that another person has done, there being no contract between them, there being no obligation by which each of them is bound, and the duty to contribute is alleged to arise only on some general principle of justice, that a man ought not to get an advantage unless he pays for it.
So that if a man were to cut down a wood which obscured his neighbour's prospect and gave him a better view, he ought upon this principle to be compelled to contribute to cutting down the wood. (p 12) The Lord Chancellors example did not involve anything which might have been argued to be an unjust factor, but the position would scarcely be different if it had: if, for example, the man had cut down the wood in the mistaken belief that the trees were diseased.
Another illustration of the need for a loss to be incurred through the provision of the benefit, also cited to the Court of Appeal in the TFL case, is the case of Edinburgh and District Tramways Co Ltd v Courtenay 1909 SC 99.
It concerned a contract between a tramway company and an advertising firm, under which the firm paid a rental for the right to display advertising on the tramcars.
It was up to the firm to provide the boards around the upper deck of the tramcars, on which the advertisements were displayed.
The tramway company subsequently constructed new tramcars with decency boards already supplied, saving the advertising firm the expense of fitting its own.
The tramway companys claim against the advertising firm for the cost of fitting the decency boards was rejected, on the ground that the tramway company had not incurred any loss through the provision of the benefit.
Lord President Dunedin observed that there are certain marks or notes of the situation in which recompense is due, and I think that one mark or note is that the person who claims recompense must have lost something (pp 105 106).
The Lord President also emphasised that the company had been acting for its own purposes.
Referring to earlier authorities, he remarked that in the case at hand you have the same element that went to the decision of some of these eases, that the thing done was as much for the benefit of the man who did it as for that of the other person (p 106).
The Lord President illustrated his opinion with an illuminating example: One man heats his house, and his neighbour gets a great deal of benefit.
It is absurd to suppose that the person who has heated his house can go to his neighbour and say Give me so much for my coal bill, because you have been warmed by what I have done, and I did not intend to give you a present of it. (p 105)
The importance of identifying a loss arising through the provision of a benefit is also illustrated by the case of TFL, where a claim based on unjust enrichment was brought by a company, A, against a defendant, B, in order to recover the costs which A had incurred in earlier legal proceedings.
Those proceedings had been brought by A in order to recover a debt from a third party, C, and had been successfully defended on the ground that the debt was due, not to A, but to B. After B recovered the debt, A brought proceedings against B on the basis that A had conferred a benefit on it by bringing the earlier proceedings and thereby clarifying Bs right to recover the debt.
Since A had done so under an erroneous understanding of its rights, it argued that B had therefore been unjustly enriched at its expense.
The Court of Appeal, by a majority (Sir Stanley Burnton dissenting), held that the claim could not be summarily dismissed.
The court had understandable difficulty in identifying the benefit which had supposedly been conferred by A on B (para 50), and accepted that the benefit, whatever it consists of, had not been directly provided by A to B (para 54).
It appears to have considered that a causal link between As payment of the costs of the proceedings and an indirect benefit to B was nevertheless arguably sufficient (para 64).
The fact that A had been acting in its own interests was considered to be no answer (para 67).
The court could hardly have reached the same conclusion if, when considering the at the expense of question, it had focused on the need to identify a transfer of value from the claimant to the defendant.
A had not provided any benefit directly to B.
At best, B had received an incidental benefit as the result of As pursuit of its own interests.
The facts of the case, so far as the at the expense of question is concerned, were not materially distinguishable from those of Lord Dunedins example of the householder whose heating warms his neighbours house.
Furthermore, As erroneous understanding of its legal rights did not in any event bear on the justice of Bs incidentally benefiting from the clarification of the legal position: one might cite Pollock CBs rhetorical question in Taylor v Laird (1856) 25 LJ Ex 329, 332, One cleans anothers shoes; what can the other do but put them on? A had received the legal services it had bargained for when it incurred the expense (and, if it also had to meet its opponents costs, that was a risk inherent in litigation, which it voluntarily assumed).
Even bearing in mind that the Court of Appeal was dealing with a strike out application, the majority of the court were wrong in not summarily dismissing the claim.
It is interesting to note that similar claims were rejected long ago in Scotland, on the basis that the litigant had been pursuing his own interests.
More, in his Notes to Stairs Institutions (1832), states: a person who, for his own benefit, carries on an expensive law suit, which, in the result, establishes some point as beneficial to other neighbouring proprietors as to himself, can make no claim against them for any part of the expense incurred by him.
And Lord Stair, in the text, states the case of a person who reduces [sets aside] a right as void, and thereby lets in the claims of third parties, which are ultimately preferred to his own, yet he says, that as he was doing his own business, not theirs, he can claim no share from them of his expenses. (p liv) Humes Lectures (1786 1822) are to the same effect, stating in relation to the person who brings an action: Now, though it should so happen, (as very often it must,) that he settles some point of law, in the decision of this lawsuit of his, and thus does a service to a number of other persons, whose property, or concerns, are in the like situation; yet still the cost of this lawsuit is his peculiar and exclusive concern.
He can recover no part of it from his neighbours, or any of them, for whose benefit he probably never would have stirred in the matter. (Vol III, p 167, citing the unreported case of Ferguson v Smyth, 18 November 1802, SC Old Sess Pap, vol 437, No 30.)
Economic reality
Nor is the at the expense of requirement satisfied by a connection between the parties respective benefit and loss merely as a matter of economic or commercial reality.
Economic reality is not only a somewhat fuzzy concept, as Moses LJ described it in Menelaou [2014] 1 WLR 854, para 62, but one which is difficult to apply with any rigour or certainty in this context, or consistently with the purpose of restitution on the ground of unjust enrichment.
An inquiry into where the economic burden of an unjust enrichment has fallen is liable to be a very complex undertaking, especially where there is a chain of suppliers and consumers.
The supplier who passes on a tax or other charge by increasing the price of his goods or services might be thought to have shifted the economic burden, but his increased prices may have an adverse impact upon his sales, and accordingly upon the profitability of his operations.
Furthermore, in a situation where numerous factors affect the prices which he charges, it may be far from easy to decide to what extent the economic burden of the tax has been reflected in the price charged.
Deciding whether the economic burden of an unjust enrichment has been passed on has been described as virtually unascertainable (Hanover Shoe Inc v United Shoe Machinery Corpn (1968) 392 US 481, 493) and a near impossibility (British Columbia v Canadian Forest Products Ltd [2004] 2 SCR 74, para 205).
These points have been made repeatedly in other jurisdictions, when considering a defence of passing on: that is to say, a defence based on the proposition that the economic burden of an unjustified enrichment was borne not by the claimant but by a third party: see, for example, Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51; 126 ALR 1; Kingstreet Investments Ltd v New Brunswick (Finance) Ltd [2007] 1 SCR 3; and the Opinions of Advocate General Mancini in Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595 (San Giorgio) and of Advocate General Geelhoed in Commission of the European Communities v Italian Republic (Case C 129/00) [2003] ECR I 14637.
A more fundamental difficulty with an approach based on economic reality arises from the fact that the purpose of restitution is not to compensate for loss, but to reverse the defective transfer.
Looking to see who has suffered an economic loss is therefore not, in principle, the correct way of identifying the appropriate claimant.
Indeed, even in tort law, which is concerned with compensation for loss, the court is not concerned with where the economic burden of the tort may ultimately have fallen as a matter of economic reality.
Co ordinated transactions
There are, on the other hand, cases in which the court has referred to reality in a different sense.
These are cases in which, for the purpose of answering the at the expense of question, the court has treated a set of related transactions, operating in a co ordinated way, as forming a single scheme or transaction, on the basis that to answer the question by considering each of the individual transactions separately would be unrealistic.
The case of Banque Financire, as explained in some of the judgments, is an example.
The claimant had entered into a refinancing arrangement involving the loan of a sum of money to the manager of a holding company, which he in turn lent to a subsidiary of that company so that it could discharge a debt secured by a first ranking security.
The purpose of interposing the manager between the claimant and the first subsidiary was to avoid a requirement to make a public disclosure of the loan, which would have applied if the claimant had lent the money directly to the first subsidiary.
The claimant paid the money directly to the subsidiarys creditor, so discharging the debt.
It was conceded that this enriched the defendant, which was another subsidiary of the holding company, since it promoted the ranking of its own security, with the consequence that it was the only creditor of the first subsidiary which was likely to be repaid.
This was contrary to the understanding on which the claimant had advanced the loan, namely that it would be repaid in priority to all intra group debts.
The House of Lords held that this would unjustly enrich the defendant, and therefore subrogated the claimant to the discharged security, as against the defendant, so as to prevent the unjust enrichment.
One of the questions considered by the House of Lords was whether the enrichment was at the expense of the claimant, when the claimant had made the loan to the manager of the holding company, who had then made a further loan to the first subsidiary, rather than the claimant lending directly to the first subsidiary.
Two different analyses were put forward.
Lord Steyn proceeded on the basis that the interposition of the loan to the manager was no more than a formal act designed to allow the transaction to proceed .
To allow [it] to alter the substance of the transaction would be pure formalism (p 227).
Lord Clyde similarly stated that the arrangement with the manager did not prevent recognition of the reality of the granting of the funds by [the claimant] to [the holder of the first ranking security] (p 238).
That was also the view of Lord Hutton (the reality was that the [defendant] was enriched at the expense of [the claimant]: p 239).
Lord Hoffmann, with whom Lord Steyn, Lord Griffiths and Lord Clyde agreed, put forward another analysis, namely that the claimants money could be traced into the discharge of the debt secured by the first ranking security (p 235).
On both analyses, the House of Lords treated the situation as one where the defendant had directly received a benefit from the claimant, since on one analysis it was in reality the claimant which had discharged the first ranking security and thereby promoted the defendants security, and on the other analysis it was the claimants money which had done so.
The case of Menelaou provides another illustration.
The case concerned the sale of a property owned by the defendants parents, and the use of part of the proceeds to purchase another property in her name, as a gift.
The claimant bank held a charge over the first property to secure the parents borrowings, and agreed to the discharge of the security in return for a fresh charge over the second property.
It instructed solicitors to deal with the discharge of the security over the first property and to obtain a charge over the second property.
The solicitors sent the bank a charge over the second property, purportedly executed by the defendant, and the bank authorised the discharge of the security over the first property.
In the event, the second charge was defective, as a result of the solicitors negligence.
The defendant had agreed to the purchase of the second property in her name, but was unaware of her parents agreement with the bank that there should be a charge.
The solicitors admitted liability to the bank for its losses, subject to credit being given for any sums which the bank might recover from the defendant.
Lord Carnwath analysed the case in terms of the law of equity rather than unjust enrichment.
He considered that the moneys held by the solicitors following the sale of the first property, and used to purchase the second property, were held on a Quistclose type trust for the bank (Quistclose Investments Ltd v Rolls Razor Ltd [1970] AC 567).
On that footing, it followed that the bank was subrogated to the lien of the unpaid vendor of the second property, so as to give it an equitable interest in the property.
In other words, the vendor had a lien over the property, to secure his right to payment of the purchase price, as long as he remained unpaid.
The bank, on discharging the parents obligation to pay the vendor, became entitled in equity to the benefit of that lien (or, strictly analysed, to a new lien to secure its own right to repayment) by subrogation.
The other members of the court held that the bank should be subrogated to the unpaid vendors lien on the basis of unjust enrichment, since it had mistakenly authorised the use of the proceeds of sale of the first property (which it could otherwise have required to be applied to discharge the debt owed to itself) to purchase the second property, thereby providing the defendant with a benefit at its expense.
Lord Clarke proceeded on the basis that the two arrangements, namely the sale of [the first property] and the purchase of [the second property], were not separate but part of one scheme, which involved the bank throughout (para 25).
Lord Neuberger agreed, observing that it is appropriate not merely to consider the purchase of, and charge over, [the second property] as a single composite transaction, applying the approach to property purchases involving a charge which was adopted in Abbey National Building Society v Cann [1991] 1 AC 56, but that it was also appropriate in the present case to treat the sale of [the first property] and the purchase of [the second property] as one scheme, at least for present purposes (para 67).
Lord Kerr and Lord Wilson agreed with both judgments in relation to this issue.
On that basis, Lord Clarke considered that the conclusion that there had been a transfer of value between the bank and the defendant gave effect to the reality of the transaction, notwithstanding the absence of a direct payment by the former to the latter (para 33).
Lord Neuberger agreed, stating: [T]here was in reality a single transaction, and it was from that transaction that [the defendant] directly benefitted, even though the benefit was effected at the direction of the Menelaou parents.
The benefit to [the defendant] was direct because it arose as the immediate and inevitable result of the very transaction to which she was party and which gave rise to the unjust enrichment. (para 73)
At the expense of in the present case
Turning to the issue raised in the present case, the only English authority cited in argument which contains a discussion of the at the expense of question in relation to taxation is the decision of the Court of Appeal in Kleinwort Benson Ltd v Birmingham City Council [1997] QB 380.
The case concerned a claim by a bank for restitution of money which it had paid to a local authority under a void swap transaction.
The bank had also entered into hedging arrangements with a third party which protected it against loss.
In considering whether English law recognised a defence of passing on, the Court of Appeal discussed the requirement that the defendants enrichment should be at the expense of the claimant.
Evans LJ, delivering the leading judgment with which Saville LJ agreed, referred to a range of authority and academic writing from other jurisdictions, including two authorities concerned with taxes paid under a mistake: the decision of the United States Federal Court of Appeals for the Second Circuit in 123 East Fifty Fourth Street Inc v United States (1946) 157 F 2d 68, and the decision of the High Court of Australia in Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd. He noted that the cases raised a question, akin to agency, which is whether the taxpayer should be regarded as having collected tax from his customers on behalf of the taxing authority, and that it had been said by Learned Hand J in the 123 East Fifty Fourth Street case that any tax recovered by the taxpayer would be held by him as a fiduciary for his customers.
Similarly, in the Royal Insurance case it had been said that if it was established that the plaintiff had charged its policy holders the tax as a separate item, it would be entitled to recover the money from the tax authority but would then hold it as a constructive trustee.
In the event, however, Evans LJ found the taxation cases of little assistance, since on the facts of the case no question of a constructive trust or of any obligation to account to customers could arise (p 391).
Morritt LJ, with whose judgment Saville LJ also agreed, emphasised that the plaintiff was legally and beneficially entitled to the money it paid to the authority, and that the case was not one in which the claimant held the money claimed as a bare trustee or tax collector such as, arguably, in the 123 East Fifty Fourth Street case (p 400).
It has not been argued in the present appeal that the Managers held the amounts paid to them by the Lead Claimants in respect of VAT as agents or trustees or in any other fiduciary capacity.
In the circumstances, it is unnecessary to consider the American and Australian authorities in any detail.
The dissenting opinion of Learned Hand J in the 123 East Fifty Fourth Street case was concerned with a simpler situation than the present case, where the supplier of services collected sales tax from his customers, as a separately identifiable amount paid for the purpose of meeting the tax, and then remitted the whole of that amount to the tax authority.
The same was true in the case of Wayne County Produce Co v Duffy Mott Co (1927) 244 NY 351, where Cardozo CJ adopted a similar approach.
The reasoning in these cases was approved by Mason CJ in the Royal Insurance case, in an opinion in which the other members of the court did not join, but he distinguished the case before him on the basis that the amount collected was not paid separately from the price of the services supplied.
In considering these authorities, it is necessary not only to bear in mind the differences from the facts of the present case, but also to remember that American and Australian law adopt a broader approach to constructive trusts than English law.
In particular, one of the essential requisites for a trust in English law is that there must be identifiable trust property (or its traceable proceeds) in the hands of the recipient which is not available to him as part of his general assets: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 705.
In the present case, the contracts between the Managers and the Lead Claimants provided for the Managers to be paid fees plus VAT if applicable (or words to similar effect).
The contractual obligation of the Lead Claimants was therefore to pay the fees plus whatever sum, if any, was necessary in order to meet the VAT chargeable on the supply in question.
This was reflected in the invoices issued by the Managers, which drew a distinction between their fees, on the one hand, and the VAT due on their fees, on the other hand.
There is, however, no evidence that the Managers were expected to keep the amounts paid to them by the Lead Claimants in respect of VAT separate from their other funds: on the face of things, they were entitled to treat them as part of their general assets.
It follows that in paying those amounts to the Managers, the Lead Claimants must be taken to have intended to part with any interest in the money, rather than to have impressed it with a special purpose trust.
Furthermore, since the Managers were not aware of any mistake prior to making payment to the Commissioners, their conscience cannot have been affected so as to render them trustees: see Westdeutsche at p 709.
In these circumstances, the right to the restitution of money paid under the contract as the result of a mistake gives rise, like the contract itself, to purely personal obligations.
Returning, then, to the question whether the unjust enrichment of the Commissioners was at the expense of the Lead Claimants, and focusing on whether there was a transfer of value from the Lead Claimants to the Commissioners, the answer is in the negative.
There was a transfer of value, comprising the notional 100, from the Lead Claimants to the Managers, under the contract between them.
It was defective, because it was made in performance of a contractual obligation which was mistakenly believed to be owed.
There was a subsequent transfer of value, comprising the notional 75, from the Managers to the Commissioners.
It was also defective, because it was made in compliance with a statutory obligation which was inapplicable because it was incompatible with EU law.
These two transfers cannot be collapsed into a single transfer of value from the Lead Claimants to the Commissioners.
That follows from a number of considerations.
First, the Lead Claimants do not challenge the judges rejection of a connection between the payments made by the Lead Claimants and the payments received by the Commissioners based on agency.
The intervention of the Managers cannot therefore be disregarded on the basis that they were in law the proxy of one of the other parties.
Secondly, since the payments made by the Lead Claimants formed part of the Managers general assets, to do with as they pleased, it is impossible to trace those payments into the payments subsequently made by the Managers to the Commissioners, and so to regard the Commissioners as having benefited from the receipt of property in which the Lead Claimants had an interest.
Thirdly, the fact that there were two separate transactions first, between the Claimants and the Managers, and secondly between the Managers and the Commissioners is not in this context something which can be disregarded.
In particular, there is no question of the transactions being a sham or involving an artificial step, or of their comprising a single scheme.
The first transfer did not even bring about the second transfer as a matter of causation: the judges rejection of a but for causal connection between the two transfers is not challenged.
The Lead Claimants rely on a connection established by commercial or economic reality.
But, for the reasons already explained, the fact that, as a matter of economic or commercial reality, the Lead Claimants bore the cost of the undue tax paid by the Managers to the Commissioners does not in itself entitle them to restitution from the Commissioners.
It follows that the Lead Claimants did not in principle have any right to restitution against the Commissioners.
They did, on the other hand, have a right to restitution against the Managers.
That right was to restitution of the entire amount paid in respect of VAT, ie the notional 100.
The Managers did not in principle have a change of position defence in respect of the notional 75 which they paid to the Commissioners, since that change of position was reversible under section 80 of the 1994 Act, as I shall shortly explain.
Nor did they have a change of position defence in respect of the notional 25 which they retained.
Steyns questions.
Section 80 of the 1994 Act
In order to determine the issues arising in relation to EU law, it is necessary next to consider the effect of section 80 of the 1994 Act.
The section has undergone amendment on a number of occasions.
The version in force at the time when the Managers made their claims, and also applicable at the time when the present actions were brought by the Lead Claimants, was in the following terms, so far as material: In the circumstances, it is unnecessary to consider the remainder of Lord Credit for, or repayment of, overstated or overpaid VAT (1) Where a person (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. (lA) Where the Commissioners (a) have assessed a person to VAT for a prescribed accounting period (whenever ended), and (b) tax an amount that was not output tax due, in doing so, have brought into account as output they shall be liable to credit the person with that amount. (lB) Where a person has for a prescribed accounting period (whenever ended) paid to the Commissioners an amount by way of VAT that was not VAT due to them, otherwise than as a result of (a) brought into account as output tax, or (b) 26 not being brought into account, an amount of input tax allowable under section an amount that was not output tax due being the Commissioners shall be liable to repay to that person the amount so paid. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose. (2A) Where (a) as a result of a claim under this section by virtue of subsection (1) or (lA) above an amount falls to be credited to a person, and after setting any sums against it under or by (b) virtue of this Act, some or all of that amount remains to his credit, the Commissioners shall be liable to pay (or repay) to him so much of that amount as so remains. (3) It shall be a defence, in relation to a claim under this section by virtue of subsection (1) or (lA) above, that the crediting of an amount would unjustly enrich the claimant. (4) The Commissioners shall not be liable on a claim under this section (a) (1) or (1A) above, or (b) (1B) above, to repay an amount to a person under subsection to credit an amount to a person under subsection if the claim is made more than three years after the relevant date [ie the end of the prescribed accounting period]. (7) Except as provided by this section, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them.
Section 80 is supplemented by section 80A, introduced by section 46(2) of the Finance Act 1997 and subsequently amended, which enables the Commissioners to make regulations providing for reimbursement arrangements to be disregarded for the purposes of section 80(3) except where they contain such provision, and are supported by such undertakings, as may be required by the regulations.
The relevant regulations are contained in Part VA of the Value Added Tax Regulations 1995 (SI 1995/2518), as amended.
They provide for reimbursement arrangements, defined by regulation 43A as arrangements for the purposes of a claim under section 80 which (a) are made by a claimant for the purpose of securing that he is not unjustly enriched by the crediting of any amount in pursuance of the claim, and (b) provide for the reimbursement of persons (consumers) who have, for practical purposes, borne the whole or any part of the original amount brought into account as output tax that was not output tax due.
The regulations go on to require the claimant under section 80 to give undertakings to the Commissioners that he will apply the whole of the amount credited, and any interest on that amount, to the reimbursement of identified consumers whom he has reimbursed or intends to reimburse.
It is common ground that, for persons who have accounted to the Commissioners for VAT that was not due, section 80 and the associated regulations provide a code for the recovery of VAT which is exhaustive and excludes other remedies such as a common law claim based on unjust enrichment.
It is also common ground that the ITCs could never have made a claim under section 80, since they did not pay or account for any of the VAT in question to the Commissioners.
The first issue in dispute is whether the effect of section 80 is to exclude a common law claim by the ITCs, assuming, contrary to my earlier conclusion, that such a claim might otherwise be brought.
The argument for the Lead Claimants is based primarily on the structure and wording of section 80.
They point out that subsections (1) to (6) are concerned with the crediting or repayment of undue VAT to the supplier, not the consumer.
In subsection (7), the words credit or repay echo the language of earlier subsections, where they can plainly refer only to the repayment or crediting of the supplier.
They submit that subsection (7) is similarly concerned with the supplier.
Only a supplier of goods or services can account for an amount to the Commissioners, and only a supplier can be credited with an amount by them.
Similarly, only a supplier can be repaid by the Commissioners, since only he has paid them in the first place.
Section 80(7) is thus designed only to exclude claims, otherwise than under the section, by persons who have a claim under the section.
That argument was accepted by the Court of Appeal.
On behalf of the Commissioners, it is argued that the word repay is capable of applying to any payment back by the Commissioners of VAT which they have received.
From their perspective, there is a repayment if the VAT is refunded, whether to the supplier or to someone else.
Furthermore, it is argued, it would be strange if section 80(7) barred a restitutionary claim by the supplier, but left the suppliers customer in a better position.
Moreover, it is argued, section 80 establishes a statutory scheme for the restitution of VAT which was not due, which by necessary implication excludes non statutory restitutionary claims.
The argument seeks to draw support from the decision of the Court of Appeal in Monro v Revenue and Customs Comrs [2008] EWCA Civ 306; [2009] Ch 69, where a common law claim was held to be excluded by a statutory scheme for the recovery of tax, since it would be inconsistent with the purpose of the scheme.
In agreement with the judge, I find the textual arguments inconclusive, when considered by themselves.
The word repay is capable of bearing a wider meaning than the one for which the claimants contend, but could also be construed more narrowly.
A purposive construction of the provision points more clearly to the correct conclusion.
In that regard, section 80(3) and (4) are particularly important.
Under section 80(3), the Commissioners have a statutory defence to a claim under section 80 a claim which, it is agreed, can only be made by a supplier where crediting the supplier would unjustly enrich him.
The possibility of unjust enrichment (in a non technical sense) arises because the supplier normally recovers from his customers the output tax for which he accounts to the Commissioners.
The subsection therefore creates a statutory defence of passing on.
Section 80A, and the 1995 Regulations, then create a scheme under which the defence is disapplied where reimbursement arrangements are made with the purpose of ensuring that the payment to the supplier is used to reimburse the consumers who have borne the economic burden of the tax.
Sections 80 and 80A, together with the 1995 Regulations, thus create a scheme which enables consumers who have been wrongly charged VAT to obtain reimbursement.
The consumers are able to recover the VAT which they were wrongly charged, to the extent that it was remitted by the supplier to the Commissioners, through the medium of the suppliers claim under section 80.
Although the consumers remedy is indirect, it can generally be expected to be effective: if the supplier is otherwise reluctant to make a claim, the consumers have a direct claim against him, as explained below.
Subject to the question of time bar, these arrangements therefore remove any need there might otherwise be, in most circumstances, for the consumer to have a direct remedy against the Commissioners.
It will be necessary at a later point to return to the question whether there may nevertheless be some circumstances in which a direct remedy is required by EU law.
Section 80(4) lays down a limitation period for claims under the section which is shorter than the period of six years, with extensions in the event of mistake, which would apply to a common law claim in unjust enrichment under section 32(1)(c) of the Limitation Act 1980 (and which also applied under section 80(4) until its amendment by the Finance Act 1997).
A statutory claim by the supplier must therefore be brought within a shorter and more certain period of time.
The evident aim is to protect public finances against the risk of a liability to repay tax emerging more than three years after the tax was received.
It would be inconsistent with that intention for there to be a potentially far longer period within which non statutory claims might be brought against the Commissioners by the suppliers customers.
In the light, therefore, of section 80(3) and (4) in particular, Parliament cannot sensibly be taken to have intended, when it created this scheme for the reimbursement of suppliers (with provision for them in turn to reimburse their customers), subject to strict time limits, that it should exist concurrently with non statutory liabilities towards suppliers and their customers which were potentially wider in scope and were subject to a longer and less certain limitation period.
Such an intention would be inconsistent with the rationale of the statutory scheme.
In these circumstances, on the hypothesis that non statutory claims by consumers might otherwise lie against the Commissioners in circumstances falling within the scope of section 80, subsection (7) must be construed as excluding such claims.
The Court of Appeal considered that that approach, which the judge accepted, presupposed that Parliament had in mind that restitutionary claims might be brought by consumers, and legislated with the intention of excluding such claims.
As they pointed out, however, Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, which established that money paid under a mistake of law might be recoverable, had not been decided when the 1994 Act was enacted.
In their view, that background pointed away from a legislative intent to restrict claims for the recovery of overpaid VAT to the machinery provided by section 80.
I find this reasoning unpersuasive.
The fact that Parliament will not have had in mind a particular common law right to payment when enacting a legislative scheme for recovery does not preclude the common law right being excluded by that scheme: R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54; [2011] 2 AC 15.
The absence of a recognised right to recover money paid under a mistake of law, at the time when section 80 was enacted, did not exclude the possibility of restitutionary claims by consumers, since there were other established grounds on which restitution might be sought, including payment under a mistake of fact.
Moreover, the Lead Claimants argument proves too much: if section 80(7) was not intended to exclude common law claims based on mistake of law, because no such cause of action was recognised when the legislation was enacted, then a common law claim by the Managers would not be excluded either; but it is common ground that section 80(7) is effective to exclude any common law claim by the Managers.
More fundamentally, the determining factor in the present case is that the scheme created by section 80 is inconsistent with the existence of a concurrent non statutory liability on the part of the Commissioners to make restitution to consumers.
In the absence of section 80(7), one would therefore conclude that section 80 impliedly excluded such liability (assuming that it might otherwise exist).
Given the existence of an express exclusion in section 80(7) which is capable of covering such liability, it is unnecessary to rely on implication: one can construe section 80(7) as having the same exclusionary effect.
It follows that section 80 bars claims by the consumers who ultimately bear the burden of VAT.
It nevertheless enables them to be reimbursed, subject to a limitation period designed to avoid the disruption of public finances.
Compatibility with EU law
Section 80 must have been intended to be compliant with EU law, since it is concerned with the recovery of VAT, which is a tax imposed by EU law.
Indeed, a report by the Law Commission indicates that section 80 was framed to accord closely with European Community law: Restitution: Mistakes of Law and Ultra Vires Public Authority Receipts and Payments, Law Com No 227 (1994) para 14.19.
The present case raises the question whether the system of reimbursement established by section 80 has achieved that objective.
There is a well established principle of EU law that a member state is in principle required to repay taxes levied in breach of EU law, and an equally well established exception whereby repayment can be refused where it would entail unjust enrichment of the taxable person because the burden of the tax has been passed on: see San Giorgio, paras 12 13.
In the latter situation, however, the Court of Justice has held that the person to whom the tax was passed on should have a right to recover the sums unduly paid, so as to offset the consequences of the taxs incompatibility with EU law by neutralising the economic burden which the tax has imposed on the operator who has actually borne it: Danfoss A/S v Skatteministeriet (Case C 94/10) [2011] ECR I 9963, paras 23 and 25.
It is for the domestic legal system of each member state to lay down the conditions under which claims may be made, subject to observance of the principles of equivalence and effectiveness: Danfoss, para 24.
These general principles apply to the reimbursement of improperly invoiced VAT: Reemtsa Cigarettenfabriken GmbH v Ministero delle Finanze (Case C 35/05) [2007] ECR I 2425.
Reasonable limitation periods are compatible with the principle of effectiveness, and the limitation period applicable to claims under section 80 of the 1994 Act has specifically been held to be reasonable: Marks & Spencer plc v Customs and Excise Comrs (Case C 62/00) [2003] QB 866, para 35.
The court has accepted that, in principle, a system under which only the supplier is entitled to seek reimbursement of VAT from the tax authorities, and the consumer can seek restitution from the supplier, meets the requirements of EU law: Reemtsma, para 39.
The court added one caveat: [I]f reimbursement of the VAT becomes impossible or excessively difficult, in particular in the case of the insolvency of the supplier, those principles may require that the recipient of the services to be able to address his application for reimbursement to the tax authorities directly. (Reemtsma, para 41).
This approach has been applied and restated in later cases.
In the Danfoss case, the Court of Justice put the matter in this way: 27.
It follows that a member state may, in principle, oppose a claim for the reimbursement of a duty unduly paid made by the final consumer to whom that duty has been passed on, on the ground that it is not that consumer who has paid the duty to the tax authorities, provided that the consumer who, in the final analysis, bears the burden of that duty is able, on the basis of national law, to bring a civil action against the taxable person for recovery of the sums unduly paid. 28.
However, if reimbursement by the taxable person were to prove impossible or excessively difficult in particular, in the case of the insolvency of that person the principle of effectiveness requires that the purchaser be able to bring his claim for reimbursement against the tax authorities directly and that, to that end, the member state must provide the necessary instruments and detailed procedural rules.
In these passages, the insolvency of the taxable person is given as an example of circumstances where reimbursement by that person might prove impossible or excessively difficult, and where the principle of effectiveness would therefore be infringed.
It is the most likely example to arise in practice, but it cannot be treated as necessarily exhaustive.
The governing principle of effectiveness means that the purchaser must, in principle (and subject to procedural rules which are compatible with the principle of effectiveness, such as reasonable limitation periods), be able to recover from the member state where reimbursement by the taxable person would be impossible or excessively difficult.
In the present case, the Lead Claimants had a common law right to restitution of the amounts mistakenly paid to the Managers, whose enforcement was neither impossible nor excessively difficult.
The Managers had a statutory right to recover the notional 75 from the Commissioners, under arrangements which ensured that it was passed on to the Lead Claimants.
The Managers retained the remaining 25 and were not insolvent.
They were therefore in a position to refund it to the Lead Claimants.
The only amounts which the Lead Claimants could not recover were the amounts which they had paid during the dead periods, to the extent that those amounts had been paid by the Managers to the Commissioners: that is to say, the notional 75 whose recovery from the Commissioners was time barred under section 80(4) of the 1994 Act.
Although a claim by the Lead Claimants against the Managers in respect of the dead periods would not have been time barred, because of the more generous limitation period allowed by section 32(1)(c) of the Limitation Act 1980, the Managers would have a defence of change of position, since the amounts which they paid to the Commissioners during those periods were irrecoverable.
The inability of the Lead Claimants to recover those sums is not, however, incompatible with EU law: as explained earlier, it is conceded that the three year limitation period imposed by section 80(4) of the 1994 Act is compatible with EU law.
In these circumstances, the inability of the Lead Claimants to pursue a direct claim for restitution against the Commissioners is not incompatible with EU law.
That follows from the application of well established principles of EU law.
There is therefore no need for any reference to the Court of Justice.
Nor is it necessary or appropriate to consider what the position would be in a hypothetical case where the supplier was insolvent: the court has heard no submissions, and has no information before it, as to how reimbursement arrangements under section 80 might operate in that situation.
Conclusion
For these reasons I would allow the Commissioners appeal and dismiss the Lead Claimants cross appeal.
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This appeal and cross appeal arise out of claims made by certain investment trust companies (the ITCs) for refunds of VAT which they had paid on the supply of investment management services from investment managers (the Managers).
The VAT transpired not to be due, because the supplies in question were exempt from VAT under EU law.
The Managers who received VAT from the ITCs paid it to the Commissioners, believing they were entitled to deduct from the VAT chargeable on their supplies to the ITCs (output tax) the tax which they had themselves paid on supplies received for the purposes of their businesses (input tax).
Out of a notional 100 received from the ITCs, the Managers might have therefore accounted to the Commissioners for only 75 after deducting 25 in respect of input tax.
When it transpired that the supplies were VAT exempt, the Managers made claims to the Commissioners for refunds under s.80 of the VAT Act 1994, and passed on the refunded VAT and interest to the ITCs.
However, under the statute, the Managers were only entitled to a refund of the VAT they had actually paid the Commissioners (i.e. the notional 75).
In addition, they could not claim refunds in relation to accounting periods excluded by the three year statutory limitation period under s.80 (the dead periods).
The ITCs did not receive the full amount of VAT they had been mistakenly charged and brought proceedings against the Commissioners seeking remedies in unjust enrichment and EU law in respect of the notional 25 and the dead periods.
The judge found that the Commissioners had been enriched by the full amount of VAT the ITCs paid to the Managers (i.e the notional 100), but that the ITCs cause of action at common law was excluded by the statutory scheme, which protected the Commissioners from liability other than as provided in s.80.
EU law required that exclusion to be disapplied so as to permit a claim, but still subject to the limitation period in s.80.
The claim in relation to the dead periods was therefore dismissed, but payment of the notional 25 outside those periods was ordered.
Both sides appealed, and the Court of Appeal allowed both appeals.
The statutory scheme did not exclude a common law claim, but it was wrong to treat the Commissioners as having been enriched to the extent of the notional 100, where they had only received 75.
There was no claim in EU law for the remaining amounts retained by the Managers.
Judgment was given for the notional 75 claim in relation to the dead periods, and the claim for the notional 25 (for all periods) was dismissed.
The Supreme Court unanimously allows the Commissioners appeal and dismisses the ITCs cross appeal.
Lord Reed gives the judgment, with which the rest of the Court agrees.
The principal issues to be decided were (i) whether the ITCs in principle could make out a claim in unjust enrichment against the Commissioners, (ii) whether such a claim was excluded by the statutory scheme under s.80 and (iii) whether the lack of any such claim was incompatible with EU law.
The extent of the Commissioners enrichment was limited to the notional 75 which they received from the Managers.
It did not include the notional 25 which the Managers retained as an input tax credit, because that was not an amount which the Commissioners owed to the Managers: it was only deductible from output tax that was properly due [25 31].
As to whether the Commissioners enrichment was at the expense of the ITCs, there has been uncertainty surrounding the approach to be adopted.
It would be unwise to attempt a definitive statement of the circumstances in which the at the expense of requirement would be satisfied, but as a general rule it will be satisfied where there is a direct transfer of value from the claimant to the defendant, and in situations equivalent to direct transfers, for example where an agent is interposed, or where a series of coordinated transactions can be treated as a single transaction.
A further situation where the requirement is satisfied is where the claimant discharges a debt owed by the defendant to a third party.
The possibility of genuine exceptions to a direct provision rule should not be ruled out, but beyond direct transfers of value, or equivalent situations, it is generally difficult to maintain that the defendant has been enriched at the claimants expense.
For there to be a transfer of value, the claimant must incur a loss through the provision of the benefit: incidental benefits alone cannot constitute a transfer of value [32 66].
In the present case there is no direct transfer of value, or equivalent situation.
The ITCs payment to the Managers became part of the Managers general assets, and was not impressed with a special purpose trust, while the Managers VAT liability to the Commissioners arose independently of whether the ITCs actually paid VAT.
The two transactions are separate and cannot be collapsed into a single transfer of value from the ITCs to the Commissioners [67 74].
Even if the ITCs had in principle been able to make out a claim in unjust enrichment, such a claim would have been excluded by s.80.
The statute creates an exhaustive code of remedies not just for suppliers who have accounted to the Commissioners, but for the ultimate consumers as well.
This is because it set out arrangements for the supplier to reimburse the consumer, subject to a limitation period, removing the need for the consumer to have a direct remedy against the Commissioners.
Parliament cannot have intended this scheme for reimbursement of consumers to exist concurrently with non statutory liabilities that would be inconsistent with the rationale of the statutory scheme [75 88].
The application of the statutory scheme in the present case is compatible with EU law.
The European Court of Justice has accepted that in principle, a system under which only the supplier is entitled to seek reimbursement of VAT from the tax authorities, and the consumer can seek restitution from the supplier, meets the requirements of EU law.
In cases where the reimbursement of the consumer by the supplier would be impossible or excessively difficult, the principle of effectiveness would require that the consumer be able to bring a claim directly against the tax authorities.
That was not the case here, and it would not be appropriate to consider what the position would be in a hypothetical case where a supplier was insolvent [89 94].
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This appeal is concerned with the interpretation of a policy of motor insurance.
The question is whether the policy confers on the insured owner of a vehicle an indemnity against liability for damage caused to the property of a third party which was caused by his acts when he was carrying out substantial repairs to his car in the commercial premises of his employer.
The appeal also raises questions about the meaning of the phrase, damage caused by, or arising out of, the use of the vehicle on a road or other public place in section 145 of the Road Traffic Act 1988, which defines the compulsory insurance requirements for the use of vehicles on such places.
The factual background
The facts behind this appeal can be stated briefly.
In 2010 Mr Thomas Holden was a mechanical fitter employed by the appellants, R & S Pilling, who traded as Phoenix Engineering (Phoenix).
He was the owner of a car and held a motor insurance policy (the Policy) with the respondents (UKI).
On 11 June 2010 Mr Holdens car failed its MOT because of corrosion to its underside.
On the following day, he asked his employer, Phoenix, if he could use the loading bay in its premises to carry out work on his car in the hope that he could enable it to pass its MOT.
He intended to weld some plates onto the underside of the car to deal with the corrosion.
His employer agreed.
He disconnected his car battery to make sure there were no live circuits.
He then used a fork lift truck to lift the car onto the drivers side to gain access to the underside of the vehicle.
He first used a grinder to prepare the underside for welding and then welded a plate under the drivers side.
He then re connected the battery, started the car and moved it round the other way before again disconnecting the battery, and lifting it up to expose the underside on the passengers side of the vehicle.
He started welding but then stood up to answer a phone call.
When he did so, he saw flames inside the car: sparks from the welding had ignited flammable material inside the car, including the seat covers.
As the fire spread, it set alight some rubber mats which were lying close to the car.
The fire then took hold in Phoenixs premises and in adjoining premises and caused substantial damage before it was put out.
Phoenix was insured against property damage and public liability by AXA which had to pay out over 2m to Phoenix and the owner of the adjoining premises.
AXA made a subrogated claim in Phoenixs name against Mr Holden.
Mr Holdens only insurance policy which arguably might cover Phoenixs claim (the claim) is the Policy.
As a result, UKI brought an action seeking a declaration that it is not liable to indemnify Mr Holden against the claim, and AXA, denying this, counterclaimed for an indemnity.
Mr Holden was named as first defendant in the action but has taken no part in the proceedings because he is not at risk: AXA has undertaken to limit its recovery to such sum, if any, as it can obtain from UKI.
The real dispute is therefore between the two insurance companies.
At its simplest, UKI says that the Policy does not respond to third party claims involving the car while the car is being repaired on private premises, such as Phoenixs garage.
Phoenix contends that the Policy covers accidents involving the car off road and that in any event the repair of the car can properly be described either as the use of it, or as arising out of its use, on a road or other public place.
The question is the correct interpretation of the Policy against the background of domestic and EU legislation which imposes compulsory third party insurance in respect of motor vehicles.
The motor insurance policy
The documents which are relevant to Mr Holdens insurance cover are (a) the policy set out in UKIs policy booklet, (b) the certificate of motor insurance (the certificate), (c) the motor insurance schedule (the schedule) and (d) the motor proposal confirmation (the confirmation).
The policy booklet instructed the insured that he must read the four documents as a whole.
The policy booklet set out in section A the insurance cover in relation to the insureds liability to other people.
It provided in clause 1a: Cover for you We will cover you for your legal responsibility if you have an accident in your vehicle and: you kill or injure someone; you damage their property; or you damage their vehicle.
Clause 2 provided the following cover for other people: We will also provide the cover under section 1a for: anyone insured by this policy to drive your vehicle, as long as they have your permission; anyone you allow to use but not drive your vehicle, for social or domestic purposes; anyone who is in or getting into or out of your vehicle; The booklet listed what was not covered under section A, including liability for more than 20m for any claim or series of claims for loss of or damage to property, and also liability caused by acts of terrorism, unless such cover was compulsory under the Road Traffic Acts.
The booklet contained general exceptions and stated: 1.
Who uses your vehicle We will not cover any injury, loss or damage which takes place while your vehicle is being: driven or used by anyone not allowed to drive it, or used for any purpose not allowed by the Certificate of Motor Insurance or Schedule; or driven by someone who does not have a valid driving licence or is breaking the conditions of their driving licence.
This exception does not apply if your vehicle is: with a member of the motor trade for maintenance or repair; stolen or permission; or being parked by an employee of a hotel, restaurant or car parking service. taken away without your The general exceptions also excluded damage caused by war etc unless we have to provide cover under the Road Traffic Acts.
The certificate identified Mr Holden as the policy holder and specified the use limitations as use for social, domestic and pleasure purposes.
It also contained a certificate of the Chief Executive of the insurers in these terms: I hereby certify that the Policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain and Northern Ireland, the Republic of Ireland, the Isle of Man, the Island of Guernsey, the Island of Jersey and the Island of Alderney.
The motor insurance schedule specified among other things the sections of the booklet which applied to the Policy and the details of the car.
The confirmation, which has no bearing on this appeal, set out in summary form details of the policy holder, the Policy, the car and method of payment of premium.
The context of compulsory insurance
i) Domestic provision: the Road Traffic Act 1988
It has, since 1930, been a statutory requirement that a driver has third party liability insurance in respect of the use of his or her vehicle on the road and it is a criminal offence if one does not.
The current statute is the Road Traffic Act 1988 (the RTA).
Section 143 of the RTA provides that it is an offence to use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such security in respect of third party risks as complies with Part VI of the RTA.
Section 145 of the RTA, which like section 143 falls within Part VI, sets out the conditions which the policy of insurance must satisfy.
It provides, so far as relevant: (1) In order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions. (3) Subject to subsection (4) below, the policy (a) must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place in Great Britain (Emphasis added) At the relevant time, section 145(4)(b) provided that such a policy was not required to provide insurance in respect of damage to property of more than 1m.
Section 145(3)(a) was amended by the Motor Vehicles (Compulsory Insurance) Regulations 2000 (SI 2000/726) to add the words or other public place which I have emphasised, in order to comply with the EU directives on motor insurance, which were later consolidated in the Directive which I describe below.
Section 143 was amended in the same way.
The amendments responded to the decision of the House of Lords in Clarke v General Accident Fire and Life Assurance Corpn plc and Cutter v Eagle Star Insurance Co Ltd [1998] 1 WLR 1647, which had held that a road did not include a car park or other public place.
The current wording of section 145(3) is to that extent implementing the relevant EU legislation.
ii) The EU Motor Insurance Directive
Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 (the Directive) consolidates various earlier EU directives and ensures that civil liability arising out of the use of motor vehicles is covered by insurance.
Recital (2) of the Directive states: Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is of special importance for European citizens, whether they are policyholders or victims of an accident.
It is also a major concern for insurance undertakings as it constitutes an important part of non life insurance business in the Community.
Motor insurance also has an impact on the free movement of persons and vehicles.
It should therefore be a key objective of Community action in the field of financial services to reinforce and consolidate the internal market in motor insurance.
Article 3, so far as relevant, provides: Compulsory insurance of vehicles Each member state shall, subject to article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance.
The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of the measures referred to in the first paragraph.
The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries.
Article 12(3) provides: The insurance referred to in article 3 shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non motorised users of roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with national civil law.
The prior judgments
In a judgment dated 19 February 2016 ([2016] EWHC 264 (QB); [2016] 4 WLR 38) which the Master of the Rolls correctly described as clear and careful, Judge Waksman QC, sitting as a Judge of the High Court (Queens Bench Division), held that UKI was entitled to the declaration which it sought.
He interpreted the Policy as extending beyond roads and public places so that its cover extended to the location of the accident on private property, if the other requirements of the Policy were made out.
But he concluded that those requirements were not made out because the accident had not arisen out of the use of the car.
The undertaking of the repair of the car was not using it: it was not being operated but was immobile and partly off the ground so that it could be worked on (para 63).
He also rejected Phoenixs argument on causation, that the fire arose out of Mr Holdens use of the car because he had been driving it before carrying out the repair or because he would be driving it after the repair.
He held (para 66): The fire was caused by and arose out of the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself.
The Court of Appeal (the Master of the Rolls, and Beatson and Henderson LJJ) allowed Phoenixs appeal ([2017] EWCA Civ 259; [2017] QB 1357).
The Court, recognizing that the wording of clause 1a of the policy booklet was inadequate and that the policy booklet had to be read together with the certificate, held that the Policy should be read to cover the requirements of section 145(3) of the RTA, as the certificate states.
The Policy did not have the geographical limitations of the statutory provision nor was the sum insured restricted to 1m.
Section 145(3) extended the cover of clause 1a without imposing its statutory geographical limitations and did not require the owner to be in the car at the time of the accident as the express terms of clause 1a provided.
The clause as so extended covered repairs which were commonplace for drivers.
The court accordingly construed the opening words of clause 1a to mean: We will cover you for your legal responsibility if there is an accident involving your vehicle (emphasis added).
This entailed substituting there is for you have and replacing the preposition in in the express terms of the clause with the present participle involving.
As a secondary argument, the Master of the Rolls held that the repairs amounted to the use of the car under section 145(3).
He stated that that interpretation was consistent with the objective of the Directive in the light of the judgment of the Court of Justice of the European Union (CJEU) in Vnuk v Zavarovalnica Triglav dd (Case C 162/13) [2016] RTR 10, which was to protect victims of accidents caused by vehicles.
He held that a purposive interpretation of section 145(3)(a) to cover use of a car consistent with its normal function was consistent with English authorities which held that there may be use of a car when it is parked or immobilised.
The Master of the Rolls set out the following summary in para 68 of his judgment: The following propositions as to the meaning of use of the vehicle in section 145(3)(a) of the RTA can be derived from the Directive, the CJEU jurisprudence and the English authorities. (1) Use is not confined to the actual operation of the car in the sense of being driven. (2) There may be use of a car when it is parked or even immobilised and incapable of being driven in the immediate future. (3) Use of a vehicle includes anything which is consistent with the normal function of the vehicle. (4) Damage or injury may arise out of the use of the car if it is consequential, rather than immediate or proximate, provided that it is, in a relevant causal sense, a contributing factor.
The Master of the Rolls therefore concluded that Judge Waksman had made an error of principle in holding that the repair of a car is not using it for the purposes of section 145(3)(a) of the RTA.
Henderson LJ agreed with this judgment and added that he found that Commonwealth authorities from Australia and Canada, some of which take a broader approach to the interpretation of motor insurance policies, were also of assistance.
Beatson LJ agreed with both judgments.
UKI appeals to this court.
Discussion
Having regard to the statutory requirements and the terms of the certificate, the Policy must be construed so that the third party cover meets the requirements of the RTA.
The parties are agreed on that and they are plainly correct, because this can be done in this case without resort to rectification.
So far as relevant to this appeal, the RTA requires Mr Holden to be insured to cover any liability in respect of damage to property caused by, or arising out of, the use of the vehicle on a road or other public place .
The principal question in this appeal is whether the Court of Appeal went beyond the bounds of what is required to be read into the Policy to achieve this end in holding that clause 1a of section A of the policy booklet should be read to state: We will cover you for your legal responsibility if there is an accident involving your vehicle.
In support of the view that the Court of Appeal was in error, UKI advances an argument for the first time in this court.
It submits that there is no need to read any term into clause 1a in order to include the RTA cover because the Policy provides cover in two strands.
First, there is the provision of clause 1a, whose words should be given their ordinary meaning so as to cover accidents occurring when the driver is in the vehicle wherever it is located, and, secondly and separately, there is the promise in the certificate that the Policy satisfies the requirements of the relevant law in the United Kingdom, which for present purposes is the RTA.
Phoenix challenges that assertion, submitting that the Policy follows a standard structure of insurance policies, with insuring clauses which define the cover, followed by exclusions and then by conditions.
The reader therefore looks to the insuring clause to determine the scope of cover before examining the extent of the exclusions and the conditions of cover.
The certificate, it is submitted, is simply a declaration of compliance and does not operate as an additional insuring clause.
Phoenix submits that Judge Waksman and the Court of Appeal were correct in focusing on the correct construction of clause 1a.
It is necessary therefore, first, to examine UKIs two strands argument and, secondly, if it is necessary to read words into clause 1a, to address what they are.
The two strands submission
The two strands approach can find some support in the Policys opening statement: Your policy is made up of: the Motor Proposal Confirmation; this Policy Booklet; the Certificate of Motor Insurance; and the Schedule.
You must read all these documents as a whole.
The documents must be read as a whole.
But what is the role of each document? It is clear from the certificate which I have quoted in para 9 above that UKI intended the Policy to meet the terms of the RTA.
But is the needed cover provided by the certificate or by a corrective interpretation of the insuring clause?
I am not persuaded by the two strands approach which UKI advocates.
The certificate is relevant to and forms part of the Policy because it alone states the limitations as to use which the Policy imposes (para 9 above).
Thus it is readily understandable why UKI requires the policy holder to read the four documents as a whole.
But the wording of the Chief Executives certificate distinguishes between the Certificate of Motor Insurance and the Policy when it speaks of the Policy to which this Certificate relates.
It certifies the legal effect of the Policy without purporting to provide additional cover.
My concern is also that the two strands approach does not fit in easily with the provisions of the RTA which draw a distinction between an insurance policy and an insurance certificate.
The certificate is the product of section 147 of the RTA and the Motor Vehicles (Third Party Risks) Regulations 1972 (SI 1972/1217) as amended (the 1972 Regulations).
Section 147 provides that an insurer issuing a motor insurance policy must deliver to the insured a certificate of insurance in the form prescribed by the 1972 Regulations.
The certificate serves as evidence of the existence of the policy, because, for example, a driver may be required by a police constable to produce the certificate (section 165) and a person against whom a claim is made must give the claimant such particulars of the policy as are specified in the certificate (section 154).
The RTA defines policy of insurance in section 161 in a non exclusive way, stating that it includes a covering note.
But the RTA also speaks of policy as something separate from the certificate of motor insurance.
For example, in section 147 the insurer issuing a policy must also deliver the certificate.
In section 144A, which creates the offence of keeping a vehicle which does not meet the insurance requirements, subsection (3) defines the first condition of meeting the insurance requirements in these terms: The first condition is that the policy or security, or the certificate of insurance or security which relates to it, identifies the vehicle by its registration mark as a vehicle which is covered by the policy or security.
The RTAs treatment of an insurance policy as a distinct concept from a certificate of insurance points against the two strands approach.
Further, if the certificate, although distinct, were interpreted as a separate contractual basis for insurance cover, questions would arise as to whether an insurer may avoid liability for a risk covered only by a certificate of insurance in circumstances in which it is barred from so doing in relation to cover under a policy.
Section 151 imposes a duty on insurers to satisfy judgments obtained against persons insured against third party risks up to the maximum at the relevant time of 1m (now 1.2m).
The section applies to judgments relating to a liability which section 145 requires to be covered by insurance and it is a liability covered by the terms of the policy (subsection (2)(a)).
In deciding whether the terms of the policy cover the liability the section disregards any requirement in the policy that the driver have a valid driving licence (section 151(3)).
The obligation to pay exists even if the insurer was entitled to avoid or cancel the policy or had avoided or cancelled it (section 151(5)).
In short, section 151 focuses on the liability covered by the terms of the policy and excludes certain terms of the policy and the avoidance or cancellation of the policy.
It does not envisage liability covered by the certificate or the avoidance or cancellation of the certificate.
I am therefore not prepared to adopt the two strands approach.
But the outcome of the appeal does not depend upon the two strands submission because I am persuaded that the Court of Appeal erred in interpreting clause 1a to include the words there is an accident involving your vehicle in place of the phrase you have an accident in your vehicle.
Reading terms into clause 1a
Three questions arise in relation to the arguments about the interpretation and application of clause 1a.
First, one must ask what is the extent of the insurance cover which section 145(3)(a) requires.
Secondly, one must ask what words should be read into the clause 1a.
And the third question is whether Mr Holdens accident falls within the wording of the clause as so interpreted.
i) What section 145(3)(a) of the RTA requires
The first question requires the court to interpret the statutory requirement that the damage to property has been caused by, or arising out of, the use of the vehicle on a road or other public place.
This involves the interpretation of the noun use and also of the causal phrase caused by, or arising out of.
Both predated the various EU Motor Insurance Directives and were the subject of English and Welsh judicial decisions.
In English case law use has been interpreted to extend beyond driving a vehicle so that an owner had to have third party insurance if he had the use of the vehicle on a road.
Thus, a person who left his broken down vehicle on a public road, without a battery and without any petrol in its tank, was convicted of unlawfully using the car without there being in force a third party insurance under section 35(1) of the Road Traffic Act 1930, which is the precursor of section 143(1) of the RTA: Elliott v Grey [1960] 1 QB 367, 372 per Lord Parker CJ.
Similarly, in Pumbien v Vines [1996] RTR 37, a motorist was convicted under section 143(1) of the RTA when he parked his vehicle on a public road for over seven months during which time the rear brakes seized, the tyres deflated and the gearbox ceased to contain any oil.
The statutory concept of use in this context is that the owner has an element of control, management or operation of the vehicle while it is on the road: Brown v Roberts [1965] 1 QB 1, 15 per Megaw J.
The good sense of having a broad interpretation of use in the requirement for compulsory third party insurance is clear as leaving an immobilised car on a public road may create a hazard for other road users, for example if the vehicle was left close to a blind corner.
Similar considerations apply to protect members of the public in other places to which the public have access, such as car parks.
The mischief is that an uninsured owner may not be able to compensate members of the public, who can be expected to be on a road or at a public place and who suffer personal injury or damage to property as a result of the presence of the vehicle in that place.
It is necessary also to consider the jurisprudence of the CJEU on the Directive as section 145(3)(a) should be interpreted in the light of the wording and purpose of the Directive so long as that is not contra legem: see for example, Pfeiffer v Deutsches Rotes Kreuz (Cases C 397/01 to C 430/01) [2005] 1 CMLR 44, paras 108 114, and Dominguez v Centre Informatique de Centre Ouest Atlantique (Case C 282/10) [2012] 2 CMLR 14, paras 24 and 25.
Both Judge Waksman and the Court of Appeal discussed the CJEUs interpretation of the Directive in their reasoning.
Judge Waksman concluded that section 145(3)(a) was not compatible with the Directive; the Court of Appeal gave what I see as a strained interpretation to use to achieve such compatibility.
Recent case law of the CJEU has demonstrated a need for Parliament to reconsider the wording of section 145(3)(a) of the RTA to comply with the Directive.
As the courts below recognized, in Vnuk the CJEU held that the objective of the First to Third Directives was to protect injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle (para 56).
As a result, the CJEU ruled that the concept of use of vehicles in article 3(1) of the First Directive (which is materially in the same terms as article 3 of the current Directive) covers any use of a vehicle that is consistent with the normal function of that vehicle (para 59 and the dispositif).
In that case, the accident occurred when a tractor was reversing in a farmyard in order to place a trailer, to which it was attached, in a barn and the trailer struck a ladder on which the claimant was standing, causing him to fall.
The CJEU, rejecting the contention that the article covered only use of a vehicle on a public road, held that article 3(1) of the First Directive could apply to the manoeuvre of the tractor in the farmyard.
Since the judgment of the Court of Appeal was handed down in this case, the Grand Chamber of the CJEU has revisited the meaning of use of vehicles in article 3(1) of the First Directive in Rodrigues de Andrade v Salvador (Case C 514/16), 28 November 2017.
The accident in that case occurred when an agricultural tractor, which had a drum with a herbicide spraying device mounted on its back, was stationary but its engine was running to drive the spray pump for the herbicide.
A landslip, which was caused by among other things the vibrations of the tractor engine and the spray, carried the tractor away, causing it to fall down terraces and crush a worker who was working on the vines below.
The Grand Chamber held that the concept of use of vehicles covers any use of a vehicle as a means of transport (para 38).
The fact that a vehicle was stationary or that its engine was not running at the time of the accident did not preclude the use falling within the scope of its function as a means of transport (para 39).
But the concept of use of vehicles did not cover a circumstance in which the tractors principal function, at the time of the accident, was not to serve as a means of transport but to generate, as a machine for carrying out work, the motive power necessary to drive the pump of a herbicide sprayer (para 42 and the dispositif).
The judgments in Vnuk and Andrade were confirmed in a judgment of the Sixth Chamber of the CJEU, which concerned article 3 of the Directive, in Torreiro v AIG Europe Ltd (Case C 334/16) 20 December 2017, [2018] Lloyds Rep IR 418, which affirmed that in EU law the location of the use of the vehicle under the Directive is not confined to a road or other public place as had been understood in prior English jurisprudence.
I am not persuaded that section 145(3)(a) can be read down to comply with the jurisprudence of the CJEU.
In R (RoadPeace Ltd) v Secretary of State for Transport [2017] EWHC 2725 (Admin), [2018] 1 WLR 1293, Ouseley J (paras 73 and 99) recorded and accepted the view of the Secretary of State for Transport and the Motor Insurers Bureau that section 145(3)(a) could not be read down and that there required to be amending legislation.
In Lewis v Tindale [2018] EWHC 2376 (QB) Soole J reached the same conclusion (paras 42 58) because reading down would go against the grain and thrust of the legislation, because it raised policy ramifications which were not within the institutional competence of the courts, and because it would necessarily impose retrospective criminal liability under section 143.
I agree.
It is important to note that EU law does not require a national court, hearing a dispute between private persons, to disapply the provisions of national law and the terms of an insurance policy, which follows national law, when it is unable to interpret national law in a manner that is compatible with a provision of a directive which is capable of producing direct effect: see judgment of the Grand Chamber of the CJEU in Smith v Meade (Case C 122/17) 7 August 2018 (paras 49, 55, 57 and the dispositif).
In that case, the requirement for third party motor insurance cover in Irish road traffic legislation did not comply with the Directive.
A motor insurance policy, which was a contract between private persons, reflected the Irish legislation.
The CJEU held that the terms of the insurance policy were not to be disapplied, notwithstanding the failure to provide the cover which the Directive required; the person disadvantaged by this failure could instead seek compensation from the member state (para 56).
On this basis, it is the cover required by the RTA, and not the extended cover which the CJEU jurisprudence now requires, which is to be read into the Policy.
The relevant use therefore is use on a road or other public place.
The matter does not stop with the interpretation of the words use of the vehicle.
It is also necessary to consider the causal phrase caused by, or arising out of the use of the vehicle on a road or other public place.
The addition of the words arising out of after caused makes it clear that there can be a causal link between use of a vehicle on a road and damage resulting from that use which occurs elsewhere.
In Romford Ice and Cold Storage Co Ltd v Lister [1956] 2 QB 180, a case which concerned the interpretation of identical words in section 36(1) of the Road Traffic Act 1930, the majority of the Court of Appeal (Birkett and Romer LJJ) held that an accident which occurred in the yard of a slaughterhouse did not arise out of use on the road.
Romer LJ (pp 211 212) opined that to hold that the accident arose out of use on a road would be stretching the language of the section beyond permissible limits.
He gave the following example to illustrate his understanding of the meaning of the statutory words: An accident is caused by the use of a vehicle on a road if it runs over a pedestrian at a zebra crossing; an accident arises out of the use of a vehicle on a road if it skids off the road and injures a pedestrian who is walking on the pavement.
Birkett LJ expressed a similar view (pp 204 205) in rejecting the idea that the accident arose out of the use of the lorry on the road because the lorry had to be driven on the road to get to the yard.
Denning LJ took a different view, holding that because the lorry was engaged in operations incidental or ancillary to a journey on the road, the accident arose out of the use of the vehicle on the road.
I agree with the majority in Romford in their interpretation of the relevant statutory words.
Their interpretation was followed in the unanimous judgment of the Court of Appeal in Inman v Kenny [2001] EWCA Civ 35; [2001] PIQR P18.
Were an accident similar to that in Romford to occur once the RTA has been amended to comply with the CJEU jurisprudence in Vnuk and Andrade, the result of that case would probably be different.
But that does not affect the meaning of the words caused by, or arising out of the use of the vehicle.
There must be a reasonable limit to the length of the relevant causal chain.
In Malcolm v Dickson 1951 SC 542, a case about remoteness of damage in a negligence claim, Lord Birnam stated (p 544): It is of course logically possible, as every schoolboy knows, to trace the loss of a battle, or even of a kingdom, to the absence of a nail in a horses shoe.
But strict logic does not appear to me to be a safe guide in the decision of questions such as this.
I agree.
Mr Eklund QC, who appeared for UKI, submitted that Dunthorne v Bentley [1999] Lloyds Rep 560 was wrongly decided.
I would not so hold.
The case did not turn on a point of law but on the application of the law to a particular set of facts.
The Court of Appeal held in that case that the trial judge was entitled to conclude that Mrs Bentley had crossed the road and so caused the accident while she was seeking help from a colleague to continue her journey, shortly after she had run out of petrol and had parked her car at the side of the road.
The judge was entitled to conclude that the accident had arisen out of her use of the car on the road.
Mr Dunthornes claim was close to the line, as Hutchison LJ recognized, but it is not apparent to me that the outcome of that borderline case was wrong, having regard to the close connection in time, place and circumstance between the use of the car on the road and the accident.
In summary, section 145(3) of the RTA must be interpreted as mandating third party motor insurance against liability in respect of death or bodily injury of a person or damage to property which is caused by or arises out of the use of the vehicle on a road or other public place.
The relevant use occurs where a person uses or has the use of a vehicle on a road or public place, including where he or she parks an immobilised vehicle in such a place (as the English case law requires), and the relevant damage has to have arisen out of that use.
ii) What term should be read into clause 1a
In Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] AC 1101, the House of Lords construed a formal commercial contract to cure a linguistic mistake.
The House, in the leading speech which Lord Hoffmann delivered, stated that where the context and background of a contract drove the court to the conclusion that something must have gone wrong with the language that the parties had used, the court did not have to attribute to the parties an intention which a reasonable person would not have understood them to have had.
He emphasised that it required a strong case to persuade a court that something must have gone wrong with the language (paras 14 15).
For the court to adopt a corrective construction, it should be clear that something has gone wrong with the language and it should be clear what a reasonable person would have understood the parties to have meant. (para 25)
In this case, there is an apparent contradiction between the terms of clause 1a, if those words are given their ordinary meaning, and the promise in the certificate (para 9 above) that the Policy satisfies the requirements of UK law, including the RTA.
If, as I have concluded, the certificate is not effective to create the needed cover, there can be no doubt that it is necessary to interpret the insuring clause in the Policy so that it meets the requirements of section 145(3)(a) of the RTA by correcting the mistake in clause 1a.
This is one of those rare cases where the mistake is clear as is the intended meaning, so that a party to the agreement does not need to apply for rectification of the Policy.
The policy booklet is written in plain language for the benefit of the policy holder and lacks the precision which one might expect from a detailed commercial contract.
For example, the statement in clause 1a that UKI will give cover for the insureds liability if you have an accident in your vehicle if read strictly would not cover an accident caused by the insured opening his car door and stepping out of the car.
Yet clause 2, which appears to address the Brown judgment to which I referred in para 34 above, provides such cover for passengers getting out of the car.
It was not disputed that clause 1a should be construed as covering the insured driver stepping out of his vehicle.
Nor is it disputed that the clause must be construed so that it meets the requirements of the RTA.
But the alteration of the clause which the Court of Appeal favoured was much more radical.
In identifying the needed correction, I derive no assistance from the fact that the Policy gives extensive first party cover and cover overseas or from the fact that the maximum sum available under the Policy for third party cover far exceeds the statutory minimum.
The correction which is needed is to enable the cover to extend beyond what is expressly provided for to that which the RTA requires.
If, as is the case, the express terms of the Policy in some respects exceed what the RTA requires, those terms must be given effect.
Construction of clause 1a to expand its cover to meet the requirements of the RTA cannot cut back that which is expressly conferred.
But that which is to be added to correct the omission is that which is needed to make the cover comply with the RTA and no more.
In my view the Court of Appeal erred in not adopting this approach.
Its formulation did not confine the Policys cover to the express terms of clause 1a and such additions as were needed to meet requirements of RTA.
Instead, the formulation we will cover you if there is an accident involving your vehicle expands the cover significantly beyond both the express terms of the clause and the requirements of the RTA by removing the statutory causal link between the use of the vehicle on a road or other public place and the accident.
Indeed, the interpretation which the Court of Appeal favours appears to go beyond that which EU law currently requires.
Dealing briefly with other arguments which Phoenix has raised, I see no basis for the operation against UKI of the contra proferentem rule in this context.
The necessity for corrective construction arises from the fact that the terms to meet the legal requirements, which the Chief Executives certificate vouched, have not been expressed in the insuring clause.
There is no doubt as to what those terms are as the statutory provision provides them.
Nor do I derive any assistance by reference to the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (the 1999 Regulations).
The requirement in regulation 7 of the 1999 Regulations (now section 69 of the Consumer Rights Act 2015) that the interpretation most favourable to the consumer is to prevail where there is doubt about the meaning of a written term of a contract applies, for example, in the circumstances which I have discussed in para 48 above.
But I am not persuaded that it can apply where the court, having recognized a mistake in the language used, is applying a corrective construction by reading into the clause words, which have not been expressed, to correct the mistake.
It is important to recall that a corrective interpretation is available only if it is clear what a reasonable person would have understood the parties to have meant (para 46 above).
Nor can the fact that UKI has amended the terms of the Policy to extend its cover since the events which gave rise to the claim in this case assist the process of construction of the terms of the Policy.
In my view the appropriate corrective construction of clause 1a to give effect to the requirements of the RTA is to add the words or if there is an accident caused by or arising out of your use of your vehicle on a road or other public place.
The clause would therefore read: We will cover you for your legal responsibility if you have an accident in your vehicle or if there is an accident caused by or arising out of your use of your vehicle on a road or other public place and Clause 2 of the Policy, which I quote in para 7 above, extends this cover to the other people which it specifies, including a person insured by the policy who is driving with the permission of the insured. iii) Does Mr Holdens accident fall within clause 1a as so interpreted?
In my view, neither English domestic case law nor the jurisprudence of the CJEU supports the view that the carrying out of significant repairs to a vehicle on private property entails the use of the vehicle.
The English case law which interprets use in the RTA as having the use of makes good sense in the context of vehicles which have been left on a road or in a public place, where members of the public are likely to encounter them, but less sense if applied without qualification to vehicles located on private property.
In ordinary language one would not speak of a person who is conducting substantial repairs to a stationary vehicle as using that vehicle, but the presence of a vehicle on a road or other public place while the owner was carrying out such repairs would, in my view, fall within the mischief which section 145(3)(a) addresses.
EU law now requires the extension of compulsory third party insurance to vehicles on private property to cover use of the vehicles as a means of transport, a concept which can include parked vehicles.
I am not persuaded that a vehicle which is on its side being repaired on private property, such as a garage, is being used as a means of transport as the CJEU jurisprudence requires.
But it is not necessary to decide that point because, as the CJEU has held in Smith v Meade (para 55 above) national legislation governs and the repair did not take place on a road or other public place.
Turning to the statutory phrase, arising out of the use of the vehicle on the road, Phoenixs argument is that Mr Holdens repairs met the causal requirement either because the disrepair of the car was the result of its use or because the repair was a precursor to his getting the car back on the road as a means of transport.
The repairs, Phoenix submitted, were ancillary and incidental to the use of the car and thus the damage to its property and that of its neighbour arose out of the use of the car.
I do not accept this submission because the causal connection is too remote: viz my discussion of the Romford case in paras 42 and 43 above.
It is likely that the prior use of the car as a means of transport was either a but for cause or (for example, if, without washing the underside after use on a road, the car was parked on a private driveway or in a garage for a prolonged period) a contributory cause of the disrepair of the vehicle which necessitated the repairs.
I would accept that the repairs may properly be said to have arisen out of the use of the car as they were a response to the disrepair of that vehicle.
But it does not follow that the property damage which is the subject of Phoenixs claim was caused by or arose out of the use of the vehicle as the RTA requires.
In agreement with Judge Waksman, I consider it to be an artificial analysis to say that the property damage, which Phoenix and its neighbour suffered, was caused by or arose out of the use of the vehicle.
As he stated (para 66 of his judgment), [t]he fire was caused by and arose out of the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself.
It was Mr Holdens alleged negligence in carrying out the repairs and not the prior use of the car as a means of transport which caused the relevant damage.
In my view, Phoenixs claim clearly falls on the wrong side of the line.
I have not overlooked the Commonwealth cases to which this court and the courts below were referred.
Some, like Elias v Insurance Corpn of British Columbia (1992) 95 DLR (4th) 303 and Pilliteri v Priore (1997) 145 DLR (4th) 531, in which repair was treated as a use of a vehicle, concerned differently worded legislation which referred to damage arising out of the ownership, use or operation of a vehicle.
The Australian cases, which Judge Waksman analysed in paras 52 57 of his judgment, appear to turn on their particular facts and two of the cases draw a distinction between repairs where the car is being prepared for use on the one hand and, on the other, circumstances in which the car is driven or some part of its mechanism is used in the course of repairs.
Like the Master of the Rolls, I do not find the Commonwealth cases helpful.
Because Mr Holden was not in his car when the accident occurred (as the express terms of clause 1a require) and because, for the reasons which I have given, the RTA does not require third party insurance cover in the circumstances of the accident in this case (with the result that the corrective interpretation does not assist Phoenix), UKI is entitled to the declaration which Judge Waksman gave in his order of 8 April 2016.
Conclusion
I would allow the appeal.
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Mr Holden accidentally set fire to his car while repairing it at the premises of his employer, Phoenix Engineering.
The fire caused 2 million of damage to Phoenix and its neighbours premises.
Phoenixs insurer (Axa) paid out and has agreed not to pursue Mr Holden personally for the money, but only his car insurance provider (Churchill).
Axa says that Mr Holden is covered by his car insurance policy's third party liability cover but Churchill says he is not.
Clause 1a of the policy says we will cover you for your legal responsibility if you have an accident in your vehicle and: you kill or injure someone; [or] you damage their property .
As required by law, the policy also includes a certificate that it satisfies the requirements of relevant legislation, which includes the Road Traffic Act 1988 (RTA).
Under the RTA, car insurance policies must provide cover in respect of any liability incurred in respect of damage to property caused by, or arising out of, the use of the vehicle on a road or other public place.
The High Court held that the policy did not cover Mr Holden's accident because it had arisen out of the negligent way in which it was being repaired and not out of the use of the car.
The Court of Appeal (CA) allowed his appeal.
It held that the wording of clause 1a was inadequate and had to be read with the certificate that the policy provided the cover required by law.
As the policy had no geographical limitations, no such limitations were to be imposed in extending its cover to meet the statutory requirements.
It accordingly construed the opening words of clause 1a to mean we will cover you for your legal responsibility if there is an accident involving your vehicle.
The Supreme Court unanimously allows the appeal.
Lord Hodge gives the only judgment.
Having regard to the statutory requirements and the terms of the certificate, which disclose the insurers intention, the policy must be construed so that the third party cover meets the requirements of the RTA [24].
As the certificate did not purport to provide any additional cover in itself, and because the relevant legislation treats a certificate of insurance as distinct from a policy, it is therefore necessary to read words into clause 1a.
However, the CA went too far by doing so in such a way as to extend cover to any accident involving Mr Holden's vehicle [25 31].
The first step is to ask what caused by, or arising out of, the use of the vehicle on a road or other public place means.
In English case law, the statutory word use has been interpreted broadly to cover any situation where the owner has an element of control, management or operation of the vehicle on the road or in a public place.
The reason is that even a parked car may be a hazard on a road or in such a place [32 34].
The words caused by, or arising out of the use of further extend the required cover, but there must be a reasonable limit to the causal chain [42 45].
The concept of use in EU law goes further, and is not confined to a road or other public place.
It extends to any use of a vehicle as a means of transport.
To comply with EU law, Parliament may need to reconsider the wording of the RTA.
But the RTA cannot be read down to comply by excising the words on a road or other public place because this would go against the grain and thrust of the legislation.
It is therefore the cover required by the RTA, not EU law, that must be read into the policy [35 41].
Where the context and background of a contract drives the courts to the conclusion that something has gone wrong with the language used, it may adopt a corrective construction where it is clear what a reasonable person would have understood the parties to have meant [46 47].
Here, the necessary correction is to extend the cover beyond what was expressly provided to that which the RTA requires, and no more [48 49].
The CA erred in not adopting this approach: the formulation involving your vehicle expanded the cover significantly beyond both the express terms of the clause and the requirements of the RTA, by removing the statutory causal link between use of the vehicle on a road or other public place and the accident [50].
Nor does the statutory rule that the interpretation most favourable to the consumer must prevail apply to a situation such as this, where the court is correcting a mistake in the language used and there is no doubt about the parties intended meaning [51].
The appropriate corrective construction is therefore to read the clause as if it said we will cover you for your legal responsibility if you have an accident in your vehicle or if there is an accident caused by or arising out of your use of your vehicle on a road or other public place and [52].
Mr Holden's accident does not fall within clause 1a as so interpreted.
A vehicle being repaired on private property is not being used [53].
Furthermore, although the attempted repairs may have arisen out of the use of the car, the property damage did not.
It was Mr Holden's alleged negligence in carrying out the repairs, not the prior use of the car as a means of transport, that caused the relevant damage [54 55].
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This case concerns the framework which will govern an application for the grant of development consent for the construction of a third runway at Heathrow Airport.
This is a development scheme promoted by the appellant, Heathrow Airport Ltd (HAL), the owner of the airport.
As a result of consideration over a long period, successive governments have come to the conclusion that there is a need for increased airport capacity in the South East of England to foster the development of the national economy.
An independent commission called the Airports Commission was established in 2012 under the chairmanship of Sir Howard Davies to consider the options.
In its interim report dated 17 December 2013 the Airports Commission reached the conclusion that there was a clear case for building one new runway in the South East, to come into operation by 2030.
In that report the Airports Commission set out scenarios, including a carbon traded scenario under which overall carbon dioxide (CO) emissions were set at a cap consistent with a goal to limit global warming to 2C.
The Commission reduced the field of proposals to three main candidates.
Two of these involved building additional runway capacity at Heathrow Airport, either to the north west of the existing two runways (the NWR Scheme) or by extending the existing northern runway (the ENR Scheme).
The third involved building a second runway at Gatwick airport (the G2R Scheme).
The Airports Commission carried out an extensive consultation on which scheme should be chosen.
In its final report dated 1 July 2015 (the Airports Commission Final Report) the Commission confirmed that there was a need for additional runway capacity in the South East by 2030 and concluded that, while all three options could be regarded as credible, the NWR Scheme was the best way to meet that need, if combined with a significant package of measures which addressed environmental and community impacts.
The Government carried out reviews of the Airports Commissions analysis and conclusions.
It assessed the Airports Commission Final Report to be sound and robust.
On 14 December 2015 the Secretary of State for Transport (the Secretary of State) announced that the Government accepted the case for airport expansion; agreed with, and would consider further, the Airports Commissions short list of options; and would use the mechanism of a national policy statement (NPS) issued under the Planning Act 2008 (the PA 2008) to establish the policy framework within which to consider an application by a developer for a development consent order (DCO).
The announcement also stated that further work had to be done in relation to environmental impacts, including those arising from carbon emissions.
In parallel with the development of national airports policy, national and
international policy to combat climate change has also been in a state of development.
The Climate Change Act 2008 (the CCA 2008) was enacted on the same day as the PA 2008.
It sets a national carbon target (section 1) and requires the Government to establish carbon budgets for the UK (section 4).
There are mechanisms in the CCA 2008 to adjust the national target and carbon budgets (in sections 2 and 5, respectively) as circumstances change, including as scientific understanding of global warming develops.
In 1992, the United Nations adopted the United Nations Framework
Convention on Climate Change. 197 states are now parties to the Convention.
Following the 21st Conference of the parties to the Convention, on 12 December 2015 the text of the Paris Agreement on climate change was agreed and adopted.
The Paris Agreement set out certain obligations to reduce emissions of greenhouse gases, in particular CO2, with the object of seeking to reduce the rate of increase in global warming and to contain such increase to well below 2oC above, and if possible to 1.5oC, above pre industrial levels.
On 22 April 2016 the United Kingdom signed the Paris Agreement and on 17 November 2016 the United Kingdom ratified the Agreement.
An expansion of airport capacity in the South East would involve a substantial increase in CO2 emissions from the increased number of flights which would take place as a result.
The proposals for such expansion have therefore given rise to a considerable degree of concern as to the environmental impact it would be likely to have on global warming and climate change.
This is one aspect of the proposals for expansion of airport capacity, among many others, which have made the decision whether to proceed with such expansion a matter of controversy.
On 25 October 2016, the Secretary of State announced that the NWR Scheme was the Governments preferred option.
In February 2017 the Government commenced consultation on a draft of an Airports NPS which it proposed should be promulgated pursuant to the PA 2008 to provide the national policy framework for consideration of an application for a DCO in respect of the NWR Scheme.
A further round of consultation on a draft of this NPS was launched in October 2017.
There were many thousands of responses to both consultations.
In June 2018 the Government published its response to the consultations.
It also published a response to a report on the proposed scheme dated 1 November 2017 by the Transport Committee (a Select Committee of the House of Commons).
On 5 June 2018 the Secretary of State laid before Parliament the final version of the Airports NPS (the ANPS), together with supporting documents.
As is common ground on this appeal, the policy framework set out in the ANPS makes it clear that issues regarding the compatibility of the building of a third runway at Heathrow with the UKs obligations to contain carbon emissions and emissions of other greenhouse gases could and should be addressed at the stage of the assessment of an application by HAL for a DCO to allow it to proceed with the development.
As is also common ground, the ANPS makes it clear that the emissions obligations to be taken into account at the DCO stage will be those which are applicable at that time, assessed in the light of circumstances and the detailed proposals of HAL at that time.
On 25 June 2018 there was a debate on the proposed ANPS in the House of Commons, followed by a vote approving the ANPS by 415 votes to 119, a majority of 296 with support from across the House.
On 26 June 2018 the Secretary of State designated the ANPS under section 5(1) of the PA 2008 as national policy.
It is the Secretary of States decision to designate the ANPS which is the subject of legal challenge in these proceedings.
Objectors to the NWR Scheme commenced a number of claims against the Secretary of State to challenge the lawfulness of the designation of the ANPS on a wide variety of grounds.
For the most part, those claims have been dismissed in the courts below in two judgments of the Divisional Court (Hickinbottom LJ and Holgate J) in the present proceedings, [2019] EWHC 1070 (Admin); [2020] PTSR 240, and an associated action ([2019] EWHC 1069 (Admin)) and in the judgment of the Court of Appeal in the present proceedings: [2020] EWCA Civ 214; [2020] PTSR 1446.
The Divisional Court dismissed all the claims brought by objectors, including those brought by the respondents to this appeal (Friends of the Earth FoE and Plan B Earth).
FoE is a non governmental organisation concerned with climate change.
Plan B Earth is a charity concerned with climate change.
However, the Court of Appeal allowed appeals by FoE and Plan B Earth and granted declaratory relief stating that the ANPS is of no legal effect and that the Secretary of State had acted unlawfully in failing to take into account the Paris Agreement in making his decision to designate the ANPS.
The Court of Appeal set out four grounds for its decision: (i) The Secretary of State breached his duty under section 5(8) of the PA 2008 to give an explanation of how the policy set out in the ANPS took account of Government policy, which was committed to implementing the emissions reductions targets in the Paris Agreement (the section 5(8) ground); (ii) The Secretary of State breached his duty under section 10 of the PA 2008, when promulgating the ANPS, to have regard to the desirability of mitigating and adapting to climate change, in that he failed to have proper regard to the Paris Agreement (the section 10 ground); (iii) The Secretary of State breached his duty under article 5 of the Strategic Environmental Assessment Directive (the SEA Directive, Directive 2001/42/EC of the European Parliament and of the Council on the assessment of the effects of certain plans and programmes on the environment) to issue a suitable environmental report for the purposes of public consultation on the proposed ANPS, in that he failed to refer to the Paris Agreement (the SEA Directive ground); and (iv) The Secretary of State breached his duty under section 10 of the PA 2008, when promulgating the ANPS, in that he failed to have proper regard to (a) the desirability of mitigating climate change in the period after 2050 (the post 2050 ground) and (b) the desirability of mitigating climate change by restricting emissions of non CO impacts of aviation, in particular nitrous oxide (the non CO2 emissions ground).
The Court of Appeal also rejected a submission by HAL, relying on section 31 of the Senior Courts Act 1981, that it should exercise its discretion as to remedy to refuse any relief, on the grounds that (HAL argued) it was highly likely that even if there had been no breach of duty by the Secretary of State the decision whether to issue the ANPS would have been the same.
HAL appeals to this court with permission granted by the court.
HAL is joined in the proceedings as an interested party.
It has already invested large sums of money in promoting the NWR Scheme and wishes to carry it through by applying for a DCO in due course and then building the proposed new runway.
The Secretary of State has chosen not to appeal and has made no submissions to us.
However, HAL is entitled to advance all the legal arguments which may be available in order to defend the validity of the ANPS.
Prior to the Covid 19 pandemic, Heathrow was the busiest two runway airport in the world.
The pandemic has had a major impact in reducing aviation and the demand for flights.
However, there will be a lead time of many years before any third runway at Heathrow is completed and HALs expectation is that the surplus of demand for aviation services over airport capacity will have been restored before a third runway would be operational.
Lord Anderson QC for HAL informed the court that HAL intends to proceed with the NWR Scheme despite the pandemic.
The Planning Act 2008
We are grateful to the Divisional Court for their careful account of the PA 2008, on which we draw for this section.
The PA 2008 established a new unified development consent procedure for nationally significant infrastructure projects defined to include certain airport related development including the construction or alteration of an airport that is expected to be capable of providing air passenger services for at least 10m passengers per year (sections 14 and 23).
Originally, many of the primary functions under the Act were to be exercised by the Infrastructure Planning Commission, established under section 1.
However, those functions were transferred to the Secretary of State by the Localism Act 2011.
The mischiefs that the Act was intended to address were identified in the White Paper published in May 2007, Planning for a Sustainable Future (Cm 7120) (the 2007 White Paper).
Prior to the PA 2008, a proposal for the construction of a new airport or extension to an airport would have required planning permission under the Town and Country Planning Act 1990.
An application for permission would undoubtedly have resulted in a public inquiry, whether as an appeal against refusal of consent or a decision by the Secretary of State to call in the matter for his own determination.
As paragraph 3.1 of the 2007 White Paper said: A key problem with the current system of planning for major infrastructure is that national policy and, in particular, the national need for infrastructure, is not in all cases clearly set out.
This can cause significant delays at the public inquiry stage, because national policy has to be clarified and the need for the infrastructure has to be established through the inquiry process and for each individual application.
For instance, the absence of a clear policy framework for airports development was identified by the inquiry secretary in his report on the planning inquiry as one of the key factors in the very long process for securing planning approval for Heathrow Terminal 5.
Considerable time had to be taken at the inquiry debating whether there was a need for additional capacity.
The Government has since responded by publishing the Air Transport White Paper to provide a framework for airport development.
This identifies airport development which the Government considers to be in the national interest, for reference at future planning inquiries.
But for many other infrastructure sectors, national policy is still not explicitly set out, or is still in the process of being developed.
Paragraph 3.2 identified a number of particular problems caused by the absence of a clear national policy framework.
For example, inspectors at public inquiries might be required to make assumptions about national policy and national need, often without clear guidance and on the basis of incomplete evidence.
Decisions by Ministers in individual cases might become the means by which government policy would be expressed, rather than such decisions being framed by clear policy objectives beforehand.
In the absence of a clear forum for consultation at the national level, it could be more difficult for the public and other interested parties to have their say in the formulation of national policy on infrastructure.
The ability of developers to make long term investment decisions is influenced by the availability of clear statements of government policy and objectives, and might be adversely affected by the absence of such statements.
The 2007 White Paper proposed that national policy statements would set the policy framework for decisions on the development of national infrastructure.
They would integrate the Governments objectives for infrastructure capacity and development with its wider economic, environmental and social policy objectives, including climate change goals and targets, in order to deliver sustainable development.
The role of Ministers would be to set policy, in particular the national need for infrastructure development (para 3.4).
Paragraph 3.11 envisaged that any public inquiry dealing with individual applications for development consent would not have to consider issues such as whether there is a case for infrastructure development, or the types of development most likely to meet the need for additional capacity, since such matters would already have been addressed in the NPS.
It was said that NPSs should have more weight than other statements of policy, whether at a national or local level: they should be the primary consideration in the determination of an application for a DCO (para 3.12), although other relevant considerations should also be taken into account (para 3.13).
To provide democratic accountability, it was said that NPSs should be subject to Parliamentary scrutiny before being adopted (para 3.27).
In line with the 2007 White Paper recommendation, Part 2 of the PA 2008 provides for NPSs which give a policy framework within which any application for development consent, in the form of a DCO, is to be determined.
Section 5(1) gives the Secretary of State the power to designate an NPS for development falling within the scope of the Act; and section 6(1) provides that [t]he Secretary of State must review each [NPS] whenever the Secretary of State thinks it appropriate to do so.
The content of an NPS is governed by section 5(5) (8) which provide that: set out the relative weight to be given to specified (5) The policy set out in [an NPS] may in particular (a) set out, in relation to a specified description of development, the amount, type or size of development of that description which is appropriate nationally or for a specified area; (b) set out criteria to be applied in deciding whether a location is suitable (or potentially suitable) for a specified description of development; (c) criteria; (d) identify one or more locations as suitable (or potentially suitable) or unsuitable for a specified description of development; (e) identify one or more statutory undertakers as appropriate persons to carry out a specified description of development; (f) set out circumstances in which it is appropriate for a specified type of action to be taken to mitigate the impact of a specified description of development. [An NPS] must give reasons for the policy set out in the (6) If [an NPS] sets out policy in relation to a particular description of development, the statement must set out criteria to be taken into account in the design of that description of development. (7) statement. (8) The reasons must (in particular) include an explanation of how the policy set out in the statement takes account of Government policy relating to the mitigation of, and adaptation to, climate change.
As is made clear, the NPS may (but is not required to) identify a particular location for the relevant development.
provides (so far as relevant to these claims): In addition, under the heading Sustainable development, section 10 (1) This section applies to the Secretary of States functions under sections 5 and 6. (2) The Secretary of State must, in exercising those functions, do so with the objective of contributing to the achievement of sustainable development. (3) For the purposes of subsection (2) the Secretary of State must (in particular) have regard to the desirability of (a) mitigating, and adapting to, climate change;
The process for designation of an NPS is also set out in the Act.
The PA 2008 imposed for the first time a transparent procedure for the public and other consultees to be involved in the formulation of national infrastructure policy in advance of any consideration of an application for a DCO.
The Secretary of State produces a draft NPS, which is subject to (i) an appraisal of sustainability (AoS) (section 5(3)), (ii) public consultation and publicity (section 7), and (iii) Parliamentary scrutiny (sections 5(4) and 9).
In addition, there is a requirement to carry out a strategic environmental assessment under the SEA Directive as transposed by the Environmental Assessment of Plans and Programmes Regulations 2004 (SI 2004/1633) (the SEA Regulations) (see regulation 5(2) of the SEA Regulations).
The consultation and publicity requirements are set out in section 7, which so far as relevant provides: (1) This section sets out the consultation and publicity requirements referred to in sections 5(4) and 6(7). (2) The Secretary of State must carry out such consultation, and arrange for such publicity, as the Secretary of State thinks appropriate in relation to the proposal.
This is subject to subsections (4) and (5). (3) In this section the proposal means (a) the statement that the Secretary of State proposes to designate as [an NPS] for the purposes of this Act or (b) (as the case may be) the proposed amendment. (4) The Secretary of State must consult such persons, and such descriptions of persons, as may be prescribed. (5) If the policy set out in the proposal identifies one or more locations as suitable (or potentially suitable) for a specified description of development, the Secretary of State must ensure that appropriate steps are taken to publicise the proposal. (6) The Secretary of State must have regard to the responses to the consultation and publicity in deciding whether to proceed with the proposal.
A proposed NPS must be laid before Parliament (section 9(2) and (8)).
The Act thus provides an opportunity for a committee of either House of Parliament to scrutinise a proposed NPS and to make recommendations; and for each House to scrutinise it and make resolutions (see section 9(4)).
An NPS is not the end of the process.
It simply sets the policy framework within which any application for a DCO must be determined.
Section 31 provides that, even where a relevant NPS has been designated, development consent under the PA 2008 is required for development to the extent that the development is or forms part of a nationally significant infrastructure project.
Such applications must be made to the relevant Secretary of State (section 37).
Chapter 2 of Part 5 of the Act makes provision for a pre application procedure.
This provides for a duty to consult pre application, which extends to consulting relevant local authorities and, where the land to be developed is in London, the Greater London Authority (section 42).
There are also duties to consult the local community, and to publicise and to take account of responses to consultation and publicity (sections 47 49; and see also regulation 12 of the Infrastructure Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/572), which makes provision for publication of and consultation on preliminary environmental information).
Any application for a DCO must be accompanied by a consultation report (section 37(3)(c)); and adequacy of consultation is one of the criteria for acceptance of the application (section 55(3) and (4)(a)).
Part 6 of the PA 2008 is concerned with Deciding applications for orders granting development consent.
Once the application has been accepted, section 56 requires the applicant to notify prescribed bodies and authorities and those interested in the land to which the application relates, who become interested parties to the application (section 102).
The notification must include a notice that interested parties may make representations to the Secretary of State.
Section 60(2) provides that where a DCO application is accepted for examination there is a requirement to notify any local authority for the area in which land, to which the application relates, is located (see section 56A)) and, where the land to be developed is in London, the Greater London Authority, inviting them each to submit a local impact report (section 60(2)).
The Secretary of State may appoint a panel or a single person to examine the application (the Examining Authority) and to make a report setting out its findings and conclusions, and a recommendation as to the decision to be made on the application.
The examination process lasts six months, unless extended (section 98); and the examination timetable is set out in the Infrastructure Planning (Examination Procedure) Rules 2010 (SI 2010/103) (the Examination Rules).
In addition to local impact reports (section 60), the examination process involves written representations (section 90), written questions by the Examining Authority (rules 8 and 10 of the Examination Rules), and hearings (which might be open floor and/or issue specific and/or relating to compulsory purchase) (sections 91 93).
As a result of the examination process, the provisions of the proposed DCO may be amended by either the applicant or the Examination Authority, eg in response to the representations of interested parties; and it is open to the Secretary of State to modify the proposed DCO before making it.
Section 104 constrains the Secretary of State when determining an application for a DCO for development in relation to which an NPS has effect, in the following terms (so far as relevant to these claims): (2) In deciding the application the Secretary of State must have regard to (a) any [NPS] which has effect in relation to development of the description to which the application relates (a relevant [NPS]), any local impact report , (b) (c) any matters prescribed in relation to development of the description to which the application relates, and (d) any other matters which the Secretary of State thinks are both important and relevant to the Secretary of States decision. (3) The Secretary of State must decide the application in accordance with any relevant [NPS], except to the extent that one or more of subsections (4) to (8) applies. (4) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would lead to the United Kingdom being in breach of any of its international obligations. (5) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would lead to the Secretary of State being in breach of any duty imposed on the Secretary of State by or under any enactment. (6) This subsection applies if the Secretary of State is satisfied that deciding the application in accordance with any relevant [NPS] would be unlawful by virtue of any enactment. (7) This subsection applies if the Secretary of State is satisfied that the adverse impact of the proposed development would outweigh its benefits. (8) This subsection applies if the Secretary of State is satisfied that any condition prescribed for deciding an application otherwise than in accordance with [an NPS] is met. (9) For the avoidance of doubt, the fact that any relevant [NPS] identifies a location as suitable (or potentially suitable) for a particular description of development does not prevent one or more of subsections (4) to (8) from applying. (1) In deciding an application for an order granting development consent, the Secretary of State may disregard representations if the Secretary of State considers that the representations (a) (b) NPS].
In this section representation includes evidence. relate to the merits of policy set out in [an (2)
Section 104 is complemented by section 106 which, under the heading Matters which may be disregarded when determining an application, provides (so far as relevant to these claims): That is also reflected in sections 87(3) and 94(8), under which the Examining Authority may disregard representations (including evidence) or refuse to allow representations to be made at a hearing if it considers that they relate to the merits of the policy set out in [an NPS] .
By section 120(1), a DCO may impose requirements in connection with the development for which consent is granted, eg it may impose conditions considered appropriate or necessary to mitigate or control the environmental effects of the development.
Section 120(3) is a broad provision enabling a DCO to make provision relating to, or to matters ancillary to, the development for which consent is granted including any of the matters listed in Part 1 of Schedule 5 (section 120(4)).
That schedule lists a wide range of potentially applicable provisions, including compulsory purchase, the creation of new rights over land, the carrying out of civil engineering works, the designation of highways, the operation of transport systems, the charging of tolls, fares and other charges and the making of byelaws and their enforcement.
Section 13 concerns Legal challenges relating to [NPSs].
Section 13(1) provides: A court may entertain proceedings for questioning [an NPS] or anything done, or omitted to be done, by the Secretary of State in the course of preparing such a statement only if the proceedings are brought by a claim for (a) judicial review, and (b) the claim form is filed before the end of the period of six weeks beginning with the day after (i) the day on which the statement is designated as [an NPS] for the purposes of this Act, or (ii) published. (if later) the day on which the statement is It was under section 13 that the claims by objectors to the ANPS were brought.
The Climate Change Act 2008
Again, we gratefully draw on the account given by the Divisional Court.
As they explain, the UK has for a long time appreciated the desirability of tackling climate change, and wished to take a more rigorous domestic line.
In the 2003 White Paper, Our Energy Future Creating a Low Carbon Economy, the Government committed to reduce CO2 emissions by 60% on 1990 levels by 2050; and to achieve real progress by 2020 (which equated to reductions of 26 32%).
The 60% figure emanated from the EU Council of Ministers Community Strategy on Climate Change in 1996, which determined to limit emissions to 550 parts per million (ppm) on the basis that to do so would restrict the rise in global temperatures to 2C above pre industrial levels which, it was then considered, would avoid the serious consequences of global warming.
However, by 2005, there was scientific evidence that restricting emissions to 550ppm would be unlikely to be effective in keeping the rise to 2C; and only stabilising CO2 emissions at something below 450ppm would be likely to achieve that result.
Parliament addressed these issues in the CCA 2008.
Section 32 established a Committee on Climate Change (the CCC), an independent public body to advise the UK and devolved Governments and Parliaments on tackling climate change, including on matters relating to the UKs statutory carbon reduction target for 2050 and the treatment of greenhouse gases from international aviation.
Section 1 gives a mandatory target for the reduction of UK carbon emissions.
At the time of designation of the ANPS, it provided: It is the duty of the Secretary of State [then, the Secretary of State for Energy and Climate Change: now, the Secretary of State for Business, Enterprise and Industrial Strategy (BEIS)] to ensure that the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline.
The figure of 80% was substituted for 60% during the passage of the Bill, as evolving scientific knowledge suggested that the lower figure would not be sufficient to keep the rise in temperature to 2C in 2050.
Therefore, although the CCA 2008 makes no mention of that temperature target, as the CCC said in its report on the Paris Agreement issued in October 2016 (see para 73 below): This 2050 target was derived as a contribution to a global emissions path aimed at keeping global average temperatures to around 2C above pre industrial levels.
The statutory target of a reduction in carbon emissions by 80% by 2050 was Parliaments response to the international commitment to keep the global temperature rise to 2C above pre industrial levels in 2050.
Since the designation of the ANPS, the statutory target has been made more stringent.
The figure of 100% was substituted for 80% in section 1 of the CCA 2008 by the Climate Change Act 2008 (2050 Target Amendment) Order 2019/1056.
The Secretary of State for BEIS has the power to amend that percentage (section 2(1) of the CCA 2008), but only: (i) if it appears to him that there have been significant developments in scientific knowledge about climate change since the passing of the Act, or developments in European or international law or policy (section 2(2) and (3)): the Explanatory Note to the Act says, as must be the case, that this power might be used in the event of a new international treaty on climate change; (ii) after obtaining, and taking into account, advice from the CCC (section 3(1)); and (iii) subject to Parliamentary affirmative resolution procedure (section 2(6)).
Section 1 of the CCA 2008 sets a target that relates to carbon only.
Section 24 enables the Secretary of State for BEIS to set targets for other greenhouse gases, but subject to similar conditions to which an amendment to the section 1 target is subject.
In addition to the carbon emissions target set by section 1 and to ensure compliance with it (see sections 5(1)(b) and 8) the Secretary of State for BEIS is also required to set for each succeeding period of five years, at least 12 years in advance, an amount for the net UK carbon account (the carbon budget); and ensure that the net UK carbon account for any period does not exceed that budget (section 4).
The carbon budget for the period including 2020 was set to be at least 34% lower than the 1990 baseline.
Section 10(2) sets out various matters which are required to be taken into account when the Secretary of State for BEIS sets, or the CCC advises upon, any carbon budget, including: (a) scientific knowledge about climate change; (b) technology relevant to climate change; (c) economic circumstances, and in particular the likely impact of the decision on the economy and the competitiveness of particular sectors of the economy; (d) fiscal circumstances, and in particular the likely impact of the decision on taxation, public spending and public borrowing; (e) of the decision on fuel poverty; (f) (h) (i) international aviation and international shipping circumstances at European and international level; the estimated amount of reportable emissions from social circumstances, and in particular the likely impact Therefore, although for the purposes of the CCA 2008 emissions from greenhouse gases from international aviation do not generally count as emissions from UK sources (section 30(1)), by virtue of section 10(2)(i), in relation to any carbon budget, the Secretary of State for BEIS and the CCC must take such emissions into account.
The evidence for the Secretary of State explains that the CCC has interpreted that as requiring the UK to meet a 2050 target which includes these emissions.
The CCC has advised that, to meet the 2050 target on that basis, emissions from UK aviation (domestic and international) in 2050 should be no higher than 2005 levels, ie 37.5 megatons (million tonnes) of CO2 (MtCO2).
This is referred to by the respondents as the Aviation Target.
However, the Aviation Policy Framework issued by the Government in March 2013 explains that the Government decided not to take a decision on whether to include international aviation emissions in its carbon budgets, simply leaving sufficient headroom in those budgets consistent with meeting the 2050 target including such emissions, but otherwise deferring a decision for consideration as part of the emerging Aviation Strategy.
The Aviation Strategy is due to re examine how the aviation sector can best contribute its fair share to emissions reductions at both the UK and global level.
It is yet to be finalised.
The SEA Directive
Again, in this section we gratefully draw on the careful account given by the Divisional Court.
As they explain, Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment as amended (the EIA Directive), as currently transposed by the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/571), requires a process within normal planning procedures. (For the purposes of these claims, the transposing regulations have not materially changed over the relevant period; and we will refer to them collectively as the EIA Regulations.) The SEA Directive as transposed by the SEA Regulations concerns the environmental impact of plans and programmes.
The SEA Directive and Regulations applied to the ANPS.
The EIA Directive would apply when there was a particular development for which development consent was sought, at the DCO stage.
Recital (1) to the SEA Directive states: Article 174 of the Treaty provides that Community policy on the environment is to contribute to, inter alia, the preservation, protection and improvement of the quality of the environment, the protection of human health and the prudent and rational utilisation of natural resources and that it is to be based on the precautionary principle.
Article 6 of the Treaty provides that environmental protection requirements are to be integrated into the definition of Community policies and activities, in particular with a view to promoting sustainable development.
As suggested here, the SEA Directive relies upon the precautionary principle where appropriate.
Recital (4) states: Environmental assessment is an important tool for integrating environmental considerations into the preparation and adoption of certain plans and programmes which are likely to have significant effects on the environment in the member states, because it ensures that such effects of implementing plans and programmes are taken into account during their preparation and before their adoption.
Recital (9) states: This Directive is of a procedural nature, and its requirements should either be integrated into existing procedures in member states or incorporated in specifically established procedures.
With a view to avoiding duplication of the assessment, member states should take account, where appropriate, of the fact that assessments will be carried out at different levels of a hierarchy of plans and programmes.
Thus, the requirements of the SEA Directive are essentially procedural in nature; and it may be appropriate to avoid duplicating assessment work by having regard to work carried out at other levels or stages of a policy making process (see article 5(2) (3) below).
Recital (17) states: The environmental report and the opinions expressed by the relevant authorities and the public, as well as the results of any transboundary consultation, should be taken into account during the preparation of the plan or programme and before its adoption or submission to the legislative procedure.
The objectives of the SEA Directive are set out in article 1: The objective of this Directive is to provide for a high level of protection of the environment and to contribute to the integration of environmental considerations into the preparation and adoption of plans and programmes with a view to promoting sustainable development, by ensuring that, in accordance with this Directive, an environmental assessment is carried out of certain plans and programmes which are likely to have significant effects on the environment.
Article 3(1) requires an environmental assessment to be carried out, in accordance with articles 4 to 9, for plans and programmes referred to in article 3(2) (4) which are likely to have significant environmental effects.
Article 3(2) requires strategic environmental assessment generally for any plan or programme which is prepared for (inter alia) transport, town and country planning or land use and which sets the framework for future development consent for projects listed in Annexes I and II to the EIA Directive.
Strategic environmental assessment is also required for other plans and programmes which are likely to have significant environmental effects (article 3(4)).
By virtue of sections 104 and 106 of the PA 2008, the ANPS designated under section 5 sets out the framework for decisions on whether a DCO for the development of an additional runway at Heathrow under Part 6 of that Act should be granted.
That development would, in due course, require environmental impact assessment under the EIA Directive and Regulations; and there is no dispute that the ANPS needed to be subjected to strategic environmental assessment under the SEA Directive and the SEA Regulations.
Article 2(b) of the SEA Directive defines environmental assessment for the purposes of the Directive: environmental assessment shall mean the preparation of an environmental report, the carrying out of consultations, the taking into account of the environmental report and the results of the consultations in decision making and the provision of information on the decision in accordance with articles 4 to 9.
Article 4(1) requires environmental assessment to be carried out during the preparation of a plan or programme and before its adoption . , which in this instance would refer to the Secretary of States decision to designate the ANPS.
Article 5 sets out requirements for an environmental report.
By article 2(c): environmental report shall mean the part of the plan or programme documentation containing the information required in article 5 and Annex I.
In the case of the ANPS the environmental report was essentially the AoS.
Article 5(1) provides: Where an environmental assessment is required under article 3(1), an environmental report shall be prepared in which the likely significant effects on the environment of implementing the plan or programme, and reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme, are identified, described and evaluated.
The information to be given for this purpose is referred to in Annex I. Annex I states, under the heading, Information referred to in article 5(1): The information to be provided under article 5(1), subject to article 5(2) and (3), is the following: the environmental characteristics of areas likely (a) an outline of the contents, main objectives of the plan or programme and relationship with other relevant plans and programmes; (b) the relevant aspects of the current state of the environment and the likely evolution thereof without implementation of the plan or programme; (c) to be significantly affected; (d) any existing environmental problems which are relevant to the plan or programme including, in particular, those relating to any areas of a particular environmental importance, such as areas designated pursuant to [the Habitats and Birds Directives]; (e) the environmental protection objectives, established at international, Community or member state level, which are relevant to the plan or programme and the way those objectives and any environmental considerations have been taken into account during its preparation; (f) the likely significant effects on the environment, including on issues such as biodiversity, population, human health, fauna, flora, soil, water, air, climatic factors, material assets, cultural heritage including architectural and archaeological heritage, landscape and the interrelationship between the above factors; (g) the measures envisaged to prevent, reduce and as fully as possible offset any significant adverse effects on the environment of implementing the plan or programme; (h) an outline of the reasons for selecting the alternatives dealt with, and a description of how the assessment was undertaken including any difficulties (such as technical deficiencies or lack of know how) encountered in compiling the required information; (i) a description of the measures envisaged concerning monitoring in accordance with article 10; (j) a non technical summary of the information provided under the above headings. (2) The environmental report prepared pursuant to paragraph 1 shall include the information that may reasonably be required taking into account current knowledge and methods of assessment, the contents and level of detail in the plan or programme, its stage in the decision making process and the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment. (3) Relevant information available on environmental effects of the plans and programmes and obtained at other levels of decision making or through other Community legislation may be used for providing the information referred to in Annex I. (Emphasis added) Thus, the information required by the combination of article 5(1) and Annex I is subject to article 5(2) and (3), which provide:
Accordingly, the information which is required to be included in an environmental report, whether by article 5(1) itself or by that provision in conjunction with Annex I, is qualified by article 5(2) and (3) in a number of respects.
First, the obligation is only to include information that may reasonably be required, which connotes the making of a judgment by the plan making authority.
Second, that judgment may have regard to a number of matters, including current knowledge and assessment methods.
In addition, the contents and level of detail in a plan such as the ANPS, the stage it has reached in the decision making process and the ability to draw upon sources of information used in other decision making, may affect the nature and extent of the information required to be provided in the environmental report for the strategic environmental assessment.
The stage reached by the ANPS should be seen in the context of the statutory framework of the PA 2008, as set out above (see paras 19 38).
Section 5(5) authorises the Secretary of State to set out in an NPS the type and size of development appropriate nationally or for a specified area and to identify locations which are either suitable or unsuitable for that development.
In addition, the Secretary of State may set out criteria to be applied when deciding the suitability of a location.
Section 104(3) requires the Secretary of State to decide an application for a DCO in accordance with a relevant NPS, save in so far as any one or more of the exceptions in section 104(4) (8) applies, which include the situation where the adverse impacts of a proposal are judged to outweigh its benefits (section 104(7)).
Section 106(1) empowers the Secretary of State to disregard a representation objecting to such a proposal in so far as it relates to the merits of a policy contained in the NPS.
In the present case, the Secretary of State made it plain in the strategic
environmental assessment process that the AoS drew upon and updated the extensive work which had previously been carried out by, and on behalf of, the Airports Commission, including numerous reports to the Airports Commission and its own final report.
It is common ground that the Secretary of State was entitled to take that course.
Article 6 of the SEA Directive sets out requirements for consultation.
Article 6(1) requires that the draft plan or programme and the environmental report be made available to the public and to those authorities designated by a member state under article 6(3) which, by virtue of their specific environmental responsibilities, are likely to be concerned by the environmental effects of implementing plans and programmes.
In England, the designated authorities are Natural England, Historic England and the Environment Agency (see regulation 4 of the SEA Regulations).
In the case of the ANPS, the Secretary of State also had to consult those designated authorities on the scope and level of detail of the information to be included in the environmental report (article 5(4)).
In relation to the consultation process, article 6(2) provides: The authorities referred to in para 3 and the public referred to in para 4 shall be given an early and effective opportunity within appropriate time frames to express their opinion on the draft plan or programme and the accompanying environmental report before the adoption of the plan or programme or its submission to the legislative procedure.
The public referred to in [article 6(4)] is a cross reference to the rules made by each member state for defining the public affected, or likely to be affected by, or having an interest in the decision making on the plan.
Regulation 13(2) of the SEA Regulations leaves this to be determined as a matter of judgment by the plan making authority.
Article 8 requires the environmental report prepared under article 5, the opinions expressed under article 6, and the results of any transboundary consultations under article 7 to be taken into account during the preparation of the plan or programme and before its adoption or submission to the legislative procedure.
In Cogent Land LLP v Rochford District Council [2012] EWHC 2542 (Admin); [2013] 1 P & CR 2, Singh J held that a defect in the adequacy of an environmental report prepared for the purposes of the SEA Directive may be cured by the production of supplementary material by the plan making authority, subject to there being consultation on that material (see paras 111 126).
He held that articles 4, 6(2) and 8 of the Directive, along with their transposition in the SEA Regulations, are consistent with that conclusion; and that none of the previous authorities on the SEA Directive (which he reviewed) suggested otherwise.
He held that SEA is not a single document, still less is it the same thing as the environmental report.
Rather, it is a process, during the course of which an environmental report must be produced (see para 112).
The Court of Appeal endorsed this analysis in No Adastral New Town Ltd v Suffolk Coastal District Council [2015] EWCA Civ 88; [2015] Env LR 28, in deciding that SEA failures in the early stages of an authoritys preparation of its Core Strategy (a statutory development plan) were capable of being, and were in fact, cured by the steps taken in subsequent stages (see paras 48 54).
We agree with this analysis.
It follows that strategic environmental assessment may properly involve an
iterative process; and that it is permissible for a plan making authority to introduce alterations to its draft plan subject to complying with the information requirements in article 5 and the consultation requirements in articles 6 and 7.
Regulation 12 of the SEA Regulations transposes the main requirements in article 5 of the Directive governing the content of an environmental report as follows (emphasis added): (2) The report shall identify, describe and evaluate the likely significant effects on the environment of implementing the plan or programme; and (a) (b) reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme. (3) The report shall include such of the information referred to in Schedule 2 to these Regulations as may reasonably be required, taking account of current knowledge and methods of assessment; the contents and level of detail in the plan or (a) (b) programme; (c) decision making process; and (d) the extent to which certain measures are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment. the stage of the plan or programme in the Schedule 2 replicates the list of items in Annex I to the SEA Directive.
No issue is raised as to the adequacy of that transposition.
As the Divisional Court observed, it is plain from the language as may reasonably be required that the SEA Regulations, like the SEA Directive, allow the plan making authority to make a judgment on the nature of the information in Schedule 2 and the level of detail to be provided in an environmental report, whether as published initially or in any subsequent amendment or supplement.
Factual background
At the heart of the challenge to the ANPS is the Paris Agreement (para 7 above) which acknowledged that climate change represents an urgent and potentially irreversible threat to human societies and the planet (Preamble to the Decision to adopt the Paris Agreement).
In article 2 the Paris Agreement sought to enhance the measures to reduce the risks and impacts of climate change by setting a global target of holding the increase in the global average temperature to well below 2C above pre industrial levels and pursuing efforts to limit the temperature increase to 1.5C above pre industrial levels.
Each signatory of the Paris Agreement undertook to take measures to achieve that long term global temperature goal so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century (article 4(1)).
Each party agreed to prepare, communicate and maintain successive nationally determined contributions (NDCs) that it intended to achieve and to pursue domestic mitigation measures with the aim of achieving the objectives of such NDCs (article 4(2)).
A partys successive NDC was to progress beyond its current NDC and was to reflect its highest possible ambition (article 4(3)).
Notwithstanding the common objectives set out in articles 2 and 4(1), the Paris Agreement did not impose an obligation on any state to adopt a binding domestic target to ensure that those objectives were met.
The specific legal obligation imposed in that regard was to meet any NDC applicable to the state in question.
So far as concerns the United Kingdom, it is common ground that the relevant NDC is that adopted and communicated on behalf of the EU, which set a binding target of achieving 40% reduction of 1990 emissions by 2030.
This is less stringent than the targets which had already been set in the fourth and fifth carbon budgets issued pursuant to section 4 of the CCA 2008, which were respectively a 50% reduction on 1990 levels for the period 2023 2027 and a 57% reduction for the period 2028 2032.
Before the United Kingdom had signed or ratified the Paris Agreement two Government Ministers made statements in the House of Commons about the Governments approach to the Paris Agreement.
On 14 March 2016 the Minister of State for Energy, Andrea Leadsom MP, told the House of Commons that the Government believe we will need to take the step of enshrining the Paris goal of net zero emissions in UK law the question is not whether, but how we do it, and there is an important set of questions to be answered before we do.
Ten days later (24 March 2016) Amber Rudd MP, Secretary of State for Energy and Climate Change, responded to an oral question on what steps her department was taking to enshrine the net zero emissions commitment of the Paris Climate Change Conference by stating that the question is not whether we do it but how we do it.
The Government received advice from the CCC on the UKs response to the Paris goal.
At a meeting on 16 September 2016 the CCC concluded that while a new long term target would be needed to be consistent with the Paris goal, the evidence was not sufficient to specify that target now.
In October 2016 the CCC published a report entitled UK Climate Action following the Paris Agreement on what domestic action the Government should take as part of a fair contribution to the aims of the Paris Agreement.
In that report the CCC stated that the goals of the Paris Agreement involved a higher level of global ambition in the reduction of greenhouse gases than that which formed the basis of the UKs existing emissions reduction targets.
But the CCC advised that it was neither necessary nor appropriate to amend the 2050 target in section 1 of the CCA 2008 or alter the level of existing carbon budgets at that time.
It advised that there would be several opportunities to revisit the UKs targets in the future and that the UK 2050 target is potentially consistent with a wide range of global temperature outcomes.
In its executive summary (p 7) the CCC summarised its advice: Do not set new UK emissions targets now The five yearly cycle of pledges and reviews created by the Paris Agreement provides regular opportunities to consider increasing UK ambition.
In October 2017 the Government published its Clean Growth Strategy which set out its policies and proposals to deliver economic growth and decreased emissions.
In Annex C in its discussion of UK climate action it acknowledged the risks posed by the growing level of global climate instability.
It recorded the global goals of the Paris Agreement and that global emissions of greenhouse gases would need to peak as soon as possible, reduce rapidly thereafter and reach a net zero level in the second half of this century.
It recorded the CCCs advice in these terms: In October 2016 the [CCC] said that the Paris Agreement target is more ambitious than both the ambition underpinning the UK 2050 target and previous international agreements, but that the UK should not set new UK emissions targets now, as it already had stretching targets and achieving them will be a positive contribution to global climate action.
The CCC advised that the UKs fair contribution to the Paris Agreement should include measures to maintain flexibility to go further on UK targets, the development of options to remove greenhouse gases from the air, and that its targets should be kept under review.
In December 2017 Plan B Earth and 11 other claimants commenced judicial review proceedings against the Secretary of State for BEIS and CCC alleging that the Secretary of State had unlawfully failed to revise the 2050 target in section 1 of the CCA 2008 in line with the Paris Agreement.
The Secretary of State pleaded: [While] the Government is fully committed to the objectives in the Paris Agreement, the legal obligation upon the Parties is to prepare, communicate and maintain nationally determined contributions to reduce net emissions, with a view to achieving the purpose of holding global average temperature increases to well below 2C above pre industrial levels and pursuing efforts to limit them to 1.5C.
This is not the same as a legal duty or obligation for the Parties, individually or collectively, to achieve this aim. (Emphasis in original) The CCC also explained its position in its written pleadings: The CCC recommended no change to the existing UK 2050 target (at that time, October 2016), not because a more ambitious target was unfeasible, but rather because the existing UK target was potentially consistent with more ambitious global temperature goals, including that in the Paris Agreement.
At an oral hearing ([2018] EWHC 1892 (Admin); [2019] Env LR 13), Supperstone J refused permission to proceed with the judicial review, holding among other things that the Paris Agreement did not impose any legally binding target on each contracting party, that section 2 of the CCA 2008 gave the Secretary of State the power, but did not impose a duty, to amend the 2050 target in the event of developments in scientific knowledge or European or international law or policy, and that on the basis of the advice of the CCC, the Secretary of State was plainly entitled to refuse to change the 2050 target.
Asplin LJ refused permission to appeal on 22 January 2019.
In January 2018 the CCC published An independent assessment of the UKs Clean Growth Strategy.
In that report the CCC explained that the aim of the Paris Agreement for emissions to reach net zero in the second half of the century was likely to require the UK to revise its statutory 2050 target to seek greater reductions and advised that it is therefore essential that actions are taken now to enable these deeper reductions to be achieved (p 21).
The CCC invited the Secretary of State for BEIS to seek further advice from it and review the UKs long term emissions targets after the publication of the report by the Intergovernmental Panel on Climate Change (IPCC) on the implications of the Paris Agreements 1.5C goal.
In January 2018 the Government published A Green Future: Our 25 Year Plan to Improve the Environment in which it undertook to continue its work in providing international leadership to meet the goals of the Paris Agreement (for example, p 118).
In early 2018 governments, including the UK Government, were able to review a draft of the IPCC report and in early June 2018 the UK Government submitted final comments on the draft of the IPCC report.
On 17 April 2018 the Government announced at the Commonwealth Heads of Government Meeting that after the publication of the IPCC report later that year, it would seek the advice of the CCC on the implications of the Paris Agreement for the UKs long term emissions reductions targets.
At the same time the Government was working to develop an aviation strategy which would address aviation emissions.
In April 2018, after public consultation, the Department for Transport published Beyond the Horizon: The Future of UK Aviation Next Steps towards an Aviation Strategy in which it undertook to investigate technical and policy measures to address aviation emissions and how those measures related to the recommendations of the CCC.
It stated (para 6.24): The government will look again at what domestic policies are available to complement its international approach and will consider areas of greater scientific uncertainty, such as the aviations contribution to non carbon dioxide climate change effects and how policy might make provision for their effects.
On 1 May in response to an oral parliamentary question concerning the offshore wind sector Claire Perry MP, Minister of State for Energy and Clean Growth, stated that the UK was the first developed nation to have said that it wanted to understand how to get to a zero carbon economy by 2050.
On 5 June 2018, the Government issued its response to the consultation on the draft ANPS and the Secretary of State laid the proposed ANPS before Parliament.
On the same day, the Secretary of State presented a paper on the proposed ANPS to a Cabinet sub committee giving updated information on the three short listed schemes and the Governments preference for the NWR scheme.
In relation to aviation emissions it stated that it was currently uncertain how international carbon emissions would be incorporated into the Governments carbon budget framework, that policy was developing and would be progressed during the development of the Aviation Strategy.
The Governments position remained that action to address aviation emissions was best taken at an international level.
On 14 June 2018 the Chair of the CCC (Lord Deben) and Deputy Chair (Baroness Brown) wrote to the Secretary of State expressing surprise that he had not referred to the legal targets in the CCA 2008 or the Paris Agreement commitments in his statement to the House of Commons on the proposed ANPS on 5 June and stressing the need for his department to consider aviations place in the overall strategy for UK emissions reduction.
They stated that the Government should not plan for higher levels of aviation emissions since this would place an unreasonably large burden on other sectors.
The Secretary of State responded on 20 June 2018 stating that the Government remained committed to the UKs climate change target and that the proposed ANPS made it clear that an increase in carbon emissions that would have a material impact on the Governments ability to meet its carbon reduction targets would be a reason to refuse development consent for the NWR.
He stated that the Government was confident that the measures and requirements set out in the proposed ANPS provided a strong basis for mitigating the environmental impacts of expansion.
He explained that the forthcoming Aviation Strategy would put in place a framework for UK carbon emissions to 2050, which ensures that aviation contributes its fair share to action on climate change, taking into account the UKs domestic and international obligations.
After the Parliamentary debate on 25 June 2018 (para 11 above), the Secretary of State designated the ANPS as national policy on 26 June 2018 (para 12 above).
Section 5 of the ANPS focused on the potential impacts of the NWR Scheme and the assessments that any applicant would have to carry out and the planning requirements which it would have to meet in order to gain development consent.
In its discussion of greenhouse gas emissions the ANPS stated that the applicant would have to undertake an environmental impact assessment quantifying the greenhouse gas impacts before and after mitigation so that the project could be assessed against the Governments carbon obligations.
In para 5.82 the ANPS stated: Any increase in carbon emissions alone is not a reason to refuse development consent, unless the increase in carbon emissions resulting from the project is so significant that it would have a material impact on the ability of Government to meet its carbon reduction targets, including carbon budgets.
As in this appeal a challenge has been made as to the factual basis of the Secretary of States decision not to consider the possible new domestic emissions targets which might result from the Paris Agreement, it is necessary to mention the evidence before the Divisional Court on this matter.
In her first witness statement Ms Caroline Low, the Director of the Airport Capacity Programme at the Department for Transport, stated (para 458): In October 2016 the CCC said that the Paris Agreement is more ambitious than both the ambition underpinning the UK 2050 target and previous international agreements but that the UK should not set new UK emissions targets now, as it already has stretching targets and achieving them will be a positive contribution to global climate action.
Furthermore, the CCC acknowledged in the context of separate legal action brought by Plan B against the Secretary of State for Business, Energy and Industrial Strategy that it is possible that the existing 2050 target could be consistent with the temperature stabilization goals set out in the Paris Agreement.
Subsequently, in establishing its carbon obligations for the purpose of assessing the impact of airport expansion, my team has followed this advice and considered existing domestic legal obligations as the correct basis for assessing the carbon impact of the project, and that it is not appropriate at this stage for the government to consider any other possible targets that could arise through the Paris Agreement.
Her account was corroborated by Ms Ursula Stevenson, an engineering and project management consultant whom the Secretary of State retained to deal with the process for consideration of the environmental impacts of the NWR Scheme.
She stated (witness statement para 3.128) that the Department had followed the CCCs advice when preparing the AoS required by the PA 2008 (see para 28 above) and accordingly had considered existing domestic legal obligations to be the correct basis for assessing the carbon impact of the project.
She added: At this stage, it is not possible to consider what any future targets [sic] might be recommended by the CCC to meet the ambitions of the Paris Agreement.
It is expected that, should more ambitious targets be recommended and set through the carbon budgets beyond 2032, then government will be required to make appropriate policy decisions across all sectors of the economy to limit emissions accordingly.
She emphasised (para 3.129) that the obligations under the CCA 2008 could be made more stringent in future, should that prove necessary, and that the ANPS provided that any application for a DCO would have to be assessed by reference to whatever obligations were in place at that time.
The IPCC Special Report on Global Warming of 1.5C was published on 8 October 2018.
It concluded that limiting global warming to that level above pre industrial levels would significantly reduce the risks of challenging impacts on ecosystems and human health and wellbeing and that it would require deep emissions reductions and rapid, far reaching and unprecedented changes to all aspects of society.
To achieve that target global net emissions of CO would need to fall by about 45% from 2010 levels by 2030, reaching zero by 2050.
The Government commissioned the CCC to advise on options by which the UK should achieve (i) a net zero greenhouse gas target and/or (ii) a net zero carbon target in order to contribute to the global ambitions set out in the Paris Agreement, including whether now was the right time to set such a target.
In December 2018 the Department for Transport published consultation materials on its forthcoming Aviation Strategy.
In Aviation 2050: The future of UK aviation the Department stated (paras 3.83 3.87) that it proposed to negotiate in the International Civil Aviation Organisation (the UN body responsible for tackling international aviation climate emissions) for a long term goal for international aviation that is consistent with the temperature goals of the Paris Agreement and that it would consider appropriate domestic action to support international progress.
It stated that the Government would review the CCCs revised aviation advice and advice on the implications of the Paris Agreement.
In the same month, in a paper commissioned and published by the Department and written by David S Lee, International aviation and the Paris Agreement temperature goals the author acknowledged that the Paris Agreement had a temperature based target which implied the inclusion of all emissions that affect the climate.
The author stated that aviation had significant climate impacts from the oxides of nitrogen, particle emissions, and effects on cloudiness but that those impacts were subject to greater scientific uncertainty than the impacts of CO.
It recorded that examples of CO emission equivalent metrics indicated up to a doubling of aviation CO equivalent emissions to account for those non CO effects.
On 1 May 2019 Parliament approved a motion to declare a climate and environmental emergency.
On the following day, the CCC published a report entitled Net zero: The UKs contribution to stopping global warming, in which they recommended that legislation should be passed as soon as possible to create a new statutory target of net zero greenhouse gases by 2050 and the inclusion of international aviation and shipping in that target (p 15).
That recommendation, so far as it related to the CO target, was implemented on 26 June 2019 when the Climate Change Act (2050 Target Amendment) Order 2019 amended section 1(1) of the CCA 2008.
On 24 September 2019 the CCC wrote to the Secretary of State for Transport advising that the international aviation and shipping emissions should be brought formally within the UKs net zero statutory 2050 target.
The statutory target has not yet been changed to this effect but international aviation and shipping are taken into account when the carbon budgets are set against the statutory target: section 10(2)(i) of the CCA 2008.
On 25 June 2020 the CCC published its 2020 Progress Report to Parliament entitled Reducing UK emissions, in which it recommended that international aviation and shipping be included in the UK climate targets when the Sixth Carbon Budget is set (which should be in 2021) and net zero plans should be developed (p 22).
It recommended that the UKs airport capacity strategy be reviewed in the light of COVID 19 and the net zero target and that action was needed on non CO effects from aviation (p 180).
The parties to this appeal have stated in the agreed Statement of Facts and Issues that it was expected that the Governments Aviation Strategy will be published before the end of 2020.
From this narrative of events it is clear that the Governments response to the targets set in the Paris Agreement has been developing over time since 2016, that it has led to the amendment of the statutory CO target in section 1(1) of the CCA 2008 approximately one year after the Secretary of State designated the ANPS, and that the Government is still in the process of developing its Aviation Strategy in response to the advice of the CCC.
Before turning to the legal challenges in this appeal it is also important to emphasise that, as we have stated in para 10 above, HAL, FoE and Plan B Earth agree that should the NWR Scheme be taken forward to a DCO application, the ANPS would not allow it to be assessed by reference to the carbon reduction targets, including carbon budgets, that were in place when the ANPS was designated in June 2018.
The ANPS requires that the scheme be assessed against the carbon reduction targets in place at the time when a DCO application is determined: para 5.82 of the ANPS which we have set out in para 87 above.
There is therefore no question of the NWR Scheme being assessed in future against outdated emissions targets.
The judgments of the Divisional Court and the Court of Appeal
A number of objectors to the NWR Scheme and the ANPS brought a large number of disparate claims in these proceedings to challenge the ANPS.
The Divisional Court heard the claims on a rolled up basis, that is to say by considering the question of whether to grant permission to apply for judicial review at the same time as considering the merits of the claims should permission be granted.
The hearing lasted for seven days and involved a full merits consideration of all the claims by the Divisional Court.
In a judgment of high quality, described by the Court of Appeal as a tour de force, the Divisional Court dismissed all of the claims.
For some claims it granted permission to apply for judicial review and then dismissed them on the merits.
For others, it decided that they were not reasonably arguable on the merits and refused to grant permission.
After thorough examination, the Divisional Court reached the conclusion that none of the claims which form the subject of grounds (i) to (iv) in the present appeal were reasonably arguable, and accordingly refused permission to apply for judicial review in relation to each of them.
In relation to those claims, the Court of Appeal decided that they were both arguable and that they were made out as good claims.
Accordingly, the Court of Appeal granted permission in relation to them for the respondents to apply for judicial review of the decision to designate the ANPS and then held that the ANPS was of no legal effect unless and until a review was carried out rectifying the legal errors.
Analysis
Ground (i) the section 5(8) ground
This ground raises a question of statutory interpretation.
Section 5(7) and (8) of the PA 2008, which we set out in para 25 above, provide that an NPS must give reasons for the policy set out in the statement and that the reasons must explain how the policy in the NPS takes account of Government policy relating to the mitigation of, and adaptation to, climate change.
Mr Crosland for Plan B Earth presented this argument.
Mr Wolfe QC for FoE adopted his submissions.
Mr Crosland submits that it was unlawful for the Secretary of State when stating the reasons for the policy in the ANPS in June 2018 to have treated as irrelevant the Governments commitment to (a) the temperature target in the Paris Agreement and (b) the introduction of a new net zero carbon target.
The Governments commitment to the Paris Agreement targets constituted Government policy within the meaning of section 5(8) of the PA 2008 and so should have been addressed in giving the reasons for the ANPS.
Plan B Earth advanced this argument before the Divisional Court, which rejected the submission.
The Divisional Court held that the Paris Agreement did not impose an obligation on any individual state to implement its global objective in any particular way, Parliament had determined the contribution of the UK towards global targets in section 1 of the CCA 2008 as a national carbon cap which represented the relevant policy in an entrenched form, and the Secretary of State could not change that carbon target unless and until the conditions set out in that Act were met.
The Court of Appeal disagreed with the approach of the Divisional Court and held that Government policy in section 5(8) was not confined to the target set out in the CCA 2008.
The words Government policy were words of the ordinary English language.
Taking into account the consequences of the Paris Agreement involved no inconsistency with the provisions of the CCA 2008.
Based on the Secretary of States written pleadings the Court of Appeal concluded that the Secretary of State had received and accepted legal advice that he was legally obliged not to take into account the Paris Agreement and the court characterised that as a misdirection of law.
We address that conclusion in the next section of this judgment at paras 124 129 below.
The court held that section 5(8) of the PA 2008 simply required the Government to take into account its own policy.
The statements of Andrea Leadsom MP and Amber Rudd MP in March 2016 (para 72 above) and the formal ratification of the Paris Agreement showed that the Governments commitment to the Paris Agreement was part of Government policy by the time of the designation of the ANPS in June 2018.
The principal question for determination is the meaning of Government policy in section 5(8) of the PA 2008.
We adopt a purposive approach to this statutory provision which expands upon the obligation in section 5(7) that an NPS give reasons for the policy set out in it and interpret the statutory words in their context.
The purpose of the provision is to make sure that there is a degree of coherence between the policy set out in the NPS and established Government policies relating to the mitigation of and adaptation to climate change.
The section speaks of Government policy, which points toward a policy which has been cleared by the relevant departments on a government wide basis.
In our view the phrase is looking to carefully formulated written statements of policy such as one might find in an NPS, or in statements of national planning policy (such as the National Planning Policy Framework), or in government papers such as the Aviation Policy Framework.
For the subsection to operate sensibly the phrase needs to be given a relatively narrow meaning so that the relevant policies can readily be identified.
Otherwise, civil servants would have to trawl through Hansard and press statements to see if anything had been said by a minister which might be characterised as policy.
Parliament cannot have intended to create a bear trap for ministers by requiring them to take into account any ministerial statement which could as a matter of ordinary language be described as a statement of policy relating to the relevant field.
In our view, the epitome of Government policy is a formal written statement of established policy.
In so far as the phrase might in some exceptional circumstances extend beyond such written statements, it is appropriate that there be clear limits on what statements count as Government policy, in order to render them readily identifiable as such.
In our view the criteria for a policy to which the doctrine of legitimate expectations could be applied would be the absolute minimum required to be satisfied for a statement to constitute policy for the purposes of section 5(8).
Those criteria are that a statement qualifies as policy only if it is clear, unambiguous and devoid of relevant qualification: see for example Inland Revenue Comrs v MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569 per Bingham LJ; R (Gaines Cooper) v Comrs for Her Majestys Revenue and Customs [2011] UKSC 47; [2011] 1 WLR 2625, paras 28 and 29 per Lord Wilson of Culworth, delivering the judgment with which the majority of the court agreed, and para 70 per Lord Mance.
The statements of Andrea Leadsom MP and Amber Rudd MP (para 72 above) on which the Court of Appeal focused and on which Plan B Earth particularly relied do not satisfy those criteria.
Their statements were not clear and were not devoid of relevant qualification in this context.
They did not refer to the temperature targets at all and they both left open the question of how the Paris Agreement goal of net zero emissions would be enshrined in UK law.
Andrea Leadsom went out of her way to emphasise that there is an important set of questions to be answered before we do.
The statements made by these ministers were wholly consistent with and plainly reflected the fact that there was then an inchoate or developing policy being worked on within Government.
This does not fall within the statutory phrase.
We therefore respectfully disagree with the Court of Appeal in so far as they held (para 224) that the words Government policy were ordinary words which should be applied in their ordinary sense to the facts of a given situation.
We also disagree with the courts conclusion (para 228) that the statements by Andrea Leadsom MP and Amber Rudd MP constituted statements of Government policy for the purposes of section 5(8).
Although the point had been a matter of contention in the courts below, no party sought to argue before this court that a ratified international treaty which had not been implemented in domestic law fell within the statutory phrase Government policy.
Plan B Earth and FoE did not seek to support the conclusion of the Court of Appeal (para 228) that it followed from the solemn act of the United Kingdoms ratification of [the Paris Agreement] that the Governments commitment to it was part of Government policy.
The fact that the United Kingdom had ratified the Paris Agreement is not of itself a statement of Government policy in the requisite sense.
Ratification is an act on the international plane.
It gives rise to obligations of the United Kingdom in international law which continue whether or not a particular government remains in office and which, as treaty obligations, are not part of UK law and give rise to no legal rights or obligations in domestic law (R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5; [2018] AC 61, para 55).
Ratification does not constitute a commitment operating on the plane of domestic law to perform obligations under the treaty.
Moreover, it cannot be regarded in itself as a statement devoid of relevant qualification for the purposes of domestic law, since if treaty obligations are to be given effect in domestic law that will require law making steps which are uncertain and unspecified at the time of ratification.
Before applying these conclusions to the facts of this case, it is necessary to consider another argument which HAL advances in this appeal.
HAL renews an argument which the Divisional Court had accepted at least in part.
HAL argues that because Parliament had set out the target for the reduction of carbon emissions in section 1 of the CCA 2008 and had established a statutory mechanism by which the target could be altered only with the assent of Parliament, Government policy was entrenched in section 1 and could not be altered except by use of the subordinate legislation procedure in sections 2 and 3 of the CCA 2008.
The statutory scheme had either expressly or by necessary implication displaced the prerogative power of the Government to adopt any different policy in this field.
In support of this contention HAL refers to the famous cases of Attorney General v De Keysers Royal Hotel Ltd [1920] AC 508 and R v Secretary of State for the Home Department, Ex p Fire Brigades Union [1995] 2 AC 513, to which this court referred in R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5; [2018] AC 61.
The short answer to that submission is that it is possible for the Government to have a policy that it will seek Parliamentary approval of an alteration of the carbon target, which is to be taken into account in section 5(8) of the PA 2008.
The ousting of a prerogative power in a field which has become occupied by a corresponding power conferred or regulated by statute is a legal rule which is concerned with the validity of the exercise of a power, and to the extent that exercise of powers might require reference to the target set out in section 1 of the CCA 2008 it would not be open to the Government to make reference to a different target, not as yet endorsed by Parliament under the positive resolution procedure applicable to changes to that statutory target.
However, the rule does not address what is Government policy for the purposes of section 5(8) of the PA 2008.
If at the date when the Secretary of State designated the ANPS, the Government had adopted and articulated a policy that it would seek to introduce a specified new carbon target into section 1 of the CCA 2008 by presenting draft subordinate legislation to that effect for the approval of Parliament, the Secretary of State could readily record in the ANPS that the Government had resolved to seek that change but that it required the consent of Parliament for the new target to have legal effect.
Further, questions such as how to mitigate non CO emissions fell outside the carbon emissions target in the CCA 2008.
Turning to the facts of the case, it is clear from the narrative of events in paras 70 96 above that in June 2018, when the Secretary of State for Transport designated the ANPS, the Governments approach on how to adapt its domestic policies to contribute to the global goals of the Paris Agreement was still in a process of development.
There was no established policy beyond that already encapsulated in the CCA 2008.
The Government followed the advice of the CCC.
The CCCs advice in 2016 was that the evidence was not sufficient to specify a new carbon target and that it was not necessary to do so at that time (paras 73 74 above).
In early 2018 the CCC invited the Government to seek further advice from it after the publication of the IPCCs report (para 79 above).
During 2018 the Governments policy in relation to aviation emissions was in a process of development and no established policy had emerged on either the steps to be taken at international level or about which domestic measures would be adopted; it was expected that the forthcoming Aviation Strategy would clarify those matters (paras 83 and 86 above).
The Governments consultation in December 2018 confirmed that the development of aviation related targets was continuing and in 2020 the Governments Aviation Strategy is still awaited (paras 92 and 96 above).
Against this background, the section 5(8) challenge fails and HALs appeal on this ground must succeed.
It is conceded that the Paris Agreement itself is not Government policy.
The statements by Andrea Leadsom MP and Amber Rudd MP in 2016, on which Plan B Earth principally founds, do not amount to Government policy for the purpose of section 5(8) of the PA 2008.
The statements concerning the development of policy which the Government made in 2018 were statements concerning an inchoate and developing policy and not an established policy to which section 5(8) refers.
Mr Crosland placed great emphasis on the facts (i) that the Airports Commission had assessed the rival schemes against scenarios, one of which was that overall CO emissions were set at a cap consistent with a worldwide goal to limit global warming to 2C, and (ii) that that scenario was an input into Secretary of States assessment of the ANPS at a time when the UK Government had ratified the Paris Agreement and ministers had made the statements to which we referred above.
But those facts are irrelevant to the section 5(8) challenge.
It is not in dispute that the internationally agreed temperature targets played a formative role in the development of government policy.
But that is not enough for Plan B Earth to succeed in this challenge.
What Mr Crosland characterised as a policy commitment to the Paris Agreement target did not amount to Government policy under that subsection.
Finally, Mr Crosland sought to raise an argument under section 3 of the Human Rights Act 1998 that interpreting section 5(8) so as to preclude consideration of the temperature limit in the Paris Agreement would tend to allow major national projects to be developed and that those projects would create an intolerable risk to life and to peoples homes contrary to articles 2 and 8 of the European Convention on Human Rights (ECHR).
This argument must fail for two reasons.
First, as Lord Anderson for HAL submits, the argument was advanced as a separate ground before the Divisional Court and rejected, that finding was not appealed to the Court of Appeal, and is therefore not before this court.
Secondly, even if it were to be treated as an aspect of Plan B Earths section 5(8) submission and thus within the scope of the appeal (as Mr Crosland sought to argue), it is in any event unsound because any effect on the lives and family life of those affected by the climate change consequences of the NWR Scheme would result not from the designation of the ANPS but from the making of a DCO in relation to the scheme.
As HAL has conceded and the respondents have agreed, the ANPS requires the NWR Scheme to be assessed against the emissions targets which would be current if and when an application for a DCO were determined.
Ground (ii): the section 10 ground
Mr Wolfe for FoE presented the submissions for the respondents on this ground and grounds (iii) and (iv).
Mr Crosland for Plan B Earth adopted those submissions.
Section 10 of the PA 2008 applies to the Secretary of States function in promulgating an NPS.
In exercising that function the Secretary of State must act with the objective of contributing to the achievement of sustainable development.
Sustainable development is a recognised term in the planning context and its meaning is not controversial in these proceedings.
As explained in paras 7 and 8 of the National Planning Policy Framework (July 2018), at a very high level the objective of sustainable development involves meeting the needs of the present without compromising the ability of future generations to meet their own needs; it has three overarching elements, namely an environmental objective, an economic objective and a social objective.
For a major infrastructure project like the development of airport capacity in the South East, which promotes economic development but at the cost of increased greenhouse gases emissions, these elements have to be taken into account and balanced against each other.
Section 10(3)(a) provides that the Secretary of State must, in particular, have regard to the desirability of mitigating, and adapting to, climate change.
Unlike in section 5(8) of the PA 2008, this is not a factor which is tied to Government policy.
As it transpired, very little divided the parties under this ground.
The basic legal approach is agreed.
A useful summation of the law was given by Simon Brown LJ in R v Somerset County Council, Ex p Fewings [1995] 1 WLR 1037, 1049, in which he identified three categories of consideration, as follows: [T]he judge speaks of a decision maker who fails to take account of all and only those considerations material to his task.
It is important to bear in mind, however, that there are in fact three categories of consideration.
First, those clearly (whether expressly or impliedly) identified by the statute as considerations to which regard must be had.
Second, those clearly identified by the statute as considerations to which regard must not be had.
Third, those to which the decision maker may have regard if in his judgment and discretion he thinks it right to do so.
There is, in short, a margin of appreciation within which the decision maker may decide just what considerations should play a part in his reasoning process.
The three categories of consideration were identified by Cooke J in the New Zealand Court of Appeal in CREEDNZ Inc v Governor General [1981] NZLR 172, 183: What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the [relevant public authority] as a matter of legal obligation that the court holds a decision invalid on the ground now invoked.
It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the court itself, would have taken into account if they had to make the decision.
Cooke J further explained at p 183 in relation to the third category of consideration that, notwithstanding the silence of the statute, there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by [the public authority] would not be in accordance with the intention of the Act.
These passages were approved as a correct statement of principle by the House of Lords in In re Findlay [1985] AC 318, 333 334.
See also R (Hurst) v London Northern District Coroner [2007] UKHL 13; [2007] 2 AC 189, paras 55 59 (Lord Brown of Eaton under Heywood, with whom a majority of the Appellate Committee agreed); R (Corner House Research) v Director of the Serious Fraud Office [2008] UKHL 60; [2009] 1 AC 756, para 40 (Lord Bingham of Cornhill, with whom a majority of the Appellate Committee agreed); and R (Samuel Smith Old Brewery (Tadcaster)) v North Yorkshire County Council [2020] UKSC 3; [2020] PTSR 221, paras 29 32 (Lord Carnwath, with whom the other members of the court agreed).
In the Hurst case, Lord Brown pointed out that it is usually lawful for a decision maker to have regard to unincorporated treaty obligations in the exercise of a discretion (para 55), but that it is not unlawful to omit to do so (para 56).
As the Court of Appeal correctly held in Baroness Cumberlege of Newick v Secretary of State for Communities and Local Government [2018] EWCA Civ 1305; [2018] PTSR 2063, paras 20 26, in line with these other authorities, the test whether a consideration falling within the third category is so obviously material that it must be taken into account is the familiar Wednesbury irrationality test (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223; Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 410 411 per Lord Diplock).
It is possible to subdivide the third category of consideration into two types of case.
First, a decision maker may not advert at all to a particular consideration falling within that category.
In such a case, unless the consideration is obviously material according to the Wednesbury irrationality test, the decision is not affected by any unlawfulness.
Lord Bingham deals with such a case in Corner House Research at para 40.
There is no obligation on a decision maker to work through every consideration which might conceivably be regarded as potentially relevant to the decision they have to take and positively decide to discount it in the exercise of their discretion.
Secondly, a decision maker may in fact turn their mind to a particular consideration falling within the third category, but decide to give the consideration no weight.
As we explain below, this is what happened in the present case.
The question again is whether the decision maker acts rationally in doing so.
Lord Brown deals with a case of this sort in Hurst (see para 59).
This shades into a cognate principle of public law, that in normal circumstances the weight to be given to a particular consideration is a matter for the decision maker, and this includes that a decision maker might (subject to the test of rationality) lawfully decide to give a consideration no weight: see, in the planning context, Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (HL), 780 (Lord Hoffmann).
The Divisional Court (para 648) and the Court of Appeal (para 237) held that the Paris Agreement fell within the third category identified in Fewings.
In so far as it is an international treaty which has not been incorporated into domestic law, this is correct.
In fact, however, as we explain (para 71 above), the UKs obligations under the Paris Agreement are given effect in domestic law, in that the existing carbon target under section 1 of the CCA 2008 and the carbon budgets under section 4 of that Act already meet (and, indeed, go beyond) the UKs obligations under the Paris Agreement to adhere to the NDCs notified on its behalf under that Agreement.
The duties under the CCA 2008 clearly were taken into account when the Secretary of State decided to issue the ANPS.
At para 5.69 of the ANPS the Secretary of State stated: The Government has a number of international and domestic obligations to limit carbon emissions.
Emissions from both the construction and operational phases of the [NWR Scheme] project will be relevant to meeting these obligations.
This statement covered the Paris Agreement as well as other international treaties.
At para 5.71 the ANPS correctly stated that [t]he UKs obligations on greenhouse gas emissions are set under the [CCA 2008].
As explained above, the relevant NDCs required to be set under the Paris Agreement were covered by the target in the CCA 2008 and the carbon budgets set under that Act.
At paras 5.72 5.73 of the ANPS it was explained how aviation emissions were taken into account in setting carbon budgets under the CCA 2008 in accordance with the advice given by the CCC.
We have set out the evidence of Ms Low and Ms Stevenson regarding this topic (paras 88 and 89 above) which confirms that, in acting for the Secretary of State in drawing up the ANPS, they followed the advice of the CCC that the existing measures under the CCA 2008 were capable of being compatible with the 2050 target set by the Paris Agreement.
The CCC did not recommend adjusting the UKs targets further at that stage.
They were to be kept under review and appropriate adjustments could be made to the emissions target and carbon budgets under the CCA 2008 in future as necessary.
According to that advice, therefore, sufficient account was taken of the Paris Agreement by ensuring that the relevant emissions target and carbon budgets under the CCA 2008 would be properly taken into account in the construction and operation of the NWR Scheme.
The ANPS ensured that this would occur: see para 5.82 (set out at para 87 above).
Therefore, on a correct understanding of the ANPS and the Secretary of States evidence, this is not a case in which the Secretary of State omitted to give any consideration to the Paris Agreement; nor is it one in which no weight was given to the Paris Agreement when the Secretary of State decided to issue the ANPS.
On the contrary, the Secretary of State took the Paris Agreement into account and, to the extent that the obligations under it were already covered by the measures under the CCA 2008, he gave weight to it and ensured that those obligations would be brought into account in decisions to be taken under the framework established by the ANPS.
On proper analysis the question is whether the Secretary of State acted irrationally in omitting to take the Paris Agreement further into account, or give it greater weight, than in fact he did.
In its judgment, the Divisional Court recorded (para 638) that the Secretary of State accepted that, in designating the ANPS, he took into account only the CCA 2008 carbon emission targets and did not take into account either the Paris Agreement or otherwise any post 2050 target or non CO2 emissions (these latter points are relevant to ground (iv) below).
However, this way of describing the position masks somewhat the way the Paris Agreement did in fact enter into consideration by the Secretary of State.
In the same paragraph, the Divisional Court summarised two submissions advanced by counsel for the Secretary of State as to why the Secretary of States approach was not unlawful: (i) on its proper construction, and having regard to the express reference to the UKs international obligations in section 104(4) of the PA 2008, the PA 2008 requires the Secretary of State to ignore international commitments except where they are expressly referred to in that Act; alternatively, (ii) even if not obliged to ignore such commitments, the Secretary of State had a discretion as to whether to do so and was not obliged to take them into account.
The Divisional Court rejected the first argument but accepted the second.
It noted that the Secretary of State was bound by the obligations in the CCA 2008, which effectively transposed international obligations into domestic law (para 643).
Beyond that, the Secretary of State had a discretion whether to take the Paris Agreement further into account, and had not (even arguably) acted irrationally in deciding not to do so.
It therefore refused to give permission for judicial review of the ANPS on this ground.
The Court said (para 648): In our view, given the statutory scheme in the CCA 2008 and the work that was being done on if and how to amend the domestic law to take into account the Paris Agreement, the Secretary of State did not arguably act unlawfully in not taking into account that Agreement when preferring the NWR Scheme and in designating the ANPS as he did.
As we have described, if scientific circumstances change, it is open to him to review the ANPS; and, in any event, at the DCO stage this issue will be re visited on the basis of the then up to date scientific position.
Mr Wolfe sought to support the judgment of the Court of Appeal in relation to this ground.
He argued that the evidence for the Secretary of State had to be read in the light of the first submission made by his counsel in the Divisional Court, and that the true position was that the Secretary of State (acting by his officials and advisers) had been advised that he was not entitled to have regard to the Paris Agreement when deciding whether to designate the ANPS and had proceeded on that basis, with the result that he had not in fact exercised any discretion in deciding not to have further regard to the Paris Agreement.
He also submitted that it was obvious that it was a material consideration.
Mr Wolfe was successful in persuading the Court of Appeal on these points (paras 203 and 234 238 of its judgment).
The Court of Appeal accepted his submissions that there was an error of law in the approach of the Secretary of State because he never asked himself the question whether he could take into account the Paris Agreement pursuant to his obligations under section 10 and [i]f he had asked himself that question the only answer that would reasonably have been open to him is that the Paris Agreement was so obviously material to the decision he had to make in deciding whether to designate the ANPS that it was irrational not to take it into account.
With respect to the Court of Appeal, they were wrong to overturn the judgment of the Divisional Court on this ground.
Mr Wolfes submissions conflated a submission of law (submission (i) above) made by counsel for the Secretary of State as recorded in para 638 of the judgment of the Divisional Court and the evidence of fact given by the relevant witnesses for the Secretary of State.
In making his submission of law, counsel was not giving evidence about the factual position.
There is a fundamental difference between submissions of law made by counsel and evidence of fact.
Clearly, if the Secretary of State had been correct in submission (i) that would have provided an answer to the case against him whatever the position on the facts.
This explains why counsel advanced the submission.
But it is equally clear that if that submission failed, the Secretary of State made an alternative submission that he had a discretion whether to take the Paris Agreement further into account than was already the case under the CCA 2008 and that there had been no error of law in the exercise of that discretion.
That was the submission accepted by the Divisional Court.
In our view, both the submissions of Mr Wolfe which the Court of Appeal accepted are unsustainable.
The Divisional Courts judgment on this point is correct.
On the evidence, the Secretary of State certainly did ask himself the question whether he should take into account the Paris Agreement beyond the extent to which it was already reflected in the obligations under the CCA 2008 and concluded in the exercise of his discretion that it would not be appropriate to do so.
As mentioned above, this case is in the class referred to in para 121 above.
Mr Wolfe sought to suggest that in deciding the case as it did, the Court of Appeal had acted as a first instance court (since the Divisional Court had refused to give permission for judicial review on this ground) and that it had made factual findings to contrary effect which this court was not entitled to go behind.
He also submitted that HAL, in its notice of appeal, had not questioned the factual position as it was taken to be by the Court of Appeal and was therefore not entitled to dispute it on this appeal.
Neither of these submissions has any merit.
The Divisional Court considered the claims brought against the Secretary of State at a rolled up hearing lasting many days and considered each claim in full and in depth.
In respect of all aspects of the Divisional Courts decision, both in relation to those claims on which it granted permission for judicial review but then dismissed the claim and in relation to those claims (including those relating to grounds (i) to (iv) in this appeal) on which after full consideration it decided they were unarguable and so refused to grant permission for judicial review, the Court of Appeal correctly understood that its role was the conventional role of an appellate court, to examine whether the Divisional Court had erred in its decision.
In any event, this court can read the undisputed evidence of Ms Low and Ms Stevenson for itself and has the benefit of an agreed Statement of Facts and Issues which makes it clear what the true factual position was.
The Court of Appeal was wrong to proceed on the basis of a different assessment of the facts.
On a fair reading of HALs notice of appeal, it indicated that its case under this ground was to be that the Secretary of State had a discretion whether to have regard to the Paris Agreement, which discretion had been exercised lawfully.
In any event, that was put beyond doubt by HALs written case.
FoE and Plan B Earth have been on notice of HALs case under this ground for a long time and are in no way prejudiced by it being presented in submissions to this court.
The view formed by the Secretary of State, that the international obligations of the UK under the Paris Agreement were sufficiently taken into account for the purposes of the designation of the ANPS by having regard to the obligations under the CCA 2008, was in our judgment plainly a rational one.
Mr Wolfe barely argued to the contrary.
The Secretary of States assessment was based on the advice of the CCC, as the relevant independent expert body.
The assessment cannot be faulted.
Further, the ANPS itself indicated at para 5.82 that the up to date carbon targets under the CCA 2008, which would reflect developing science and any change in the UKs international obligations under the Paris Agreement, would be taken into account at the stage of considering whether a DCO should be granted.
That was a necessary step before the NWR Scheme could proceed.
Moreover, as observed by the Divisional Court, there was scope for the Secretary of State to amend the ANPS under section 6 of the PA 2008, should that prove to be necessary if it emerged in the future that there was any inconsistency between the ANPS and the UKs obligations under the Paris Agreement.
It should also be observed that the carbon emissions associated with all three of the principal options identified by the Airports Commission (that is, the NWR Scheme, the ENR Scheme and the G2R Scheme) were assessed to be broadly similar.
Accordingly, reference to the Paris Agreement does not provide any basis for preferring one scheme rather than another.
To the extent the obligations under the Paris Agreement have a bearing on the decision to designate the ANPS, therefore, they are only significant if it is to be argued that there should not be any decision to meet economic needs by increasing airport capacity by one of these schemes.
But in light of the extensive work done by the Airports Commission about the need for such an increase in capacity it could not be said that the Secretary of State acted irrationally in considering that the case for airport expansion had been sufficiently made out to allow the designation of the ANPS.
The respondents did not seek to argue that this aspect of his reasoning was irrational.
As we have noted above, the concept of sustainability in section 10 of the PA 2008 includes consideration of economic and social factors as well as environmental ones.
In light of the factual position, it is not necessary to decide the different question whether, if the Secretary of State had omitted to think about the Paris Agreement at all (so that this was a case of the type described in para 120 above), as an unincorporated treaty, that would have constituted an error of law.
That is not a straightforward issue and we have not heard submissions on the point.
We say no more about it.
Ground (iii): the SEA Directive ground
The SEA Directive operates along with the EIA Directive to ensure that environmental impacts from proposals for major development are properly taken into account before a development takes place.
The relationship between the Directives was explained by Lord Reed in Walton v Scottish Ministers [2012] UKSC 44; [2013] PTSR 51, paras 10 30.
The SEA Directive applies upstream, at the stage of preparation of strategic development plans or proposals.
The EIA Directive requires assessment of environmental impacts downstream, at the stage when consent for a particular development project is sought.
Although the two Directives are engaged at different points in the planning process for large infrastructure projects such as the NWR Scheme, they have similar objects and have to deal with similar issues of principle, including in particular the way in which regard should be had to expert assessment of various factors bearing on that process.
These points indicate that a similar approach should apply under the two Directives.
The SEA Directive is implemented in domestic law by the SEA Regulations.
It is common ground that the SEA Regulations are effective in transposing the Directive into domestic law.
Accordingly, it is appropriate to focus the discussion of this ground on the SEA Directive itself.
The structure of the SEA Directive appears from its provisions, set out and discussed above.
The Directive requires that an environmental assessment of major plans and proposals should be carried out.
The ANPS is such a plan, which will have a significant effect in setting the policy framework for later consideration of whether to grant a DCO for implementing the NWR Scheme.
Therefore the proposal to designate it under section 5 of the PA 2008 required an environmental assessment as defined in article 2(b).
The environmental assessment had to include the preparation of an environmental report and the carrying out of consultations.
An environmental report for the purposes of the Directive is directed to providing a basis for informed public consultation on the plan.
The decision making framework under the SEA Directive is similar to that under the EIA Directive for environmental assessment of particular projects.
Under the EIA Directive, an applicant for planning consent for particular projects has to produce an environmental statement which, among other things, serves as a basis for consultation with the public.
Under the SEA Directive, the public authority which proposes the adoption of a strategic plan has to produce an environmental report for the same purpose.
In due course, any application by HAL for a DCO will have to go through the process of environmental assessment pursuant to the EIA Directive and the EIA Regulations.
FoE and Plan B Earth complain that the environmental report which the Secretary of State was required under the SEA Directive to prepare and publish was defective, in that it did not make reference to the Paris Agreement.
Mr Wolfe pointed out that the Secretary of State did not include the Paris Agreement in the long list of legal instruments and other treaties appended to the scoping report produced in March 2016 (ie after the Paris Agreement was adopted in December 2015 but before it was signed by the UK in April 2016 and ratified by it in November 2016) for the purposes of preparing the draft AoS which was to stand as the Secretary of States environmental report for the purposes of the SEA Directive for the consultation on the draft ANPS.
No reference to the Paris Agreement was included in the AoS used for the February 2017 consultation on the draft ANPS, nor in that used for the October 2017 consultation on the draft ANPS.
Against this, HAL points out that the carbon target in the CCA 2008 and the carbon budgets set under that Act were referred to in the AoS, as well as in the draft ANPS itself, so to that extent the UKs obligations under the Paris Agreement were covered in the environmental report.
Beyond that, the evidence of Ms Stevenson (who led the team who prepared the AoS on behalf of the Secretary of State) makes it clear that the Secretary of State followed the advice of the CCC in deciding that it was not necessary and would not be appropriate to make further reference to the Paris Agreement in the AoS. The existing domestic legal obligations were considered to be the correct basis for assessing the carbon impact of the project, and it would be speculative and unhelpful to guess at what different targets might be recommended by the CCC in the future.
Therefore, despite its omission from the scoping report, when the AoS actually came to be drafted the Paris Agreement (which had been ratified by the UK after the scoping report was issued) had been considered and the Secretary of State, acting by Ms Stevenson and her team, had decided in the exercise of his discretion not to make distinct reference to it.
As regards the law, the parties are in agreement.
Any obligation to make further reference to the Paris Agreement in the environmental report depended on the application of three provisions of the SEA Directive.
Under paragraph (e) of Annex I, the AoS had to provide information in the form of the environmental protection objectives, established at international, Community or member state level, which are relevant to the plan or programme and the way those objectives and any environmental considerations have been taken into account during its preparation.
But, as stated in the introduction to Annex I, this was subject to article 5(2) and (3) of the Directive, set out at para 58 above.
It is common ground that the effect of article 5(2) and (3) is to confer on the Secretary of State a discretion regarding the information to include in an environmental report.
It is also common ground that the approach to be followed in deciding whether the Secretary of State has exercised his discretion unlawfully for the purposes of that provision is that established in relation to the adequacy of an environmental statement when applying the EIA Directive, as set out by Sullivan J in R (Blewett) v Derbyshire County Council [2003] EWHC 2775 (Admin); [2004] Env LR 29 (Blewett).
Blewett has been consistently followed in relation to judicial review of the adequacy of environmental statements produced for the purposes of environmental assessment under the EIA Directive and endorsed at the highest level.
In Shadwell Estates Ltd v Breckland District Council [2013] EWHC 12 (Admin) Beatson J held that the Blewett approach was also applicable in relation to the adequacy of an environmental report under the SEA Directive.
The Divisional Court and the Court of Appeal in the present case endorsed this view (at paras 401 435 and paras 126 144 of their respective judgments).
The respondents have not challenged this and we see no reason to question the conclusion of the courts below on this issue.
As Sullivan J held in Blewett (paras 32 33), where a public authority has the function of deciding whether to grant planning permission for a project calling for an environmental impact assessment under the EIA Directive and the EIA Regulations, it is for that authority to decide whether the information contained in the document presented as an environmental statement is sufficient to meet the requirements of the Directive, and its decision is subject to review on normal Wednesbury principles.
Sullivan J observed (para 39) that the process of requiring that the environmental statement is publicised and of public consultation gives those persons who consider that the environmental statement is inaccurate or inadequate or incomplete an opportunity to point out its deficiencies.
The EIA Directive and Regulations do not impose a standard of perfection in relation to the contents of an environmental statement in order for it to fulfil its function in accordance with the Directive and the Regulations that it should provide an adequate basis for public consultation.
At para 41 Sullivan J warned against adoption of an unduly legalistic approach in relation to assessment of the adequacy of an environmental statement and said: The [EIA] Regulations should be interpreted as a whole and in a common sense way.
The requirement that an [environmental impact assessment] application (as defined in the Regulations) must be accompanied by an environmental statement is not intended to obstruct such development.
As Lord Hoffmann said in R v North Yorkshire County Council, Ex p Brown [2000] 1 AC 397, at p 404, the purpose is to ensure that planning decisions which may affect the environment are made on the basis of full information.
In an imperfect world it is an unrealistic counsel of perfection to expect that an applicants environmental statement will always contain the full information about the environmental impact of a project.
The Regulations are not based upon such an unrealistic expectation.
They recognise that an environmental statement may well be deficient, and make provision through the publicity and consultation processes for any deficiencies to be identified so that the resulting environmental information provides the local planning authority with as full a picture as possible.
There will be cases where the document purporting to be an environmental statement is so deficient that it could not reasonably be described as an environmental statement as defined by the Regulations , but they are likely to be few and far between.
Lord Hoffmann (with whom the other members the Appellate Committee agreed on this issue) approved this statement in R (Edwards) v Environment Agency [2008] UKHL 22; [2008] 1 WLR 1587, para 38.
As the Divisional Court and the Court of Appeal held in the present case, the discretion of the relevant decision maker under article 5(2) and (3) of the SEA Directive as to whether the information included in an environmental report is adequate and appropriate for the purposes of providing a sound and sufficient basis for public consultation leading to a final environmental assessment is likewise subject to the conventional Wednesbury standard of review.
We agree with the Court of Appeal when it said (para 136): The courts role in ensuring that an authority here the Secretary of State has complied with the requirements of article 5 and Annex I when preparing an environmental report, must reflect the breadth of the discretion given to it to decide what information may reasonably be required when taking into account the considerations referred to first, current knowledge and methods of assessment; second, the contents and level of detail in the plan or programme; third, its stage in the decision making process; and fourth the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment.
These requirements leave the authority with a wide range of autonomous judgment on the adequacy of the information provided.
It is not for the court to fix this range of judgment more tightly than is necessary.
The authority must be free to form a reasonable view of its own on the nature and amount of information required, with the specified considerations in mind.
This, in our view, indicates a conventional Wednesbury standard of review as adopted, for example, in Blewett.
A standard more intense than that would risk the court being invited, in effect, to substitute its own view on the nature and amount of information included in environmental reports for that of the decision maker itself.
This would exceed the proper remit of the court.
The EIA Directive and the SEA Directive are, of course, EU legislative instruments and their application is governed by EU law.
However, as the Court of Appeal observed (paras 134 135), the type of complex assessment required in compiling an environmental report for the purposes of environmental assessment is an area where domestic public law principles have the same effect as the parallel requirements of EU law.
As Advocate General Lger stated in his opinion in Upjohn Ltd v Licensing Authority Established Under Medicines Act 1968 (Case C 120/97) [1999] 1 WLR 927, para 50, [the] court has always taken the view that when an authority is required, in the exercise of its functions, to undertake complex assessments, a limited judicial review of the action which that authority alone is entitled to perform must be exercised, since otherwise that authoritys freedom of action would be definitively paralysed .
The appropriateness of this approach is reinforced in the present context, having regard to the function which an environmental report is supposed to fulfil under the scheme of the SEA Directive.
It is intended that such a report should inform the public by providing an appropriate and comprehensible explanation of the relevant policy context for a proposed strategic plan or project to enable them to provide comments thereon, and in particular to suggest reasonable alternatives by which the public need for development in accordance with the proposed plan or project could be met.
As article 6(2) states, the public is to have an early and effective opportunity to express their opinion on a proposed plan or programme.
It is implicit in this objective that the public authority responsible for promulgating an environmental report should have a significant editorial discretion in compiling the report to ensure that it is properly focused on the key environmental and other factors which might have a bearing on the proposed plan or project.
Absent such a discretion, there would be a risk that public authorities would adopt an excessively defensive approach to drafting environmental reports, leading to the reports being excessively burdened with irrelevant or unfocused information which would undermine their utility in informing the general public in such a way that the public is able to understand the key issues and comment on them.
In the sort of complex environmental report required in relation to a major project like the NWR Scheme, there is a real danger that defensive drafting by the Secretary of State to include reference to a wide range of considerations which he did not consider to be helpful or appropriate in the context of the decision to be taken would mean that the public would be drowned in unhelpful detail and would lose sight of the wood for the trees, and their ability to comment effectively during the consultation phase would be undermined.
The appositeness of Sullivan Js analysis in Blewett at para 41, quoted above, has been borne out in this case.
The draft ANPS issued with the AoS for the purposes of consultation included the statement that it was compatible with the UKs international obligations in relation to climate change.
Concerns about the impact of the expansion of Heathrow on the UKs ability to meet its climate change commitments were raised in representations made during the consultation.
In the Governments response to the consultation published on 5 June 2018 these representations were noted and the Governments position in relation to them was explained (paras 8.18 8.19 and 8.25).
The Governments view was that the NWR Scheme was capable of being compatible with the UKs international obligations and that there was no good reason to hold up the designation of the ANPS until future policy in relation to aviation carbon emissions, which was in a state of development internationally and domestically, was completely fixed.
Accordingly, it is clear that the public was able to comment on the Paris Agreement in the course of the consultation and that their comments were taken into account in the environmental assessment required by the SEA Directive.
It again appears from this material that the Secretary of State did have regard to the Paris Agreement when deciding to designate the ANPS.
As we have said, Mr Wolfe did not challenge the legal framework set out above.
In particular, he did not challenge the appropriateness of applying the Wednesbury standard in relation to the exercise of discretion under article 5(2) and (3).
Instead, in line with his submission under ground (ii) above, his submission was that the Secretary of State had decided that the Paris Agreement was not a relevant statement of international policy falling within Annex I, paragraph (e), because he had been advised that it was legally irrelevant to the decision he had to take as to whether to designate the ANPS.
Thus, according to Mr Wolfe, the Secretary of State had never reached the stage of exercising his discretion whether to include a distinct reference to the Paris Agreement in the AoS. The Secretary of States decision that the Paris Agreement was irrelevant as a matter of law was wrong, and therefore the Secretary of State had erred in law because he simply did not turn his mind to whether reference to it should be included in the environmental report (the AoS).
This was the argument which the Court of Appeal accepted at paras 242 to 247.
The Court of Appeals reasoning on this point was very short because, as it pointed out, it followed its reasoning in relation to the respondents submissions in relation to section 10 of the PA 2008 (ground (ii) above).
In our view, as with the ground (ii) above, Mr Wolfes submission and the reasoning of the Court of Appeal cannot be sustained in light of the relevant evidence on the facts.
As we have explained, the Secretary of State did not treat the Paris Agreement as legally irrelevant and on that basis refuse to consider whether reference should be made to it.
On the contrary, as Ms Stevenson explains in her evidence, in compiling the AoS as the environmental statement required under the SEA Directive the Secretary of State decided to follow the advice of the CCC to the effect that the UKs obligations under the Paris Agreement were sufficiently taken into account in the UKs domestic obligations under the CCA 2008, which were referred to in the ANPS and the AoS. Further reference to the Paris Agreement was not required.
As we have already held above, this was an assessment which was plainly rational and lawful.
Therefore, we would uphold this ground of appeal as well.
Having regard to the evidence regarding the factual position, the Divisional Court was right to reject this complaint by the respondents (paras 650 656).
The Secretary of State did not act in breach of any of his obligations under the SEA Directive in drafting the AoS as the relevant environmental report in respect of the ANPS, and in omitting to include any distinct reference in it to the Paris Agreement.
Ground (iv) the post 2050 and non CO emissions grounds
This ground concerns other matters which it is said that the Secretary of State failed to take into consideration in the performance of his duty under section 10(2) and (3) of the PA 2008.
Those provisions, as we have said, obliged the Secretary of State in performing his function of designating the ANPS to do so with the objective of contributing to sustainable development and in so doing to have regard to the desirability of mitigating, and adapting to, climate change.
FoE has argued and the Court of Appeal (paras 248 260) has accepted that the Secretary of State failed in his duty under section 10 to have regard to (i) the effect of emissions created by the NWR Scheme after 2050 and (ii) the effect of non CO emissions from that scheme.
The Divisional Court dealt with this matter together with the matter which has become ground (ii) in this appeal, namely whether the Secretary of State failed to have regard to the Paris Agreement in breach of section 10, as issue 19 in the rolled up hearing (paras 633 648, 659(iv)) and held that that FoEs case was not arguable.
The Court of Appeal (para 256) correctly treated this issue as closely bound up with what is now ground (ii) in this appeal.
It is not in dispute in this appeal that in assessing whether the Secretary of State was bound to address the effect of the post 2050 emissions and the effect of the non CO emissions in the ANPS we are dealing with the third category of considerations in Simon Brown LJs categorisation in R v Somerset County Council, Ex p Fewings (para 116 above).
The Secretary of State had a margin of appreciation in deciding what matters he should consider in performing his section 10 duty.
It is also not in dispute that it is appropriate to apply the Wednesbury irrationality test to that decision (para 119 above).
The task for the court therefore is one of applying that legal approach to the facts of this case.
We address first the question of post 2050 emissions before turning to the non CO emissions. (i)
post 2050 emissions
FoEs argument on the relevance to the objectives of the Paris Agreement of the impacts of emissions after 2050 was straightforward.
An assessment of the impact of the emissions from aircraft using the North West Runway by reference to a greenhouse gas target for 2050 fails to consider whether it would be sustainable for the additional aviation emissions from the use of the North West Runway to occur after 2050 given the goal of the Paris Agreement for global emissions to reach net zero in the second half of the century.
HAL submitted that the Secretary of States approach is entirely rational.
Lord Anderson points out, and FoE accepts, that the Airports Commission assessed the carbon emissions of each of the short listed schemes over a 60 year appraisal period up to 2085/2086 and that the same appraisal period was used in the AoS which accompanied the ANPS.
The Secretary of State therefore did take into account the fact that there would be carbon emissions from the use of the North West Runway after 2050 and quantified those emissions.
It was not irrational to decide not to attempt to assess post 2050 emissions by reference to future policies which had yet to be formulated.
It was rational for him to assume that future policies in relation to the post 2050 period, including new emissions targets, could be enforced by the DCO process and mechanisms such as carbon pricing, improvements to aircraft design, operational efficiency improvements and limitation of demand growth.
In our view, HAL is correct in its submission that the Secretary of State did not act irrationally in not attempting in the ANPS to assess post 2050 emissions against policies which had yet to be determined.
It is clear from the AoS that the Department for Transport modelled the likely future carbon emissions of both Heathrow and Gatwick airports, covering aircraft and other sources of emissions, to 2085/2086 (paras 6.11.1 6.11.3, 6.11.13 and Table 6.4).
As we have set out in our discussion of ground (i) above, policy in response to the global goals of the Paris Agreement was in the course of development in June 2018 when the Secretary of State designated the ANPS and remains in development.
Further, as we have already pointed out (paras 10 and 98 above), the designation of the NWR Scheme in the ANPS did not immunise the scheme from complying with future changes of law and policy.
The NWR Scheme would fall to be assessed against the emissions targets which were in force at the date of the determination of the application for a DCO.
Under section 120 of the PA 2008 (para 37 above) the DCO may impose requirements corresponding to planning conditions and requirements that the approval of the Secretary of State be obtained.
Under section 104 (para 35 above), the Secretary of State is not obliged to decide the application for the DCO in accordance with the ANPS if (i) that would lead the United Kingdom to be in breach of any of its international obligations, (ii) that would lead the Secretary of State be in breach of any duty imposed by or under any other enactment, (iii) the Secretary of State is satisfied that deciding the application in accordance with the ANPS would be unlawful by virtue of any enactment and (iv) the Secretary of State is satisfied that the adverse impact of the proposed development would outweigh its benefits.
There are therefore provisions in place to make sure that the NWR Scheme complies with law and policy, including the Governments forthcoming Aviation Strategy, at the date when the DCO application is determined.
There are also mechanisms available to the Government, as HAL submits (para 155 above), by which the emissions from the use of the North West Runway can be controlled.
(ii) non CO emissions
To understand FoEs argument in relation to non CO emissions, it is necessary first to identify what are the principal emissions which give rise to concern.
Mr Tim Johnson, of the Aviation Environmental Federation, explained in his first witness statement that aircraft emit nitrogen oxides, water vapour and sulphate and soot aerosols, which combine to have a net warming effect.
Depending on atmospheric humidity, the hot air from aircraft exhausts combines with water vapour in the atmosphere to form ice crystals which appear as linear condensation trails and can lead to cirrus like cloud formation.
Using the metric of radiative forcing (RF), which is a measure of changes in the energy balance of the atmosphere in watts per square metre, it is estimated that the overall RF by aircraft is 1.9 times greater than the forcing by aircraft CO emissions alone, but the RF metric is not suitable for forecasting future impacts.
He recognised that there is continuing uncertainty about the impacts of non CO emissions, which tend to be short lived, but he stated that there is high scientific consensus that the total climate warming effect of aviation is more than that from CO emissions alone.
Scientists are exploring metrics to show how non CO impacts can be reflected in emission forecasts for the purpose of formulating policy.
There is substantial agreement between the parties that there is continuing uncertainty in the scientific community about the effects of non CO emissions.
The Department for Transport acknowledged this uncertainty in the AoS (para 6.11.11): The assessment undertaken is based on CO emissions only There are likely to be highly significant climate change impacts associated with non CO emissions from aviation, which could be of a similar magnitude to the CO emissions themselves, but which cannot be readily quantified due to the level of scientific uncertainty and have therefore not been assessed.
There are also non CO emissions associated with the operation of the airport infrastructure, such as from refrigerant leaks and organic waste arisings, however, evidence suggests that these are minor and not likely to be material.
The AoS returned to this topic (Appendix A 9, para 9.11.5): In addition, there are non carbon emissions associated with the combustion of fuels in aircraft engines while in flight, which are also thought to have an impact on climate change.
As well as CO, combustion of aviation fuel results in emission of water vapour, nitrogen oxides (NO) and aerosols.
NO are indirect greenhouse gases, in that they do not give rise to a radiative effect themselves, but influence the concentration of other direct greenhouse gases With the exception of sulphate aerosols, all other emissions cause warming.
In addition, the flight of aircraft can also cause formation of linear ice clouds (contrails) and can lead to further subsequent aviation induced cloudiness.
These cloud effects cause additional warming.
Evidence suggests that the global warming impact of aviation, with these sources included, could be up to two times that of the CO impact by itself, but that the level of scientific uncertainty involved means that no multiplier should be applied to the assessment.
For these reasons the [Airports Commission] did not assess the impact of the non CO effects of aviation and these have not been included in the AoS assessment.
This position is kept under review by DfT but it is worth noting that non CO emissions of this type are not currently included in any domestic or international legislation or emissions targets and so their inclusion in the assessment would not affect its conclusion regarding legal compliance.
It is recommended that further work be done on these impacts by the applicant during the detailed scheme design, according to the latest appraisal guidance. (Emphasis added)
This approach of addressing the question of capacity by reference to CO emissions targets, keeping the policy in relation to non CO emissions under review and requiring an applicant for a DCO to address such impacts by reference to the state of knowledge current at the time of the determination of its application was consistent with the advice of the CCC to the Airports Commission and to the Secretary of State.
The Airports Commission recorded that advice in its interim report in December 2013: because of the uncertainties in the quantification of the impact of non CO emissions, the target for constraining CO emissions remained the most appropriate basis for planning future airport capacity.
The approach of reconsidering the effect of all significant emissions when determining an application for a DCO is reflected in the ANPS which addressed the CO emissions target and stated (para 5.76): Pursuant to the terms of the Environmental Impact Assessment Regulations, the applicant should undertake an assessment of the project as part of the environmental statement, to include an assessment of any likely significant climate factors.
The applicant should quantify the greenhouse gas impacts before and after mitigation to show the impacts of the proposed mitigation. (Emphasis added) The approach remains consistent with the CCCs advice since the designation of the ANPS.
In its letter of 24 September 2019 to the Secretary of State recommending that international aviation and shipping emissions be included in a net zero CO emissions target, the CCC stated: Aviation is likely to be the largest emitting sector in the UK by 2050, even with strong progress on technology and limiting demand.
Aviation also has climate warming effects beyond CO, which it will be important to monitor and consider within future policies. (Emphasis added)
The Government in its response to consultations on the ANPS (para 11.50) stated that it will address how policy might make provision for the effects of non CO aviation emissions in its Aviation Strategy.
That strategy is due to be published shortly.
The Secretary of State when he designated the ANPS was aware that the applicant for a DCO in relation to the NWR Scheme would have to provide an environmental assessment which addressed, and would be scrutinised against, the then current domestic and international rules and policies on aviation and other emissions.
He would have been aware of his power to make requirements under section 120 of the PA 2008 and to depart from the ANPS in the circumstances set out in section 104 of that Act (para 157 above).
The Court of Appeal (para 258) upheld FoEs challenge stating the precautionary principle and common sense suggested that scientific uncertainty was not a reason for not taking something into account at all, even if it could not be precisely quantified at this stage.
The Court did not hold in terms that the Secretary of State had acted irrationally in this regard but said (para 261) that, since it was remitting the ANPS to the Secretary of State for reconsideration, the question of non CO emissions and the effect of post 2050 emissions would need to be taken into account as part of that exercise.
We respectfully disagree with that approach.
The precautionary principle adds nothing to the argument in this context and we construe the judgment as equating the principle with common sense.
But a courts view of common sense is not the same as a finding of irrationality, which is the only relevant basis on which FoE seeks to impugn the designation in its section 10 challenges.
In any event we are satisfied that the Secretary of States decision to address only CO emissions in the ANPS was not irrational.
In summary, we agree with the Divisional Court that it is not reasonably arguable that the Secretary of State acted irrationally in not addressing the effect of the non CO emissions in the ANPS for six reasons.
First, his decision reflected the uncertainty over the climate change effects of non CO emissions and the absence of an agreed metric which could inform policy.
Secondly, it was consistent with the advice which he had received from the CCC.
Thirdly, it was taken in the context of the Governments inchoate response to the Paris Agreement.
Fourthly, the decision was taken in the context in which his department was developing as part of that response its Aviation Strategy, which would seek to address non CO emissions.
Fifthly, the designation of the ANPS was only the first stage in a process by which permission could be given for the NWR Scheme to proceed and the Secretary of State had powers at the DCO stage to address those emissions.
Sixthly, it is clear from both the AoS and the ANPS itself that the applicant for a DCO would have to address the environmental rules and policies which were current when its application would be determined.
Conclusion
It follows that HAL succeeds on each of grounds (i) to (iv) of its appeal.
It is not necessary therefore to address ground (v) which is concerned with the question whether the court should have granted the relief which it did.
We would allow the appeal.
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This appeal concerns the lawfulness of the Airports National Policy Statement (the ANPS) and its accompanying environmental report.
The ANPS is the national policy framework which governs the construction of a third runway at Heathrow Airport.
Any future application for development consent to build this runway will be considered against the policy framework in the ANPS.
The ANPS does not grant development consent in its own right.
Successive governments have considered whether there is a need for increased airport capacity in the South East of England.
The Secretary of State for Transport (the Secretary of State) declared that the Government accepted the case for airport expansion in 2015.
He announced that the North West Runway (NWR) scheme was the preferred scheme in October 2016.
The UK was separately developing its policy on environmental issues and climate change.
On 22 April 2016 the UK signed the Paris Agreement under the United Nations Framework Convention on Climate Change (the Paris Agreement).
The UK ratified the agreement on 17 November 2016.
The agreement sets out various targets for the reduction of greenhouse gas emissions, particularly carbon dioxide, and the reduction of temperature increases resulting from global warming (the Paris Agreement Targets).
Two Government ministers Andrea Leadsom MP and Amber Rudd MP made statements about the Governments approach to the Paris Agreement in March 2016.
Against this background, the Secretary of State designated the ANPS as national policy on 26 June 2018.
Objectors to the NWR scheme, including Friends of the Earth Ltd (FoE) and Plan B Earth, challenged the lawfulness of the Secretary of States designation on a number of grounds.
The Divisional Court dismissed all of the objectors various claims in two separate judgments.
The Court of Appeal upheld the main parts of these judgments on appeal but allowed some of FoE and Plan B Earths grounds.
It held the Secretary of State had acted unlawfully in failing to take the Paris Agreement into account when designating the ANPS.
Accordingly, the ANPS was of no legal effect.
The Secretary of State does not appeal the Court of Appeals decision.
However, the company which owns Heathrow Airport, Heathrow Airport Ltd (HAL), is a party to the proceedings and has been granted permission to appeal to the Supreme Court.
HAL has stated that it has already invested a large sum of money in promoting the NWR scheme and wishes to make an application for development consent to carry the project through.
The Supreme Court unanimously allows the appeal.
Lord Hodge and Lord Sales give the main judgment (with which Lord Reed, Lady Black and Lord Leggatt agree).
Government policy The Secretary of State designated the ANPS under section 5(1) of the Planning Act 2008 (the PA 2008) [12].
Section 5(7) of the PA 2008 provides that national policy frameworks such as the ANPS must give reasons for the policy adopted.
Section 5(8) states that these reasons must include an explanation of how that policy takes account of existing Government policy relating to the mitigation of and adaptation to climate change [25].
The Court rejects Plan B Earths argument that the reasons in the ANPS needed to refer to the Paris Agreement Targets in order to comply with section 5(8).
The March 2016 statements of Andrea Leadsom MP and Amber Rudd MP and the formal ratification of the Paris Agreement do not mean that the Governments commitment to the Paris Agreement constitutes Government policy in the sense in which that term is used in the statute [102].
The meaning of Government policy is a matter of interpretation of the statutory provision [101].
The phrase needs to be construed relatively narrowly in context to allow section 5(8) to operate sensibly.
Otherwise it would create a bear trap for civil servants and ministers, who would have to consider all ministerial statements given in any context which might be characterised as policy in a broad sense [105].
The Court explains that Government policy in the context of section 5(8) refers to carefully formulated written statements of policy which have been cleared by the relevant departments on a Government wide basis [105].
The epitome of Government policy is a formal written statement of established policy.
The absolute minimum standard is a statement which is clear, unambiguous, and devoid of relevant qualification [106].
The Court does not consider that the statements of Andrea Leadsom MP and Amber Rudd MP meet this minimum standard.
They were not clear, did not refer to the Paris Temperature Targets at all, and did not explain how the Paris Agreement goal of net zero emissions would be incorporated into UK law [106].
The lower courts were asked to consider whether international treaties which have been formally ratified but have not been incorporated into domestic law such as the Paris Agreement are Government policy.
FoE and Plan B Earth did not maintain that argument in the Supreme Court.
As the Court explains, international treaties are binding only as a matter of international law and do not have an effect in domestic law.
Treaty commitments continue whether or not a particular Government remains in office and do not constitute a statement of Government policy for the purposes of domestic law [108].
Section 1 of the Climate Change Act 2008 (the CCA 2008) sets a national carbon target.
Section 4 obliges the Government to establish carbon budgets for the UK [6].
These are already more demanding than the limits which the UK is currently obliged to have in place under the Paris Agreement [71].
The Court holds that, at the point the ANPS was designated in June 2018, there was no established Government policy on climate change beyond that already reflected in the CCA 2008 [111].
Sustainable development Section 10(2) and (3) of the PA 2008 requires the Secretary of State to designate national policy frameworks with the aim of contributing to the achievement of sustainable development.
He has to take into account the environmental, economic and social objectives that make up sustainable development.
He must, in particular, have regard to the desirability of mitigating and adapting to climate change [26],[115].
The Court dismisses FoEs argument that the Secretary of State breached this duty on the ground that he failed to have proper regard to the Paris Agreement when designating the ANPS.
The evidence shows that the Secretary of State took the Paris Agreement into account and, to the extent that its obligations were already covered by the measures in the CCA 2008, ensured that these were incorporated into the ANPS framework [123] [125].
Insofar as the Paris Agreement might in future require steps going beyond the current measures in the CCA 2008, the Secretary of State took it into account but decided that it was not necessary to give it further weight in the ANPS [126],[129].
The weight to be given to a particular consideration is a matter which falls within the discretion of the decision maker, in this case the Secretary of State.
His exercise of discretion is lawful unless the decision made is so unreasonable that no reasonable
decision maker would have made it [121].
That could not be said to be the case here [128].
The ANPS was carefully structured to ensure that when HAL applied for development consent to construct the runway, it would have to show at that stage that the development would be compatible with the up to date requirements under the Paris Agreement and the CCA 2008 measures as revised to take account of those requirements [87] [89], [123] [124].
Post 2050 and non CO emissions The Court dismisses FoEs argument that the Secretary of State separately breached his section 10 duty by failing to have regard to, firstly, the effect of greenhouse gas emissions created by the NWR scheme after 2050 and, secondly, the effect of non CO emissions [151],[156],[166].
The UKs policy in respect of the Paris Agreements global goals, including the post 2050 goal for greenhouse gas emissions to reach net zero, was in the course of development in June 2018 [154].
The Secretary of State did not act irrationally in deciding not to assess post 2050 emissions by reference to future policies which had yet to be formulated [155].
The Secretary of States department was also still considering how to address the effect of non CO emissions in June 2018 [166].
The Court further holds that future applications for development consent regarding the NWR scheme will be assessed against the emissions targets and environmental policies in force at that later date rather than those set out in the ANPS [157], [166].
Environmental report Section 5(3) of the PA 2008 requires the Secretary of State to produce an appraisal of sustainability in respect of frameworks such as the ANPS [28].
This is also required by EU law.
Council Directive 2001/42/EC of 27 June 2001 (the SEA Directive) as transposed into domestic law by the Environmental Assessment of Plans and Programmes Regulations 2004 (SI 2004/1633), requires the Secretary of State to produce an environmental report in respect of major plans and proposals such as the ANPS [28].
The report must include information about relevant environmental protection objectives established at the international, EU or domestic level and the way that they have been taken into account during the preparation of the plan as may reasonably be required (Article 5 and Annex I to the SEA Directive) [57],[58].
The appraisal of sustainability accompanying the ANPS was intended to meet both the domestic and EU requirements for an appraisal of sustainability and environmental report respectively.
The Court dismisses the respondents complaint that the appraisal of sustainability accompanying the ANPS was defective because it did not refer to the Paris Agreement [139].
Emphasising that the purpose of these reports is to provide the basis for informed public consultation [137], it holds that an unduly legalistic approach should not be taken when assessing their adequacy [143].
Whether a report provides a sound and sufficient basis for public consultation is a matter that falls within the Secretary of States discretion and the exercise of this discretion will only be found unlawful if it is one that no reasonable decision maker would have made [144].
Were this discretion removed, public authorities might adopt an excessively defensive and counterproductive approach by including so much detail that the public would be unable to comment effectively, contrary to the object of the SEA Directive [146].
In this instance, the targets set out in the CCA 2008, which were referred to in the appraisal of sustainability, took the UKs obligations under the Paris Agreement sufficiently into account [149].
The Court therefore upholds this ground of appeal as well [150].
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The law of vicarious liability is on the move.
So stated Lord Phillips of Worth Matravers in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1, generally known as Christian Brothers, at para 19.
The question raised by the current case, and by the parallel case of WM Morrison Supermarkets plc v Various Claimants [2020] UKSC 12, is how far that move can take it.
Two elements have to be shown before one person can be made vicariously liable for the torts committed by another.
The first is a relationship between the two persons which makes it proper for the law to make the one pay for the fault of the other.
Historically, and leaving aside relationships such as agency and partnership, that was limited to the relationship between employer and employee, but that has now been somewhat broadened.
That is the subject matter of this case.
The second is the connection between that relationship and the tortfeasors wrongdoing.
Historically, the tort had to be committed in the course or within the scope of the tortfeasors employment, but that too has now been somewhat broadened.
That is the subject matter of the Morrisons case.
The facts
The issue before us is whether Barclays Bank is vicariously liable for the sexual assaults allegedly committed between 1968 and about 1984 by the late Dr Gordon Bates on some 126 claimants in this group action.
Dr Bates was a medical practitioner practising in Newcastle upon Tyne.
According to his sons evidence, he had a portfolio practice.
Some of it was as an employee in local hospitals.
Some of it was doing medical examinations for emigration purposes.
Some of it was doing miscellaneous work for insurance companies, a mining company and a government board.
Some of it was doing medical assessments and examinations of employees or prospective employees, originally for Martins Bank, and later for Barclays Bank following their merger in 1969.
This was, however, a comparatively minor part of his practice.
He also wrote a newspaper column.
Applicants for jobs at Barclays who were successful at interview would be told that they would be offered a job, subject to passing a medical examination and obtaining satisfactory results in their GCE examinations.
The purpose of the examination was to show that they were medically fit for working in the Bank and could be recommended for life insurance at ordinary rates as required by the Banks pension scheme.
The Bank arranged the appointments with Dr Bates, told the applicants when and where to go, and provided him with a pro forma report to be filled in.
This was headed Barclays Confidential Medical Report and signed by Dr Bates and the applicant.
Dr Bates was paid a fee for each report.
He was not paid a retainer by the Bank.
If the report was satisfactory, the job offer would be confirmed, subject to examination results.
At that time, the Bank was recruiting young people, many of them female.
Many of the claimants were teenagers at the time, some aged 16, going for their first jobs on leaving school.
The examinations took place in Dr Bates home in Newcastle.
A room in the house had been converted into a consulting room.
The claimants were always alone in the room when they were examined by the doctor, although some attended on their own and some were accompanied by other family members.
It is alleged that Dr Bates sexually assaulted them in the course of those examinations, by inappropriate examination of their breasts and/or digital contact with or penetration of their anus or vagina.
Dr Bates died in 2009 and his estate (worth over half a million pounds) has been distributed.
He cannot be sued by the claimants but neither can the Bank claim contribution from him should any of these actions succeed.
This litigation began in 2015 and a group litigation order was made in 2016.
The managing judge, Nicola Davies J, ordered a trial of the preliminary issue of whether the Bank is vicariously liable for any assaults that Dr Bates is proved to have perpetrated in the course of medical examinations carried out at the Banks request.
On 26 July 2017, Nicola Davies J held that Barclays is vicariously liable for any assaults proved: [2017] EWHC 1929 (QB); [2017] IRLR 1103.
On 17 July 2018, the Court of Appeal dismissed Barclays appeal: [2018] EWCA Civ 1670; [2018] IRLR 947.
The Bank now appeals to this court.
The parties cases
The parties respective positions can be simply put.
As Lord Bridge of Harwich stated in D & F Estates Ltd v Church Comrs [1989] AC 177, 208 (echoing the words of Widgery LJ in Salsbury v Woodland [1970] 1 QB 324, 336), It is trite law that the employer of an independent contractor is, in general, not liable for the negligence or other torts committed by the contractor in the course of the execution of the work.
The Bank argues that, although recent decisions have expanded the categories of relationship which can give rise to vicarious liability beyond a contract of employment, they have not so expanded it as to destroy this trite proposition of law, which has been with us since at least the decision of Baron Parke in Quarman v Burnett (1840) 6 M & W 499, 151 ER 509.
The claimants, on the other hand, argue that the recent Supreme Court cases of Christian Brothers, Cox v Ministry of Justice [2016] UKSC 10; [2016] AC 660, and Armes v Nottinghamshire County Council [2017] UKSC 60; [2018] AC 355, have replaced that trite proposition with a more nuanced multi factorial approach in which a range of incidents are considered in deciding whether it is fair, just and reasonable to impose vicarious liability upon this person for the torts of another person who is not his employee.
That was the approach adopted both by the trial judge and the Court of Appeal in this case.
It will be apparent, therefore, that it is necessary to examine those three decisions in some detail, along with their precursor, the decision of the Court of Appeal in E v English Province of Our Lady of Charity [2012] EWCA Civ 938; [2013] QB 722, some four months before the decision in the Christian Brothers case, as well as some later cases.
As it happens, I sat on all three of the Supreme Court cases and agreed with the leading judgment in each; Lord Reed sat on Cox and Armes, in each of which he delivered the leading judgment; Lord Kerr sat on Christian Brothers and Armes and agreed with the leading judgment in each.
The recent decisions
The recent expansion in the law of vicarious liability began with the House of Lords decision in Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215.
The owners of a childrens home were held vicariously liable for the sexual abuse perpetrated by their employee, the warden.
It was thus concerned with stage two of the enquiry the connection between the employment and the wrongdoing and not with stage one.
Nevertheless, it proved influential in later cases, partly because of the willingness to expand the law, and partly because of the prominence it gave to some important decisions of the Supreme Court of Canada, which had placed emphasis on the policy considerations underlying the law.
Although their lordships did not endorse all of those policy considerations, they did adopt the same test as had been adopted in Canada.
Furthermore, some of those policy considerations found their way into the later cases dealing with stage one of the enquiry.
In Bazley v Curry [1999] 2 SCR 534, the owners of a childrens home were held vicariously liable for sexual abuse committed by one of their employees in the home.
The fundamental question was whether the wrongful act was sufficiently related to the conduct authorised by the employer to justify imposing vicarious liability.
This was generally appropriate where there was a significant connection between the creation or enhancement of the risk and the wrongdoing.
Vicarious liability would then serve the policy aims of providing an adequate remedy and deterring the risk.
Once engaged in a business it was fair that the employer be made to pay for the generally foreseeable risks of that business.
In contrast, in Jacobi v Griffiths [1999] 2 SCR 570, a childrens club was not vicariously liable for the acts of an employee which took place in the employees home outside working hours.
It was not enough that his employment in the club gave him the opportunity to make friends with the children.
The first English case to consider directly whether the enquiry at stage one might expand beyond the relationship of employee and employer was Es case.
This built upon the earlier decision in Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2005] EWCA Civ 1151; [2006] QB 510.
Severe flood damage had been caused to a factory, where air conditioning was being installed, by the negligence of a fitters mate; the fitter and his mate had been supplied on a labour only basis by the third defendant to the second defendant to whom some of the work had been sub contracted; the Court of Appeal held both the second and third defendants jointly vicariously liable.
May LJ relied on the fact that both were in a position to control the fitters mate.
Rix LJ, on the other hand, said that he would hazard the view that what one is looking for is a situation where the employee in question, at any rate for relevant purposes, is so much a part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence (para 79).
Thus was vicarious liability extended to a person who was not in law the employer of the tortfeasor.
In Es case, the claimant alleged that while living in a childrens home run
by a Roman Catholic order of nuns she had been sexually abused by a priest appointed by the local diocesan bishop.
The issue was whether the trust which stood in the place of the bishop could be vicariously liable for the priests wrongdoing.
The priest was not an employee of the bishop or the diocese.
Nevertheless, it was held that his relationship with the bishop was sufficiently akin to employment to make it fair and just to hold the bishop vicariously liable.
Significantly, Ward LJ, who gave the leading judgment, did not question the traditional distinction between an employee and an independent contractor.
Rather, he asked himself what was the essence of each of those roles and then asked whether the relationship between the priest and the bishop was closer to that of an employee or to that of an independent contractor.
He summed up the difference thus (para 70): an employee is one who is paid a wage or salary to work under some, if only slight, control of his employer in his employers business for his employers business.
The independent contractor works in and for his own business at his risk of profit or loss.
By that test, the relationship between priest and bishop was sufficiently akin to employment to make it fair and just to hold the bishop liable.
Next came the Christian Brothers case.
This raised issues at both stage one and stage two of the enquiry but much more prominently at stage one.
The claimants had been inmates at a residential school owned by the Catholic Child Welfare Society (referred to as the Middlesbrough defendants), which also employed the teachers.
Some of the teachers, and the head teacher, were members of the Institute of Christian Brothers.
Serious physical and sexual abuse was alleged against some of the brothers.
The issue was whether the Institute could be vicariously liable, jointly with the Middlesbrough defendants.
In para 35, Lord Phillips of Worth Matravers listed a number of policy reasons usually making it fair, just and reasonable to impose vicarious liability upon an employer for the torts committed by an employee in the course of his employment: the tort will have been committed as a result of activity the employees activity is likely to be part of the the employer is more likely to have the means to (i) compensate the victim than the employee and can be expected to have insured against that liability; (ii) being taken by the employee on behalf of the employer; (iii) business activity of the employer; (iv) the employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee; (v) been under the control of the employer.
the employee will, to a greater or lesser degree, have
These are policy reasons, closely related to the policy reasons derived from the Canadian cases and Lister v Hesley Hall.
But, as Lord Hobhouse of Woodborough stressed in that case, at para 60, an exposition of the policy reasons for a rule (or even a description) is not the same as defining the criteria for its application.
Legal rules have to have a greater degree of clarity and definition than is provided by simply explaining the reasons for the existence of the rule and the social need for it, instructive though that may be.
This passage was cited by Ward LJ in Es case, para 54, followed by this: My own view is that one cannot understand how the law relating to vicarious liability has developed nor how, if at all, it should develop without being aware of the various strands of policy which have informed that development.
On the other hand, a coherent development of the law should proceed incrementally in a principled way, not as an expedient reaction to the problem confronting the court.
There appears to have been a tendency to elide the policy reasons for the doctrine of the employers liability for the acts of his employee, set out in para 35 of Christian Brothers, with the principles which should guide the development of that liability into relationships which are not employment but which are sufficiently akin to employment to make it fair and just to impose such liability.
This may have arisen because of what Lord Phillips said, at para 47: At para 35 above, I have identified those incidents of the relationship between employer and employee that make it fair, just and reasonable to impose vicarious liability on a defendant.
Where the defendant and the tortfeasor are not bound by a contract of employment, but their relationship has the same incidents, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee.
That was the approach adopted by the Court of Appeal in Es case [2013] QB 722.
I do not believe that by his reference to those incidents Lord Phillips was saying that they were the only criteria by which to judge the question.
This is for two reasons.
First, in Es case, Ward LJ had adopted the test of akin to employment but he had not asked himself whether those five incidents were present.
He had conducted a searching enquiry into whether the relationship between the priest and the bishop was more akin to employment than to anything else.
Secondly, when it came to applying the akin to employment test in the Christian Brothers case, Lord Phillips did not address himself to those five incidents but to the detailed features of the relationship.
Thus: 56.
In the context of vicarious liability the relationship between the teaching brothers and the institute had many of the elements, and all the essential elements, of the relationship between employer and employees. (i) The institute was subdivided into a hierarchical structure and conducted its activities as if it were a corporate body. (ii) The teaching activity of the brothers was undertaken because the provincial directed the brothers to undertake it.
True it is that the brothers entered into contracts of employment with the Middlesbrough defendants, but they did so because the provincial required them to do so. (iii) The teaching activity undertaken by the brothers was in furtherance of the objective, or mission, of the institute. (iv) The manner in which the brother teachers were obliged to conduct themselves as teachers was dictated by the institutes rules. 57.
The relationship between the teacher brothers and the institute differed from that of the relationship between employer and employee in that: (i) The brothers were bound to the institute not by contract, but by their vows. (ii) Far from the institute paying the brothers, the brothers entered into deeds under which they were obliged to transfer all their earnings to the institute.
The institute catered for their needs from these funds. 58.
Neither of these differences is material.
Indeed they rendered the relationship between the brothers and the institute closer than that of an employer and its employees.
I have quoted these paragraphs at length to show that he was answering the questions by reference to the details of the relationship, and its closeness to employment, rather than by reference to the five policy reasons in para 35.
It is significant that, shortly after the decision in Christian Brothers, this court decided the case of Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] AC 537, in which it was held that a school had a non delegable duty of care towards the pupils for whom it arranged compulsory swimming lessons with an independent contractor.
Lord Sumption said this, at para 3: The boundaries of vicarious liability have been expanded by recent decisions of the courts to embrace tortfeasors who are not employees of the defendant, but stand in a relationship which is sufficiently analogous to employment: Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1.
But it has never extended to the negligence of those who are truly independent contractors, such as Mrs Stopford appears to have been in this case.
Lord Sumption not only saw the Christian Brothers case as adopting the sufficiently analogous to employment test but also as casting no doubt on the conventional distinction between employees, and those analogous to employees, and independent contractors.
The next case was Cox v Ministry of Justice [2016] UKSC 10; [2016] AC 660.
The issue was whether the prison service could be vicariously liable for injuries caused to a prison catering manager by the negligence of a prisoner who was working under her direction on prison service pay.
There was no contract of employment between the prison and the prisoners.
Nevertheless, applying the Christian Brothers case, this court held that the prison was vicariously liable.
It is fair to say that Lord Reed did focus on the five policy factors identified by Lord Phillips.
He pointed out that they are not all of equal significance.
Factor (i), deep pockets, is not in itself a principled reason to impose liability, although the absence of any other source of compensation may sometimes be taken into account (para 20).
Factor (v), control, does not have the significance which once it did.
In todays world an employer is likely to be able to tell an employee what to do but not (at least always) how to do it.
But the absence of even this vestigial degree of control would point against liability (para 21).
That left three interrelated factors: (ii) that the tort was committed as a result of activity undertaken by the tortfeasor on behalf of the defendant; (iii) that the activity was part of the business activity of the defendant; and (iii) that by employing the tortfeasor to do it, the defendant created the risk of his committing the tort (para 22).
He summed up the principle thus (para 24): The result of this approach is that a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question. (Emphasis supplied)
Lord Reed went on to refer to Lord Phillips citation of Es case and the sufficiently akin to employment test (para 26) and to his application of that test to the facts of the Christian Brothers activities (para 27).
He emphasised that this new general approach was not special to cases of alleged sexual abuse (para 29).
He repeated the distinction between integrated activities and activities entirely attributable to the conduct of a recognisably independent business of the tortfeasor or some other person (para 29).
And he pointed out that references to business and enterprise did not mean that the employers activities had to be commercial in nature (para 30).
He had no difficulty in concluding that the prison service was vicariously liable for the prisoners tort.
It seems to me obvious that in Cox the result was bound to be the same whether it was expressed in terms of the test stated in para 24 of Lord Reeds judgment or in terms of the sufficiently akin to employment test.
Indeed, the case for vicarious liability for torts committed by prisoners in the course of their work within the prison seems to me a fortiori the case for vicarious liability for the work done by employees for their employers.
There is nothing in Lord Reeds judgment to cast doubt on the classic distinction between work done for an employer as part of the business of that employer and work done by an independent contractor as part of the business of that contractor.
The last, and perhaps the most difficult, case is Armes v Nottinghamshire County Council [2017] UKSC 60; [2018] AC 855.
The issue was whether the County Council could be vicariously liable for physical and sexual abuse allegedly carried out by two of the foster parents with whom the claimant was placed by the County Council while in their care.
Lord Reed repeated his analysis in Cox, prefacing his account with the statement that, while the classic example of a relationship justifying the imposing of vicarious liability was employer and employee, as explained in Cox and Christian Brothers the doctrine can also apply where the relationship has certain characteristics similar to those found in employment (para 54).
In applying the five incidents identified in those cases, he placed more emphasis on the lack of any other source of compensation if there were no vicarious liability and on the extent of the control exercised by the local authority over the foster parents care for the children (para 62).
In applying the three inter related factors, he held that the relevant activity of the local authority was the care of children committed to the local authoritys care (para 59).
The foster parents were an integral part of the local authoritys organisation of its childcare services, carried on for the benefit of the local authority (para 60).
By placing the children in foster care, the local authority had created the risk of the harm being done (para 61).
Significantly, having examined the relationship between the foster parents and the local authority in some detail, he concluded that the foster parents cannot be regarded as carrying on an independent business of their own (para 59).
There is nothing, therefore, in the trilogy of Supreme Court cases discussed above to suggest that the classic distinction between employment and relationships akin or analogous to employment, on the one hand, and the relationship with an independent contractor, on the other hand, has been eroded.
Two cases decided by common law courts since Christian Brothers and Cox have reached the same conclusion.
In Kafagi v JBW Group Ltd [2018] EWCA Civ 1157, Singh LJ stated that the
development from employment to something akin to employment had not undermined the conventional distinction between a contract of employment and a contract for services (para 21).
The defendant company had a contract with a local authority to collect their council tax debts.
It sub contracted the work to a registered bailiff, the alleged tortfeasor, who ran his own business and could pick and choose what work to do (para 50), had his own insurance (para 52) and could work for other clients (para 53).
Their relationship was not akin to employment (para 56).
In Ng Huat Seng v Mohammad [2017] SGCA 58, the owners of a property
had engaged the tortfeasor as an independent contractor to carry out demolition works at their premises.
It was argued that the recent decisions had undermined the distinction between employees and independent contractors.
The Singapore Court of Appeal (their final court) held that the two cases did not present a new analytical framework.
Rather (para 63): while we accept that the Christian Brothers case and Cox recognise that the doctrine of vicarious liability can be applied outside the strict confines of an employment relationship, it becomes evident, when one examines these judgments more closely, that their essential contribution was to fine tune the existing framework underlying the doctrine so as to accommodate the more diverse range of relationships which might be encountered in todays context.
These relationships, when whittled down to their essence, possess the same fundamental qualities as those which inhere in employer employee relationships, and thus make it appropriate for vicarious liability to be imposed.
Further (para 64): Indeed, we do not see how vicarious liability, the normative foundation of which rests on the theory that it is fair, just and reasonable to hold a defendant liable for the acts of the tortfeasor on the ground that the tortfeasor is in fact engaged in the defendants enterprise, could possibly be extended to tortious acts committed by an independent contractor, who, by definition, is engaged in his own enterprise.
There is simply nothing fair, just and reasonable about imposing secondary liability on a defendant in such a situation.
The question therefore is, as it has always been, whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment with the defendant.
In doubtful cases, the five incidents identified by Lord Phillips may be helpful in identifying a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability.
Although they were enunciated in the context of non commercial enterprises, they may be relevant in deciding whether workers who may be technically self employed or agency workers are effectively part and parcel of the employers business.
But the key, as it was in Christian Brothers, Cox and Armes, will usually lie in understanding the details of the relationship.
Where it is clear that the tortfeasor is carrying on his own independent business it is not necessary to consider the five incidents.
Application in this case
Clearly, although Dr Bates was a part time employee of the health service, he was not at any time an employee of the Bank.
Nor, viewed objectively, was he anything close to an employee.
He did, of course, do work for the Bank.
The Bank made the arrangements for the examinations and sent him the forms to fill in.
It therefore chose the questions to which it wanted answers.
But the same would be true of many other people who did work for the Bank but were clearly independent contractors, ranging from the company hired to clean its windows to the auditors hired to audit its books.
Dr Bates was not paid a retainer which might have obliged him to accept a certain number of referrals from the Bank.
He was paid a fee for each report.
He was free to refuse an offered examination should he wish to do so.
He no doubt carried his own medical liability insurance, although this may not have covered him from liability for deliberate wrongdoing.
He was in business on his own account as a medical practitioner with a portfolio of patients and clients.
One of those clients was the Bank.
Comment
Until these recent developments, it was largely assumed that a person would be an employee for all purposes employment law, tax, social security and vicarious liability.
Recent developments have broken that link, which may be of benefit to people harmed by the torts of those working in the gig economy.
It would be tempting to align the law of vicarious liability with employment law in a different way.
Employment law now recognises two different types of worker: (a) those who work under a contract of employment and (b) those who work under a contract 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 (Employment Rights Act 1996, section 230(3)).
Limb (b) workers enjoy some but by no means all the employment rights enjoyed by limb (a) workers.
It would be tempting to say that limb (b) encapsulates the distinction between people whose relationship is akin to employment and true independent contractors: people such as the solicitor in Bates van Winkelhof v Clyde and Co LLP [2014] UKSC 32; [2014] 1 WLR 2047, or the plumber in Pimlico Plumbers Ltd v Smith [2018] UKSC 29; [2018] ICR 1511.
Asking that question may be helpful in identifying true independent contractors.
But it would be going too far down the road to tidiness for this court to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of worker, developed for a quite different set of reasons.
Conclusion
I would allow this appeal and hold that the Bank is not vicariously liable for
any wrongdoing of Dr Bates in the course of the medical examinations he carried out for the Bank.
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In this appeal, the Supreme Court is asked to decide whether Barclays Bank is vicariously liable for sexual assaults allegedly committed between 1968 and about 1984 by the late Dr Gordon Bates.
Dr Bates was a self employed medical practitioner with a portfolio practice.
His work included conducting medical assessments and examinations of prospective Barclays employees.
Barclays required job applicants to pass a pre employment medical examination as part of its recruitment and employment procedures.
Barclays arranged the appointments with Dr Bates and provided him with a pro forma report headed Barclays Confidential Medical Report.
Dr Bates was paid a fee for each report; Barclays did not pay him a retainer.
If the report was satisfactory, the applicants job offer would be confirmed, subject to satisfactory GCE examination results.
Dr Bates conducted the (unchaperoned) medical examinations in a consulting room at his home.
It is alleged that Dr Bates sexually assaulted the 126 claimants in this group action during their medical examinations.
After Dr Bates died in 2009, the claimants sought damages from Barclays.
At first instance, the judge held that Barclays is vicariously liable for any assaults that Dr Bates is proved to have perpetrated.
The Court of Appeal agreed and dismissed Barclays appeal.
Barclays now appeals to the Supreme Court.
The Supreme Court unanimously allows Barclays appeal, and holds that it is not vicariously liable for Dr Bates alleged wrongdoing.
Lady Hale gives the judgment, with which all members of the Court agree.
Before one person can be made vicariously liable for the torts of another, two elements must be shown.
First, there must be a relationship between the two persons which makes it proper for the law to make one pay for the fault of the other.
Second, there must be a sufficient connection between that relationship and the wrongdoing of the person who committed the tort.
This case concerns the first element [1].
Historically, and leaving aside relationships such as agency and partnership, the relationships that could give rise to vicarious liability were limited to that between an employee and an employer [1].
Accordingly, Barclays case is that, since Dr Bates was an independent contractor and not a Barclays employee, it cannot
be held liable for his wrongdoing.
As Lord Bridge of Harwich said in D & F Estates Ltd v Church Comrs [1989] AC 177 at 208, It is trite law that the employer of an independent contractor is, in general, not liable for the negligence or other torts committed by the contractor in the course of the execution of the work [7].
The claimants, on the other hand, argue that the law has been broadened by the Supreme Court decisions in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 (generally known as Christian Brothers), Cox v Ministry of Justice [2016] UKSC 10 and Armes v Nottinghamshire County Council [2017] UKSC 60.
They say that these decisions have established a more nuanced approach, in which a range of factors are considered to determine whether or not it is fair, just and reasonable to impose vicarious liability in the circumstances of the case [8].
Lady Hale examines these three decisions in detail at [10 23], together with their precursor, the Court of Appeal decision in E v English Province of Our Lady of Charity [2012] EWCA Civ 938.
The cases make it clear that a person can be held vicariously liable for the acts of someone who is not their employee, provided the relationship between them is sufficiently akin or analogous to employment.
However, they do not erode the classic distinction between employment (and relationships that are akin or analogous to employment) on the one hand, and the relationship with an independent contractor on the other hand [24].
Two cases decided by common law courts since Christian Brothers have reached the same conclusion: namely, the Court of Appeals decision in Kafagi v JBW Group Ltd [2018] EWCA Civ 1157 and the Singapore Court of Appeals decision in Ng Huat Seng v Mohammad [2017] SGCA 58 [25 26].
In light of this, the question is, as it has always been, whether the person who committed the tort is carrying on business on his own account, or whether he is in a relationship akin to employment with the defendant.
In doubtful cases, the five factors or incidents identified by Lord Phillips in Christian Brothers (reproduced at [15]) may help to identify a relationship which is sufficiently analogous to employment to make it fair, just and reasonable to impose vicarious liability.
But the key will usually lie in understanding the details of the relationship.
Where it is clear that the person who committed the tort is carrying on his own independent business, it is not necessary to consider the five incidents [27].
On the facts, Dr Bates was not at any time an employee or anything close to an employee of Barclays.
Rather, he was in business on his own account as a medical practitioner, with a portfolio of patients and clients.
He did work for Barclays, which made the arrangements for the medical examinations and chose the questions to which it wanted answers, but much the same would be true of window cleaners or auditors.
Dr Bates was not paid a retainer, which might have obliged him to accept a certain number of referrals from Barclays.
He was paid a fee for each report and was free to refuse to conduct an offered examination.
He no doubt carried his own medical liability insurance [28].
Lady Hale considers the relationship between the first element of the test for vicarious liability and the definition of worker in section 230(3) of the Employment Rights Act 1996.
She concludes that asking whether or not a person is a worker who is not an employee within the definition in section 230(3)(b) may be helpful in identifying whether or not they are a true independent contractor, as opposed to being in a relationship akin to employment.
However, she declines to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of worker, developed for quite a different set of reasons [29].
Accordingly, the Court allows the appeal and holds that Barclays is not vicariously liable for any assaults that Dr Bates is proved to have perpetrated in the course of the medical examinations he carried out for Barclays [30].
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Each of the appellants has been convicted on indictment of a serious criminal offence.
Each has had an appeal against conviction dismissed by the Court of Appeal.
Each appeals on the ground that he did not receive a fair trial, contrary to article 6 of the European Convention on Human Rights (article 6) (The Convention).
The appeal of each is based on the fact that there was placed before the jury the statement of a witness who was not called to give evidence.
In each case the witness was the victim of the alleged offence.
Mr Horncastle and Mr Blackmore were convicted of causing grievous bodily harm, with intent, to Mr Peter Rice.
Mr Rice made a witness statement to the police about what had happened to him.
He died before the trial of causes not attributable to the injuries that had been inflicted upon him.
His statement was read at the trial.
Although there was other evidence that supported it, the Court of Appeal concluded that the statement was to a decisive degree the basis upon which the appellants were convicted.
Mr Marquis and Mr Graham were convicted of kidnapping a young woman called Hannah Miles.
She made a witness statement to the police in which she described what happened to her.
The day before the appellants trial she ran away because she was too frightened to give evidence.
Her statement was read to the jury.
A considerable body of oral evidence was also given at the trial.
The Court of Appeal held that the appellants convictions did not rest on the evidence of Miss Miles to a decisive extent.
The appellants challenge that finding.
Mr Rices witness statement was admitted pursuant to section 116(1) and (2)(a) of the Criminal Justice Act 2003 (the CJA 2003), which makes admissible, subject to conditions, the statement of a witness who cannot give evidence because he has died.
Miss Miles witness statement was admitted pursuant to section 116(1) and (2)(e) of the CJA 2003, which makes admissible, subject to conditions, the statement of a witness who is unavailable to give evidence because of fear.
The principal issue raised by these appeals is whether a conviction based solely or to a decisive extent on the statement of a witness whom the defendant has had no chance of cross examining necessarily infringes the defendants right to a fair trial under articles 6(1) and 6(3)(d) which provide: (1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. (3) Everyone charged with a criminal offence has the following minimum rights: . to examine or have examined witnesses (d) against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him.
The appellants submit that an affirmative answer must be given to this principal
issue.
In each case it is submitted that the trial judge should have refused to admit the statement on the ground that it was a decisive element in the case against the appellants.
This the judge could have done, either by reading down the relevant provisions of the 2003 Act so as to preclude the admission of hearsay evidence in such circumstances or by excluding it under section 78 of the Police and Criminal Evidence Act 1984 (PACE).
In so submitting the appellants rely on a line of Strasbourg cases, culminating in the decision of the Fourth Section of the European Court of Human Rights (the Chamber), delivered on 20 January 2009, in the cases of Al Khawaja and Tahery v United Kingdom (2009) 49 EHRR 1.
In each of those applications statements had been admitted in evidence at a criminal trial of a witness who was not called to give evidence.
The Strasbourg Court held that, in each case, the statement was the sole or, at least, the decisive basis for the applicants conviction.
The Court reviewed its own jurisprudence and concluded that this established that the rights of each applicant under articles 6(1) and 6(3)(d) had not been respected.
The Court took as its starting point the following statement in Luc v Italy (2001) 36 EHRR 807 at paragraph 40: where a conviction is based solely or to a decisive degree on depositions that have been made by a person whom the accused has had no opportunity to examine or to have examined, whether during the investigation or at the trial, the rights of the defence are restricted to an extent that is incompatible with the guarantees provided by article 6.
I shall call the test of fairness that this statement appears to require the sole or decisive rule.
The Court of Appeal did not accept that the decision in Al Khawaja was
determinative of the results of these appeals.
It held that, in the circumstances of each of the appeals, the appellants had received a fair trial and dismissed the appeals.
The approach to this appeal
Article 43(1) of the Convention provides that within a period of three months from the date of judgment of the Chamber any party may, in an exceptional case, request that the case be referred to the Grand Chamber.
Article 43(2) provides that a Panel of 5 judges of the Grand Chamber shall accept the request if the case raises a serious question affecting the interpretation or application of the Convention or its Protocols, or a serious issue of general importance.
On 16 April 2009 the United Kingdom requested that the decision of the Chamber in Al Khawaja be referred to the Grand Chamber.
On 5 June 2009 the Panel of the Grand Chamber adjourned consideration of that request pending our judgment in the present case.
Mr Tim Owen QC, for Mr Horncastle and Mr Blackmore, submitted that we should treat the judgment of the Chamber in Al Khawaja as determinative of the success of these appeals.
He submitted that this was the appropriate response to the requirement of section 2(1) of the Human Rights Act 1998 that requires a court to take into account any judgment of the European Court of Human Rights in determining any question to which such judgment is relevant.
He submitted that the decision of the House of Lords in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2009] 3 WLR 74 exemplified the correct approach to a decision of the European Court.
In that case the Committee held itself bound to apply a clear statement of principle by the Grand Chamber in respect of the precise issue that was before the Committee.
Mr Owen submitted that we should adopt precisely the same approach to the decision of the Chamber in Al Khawaja.
I do not accept that submission.
The requirement to take into account the Strasbourg jurisprudence will normally result in this Court applying principles that are clearly established by the Strasbourg Court.
There will, however, be rare occasions where this 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 this 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 this court and the Strasbourg Court.
This is such a case.
The decision of the Court of Appeal
In recognition of the importance of these appeals for English criminal procedure
the Criminal Division of the Court of Appeal sat five strong in a composition that included the Vice President and other senior judges with extensive experience of the criminal process.
The court was thus particularly well qualified to consider the questions at the heart of these appeals.
These questions are: (i) whether the regime enacted by Parliament in relation to the admission of the evidence of an absent witness at a criminal trial will result in an unfair trial and, if not, (2) whether the Strasbourg jurisprudence none the less requires the court to apply that regime in a manner contrary to the intention of Parliament.
The Court of Appeal carried out an extensive survey of both domestic and Strasbourg jurisprudence.
They concluded that the statutory regime produced a fair trial and that the Strasbourg jurisprudence did not require the court to apply that regime in a manner contrary to Parliaments intention.
I endorse those conclusions and almost all the reasoning that led to them.
I commend the Court of Appeals judgment and shall, in places, borrow from it.
This judgment should be read as complementary to that of the Court of Appeal, not as a substitute for it.
A summary of my conclusions
The following are the conclusions that I have reached for reasons that I shall develop: (1) Long before 1953 when the Convention came into force the common law had, by the hearsay rule, addressed that aspect of a fair trial that article 6(3)(d) was designed to ensure. (2) Parliament has since enacted exceptions to the hearsay rule that are required in the interests of justice.
Those exceptions are not subject to the sole or decisive rule.
The regime enacted by Parliament contains safeguards that render the sole or decisive rule unnecessary.
The continental procedure had not addressed that aspect of a fair trial (3) that article 6(3)(d) was designed to ensure.
The Strasbourg Court has recognised that exceptions to article 6(3)(d) (4) are required in the interests of justice.
The manner in which the Strasbourg Court has approved those (5) exceptions has resulted in a jurisprudence that lacks clarity.
The sole or decisive rule has been introduced into the Strasbourg (6) jurisprudence without discussion of the principle underlying it or full consideration of whether there was justification for imposing the rule as an overriding principle applicable equally to the continental and common law jurisdictions. (7) Although English law does not include the sole or decisive rule it would, in almost all cases, have reached the same result in those cases where the Strasbourg Court has invoked the rule. (8) The sole or decisive rule would create severe practical difficulties if applied to English criminal procedure.
Al Khawaja does not establish that it is necessary to apply the sole or (9) decisive rule in this jurisdiction.
The common law approach to a fair trial
The United Kingdom was the first country to ratify the Convention in 1951 and the Convention came into force in 1953.
Since then the Strasbourg Court has repeatedly had to grapple in judgments relating to article 6 with the requirements of a fair trial.
During the same period England and Wales and the Commonwealth countries that apply the common law have been involved in the same exercise, largely by means of legislation, as have the civil law jurisdictions which, in 1953, had a very different approach to the criminal process.
The English criminal process is adversarial.
Its focal point is the trial, which is the judicial part of the process.
The investigation into a crime is carried out by the executive, in the form of the police.
The police under the supervision of the independent Crown Prosecution Service, which is responsible for ensuring the fairness, impartiality and integrity of the process, charge the defendant with the offence, prepare the case against him and seek to prove it at the trial.
Rules have been laid down to protect the defendant against unfair treatment during the investigation and preparation for trial.
These include the caution and the right of silence, the entitlement to legal representation, rules governing questioning by the police, an embargo on questioning a defendant after he has been charged and an entitlement to know the case against him.
Two underlying themes have marked the common law approach to a fair criminal trial.
The first has been that the determination of guilt or innocence should be entrusted to a lay tribunal the jury in the case of the more serious offences and the magistrates in most cases of less serious offences.
The second has been a reluctance to trust the lay tribunal to attach the appropriate weight to the evidence placed before them.
These themes have been reflected in the rules governing the trial process.
There are two principal objectives of a fair criminal trial.
The first is that a defendant who is innocent should be acquitted.
The second is that a defendant who is guilty should be convicted.
The first objective is in the interests of the individual; the second is in the interests of the victim in particular and society in general.
The two objectives are sometimes in tension and, where they are, the first carries more weight than the second.
English law has different kinds of rules that are designed to ensure a fair trial.
Some relate to the procedure itself, such as the right of the defendant to be informed of the case against him, to be given any information available to the prosecution that is relevant to that case, to have legal assistance, to decline to answer questions, to be exempt from further questioning once charged with a crime, to be tried in public at a single continuous trial at which all the evidence has to be adduced, to be present at that trial to confront and cross examine the witnesses who are called to give evidence, and to be informed of the identity of those witnesses.
Other rules relate to the evidence that can be placed before the tribunal, be it magistrates or a jury, which is to rule on the defendants guilt.
These are rules of admissibility.
Jury trials are presided over by a judge who acts as gatekeeper as to what is and what is not permitted to be placed before the jury as evidence.
This is an important safeguard for the defendant.
The basic principle is that only the best evidence is placed before the jury, that is, the evidence that is most likely to be reliable.
In 1953 this principle rendered inadmissible almost all hearsay evidence.
Hearsay evidence is any statement of fact other than one made, of his own knowledge, by a witness in the course of oral testimony.
Hearsay evidence was inadmissible even if it was a past statement made by someone who was called to give oral evidence and who could be cross examined about it.
Furthermore, hearsay evidence was inadmissible, whether it assisted the prosecution or the defence.
There were two principal reasons for excluding hearsay evidence.
The first was that it was potentially unreliable.
It might even be fabricated by the witness giving evidence of what he alleged he had been told by another.
Quite apart from this, the weight to be given to such evidence was less easy to appraise than that of evidence delivered by a witness face to face with the defendant and subject to testing by cross examination.
The admissibility of some categories of evidence was excluded because, although the evidence was probative, it was thought that the jury could not be trusted not to give the evidence more weight than it deserved.
Its probative value was outweighed by its potentially prejudicial effect.
Such evidence included evidence of a defendants previous bad character or criminal record and psychiatric evidence that suggested that the defendant might have a propensity to commit an offence of the type charged.
Rules governing the admissibility of evidence are important aspects of both criminal and civil procedure.
They have generated lengthy text books on the law of evidence. [I am not aware that the civil law systems have a comparable body of jurisprudence].
A third category of rules related to the reasoning permissible in arriving at a conclusion of guilt.
Of these the most fundamental were, and are, first that a defendant is deemed to be innocent until proved to be guilty.
The jury cannot convict simply upon suspicion of guilt.
More fundamentally, a jury cannot convict even if they consider it more likely than not that the defendant is guilty.
They can only convict if they are sure, or satisfied beyond reasonable doubt that the defendant is guilty.
But there were many more directions that a judge was required to give to a jury in relation to the process of reasoning that was permitted, or not permitted, in reaching their verdict.
These sometimes required the jury to disregard evidence that was probative of guilt in order to guard against the risk that the jury would attach too much weight to such evidence.
Thus the trial judge had to tell the jury that no adverse inference could be drawn from the fact that a defendant had elected not to go into the witness box and, in the exceptional case where the jury learnt that a defendant was a man of bad character, they had to be instructed that this made it no more likely that he was guilty of the crime charged.
There were some circumstances in which common law or statute required the jury to be told either that they could not convict on the evidence of one witness alone unless this was corroborated, or that it would be dangerous for them to do so.
This again reflected the perceived danger that a jury would give too much weight to certain categories of evidence.
While some of these rules were designed to guard against the risk of an innocent man being convicted, others also met the requirement of fairness that called for equality of arms in a procedure that was adversarial.
Exceptions to the rules
Over the past half century it was recognised that the application, without exception, of some of these rules placed an obstacle in arriving at the truth that could not be justified.
Witness statements were prepared close to the time of the crime that contained detail that the witness might not remember when called to give evidence months later.
In such cases the hearsay rule might be evaded by permitting the witness to refresh his memory from the statement.
Sometimes the rule operated in a way that was prejudicial to the defendant.
Thus the fact that another man had confessed to the crime of which the defendant was charged was inadmissible.
In other circumstances the rule excluded evidence that was plainly more reliable than the oral testimony of the witness.
While the best evidence rule might justify the hearsay rule in relation to a witness who was available to give evidence, if, for some reason such as death or illness, the witness was not able to give oral evidence, a statement made by that witness might be the best evidence available of what had occurred.
Sometimes the application of the rules resulted in the acquittal of defendants who were manifestly guilty see Myers v Director of Public Prosecutions [1965] AC 1001.
Over the years a host of exceptions were created by the judges or by statute to these rules, and particularly to the hearsay rule, aimed at addressing these problems.
In relation to civil proceedings the hearsay rule was effectively abolished by the Civil Evidence Act 1968.
In relation to the criminal law, less far reaching changes were made by the Criminal Evidence Act 1965 and the Police and Criminal Evidence Act 1984.
But these also included the very important general safeguard in section 78(1) of the latter statute, which remains in force.
This provides: In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it.
More significant changes were made to the hearsay rule in criminal proceedings by the Criminal Justice Act 1988, but these have been replaced by provisions of the CJA 2003.
These provisions largely implemented the recommendations of the Report of the Law Commission dated 4 April 1997 (Law Com No 245) on Evidence in Criminal Proceedings: Hearsay and Related Topics.
In 1995 the Law Commission had published a Consultation Paper on these topics, in response to a recommendation as to the need for reform made by a Royal Commission on Criminal Justice in 1993.
As the Court of Appeal observed at paragraph 10, the consultation embraced judges, practitioners, academic lawyers and other experts and the code enacted pursuant to the Report was: informed by experience accumulated over generations and represents the product of concentrated consideration by experts of how the balance should be struck between the many competing interests affected.
It also represents democratically enacted legislation substantially endorsing the conclusions of the expert consideration.
The relevant provisions of the CJA 2003 have been summarised by the Court of Appeal at paragraphs 11 to 16 and I shall adopt that summary, subject to a small addition.
Hearsay is not made generally admissible by this statutory code.
The scheme of the code is as follows: It preserves certain specified common law categories of admissible (i) evidence (ss.114(1)(b) and 118). (ii) It makes specific provision for a limited number of categories of hearsay where there is special reason to make it admissible (ss.114(1)(a) and (c), 116 117, 119 120 and 127 129).
It provides for a limited residual power to admit hearsay if the interests of (iii) justice require it (s.114(1)(d) and 114(2)). (iv) It establishes special stipulations to which hearsay evidence is subject (ss.121 126).
Among the provisions of Part 11, Chapter 2 of the CJA 2003 in the second group are the following: (i) by s.116(1) and (2)(a) the statement of a witness who is unavailable because he is dead is, subject to conditions, made admissible; similar provisions apply to a witness who is medically unfit, absent overseas and cannot be brought to the UK, or cannot despite all practicable efforts be found; by s.116(1) and (2)(e) the statement of a witness who is unavailable (ii) because he does not give evidence through fear is, subject to conditions, made admissible; (iii) by s.116(3) fear is to be widely construed and (for example) includes fear of the death or injury of another person or of financial loss. (This is the addition I have made to the Court of Appeals summary); (iv) by s.117 the contents of business records maintained by those who can be expected to have had personal knowledge of the matters recorded are, subject to conditions, made admissible.
In relation to a witness who is unavailable because he is dead (or unavailable for medical reasons or because he is abroad or missing), the conditions for admissibility are as follows: the evidence must be such as would be admissible if the witness were (i) present to give it orally (s.116(1)(a)); and the witness must be identified to the satisfaction of the court (s.116(1)(b)). (ii)
Those same conditions apply also to the case of a witness who does not give evidence through fear.
In that case an important additional condition must be satisfied.
The court must be persuaded to admit the evidence and it must do so only when satisfied that it ought to be admitted in the interests of justice.
In deciding whether or not this is so, the court must have regard to all relevant circumstances, but in particular to: (a) the contents of the statement; (b) any risk that its admission or exclusion will result in unfairness to any party to the proceedings (and in particular to how difficult it will be to challenge the statement in the absence of the maker); (c) the possibility of alternative special measures for the protection of the witness, such as screens or video transmitted evidence.
The statements of witnesses who are dead, ill, missing, or absent through fear are examples of hearsay made admissible because the evidence is otherwise unavailable.
Other categories of hearsay are made admissible because, in the ordinary way, they are likely to be reliable.
Business records are made admissible (by s.117 or, where a machine is involved, s.129) because, in the ordinary way, they are compiled by persons who are disinterested and, in the ordinary course of events, such statements are likely to be accurate; they are therefore admissible as evidence because prima facie they are reliable.
So, to be admissible, it must be demonstrated that they are the product of information gathered by someone with personal knowledge of the matters recorded, and that anyone through whose hands they have passed has acted in the course of trade, business, profession or office (s.117(2)), and the court is not to admit them if there is doubt about their reliability (ss.117(6) and (7) and 129(1)).
If the record was compiled for the purpose of the criminal proceedings, rather than simply in the usual course of business, there is an additional requirement that the source of the information be absent or will have no recollection of the material (s.117(5)): that is designed to ensure that if he can attend to give first hand evidence he does so.
S.127 (preparatory work done by the assistants to experts) is a further example of hearsay evidence which is prima facie reliable and which is admissible for either party; its admission is hedged with a similar safeguard providing for non admission if the interests of justice point against it.
S.128 (confessions by co accused) is another example of hearsay made admissible (at the suit of the defendant) in the interests of fairness to the accused and because a confession is prima facie, in the absence of reason to the contrary, likely to be true; the CJA 2003 preserves a balance between the competing interests of co accused by providing for exclusion unless it be shown that the confession was not obtained by oppression or anything else likely to render it unreliable.
It follows that both in the case of unavailable witnesses, and in the case of
apparently reliable hearsay, the CJA 2003 contains a crafted code intended to ensure that evidence is admitted only when it is fair that it should be.
The CJA 2003 goes on, in the fourth group of its provisions, to lay down special stipulations applicable to all hearsay, designed to further the same end.
They are as follows: (i) S.124 makes special provision for the admissibility of any material which it is contended challenges the credibility of an absent witness.
The opposing party is enabled to put in evidence anything which he could have put in if the witness had been present, but he may also put in material which, if the witness had been present, could only have been asked of him in cross examination in circumstances where his answers would have been final; this puts the challenger to that extent in a better position than if the witness is present, and is designed to help to counterbalance the absence of cross examination of the witness in person.
In most cases also, in addition to the statutory rules, a defendant who is faced with hearsay evidence will be entitled to ask the court to call upon the Crown to investigate the credibility of any absent witness and to disclose anything capable of challenging it.
That exercise will ordinarily require the Crown to go considerably beyond what would otherwise be the duty simply to disclose what is already in its possession and capable of undermining its case; it will require active investigation of the bona fides, associates and credibility of the witness, so as to provide the defendant with, in addition to anything he already knows, everything capable of being found which can be used to test the reliability of the absentee. (ii) By s.125 the judge is required to stop any case depending wholly or partly on hearsay evidence if that evidence is unconvincing to the point where conviction would, in the judges opinion, be unsafe; this is an important exception to the usual rule of the law of England and Wales that the assessment of the weight of evidence is exclusively for the jury (see R v Galbraith (1981) 1 WLR 1039). (iii) S.126 preserves the general power of the judge (which existed at common law and is enshrined in s.78 of the Police and Criminal Evidence Act 1984) to exclude any evidence relied upon by the Crown (but not by a defendant) if its admission would have such an adverse effect on the fairness of the trial that it ought not to be admitted; the section adds a further obligation upon the judge to exclude hearsay evidence if its admission would generate satellite disputes which would cause an undue waste of time such as to outweigh the case for admitting it.
It is significant, as the Court of Appeal has pointed out, that the Law Commission gave special consideration to whether there should be a requirement that hearsay should not be capable of proving an essential element of an offence unless supported by other evidence.
The Commission was persuaded by the responses to consultation that this would not be desirable.
It would require a complex direction to the jury of a type that had proved unsatisfactory in relation to other circumstances where the jury used to be directed to look for corroboration of evidence.
The Commission concluded that the danger of a defendant being unfairly convicted on the basis of hearsay evidence alone would be met by the safeguards that it proposed, in particular that which was subsequently adopted as section 125 of the CJA 2003.
The principal safeguards designed to protect a defendant against unfair prejudice as a result of the admission of hearsay evidence, seen in the context of the more general safeguards that apply to every jury trial, can be summarised as follows: i) The trial judge acts as gatekeeper and has a duty to prevent the jury from receiving evidence that will have such an adverse effect on the fairness of the proceedings that it should not be received. ii) Hearsay evidence is only admissible in strictly defined circumstances.
In essence the judge has to be satisfied beyond reasonable doubt that the prosecution is not able to adduce the evidence by calling the witness. iii) Once the prosecution case is closed, the judge must withdraw the case from the jury if it is based wholly or partly on hearsay evidence and that evidence is so unconvincing that, considering its importance, the defendants conviction would be unsafe. iv) The judge has to direct the jury on the dangers of relying on hearsay evidence.
The jury has to be satisfied of the defendants guilt beyond reasonable v) doubt. vi) The defendant can apply for permission to appeal against his conviction, which will be granted where reasonable grounds for appeal are demonstrated.
A failure to comply with the safeguards outlined above, and in particular the admission of hearsay evidence contrary to the rules on its admissibility, will constitute such grounds.
Where the Court of Appeal finds that there has been such a failure, the appeal will be allowed unless the court is satisfied that, despite the shortcoming, the conviction is safe.
As the Court of Appeal observed at paragraphs 77 78, the CJA 2003 has now been in force for a number of years and it is clear that the admissibility of hearsay evidence is being cautiously approached by the courts see the passages quoted from R v Y [2008] 1 WLR 1683.
Sir Robin Auld in his Review of the Criminal Courts of England and Wales (2001) into the workings of the criminal courts expressed the view, supported by a body of academic opinion, that the recommendations of the Law Commission did not go far enough.
He recommended at paragraph 104 that hearsay should be generally admissible, subject to an obligation to adduce the best evidence, rather than generally inadmissible subject to specified exceptions as proposed by the Law Commission.
But in the event (as indicated in para 29 above), it was upon the Law Commissions recommendations that the 2003 Act was essentially based.
Hearsay exceptions in other Commonwealth Jurisdictions
Other established common law jurisdictions, namely Canada, Australia and New Zealand have, by both common law and statutory development, recognised hearsay evidence as potentially admissible, under defined conditions, in circumstances where it is not possible to call the witness to give evidence, even where the evidence is critical to the prosecution case.
An analysis of the position in those jurisdictions, prepared by Lord Mance, is annexed to this judgment as Annexe 1.
This demonstrates that, under the common law and statutory exceptions to the hearsay rule recognised in those jurisdictions there is no rigid rule excluding evidence if it is or would be either the sole or decisive evidence, however those words may be understood or applied.
Instead, the common law and legislature in these countries have, on a principled basis, carefully developed and defined conditions under which hearsay evidence may be admitted, in the interests of justice and on a basis ensuring that defendants receive a fair trial.
Under the common law system of jury trial, the conditions relating to the admissibility of evidence combine, to this end, with the trial judges role as gatekeeper in applying them and his general residual discretion to exclude prejudicial or unfair evidence from going before the jury.
Hearsay in the United States
The position in the United States differs markedly from that in this jurisdiction and in the Commonwealth jurisdictions to which I have referred.
In the United States, the Sixth Amendment to the Constitution provides that: In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favour, and to have the Assistance of Counsel for his defence.
The right under the Sixth Amendment to be confronted with the witnesses against him has recently been interpreted in an absolute sense by the majority of the Supreme Court in Crawford v Washington 124 S.Ct. 1354 (2004), reversing its previous decision in Ohio v Roberts 448 U.S. 56; 100 S.Ct 2531 (1980), and in Melendez Diaz v Massachusetts 25 June 2009.
The majority in the Supreme Court in reaching these decisions took an originalist approach to the Constitution, relying on its view of the common law position in the late 17th century.
The result of these United States decisions is to exclude any testimonial evidence whatever in respect of which there has been or can be no cross examination.
Testimonial evidence is not precisely defined in these authorities, but includes police interrogations or prior testimony at a preliminary hearing or former trial (Crawford p.1374) and, in the light of Melendez Diaz, certificates of state laboratory analysts stating that material seized by police and alleged by the prosecution to be connected to a defendant was a prohibited drug.
Business records or statements in furtherance of a conspiracy were, in contrast, identified in Crawford at p.1367 as by their naturenot testimonial.
Crawford also recognised one possible exception to the principle requiring confrontation in respect of testimonial evidence, that is dying declarations (footnote 6, p.1367).
Article 6(3)(d) has not been interpreted by the Strasbourg Court in the same way that the US Supreme Court has now interpreted the Sixth Amendment.
The Strasbourg Court has accepted that there are circumstances that justify the admission of statements of witnesses who have not been subject to confrontation with the defendant.
The possibility remains, however, that by propounding the sole or decisive test the Strasbourg Court has condemned as rendering a trial unfair the admission of hearsay evidence in circumstances where the legislature and courts of this jurisdiction and of other important Commonwealth jurisdictions (Canada, Australia and New Zealand) have determined that the evidence can fairly be received.
This is a startling proposition and one that calls for careful analysis of the Strasbourg jurisprudence.
Special measures and anonymity
I referred earlier to the recognition at common law of the defendants right to
know the identity of the witnesses to be called by the prosecution.
This, coupled with the right of a defendant to know the case to be advanced against him, ensured that he could make proper preparations to examine the witnesses called at his trial.
The right to know the witnesses identities was thus an important element in the right of confrontation.
Where a witness is not prepared through fear to be seen to give evidence against a defendant there are two ways in which his evidence may none the less be placed before the court.
If he has previously made a witness statement that statement can be read as evidence.
Alternatively he may be persuaded to give evidence anonymously if special measures are taken to ensure that he cannot be recognised by the defendant.
Similar issues can arise in respect of each method of adducing evidence and the Strasbourg jurisprudence sometimes does not draw a distinction between the two.
In Al Khawaja 49 EHRR 1 the Court held that the sole or decisive rule applied equally in the case of each.
Mr Perry QC for the Crown urged that we should not consider anonymous witnesses but should confine ourselves to the circumstances of these appeals which concern the reading of statements of absent witnesses.
This was the course followed by the Court of Appeal, who suggested that the Strasbourg jurisdiction dealing with anonymous witnesses did not necessarily apply to absent witnesses.
There is a difference of principle between a witness who cannot be called to give evidence because, for instance, he is dead or untraceable, and a witness who is able and available to give evidence but not willing to do so.
It might be argued that, where a witness is in a position to give evidence, fairness demands that his evidence should not be used if he is not prepared to face the defendant in court without anonymity.
But, as I shall show, both the Strasbourg Court and the United Kingdom Parliament and, indeed, the Ministers of the Council of Europe have recognised that in some circumstances it is permissible to allow witnesses to give their evidence anonymously.
So far as a sole or decisive rule is concerned, I am not persuaded that there is a difference in principle between its existence in relation to absent witnesses and its existence in relation to anonymous witnesses.
Each situation results in a potential disadvantage for the defendant.
The extent of that disadvantage will depend on the facts of the particular case.
I cannot see why a sole or decisive test should apply in the case of anonymous evidence but not in the case of a witness statement.
The critical question is whether, in either case, the demands of a fair trial require that a sole or decisive test should apply regardless of the particular circumstances and, in particular, regardless of the cogency of the evidence.
Accordingly, I propose to set out the approach of English law to anonymity.
Some witnesses in criminal proceedings are intimidated by giving evidence or by the prospect of so doing.
This is especially true of children and those who are mentally or physically disabled, but it can also be the case of victims who fear being confronted by the defendant, particularly in cases of sexual offences.
Section 16 of the Youth Justice and Criminal Evidence Act 1999 makes those who are under 17 or incapacitated eligible for special measures when giving evidence.
Section 17 does the same in the case of any witness if the court is satisfied that the quality of his or her evidence is likely to be diminished by fear or distress when testifying.
Special measures include giving evidence screened from the defendant or by video link.
Over the last 20 years judges purported to exercise a common law power to permit witnesses to give evidence anonymously, sometimes resorting to special measures in order to conceal their identities, where this was considered necessary in the interests of justice.
In some cases permission was given because of the desirability of not disclosing the identity of undercover police agents; in others because of fear on the part of the witness of retaliation by or on behalf of defendants.
In R v Davis [2008] UKHL 36; [2008] AC 1128 this practice was challenged before the House of Lords.
The appellant had been convicted of murdering two men by shooting them at a party.
He was identified as the murderer by three witnesses who had been permitted to give evidence anonymously, from behind screens, because they had refused, out of fear, to testify should their identities be disclosed.
It was submitted on behalf of the appellant that this procedure was contrary both to the common law right of a defendant to be confronted by his accusers and to article 6(3)(d) of the Convention.
Both limbs of this argument were accepted unanimously by the House.
Lord Bingham of Cornhill at paragraph 5 of his opinion set out the history of 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.
He observed at paragraph 20 that the statutory exceptions to calling a witness in the CJA 2003 did not permit the adducing of a statement by any witness whose name and identity was not disclosed to the defendant and that the safeguards provided by that Act would be denied to a defendant who did not know the identity of the witness.
Their Lordships held that it was not open to a judge to depart from the common law rule by allowing a witness to remain anonymous.
While there might well be a need for such a measure in order to combat the intimidation of witnesses, it was for Parliament not the courts to change the law.
In the course of his concurring judgment Lord Mance carried out an analysis of
the relevant Strasbourg case law.
At paragraph 25 Lord Bingham adopted this analysis and summarised its effect as follows: It is that no conviction should be based solely or to a decisive extent upon the statements or testimony of anonymous witnesses.
The reason is that such a conviction results from a trial which cannot be regarded as fair.
This is the view traditionally taken by the common law of England.
In fact, as I shall show, Lord Bingham slightly overstated Lord Mances conclusion.
As a result of this decision Parliament amended the common law.
The Criminal Evidence (Witness Anonymity) Act 2008 gave the court the power to make a witness anonymity order in the circumstances and subject to the conditions prescribed by the Act.
Such an order enables a witness to give evidence subject to special measures designed to protect the identity of the witness being known.
Section 4 sets out the conditions for making such an order: (1) This section applies where an application is made for a witness anonymity order to be made in relation to a witness in criminal proceedings. (2) The court may make such an order only if it is satisfied that Conditions A to C below are met. (3) Condition A is that the measures to be specified in the order are necessary (a) in order to protect the safety of the witness or another person or to prevent any serious damage to property, or (b) in order to prevent real harm to the public interest (whether affecting the carrying on of any activities in the public interest or the safety of a person involved in carrying on such activities, or otherwise). (4) Condition B is that, having regard to all the circumstances, the taking of those measures would be consistent with the defendant receiving a fair trial. (5) Condition C is that it is necessary to make the order in the interests of justice by reason of the fact that it appears to the court that (a) it is important that the witness should testify, and (b) the witness would not testify if the order were not made. (6) In determining whether the measures to be specified in the order are necessary for the purpose mentioned in subsection (3)(a), the court must have regard (in particular) to any reasonable fear on the part of the witness (a) that the witness or another person would suffer death or injury, or (b) that there would be serious damage to property, if the witness were to be identified.
Section 5 sets out the matters to be taken into consideration when deciding whether the considerations in section 4 are satisfied: (1) When deciding whether Conditions A to C in section 4 are met in the case of an application for a witness anonymity order, the court must have regard to (a) the considerations mentioned in subsection (2) below, and (b) such other matters as the court considers relevant. (2) The considerations are (a) the general right of a defendant in criminal proceedings to know the identity of a witness in the proceedings; (b) the extent to which the credibility of the witness concerned would be a relevant factor when the weight of his or her evidence comes to be assessed; (c) whether evidence given by the witness might be the sole or decisive evidence implicating the defendant; (d) whether the witnesss evidence could be properly tested (whether on grounds of credibility or otherwise) without his or her identity being disclosed; (e) whether there is any reason to believe that the witness (i) has a tendency to be dishonest, or (ii) has any motive to be dishonest in the circumstances of the case, having regard (in particular) to any previous convictions of the witness and to any relationship between the witness and the defendant or any associates of the defendant; (f) whether it would be reasonably practicable to protect the witnesss identity by any means other than by making a witness anonymity order specifying the measures that are under consideration by the court.
Thus Parliament has decreed that the question of whether evidence is or is likely to be sole or decisive is relevant to the question of whether the court should permit it to be given anonymously but there is no mandatory rule prohibiting the admission of such evidence.
Criminal procedure in the civil law jurisdictions
paragraphs 10 and 11 Lord Rodger stated: In R(D) v Camberwell Green Youth Court [2005] UKHL 4; [2005] 1 WLR 393 at the introduction of article 6(3)(d) will not have added anything of significance to any requirements of English law for witnesses to give their evidence in the presence of the accused.
An examination of the case law of the European Court of Human Rights tends to confirm that much of the impact of article 6(3)(d) has been on the procedures of continental systems which previously allowed an accused person to be convicted on the basis of evidence from witnesses whom he had not had an opportunity to challenge.
We have not been referred to the travaux preparatoires to the Convention or to the reason why paragraph (3)(d) was included in article 6.
The continental systems to which Lord Rodger referred are best exemplified by the French Criminal Procedure, upon which many others were based.
This, together with other continental systems has undergone marked changes over the last fifty years, and is still facing proposed radical change.
The marked difference between that system and the English system in 1953 was the importance of the inquisitorial phase of the French process, which, in the case of a serious offence, was the second of the three stages of the procedure.
The first stage was a police investigation, under the supervision of the public prosecutor (ministre public), that ascertained that a crime had been committed and identified a suspect.
The second stage was a judicial inquiry aimed at ascertaining the facts and determining whether there was a case against the suspect fit for trial (the instruction).
This stage was inquisitorial, classically conducted by a juge dinstruction, an examining judge.
The third stage was the trial itself.
The instruction was conducted in private episodically, often over many months, during which time the suspect might be held in detention.
It included repeated interrogations of the suspect, who seldom exercised his right to remain silent.
It included examination of witnesses in the absence of the suspect and his lawyer, unless the examining judge chose to arrange a confrontation with the suspect.
Interrogations or examinations were not recorded verbatim, but in the form of a summary of the evidence given, dictated by the examining judge and recorded by a greffier.
In this way a dossier was built up.
This dossier formed the basis of the conduct of the trial by the judge presiding.
The reports of the Strasbourg cases show that evidence given during the instruction by witnesses whom the defendant had had no chance to question was frequently used at the trial.
There was no bar to the reception of hearsay evidence nor rules of admissibility designed to prevent the tribunal at the trial from receiving evidence on the ground that its prejudicial effect outweighed its probative value.
Generally speaking the instruction was the most significant stage of the criminal process all the more so because the guilty plea procedure was unknown.
In this jurisdiction a defendant may decide to plead guilty at any stage between being charged and the trial.
If he takes this course there will be no trial.
Well over 80% of criminal prosecutions are resolved by a plea of guilty.
If a trial takes place, this is because the defendant contests his guilt.
Under the civil law system there is no such procedure.
Guilt must always be proved at the trial.
But if the defendant has confessed his guilt in one of the earlier stages of the procedure and does not retract that confession at his trial, the trial will be very much a formality.
In this jurisdiction there is no judicial investigation, in the course of which a confrontation can take place between witnesses and the suspect.
The investigation into a crime is carried out by the police, who do not act as judicial officers, although they act under the supervision of the independent Crown Prosecution Service (para 16 above).
If the police obtain sufficient evidence to justify a prosecution, the defendant must then be charged.
Thereafter he is immune from further questioning unless and until he chooses to give evidence at his trial.
The Strasbourg jurisprudence prior to Al Khawaja
The wording of article 6(3)(d) suggests that it required a procedure similar to that which followed from the application in this jurisdiction of the hearsay rule.
It appears to require the witness to give his or her evidence live at the trial and thus to be subject to examination by or on behalf of the defendant.
Some of the early jurisprudence supports this approach.
Thus the Court held that the paragraph (3)(d) rights applied at the trial and not when a witness was being questioned by the police X v Germany (1979) 17 DR 231 or by the investigating judge Ferrari Bravo v Italy (1984) 37 DR 15.
But, just as in this jurisdiction it was found that, in some circumstances, justice required exceptions to the hearsay rule, the Strasbourg Court came to accept that some exceptions had to be made to the strict application of article 6(3)(d).
The Strasbourg jurisprudence deals with the two situations that raise similar issues of principle: the admission of evidence of a witness who is anonymous and the admission of evidence in the form of a statement made by a witness who is not called to testify.
The Strasbourg jurisprudence in relation to article 6, and article 6(3)(d) in particular, has received detailed consideration by courts in this country on a number of occasions prior to this case.
The conclusions reached, prior to the decision of the Strasbourg Court in Al Khawaja, were summarised by Lord Bingham in Grant v The Queen [2006] UKPC 2; [2007] 1 AC 1 at paragraph 17 (Strasbourg references omitted): The Strasbourg court has time and again insisted that the admissibility of evidence is governed by national law and that its sole concern is to assess the overall fairness of the criminal proceedings in question .
The Strasbourg court has been astute to avoid treating the specific rights set out in article 6 as laying down rules from which no derogation or deviation is possible in any circumstances.
What matters is the fairness of the proceedings as a whole. the Strasbourg court has recognised the need for a fair balance between the general interest of the community and the personal rights of the individual, and has described the search for that balance as inherent in the whole ConventionThus the rights of the individual must be safeguarded, but the interests of the community and the victims of crime must also be respected.
An example, not based on the present facts, illustrates the point.
In Jamaica, as in England and Wales, as already noted, the statement of a witness may be adduced in evidence if he is shown to have absented himself through fear of the consequences to him if he gives evidence.
In the case of a prosecution witness, such fear is likely to have been induced by or on behalf of a defendant wishing to prevent adverse evidence being given.
As observed by Potter LJ in R v M (KJ) [2003] 2 Cr App R 322, para 59, echoed by Waller LJ in R v Sellick [2005] I WLR 3257, paras 36, 52 53, it would be intolerable if a defendant shown to have acted in such a way could rely on his human rights under article 6 (or section 20) to prevent the admission of hearsay evidence.
Where a witness is unavailable to give evidence in person because he is dead, or too ill to attend, or abroad, or cannot be traced, the argument for admitting hearsay evidence is less irresistible, but there may still be a compelling argument for admitting it, provided always that its admission does not place the defendant at an unfair disadvantage.
While, therefore, the Strasbourg jurisprudence very strongly favours the calling of live witnesses, available for cross examination by the defence, the focus of its inquiry in any given case is not on whether there has been a deviation from the strict letter of article 6(3) but on whether any deviation there may have been has operated unfairly to the defendant in the context of the proceedings as a whole.
This calls for consideration of the extent to which the legitimate interests of the defendant have been safeguarded.
This is, I believe, a fair and accurate summary of a difficult area of Strasbourg jurisprudence.
Article 6(3)(d) is concerned with the fairness of the trial procedure.
It recognises that a fair procedure should entitle the defendant to have examined the witnesses against him and to obtain the attendance and examination of witnesses on his behalf.
What the article does not deal with is the procedure that is appropriate where it is simply not possible to comply with article 6(3)(d); where, for instance, after making a statement, the witness for the prosecution or defence has died.
Fairness does not require that in such circumstances the evidence of the witness should not be admitted at the trial.
On the contrary it may well require that it should be admitted.
The Strasbourg Court has recognised this.
As the Court of Appeal in the present case pointed out in paragraph 37 of its judgment examples of the admission of statements in such circumstances include death: Ferrantelli and Santangelo v Italy (1996) 23 EHRR 288; illness: Trivedi v United Kingdom (1997) 89 A DR 136 and impossibility of tracing the witness: Artner v Austria (Application No 13161/87), 25 June 1992.
Thus where a statement has been read of an absent witness, or evidence has been given anonymously, the Strasbourg Court first considers whether there was justification for this course.
When considering justification the Strasbourg Court properly has regard to the human rights of witnesses and victims.
In Doorson v The Netherlands (1996) 22 EHRR 330 the Court observed: It is true that article 6 does not explicitly require the interests of witnesses in general, and those of victims called upon to testify in particular, to be taken into consideration.
However, their life, liberty or security of person may be at stake, as may interests coming generally within the ambit of article 8 of the Convention.
Such interests of witnesses and victims are in principle protected by other, substantive provisions of the Convention, which imply that Contracting States should organise their criminal proceedings in such a way that those interests are not unjustifiably imperilled.
Against this background, principles of fair trial also require that in appropriate cases the interests of the defence are balanced against those of witnesses or victims called upon to testify.
One situation where Strasbourg has recognised that there is justification for not calling a witness to give evidence at the trial, or for permitting the witness to give that evidence anonymously, is where the witness is so frightened of the personal consequences if he gives evidence under his own name that he is not prepared to do so.
If the defendant is responsible for the fear, then fairness demands that he should not profit from its consequences.
Even if he is not, the reality may be that the prosecution are simply not in a position to prevail on the witness to give evidence.
In such circumstances, having due regard for the human rights of the witness or the victim, as well as those of the defendant, fairness may well justify reading the statement of the witness or permitting him to testify anonymously.
Claims of justification on such grounds have to be rigorously examined see Doorson v The Netherlands (1996) 22 EHRR 330 at paragraph 71, Kok v The Netherlands (Application No 43149/98), Reports of Judgments and Decisions 2000 VI, p 597; Visser v The Netherlands (Application No 26668/95), 14 February 2002 at paragraph 47; Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 at paragraphs 80 81; Luc v Italy (2001) 36 EHRR 807 at paragraph 40: As the Court has stated on a number of occasions, it may prove necessary in certain circumstances to refer to depositions made during the investigative stage (in particular, where a witness refuses to repeat his deposition in public owing to fears for his safety, a not infrequent occurrence in trials concerning Mafia type organisations).
Where the court has found justification for the admission of a statement from a witness not called, or for a witness giving evidence anonymously, the Court has been concerned with whether the process as a whole has been such as to involve the danger of a miscarriage of justice.
The exercise has been similar to that conducted by the English Court of Appeal when considering whether, notwithstanding the breach of a rule relating to admissibility, the conviction is safe.
There is, of course, an overlap between considering whether procedure has been fair and whether a verdict is safe, and it is sometimes difficult to distinguish between the two questions.
Doorson v The Netherlands is a particularly informative example of the approach of the Strasbourg Court to a situation where there was justification both for admitting the statement of a witness who was not called to give evidence and for hearing the evidence of two anonymous witnesses whose evidence was not given in the presence of the defendant.
The applicant was convicted of drug trafficking.
The justification for admitting the statement of the witness who was not called was that he had absconded and it was thus impossible to call him to give evidence.
The justification for permitting the two witnesses to give evidence anonymously and without the defendant being present was that it was reasonable for them to fear reprisals from the applicant if he discovered that they had given evidence against him, albeit that there was no evidence that they had ever been threatened by the applicant.
Both the opinion of the Commission and the judgment of the Court suggest that the primary concern of each when considering whether the admission of the evidence had rendered the trial unfair was whether the evidence was reliable.
So far as the witness who had absconded was concerned, the Commission held that it could not be regarded as unfair if the courts took into account the statement that he had made to the police (paragraph 78).
The Court held that it had been permissible for the court to have regard to the statement especially since it could consider that statement to be corroborated by other evidence before it (paragraph 80).
So far as the anonymous witnesses were concerned, the Court of Appeal had ordered them to be examined by an investigating judge in the presence of the defendants counsel, though not of the defendant.
She knew the identity of the witnesses.
She reported that she had the impression that both witnesses knew whom they were talking about and that her impression had been that the witnesses themselves believed their statements to be true (paragraph 32).
The Court concluded that: in the circumstances the counterbalancing procedure followed by the judicial authorities in obtaining the evidence of witnesses Y15 and Y16 must be considered sufficient to have enabled the defence to challenge the evidence of the anonymous witnesses and attempt to cast doubt on the reliability of their statements, which it did in open court by, amongst other things, drawing attention to the fact that both were drug addicts.
Although, as I have shown, the Strasbourg Court has accepted that in exceptional cases failure to comply with the strict requirements of article 6(3)(d) will not invalidate the fairness of the trial, the Court has not acknowledged this in terms.
The Court might have said, in terms, that paragraph (3)(d) has no application where it is impossible to call a witness at the trial, but it did not.
The Court might have said, in terms, that in exceptional circumstances a failure to comply with paragraph (3)(d) will not render the trial unfair, but it did not.
Rather the Court has used language that has tended to obscure the fact that it is, in reality and in special circumstances, countenancing a failure to comply with the requirements of paragraph (3)(d).
I shall take Kostovski v The Netherlands (1989) 12 EHRR 434 as an example of the language used.
The phraseology is almost standard form in cases dealing with article 6(3)(d).
The recital of the relevant legal principles begins with this statement: It has to be recalled at the outset that the admissibility of evidence is primarily a matter for regulation by national law.
Again, as a general rule it is for the national courts to assess the evidence before them.
In the light of these principles the Court sees its task in the present case as being not to express a view as to whether the statements in question were correctly admitted and assessed but rather to ascertain whether the proceedings considered as a whole, including the way in which evidence was taken, were fair.
This being the basic issue, and also because the guarantees in article 6(3) are specific aspects of the right to a fair trial set forth in paragraph (1), the Court will consider the applicants complaints from the angle of paragraphs (3)(d) and (1) taken together.
This passage indicates that the fairness of a trial has to be assessed on a case by case basis, viewing each trial as a whole, and that an inability on the part of a defendant to cross examine the maker of a statement that is admitted in evidence will not necessarily render the trial unfair.
The Court in Kostovski went on to say this: In principle, all the evidence must be produced in the presence of the accused at a public hearing with a view to adversarial argument.
This does not mean, however, that in order to be used as evidence statements of witnesses should always be made at a public hearing in court: to use as evidence such statements obtained at the pre trial stage is not in itself inconsistent with paragraphs (3)(d) and (1) of article 6, provided the rights of the defence have been respected.
As a rule, these rights require that an accused should be given an adequate and proper opportunity to challenge and question a witness against him, either at the time the witness was making his statement or at some later stage of the proceedings.
There are two points to make in respect of this passage.
The first is that the phrases in principle and as a rule reflect the fact that the Strasbourg Court has recognised that the requirements of article 6(3)(d) are not absolute or inflexible.
The second point is that the proposition that an accused should be given an adequate and proper opportunity to challenge and question a witness against him, either at the time the witness was making his statement or at some later stage of the proceedings (emphasis mine) reflects Strasbourg jurisprudence which appears to dilute the protection that article 6(3)(d) would otherwise supply.
One of the objects of the right of a defendant to cross examine witnesses is to give the trial court the chance of observing their demeanour under questioning and thus forming its own impression of their reliability see Kostovski at paragraph 43.
The aim is adversarial argument at a public hearing see Kostovski at paragraph 41.
These objects will not be achieved by granting the defendant or his lawyers an opportunity to confront or question witnesses in the course of the inquisitorial investigation by the investigating judge.
The words that I have emphasised, repeated again and again in the Strasbourg jurisprudence, appear to suggest that a right to challenge a witness at the investigatory stage of the criminal process will be enough to satisfy article 6(3)(d).
This exemplifies the danger that repeated repetition of a principle may lead to its being applied automatically without consideration of whether, having regard to the particular facts of the case, its application is appropriate.
The true position is, I suggest, that where possible the defendant should be entitled to examine witnesses at the trial but that, where this proves impossible, the fact that the defendant had a right to challenge the witness at the investigatory stage is a relevant factor when considering whether it is fair to rely on the witness deposition as evidence at the trial see, for instance, Luc v Italy (2001) 36 EHRR 807.
The sole or decisive rule
The sole or decisive rule entered the Strasbourg jurisprudence in Doorson v The Netherlands where, having found justification for admitting the statement of an absent witness and for the anonymity of two witnesses, the Court added: Finally, it should be recalled that, even when counterbalancing procedures are found to compensate sufficiently the handicaps under which the defence labours, a conviction should not be based either solely or to a decisive extent on anonymous statements.
The seeds of the sole or decisive rule would seem to be found in a series of earlier cases, details of which are set out in Annexe 2 to this judgment.
In most of these cases there had been a failure to comply with the requirements of article 6(3)(d) for which there was no justification.
The Court none the less considered it relevant to consider the impact of the evidence in question on the applicants conviction when deciding whether this had rendered the trial unfair in violation of article 6(1).
The inference was that if the evidence had not had a significant effect on the outcome of the trial, there would be no violation of article 6(1).
The sole or decisive test propounded in Doorson went a significant step further.
It stated that, even where there was justification for not calling a witness, basing a conviction solely or decisively on the evidence of that witness would be unfair.
In 1997 the Committee of Ministers of the Council of Europe published Recommendation No R (97) 13 concerning Intimidation of Witnesses and the Rights of the Defence.
This included measures to be taken in relation to organised crime.
The measures dealt with different methods of protecting witnesses from the risk of reprisals, or accommodating their fear of such reprisals.
These included admitting evidence of pre trial statements made before a judicial authority and preserving the anonymity of witnesses.
In relation to anonymity, the Ministers recommended When anonymity has been granted the conviction shall not be based solely or to a decisive extent on the evidence of such persons.
The recommendation would seem to have been derived from the Strasbourg jurisprudence, for the preamble to the Recommendation recites: Bearing in mind the provisions of the European Convention on Human Rights and the case law of its organs, which recognise the rights of the defence to examine the witness and to challenge his/her testimony but do not provide for a face to face confrontation between the witness and the alleged offender;
In his review of the Strasbourg jurisprudence in Grant v The Queen Lord Bingham did not address the question of whether the admission of hearsay evidence was subject to the sole or decisive test.
That question was considered by the Court of Appeal in R v Sellick [2005] EWCA Crim 651; [2005] 1 WLR 3257.
In that case the trial judge had permitted the statements of witnesses to be read pursuant to sections 23 and 26 of the 1988 Act on the ground that they had not given evidence through fear.
Waller LJ reviewed the Strasbourg authorities and summarised the position as follows: 50.
What appears from the above authorities are the following propositions. (i) The admissibility of evidence is primarily for the national law. (ii) Evidence must normally be produced at a public hearing and as a general rule article 6(1) and (3)(d) of the Convention require a defendant to be given a proper and adequate opportunity to challenge and question witnesses. (iii) It is not necessarily incompatible with article 6(1) and (3)(d) of the Convention for depositions to be read and that can be so even if there has been no opportunity to question the witness at any stage of the proceedings.
Article 6(3)(d) is simply an illustration of matters to be taken into account in considering whether a fair trial has been held.
The reasons for the court holding it necessary that statements should be read and the procedures to counterbalance any handicap to the defence will all be relevant to the issue, whether, where statements have been read, the trial was fair. (iv) The quality of the evidence and its inherent reliability, plus the degree of caution exercised in relation to reliance on it, will also be relevant to the question whether the trial was fair. 51.
The question is whether there is a fifth proposition to the effect that where the circumstances would otherwise justify the reading of the statement where the defendant has had no opportunity to question the witness at any stage of the trial process, the statement must not be allowed to be read if it is the sole or decisive evidence against the defendant.
Certainly at first sight para 40 of Luc v Italy 36 EHRR 807 seems to suggest that in whatever circumstances and whatever counterbalancing factors are present if statements are read then there will be a breach of article 6 of the Convention, if the statements are the sole or decisive evidence.
Furthermore there is some support for that position in the previous authorities.
But neither Luc v Italy nor any of the other authorities were concerned with a case where a witness, whose identity was well known to a defendant, was being kept away by fear, although we must accept that the reference to Mafia type organisations and the trials thereof in para 40 of Luc v Italy shows that the court had extreme circumstances in mind. 52.
The question we have posed to ourselves is as follows.
If the European court were faced with the case of an identified witness, well known to a defendant, who was the sole witness of a murder, where the national court could be sure that that witness had been kept away by the defendant, or by persons acting for him, is it conceivable that it would hold that there were no counterbalancing measures the court could take which would allow that statement to be read.
If care had been taken to see that the quality of the evidence was compelling, if firm steps were taken to draw the jurys attention to aspects of that witnesss credibility and if a clear direction was given to the jury to exercise caution, we cannot think that the European court would nevertheless hold that a defendants article 6 rights had been infringed.
In such a case, as it seems to us, it is the defendant who has denied himself the opportunity of examining the witnesses, so that he could not complain of an infringement of article 6(3)(d), and the precautions would ensure compliance and fairness in compliance with article 6(1).
We for our part see no difficulty in such a clear case. 53.
More difficulty arises in cases where it is not quite so clear cut, but the court believes, to a high degree of probability, that identified witnesses are being intimidated for and on behalf of the defence, and where the court is sure to the criminal standard of proof that witnesses cannot be traced and brought before the court (Butterfield Js state of mind on Lee in the instant case).
In our view, having regard to the rights of victims, their families, the safety of the public in general, it still cannot be right for there to be some absolute rule that, where compelling evidence is the sole or decisive evidence, an admission in evidence of a statement must then automatically lead to a defendants article 6 rights being infringed.
That would lead to a situation in which the more successful the intimidation of the witnesses, the stronger the argument becomes that the statements cannot be read.
If the decisive witnesses can be got at the case must collapse.
The more subtle and less easily established intimidation provides defendants with the opportunity of excluding the most material evidence against them.
Such an absolute rule cannot have been intended by the European court in Strasbourg.
In R v Davis Lord Mance analysed the Strasbourg jurisprudence in relation to anonymous witnesses and summarised his conclusions as follows: 89.
In his submissions for the Crown Mr Perry suggested that any requirement that anonymous evidence should not be the sole or decisive basis for conviction derived from the authorities on pretrial statements by (identified) witnesses who were not called for cross examination at trial.
That submission derives possible support from the citation in Kok, Visser and Krasniki of authorities which deal with that subject matter, rather than with anonymous witnesses.
But it does not mean that a similar principle is inappropriate in relation to anonymous witnesses who are available for such cross examination as is possible at trial.
Whatever its origin, the requirement has been deployed without drawing this distinction, which is probably less real in those civil law countries with procedures involving use of an investigating magistrate than it is in the United Kingdom.
Further, in Krasniki the requirement was applied to one anonymous witness who was called at trial.
It is considerably less certain, for the reasons I have mentioned in paras 84 86 above, that there is an absolute requirement that anonymous testimony should not be the sole or decisive evidence, or whether the extent to which such testimony is decisive may be no more than a very important factor to balance in the scales.
I doubt whether the Strasbourg court has said the last word about this.
The Court in Doorson v The Netherlands gave no explanation for the sole or decisive rule.
It was not a rule that was relevant on the facts of that case, so an English jurist might suggest that it was mere obiter dicta which need not be afforded much weight.
But the rule was propounded repeatedly in subsequent cases, and it is necessary to consider these in order to attempt to deduce the principle underlying the rule.
I have set out a brief analysis of a number of the decisions in an attempt to identify the governing principle.
This forms Annexe 3 to this judgment.
It is clear from these cases that a failure to comply with article 6(3)(d), even if there is no justification for this, does not automatically result in a violation of article 6(1).
It is necessary to consider whether the failure has affected the result.
If it has not, no question of a violation of article 6(1) arises see X v United Kingdom (1992) 15 EHRR CD 113; Craxi v Italy (Application No 34896197), 5 December 2002.
Where there has been a failure to comply with article 6(3)(d) for which there is no justification, the Court has found a violation of article 6(1) where the evidence may have contributed to the applicants conviction Ldi v Switzerland (1992) 15 EHRR 173; Taxquet v Belgium (Application No 926105), 13 January 2009.
In the majority of cases there has been a failure to comply with article 6(3)(d) which has not been justified and the evidence in question has been the sole or decisive basis of the applicants conviction.
A violation of article 6(1) has naturally been found in such cases.
Where there is justification for a failure to comply with the requirements of article 6(3)(d) because, for instance, it is impossible in fact or law to procure the presence of the witness for cross examination, the Court has been concerned with the reliability of the evidence in question.
In two cases which preceded Doorson, no violation of article 6(1) was found where the evidence in question was the principal evidence, but where it was supported by other evidence: Asch v Austria (Application No 12398/86), 29 April 1991 and Artner v Austria (Application No 13161/87), 25 June 1992.
Ferrantelli and Santangelo v Italy 23 EHRR 288 was a case decided soon after Doorson.
The sole or decisive test was not mentioned.
The applicants were convicted of being party to the murder of two police officers committed by V. The principal evidence against them consisted of statements made by V. There was no confrontation between V and the applicants.
V committed suicide before the trial.
In these circumstances there was justification for reading his statements.
The Court found that the applicants had had a fair trial and that there had been no violation of articles 6(1) and article 6(3)(d).
In so finding it had regard to the fact that the trial court had conducted detailed analysis of the statements and found them to be corroborated.
In Doorson itself, which was primarily an anonymity case, the Court found that it had been acceptable to have regard to a statement of a witness whose attendance could not be procured especially since it could consider that statement to be corroborated by other evidence before it.
No explanation was given in Doorson in respect of the principle underlying the sole or decisive test first propounded by the Court in that case, and, so far as I am aware, the Strasbourg Court has not subsequently explained why a conviction based in part on the evidence of a witness who was not called, or who was anonymous, need not offend article 6(1) and (3)(d), while, on the contrary, if the evidence is sole or decisive the article will be violated.
I have concluded, however, that the Strasbourg Court has drawn the distinction on the premise that a conviction based solely or decisively upon the evidence of a witness whose identity has not been disclosed, or who has not been subjected to cross examination, or both, will not be safe.
I have reached this conclusion for a number of reasons.
First because there is nothing intrinsically objectionable or unfair in having regard to the statement of a witness where it is simply not possible to call that witness to give the evidence in question.
Secondly because of the general emphasis that the Strasbourg Court understandably places on the reliability of evidence.
Thirdly because the approach evidenced by the passage quoted from Kok in Annexe 3 seems to treat reliability as being the relevant factor and finally because I have not been able to identify any convincing alternative rationale for the sole or decisive test.
Practicality
One of the reasons why the Court of Appeal was not prepared to accept that the
sole or decisive rule applied to English criminal law was the fact that the application of that rule would give rise to severe practical difficulties under our system.
Two questions arise in relation to practicability. (1) How easy is it for the trial court itself to apply the sole or decisive test? (2) How easy is it for an appeal court, or for the Strasbourg Court, to determine whether the test has been properly applied? The Strasbourg Court has repeatedly emphasised that it is not its task to rule on admissibility but to consider whether the trial as a whole has been fair.
When considering articles 6(1) and 6(3)(d) Strasbourg is concerned not with whether a statement ought to have been admitted in evidence by the trial court but with the use the trial court has made of the evidence.
The sole or decisive test permits a court to take the evidence into account but not to base a conviction solely or decisively upon it.
In a dissenting opinion in Van Mechelen v The Netherlands (1997) 25 EHRR 647
Judge van Dijk expressed the view that the sole or decisive test is difficult to apply, because if the testimony of anonymous witnesses is used by the court as part of the evidence, that will always be because the court considers it a decisive part of that evidence.
This comment raises the question of what is meant by decisive.
Under English procedure no evidence should be admitted unless it is potentially probative.
In theory any item of probative evidence may make all the difference between conviction and acquittal.
It may be the vital piece of evidence which tilts the scales enough to satisfy the tribunal beyond reasonable doubt that the defendant is guilty.
Is such a piece of evidence to be treated as decisive? In Al Khawaja at paragraph 39 the Court relied, as indicating that a statement was decisive, on the statement of the Court of Appeal in Tahery that it was both important and probative of a major issue in the case.
Had it not been admitted the prospect of a conviction would have receded and that of an acquittal advanced.
Whatever be the precise definition of decisive, the duty not to treat a particular piece of evidence as decisive is hard enough for a professional judge to discharge.
In theory he can direct himself that he must not convict if the relevant statement is decisive, and state in a reasoned judgment that he has complied with that direction.
In practice such a course will often not be easy.
As for the Court of Appeal or the Strasbourg Court, it will often be impossible to decide whether a particular statement was the sole or decisive basis of a conviction.
In the case of a jury trial, a direction to the jury that they can have regard to a witness statement as supporting evidence but not as decisive evidence would involve them in mental gymnastics that few would be equipped to perform.
If the sole or decisive test is to be applied in the context of a jury trial, the only practical way to apply it will be a rule of admissibility.
The judge will have to rule inadmissible any witness statement capable of proving decisive.
This will be no easy task see the judgment of the Court of Appeal at paragraphs 68 to 70.
If decisive means capable of making the difference between a finding of guilt and innocence, then all hearsay evidence will have to be excluded.
In Trechsels lengthy analysis of this area of the law in Human Rights in Criminal Proceedings the author advances precisely this proposition at p 298.
Discussion
The sole or decisive test produces a paradox.
It permits the court to have regard to evidence if the support that it gives to the prosecution case is peripheral, but not where it is decisive.
The more cogent the evidence the less it can be relied upon.
There will be many cases where the statement of a witness who cannot be called to testify will not be safe or satisfactory as the basis for a conviction.
There will, however, be some cases where the evidence in question is demonstrably reliable.
The Court of Appeal has given a number of examples.
I will just give one, which is a variant of one of theirs.
A visitor to London witnesses a hit and run road accident in which a cyclist is killed.
He memorises the number of the car, and makes a statement to the police in which he includes not merely the number, but the make and colour of the car and the fact that the driver was a man with a beard.
He then returns to his own country, where he is himself killed in a road accident.
The police find that the car with the registration number that he provided is the make and colour that he reported and that it is owned by a man with a beard.
The owner declines to answer questions as to his whereabouts at the time of the accident.
It seems hard to justify a rule that would preclude the conviction of the owner of the car on the basis of the statement of the deceased witness, yet that is the effect of the sole or decisive test.
As I have suggested earlier, the justification for the sole or decisive test would appear to be that the risk of an unsafe conviction based solely or decisively on anonymous or hearsay evidence is so great that such a conviction can never be permitted.
Parliament has concluded that there are alternative ways of protecting against that risk that are less draconian, as set out in the 1988 and 2003 Acts (and now, with regard to anonymous witnesses, the 2008 Act).
When the Strasbourg decisions are analysed it is apparent that these alternative safeguards would have precluded convictions in most of the cases where a violation of article 6(1) and (3)(d) was found.
In particular the legislation does not permit the admission of the statement of a witness who is neither present nor identified.
Where the witness is unavailable but identified, or present but anonymous, the respective Acts provide the safeguards to which I have referred earlier against the risk that the use of the witness evidence will render the verdict unsafe and the trial unfair.
Lord Judge has subjected many of the Strasbourg decisions to which I have referred, together with a number of others, to a detailed analysis.
He has, for the most part chosen cases in which the Strasbourg Court held that article 6(1) taken together with article 6(3)(d) had been violated.
Under our domestic principles of admissibility in almost all of these cases the relevant evidence would have been ruled inadmissible and the defendant would not have been convicted.
The cases suggest that in general our rules of admissibility provide the defendant with at least equal protection to that provided under the continental system.
Lord Judges analysis is annexed to this judgment as Annexe 4.
Before Al Khawaja, while the Strasbourg Court had repeatedly recited the sole or decisive test, there had, as the Court of Appeal observed, been no case where that test had been applied so as to produce a finding of a violation of article 6(1) and (3)(d) in a case where there had been justification for not calling a witness and where the evidence was demonstrably reliable.
Nor had the sole or decisive rule ever been applied or cited in an application in relation to the criminal process in this jurisdiction.
Thus no consideration had been given as to whether it was necessary or appropriate to apply that rule having regard to the safeguards inherent in our system.
It is time to turn to consider Al Khawaja.
Al Khawaja
In Al Khawaja 49 EHRR 1 the Court heard two applications together.
Mr Al Khawaja had been convicted on two counts of indecent assault on female patients.
The first had made a statement to the police providing details of the assault, but subsequently committed suicide for reasons unconnected to the assault.
Her statement was admitted under the 1988 Act.
Mr Tahery was convicted of wounding with intent.
An Iranian had been stabbed in the back in a brawl.
Another Iranian made a statement to the police saying that he had seen Mr Tahery inflict the wound.
He subsequently refused to give evidence because of fear.
The judge gave permission for his statement to be read pursuant to section 116(2)(e) of the 2003 Act.
Appeals by each applicant were dismissed by the Court of Appeal.
Each applicant complained to the Strasbourg Court that his rights under article 6(3)(d) had been violated.
out general principles applicable to both cases.
This section began: In the section of its judgment dealing with the merits the Court began by setting Article 6(3)(d) is an aspect of the right to fair trial guaranteed by article 6(1), which, in principle, requires that all evidence must be produced in the presence of the accused in a public hearing with a view to adversarial argument (Krasniki v Czech Republic (Application No 51277/99), 28 February 2006, para 75).
As with the other elements of article 6(3), it is one of the minimum rights which must be accorded to anyone who is charged with a criminal offence.
As minimum rights, the provisions of article 6(3) constitute express guarantees and cannot be read, as it was by the Court of Appeal in Sellick (see para [25] above), as illustrations of matters to be taken into account when considering whether a fair trial has been held (see Barber v Spain (1987) 9 EHRR CD101, paras 67 and 68; Kostovski v The Netherlands, (1989) 12 EHRR 434, para 39).
I find it impossible to reconcile this paragraph with statements of principle that the Strasbourg Court has regularly made in respect of the interrelationship between articles 6(1) and 6(3)(d), as quoted from Kostovski at paragraph 75 (above).
These statements indicate that the fairness of a trial has to be assessed on a case by case basis, viewing each trial as a whole, and that an inability on the part of a defendant to examine the maker of a statement that is admitted in evidence will not necessarily render the trial unfair.
The statement of principle in the opening passage in Kostovski is notably absent from the judgment in Al Khawaja.
That which replaces it is at odds with the approach in the individual Strasbourg cases to which I have referred.
The Court went on to add: Equally, even where those minimum rights have been respected, the general right to a fair trial guaranteed by article 6(1) requires that the Court ascertain whether the proceedings as a whole were fair.
This proposition is unexceptionable.
What is puzzling is that the Court should cite Unterpertinger v Austria in support of it, for that was a case where the Court found that both articles 6(1) and 6(3)(d) had not been satisfied.
said: I now come to the crucial passages in Al Khawajia.
At paragraph 36 the Court Whatever the reason for the defendants inability to examine a witness, whether absence, anonymity or both, the starting point for the Courts assessment of whether there is a breach of article 6(1) and (3)(d) is set out in Luc at para 40: If the defendant has been given an adequate and proper opportunity to challenge the depositions either when made or at a later stage, their admission in evidence will not in itself contravene article 6(1) and (3(d).
The corollary of that, however, is that where a conviction is based solely or to a decisive degree on depositions that have been made by a person whom the accused has had no opportunity to examine or to have examined, whether during the investigation or at the trial, the rights of the defence are restricted to an extent that is incompatible with the guarantees provided by article 6 [references omitted].
The first point to be made about this citation from Luc is that neither of the propositions that it contains is axiomatic.
For reasons that I have already given, an opportunity to challenge a deposition when made, whether the opportunity is taken or not, will not necessarily render it fair at the trial simply to read the deposition if the maker can be called to give evidence.
The second proposition incorporates the sole or decisive test.
That test is not the corollary of the first proposition.
It is not to be found in article 6(3)(d).
It has, as I have shown, been developed in the jurisprudence of the Strasbourg Court.
In both Al Khawaja and Tahery the statements admitted in evidence were central to the prosecution case but were, in each case, supported by other evidence.
The Court of Appeal had held, in each case, that there was no reason to doubt the safety of the conviction.
In Al Khawaja, the Court of Appeal, citing Sellick, had held that the Strasbourg case law did not require the conclusion that, in the circumstances of that case, the trial would be unfair.
The Strasbourg Courts response appears in paragraph 37 of its judgment: The Court notes that in the present cases the Government relying on the Court of Appeals judgment in Sellick (see paragraph 25 above), argue that this Courts statement in Luc and in other similar cases is not to be read as laying down an absolute rule, prohibiting the use of statements if they are the sole or decisive evidence, whatever counterbalancing factors might be present.
However, the Court observes that the Court of Appeal in Sellick was concerned with identified witnesses and the trial judge allowed their statements to be read to the jury because he was satisfied that they were being kept from giving evidence through fear induced by the defendants.
That is not the case in either of the present applications and, in the absence of such special circumstances, the Court doubts whether any counterbalancing factors would be sufficient to justify the introduction in evidence of an untested statement which was the sole or decisive basis for the conviction of an applicant.
While it is true that the Court has often examined whether the procedures followed in the domestic courts were such as to counterbalance the difficulties caused to the defence, this has been principally in cases of anonymous witnesses whose evidence has not been regarded as decisive and who have been subjected to an examination in some form or other.
There are two points to be made about this passage.
The first is that the Court appears to have accepted that the sole or decisive rule does not apply so as to preclude the reliance on the statement of a witness who refuses to testify because of fear induced by the defendant.
The second is that the Court did not completely close the door to the possibility of counterbalancing factors being sufficient to justify the introduction of a statement as sole or decisive evidence in other circumstances.
The Court made it quite plain, however, that compliance with the statutory regime under which the statements in the two appeals had been admitted carried limited weight paragraph 40.
The Court must surely have been correct to recognise that the sole or decisive rule does not apply where a defendant has induced such fear in a witness that the witness refuses to testify.
A defendant can never be heard to complain of the absence of a witness if he has been responsible for that absence.
It is, however, notoriously difficult for a court to be certain that a defendant has threatened a witness, for if the threat is effective the witness is likely to be too frightened to testify to it.
The Strasbourg Court has recognised that anonymity can be justified where a witness is too frightened to be identified, even where the defendant has not himself induced the fear Doorson, Kok and Visser.
There are strong reasons of policy why the evidence of such a witness should be received, subject to adequate safeguards, and this is recognised by section 116 of the 2003 Act.
The sole or decisive rule was first propounded in Doorson as an obiter observation, without explanation or qualification.
It has since frequently been repeated, usually in circumstances where there has been justification for finding breaches of article 6(1) and (3)(d) without reliance on the test.
If applied rigorously it will in some cases result in the acquittal, or failure to prosecute, defendants where there is cogent evidence of their guilt.
This will be to the detriment of their victims and will result in defendants being left free to add to the number of those victims.
The Court of Appeal in this case, comprising five senior judges with great experience of the criminal jurisdiction, referred to the manner in which the 2003 Act is working in practice and concluded that provided its provisions are observed there will be no breach of article 6 and, in particular, article 6(3)(d), if a conviction is based solely or decisively on hearsay evidence paragraph 81.
The court thus differed from the doubt expressed in Al Khawaja as to whether there could be any counterbalancing factors sufficient to justify the introduction of an untested statement which was the sole or decisive basis for a conviction.
I concur in these conclusions reached by the Court of Appeal and the reasons for those conclusions so clearly and compellingly expressed.
The jurisprudence of the Strasbourg Court in relation to article 6(3)(d) has developed largely in cases relating to civil law rather than common law jurisdictions and this is particularly true of the sole or decisive rule.
In the course of the hearing in Al Khawaja, Sir Nicolas Bratza observed that both parties had accepted the sole or decisive test which appears in Luc and other cases as an accurate summary of the Courts case law.
He asked whether there was any authority of the Court which gave any scope for counterbalancing factors in a sole or decisive case.
Mr Perry for the Government conceded that he was not aware of any direct authority on the point.
The Court then applied the sole or decisive rule in reliance on the pre existing case law.
But as I have shown that case law appears to have developed without full consideration of the safeguards against an unfair trial that exist under the common law procedure.
Nor, I suspect, can the Strasbourg Court have given detailed consideration to the English law of admissibility of evidence, and the changes made to that law, after consideration by the Law Commission, intended to ensure that English law complies with the requirements of article 6(1) and (3)(d).
In these circumstances I have decided that it would not be right for this court to hold that the sole or decisive test should have been applied rather than the provisions of the 2003 Act, interpreted in accordance with their natural meaning.
I believe that those provisions strike the right balance between the imperative that a trial must be fair and the interests of victims in particular and society in general that a criminal should not be immune from conviction where a witness, who has given critical evidence in a statement that can be shown to be reliable, dies or cannot be called to give evidence for some other reason.
In so concluding I have taken careful account of the Strasbourg jurisprudence.
I hope that in due course the Strasbourg Court may also take account of the reasons that have led me not to apply the sole or decisive test in this case.
The individual appeals
Although the principal ground of appeal was that the sole or decisive rule had not been applied, counsel for the appellants in each appeal also argued that, quite apart from this rule, the relevant statements should not have been admitted.
In the case of Horncastle and Blackmore the argument was that the deceased victims statement was inherently unreliable.
In the case of Marquis and Graham it was argued that the fear that had led to Miss Miles running away because she was too frightened to give evidence had been induced, not by the defendants, but by alarmist warnings given by the police and that, in these circumstances, it was unjust to put her statement in evidence.
These points received careful consideration by the Court of Appeal.
I have found no basis for differing from the courts conclusion that they were without merit.
Accordingly I propose simply to rely upon the reasoning of the Court of Appeal in dismissing these grounds of appeal.
For the reasons that I have given I would dismiss these appeals.
ANNEXE 1 (Prepared by Lord Mance see paragraph 41). 1.
In Canada, the Supreme Court addressed the question of the admission of hearsay evidence on three occasions, in R v Khan [1990] 2 SCR 531; R v Smith [1992] 2 SCR 915 and R v Rockey [1996] 3 SCR 829.
It noted that the purpose and reason of the Hearsay rule is the key to the exceptions to it, drawing in this connection on the well known American text, Wigmore on Evidence (2nd ed. 1923).
Wigmore went on to point out that the theory of the hearsay rule was that the many possible sources of inaccuracy and untrustworthiness which may lie underneath the bare untested assertion of a witness can best be brought to light and exposed, if they exist, by the test of cross examination, but that, in circumstances in which a statement is free from this risk or in which cross examination is impossible, it may be possible under certain conditions to contemplate its use without cross examination.
The Supreme Court of Canada in R v Smith, at p 930, referred to the approach 2. along these lines first adopted in R v Khan as the triumph of a principled analysis over a set of ossified judicially created categories.
It held that, in addition to the basic requirement of relevance, hearsay evidence might be admitted if there was sufficient necessity and its reliability could be sufficiently verified by the judge before it was put before the jury.
In R v Khan evidence was thus admitted of an infant complainants description to her mother shortly after the event of a sexual assault upon her, in circumstances where the infant was not permitted to testify at trial.
In R v Smith these tests were satisfied in relation to the contents of two of the 3. critical three telephone calls made by the deceased to her mother shortly before death.
However, in relation to the third call, although there was no problem about satisfying the test of necessity in view of her death, a careful review by the Court of the circumstances surrounding the call gave rise to apprehensions about its reliability, and a possibility that what had been said might have been mistaken or intended to deceive the mother.
The contents of this call could not therefore safely be admitted in the absence of cross examination.
The conviction was set aside and a fresh trial ordered.
R v Rockey was another case, like R v Khan, where the accused was charged with sexual assault on an infant (aged two and a half), who had made a number of statements about the incident.
The Court was, after examination of the circumstances, satisfied that the requirements of both necessity and reliability were met.
It found, with regard to necessity, that the infant though by now aged five, could not have given evidence in any meaningful sense, and would anyway have been traumatised by doing so.
Reliability was not an issue on the appeal.
If (which the Court did not decide) there was any error in the judges directions to the jury, it was immaterial.
It is right to add that, in this case (in contrast to R v Khan and R v Smith), there was also strong surrounding evidence inculpating the accused. 4.
In Australia in the case of Bannon v The Queen (1995) 185 CLR 1, the High Court of Australia noted the Canadian decisions.
Brennan CJ at p 12 expressed the view (obiter) that the approach they took should not be adopted in Australia.
The other judges, Deane J at pp 12 13, Dawson, Toohey and Gummow JJ at pp 24 25 and 28 and McHugh J at pp 40 41 said that it was unnecessary to decide whether it should be adopted, although McHugh J also went further and said that Adoption of the Canadian principle would undoubtedly have beneficial effects on the law of evidence.
The case was actually decided on the basis that the evidence in question could not on any view be regarded as reliable and was rightly excluded from being put before the jury. 5.
As McHugh J also noted, the federal Australian Parliament had enacted the Evidence Act 1995, and New South Wales had adopted comparable legislation.
The federal Evidence Act 1995 contains a careful set of provisions regulating the admission of hearsay evidence.
The starting point under s.59(1) is that hearsay evidence is generally excluded: 59(1).
Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation. (2) Such a fact is in this Part referred to as an asserted fact.
There follow a number of specific exceptions, including: 65 Exception: criminal proceedings if maker not available (1) This section applies in a criminal proceeding if a person who made a previous representation is not available to give evidence about an asserted fact. (2) The hearsay rule does not apply to evidence of a previous representation that is given by a person who saw, heard or otherwise perceived the representation being made, if the representation: (a) was made under a duty to make that representation or to make representations of that kind; or (b) was made when or shortly after the asserted fact occurred and in circumstances that made it unlikely that the representation is a fabrication; or (c) was made in circumstances that make it highly probably that the representation is reliable; or (d) was: (i) against the interests of the person who made it at the time it was made; and (ii) made in circumstances that make it likely that the representation is reliable. 66 Exception: criminal proceedings if maker available (1) This section applies in a criminal proceeding if a person who made a previous representation is available to give evidence about an asserted fact. (2) If that person has been or is to be called to give evidence, the hearsay rule does not apply to evidence of the representation that is given by: (a) that person; or (b) a person who saw, heard or otherwise perceived the representation being made; if, when the representation was made, the occurrence of the asserted fact was fresh in the memory of the person who made the representation.
The scheme of the Australian statute is both nuanced and circumscribed, with a view to ensuring the overall fairness of the proceedings.
The admissibility of hearsay evidence has also been addressed in New Zealand.
In 6. 1980 the legislature enacted the Evidence Amendment Act (No.2) 1980.
S.3 enabled the admission of out of court statements made by a maker with personal knowledge of the contents who is unavailable to give evidence, provided that the statement was not made in contemplation of criminal proceedings (and would not otherwise be inadmissible therein).
S.18 gave the trial judge a discretion to exclude any such statement from the jury, and s.19 enabled an appellate court to exercise an independent discretion on any appeal to it on the issue of admissibility.
The operation of these statutory provisions was considered by the Court of Appeal in R v Hovell [1987] 1 NZLR 610.
In that case, an 82 year old woman gave to a detective shortly after the event a detailed written account of indecencies perpetrated on her by a disguised intruder whom she was unable to describe in any detail.
There was medical and scientific evidence corroborating recent sexual activity.
The next year, before the defendants arrest, she died.
Her statement was admitted in evidence.
On appeal, it was submitted that it should have been excluded under s.18, in that it would be contrary to the interests of justice not to exclude a statement dealing with facts of such central importance to the case (p.612).
The Court of Appeal dismissed the appeal, holding that there was no basis for limiting the admission of such statements to less serious cases or to peripheral evidence, that the Act had its own safeguards for an accused, that it could not seriously be suggested that the complainants account was a fabrication, or that a woman of that age in those circumstances would complain of rape and the other sexual indignities if she had in fact consented, that the trial judge had rightly concluded that the identity of the assailant was the only issue for the jury and that the trial would be fought around the alibi claimed by the accused.
The appeal was thus dismissed. 7.
R v Baker [1989] 1 NZLR 738 concerned the common law principle whereby evidence of out of court statements may be admitted to show the makers state of mind, where this is a relevant issue.
The defendant was accused of having raped and then shot his estranged wife before attempting to commit suicide.
His explanation was that she had invited him around to shoot stray cats, and that, after inviting him to consensual sex, she had then taken his gun and shot first him, then herself.
To rebut this account, the prosecution wished to adduce evidence from several witnesses of statements made by the deceased in the previous month and as late as the afternoon before her death as to her extreme fear of the accused which made it implausible to suggest that she would have invited him round to shoot stray cats or invited him to have sex.
The trial judge refused to admit the statements, and the prosecution appealed.
Giving the main judgment in the Court of Appeal allowing the appeal, Cooke P said (at p.741) that At least in a case such as the present it may be more helpful to go straight to basics and ask whether in the particular circumstances it is reasonably safe and of sufficient relevance to admit the evidence notwithstanding the dangers against which the hearsay rule guards. 8.
R v Baker and the later case of R v Bain [1996] 1 NZLR 129 were considered in R v Manase [2001] 2 NZLR 197, as were also the Canadian and Australian cases to which I have already referred.
This was another case of an infant (aged three and a half) who was the alleged victim of sexual violation by rape and otherwise.
She had made statements to her mother and a receptionist, which she could not now remember having made, as well as making certain drawings in the receptionists presence.
The trial judge had admitted evidence from the mother and receptionist about these statements and drawings.
The Court of Appeal, reviewing the Canadian authorities, concluded that they had in practice diluted too far the concept of necessity (p.202).
It noted certain recognised categories of exception to the hearsay rule, such as dying declarations and statements made as part of the res gestae.
In other cases, the Court said, it was necessary to develop criteria for identifying when the rule might be displaced.
I note, in parenthesis, that this is also the approach adopted by the federal Australian Evidence Act 1995 (above).
The criteria which the Court developed involved three distinct requirements: 9. under the three distinct headings of relevance (although, as the Court noted, this is an affirmation and a reminder of the overriding criterion for the admissibility of all and any evidence), inability (which the Court indicated should be approached strictly) and reliability.
In relation to this last criterion, the Court said: 30.
The hearsay evidence must have sufficient apparent reliability, either inherent or circumstantial, or both, to justify its admission in spite of the dangers against which the hearsay rule is designed to guard.
We use the expression apparent reliability to signify that the judge is the gatekeeper and decides whether to admit the evidence or not.
If the evidence is admitted, the jury or judge, as trier of fact, must decide how reliable the evidence is and therefore what weight should be placed on it.
If a sufficient threshold level of apparent reliability is not reached, the hearsay evidence should not be admitted.
The inability of a primary witness to give evidence is not good reason to admit unreliable hearsay evidence. 31.
As a final check, as with all evidence admitted before a jury, the Court must consider whether hearsay evidence which otherwise might qualify for admission should nevertheless be excluded because its probative value is outweighed by its illegitimate prejudicial effect.
Reviewing the facts of R v Manase, the Court of Appeal concluded that there was a lack of sufficient apparent reliability in the primary utterances and drawings to qualify them for admission as hearsay.
The appeal was therefore allowed.
ANNEXE 2 (See paragraph 77) 1.
In Unterpertinger v Austria (1986) 13 EHRR 175 at paragraph 33 the Court held that there had been a breach of article 6(1), taken together with the principles inherent in paragraph (3)(d) where the conviction was based mainly on statements of two witnesses that had been read.
The witnesses had exercised a legal right, as members of the applicants family, to refuse to testify against him. 2.
In Bricmont v Belgium (1989) 12 EHRR 217 at paragraph 82 the Court held that it was necessary to determine to what extent convictions had been based on accusations made by a witness whom the applicant had been unable to cross examine, where the Court had not found justification for this. 3.
In Kostovski v The Netherlands (1989) 12 EHRR 434 in finding a violation of article 6 the Court remarked at paragraph 44 that the Government accepted that the applicants conviction was based to a decisive extent on the anonymous statements.
The Court did not find justification for the procedures adopted, albeit that it recognised that the growth in organised crime doubtless demands the introduction of appropriate measures paragraph 44. 4.
In Windisch v Austria (1990) 13 EHRR 281 the Court held that there had been a violation of paragraph (3)(d) taken together with paragraph (1) of article 6 where the court had relied to a large extent on identification evidence in the form of statements to the police of two anonymous witnesses.
They had been promised anonymity by the police because of fear of reprisals. 5.
In Delta v France (1990 16 EHRR 574 at paragraph 37 the Court found that there had been a breach of paragraph (3)(d) taken together with paragraph (1) of article 6 where statements of two witnesses had been taken into accountdecisivelyas the file contained no other evidence.
There was no justification for the failure to procure the attendance of the witnesses. 6.
In X v United Kingdom (1992) 15 EHRR CD 113 the Commission found that a complaint under article 6(1) and (3)(d) was manifestly ill founded where it related to evidence given by anonymous witnesses where far from being the only item of evidence on which the trial court based its decision to convict, the evidence in question did not implicate the applicant at all.
The identity of the witnesses had been concealed because of fear of reprisals.
In Ldi v Switzerland (1992) 15 EHRR 173 the Court found a violation of 7. paragraph (3)(d) in conjunction with paragraph (1) of article 6.
The applicant had been convicted of drug trafficking.
The evidence admitted at the trial had included reports made by an anonymous undercover police agent.
While the Court found that there was justification for anonymity it ruled that this need not have precluded a procedure that permitted the witness to be questioned.
The Swiss Government had argued that there had been no breach of article 6(1) and (3)(d) because the conviction had not been based to a decisive extent on the agents evidence.
The Court observed at paragraph 47 that, while the Swiss courts did not reach their decisions solely on the basis of the agents statements, these played a part in establishing the facts which led to the conviction. 8.
In Sadi v France (1993) 17 EHRR 251 the Court found that there had been a violation of article 6(1) and (3)(d).
The applicant was convicted of drug dealing on the sole evidence of statements made to the police by three of his customers, who were identified.
The Court did not find that there was any justification for failing to call them.
ANNEXE 3 (See paragraph 80) 1.
In Van Mechelen v The Netherlands (1997) 25 EHRR 647 the applicants had been convicted of attempted manslaughter and murder, where the only evidence of positive identification was supplied by anonymous police officers whose evidence was not taken in the presence of the applicants or their counsel.
The Court did not find that the procedure adopted was justified but, having cited the sole or decisive test as set out in Doorson, added at paragraph 63 that the conviction of the defendants was based to a decisive extent on the evidence of the police officers. 2.
In Craxi v Italy (Application No 34896/97), 5 December 2002 the applicant was convicted solely on the basis of statements of co defendants who exercised their rights not to give evidence.
The Court held that there had been a violation of article 6(1) and (3)(d).
Statements of one witness were read on the ground that he was untraceable.
The Court held that these statements had not contributed to the applicants conviction, so there was no need to consider his complaint that their admission had violated article 6(3)(d). 3.
In Kok v The Netherlands (Application No 43149/98), Reports of Judgments and Decisions 2000 VI, p 597 the Court found the applicants complaint of a violation of article 6(1) and (3)(d) to be manifestly ill founded.
The evidence placed before the court included a statement made by an informer.
His identity was not disclosed in order to protect him from reprisals and the Strasbourg Court held that there was justification for this.
In applying the sole or decisive test, the Court said this: The Court therefore concludes that in the present case the applicants conviction was not based exclusively or to a decisive extent on the evidence of the anonymous witness.
In the Courts view, in assessing whether the procedures involved in the questioning of the anonymous witness were sufficient to counterbalance the difficulties caused to the defence due weight must be given to the above conclusion that the anonymous testimony was not in any respect decisive for the conviction of the applicant.
The defence was thus handicapped to a much lesser degree.
In Luc v Italy 36 EHRR 807 the applicant had been convicted on the sole basis of 4. a statement of a co accused, who had exercised his right not to give oral evidence and whom neither the applicant nor his counsel had had the right to question.
The Court held that there had been a violation of articles 6(1) and 6(3)(d). 5.
In PS v Germany (2001) 36 EHRR 1139 the applicant had been convicted of sexual assault on an 8 year old girl on the basis of statements that she had made which were the only direct evidence of his guilt, so that the conviction was based on the statements to a decisive extent.
She was not called to give evidence and the Court found that there were shortcomings in the procedure that had been used.
The Court held that there had been a violation of paragraph (3)(d) taken in conjunction with paragraph (1) of article 6. 6.
In Visser v The Netherlands (Application No 26668/95), 14 February 2002 the applicants conviction had been based to a decisive extent on the statement of an anonymous witness who was not called to give evidence.
The Court held that justification for this had not been demonstrated and that there had been a violation of articles 6(1) and 6(3)(d).
The court recited the sole or decisive test.
It also recited the passage from Kok, which I have quoted above. 7.
In Birutis and others v Lithuania (Application Nos 47698/99 and 48115/99), 28 March 2002 the applicants had been convicted of taking part in a prison riot.
A number of anonymous statements were admitted in evidence.
The Court held that there was justification for the anonymity, but found a failure to take steps that were available to check the reliability of the statements.
The Court found that one of the applicants had been convicted solely on the basis of such statement evidence, but that in the case of the other two such evidence had not been sole or decisive, but that the anonymous statements were among the grounds upon which their convictions were based paragraph 32.
A violation of article 6(1) and (3)(d) was found in the case of each applicant.
In Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 the 8. applicant was convicted of drug offences on the basis of the statement of an anonymous witness.
The Court found a violation of article 6(1) and (3)(d) taken together.
The Court was not satisfied that the anonymity was justified and also held that the applicant had been convicted solely or at least to a decisive extent on the anonymous evidence.
Once again the Court recited the passage that I have cited from Kok: paragraph 79. 9.
In Taxquet v Belgium (Application No 926/05), 13 January 2009 the applicant had been convicted of murder and attempted murder at a trial where the statement of an anonymous witness had been admitted.
The Court was not satisfied that anonymity was justified.
The Court was unable to determine whether the conviction was based on objective evidence, or solely on the information supplied by the anonymous witness, orsolely on the statement by one of the co defendants accusing him.
The Court found a violation of articles 6(1) and 6(3)(d).
ANNEXE 4 (Prepared by Lord Judge see paragraph 93) 1.
In this annexe references to the Domestic Position refer to the position in England and Wales.
With one or two exceptions, this document only addresses cases cited to the House in which the ECtHR found the European Convention on Human Rights (the Convention) to have been violated.
In relation to the non violation cases, the purpose behind their inclusion is that they illustrate that the absence of a violation of article 6 entitlements may nevertheless produce a conviction which would be regarded domestically as unsafe. 2 6 10 14 17 21 26 31 41 46 55 60 65 70 76 82 86 91 Contents Reference (1986) 13 EHRR 175 (1989) 12 EHRR 217 (1989) 12 EHRR 434 (1990) 13 EHRR 281 (1990) 16 EHRR 574 (1992) 15 EHRR173 (1993) 17 EHRR 251 (1996) 22 EHRR 330 (1996) 23 EHRR 288 (1997) 25 EHRR 647 (1999) (Application No 37019/97) (2001) 36 EHRR 807 (2001) 36 EHRR 1139 (2002) (Application No 26668/95) (2002) (Application Nos 47698/99 and 48115/99) (2003) 36 EHRR 431 (2006) (Application No 51277/99) (2009) (Application No 926/05) Category of Witness Paragraph Absent, identified Absent, identified Absent, anonymous Absent, anonymous Absent, identified Absent, anonymous Absent, identified Combination Absent, identified Anonymous present Absent identified Absent identified Absent Identified Anonymous, present in part Anonymous, absent Absent, identified Anonymous, absent, present Absent, anonymous Case Unterpertinger v Austria Bricmont v Belgium Kostovski v The Netherlands Windisch v Austria Delta v France Ldi v Switzerland Sadi v France Doorson v The Netherlands Ferrantelli and Santangelo v Italy Van Mechelen and others v The Netherlands AM v Italy Luc v Italy PS v Germany Visser v The Netherlands Birutis and others v Lithuania Sadak and others v Turkey Krasniki v Czech Republic Taxquet v Belgium Unterpertinger v Austria (1986) 13 EHRR 175 2.
This case involves known, absent witnesses; the applicant was convicted of causing actual bodily harm to his step daughter on 14 August 1979 and grievous bodily harm (a fractured thumb) on 9 September 1979.
During the first incident the applicant himself received injuries.
The police were informed by a neighbour.
His wife was questioned as a suspect, and his step daughter as a person involved.
They made statements about the incident.
Shortly afterwards the second incident occurred.
The applicants wife received treatment for her injuries.
The injury and incident were reported to the police by the hospital.
In due course statements from the applicant and his wife were supplied by the hospital to the police.
A judicial investigation into both incidents took place.
During the investigation the wife gave an account of both incidents.
She was later acquitted of criminal involvement in the first incident.
When the wife and step daughter were informed by the trial court of their right to refuse to testify against the applicant, they did so.
This meant that their oral testimony was not available at trial, and indeed the interview conducted with the wife during the judicial investigation was also excluded.
The prosecution adduced the earlier statements to the police by the wife and step daughter.
Evidence which was said to undermine their credibility was not admitted, although the statements in relation to the first incident had been obtained when they were questioned as a suspect and a person involved respectively. 3.
Following a finding by the Commission that there was no violation, the ECtHR held that the applicants rights under articles 6(1) and 6(3)(d) were breached.
The applicant was convicted on the basis of testimony in respect of which his defence rights were appreciably restricted (para 33).
Domestic Position 4. would be quashed. 5.
The oral testimony of both the wife and the step daughter is admissible.
Both were available to give evidence, and they should have been called.
Neither fell within the admissibility provisions in section 116.
Any attempt to use the section 114(1)(d) route would have failed the interests of justice test.
The statements before the trial court from the wife were incomplete, because her account to the investigating judge was not available.
Yet every pre trial statement of any witness should be available for cross examination purposes.
In any event, however, the applicant was prevented from challenging the credibility of the witnesses, or calling evidence to undermine it.
No measures whatever were available or could be or were taken to protect the applicants position.
A conviction on the basis of the evidence admitted in this case would be unsafe: in reality there would have been no trial.
Bricmont v Belgium (1989) 12 EHRR 217 This trial would simply not proceed on this basis, and if it did, any conviction The ECtHR held that in relation to the charges which had not been subject to the 6.
This conviction involved a known absent witness, the Prince of Belgium.
He could not be summoned as a witness in the absence of a specific Royal decree.
The trial court found that there was a clear and inexplicable want of diligence in seeking the truth (para 28) and noted that the persons best placed to provide information had been neither summoned nor examined as witnesses (para 28(a)).
The applicant was acquitted of criminal charges brought against him on the basis of financial mismanagement. 7.
The acquittal was appealed by the prosecution.
The Court considered regrettable that evidence had been taken from the Prince in an unusual manner nevertheless, by allowing the prosecution to use the written statement of the alleged victim of the fraud without producing him for cross examination because he was old and ill, the applicant was convicted. 8. confrontation, there had been a violation of article 6(1) and (3)(d) taken together.
Domestic Position 9.
Ignoring the complicating factor that in Belgium the victims status as a member of the Royal Family gave him special privileges in the proceedings, which would not have been the case here, the admission of his untested evidence would have been highly unusual.
The prosecution would have had to persuade the court that his written statement should be admitted under section 116(2)(b).
In practical reality such an application would have been very surprising, and if made, would have failed the interests of justice test.
There was no sufficient explanation for the inability of the witness to give oral testimony, and the trial court itself had serious reservations about the reliability of the evidence adduced from the complainant.
If the Court of Appeal concluded that there had been a want of diligence in seeking the truth which was inexplicable or that the judge misdirected himself in relation to the interests of justice any conviction would be quashed as unsafe.
Kostovski v The Netherlands 12 EHRR 434 10.
This case concerned absent, anonymous witnesses.
The applicant was convicted by the District Court, and, later, the Amsterdam Court of Appeal of conducting an armed robbery.
The applicants conviction was based to a decisive extent on the statements of anonymous witnesses.
Anonymous statements were made to the police and examining magistrates.
The examining magistrate invited questions for him to put to the witness; of the 14 questions submitted by the applicants lawyers, only 2 were answered, on the basis that the remaining 12 may have breached the anonymity of the witness.
The witnesses were not examined at trial.
The witnesses identities were not known either to the examining magistrates or to the trial courts.
The magistrates testified that, on the basis of their assessments, the anonymous witnesses were not unreliable and completely reliable. 11.
The ECtHR held there had been a violation of articles 6(1) and 6(3)(d) taken together.
At paragraphs 41 and 42, the Court noted that the use of statements acquired at the pre trial investigative stage was not in itself inconsistent with paragraphs (3)(d) and (1) of article 6 providing the defence had the opportunity to challenge and question a witness, but that, on this occasion, the nature and scope of the questions it could put [via the examining magistrates earlier in the proceedings] was considerably restricted by reason of the decision that the anonymity of the authors of the statements should be preserved.
It is significant that the Court ascribed the problems associated with anonymous witnesses to the decision to render the witnesses anonymous; this suggests that the process by which the court arrived at the decision to grant anonymity was flawed, rather than the fact of anonymity per se. 12.
The Court recognised the policy in favour of the use of anonymous evidence (para 44) but held that the general problems of anonymity were compounded by the absence of the anonymous witnesses at trial, and the subsequent admission of their evidence as hearsay see para 43.
However, in concluding that paragraphs (1) and (3)(d) of article 6 of the Convention had been breached, it is significant that the Court noted that the right to a fair administration of justice. cannot be sacrificed to expediency(emphasis added); by contrast, the relevant considerations for the granting of anonymity, in section 5 of the 2008 Act, would not, on any reading, permit the granting of an order for reasons of expediency.
Domestic Position 13.
This case would not come to trial.
If it did, it would be stopped.
This evidence was anonymous hearsay.
The relaxation of some of the rules against the use of anonymous witnesses under the Criminal Evidence (Witness Anonymity) Act 2008 does not extend to witnesses who are not only anonymous but also absent.
In R v Mayers [2008] EWCA Crim 2989; [2009] 1 Cr App R 403, para 113, the Court of Appeal (Criminal Division) addressed an application by the Crown that a written statement by an anonymous absent witness should be admitted in evidence and read to the jury, and summarised the principle: we are being invited to re write the [Criminal Evidence (Witness Anonymity) Act 2008] by extending anonymous witness orders to permit anonymous hearsay evidence to be read to the jury.
We cannot do so.
Neither the common law, nor the [Criminal Justice Act 2003], nor the 2008 Act, permits it.
In short, such evidence is inadmissible.
Windisch v Austria (1990) 13 EHRR 281 14.
The applicant was convicted of burglary on the basis of the anonymous, absent, testimony of two witnesses who had seen him in the vicinity of the area of the burglary, although they did not witness the crime itself.
The witnesses were assured of anonymity by the police at the investigative stage, and their identity was kept from the Regional Court and the Supreme Court.
On appeal, the Supreme Court refused the applicants request to have the witnesses summoned, on the basis that he had not established how the witnesses would be identified sufficiently to allow the summonses to be served. 15.
The ECtHR noted, at para 31, that although the anonymous absent witnesses had not witnessed the crime itself, their testimony became the central issue during the investigation and at the hearing, and that the trial court relied, to a large extent on their testimony.
Earlier in the judgment, at para 28, the Court stated that being unaware of their identity, the defence was confronted with an almost insurmountable handicap: it was deprived of the necessary information permitting it to test the witnesses reliability or cast doubt on their credibility.
As such, the evidence involved such limitations on the rights of the defence that there had been a violation of para (3)(d), taken together with para (1), of article 6.
Domestic Position 16.
See paragraph 13 (above): the evidence would not be admissible.
Delta v France (1990) 16 EHRR 574 17.
This matter concerned an absent, identified witness.
The applicant was convicted at the Paris Criminal Court, and, subsequently, at the Paris Court of Appeal and the Court of Cassation of the robbery of jewellery from two identified teenage girls.
Upon being searched following his arrest, nothing incriminating was found on the applicant.
The victims were the only witnesses, and, having provided statements to the police, failed to respond to court summons to attend as witnesses at the applicants trial.
No reasons were given for their failure to do so.
At the trial of first instance, the trainee barristers representing the applicant made no submissions in relation to the absent witnesses. 18.
In upholding the conviction, the Paris Court of Appeal held that the absent witnesses statements satisf[ied] the Court that the defendant was guilty of the offences charged and [made] the requested examination of the witnesses unnecessary (para 20).
The Court of Cassation refused to intervene in the appeal courts final assessment of all the evidence adduced and dismissed the appeal. 19.
The ECtHR noted, at para 37, that neither the applicant nor his counsel ever had an adequate opportunity to examine witnesses whose evidence was taken into account decisively at first instance and on appeal, as the file contained no other evidence.
They were therefore unable to test the witnesses reliability or cast doubt on their credibility The Court concluded that there had been a breach of article 6(3)(d) taken together with para (1).
Domestic Position 20.
The absence of the crucial witnesses for the prosecution was unexplained and unjustified.
No attempt was made to trace them or compel their attendance, or to justify the reading of their statements.
No countervailing measures to protect the interests of the defendant were or could be taken.
An application for this evidence to be read would have failed the interests of justice test.
Therefore if the case had proceeded to trial it would have been stopped, but if that safeguard had failed, and the case had resulted in a conviction, the conviction would have been quashed.
Ldi v Switzerland (1992) 15 EHRR 173 21.
This case concerned an anonymous, absent witness.
The applicant was convicted of drug trafficking offences on the basis of the evidence of an absent and unidentified undercover police officer, operating with requisite official authorisation.
The undercover officer initiated a series of meetings with the applicant in which, the officer testified, the applicant offered to sell large quantities of cocaine.
The applicant was convicted by the District Court and, subsequently, by the Bern Court of Appeal and the Federal Court.
In order to preserve his anonymity, the undercover officer was not called at trial; the court considered that telephone intercept records and the reports of the undercover agent were sufficient to establish the applicants criminality. 22.
The Commission stated (at para 87) that the applicant did not have the opportunity to challenge and question the undercover officer, and noted that, while the applicant was convicted partly on the basis of his own admissions, those admissions were made when the applicant was confronted with intercept evidence by the undercover officer which he was unable to challenge in the trial proceedings.
The Commission concluded that there was a breach of article 6(3)(d) taken together with article 6(1). 23.
The ECtHR noted the operational requirement of law enforcement agencies to undertake intrusive and covert surveillance, but found that it would have been possible to preserve the anonymity of the undercover officer while simultaneously affording the applicant the opportunity to question him, or cast doubt on his credibility (para 49).
This failure constituted a breach of article 6.
Domestic Position 24.
See paragraph 13 (above): the evidence would not be admissible. 25.
In this particular case it is possible to go a little further: there was no reason to conceal the appearance of the undercover police officer from the applicant who had met him under his assumed identity on a number of occasions.
So a witness anonymity order to preserve the true identity of the officer would nevertheless not prevent him from testifying in court, and therefore cross examined and challenged on the applicants behalf.
It has already been recognised that: In relation to police officers the normal problem is not quite the same as that envisaged by orders for witness anonymity which were considered at the trial of Davis.
These witnesses may well be known to the defendant by a false identity, or are using a false identity.
Knowledge of their true identities can rarely be of any importance to the defendant, who can advance whatever criticisms of the evidence, or indeed the conduct of the officers, while they continue to be known by their false identities (R v Mayers [2009] 1 Cr App R 403, para 31).
Effectively, the approach domestically and in Strasbourg would have been identical.
It is unnecessary to address the admissibility of the telephone tap evidence: it is, to put it no higher, extremely unlikely that this evidence would have been admissible.
Sadi v France (1993) 17 EHRR 251 26.
This case involved identified, absent witnesses.
The applicant was convicted in the Nice Criminal Court and, later, the Court of Appeal and Court of Cassation of the involuntary homicide of a fellow drug user, who died following the administration of drugs provided by the applicant.
During the judicial investigation for that and other drugs related charges, the applicant was remanded in custody; one of the reasons for the detention at the time was the need to arrange witness confrontations.
During his detention, the applicant was identified through a two way mirror by suspects detained by the police on other charges relating to drugs (see para 10) as the person responsible for providing them and the deceased with drugs.
At trial and before the Court of Appeal, the applicant was convicted on the basis of statements made by these witnesses, who were absent from the trial.
There was no positive attempt to conceal their identity nor to discuss the possibility of using other special measures, and on appeal no specific request was made for a confrontation.
Nevertheless, stress was laid on Sadis behalf on the inadequacy of the investigation and the absence of any confrontation between him and his accusers.
The Court of Cassation refused to interfere with the verdicts below. 27.
The Commission noted (at para 44), that the applicant had been accused by his habitual [drug] clients and by the very persons who carried out some of his deliveries.
It also noted that the applicant was found guilty on the sole basis of the statements of his accusers, and continued, the applicant should have been given the opportunity of being confronted with his accusers and thus enabled to put his own questions and comments about their statements.
It concluded that there had been a violation of article 6. 28.
Before the ECtHR, France argued that oral testimony was not required because (i) the file against the applicant was complete and confrontations would have served little purpose; and (ii) of the general difficulty of obtaining testimony from drug addicts, who may be fearful of reprisals arising from their cooperation with the authorities, made organising confrontations a sensitive matter.
However no specific assertion was advanced that any of the witnesses was in fear of the applicant, or indeed his colleagues. 29.
The ECtHR found (at para 44) that the convicting courts referred to no evidence other than the statements obtained prior to trial after the two way mirror identification.
It also noted that the convicting courts themselves highlighted the relationship the witnesses bore to the applicant, namely that they were some of his regular customers and were those responsible for delivering consignments of drugs to other users.
The failure to enable the applicant to examine the witnesses either at the investigative stage or at trial constituted a breach of article 6(1) and (3)(d).
Domestic Position 30.
This evidence would not be admitted.
There was no good reason why the key witnesses could not be called and cross examined.
Many witnesses in this class of case are reluctant to give evidence, but that does not constitute a sufficient basis for allowing hearsay evidence and disabling the defendant from challenging the evidence.
In these cases witnesses are expected to give evidence: witness reluctance does not provide a sufficient basis for their absence, and in any event many of the concerns expressed by witnesses can be addressed by special measures.
The crucial point is that the evidence of these witnesses was in issue, they were closely involved in the same drugs related question, and the circumstances in which their purported identifications took place required close examination.
No countervailing measures offering appropriate protection to the applicants interests were available.
The interests of justice required their oral testimony or the exclusion of their evidence.
Doorson v The Netherlands (1996) 22 EHRR 330 31.
This case concerned a combination of absent, identified, and anonymous witnesses.
The applicant was convicted before the Amsterdam Regional Court and, later, by the Court of Appeal and the Supreme Court of drug trafficking.
The applicant was identified from a photograph as a drug dealer by a number of witnesses who were known to be drug users. 32.
Six of the witnesses who identified the applicant remained anonymous; the identity of a further two was disclosed.
At first instance trial, the defence applied unsuccessfully for the court to summon the anonymous witnesses.
Of the two identified witnesses, only one appeared at trial, initially testifying that he did not recognise the applicant.
The witness subsequently purported to recognise the applicant when presented with the photograph from which he originally recognised him, though later admitted that he could not be sure, and that the reason he identified him to the police was in order to be reunited with his confiscated drugs.
The evidence of a second absent but identified witness was read.
The defence also questioned the failure of the prosecution to disclose details arising from identification of the applicant from photographs.
The applicant was convicted. 33.
The Court of Appeal requested the investigatory judge (who had been a member of the court in an earlier constitution of the Regional Court) to re examine the need for the witnesses continued anonymity and to question them on the applicants behalf.
Two of the six anonymous witnesses attended the hearing before the investigatory judge.
Their anonymity was upheld.
They were questioned extensively by the judge and the applicants lawyer.
They re identified the applicant from photographs put to them.
In view of this questioning, and the fact it was not possible to secure the attendance of the remaining witnesses, the investigatory judge and Court of Appeal refused the applicants request to re summon all anonymous witnesses.
The Court of Appeal and, later, the Supreme Court, upheld the conviction. 34.
The Commission found by a majority there had been no breach of the Convention. 35.
In summary, the conviction was based on (a) the oral evidence of one prosecution witness who deposed at trial, and retracted his statement to the police: (b) two anonymous witnesses who deposed orally and whom the defence could cross examine: (c) one witness who made a statement to the police and then disappeared. 36.
The ECtHR found there was no breach of article 6(1) and (3)(d).
In relation to anonymous witnesses, it articulated the following doctrine, at para 76, it should be recalled that, even when counterbalancing procedures are found to compensate sufficiently the handicaps under which the defence labours, a conviction should not be based either solely or to a decisive extent on anonymous statements 37.
The Court continued that evidence obtained from witnesses, at para 76, under conditions in which the rights of the defence cannot be secured to the extent normally required by the Convention should be treated with extreme care.
The Court is satisfied that this was done in the criminal proceedings leading to the applicants conviction, as is reflected in the express declaration of the Court of Appeal that it had treated [the anonymous testimony] with the necessary caution and circumspection.
The Court held that the testimony from the absent but identified witness caused the applicant no unfairness because it was impossible to trace the witness, and the evidence was corroborated by other evidence before the court (para 80).
In conclusion, therefore, the Court considered, None of the alleged shortcomings considered on their own lead the Court to conclude that the applicant did not receive a fair trial.
Moreover, it cannot find, even if the alleged shortcomings are considered together, that the proceedings as a whole were unfair.
Domestic Position 38.
See paragraph 13: the anonymous witnesses did not give oral testimony at trial.
Their evidence would not be admissible.
The evidence of the witness who retracted his statement would have been judged by the jury.
Given that the statement he made incriminating the applicant was rejected, the reliability of his allegations against the applicant would have been in serious doubt. 39.
In relation to the identified witness who disappeared his written statement might have been admitted under section 116(2)(d) of the 2003 Act if the court had been satisfied all reasonably practicable steps had been taken to find him.
However given that the witness was a known drug user, and the allegation against the applicant was drug trafficking, the absence of any opportunity for the defence to challenge the evidence would probably have led the court to exclude it. 40.
A conviction would be most unlikely: and the case would probably be stopped.
Ferrantelli and Santangelo v Italy (1996) 23 EHRR 288 41.
This matter involved an absent, identified witness.
The applicants, who were aged 17 and 18 at the time of the offence, were convicted of the murder of two police officers following statements provided to the police by a co accused.
The co accused died before trial and before the applicants had the opportunity to examine him.
During police questioning, the applicants admitted involvement in the attacks, but gave conflicting accounts and later claimed ill treatment.
Three trials took place.
The applicants were convicted 16 years following their initial arrest. 42.
The Commission upheld the applicants complaints that there was excessive delay, in breach of article 6(1), and that the reliance on the statements of the deceased co accused was objectionable.
The Commission held that the admission of the deceaseds statements was not per se objectionable, but that, at para 51, given the confession evidence taken with the evidence of the deceased co accused constituted the fundamental grounds for their conviction, there was a breach of article 6(1) of the Convention. 43.
The ECtHR held that the delay amounted to a breach of article 6, in relation to the length of the proceedings, but that the reliance on the statement of the deceased co accused was compatible with the right to a fair trial contained in paragraphs (1) and (3)(d) of article 6.
The reasoning for the latter conclusion appears to be because the Government could not be held responsible for the deceaseds death, and the fact that his evidence was corroborated by the applicants admissions to the police, other circumstantial evidence, and the lack of an alibi for either of them (see para 52).
Domestic Position 44.
Although this is a non violation case, it is worth noting that domestically, a trial taking place 16 years after the initial arrest of the defendants would almost certainly lead to an abuse of process argument, reinforced by the fact of prejudice to the defendants from their inability to cross examine a co accused whose statements to the police were relied on in support of the allegation against them. 45.
For the same reason, given the absence of any opportunity for the defendants to test the accounts of the deceased co accused, although section 116(2)(a) provides that the statement of an identified, absent witness may be admitted as hearsay evidence where the witness is dead, admission in these circumstances would be likely to fail the interests of justice test under the 2003 Act and the fairness test under section 78(1) of the 1984 Act.
In practice therefore the outcome of this case would have coincided with the decision of the Commission rather than the ECtHR itself.
Van Mechelen and others v The Netherlands (1997) 25 EHRR 647 46.
This case involved anonymous absent witnesses.
The applicants were convicted of armed robbery and attempted murder on the basis of anonymous statements from police officers.
The police officers were questioned by the investigatory judge in the shielded presence of the applicants and their lawyers who could hear but not see them.
The officers did not testify at trial. 47.
The Commission held by a majority that there had been no violation of article 6(1) and (3)(d), noting, at para 77, that article 6 does not grant the accused an unlimited right to secure the appearance of witnesses in court and, at para 79, that the applicants were suspected of having committed serious offences of violence. 48.
Although anonymous testimony was received by an investigatory judge, it had been possible to challenge that evidence, (para 82) the Commission concluded that the applicants convictions did not solely rest on the statements by these unidentified witnesses, and continued to outline corroborative evidence, including tapped telephone conversations (para 84). 49.
The ECtHR noted that special considerations apply where witnesses seeking anonymity were members of the police force of the State.
The Court stated at para 60 that it had not been explained to the Courts satisfaction why it was necessary to resort to what it termed such extreme limitations and why less far reaching measures were not considered.
The Court implied that it was not opposed to anonymous police testimony per se but that under the circumstances of the case, it had not been persuaded it was necessary; in the absence of further information, the Court cannot find that the operational needs of the police provide sufficient justification [for anonymity]. 50.
The alleged threat of reprisals arising from testimony had not been assessed properly; anonymity was granted simply on the basis of the seriousness of the crime committed (para 61).
Accordingly, the Court found that the convictions of the applicants were based to a decisive extent on anonymous statements and concluded that the proceedings taken as a whole were not fair (paragraphs 63 and 65), and there was a breach of article 6(1) taken together with article 6(3)(d).
Domestic Position 51.
Before considering whether it would be legally possible to apply for mass police anonymity, it is useful to consider whether such an application would actually be made, and whether those responsible for the application would deem such an application to be reasonable.
In August 2008, the Director of Public Prosecutions issued Guidance on Witness Anonymity1 which states, under the section titled Considering whether to make an application, 1 http://www.cps.gov.uk/publications/directors_guidance/witness_anonymity.html#_08 Prosecutors must also be able to show that any fear expressed by the witness that they, or any other person, would suffer death or injury, or that there would be serious damage to property, if they were identified to the defendant, is reasonable (emphasis added).
In this case it is open to very serious question whether an application for police anonymity would be made at all. 52.
The Criminal Evidence (Witness Anonymity) Act 2008 contains no specific statutory provision relating to the anonymity of police officers: see para 25 (above) for further comment. 53.
In the result, the conditions which would permit consideration to be given to the making of witness anonymity orders in this case were not established.
Even on the basis that the justification for anonymity could be justified, the witnesses would nevertheless have been required to give oral testimony at trial, probably with the protection of special measures for them, which kept open the possibility of cross examination and challenge on behalf of the defendant.
Incidentally, the views of the investigating judge about the credibility of the witnesses would be irrelevant and inadmissible: all decisions on credibility are the exclusive function of the jury on the basis of the evidence before them. 54.
In reality, from the point of view of a trial before the jury, the way in which the evidence in the present case was actually presented that is, critical evidence from anonymous witnesses who were not present at trial would, even if permitted, have resulted in the quashing of any conviction.
In effect, see paragraph 13: the evidence would not be admissible.
AM v Italy (Application No 37019/97), 14 December 1999 55.
The applicant was convicted of sexually assaulting G during a school trip G made to Italy.
On his return to the United States G provided a detailed account of what took place to a US police officer.
His father confirmed in interview that the child had made the complaint.
Gs mother and Gs psychotherapist provided written statements confirming that G had recited to them the allegations against the applicant.
The record of the account given by G and the other statements were used in evidence against the applicant.
This case involved absent but identified witnesses.
The international rogatory letter issued by the authorities in Italy explicitly asked the authorities in the USA to arrange for the witnesses to be questioned without a defence lawyer being present. 56.
The ECtHR concluded, at para 26, in convicting the applicant the domestic courts relied solely on the statements made in the United States before trial and the applicant was at no stage in the proceedings confronted with his accusers 57.
There was a breach of article 6(1) taken together with article 6(3).
Domestic Position 58.
Section 116(2)(c) of the CJA 2003 permits the admission of hearsay evidence where the relevant person is outside the United Kingdom and it is not reasonably practicable to secure his attendance.
Before evidence can be introduced in this way it is necessary to show (a) that all reasonable steps have been taken to secure the presence of the witness; and (b) why those steps have failed.
Moreover, assuming that this hurdle is cleared, it would then be necessary for the prosecution to show why other methods by which the evidence could be given, such as by means of a live link, would be impracticable. 59.
Assuming that none of these steps to enable the jury to see the witness, or to enable the witness to be confronted by the defence could be taken, the starting point is that the statements of the father, mother and psychotherapist all constitute multiple hearsay obtained in circumstances where the investigating authorities expressly sought to arrange for the absence of a defence lawyer.
In the circumstances of this case, that would have been likely to produce a decision under section 78 of the Police and Criminal Evidence Act 1984 excluding the evidence.
But, if such an order were not made on the basis that the defendants lawyer did not press sufficiently for the opportunity to be present, the admission of the evidence would have been questioned as a step inconsistent with the interests of justice and section 78 would also have been engaged in the context of the adverse effect on the fairness of proceedings resulting from the admission of this evidence.
The reality is that (a) the defendant could not defend himself against the allegations and (b) the jury would have no basis for making any assessment about the credibility and reliability of the makers of the statement.
If the judge admitted the evidence he would have had to give the jury such clear directions about the dangers of convicting on the basis of such remote and untested evidence, that either (a) an acquittal would have been inevitable or (b) the Court of Appeal would quash the conviction on the basis, first, that the evidence should never have been admitted and, second, because the consequent conviction was unsafe.
Luc v Italy (2001) 36 EHRR 807 60.
This case involved an absent, but identified, witness.
The applicant was convicted of drugs offences by the Locri Criminal Court and, later, the Court of Appeal and the Court of Cassation.
An acquaintance of the applicant from the drugs world, N, made statements to the police, whilst detained as a suspect himself, which implicated the applicant.
Italian law deemed N to be a person accused in connected proceedings against the applicant and, accordingly, N was permitted to refuse to testify.
Further domestic provisions, triggered by Ns testimonial immunity, allowed the prosecution to read Ns statement to the Court. 61.
Before the ECtHR the Italian Government argued that the domestic provisions highlighted the tension between the right of a co accused to remain silent, the right of the accused to question a witness against him, and the right of the judicial authority not to be deprived of evidence obtained during the investigation.
In its summary of the facts, the ECtHR, at para 14, stated as a result [of the testimonial immunity provisions], the accused was deprived of any opportunity of examining [N] or of having him examined.
It was irrelevant that the statements had been made by a co accused rather than a 62. witness; this illustrates the principle, found in many judgments relating to article 6(3)(d), that the term witness has an autonomous meaning within the Convention system.
N, a co accused, was therefore a witness for these purposes.
Accordingly, the Court was not satisfied that the applicant was given an adequate and proper opportunity to contest the statements on which his conviction was based and there had been a breach of article 6(1) and (3)(d).
Domestic Position 63.
Although described as a co accused, it appears from the judgment that the witness was an accused in a related but separate case.
That said, he was entitled to and would have been warned that he was not obliged to give evidence which might incriminate him in any offence.
Assuming that he elected not to give evidence, any oral statement he made during the police investigation would not have been admissible.
An application could have been made for any written statement, taken in proper form, to be read to the jury.
The evidence would not have been admissible under section 116, but the prosecution might have argued for its admissibility under section 114(1)(d). 64.
In exercising his discretion whether to admit the evidence, the judge would have been alert to the dangers of admitting a statement made by a suspect who had exercised his right not to incriminate himself, and thus avoiding any challenge or cross examination.
That consideration would then bear on issues of the potential unreliability of the maker of the statement, and the difficulties faced by the defendant, unable to meet the allegation head on, and the prejudice which would be likely to be occasioned to him.
All these would provide overwhelming reasons against permitting the statement of the witness to be read.
If nevertheless admitted, the judge would have been required to give the clearest possible warnings against the jury relying on this evidence, but if the jury had convicted, the Court of Appeal could almost certainly question whether (a) the decision to admit the evidence was correct: (b) whether the warnings to the jury were in sufficiently clear terms: and (c) whether the conviction was nevertheless a safe one.
In short, a conviction might in theory have been open: in reality there would have been none, and the prosecution would almost certainly have failed to persuade the court to admit the evidence in the first place, and any conviction would be regarded as unsafe.
PS v Germany (2001) 36 EHRR 1139 65.
This case involved an absent, identified witness.
The applicant was convicted of a sexual offence against an 8 year old girl, section The applicant was her private music teacher.
Her father reported to the police that the applicant had abused her during a music lesson.
S and her mother were questioned at the police station.
S confirmed her fathers allegation.
Her mother stated that S had been very disturbed after her music lesson and that she had later confided in her mother, presumably that she had been assaulted.
At trial a request on the applicants behalf for a psychological expert opinion regarding the credibility of Ss complaints was rejected.
The court believed that it was not reasonable to hear the evidence from the complainant herself, on the basis that her recollection had been repressed and if she were reminded of it, or required to remember it, her personal development would be seriously impaired. 66.
The Regional Court dismissed an appeal against conviction.
The applicants guilt was established on the basis of the statements made by the complainants mother and the police officer as well as a psychological expert opinion on Ss credibility which was prepared for the appeal process.
There was medical evidence before the Regional Court confirming the likely deterioration of Ss health if she gave evidence of the assault. 67.
Following the alleged sexual assault, S and her mother were questioned at a police station.
The parents of S provided statements to the police as to her condition and state immediately following the assault, but did not allow her to testify at trial on account of the distress that it would cause her to recount the events in court.
The trial court refused the applicants request to appoint an expert to determine the credibility of Ss statements, holding that its own professional experience in evaluating statements made by children was sufficient.
The trial court also noted that if S were to be examined as a witness, rather than contributing to a further clarification of the facts, it would, by contrast, seriously impair her personal development. 68.
The ECtHR concluded that a conviction based on this evidence involved such limitations on the rights of the defence that the trial was unfair.
No counterbalancing measures could be taken to address the limitations on the rights of the defence, and the decision of the District Court to refuse to hear the oral testimony of the child or to appoint the expert requested by the defence were rather vague and speculative.
There was, accordingly, a violation of article 6(1) and (3)(d).
Domestic Position 69.
This conviction of a sexual offence against a child was based on the hearsay evidence of her mother, a police officer, and a psychological expert, who all reported what the child had said.
There was no evidence to suggest that the child could not have been called, subject to special protective measures, as a prosecution witness.
Therefore, apart from the mothers evidence of her daughters condition on her return home after the music lesson, none of the material on which this conviction was based would be admitted.
The childs accounts to the police and her mother and the expert were hearsay.
The evidence of the expert about the childs credibility would also have been inadmissible; in effect such evidence would usurp the responsibility of the jury.
Visser v The Netherlands (Application No 26668/95), 14 February 2002 70.
This case involved a conviction for kidnapping, based to a decisive extent on the evidence of an anonymous witness who was not called to give evidence on the basis of his/her fear of reprisals from the applicants co accused.
Six years after the offence was committed, as the case progressed through the system, the anonymous witness was questioned before an investigatory judge, and his counsel was given a limited opportunity to provide questions for the judge to put to the witness. 71.
The ECtHR found, para 47, that the investigatory judge did not show how he assessed the reasonableness of the personal fear of the witness either as this had existed when the witness was heard by police or when s/he was heard by the investigating judge nearly six years later.
Moreover an examination into the seriousness and well foundedness of the reasons for the anonymity of the witness when it decided to use the statement before the investigating judge in evidence was not carried out. 72.
The ECtHR did not appear to object to the use of anonymous witnesses per se; rather it was the case that, at para 48, In these circumstances the Court is not satisfied that the interest of the witness in remaining anonymous could justify limiting the rights of the defence to the extent that they were limited (emphasis added).
In short, for this evidence to be admitted the judge would have had to make a Domestic Position 73.
See paragraph 13: the evidence of any absent anonymous witness would not be admissible.
The evidence of a witness who gives oral testimony at trial may be given anonymously.
Before such evidence can be admitted at all, a robust analysis of the need for his or her anonymity is required by the Criminal Evidence (Witness Anonymity) Act 2008.
The prosecutor must, unless the court directs otherwise, inform the court of the identity of the witness (section 3(2)).
The court must be satisfied that the measures proposed are necessary: that if adopted they would be consistent with the defendant receiving a fair trial: and that without an anonymity order, the witness would not testify (section 4).
The court must examine the credibility of the witness, and whether and if so how it could be properly tested without disclosure of his or her identity (section 5).
Thereafter, even with the use of special measures, such as screening, the defence would be enabled to challenge the evidence. 74. reasoned finding that the necessary conditions were satisfied. 75.
It is highly unlikely that a domestic court would find that the necessary conditions were satisfied, but in any event in accordance with the reasoning of the ECtHR, if a proper examination of the facts or a reasoned decision about whether to admit this evidence were lacking, the conviction would be unsafe.
Birutis and others v Lithuania (Application Nos 47698/99 and 48115/99), 28 March 2002 76.
This case involves the use of anonymous, absent witnesses resulting in the conviction of three applicants, A, B, and C, for taking part in a prison riot.
The evidence against A and B included testimony given by other co accused, circumstantial evidence, in addition to the statements of a variety of anonymous witnesses, believed to be fellow inmates at the prison.
The Regional Court referred to the statements of 17 and 19 anonymous witnesses when convicting A and B respectively.
When convicting C, the Regional Court referred solely to the statements by six anonymous witnesses recorded by the prosecution during the pre trial investigation. 77.
The ECtHR noted that anonymous evidence may be appropriate in some cases, especially in the instant cases, where prisoners may fear testifying against fellow detainees.
However, it noted, at para 30, that this circumstance, as such, could not justify any choice of means by the authorities in handling the anonymous evidence.
At para 31 the ECtHR noted that applicant C was convicted solely on the basis of anonymous evidence; although he had been permitted to question three other witnesses in open court during the trial, the domestic courts did not base his conviction on any evidence given by those witnesses. 78.
The Court noted that the convictions of applicants A and B were not based solely, or to a decisive extent, on the anonymous evidence but that because there were a high number of anonymous statements, the trial court effectively demonstrated that the statements in question were among the grounds upon which the first and second applicants conviction was based (para 32).
As such, the Court looked for counterbalancing measures to offset the handicap suffered by the defence; it did not find adequate measures. 79.
The Court noted at paragraphs 33 and 34 that A and B had alleged that there were inconsistencies in the anonymous statements.
There was a basis to suspect the authorities had collaborated with the makers of the statements to implicate the applicants; this was evidenced by the fact that the witnesses who did testify at trial sought to retract their original statements implicating the applicants, claiming they had been made under pressure from the prison authorities.
In fact, the trial courts held that their original testimony was more reliable, and discarded the revised testimony.
Despite these genuine concerns as to the credibility of the anonymous witnesses, A and B were not permitted to question them.
The domestic courts did not avail themselves of their statutory power to question the witnesses.
In addition, there was no scrutiny by the courts of the decision to grant anonymity.
As such, the handicaps on the first and second applicants defence rights were not counterbalanced by the procedures followed by the domestic judicial authorities There was a breach of article 6.
Domestic Position 80.
The prosecution case against some defendants depended exclusively on anonymous hearsay evidence, and against others, largely of anonymous hearsay, that is anonymous absent witnesses.
See paragraph 13: the evidence would not be admissible. 81.
Assuming that any individual witness were available to be called at trial, an application for his anonymity would have required the process identified in paragraph 73 (above) to be engaged.
It was essential that the defendant should have the opportunity of challenging this evidence, not least because, by definition, they would almost certainly (as prisoners, unless individuals of good previous character on remand) have had previous criminal convictions, which the defendant might have wished to explore before the jury.
Assuming that this case had proceeded before the jury on the basis of the process before the regional court in Lithuania, even if the judge had admitted any of this evidence, he would have been required to give the jury a most solemn warning about the dangers of relying on evidence which the defendant could not test, and assuming that the jury disregarded his warnings, the overwhelming likelihood is that without any further evidence (and as far as we can see there was none which the jury could have relied on) the convictions would be unsafe.
Sadak and others v Turkey (2003) 36 EHRR 431 82.
The applicants were former Turkish parliamentarians convicted of membership of an armed gang, on account of their involvement in the Peoples Democratic Party, which the domestic courts held to be separatist activity linked to a paramilitary campaign for the creation of a separate Kurdish state (para 17).
Legal argument took place as to the classification of their offences under terrorism or treason provisions; different charges were brought in the course of the proceedings.
The applicants were acquitted of treason charges, which attracted the death penalty. 83.
At trial, the prosecution had refused to call some witnesses on account of their fear of sectarian violence; others were not requested by the applicants at trial.
The case therefore involved known, absent witnesses.
Argument before the ECtHR addressed, inter alia, whether the absence of those witnesses breached article 6(3)(d). 84.
The ECtHR noted that in some circumstances, the judicial authorities may find it necessary to use statements obtained at the preparatory investigation stageprovided the accused has had an adequate and sufficient opportunity to challenge the statements at the time they were made or at a later date However, the Court stated that the domestic court gave a determining weight to certain statements made by witnesses which the applicants were not able to examine or challenge.
Domestic Position 85.
Assuming that it was established that the witnesses were fearful of giving evidence within the context of section 116(2)(e) of the 2003 Act, the additional admissibility criteria in section 116(4) would have to be addressed.
The application to adduce this evidence would fail, first, because there had been no adequate investigation into the reasons why the witnesses attendance at court to give oral testimony, if necessary using special measures available for fearful witnesses, was justified, and, second, because the admission of this evidence, given the difficulty faced by the defendant seeking to challenge it, would be likely to produce an unfair trial.
Krasniki v Czech Republic (Application No 51277/99), 28 February 2006 86.
This case concerns anonymous witnesses, one present and one absent from trial.
The applicant was convicted of drugs offences.
During the pre trial judicial investigation, two anonymous witnesses, both of whom were drug users, were questioned.
The applicants lawyer was permitted to ask questions relating to, amongst other matters, why the witnesses sought anonymity.
In reply they stated they were in fear of reprisals for speaking to the authorities, and one of them owed money for drugs.
One of the anonymous witnesses testified at trial, but, because the other could not be located, her testimony was read to the court.
The testimony alleged that drugs had been purchased from the applicant. 87.
Before the ECtHR, the applicant argued that the need for anonymity had not been tested properly and the authorities should have made greater efforts to assess the witnesses fear of reprisals.
The applicant also challenged the prosecutions failure to disclose the criminal record of one of the anonymous witnesses who was, it emerged, being held in the same prison as the applicant.
He also highlighted discrepancies between some aspects of the testimony of the witnesses that should have led to the prosecution assessing the witnesses credibility in further depth. 88.
The Court held that there had been a breach of article 6(1) and (3)(d), and noted, at para 81, that the authorities had attempted to approach the anonymous testimony with some caution, but that it was not clear how the investigating officer and the trial judge assessed the reasonableness of the personal fear of the witnesses in relation to the applicant.
The conclusion at para 83 was that, the Court is not satisfied that the interest of the witnesses in remaining anonymous could justify limiting the rights of the applicant to such an extent Domestic Position 89.
See paragraph 13: the evidence of an anonymous absent witness would not be admissible. 90.
In any event, so far as the witness who gave oral evidence, but anonymously, no proper foundation for his anonymity was established.
The strict conditions in the 2008 Act were not met: his evidence, too, would therefore not have been admitted.
Taxquet v Belgium (Application No 926/05), 13 January 2009 91.
This case concerns an absent, anonymous witness.
The applicant was convicted of being a principal party to the 1991 murder and attempted murder of a Belgian government minister and his partner respectively.
An anonymous informant, whose identity was known only to the police, provided detailed information implicating several of the 8 people who would be the co defendants in the case.
Only one aspect of the information implicated the applicant. 92.
At trial before the Assize Court, the applicant unsuccessfully applied for an investigating judge to question the original anonymous witness.
In refusing the request, the Assize Court held that the information had no probative value as such.
In the present case it simply constituted information capable of giving fresh impetus or a new slant to the investigation and leading to the independent gathering of lawful evidence.
The Assize Court also stated that the court was unaware of the identity of the witness in any event and regardless of the grounds [for maintaining anonymity] relied upon by the investigating authorities it does not appear useful for establishing the truth and would delay the proceedings needlessly (para 12). 93.
Before the Chamber, the applicant complained that his article 6 rights had been breached in relation to: (i) the inadequate reasoning given by the jury; and (ii) the reliance on anonymous witnesses.
It appears that this is the first reported instance at Strasbourg of the sole or decisive test being linked to the extent to which the jury are obliged to give reasons for their conclusions.
In holding that the applicants article 6 rights were breached, the Chamber appears to have considered the issues being interrelated.
It may be helpful to quote the summary of the applicants position in full, taken from para 55, testimony The applicant contended that the question of the anonymous witness took on particular significance in his case as it was linked to the preceding complaint concerning the lack of reasoning in the Assize Courts judgment.
In order to be able to find that a witness statement had played a decisive role in a persons conviction, it was necessary to know the reasons for the decision, but in the present case none had been given.
If the reasoning had been known, it might have been possible to identify the information received anonymously as having been a decisive factor, or the sole factor, in establishing his guilt. 94.
The ECtHR did not rule out the use of anonymous statements per se, rather, it stipulated the process by which the informants anonymity should be granted.
No such process was followed in the instant case.
At para 64 the Court stated, anonymous statements should be examined by a judge who knows of the identity of the witness, has verified the reasons for granting anonymity and is able to express an opinion on the witnesss credibility in order to establish whether there is any animosity between the witness and the accused. (Emphasis added).
In relation to whether the evidence of the anonymous informant was sole or 95. decisive, the Court stated that the Government had not produced anything to show that the finding of the applicants guilt was based on other real evidence, on inferences drawn from the examination of other witnesses or on other undisputed facts (para 66).
It concluded that the applicants misgivings in relation to the use of the anonymous witness were justified, and accordingly, there was a violation of article 6(1) and (3)(d) of the Convention.
Domestic Position 96.
See paragraph 13: the statement of an absent anonymous witness would not be admissible.
Even if present, anonymity is only permitted under strict conditions and subject to countervailing safeguards for the defendant.
In any event, on the basis of this evidence, this case would not have proceeded to trial.
Any conviction would have been unsafe.
LORD BROWN
add a few paragraphs of my own.
I am in full agreement with the judgment of Lord Phillips.
I wish, however, to
These appeals are of the utmost importance.
If the Strasbourg case law does indeed establish an inflexible, unqualified principle that any conviction based solely or decisively on evidence adduced from an absent or anonymous witness is necessarily to be condemned as unfair and set aside as contrary to articles 6(1) and 6(3)(d) of the Convention, then the whole domestic scheme for ensuring fair trials the scheme now enshrined (as to hearsay evidence) in the Criminal Justice Act 2003 and (as to anonymous evidence) in the Criminal Evidence (Witness Anonymity) Act 2008 cannot stand and many guilty defendants will have to go free.
It is difficult to suppose that the Strasbourg Court has in fact laid down so absolute a principle as this and, indeed, one exception to it, at least, appears to be acknowledged: the fairness of admitting hearsay evidence from a witness absent as a result of the defendants own intimidation.
But if this is recognised (and, as others have pointed out, this exception itself involves difficulties of proof) why not recognise other exceptions too provided only and always that the procedures honour the ultimate imperative of a fair trial? That, after all, is the overarching principle for which the great bulk of Strasbourg jurisprudence on article 6 stands.
Given, moreover, the recognition of even one exception, what justification can there be for an otherwise absolute principle? It cannot then be said to be mandated simply by the language of article 6(3)(d).
Nor, indeed, do I understand the Strasbourg Court ever to have suggested this.
Nor can Strasbourg readily be supposed to have intended the sort of practical
problems and anomalies identified by the Court of Appeal (paragraphs 61 63 and 68 71) that must inevitably flow from any absolute principle of the kind here contended for.
Obviously, the more crucial the evidence is to the proof of guilt, the more scrupulous must the Court be to ensure that it can be fairly adduced and is likely to be reliable.
In this connection there can be no harm in using the concept of sole or decisive so long as it is used broadly as it is in the 2008 Act with regard to anonymous witnesses and, indeed, in the control order context where it relates rather to the allegations made against the suspect than the evidence adduced in support.
Understood and applied inflexibly, however, the concept would involve insoluble problems of detailed interpretation and application.
The better view may therefore be that no such absolute principle emerges from the Strasbourg Courts judgment in Al Khawaja and Tahery v United Kingdom (2009) 49 EHRR 1.
In this event the stuffing falls out of these appeals and they must fail: the domestic legislation on hearsay evidence was faithfully followed in the courts below; there was nothing unfair about admitting the relevant statements and the convictions can be seen to be perfectly safe.
I recognise, however, the distinct possibility that the Strasbourg Court in Al Khawaja really did intend to lay down an absolute principle along the lines here contended for and it may be, indeed, that the outcome of that very case itself tends to support such a view.
In this event the question then arises: what should this Court do? Should we accept and apply this absolute principle with the inevitable result that these appeals must be allowed or should we instead decline to follow the Strasbourg decision in Al Khawaja and in effect join with the United Kingdom Government in inviting the Grand Chamber to overrule it (the Grand Chamber panel having adjourned the UKs request for such a reference until the pronouncement of our decision on these appeals)?
I have not the least doubt that the latter course is to be preferred.
This case seems to me a very far cry from Secretary of State for the Home Department v AF (No 3) [2009] 3 WLR 74 where the House of Lords was faced with a definitive judgment of the Grand Chamber in A v United Kingdom (2009) 49 EHRR 625 on the very point at issue and where each member of the Committee felt no alternative but to apply it.
Lord Rodger put it most succinctly (at para 98): Argentoratum locutum, iudicium finitum Strasbourg has spoken, the case is closed.
Moreover not merely was the Strasbourg ruling in A clear and authoritative but,
whatever view individual members of the Committee may have taken about it (and it is evident that, whilst many agreed with it, others did not), it expressed an entirely coherent view.
The contrasts with the present situation are striking.
In the first place, we are faced here not with a Grand Chamber decision but rather with the possible need for one.
Moreover, not merely is the Courts ruling in Al Khawaja not as authoritative as a Grand Chamber decision, but it is altogether less clear than was the decision in A. Indeed, as I have already suggested, it is far from certain that Al Khawaja stands for any absolute principle of the sort here contended for.
I would reject the appellants argument that not merely is the Courts judgment in Al Khawaja clear but, unlike the position in A, it is supported by a whole stream of consistent earlier Strasbourg case law and consequently more, rather than less, authoritative than the ruling in A.
For the reasons fully elaborated by the Court of Appeal and now by Lord Phillips, I cannot accept that the earlier cases support, still less compel, an absolute principle such as Al Khawaja is now said to stand for.
Accordingly, in agreement both with Lord Phillips and with the judgment of the Court of Appeal, I too would dismiss these appeals and express the hope that the Grand Chamber will clarify the law upon hearsay evidence and recognise that our domestic legislation is compatible with article 6.
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The appellants were convicted of serious criminal offences after trials in which the victims of the offences did not give evidence: in one case because he had since died and in the other because she had run away in fear when the trial was about to commence.
In each case a statement from the victim was admitted pursuant to s 116 Criminal Justice Act 2003 and placed before the jury.
The appellants complained that their convictions were based solely or to a decisive extent on the statement of a witness whom they had had no chance to cross examine.
This had infringed their right to a fair trial guaranteed by articles 6(1) and 6(3) of the European Convention on Human Rights which provide: 6(1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law (3) Everyone charged with a criminal offence has the following minimum rights: (d) To examine or have examined witnesses against him and to obtain the attendance and examination of The Court of Appeal had dismissed the appellants appeals against conviction, holding that the test of fairness laid down by the European Court of Human Rights in Al Khawaja and Tahery v United Kingdom (2009) 49 EHRR 1 was not determinative of the results in these appeals.
The United Kingdom had requested that this decision be referred to the Grand Chamber of the Strasbourg Court.
On 5 June 2009 the Panel of the Grand Chamber adjourned consideration of that request pending the judgement of the Supreme Court in this case.
The Supreme Court unanimously dismissed the appeal.
The judgment of the court was given by Lord Phillips, President. witnesses on his behalf under the same conditions as witnesses against him.
The questions before the court were (i) whether the regime enacted by Parliament in relation to the admission of the evidence of an absent witness at a criminal trial will result in an unfair trial and, if not (ii) whether the case law of the European Court on Human Rights nonetheless requires the court to apply that regime in a manner contrary to the intention of Parliament.
The requirement to take into account any judgment of the European Court of Human Rights found in s 2 Human Rights Act 1998 would normally result in the Supreme Court applying principles that were clearly established by the Strasbourg court.
There would however be rare occasions where the court had concerns as to whether a decision of the Strasbourg court sufficiently appreciated or accommodated particular aspects of the UK trial process.
In such circumstances it was open to the Supreme Court to decline to follow the Strasbourg decision, giving reasons for adopting this course.
This was likely to give the Strasbourg Court the opportunity to reconsider the particular aspect of the decision that was in issue, so that there took place what might prove to be a valuable dialogue between the courts [para 11].
The conclusions of the Court of Appeal were correct and the judgement of the Supreme Court should be read as complementary to that of the Court of Appeal and not as a substitute for it [para 13].
The Supreme Court held that the appellants trials were fair notwithstanding the decision in Al Khawaja for the following reasons: (i) The common law hearsay rule addressed the aspect of a fair trial covered by article 6(3)(d).
Parliament had enacted exceptions to the hearsay rule in a regime which contained safeguards that rendered the sole or decisive rule unnecessary. (ii) The Strasbourg Court had recognised that exceptions to article 6(3)(d) were required in the interests of justice but the jurisprudence on the exceptions lacked clarity and had introduced a sole or decisive rule without discussion of the principle underlying it or full consideration of whether it was justified to impose it equally on common law and continental jurisdictions (iii) The sole or decisive rule would create severe practical difficulties if applied to English criminal procedure.
In almost all cases English law would reach the same result without it.
Al Khawaja did not establish that it was necessary to apply the rule in this jurisdiction.
Judgments
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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.
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The issue is whether the ban on the entry for settlement of foreign spouses or civil partners unless both parties are aged 21 or over, contained in paragraph 277 of the Immigration Rules, was a lawful way of deterring or preventing forced marriages.
Paragraph 277 of the Immigration Rules [Paragraph 277] was amended with effect from 27 November 2008 to raise the minimum age for a person either to be granted a visa for the purposes of settling in the United Kingdom as a spouse or to sponsor another for the purposes of obtaining such a visa from 18 to 21.
The purpose of the amendment was not to control immigration but to deter forced marriages.
A forced marriage is a marriage into which at least one party enters without her or his free and full consent through force or duress, including coercion by threats or other psychological means.
Mr Quila, a Chilean national, entered into a fully consensual marriage with Ms Jeffery, a British citizen.
Mr Aguilar Quila applied for a marriage visa before the amendment took effect, but his application was refused as his wife was only 17 and a sponsoring spouse had to be 18.
By the time that Ms Jeffrey had turned 18 the amendment was in force and the Home Office refused to waive it.
Consequently, Mr Quila and his wife were forced to leave the UK initially to live in Chile (his wife having had to relinquish a place to study languages at Royal Holloway, University of London) and subsequently to live in Ireland.
Bibi (as she invited the Court to describe her) is a Pakistani national who applied to join her husband, Mohammed, a British citizen, in the UK.
Bibi and Mohammed had an arranged marriage in Pakistan in October 2008, to which each of them freely consented.
Their application was refused as both parties were under 21.
The Respondents claims for judicial review of the decisions were both rejected in the High Court.
The Respondents successfully appealed to the Court of Appeal, which declared that the application of Paragraph 277 so as to refuse them marriage visas was in breach of their rights under Article 8 of the European Convention on Human Rights and Fundamental Freedoms 1950 [the ECHR].
The Secretary of State has appealed to the Supreme Court.
The Supreme Court, by a 4 1 majority, dismisses the Secretary of States appeal on the grounds that the refusal to grant marriage visas to the Respondents was an infringement of their rights under Article 8 ECHR.
Lord Wilson gives the leading judgment; Lady Hale gives a concurring judgment.
Lord Phillips and Lord Clarke agree with Lord Wilson and Lady Hale.
Lord Brown gives a dissenting judgment.
Article 8 ECHR was engaged [43; 72].
Applying R (Razgar) v Secretary of State for the Home Department [2004] UKHL 27, the relevant question was whether there had been 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 consequences of sufficient gravity to engage the operation of the article [30].
Unconstrained by authority,
Lord Wilson would have considered it a colossal interference to require for up to three years either that the spouses should live separately or that a British citizen should leave the UK for up to three years [32].
The ECtHR in Abdulaziz v United Kingdom (1985) 7 EHRR 471 has, however, held that there was no lack of respect for family life in denying entry to foreign spouses.
There was no positive obligation on the State to respect a couples choice of country of matrimonial residence [35 36].
Lord Wilson holds that Abdulaziz should not be followed in this respect; there was dissent at the time and no clear and consistent subsequent jurisprudence from the ECtHR as four more recent decisions [38 41] were inconsistent with the decision [43].
The ECtHR has since recognized that the distinction between positive and negative obligations should not generate different outcomes [43].
The Secretary of State has failed to establish that the interference with the Respondents rights to a family life was justified under Article 8(2) ECHR.
Paragraph 277 has a legitimate aim, namely the protection of the rights and freedoms of those who might be forced into marriage [45] and is rationally connected to that objective, but its efficacy is highly debatable [58].
A number of questions remain unanswered including how prevalent the motive of applying for UK citizenship is in the genesis of forced marriages; whether the forced marriage would have occurred in any event and thus the rule increase the control of victims abroad and whether the amendment might precipitate a swift pregnancy in order to found an application for a discretionary grant of a visa [49].
The Secretary of State has failed to adduce any robust evidence that the amendment would have any substantial deterrent effect [50; 75].
By contrast, the number of forced marriages amongst those refused a marriage visa had not been quantified [53].
The only conclusion that could be drawn was that the amendment would keep a very substantial number of bona fide young couples apart or forced to live outside the UK [54], vastly exceeding the number of forced marriages that would be deterred [58; 74].
The measure was similar to the blanket prohibition on persons subject to immigration control marrying without the Secretary of States written permission found to be unlawful in R (Baiai) v Secretary of State for the Home Department [2008] UKHL 53 [57, 78 79].
The Secretary of State has failed to exercise her judgement on this imbalance and thus failed to establish both that the measure is no more than is necessary to accomplish the objective of deterring forced marriage and that it strikes a fair balance between the rights of parties to unforced marriages and the interests of the community in preventing forced marriage.
On any view, the measure was a sledgehammer but the Secretary of State has not attempted to identify the size of the nut [58].
Lady Hale holds that the debate on Abdulaziz is something of a red herring as the Secretary of State could not simultaneously state that the measure was not for the purpose of controlling immigration and rely upon jurisprudence wholly premised on the States right to control immigration [72].
She further holds that the restriction was automatic and indiscriminate [74]; failed to detect forced marriages and imposed a delay on cohabitation in the country of choice, which was a deterrent that could impair the essence of the right to marry under Article 12 ECHR [78 79].
Whilst the judgment is essentially individual, it is hard to conceive that the Secretary of State could avoid infringement of Article 8 ECHR when applying Paragraph 277 to an unforced marriage [59; 80].
Lord Brown, dissenting, holds the extent of forced marriage is impossible to quantify so the deterrent effect of Paragraph 277 could never be satisfactorily determined [87].
The judgement of how to balance the enormity of suffering within forced marriages with the disruption to innocent couples was one for elected politicians, not for judges [91].
The measure was not an automatic indiscriminate restriction [92]; would be disapplied in exceptional circumstances [93] and similar rules applied in other European countries [85].
To disapply the rule would exceed ECtHR jurisprudence and in such a sensitive context, government policy should not be frustrated except in the clearest cases [97].
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This is an interlocutory appeal in a criminal case which concerns the correct construction of section 92(1) of the Trade Marks Act 1994 (the 1994 Act).
The appellants are a limited company and two individuals connected with its management.
They are indicted for, inter alia, offences of unauthorised use of trade marks, contrary to section 92(1)(b) and (c) of the 1994 Act.
No trial has yet been held, and the Crown case remains at this point a matter merely of allegation, which may or may not be proved.
At a preparatory hearing in the Crown Court, they advanced a submission that part of what was alleged was, on any view, outside the terms of section 92 and no offence.
Both the trial judge and the Court of Appeal (Criminal Division) rejected that submission.
They renew it in this court.
What is alleged is that the defendants are engaged in the bulk importation and subsequent sale of goods such as clothes and shoes.
The goods, or many of them, are said to bear what appear to be the trade marks of well known brands, such as Ralph Lauren, Adidas, Under Armour, Jack Wills, Fred Perry or similar.
The goods were manufactured abroad, in countries outside the EU.
Some of the goods in the possession of the defendants are said to have been manufactured by people who were neither the trade mark proprietor, nor authorised by the proprietor to make them.
This first category of goods, the appellants describe as counterfeits in the true sense.
A significant portion of the remainder of the goods are, however, ones where there had originally been an authorisation of manufacture by the registered trade mark holder, whether by subcontract, licence or otherwise, but whose sale had not been authorised by him.
They were thus sold, bearing the trade mark, without the consent of the owner of the mark.
The causes of the non authorisation of sale might be, it is said, various.
Some garments might deliberately have been made by the factories in excess of the numbers permitted by the trade mark owner, so that the balance could be sold for their own benefit.
Some might have been made in excess of the order without that original ulterior intention (indeed perhaps as precautionary spare capacity planned and approved by the trade mark owner), but then have been put on the market without his consent.
Some might have been made under a permission which was cancelled by the trade mark owner; that in turn might include cases where the trade mark owner was dissatisfied with the quality and not prepared to have the goods put on the market as if their own, but cancellation might not be limited to that cause.
Those are not exhaustive of the possibilities.
These latter various types of goods are described by the appellants as goods appearing on the grey market.
It is common ground that neither the indictment nor the way the Crown puts its case distinguishes between these various different provenances.
That led to submissions that the indictment would turn out either to be bad for duplicity or to be misleading, and at risk of producing verdicts which it was difficult to interpret.
Thus was the point now at issue identified.
In short, it is common ground that: (i) before there can be a criminal offence of unauthorised use of a trade mark there must be an infringement of that mark which would be unlawful as a matter of civil law; see R v Johnstone [2003] UKHL 28; [2003] 1 WLR 1736; and (ii) the sale, or the possession in the course of trade, of goods of any of the various provenances set out in para 5 above, would amount to an infringement of trade marks, giving rise to civil liability.
But the appellants case is that whilst any of the various provenances set out would involve civil liability, it is only in the case of what they describe as true counterfeits that there is any criminal offence.
They say that goods which were originally manufactured with the permission of the trade mark proprietor, but which are ones where he has not authorised the sale, are not true counterfeits and are not within the statute.
Section 92(1) does not apply, they contend, to goods put on the grey market.
The resolution of this contention depends on the true construction of section 92(1) of the 1994 Act.
It says: 92. (1) A person commits an offence who with a view to gain for himself or another, or with intent to cause loss to another, and without the consent of the proprietor (a) applies to goods or their packaging a sign identical to, or likely to be mistaken for, a registered trade mark, or (b) sells or lets for hire, offers or exposes for sale or hire or distributes goods which bear, or the packaging of which bears, such a sign, or (c) has in his possession, custody or control in the course of a business any such goods with a view to the doing of anything, by himself or another, which would be an offence under paragraph (b).
Subsection 92(5) adds a reverse onus statutory defence: (5) It is a defence for a person charged with an offence under this section to show that he believed on reasonable grounds that the use of the sign in the manner in which it was used, or was to be used, was not an infringement of the registered trade mark.
The appellants contention focuses on the use of the expression such a sign in subsection (1)(b).
That refers back, they say, to subsection (1)(a).
And by referring back to (1)(a), they say, it means that (b) applies only to goods where the relevant sign (ie trade mark) has been applied without the consent of the proprietor.
Any goods in the grey market category have had the trade mark originally applied with the consent of the proprietor.
It is only the sale which the proprietor has not authorised.
Therefore, they say, those goods are not ones to which paragraph (a) of the subsection could apply.
It follows, they contend, that they are not, when it comes to paragraph (b), goods which bear such a sign.
It may readily be agreed that the expression such a sign in section 92(1)(b) refers back to the sign described in the immediately preceding paragraph (a).
The difficulty comes when one is asked to read such a sign as incorporating the words without the consent of the proprietor which appear in the first few lines of the section before (a), and also the requirement that the sign has been applied to the goods (without such consent), which is the central component of the offence under (a).
This is simply not a possible construction of section 92(1).
There is no difficulty, on the ordinary reading of paragraphs (a) and (b), in seeing what the reference back to such a sign in (b) imports from (a).
Such a sign in (b) plainly means a sign such as is described in (a).
The sign described in (a) is a sign which is identical to, or likely to be mistaken for, a registered trade mark.
Signs (or trade marks) having any of the provenances described in para 5 above are squarely within this description.
So called grey market goods are caught by the expression.
The offences set out in paragraphs (a), (b) and (c) of section 92 are, as a matter of plain reading, not cumulative, but separate.
It is not necessary that one has been committed (by someone) before one can say that the next in line has been.
The mental element of a view to gain or the intent to cause loss is applicable to all three.
So is the element that the use made of the sign is without the consent of its proprietor.
Paragraph (a) then makes it an offence to apply such a mark, without consent and with the relevant mental element.
Paragraph (b) makes it an offence to sell (etc) goods with such a mark, without the consent of the proprietor and with the necessary mental element.
Paragraph (c) does the same for the preparatory offence of possession in the course of business with a view to behaviour which would be an offence under (b), again without the consent of the proprietor and with the relevant mental element.
Subparagraph (c) thus involves anticipation (but not necessarily the commission) of an offence under (b).
Of course, a person may commit all three offences, or different people may commit all three between them.
But that is not necessary.
Each stands alone.
The appellants reading of paragraph (b) is, by contrast, strained and unnatural.
It does not simply reach back to (a) but to the general words of the section which precede it.
It requires one to read sign in (a), which is incorporated into (b), as which bears a sign, so applied, or at least as such a sign, so applied.
This being so, there is no ambiguity or obscurity in the language such as would justify the court, pursuant to Pepper v Hart [1993] AC 593, in investigating the contents of Parliamentary debate at the time of the passage of the Bill which became the 1994 Act.
Nor can it be suggested that the ordinary (or literal) reading of the Act gives rise to absurdity.
It should be recorded, moreover, that the appellants realistically did not contend that there had been the kind of clear ministerial statement which amounted to a definitive identification of what the Bill was intended to achieve.
The most that is contended for is that the passage of the Bill was marked by several references to the desirability of punishing counterfeiting.
No doubt it was.
But there is not suggested to be any point at which Parliament, or any individual speaker, confronted the suggested difference between fake goods (which the appellants here describe as true counterfeits) and grey market goods.
Still less is there any point at which it can be suggested that Parliament plainly confined itself to criminalising fake goods and abjured the criminalising of grey market goods.
In support of their contention that such a distinction was plainly intended, the appellants referred to observations made by Lord Nicholls and Lord Walker in R v Johnstone upon the differences between counterfeit goods, pirated goods, and bootlegged goods.
Those observations arose, however, in the context of the case in which they were spoken.
The defendant was charged with offences against section 92(1)(c).
The offences were said to have arisen out of his possession for sale of compilation compact discs comprising songs which had covertly been recorded at concerts given by well known artistes.
The compact discs referred to the artistes by name, track by track, and the artiste had in each case registered his name as a trade mark.
The issue was whether the use of the name was, in the particular circumstances, one which might be taken by the buying public as an indication of authorised origin of the disc, as distinct from identifying the singer.
That was a question of fact, but unless it was demonstrated that the use of the name would be taken as an indication of origin, there would be no civil liability for trade mark infringement, and the decision of the House was that in that event there could be no criminal liability either.
It was in that context that Lord Nicholls referred at paragraph 1 to counterfeit goods as cheap imitations of the authentic article; that was said to distinguish that case from pirated music, which is music marketed without any trade mark, although recorded from a trade marked disc, and from bootlegged music, which is what Mr Johnstone had.
Likewise, Lord Walker, at para 59, referred to counterfeiting as an expression generally used to include unauthorised sale, under a well known trade mark, of goods not made or authorised by the proprietor.
Neither of their Lordships was addressing what is here said to be the critical difference between fake goods and unauthorised goods on the grey market.
Their observations came, moreover, years after the passage of the 1994 Act, and could not have been in mind at the time of its passing.
The appellants are correct that, in the context of goods which a proprietor voluntarily puts into the European single market with his trade mark attached, section 12 of the 1994 Act, transposing article 7 of Directive 89/104/EEC, has the effect that further objection to the use of the mark is limited to special cases, such as changes or impairments to the goods.
But that is true whichever of the rival constructions of section 92 is correct.
Where it applies, this concept of exhaustion means that there is no infringement of the mark as a matter of civil law, and thus no criminal offence.
But this sheds no light on the correct construction of section 92.
The appellants further drew attention to the wording of the predecessor of section 92, section 58A of the Trade Marks Act 1938.
This had provided: 58A.(l) It is an offence, subject to subsection (3) below, for a person (a) to apply a mark identical to or nearly resembling a registered trade mark to goods, or to material used or intended to be used for labelling, packaging or advertising goods, or (b) hire, or distribute to sell, let for hire, or offer or expose for sale or goods bearing such a mark, or (i) (ii) material bearing such a mark which is used or intended to be used for labelling, packaging or advertising goods, or (c) to use material bearing such a mark in the course of a business for labelling, packaging or advertising goods, or to possess in the course of a business goods or (d) material bearing such a mark with a view to doing any of the things mentioned in paragraphs (a) to (c), when he is not entitled to use the mark in relation to the goods in question and the goods are not connected in the course of trade with a person who is so entitled. (3) A person commits an offence under subsection (1) or (2) only if (a) he acts with a view to gain for himself or another, or with intent to cause loss to another, and (b) he intends that the goods in question should be accepted as connected in the course of trade with a person entitled to use the mark in question; and it is a defence for a person charged with an offence under subsection (1) to show that he believed on reasonable grounds that he was entitled to use the mark in relation to the goods in question.
This section provided, in subsection (3), for a more stringent test of mental element than does the present section 92.
The appellants invite us to conclude that the earlier, more stringent, mental element may have had the practical effect of confining criminal liability to cases of their category of true counterfeits, and they say that a change in that effect is not demonstrated to have been intended by the 1994 Act.
The difficulty with that is that whilst it is certainly true that the mental element was more stringent, the 1938 Act would still have caught so called grey market goods, for paragraph (1)(b) clearly applied to goods which were sold when sale was unauthorised, whether or not the original application of the mark had been permitted.
Moreover, it is noticeable that the construction now contended for of section 92(1)(b) could not have been applied to section 58A(1)(b) without considerable difficulty, for the words giving effect to the element of absence of consent of the trademark proprietor did not appear at the beginning of the section as they now do, but only at the end; hence it would have been even more problematical to suggest that such a mark imported them.
It is plain enough that the inversion of the order of the words was a grammatical rather than a substantive variation.
Nor is there any reason to strain the language of section 92(1)(b) so as to exclude the sale of grey market goods.
That is not because of the consequentialist arguments pressed on us by the Crown.
It is doubtful that (absurdities or impossibilities apart) difficulties in assembling evidence can ordinarily affect the construction of a criminal statute.
Moreover, some of the supposedly adverse consequences of such a construction which were put before us on behalf of the Crown would be as likely to ensue even on the correct interpretation of the Act set out above.
The possible difficulty of distinguishing, where there has been an overrun, between the goods marketed with the proprietors authority and those which were a backdoor venture on the part of the manufacturer and subsellers, might as well arise on both constructions; no doubt in many cases the circumstances of the exit from the factory and of the subsequent sales will often be telling.
Likewise it is far from clear that there will be greater difficulty occasioned by the appellants suggested construction than by the correct one in the case of convincing fakes.
In both cases the defendant may occasionally be in a position to assert that he was taken in and thus reasonably believed that no infringement was involved.
Such a defence, if advanced, must be met on its merits, which will no doubt involve investigation of, inter alia, the circumstances in which the defendant acquired the goods and the inquiries which he did or did not make.
But, these consequentialist arguments apart, it is, on any view, unlawful for a person in the position of the defendants to put grey goods on the market just as it is to put fake ones there.
Both may involve deception of the buying public; the grey market goods may be such because they are defective.
The distinction between the two categories is by no means cut and dried.
But both are, in any event, clear infringements of the rights of the trade mark proprietor.
Defendants who set out to buy up grey market goods to make a profit on re sale do so because the object is to cash in on someone elses trade mark.
If such be proved, they have scant claim to a beneficent construction of the Act.
As it is, its ordinary reading plainly means that, unless they have the statutory defence, they have committed an offence.
In the alternative, the appellants contend that the Crowns construction of section 92(1) involves a disproportionate breach of their rights under article 1, Protocol 1 to the European Convention on Human Rights.
It may be accepted that it is perfectly possible that the imposition of a criminal sanction might be disproportionate where a civil law sanction is not.
But persons in the position of these defendants have no proprietary right in the trade marks.
They do have a right in the goods which they have bought, but the 1994 Act does not stop them selling them, except if they wish to do so whilst still with the misleading and infringing trade mark attached.
The 1994 Act does not, therefore, deprive the defendants of any property which they have.
The most it does is to regulate their use or the manner of their disposal of the goods, which is permitted under the second paragraph of article 1 in the general interest, which must include a general interest in the protection of trade marks.
There is in any event nothing disproportionate in the 1994 Act penalising sales when the infringing trade mark is still attached, nor in imposing a criminal sanction on those who might otherwise calculate that the risk of liability in damages is worth taking.
That is a perfectly legitimate balance to draw between the rights of the proprietor to protect his valuable trademark and goodwill, and those of the person who wishes to sell goods which he has bought.
For these several reasons, these appeals must be dismissed and the trial may proceed accordingly.
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This is an interlocutory appeal in a criminal case in which the appellants are defendants indicted for offences of unauthorised use of trademarks, contrary to section 92(1) of the Trade Marks Act 1994 (the 1994 Act).
An offence is committed under that section where a person does any of the following three things (with the intent to gain or to cause loss, and without the consent of the trademark proprietor): (a) applies to goods a sign identical to, or likely to be mistaken for, a registered trade mark, (b) sells goods which bear such a sign, or (c) possesses in the course of a business any such goods with a view to committing an offence under (b).
The allegations against the appellants (which have yet to be proved) are that they are engaged in the bulk import and subsequent sale of goods bearing registered trademarks, manufactured abroad, in countries outside the EU.
A significant portion of the goods said to be sold by the appellants were manufactured (and the trademark applied) with the permission of the trademark proprietor, but were then sold without the trademark proprietors consent (for example because the goods were in excess of the numbers or below the quality permitted by the trademark proprietor).
The appellant describes these as grey market goods and distinguishes them from true counterfeits manufactured without the authorisation of the trademark proprietor.
At a preparatory hearing in the Crown Court, the appellants argued that while the sale of grey goods attracts civil liability, it is not covered by the offence in s.92(1), which properly construed applies only to true counterfeits.
The appellants argued that such a sign in subsection (1)(b) refers back to (1)(a), so that 1(b) applies only to goods where the trademark has been applied without the consent of the proprietor.
Any goods in the grey market category have had the trademark originally applied with the consent of the proprietor.
It is only the sale which the proprietor has not authorised.
It follows, they contend, that they are not, when it comes to paragraph (b), goods which bear such a sign.
Both the trial judge and the Court of Appeal (Criminal Division) rejected that submission.
The Supreme Court unanimously dismisses the appeals.
Lord Hughes gives the lead judgment, with which the rest of the Court agrees.
So called grey market goods are caught by the criminal offence in s.92(1), and the appellants contended construction of that section must be rejected.
The plain reading of such a sign in (1)(b) is that it refers back to the sign mentioned in (1)(a) i.e. a sign which is identical to, or likely to be mistaken for, a registered trade mark. 1(b) therefore covers the unauthorised sale of any
goods bearing a trademark (regardless of whether the trademark was applied to the goods in their manufacture with consent or not).
But this reference back to (1)(a) does not also incorporate into the meaning of such a sign the commission of an offence under (1)(a), i.e. the requirement that the sign has been applied without the consent of the proprietor.
Such a reading of (1)(b) is strained and unnatural and requires one to read such sign as such a sign, so applied.
The offences set out in (a), (b) and (c) are not cumulative, but separate, and the requirement in the opening lines of s.92(1) that the use made of the sign is without the consent of the proprietor applies to each type of use specified whether it is the application of a trademark to goods, the sale of goods bearing a trademark, or the possession for sale of goods bearing a trademark. [8 12] The predecessor of section 92, section 58A of the Trademarks Act 1938, also plainly covered grey market goods.
The appellants contention therefore that the more stringent test for intention in s.58A had the practical effect of confining criminal liability to cases of their category of true counterfeits must be rejected. [16 17] There is therefore no ambiguity in the language of the section to justify investigating the Parliamentary debate at the passing of the 1994 Act.
In any event, the appellants did not contend that Parliament considered a difference between true counterfeits and grey market goods.
Still less is there any point at which it can be suggested that Parliament plainly confined itself to criminalising fake goods and abjured the criminalising of grey market goods.
The authorities relied on by the appellants in support of their contention that such a distinction was plainly intended do not assist here, as they were not addressing any difference between fake goods and unauthorised goods on the grey market, and moreover came years after the passage of the 1994 Act so could not have been in mind at the time of its passing. [13 14] The appellants are correct that in the context of goods which a proprietor voluntarily puts into the European single market with his trademark attached, section 12 of the 1994 Act, transposing article 7 of Directive 89/104/EEC, has the effect that further objection to the use of the mark is limited to special cases, such as changes or impairments to the goods.
But that is true whichever of the rival constructions of section 92 is correct.
Where it applies, this concept of exhaustion means that there is no infringement of the mark as a matter of civil law, and thus no criminal offence.
But this sheds no light on the correct construction of section 92. [15] There is no reason to strain the construction of s.92(1) to exclude the sale of grey market goods.
This is not because of the supposedly adverse consequences which the Crown argued would follow, some of which would be as likely to ensue even on the correct interpretation of the section.
The distinction between the two categories suggested by the appellant is not cut and dried, but both are clear infringements of the rights of the trademark proprietor.
The plain meaning of the Act is that it is unlawful to put grey goods on the market just as it is to put fake ones on there.
In both cases the trader is setting out to profit from someone elses trademark without permission. [18] In the alternative, the appellants contend that the Crowns construction of section 92(1) involves a disproportionate breach of their rights under article 1, Protocol 1 to the European Convention on Human Rights.
But the 1994 Act does not deprive them of their property, as it does not stop them selling the goods, except if they wish to do so whilst still with the misleading and infringing trademark attached.
Such regulation of use or disposal of goods is permitted under the second paragraph of article 1 in the general interest, and is in any event a proportionate measure, striking a legitimate balance between the rights of the proprietor to protect his valuable trademark, and those of the person who wishes to sell good which he has bought. [19]
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These appeals raise the question whether it was lawful for the Secretary of State to make subordinate legislation imposing a cap on the amount of welfare benefits which can be received by claimants in non working households, equivalent to the net median earnings of working households.
The legislation is challenged under the Human Rights Act 1998 primarily on the basis that it discriminates unjustifiably between men and women, contrary to article 14 of the European Convention on Human Rights (the ECHR) read with article 1 of Protocol No 1 to the ECHR (A1P1).
The discrimination arises indirectly.
The cap affects all non working households which would otherwise receive benefits in excess of the cap.
Those are predominantly households with several children, living in high cost areas of housing.
The heads of such households are entitled, in the absence of the cap, to relatively high amounts of child benefit, which is payable in direct proportion to the number of children.
They are also entitled, in the absence of the cap, to relatively high amounts of housing benefit, which reflects the rental cost of the accommodation in which the household lives, and tends therefore to reflect to some extent the size of the household and, more particularly, the level of rental values in the area.
In practice, this means that non working households with several children, living in London, are most likely to be affected.
The majority of non working households with children are single parent households, and the vast majority of single parents are women (92% in 2011).
A statistically higher number of women than men are therefore affected by the cap.
The great majority of single parent non working households are however unaffected by the cap.
It is argued that the cap also affects victims of domestic violence, because they may be temporarily housed in accommodation which is relatively expensive (the rent for such accommodation having tended to reflect the amount of housing benefit payable), and in that event are entitled, in the absence of the cap, to relatively high amounts of housing benefit.
That will also be the position if they are entitled to housing benefit in respect of both the temporary accommodation and also other accommodation to which they hope to return.
Victims of domestic violence are also predominantly women.
The justification put forward for the cap is one of economic and social policy, namely that it is necessary (1) to set a reasonable limit to the extent to which the state will support non working households from public funds, (2) to provide the members of such households of working age with a greater incentive to work, and (3) to achieve savings in public expenditure at a time when such savings are necessary in the interests of the economic well being of the country.
Article 14
Article 14 provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.
As is apparent from its terms, article 14 can only be considered in conjunction with one or more of the substantive rights or freedoms set forth in the Convention.
In the present case, the relevant right is that set forth in A1P1: Every natural or legal person is entitled to the peaceful enjoyment of his possessions.
No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.
The appeal has been argued on the basis that the cap constitutes an interference with the peaceful enjoyment of possessions, within the meaning of A1P1.
The general approach followed by the European Court of Human Rights in the application of article 14 was explained by the Grand Chamber in Carson v United Kingdom (2010) 51 EHRR 369, para 61: 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.
Such a difference of treatment is discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised.
A violation of article 14 therefore arises where there is: a difference in treatment, (1) (2) of persons in relevantly similar positions, if it does not pursue a legitimate aim, or (3) if there is not a reasonable relationship of proportionality (4) between the means employed and the aim sought to be realised.
In practice, the analysis carried out by the European court usually elides the second element the comparability of the situations and focuses on the question whether differential treatment is justified.
This reflects the fact that an assessment of whether situations are relevantly similar is generally linked to the aims of the measure in question (see, for example, Rasmussen v Denmark (1984) 7 EHRR 371, para 37).
In relation to the third element, the court has referred to the criteria laid down in the second paragraphs of articles 8 to 11 of the Convention as legitimate aims, where article 14 has been read in conjunction with those articles.
In Sidabras v Lithuania (2004) 42 EHRR 104, for example, the court stated at para 55 that the difference in treatment pursued the legitimate aims of the protection of national security, public order, the economic well being of the country and the rights and freedoms of others.
The court has also treated aims which are legitimate in the public interest in the context of A1P1, such
as securing social justice and protecting the states economic well being, as
legitimate aims when article 14 has been read in conjunction with that article, as for example in Hoogendijk v The Netherlands (2005) 40 EHRR SE 189 and Andrejeva v Latvia (2009) 51 EHRR 650.
National authorities enjoy a margin of appreciation in assessing whether and to what extent differences in treatment are justified.
The European court has emphasised the width of the margin of appreciation in relation to general measures of economic or social strategy, stating in its Carson judgment at para 61: The contracting state enjoys a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment.
The scope of this margin will vary according to the circumstances, the subject matter and the background.
A wide margin is usually allowed to the state under the Convention when it comes to general measures of economic or social strategy.
Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislature's policy choice unless it is manifestly without reasonable foundation.
That approach was followed by this court in Humphreys v Revenue and Customs Commissioners [2012] UKSC 18; [2012] 1 WLR 1545, where Lady Hale stated at para 22 that the normally strict test for justification of sex discrimination in the enjoyment of the Convention rights gives way to the manifestly without reasonable foundation test in the context of welfare benefits.
Article 14 is not confined to the differential treatment of similar cases: discrimination may also arise where states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different (Pretty v United Kingdom (2002) 35 EHRR 1, para 87).
An example is the case of Thlimmenos v Greece (2001) 31 EHRR 411, where this type of discrimination was first recognised.
The European court has also accepted that a difference in treatment may be inferred from the effects of a measure which is neutral on its face.
In DH v Czech Republic (2007) 47 EHRR 59, the court stated at para 175: The court has established in its case law that discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations.
The court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group.
In such a case, it will again be necessary to consider whether the difference in treatment has an objective and reasonable justification, in the light of the aim of the measure and its proportionality as a means of achieving that aim.
For example, a rule requiring that employees should be capable of heavy lifting will exclude a higher number of women than men, because of differences in the average bodily strength of the sexes.
Whether that difference in treatment has an objective and reasonable justification will depend on whether the rule which results in the difference in treatment has a legitimate aim and is a proportionate means of realising that aim: a test which might be met in employments where it is necessary to lift heavy objects.
The present case is essentially of a similar kind: the cap, in the form in which it has been established, affects a higher number of women than men because of differences in the extent to which the sexes take responsibility for the care of children following the break up of relationships.
Whether that differential effect has an objective and reasonable justification depends on whether the legislation governing the cap, which brings about that differential effect, has a legitimate aim and is a proportionate means of realising that aim.
When applying article 14 in the context of welfare benefits, the European court recognises the need for national rules to be framed in broad terms, which may result in hardship in particular cases.
In its Carson judgment, for example, the Grand Chamber stated at para 62: The court observes at the outset that, as with all complaints of alleged discrimination in a welfare or pensions system, it is concerned with the compatibility with article 14 of the system, not with the individual facts or circumstances of the particular applicants or of others who are or might be affected by the legislation.
Much is made in the applicants' submissions and in those of the third party intervener of the extreme financial hardship which may result from the policy .
However, the court is not in a position to make an assessment of the effects, if any, on the many thousands in the same position as the applicants and nor should it try to do so.
Any welfare system, to be workable, may have to use broad categorisations to distinguish between different groups in need. the court's role is to determine the question of principle, namely whether the legislation as such unlawfully discriminates between persons who are in an analogous situation.
It is important to bear this in mind in the present case, where much has again been made of the financial hardship which, it is argued, may result from the cap in particular cases.
The relevant question, however, is whether the legislation as such unlawfully discriminates between men and women.
The present case
In considering the issues arising under article 14 in the present case, I shall begin by examining the process which led to the legislation with which we are concerned, in order to identify the aims pursued by the legislation and information relevant to the issue which the court has to determine.
Consideration of the Parliamentary debates for that purpose is not inconsistent with anything said in the case of Wilson v First County Trust Ltd (No 2) [2003] UKHL 40; [2004] 1 AC 816: the purpose of the exercise is not to assess the quality of the reasons advanced in support of the legislation by Ministers or other members of Parliament, nor to treat anything other than the legislation itself as the expression of the will of Parliament.
The Welfare Reform Bill
On 22 June 2010 the Chancellor of the Exchequer laid before Parliament his Emergency Budget: Budget 2010 (HC 61).
It set out a five year plan to rebuild the British economy by reducing the structural fiscal deficit.
The plan involved reductions in Government spending of 32 billion per annum by 2014/15.
These reductions would include 11 billion in savings achieved through reforms of welfare.
The reforms were intended to make the welfare system fairer and more affordable, to reduce dependency, and to promote employment.
The following month, the Department for Work and Pensions (the Department) published a consultation document, 21st century Welfare (Cm 7913), seeking views on options to reform the system of working age benefits.
In response to a question about the steps which the Government should consider to reduce welfare dependency and poverty, many respondents answered that the most effective way would be to ensure that people were significantly better off working than on benefit, and suggested the introduction of a benefit cap to restrict the amount of welfare payments which people could receive while out of work: Consultation Responses to 21st century Welfare (2010) (Cm 7971).
A common view was that the cap should be set by reference to the national minimum wage.
This idea was then discussed at the Departments Policy and Strategy Forum, at which the Department engages with groups representing benefit recipients.
On 11 October 2010 the Secretary of State announced the Governments intention to set a cap on benefits for non working households.
Further details were provided in the Spending Review 2010 (Cm 7942), which announced the intention to cap non working household benefits at around 500 per week for couple and single parent households, and around 350 per week for single adult households, so that no non working household would receive more in welfare than the median after tax earnings of working households.
A household would comprise one or two adults living together as a couple, plus any dependent children living with them.
The cap would be implemented by local authorities, which would assess the benefit income of housing benefit claimants, and reduce the payments of housing benefit where necessary to ensure that they did not receive more than the cap.
It is relevant to note, in relation to submissions concerning the impact of the cap upon children, that the Spending Review made clear the Governments belief that the proposed reforms would promote the interests of children: The UK's existing system of support can trap the poorest families and children in welfare dependency.
For many poor children the current system of support delivers little practical change in their long term economic prospects.
Many born into the very poorest families will typically spend their entire lives in poverty.
The Government wants to fundamentally change the prospects of these children. (para 1(54))
Contemporaneously with the Spending Review, HM Treasury published its Overview of the Impact of Spending Review 2010 on Equalities.
This document considered the impact of the Spending Review on groups protected
by equalities legislation, including women.
It noted that decisions had been
taken within the Spending Review which protected most of the services which women used more than men, in particular health, social care, early years and childcare.
In order to protect those areas of spending, savings had to be made in other areas, including welfare.
In relation to benefits, it was noted that any changes affecting single parent households would affect more women than men.
In November 2010 the White Paper, Universal Credit: Welfare That Works (Cm 7957) was published.
It included the benefit cap as part of the design of universal credit.
The Parliamentary Select Committee on Work and Pensions considered the White Paper, and received evidence from, amongst others, the two interveners in the present proceedings, the Child Poverty Action Group and Shelter, as to the likely impact of the cap: House of Commons Work and Pensions Committee, White Paper on Universal Credit, Oral and Written Evidence (2011) (HC 743).
The impact on larger families, and those living in high cost areas, was highlighted.
That reflected the fact, recognised from the outset, that the cap would primarily affect households receiving large amounts of child related benefits and large amounts of housing benefit.
On 16 February 2011 the Welfare Reform Bill received its First Reading in the House of Commons.
Clauses 93 and 94 set out the proposed provisions in respect of a benefit cap.
As is customary in the area of social security, the clauses were drafted on the footing that the primary legislation would establish a framework for secondary legislation in which the rules would be set out in detail.
At the same time, the Department laid before Parliament an Impact Assessment for the Household Benefit Cap.
That document explained the three policy aims: to deliver fiscal savings, to make the system fairer as between non working households and working households, and to incentivise the non working to work.
It explained the policy options which had been considered, and the reasons for adopting the preferred option.
In particular, it explained that consideration had been given to applying the cap to working households which also received benefits, but that it had been decided that they should be exempted, as including recipients of working tax credit among those affected by the cap would seriously reduce incentives to work (p 5).
It had also been decided to exempt those in receipt of disability living allowance and constant attendance allowance, as disabled people with additional care or mobility costs had less ability to alter their spending patterns or reduce their housing costs in response to a cap on benefit.
War widows and widowers would also be exempted, in order to recognise their sacrifice.
Consideration had also been given to setting the cap at a different level, but it was decided that to base it on net median household earnings would best represent the average take home pay of working households. 26.
The document explained that about 50,000 households would have their benefits reduced (representing around 1% of the out of work benefit case load), and that affected households would lose an average of 93 per week.
Those affected by the cap would need to choose between taking up work (in which event they would no longer be affected), obtaining other income (such as child maintenance payments from absent parents: other reforms were designed to make it more difficult for absent parents to evade their obligation to provide financial support to single parents), reducing their non rent expenditure, negotiating a lower rent, or moving to cheaper accommodation.
In March 2011 the Department laid before Parliament its Household Benefit Cap Equality Impact Assessment.
The document stated that the cap was intended to reverse the disincentive effects and detrimental impacts of benefit dependency on families and children (para 5).
The likely impact was analysed according to disability, race, gender, age, gender reassignment, sexual orientation, religion or belief, and pregnancy or maternity.
In relation to gender, it was estimated that around 60% of claimants who had their benefits cut would be single females, whereas 3% would be single men.
That was because around 60% of households affected would comprise single parents living with children, and single parents living with children were predominantly women.
The impact of the cap on single parents would be mitigated by the provision of support to help them to move into work.
Single parents would also be exempt from the cap if they worked for only 16 hours per week, whereas other single claimants would have to work for at least 30 hours per week before they were exempt. 27.
The policy was subjected to detailed and vigorous scrutiny by both Houses of Parliament, over a period of more than 12 months, during the passage of the Bill through Parliament.
That scrutiny was assisted by a number of House of Commons Research Papers, and by briefings prepared by organisations opposed to the policy.
During the Committee stage which followed the Second Reading debate in the House of Commons, the Public Bill Committee also received evidence from many organisations with an interest, including the interveners.
Consideration was also given to reports on the Bill produced by the Office of the Childrens Commissioner, which focused upon the impact on children, and by the Equality and Human Rights Commission.
The former report expressed concern about the potential impact on children if households affected by the cap moved home in order to reduce their housing costs.
It also expressed concern about the potential impact if households were unable to reduce their housing costs. 28.
The discussion in Committee, and in the earlier Second Reading debate, concerned a number of issues, including the impact of the cap on single parents, its impact on children, its impact on those living in temporary 29. 30. accommodation, and the appropriateness of fixing the cap according to the net median earnings of working households, when working households receiving net median earnings might also receive certain benefits.
In relation to the impact on single parents, it was argued that if such households included children under five years of age, there would be less likelihood of the parent being able to take up work, because of child care responsibilities and the potential cost of child care.
Amendments to the Bill were tabled in Committee that would have exempted households from the cap where a single parent had children under five years of age, or where work was not financially more advantageous due to child care costs.
In relation to the impact on children, it was argued that if households whose benefits were capped moved to areas where housing was less expensive, there could be consequent disruption in the supervision of children who were at risk of abuse, and also disruption of childrens schooling.
If such households did not move to cheaper areas, they would have to economise in other ways.
Amendments were moved in both Houses that child related benefits should be excluded from the scope of the cap, and that the cap should be related to household size. 32. 31.
The potential impact on households living in temporary accommodation, at a relatively high cost, was also emphasised.
Amendments were moved in both Houses that would have exempted households which were owed a duty by the local authority to be supported in temporary accommodation.
In relation to the use of net median household earnings as the benchmark, it was argued that the cap would leave the households affected worse off than working households with equivalent earnings, since some benefits were payable to households receiving average earnings.
An amendment was tabled in Committee to require the cap to reflect net average earnings plus in work benefits which an average earner might expect to receive: Hansard (HC Debates), 17 May 2011, col 970.
An amendment to similar effect was also proposed in the House of Lords.
In responding to these arguments during the discussion in Committee on 17 May 2011, the Minister emphasised the need to create a welfare system which was fair in the eyes of the general public and commanded public confidence, and the need to address a culture of welfare dependency.
In relation to the former point, he stated that it did no service to welfare claimants if they were seen to be receiving amounts of money from the state that exceeded the average earnings of people who were working.
That encouraged the view that 33. 34. 35. 36. there was something wrong, and it had the effect of stigmatising those claimants.
It was important to help people into work, and it was also important to have a welfare system in which the public had confidence.
At present, it was clearly demonstrable that that was not the case (col 950).
In that regard, the Minister referred to the stigmatisation of non working families who received high levels of benefit, and to the level of public support for the introduction of a cap on benefits.
He went on to say that it was not reasonable or fair for out of work households to have a greater income from benefits than the net average weekly wage of working households (col 952).
The proposed cap for couples and families was equivalent to an earned salary of 35,000 per annum, which was considered fair (col 984).
In response to the argument that average earnings were not a proper basis for comparison, since households on average earnings might also be in receipt of benefits, the Minister responded that it was necessary, for public confidence in the benefit system, to have a cap related to average earnings.
He acknowledged that the proposed level of the cap was lower than the total income of a working household on average earnings which was receiving in work benefits, but said that it was necessary to ensure that people were better off in work (cols 952 and 975).
The Minister also observed that the policy would only succeed in its objectives of influencing behaviour and increasing public confidence in the benefits system if there was a simple rule which people could understand (col 954).
In relation to arguments based on the different needs of different types of household, such as those with several children, the Minister observed that there was a divide in philosophical view between those who thought that the cap should vary according to household size and other characteristics, and those who believed that there should be some limit to the overall benefits that the state should provide.
Working people on low incomes had to cope with difficult circumstances, and they had to live within their means (cols 952, 973).
Their earnings were not determined by the size of their families, and the Government believed that the same principle should apply to the level of the cap (col 975).
Households whose benefits were capped might need to move to cheaper accommodation, but like other families they had to live in accommodation that they could afford.
In relation to those living in temporary accommodation, the Minister observed that local authorities had a legal duty to provide accommodation which was suitable for homeless applicants, and suitability included affordability.
That observation was consistent with the decision in R (Best) v Oxford City Council [2009] EWHC 608 (Admin), approved by the Divisional Court in the present proceedings: [2013] EWHC 3350 (QB), [2014] PTSR 23, para 53.
The Minister explained that, whatever the cost of the 37. accommodation might be, the local authority could pass on only a charge that the applicant could afford.
The issue of housing costs for those in temporary accommodation was being considered.
In relation to this matter, it is relevant to note the evidence given in these proceedings by Mr Robert Holmes, the Departments lead official on the benefit cap policy.
He explains that the Government used to reimburse local authorities, via the housing benefit system, the rent which they charged claimants for the provision of temporary accommodation, up to a maximum for each property of 500 per week in London and 375 per week elsewhere.
It became clear that some local authorities were using this system to generate surplus revenues, by charging claimants at or about the maximum level regardless of the rental value of the accommodation in question.
Claimants in temporary accommodation were then reluctant to seek employment, as they were concerned that they might lose their housing benefit and be unable to pay these artificially inflated rents.
The Government was unwilling to exempt temporary accommodation from the cap, as it considered that to do so would continue to subsidise inflated rents and would discourage claimants from obtaining work.
It decided instead to provide additional support for those in temporary accommodation through the discretionary housing payments scheme, to which it will be necessary to return. 38.
The Bill was also considered in detail by the House of Lords, which was provided with an updated version of the Housing Benefit Cap Equality Impact Assessment (2011).
The discussion in the House of Lords focused particularly upon the impact of the cap on households with children, and upon the use of median earnings, rather than income inclusive of benefits, as the benchmark.
In the course of the discussion, the Minister gave an assurance that he had considered the requirements of the Human Rights Act 1998 and the ECHR in respect of the policy, and was satisfied that the way in which the Government would implement the clauses in question would meet those requirements (Hansard (HL Debates), 21 November 2011, col GC415).
In relation to the use of median earnings as the basis of the cap, the Minister explained that it necessarily followed, by definition, that half the working households in the UK would have earnings below the level of the cap (col GC425).
In relation to the impact of the cap on households with children, an amendment seeking to exempt single parents with children under five was opposed by the Government.
In response to the argument that, since such parents were not obliged to seek work in order to be eligible to receive benefits, they ought also to be exempted from the cap on the amount of any 39. 40. benefits which they might receive, the Minister stated that the cap was intended to act as an incentive to work.
Although single parents with children under five were not required to seek work as a condition of receiving benefits, that did not mean that the Government did not want to encourage them to find employment.
The amendment would undermine the fundamental principles underpinning the cap: that ultimately there had to be a limit to the amount of benefit that a household could receive, and that work should always pay (col GC421). 41.
A proposed amendment to exclude child benefit from the scope of the cap was opposed by the Government on the basis that its policy was that there should be a reasonable limit to the overall amount of support that non working households could receive in welfare payments, that child benefit was as much part of that support as other welfare payments, and that it should therefore be taken into account in deciding whether the limit had been reached.
It was estimated that excluding child benefit from the scope of the cap would reduce the savings from the cap by 40 to 50%, and that also excluding child tax credit would reduce the savings by 80 to 90% (Hansard (HC Debates), 28 November 2011, col 763W).
There would be a similar impact upon the number of households affected (Hansard (HC Debates), 23 May 2011, col 496W). 42.
The Bill was also scrutinised by the House of Lords and House of Commons Joint Committee on Human Rights, which considered the human rights effects of the Bill and published its report in December 2011 (HL Paper 233; HC 1704).
In written evidence to the Committee, the Secretary of State stated that it was the Governments view that, if A1P1 was engaged, the measures in the Bill were proportionate to the legitimate aim of securing the economic well being of the country.
He observed that the greater employment of single parents would have a positive effect on child poverty, and that there was a wide range of support available to single parents seeking employment, to take account of their role as the main carer for their child.
He added that the Government believed that the effect of the cap was proportionate, taking into account (1) the amount of the cap and the fact that it would be based on average household earnings, (2) the fact that claimants would be notified of the cap and given time to adjust their spending to accommodate their new levels of benefit, and (3) the fact that the cap would affect relatively few households and that those affected would continue to receive a substantial income from benefits. 43.
At the Report stage in the House of Lords, the Bill was amended so as to exclude child benefit from the scope of the cap.
When the Bill returned to the House of Commons, the House considered and voted against that amendment.
When the Bill subsequently returned to the House of Lords, the House agreed, on a vote, not to insist on the amendment. 44.
During the Bills passage, Ministers indicated that some of the concerns expressed in Parliament, many of them reflected in other proposed amendments, would be considered as the policy was developed.
So it proved.
One example was the introduction of a period of grace for benefit claimants who had previously been employed, so that their benefits would not be capped for a period of 39 weeks after they had last been in employment.
That development reflected concerns which had been expressed about the application of the cap to households in which someone had been in work but had been made redundant or had left work in order to care for a child.
It was also understood that child care responsibilities might make it difficult for some single parents to seek work and, by that means, to secure exemption from the cap.
Measures were taken to address those difficulties by exempting benefits used to pay for child care (meeting 70% of the cost) from the cap, by providing single parents with job focused interviews to assist them in finding work, and by setting the number of hours required to be worked by a single parent, in order to obtain exemption from the cap, at a lower level, of 16 hours per week, than for other claimants.
Another development was the introduction of an exception to prevent payments covering the cost of accommodation in refuges, for women who had been victims of domestic violence, from being taken into account.
It will be necessary to return to that matter.
Measures were also taken to ensure that the supervision of children at risk of ill treatment was not jeopardised in the event that their families moved to less expensive areas to live. 45.
A decision was also taken to provide additional funding of 65m in 2013/2014 and 35m in 2014/15 for discretionary housing payments under the Discretionary Financial Assistance Regulations 2001 (SI 2001/1167) (the DHP Regulations).
These are payments made by local authorities to claimants who require further financial assistance, in addition to any welfare benefits, in order to meet housing costs.
They do not count towards the cap.
As is stated in the guidance for local authorities published by the Government, the additional funding is intended to provide assistance to a number of groups who are likely to be particularly affected by the cap, including those in temporary accommodation, victims of domestic violence, families with children at school, and households moving to, or having difficulty finding, more appropriate accommodation.
Households in those categories may be unable to avoid high costs in the short term: they may, for example, have to delay a move until suitable arrangements can be made for the education of children, or may require financial assistance to pay the deposit on a new home and the initial instalment of rent.
The additional funding was intended to help them to meet those costs.
The Government also undertook to review the operation of the cap, as had been recommended by the Joint Committee on Human Rights, and to lay before Parliament a report on its impact after a year of operation.
The Welfare Reform Act 2012 46.
The Welfare Reform Act 2012 (the 2012 Act) received Royal Assent in March 2012.
The provisions relevant to the cap are sections 96 and 97. 47.
Section 96 enables regulations to provide for a benefit cap to be applied to the welfare benefits to which a single person or couple is entitled.
For the purposes of the section, applying a benefit cap means securing that: where a single persons or couples total entitlement to welfare benefits in respect of [a period of a prescribed duration] exceeds the relevant amount, their entitlement is reduced by an amount up to or equalling the excess (section 96(2)). 48.
Welfare benefits are any benefit, allowance, payment or credit prescribed in regulations: section 96(10).
The regulations cannot however prescribe as welfare benefits either state pension credit or retirement pensions: section 96(11).
The relevant amount is an amount specified in regulations, which must be determined by reference to the average weekly earnings of a working household after deductions in respect of tax and national insurance: sections 96(5), (6) and (7).
More detailed provision in respect of the benefit cap arrangements, including the welfare benefits or benefits from which a reduction is to be made, and any exceptions to the application of the benefit cap, are to be set out in the regulations: section 96(4).
The regulations are to be made by the Secretary of State, and the first such regulations must be approved by Parliament under the affirmative resolution procedure: sections 96(10) and 97(3).
Subsequent regulations must be approved under the negative resolution procedure.
The Benefit Cap (Housing Benefit) Regulations 2012 49.
Before laying draft regulations before Parliament, the Department consulted interested bodies, including the statutory Social Security Advisory Committee, Citizens Advice, Crisis and Shelter.
That consultation influenced some of the policy changes which I mentioned in paras 44 45. 50.
On 16 July 2012 the Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) (the Regulations) were laid in draft before both Houses of Parliament.
At the same time, the Department published updated impact assessments in respect of the cap.
It was then estimated that 56,000 households would be affected (1% of the out of work benefit caseload), losing on average around 93 per week. 39% of households affected were expected to be couples with children, and 50% were expected to be single parents with children.
Because single parents were predominantly women, 60% of affected claimants were expected to be single women, compared with 10% who were expected to be single men.
Almost all the local authorities most affected were expected to be in London, reflecting the higher rents payable there. 51.
Parliament received submissions on the draft regulations from a number of bodies, including Shelter.
The draft regulations were considered by the House of Lords Secondary Legislation Scrutiny Committee, and were debated by the House of Lords Grand Chamber on 6 November 2012.
They were also considered by the House of Commons Delegated Legislation Committee on the same date.
The issues then considered included temporary accommodation, including womens refuges and other accommodation for victims of domestic violence, the impact upon children of households moving to areas where housing was less expensive, and the greater difficulty which people who moved out of London might experience in obtaining work.
The draft regulations were approved by both Houses of Parliament, and the Regulations were then made. 52.
As had been announced, the Regulations fix the cap at 350 per week for single persons and 500 for families and couples, equivalent to gross salaries of 26,000 and 35,000 per annum respectively.
These figures are slightly above the median earnings of single persons and couples respectively.
They are well above the national minimum wage, which in 2012 was about 12,500 per annum for a 40 hour week.
The Regulations list the benefits which are to be treated as welfare benefits.
As anticipated, they include the main out of work benefits, together with child benefit, child tax credit and housing benefit.
Again as anticipated, exceptions from the application of the cap are made in respect of households where a person receives specified benefits based on disability or service in the armed forces, and in respect of households where a single parent works for 16 hours per week or a couple work for 24 hours (provided one of them works for 16 hours).
Provision is made for the 39 week period of grace.
In response to concerns expressed about the potential impact of the cap on households living in exempt accommodation (ie accommodation provided by housing associations, charities, other voluntary bodies or county councils to 53. persons receiving care, support or supervision provided by or on behalf of the landlord), including in particular those living in refuges for victims of domestic violence, the Regulations were amended with effect from 15 April 2013 (when, as I shall explain, the cap first came into partial effect) by the Benefit Cap (Housing Benefit) (Amendment) Regulations 2013 (SI 2013/546).
The effect of the amendment was that housing benefit provided in respect of such accommodation was to be disregarded for the purposes of the cap.
In response to contentions that some womens refuges fell outside the definition of exempt accommodation, the Minister announced in April 2013 that the issue was being addressed and that proposals would be brought forward at the earliest opportunity.
The Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014 (SI 2014/771) (the 2014 Regulations) were subsequently made, after the present proceedings were under way.
They replace the concept of exempt accommodation with a broader concept of specified accommodation, which encompasses a wider range of accommodation provided for vulnerable people, including the womens refuges previously excluded.
The implementation of the Regulations 54.
The Regulations were made in November 2012, more than two years after the intention to introduce the cap had been announced.
From April 2012 jobcentres and local authorities implemented arrangements to provide support to households that would be affected by the cap and assist them in deciding how to respond.
In May 2012 jobcentres wrote to all claimants potentially affected by the cap, notifying them that they might be affected and explaining the support available.
That support included assistance from dedicated staff in moving into the labour market, obtaining access to child care provision and negotiating rent reductions with private landlords, together with advice on housing options and household budgets.
A help line was also set up to provide information about the changes and the support available.
Employment events were organised with local employers and training bodies.
Further letters were sent to claimants in October 2012, February 2013 and March 2013.
Claimants were also contacted by telephone and, where that proved ineffective, were visited.
The cap was then introduced in phases, during which its impact was monitored by the Department.
On 15 April 2013 the cap was applied in four local authority areas in London.
Between 15 July 2013 and the end of September 2013 the cap was applied in other local authority areas. 55.
Since the introduction of the cap, its impact has been discussed at meetings of the Benefit Cap Project, a forum for meetings between the Department and interested bodies, including voluntary organisations working with children and the homeless. 56.
From August 2013 the Department published a number of reports on the impact of the cap.
The most recent report, at the time when these appeals were heard, was that published in March 2014, which contained data for the period to January 2014.
It reported that 38,665 households had had their housing benefit capped. 28% of the households which had at one time been capped were no longer capped. 39% of those had become exempt because a member of the household had entered work. 27% were no longer claiming housing benefit or had reduced their rent so as to come below the cap.
Of the 20 local authorities with the highest number of capped households, 19 were in London. 95% of capped households included children. 59% of capped households, and 62% of capped households with children, comprised a single parent with children.
In response to a request from this court, counsel also provided the Departments analysis of the data for the period up to March 2014 in respect of single parent households including a child under five years of age. 29% of such households which had at one time been capped were no longer capped. 38% of those had become exempt because a member of the household had entered work.
These figures are in line with those for all households. 57. 58.
According to the Departments most recent estimate as at the date of the hearing, the cap is expected to save 110m in 2013/2014 and 185m in 2014/2015.
This level of savings is expected to continue over the longer term.
These figures do not take into account the implementation costs or the additional funding made available for discretionary housing payments.
Nor, on the other hand, do they take account of any reduction in benefit payments, or any receipts from income tax or national insurance, resulting from claimants moving into work.
The present proceedings 59.
There is no challenge in these proceedings to the 2012 Act: it is not argued that section 96 is incompatible with the ECHR.
It follows that there is no challenge to the principle of a cap, the impact of which is inevitably greatest for those who would otherwise be entitled to the highest amount of relevant benefits.
Nor is there any challenge to the fixing of one relevant amount (ie the cap) for single claimants and another for all other households, rather than the relevant amount being tailored to individual circumstances.
Nor is there any challenge to the fixing of the relevant amount by reference to estimated average net household earnings, rather than by reference to estimated average net household income inclusive of benefits.
The challenge is primarily to the compatibility of the Regulations with article 14 of the ECHR read in conjunction with A1P1. Compatibility with article 14 read with A1P1 60.
Interference with possessions In considering the compatibility of the Regulations with article 14 in conjunction with A1P1, the first question is whether there is an interference with possessions.
That is not a straightforward question: as the European court explained in Valkov v Bulgaria (Applications Nos 2033/04, 19125/04, 19475/04, 19490/04, 19495/04, 19497/04, 24729/04, 171/05 and 2041/05) (unreported) given 25 October 2011 at para 85, a cap may be regarded either as a provision limiting the amount of benefit after it has been calculated under the general rules, and thus an interference with a possession of the appellants, or as part of the overall set of statutory rules governing the manner in which the amount of benefit should be calculated, and thus as amounting to a rule preventing the appellants from having any possession in relation to the surplus.
It is however unnecessary to resolve that question in the present appeal, since the applicability of A1P1 has not been contested on behalf of the Secretary of State.
Differential treatment 61.
The next question is whether the Regulations result in differential treatment of men and women.
This is conceded on behalf of the Secretary of State.
Given the statistics as to the proportion of those affected who are single women as compared with the proportion who are single men, that concession is understandable.
It is indeed almost inevitable that a measure capping the benefits received by non working households will mainly affect households with children, since they comprise the great majority of households receiving the highest levels of benefits.
It follows inexorably that such a measure will have a greater impact on women than men, since the majority of non working households with children are single parent households, and the great majority of single parents are women.
That consequence could be avoided only by defining welfare benefits so as to exclude benefits which are directly or indirectly linked to responsibility for children, a possibility to which it will be necessary to return. 62.
On the other hand, the argument that the Regulations also result in differential treatment of women because of their effect upon the victims of domestic violence has not in my opinion been established.
In so far as the argument is based upon the failure of the Regulations, as originally made, to exempt housing benefit received in connection with all womens refuges, the amendments effected by the 2014 Regulations were designed to address that problem, and it is not argued in these appeals that they have failed to do so.
In so far as the argument was that women fleeing domestic violence may live in temporary accommodation rather than refuges, and may then be entitled to housing benefit in respect of both their original home and the temporary accommodation, that problem, which is inherently of a temporary nature, is capable of being addressed under the DHP Regulations by the use of discretionary housing payments; and the funding made available by Government for such payments has been increased for that very purpose.
As I have explained, guidance has been issued by the Government to local authorities advising them that the funding is specifically aimed at groups including individuals or families fleeing domestic violence, and that payments can be awarded for two homes when someone is temporarily absent from their main home because of domestic violence.
It cannot therefore be said that the Regulations have a disparate impact upon victims of domestic violence.
Whether problems are avoided in practice will depend upon how the discretionary payments scheme is operated by local authorities in individual cases.
It is not suggested that any problems have arisen in the cases with which these appeals are concerned.
Legitimate aim 63.
The next question is whether the Regulations pursue a legitimate aim.
In my view that cannot be doubted.
They pursue, in the first place, the aim of securing the economic well being of the country, as the Secretary of State explained to the Parliamentary Joint Committee on Human Rights, and as is evident from the legislative history since the policy of reducing expenditure on benefits was first announced in June 2010.
A judgment was made, following the election of a new Government in May 2010, that the current level of expenditure on benefits was unaffordable.
The imposition of a cap on benefits was one of many measures designed to reduce that expenditure, or at least to constrain its further growth.
It was argued on behalf of the appellants that savings in public expenditure could never constitute a legitimate aim of measures which had a discriminatory effect, but that submission is inconsistent with the approach adopted by the European court in the cases mentioned in para 10.
It is also inconsistent with the acceptance of the economic well being of the country as a legitimate aim of interferences with Convention rights under the second paragraphs of articles 8 to 11, and under A1P1.
An interpretation of the Convention which permitted the economic well being of the country to constitute a legitimate aim in relation to interferences with the substantive Convention rights, but not as a legitimate aim in relation to the ancillary obligation to secure the enjoyment of those rights without discrimination, would lack coherence. 64.
In relation to the case of Ministry of Justice (formerly Department for Constitutional Affairs) v OBrien (Council of Immigration Judges intervening) [2013] UKSC 6; [2013] 1 WLR 522, para 69, on which the appellants relied, I would observe that acceptance that savings in public expenditure can constitute a legitimate aim for the purposes of article 14 does not entail that that aim will in itself constitute a justification for discriminatory treatment.
As I have explained, the question whether a discriminatory measure is justifiable depends not only upon its having a legitimate aim but also upon there being a reasonable relationship of proportionality between the means employed and the aim sought to be realised. 65.
The second aim, of incentivising work, is equally legitimate.
It is, in the first place, an aspect of securing the economic well being of the country.
It has however a broader social objective which Ministers made clear to Parliament.
That objective is based on the view that long term unemployment is socially undesirable, because of its impact upon those affected by it (including the children brought up in non working households), and that it is therefore important to make efforts to assist those capable of working to find work: efforts which can include the removal of financial disincentives. 66.
The third aim, of imposing a reasonable limit upon the total amount which a household can receive in welfare benefits, is in my opinion equally legitimate.
It is again an aspect of securing the economic well being of the country: it is one of the means of achieving that objective.
It also however has a broader aspect, namely to reflect a political view as to the nature of a fair and healthy society.
As Ministers explained to Parliament, this objective responds in particular to a public perception that the benefits system has been excessively generous to some recipients: a perception which is related to the stigmatisation in the media of non working households receiving high levels of benefit.
The maintenance of public confidence in the welfare system, so that recipients are not stigmatised or resented, is undeniably a legitimate aim.
In the language used by the European court in Hoogendijk and other cases, the benefit system is the means by which society expresses solidarity with its most vulnerable members.
That being so, it is in principle legitimate to reform the system when necessary to respond to a threat to that solidarity.
Proportionality 67.
The remaining question is whether the Regulations maintain a reasonable relationship of proportionality between the means employed and the aims sought to be realised. 68.
It was argued by counsel for the appellants and interveners that the aim of setting a reasonable limit to the amount of benefits which a household can receive could have been achieved by using as a benchmark not the average earnings of working households but their average income inclusive of benefits.
This would have been fair, adopting the adjective used by Ministers at some points during the Parliamentary debates, since it would have achieved parity between the maximum income received by non working households and the average income of working households. 69.
There are three problems with this argument.
The first is that section 96 of the 2012 Act, whose compatibility with Convention rights is not challenged, requires the cap to be set by reference to earnings.
The Regulations cannot be unlawful in so far as they follow that approach (Human Rights Act, section 6(2)(a)), and would be ultra vires if they failed to do so.
Secondly, the assessment of the level at which a cap would represent a fair balance between the interests of working and non working households is a matter of political judgment.
Furthermore, the assumption that fairness requires an equivalence between the incomes of working and non working households ignores the costs incurred by working households in earning that income: both financial costs in respect of such matters as travel and clothing, and non financial costs in respect of the time spent commuting and working.
As the Thlimmenos principle illustrates, non discrimination does not require that different situations should be treated in the same way.
Thirdly, and in any event, the Government has made a judgment, endorsed by Parliament, that a cap set at the level of the average income of working households would be less effective in achieving its aims.
That is not an unreasonable judgment: plainly, the fiscal savings would be less, and the financial incentive to find work would be reduced.
Indeed, if the cap were set at a level which achieved parity between the income of a person on benefits and the average income of a person in work, it would act as a disincentive to work for below average earnings.
Whether the aim of securing a benefit system which was perceived by the public as fair and reasonable would also have been less effectively achieved is again a political judgment, which cannot be said to be manifestly unreasonable.
It was also argued that the short term fiscal savings appear to be relatively marginal at best.
It is true that the savings made are a small proportion of the total welfare budget, the bulk of which is spent on pensions.
They nevertheless contribute towards the achievement of the objective of reducing the fiscal deficit.
It is also necessary to bear in mind that the Regulations are designed to result in savings over the longer term, as the intended change in the welfare culture takes effect. 70. 72. 71.
Other criticisms of the Regulations focused upon the impact of the cap upon the income of the households most severely affected, such as those of the appellants.
Emphasis was placed in particular upon the inclusion of child benefit and child tax credit among the welfare benefits, and the difficulties which single parents faced with a loss of income might encounter in finding work, because of their child care responsibilities, or in moving to cheaper accommodation, because of the impact upon their children.
In relation to the reduction in income, it has to be borne in mind that the cap for a household with children has been set by Parliament at the median earnings of working households, equivalent to a salary of 35,000 per annum.
By definition, half of all working households earn less than that amount.
The exclusion of child benefit and child tax credit from the welfare benefits counting towards the cap would enable non working households with children to receive an income from public funds in excess of that amount.
Whether that level of benefits ought to be paid by the state is inherently a political question on which opinions within a democratic society may reasonably differ widely.
It is not the function of the courts to determine how much public expenditure should be devoted to welfare benefits.
It is also important to recognise that the households affected were given advance notice of the reduction in their income, and that assistance was made available to them to enable them to address the implications, as I have explained.
In relation to the related criticism that children in households affected by the cap are deprived of the basic necessities of life, that argument was rejected by the courts below, and I see no basis for reaching a different conclusion.
As I have explained, the cap for a household with children is equivalent to a gross salary of 35,000 per annum, higher than the earnings of half the working population in the UK, almost three times the national minimum wage, and not far below the point at which higher rate tax becomes payable (in 2013/14, a salary of 41,450).
Although the compatibility of the Regulations with article 14 does not depend on the individual circumstances of the appellants, as I have explained, the Court of Appeal considered in detail submissions to the effect that the cap would reduce them to a state of destitution, and concluded that their circumstances did not approach that level.
The Divisional Court noted that even in cases where the cap had particularly adverse consequences, in the last resort the local authority was under a duty to secure suitable and affordable accommodation for the family.
In relation to the difficulties of finding work, data from the Office for National Statistics (ONS) indicate that 63.4% of single parents with dependent children were in work during the second quarter of 2014.
An ONS analysis based on data for 2012 indicated that the employment rate for single 73. 74. 75. parents with a dependent child under the age of 2 was 32%; for the age range 2 4 it increased to 42%; for the age range 5 11 it was 63%.
Plainly, many single parents, including those on low incomes, make arrangements for the care of children in order to work.
Their children over five years of age are required to attend school.
Their younger children may attend nurseries or may be looked after by family members or child minders.
The amount of work which a single parent has to perform, in order to be exempted from the cap, is only 16 hours per week.
Even those hours need not necessarily be worked throughout the year: if a person works in a place of employment which has a recognisable cycle of employment, such as a school, the holiday periods during which she does not work are disregarded.
As I have explained, assistance with meeting the cost of child care is available and is excluded from the cap.
The statistics set out at paras 56 and 57 above do not support the contention that single parents with children under five have experienced greater difficulty in obtaining work than other claimants affected by the cap.
Some people take the view that it is better for the single parent of a young child to remain at home full time with the child, but there is no basis for requiring that view to be adopted by Government as a matter of law.
In relation to the argument that households with children cannot reasonably be expected to move house, because of the impact on the children, it is not merely a forensic point that one of the two adult appellants came with her family to the UK from Belgium, and that the other adult appellant came with her family to the UK from Algeria.
Millions of parents in this country have moved house with their children, for a variety of reasons, including economic reasons.
It is, in particular, not uncommon for working households to move out of London in order to find more affordable property elsewhere.
It is also necessary to recognise that transitional financial assistance is available for households affected by the cap who cannot move until suitable arrangements have been made in relation to the children, as I have explained.
Although assistance of that nature may not constitute a complete or satisfactory answer to a structural problem of a permanent nature arising from discriminatory legislation, such as the inadequacy of housing benefit to meet the cost of accommodation suitable for the needs of severely disabled claimants (as was held in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117), it is relevant to an assessment of the proportionality of a measure which is liable to give rise to transitional difficulties in individual cases. 76.
As I have explained, the court is concerned in a case of this kind with the question whether the legislation as such unlawfully discriminates between men and women, rather than with the hardship which might result from the cap in the cases of those most severely affected.
In that regard, it is highly significant that no credible means was suggested in argument by which the legitimate aims of the Regulations might have been achieved without affecting a greater number of women than men.
Put shortly, since women head most of the households at which those aims are directed, it appears that a disparity between the numbers of men and women affected was inevitable if the legitimate aims were to be achieved. 77.
The greater number of women affected results from the inclusion of child related benefits within the scope of the cap.
If those benefits had been excluded from the cap, the legitimate aims of the cap would not have been achieved, as Ministers made plain to Parliament.
The question is raised by Lady Hale whether taking child related benefits out of the cap as it applies to single parents only would have an emasculating effect.
I do not recall this point being raised with counsel for the Secretary of State, but the information available enables it to be considered.
Parliament was informed that the exclusion of child related benefits would reduce the savings, and the number of households affected by the cap, by 80 to 90% (para 41).
According to the most recent statistics available at the time of the hearing, single parent households form 62% of the affected households receiving child related benefits (para 56).
It is therefore plain that the exclusion of child related benefits, even if confined to single parent households, would have compromised the achievement of the legitimate aims of the Regulations.
Article 3(1) of the UNCRC 78.
An argument of a different character was put forward on the basis of article 3(1) of the United Nations Convention on the Rights of the Child (UNCRC), which provides that in all actions concerning children the best interests of the child shall be a primary consideration.
The argument developed during and after the hearing of the appeal.
Initially, it was contended that the Secretary of State was obliged by section 6 of the Human Rights Act to treat the best interests of children as a primary consideration when making the Regulations, in accordance with article 3(1) of the UNCRC, since the cap had an impact upon the private and family lives of children forming part of the households affected.
Article 8(1) of the ECHR was therefore applicable.
Since the European court would have regard to the UNCRC when applying article 8 in relation to children, it followed that the Secretary of State was also obliged to comply with article 3(1) of the UNCRC, but failed to do so. 79.
This argument raises a number of questions.
In the first place, there is the question whether general legislation which limits welfare benefits, resulting in some cases in a reduction in household income, constitutes, by reason of the impact of that reduction in income upon the lives and circumstances of those affected, an interference with their right to respect for their private and family life.
If it does, the ambit of article 8 is enlarged beyond current understanding so as to embrace legislation imposing increases in taxation or reductions in social security benefits.
Secondly, on the assumption that such legislation falls within the ambit of article 8(1), article 8(2) permits an interference with the right to respect for family life to be justified as being necessary in a democratic society in the interests of the economic well being of the country.
The argument that justification on that ground is impossible unless the best interests of the children affected by the measure in question have been treated as a primary consideration not only in the sense that they have been taken into account but, as counsel emphasised, in the sense that the legislation is in reality in the best interests of the children affected by it has major implications for the effect of the ECHR in relation to legislation in the field of taxation and social security. 80.
These issues were not addressed in the course of the argument.
Most of the European authorities cited in support were concerned with the different question of the eviction of individuals from their homes, which is not an issue arising on the facts of the present cases.
The cases indicate that a reduction in income may have consequences which are such as to engage article 8, as for example where non payment of rent leads to the threat of eviction from ones home, but they do not indicate that the reduction in income is itself within the ambit of article 8.
The only other European authority cited was the case of Neulinger v Switzerland (2010) 54 EHRR 1087, which was concerned with the return of a child under a child abduction convention.
It is unnecessary to say more than that the argument has not been made out. 81.
A more closely reasoned argument has been developed in submissions lodged after the hearing, which treats article 3(1) of the UNCRC as forming part of the proportionality assessment under article 14 of the ECHR read with A1P1.
In consequence, a test of compliance with article 3(1) is effectively substituted for the manifestly without reasonable foundation test which all parties agree to be applicable in the present context.
On that basis, article 3(1) is argued to be decisive of the appeals.
It is therefore necessary to consider carefully how, if at all, article 3(1) bears on the issues in these appeals. 82.
As an unincorporated international treaty, the UNCRC is not part of the law of the United Kingdom (nor, it is scarcely necessary to add, are the comments upon it of the UN Committee on the Rights of the Child).
The spirit, if not the precise language, of article 3(1) has been translated into our law in particular contexts through section 11(2) of the Children Act 2004 and section 55 of the Citizenship, Borders and Immigration Act 2009: ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166, para 23.
The present case is not however concerned with such a context. 83.
The UNCRC has also been taken into account by the European Court of Human Rights in the interpretation of the ECHR, in accordance with article 31 of the Vienna Convention on the Law of Treaties.
As the Grand Chamber stated in Demir v Turkey (2008) 48 EHRR 1272, para 69, the precise obligations that the substantive obligations of the Convention impose on contracting states may be interpreted, first, in the light of relevant international treaties that are applicable in the particular sphere.
It is not in dispute that the Convention rights protected in our domestic law by the Human Rights Act can also be interpreted in the light of international treaties, such as the UNCRC, that are applicable in the particular sphere. 84.
The approach adopted is illustrated by V v United Kingdom (1999) 30 EHRR 121, where the European court had regard to articles 37 and 40 of the UNCRC when considering how the prohibition of inhuman and degrading treatment in article 3 of the ECHR applied to the trial and sentencing of child offenders, and, in a domestic context, by R (T) v Chief Constable of Greater Manchester Police [2014] UKSC 35; [2015] AC 49, where this court referred to article 40 of the UNCRC when considering whether legislation regulating the disclosure of offences committed by children was compatible with article 8 of the ECHR. 85.
The case of X v Austria (2013) 57 EHRR 405, on which the appellants and the interveners principally rely, concerned the proposed adoption of a child by the female partner of the childs biological mother.
The effect of adoption under Austrian law was to sever the legal relationship between the child and the biological parent of the same sex as the adoptive parent.
In consequence, therefore, Austrian law could not recognise a legal relationship between a child, an adoptive parent, and a biological parent of the same sex as the adoptive parent.
An application to the European court was brought by the child, the mother, and her partner, all of whom lived together as a family, on the basis that they had been denied legal recognition of their family life by reason of the sexual orientation of the two adults, in violation of article 14 of the ECHR read together with article 8.
The court considered their complaint on the basis that all three applicants enjoyed family life together, and all three were therefore entitled to complain of a violation of their rights.
The effect of the Austrian law was to prevent second parent adoption by same sex couples.
The justifications advanced were the protection of the family in the traditional sense, and the protection of the interests of children, both of which were legitimate aims.
The question was whether the principle of proportionality was adhered to.
In considering that question, the court identified a number of considerations which weighed in favour of allowing the courts to carry out an examination of each individual case, rather than imposing an absolute rule.
The court added that this would also appear to be more in keeping with the best interests of the child, which was a key notion 86. in the relevant international instruments.
In that regard, the court had earlier referred to a number of provisions of the UNCRC, including article 3(1).
It is clear, therefore, that the UNCRC can be relevant to questions concerning the rights of children under the ECHR.
There are also cases in which, although the court has not referred to the UNCRC, it has taken the best interests of children into account when considering whether an interference with their fathers or mothers right to respect for their family life with the children was justified.
An example is the case of ner v Netherlands (2006) 45 EHRR 421, which concerned the deportation of an adult, resulting in his separation from his children.
In circumstances of that kind, the proportionality of the interference with family life could not be assessed without consideration of the best interests of the children, a matter which was relevant to respect for his family life with them, as it was also to their right to respect for their family life with him.
Indeed, they might themselves have been applicants, on the basis that their own article 8 rights were engaged. 87.
The present context, on the other hand, is one of alleged discrimination between men and women in the enjoyment of the property rights guaranteed by A1P1.
That is not a context in which the rights of the adults are inseparable from the best interests of their children.
It is of course true that legislation limiting the total income which persons can receive from benefits, like any legislation affecting their income, may affect the resources available to them to provide for any children in their care, depending upon how they respond to the cap: something which will vary from one case to another.
They may increase their income from other sources, for example by obtaining employment or by obtaining financial support for the upkeep of a child from an absent parent; or they may respond by reducing their expenditure, for example by moving to cheaper accommodation.
Depending on how parents respond, the consequences of the cap for their children may vary greatly, and may be regarded as positive in some cases and as negative in others. 88.
The questions (1) whether legislation of this nature should be regarded as action concerning children, within the meaning of article 3(1) of the UNCRC, (2) whether that provision requires such legislation to be in the best interests of all the children affected by it, and (3) whether the Regulations fulfil that requirement, appear to me to be questions which, for reasons I shall explain, it is unnecessary for this court to decide.
Even on the assumption, however, (1) that article 3(1) of the UNCRC applies to general legislation of this character, (2) that article 3(1) requires such legislation to be in the best interests of all the children indirectly affected by it, and (3) that the legislation in question is not in reality in the best interests of all the children indirectly affected by it, that does not appear to me to provide an answer to the question 89. whether the legislation unjustifiably discriminates between men and women in relation to their enjoyment of the property rights guaranteed by A1P1.
It is true that the benefits which are taken into account when deciding whether the cap has been exceeded include benefits payable to parents by reason of their responsibility for the care of children.
It is also true that the differential impact of the measure upon men and women arises from the fact that more women than men take on responsibility for the care of their children when they separate.
It is argued that it is therefore unrealistic to distinguish between the rights of women under article 14 read with A1P1, and those of their children under the UNCRC.
There is nevertheless a clear distinction.
In cases where the cap results in a reduction in the resources available to parents to provide for children in their care, the impact of that reduction upon a child living with a single father is the same as the impact on a child living with a single mother in similar circumstances, or for that matter a child living with both parents.
The fact that children are statistically more likely to be living with a single mother than with a single father is unrelated to the question whether the childrens rights under article 3(1) of the UNCRC have been violated.
There is no factual or legal relationship between the fact that the cap affects more women than men, on the one hand, and the (assumed) failure of the legislation to give primacy to the best interests of children, on the other.
The conclusion that the cap is incompatible with the UNCRC rights of the children affected therefore tells one nothing about whether the fact that it affects more women than men is unjustifiable under article 14 of the ECHR read with A1P1.
The contrary view focuses on the question whether the impact of the legislation on children can be justified under article 3(1) of the UNCRC, rather than on the question whether the differential impact of the legislation on men and women can be justified under article 14 read with A1P1, and having concluded that the legislation violates article 3(1) of the UNCRC, mistakenly infers that the difference in the impact on men and women cannot therefore be justified. 90.
Nor is the argument made stronger by being recast in terms of domestic administrative law, on the basis that the decision to make the Regulations was vitiated by an error of law as to the interpretation of article 3(1) of the UNCRC.
It is firmly established that UK courts have no jurisdiction to interpret or apply unincorporated international treaties: see, for example, J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 499; R v Lyons (Isidore) [2002] UKHL 44; [2003] 1 AC 976, para 27.
As was made clear in R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE Intervening) [2008] UKHL 60; [2009] AC 756, it is therefore inappropriate for the courts to purport to decide whether or not the Executive has correctly understood an unincorporated treaty obligation.
As Lord Bingham of Cornhill said at para 44: Whether, in the event that there had been a live dispute on the meaning of an unincorporated provision on which there was no judicial authority, the courts would or should have undertaken the task of interpretation from scratch must be at least questionable.
It would moreover be unfortunate if decision makers were to be deterred from seeking to give effect to what they understand to be the international obligations of the United Kingdom by fear that their decisions might be held to be vitiated by an incorrect understanding.
Lord Brown of Eaton under Heywood expressed himself more emphatically (para 67): It simply cannot be the law that, provided only a public officer asserts that his decision accords with the states international obligations, the courts will entertain a challenge to the decision based upon his arguable misunderstanding of that obligation and then itself decide the point of international law at issue. 91.
The case of R v Secretary of State for the Home Department, Ex p Launder [1997] 1 WLR 839, on which reliance is placed, is distinguishable from the present case on the same basis as it was distinguished in the Corner House Research case.
In the first place, as Lord Bingham pointed out (para 44), there was in Launder no issue between the parties about the interpretation of the relevant articles of the Convention, whereas in Corner House, as in the present case, the court was being asked to determine, in the absence of any international judicial authority, the meaning of a provision of an unincorporated international treaty.
Secondly, as Lord Brown noted (para 66), Launder was a case in which it was plain that the decision maker would have taken a different decision had his understanding of the treaty been different: his clear intention was to act consistently with the United Kingdoms international obligations, whatever decision that would have involved him in taking.
In Corner House, on the other hand, the primary intention behind the decision was to save this country from a threat which it faced, and all that the Ministers were really saying was that they believed the decision to be consistent with the international obligation in question.
The intensity of review 92.
Finally, it has been explained many times that the Human Rights Act entails some adjustment of the respective constitutional roles of the courts, the executive and the legislature, but does not eliminate the differences between them: differences, for example, in relation to their composition, their expertise, their accountability and their legitimacy.
It therefore does not alter the fact that certain matters are by their nature more suitable for determination by Government or Parliament than by the courts.
In so far as matters of that nature have to be considered by the courts when deciding whether executive action or legislation is compatible with Convention rights, that is something which the courts can and do properly take into account, by giving weight to the determination of those matters by the primary decision maker. 93.
That consideration is relevant to these appeals, since the question of proportionality involves controversial issues of social and economic policy, with major implications for public expenditure.
The determination of those issues is pre eminently the function of democratically elected institutions.
It is therefore necessary for the court to give due weight to the considered assessment made by those institutions.
Unless manifestly without reasonable foundation, their assessment should be respected. 94.
As I have explained, the Regulations were considered and approved by affirmative resolution of both Houses of Parliament.
As Lord Sumption observed in Bank Mellat v H M Treasury (No 2) [2013] UKSC 39; [2014] AC 700, para 44: When a statutory instrument has been reviewed by Parliament, respect for Parliament's constitutional function calls for considerable caution before the courts will hold it to be unlawful on some ground (such as irrationality) which is within the ambit of Parliament's review.
This applies with special force to legislative instruments founded on considerations of general policy. 95.
Many of the issues discussed in this appeal were considered by Parliament prior to its approving the Regulations.
That is a matter to which this court can properly have regard, as has been recognised in such cases as R (Williamson) v Secretary of State for Education and Employment [2005] UKHL 15; [2005] 2 AC 246, R (Hooper) v Secretary of State for Work and Pensions [2005] UKHL 29; [2005] 1 WLR 1681, 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.
Furthermore, that consideration followed detailed consideration of clause 93 of the Bill, which became section 96 of the 2012 Act.
It is true that the details of the cap scheme were not contained in the Bill which Parliament was debating, but the Governments proposals had been made clear, they were challenged by means of proposed amendments to the Bill, and they were the subject of full and intense democratic debate.
That is an important consideration.
As Lord Bingham of Cornhill observed in R (Countryside Alliance) v Attorney General [2007] UKHL 52; [2008] AC 719, para 45: The democratic process is liable to be subverted if, on a question of moral and political judgment, opponents of the Act achieve through the courts what they could not achieve in Parliament.
The same is true of questions of economic and political judgment. 96.
Giving due weight to the assessment of the Government and Parliament, I am not persuaded that the Regulations are incompatible with article 14.
The fact that they affect a greater number of women than men has been shown to have an objective and reasonable justification.
No one has been able to suggest an alternative which would have avoided that differential impact without compromising the achievement of the Governments legitimate aims.
Put shortly, it was inevitable that measures aimed at limiting public expenditure on welfare benefits, addressing the perception that some of the out of work were receiving benefits which were excessive when compared with the earnings of those in work, and incentivising the out of work to find employment, would have a differential impact on women as compared with men.
That followed from the fact that women formed the majority of those who were out of work and receiving high levels of benefit.
The Governments considered view, endorsed by Parliament, that the achievement of those aims was sufficiently important to justify the making of the Regulations, notwithstanding their differential impact on men and women, was not manifestly without reasonable foundation.
I would accordingly dismiss the appeals.
LORD CARNWATH: 97.
Others have explained the factual and legal background of these appeals.
The following issues were agreed between the parties for consideration by the Supreme Court: (i) Was the Court of Appeal wrong to have declined to decide whether the benefit cap, as formulated in the 2012 Regulations, had an unlawfully disproportionate impact on victims of domestic violence? (ii) Was the Court of Appeal wrong not to have found that the disproportionate effect of the 2012 Regulations on victims of domestic violence was contrary to article 14 ECHR (read with article 8 and/or article 1 of Protocol 1) and unlawful? (iii) Was the Court of Appeal wrong to have found that the discriminatory effects of the 2012 Regulations on lone parents were justified and lawful, and not contrary to article 14 (read with article 8 and/or article 1 of Protocol 1)? (iv) Was the Court of Appeal wrong to have found that the Respondent has complied with his obligation to treat the best interests of children as a primary consideration when implementing the benefit cap scheme? 98.
The boundaries between these heads of claim have not been very clearly delineated in the arguments before us.
However, in agreement with both Baroness Hale and Lord Reed, I find it most helpful to concentrate on issues (iii) and (iv), with specific regard to article 1 of protocol 1 (A1P1).
Like them I do not think that a case has been made, at least on the evidence before us, for separate treatment of the position of victims of domestic violence, the subject of issues (i) and (ii).
Under issue (iii) it is common ground that the scheme falls within the ambit of A1P1, and that in the context of article 14 it is indirectly discriminatory against women, particularly lone parents.
The only issue therefore is justification. 99.
Article 8 was also mentioned under issue (iii), and was relied on by Mr Wise in his printed case.
However, as I understood it, this was not by way of challenge to the Court of Appeals rejection of the free standing claim under article 8, which is consequently not one of the agreed issues for this court.
Rather he relied on article 8 either as an alternative route into article 14, or as supporting his best interest claim under issue (iv).
I note that article 8 was not relied on by Mr Drabble QC for the Child Poverty Action Group.
I have not been persuaded that either of Mr Wises formulations adds anything of substance to the claim based on A1P1. 100.
It is important also to understand how the interests of children affected by the scheme may be relevant to the legal analysis, either under the Convention itself, or indirectly by reference to article 3(1) of the UNCRC (best interests of children as a primary consideration).
As to the Convention, the children have no relevant possessions under A1P1 in their own right; nor are they a protected class under article 14.
However, as Lady Hale has said (para 218), the disproportionate impact on women arises because they are responsible for the care of dependent children.
Elias LJ said in the Divisional Court (para 62): In this case there is no dispute that the rights of the adult claimants under A1P1 (the right to peaceful enjoyment of possessions) are affected by a reduction in the benefits paid to them.
And although the child claimants have no A1P1 rights themselves, we agree with CPAG's submission that it would be artificial to treat them as strangers to the article 14/A1P1 arguments.
The benefits in each case are paid to the mother to enable her both to feed and house herself and to feed and house her children.
I agree.
Accordingly, in considering the nature of the admittedly discriminatory effect of the scheme on lone parents, and its alleged justification, the effects on their children must also be taken into account. 101.
The possible relevance of UNCRC article 3(1) requires a little more explanation.
Before the Divisional Court (para 45) Mr Eadie QC was recorded as having submitted on behalf of the Secretary of State that, as an international instrument with no binding effect in English law, the Convention had no bearing on the case.
This argument was rejected by Elias LJ and has not been renewed.
The Court of Appeal said: 69.
The Divisional Court held that, notwithstanding the fact that the UNCRC is an international convention which has not been incorporated into our domestic law, the court should nevertheless have regard to it as a matter of Convention jurisprudence: see Neulinger v Switzerland (2010) 28 BHRC 706, cited by Baroness Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166 at para 21.
This has not been challenged by the Secretary of State on this appeal. (para 69) Whether or not for this reason, issue (iv) was agreed by the Secretary of State in a form which raised directly the issue of compliance with article 3(1), without overtly questioning its legal relevance, or advancing any substantive argument on that issue.
In the circumstances it seemed right to proceed on the basis, conceded rather than decided, that the obligations imposed by article 3(1) were matters to be taken into account under the Convention on Human Rights.
As will be seen, this has now emerged as a crucial issue following the post hearing exchanges.
However, before returning to it in that context, I will consider the treatment of the discrimination issues, and in particular article 3(1), in the courts below. 102.
It is unnecessary to repeat the accounts given in other judgments of the nature of the discrimination, of the three fold justification put forward by the Secretary of State, and of the criticisms made of it by the appellants, supported by the interveners.
In short, it is said, the two objectives of fairness and increasing incentives to work are largely irrelevant or misconceived in their application to the group which is the object of discrimination; and that the third, saving money, cannot on its own justify discriminatory treatment in the enjoyment of a convention right.
The essential objection was put shortly by Mr Drabble for the Child Poverty Action Group: Although this is not the expressed aim of the cap, its discriminatory effect is built in to its structure.
Lone parent families are more likely to be affected by the cap precisely because it is so difficult for them to move into work; and the effects of the cap on them will necessarily be much harsher the corollary is that a lone parent will be far less likely to be able to avoid the cap by moving into work (a point accepted by the Government).
The effects of the cap on a single mother and her children will be more severe the more children she has to clothe, feed and house, and she must do so alone. 103.
The Court of Appeal, in agreement with the Divisional Court, rejected these criticisms, holding in particular that there had been compliance with article 3(1) (para 72ff).
Applying the approach of members of this court in H (H) v Italian Prosecutor [2013] 1AC 338, they held that it was not necessary for the decision maker to adopt a tightly structured approach to consideration of the issues raised by article 3(1).
It was enough for him to give appropriate weight to the interests of children as a primary consideration in the overall balancing exercise. 104.
They found ample evidence that the Secretary of State had satisfied this test, citing five matters (para 74): (i) The 2010 Treasury Spending Review made clear that a principal objective was to raise children out of long term poverty; (ii) The February 2011 Impact Assessment showed that the government was keenly aware of the likely impact on children; (iii) The March 2011 Equality Impact Assessment stressed the objective of reversing the detrimental impact on families and children of benefits dependency, and indicated that the government was looking at ways to ease the transition for large families; (iv) The Parliamentary debates focussed time and again on the interests of children; and (v) The July 2012 Impact Assessment revised the assessment of the number of children likely to be affected and addressed the issue of short term relief.
These points have been in substance adopted in the submissions of the Secretary of State in this court. 105.
The comments in this court in H (H) predated, and therefore did not take account of, the most authoritative guidance now available on the effect of article 3(1).
This is in General Comment No 14, adopted by the UN Committee on the Rights of the Child early in 2013.
Although this guidance was not available at the time of the decisions under challenge, it is as I understand it intended as a restatement of established practice, rather than a new departure. 106.
Paragraph 6 explains that best interests in this context is a three fold concept: (a) a substantive right, (b) a fundamental, interpretative legal principle, and (c) a rule of procedure.
The first and third are explained as follows: (a) A substantive right: The right of the child to have his or her best interests assessed and taken as a primary consideration when different interests are being considered in order to reach a decision on the issue at stake, and the guarantee that this right will be implemented whenever a decision is to be made concerning a child, a group of identified or unidentified children or children in general.
Article 3, paragraph 1, creates an intrinsic obligation for States, is directly applicable (self executing) and can be invoked before a court. (c) A rule of procedure: Whenever a decision is to be made that will affect a specific child, an identified group of children or children in general, the decision making process must include an evaluation of the possible impact (positive or negative) of the decision on the child or children concerned.
Assessing and determining the best interests of the child require procedural guarantees.
Furthermore, the justification of a decision must show that the right has been explicitly taken into account.
In this regard, States parties shall explain how the right has been respected in the decision, that is, what has been considered to be in the childs best interests; what criteria it is based on; and how the childs interests have been weighed against other considerations, be they broad issues of policy or individual cases. (emphasis added) 107.
Later paragraphs explain that the phrase actions concerning children is to be read in a very broad sense covering actions including children and other population groups, such as those relating to housing (para 19); that where a decision will have a major impact on children a greater level of protection and detailed procedures to consider their best interests (are) appropriate (para 20); and that the childs interests have high priority and (are) not just one of several considerations larger weight must be attached to what serves the child best (para 39). 108.
In relying on this guidance, Mr Wise accepted that it was not necessary for the decision maker to address the issues in a particular structured order, as the Court of Appeal may have understood his argument.
What matters is the substance of what is done rather than the form.
However those passages do show in my view that the evaluation needs to consider, where relevant, the interests both of children in general and of those directly affected by the action.
It also needs to indicate the criteria by which the high priority given to childrens interests has been weighed against other considerations.
In so far as that evaluation shows conflict with the best interests of the children affected, it needs either to demonstrate how that conflict will be addressed, or alternatively what other considerations of equal or greater priority justify overriding those interests. 109.
Accordingly, as the submissions and evidence stood at the end of the hearing, my view was that, judged by those criteria, the matters relied on by the Court of Appeal fell well short of establishing compliance.
The Treasurys long term objective of taking children out of poverty, laudable in itself, was no substitute for an evaluation of the particular impact on the children immediately and directly concerned, and their parents.
The February 2011 Impact Assessment and the March 2011 Equality Impact Assessment may have shown that the government was keenly aware of the likely impact on children, and was looking at ways to ease the transition, but they did not provide the answers.
In any event, those assessments were related to the statute rather than the regulations which are now under challenge. 110.
Those assessments also predated the report by the Childrens Commissioner in January 2012, which set out a number of likely outcomes of concern to the Commissioner.
They included increase in child poverty (including diversion to housing costs of money which would otherwise have been spent on necessities for childrens health and wellbeing), children losing their homes, incentivising family breakdown, and disproportionate impact on children from some BME groups.
The Commissioner expressed the view that the universal imposition of the cap without regard to the individual circumstances of children would conflict with the best interests principle under UNCRC article 3(1).
This view had special significance, as that of the authority responsible under the Children Act 2004 for advising the Secretary of State on the interests of children. 111.
The subsequent Equality Impact Assessment of July 2012, prepared by the Department in support of the regulations, did indeed make some revisions to the earlier figures, and mentioned the short term relief to be provided by discretionary housing payments.
But it did not in terms respond to the more fundamental points of concern raised by the Commissioners report.
In his evidence for the Secretary of State, Mr Holmes observed simply that the government did not agree with the Commissioners assessment, but without further detail.
The July assessment also indicated that there would in due course be a full evaluation of the operation of the benefit cap, to be published in autumn 2014. (We have not been given any information relating to this exercise, nor has it been suggested that it is relevant to our consideration of the legal issues relating to the decisions under challenge.) 112.
For these reasons, my provisional view at the end of the hearing was that, in their application to lone parents and their dependent children, the regulations were not compatible with Convention rights, and that the court should so declare.
Post hearing submissions 113.
In post hearing submissions permitted by the court, the point was taken on behalf of the Secretary of State that A1P1 (with or without article 14) was not the context in which article 3(1) UNCRC had hitherto been relied on by the appellants.
I observe that this limitation is not apparent from the agreed wording of question (iv).
Nor it seems was the discussion in the courts below so limited.
Lord Dysons reference to this argument (paras 67 75), and to its treatment by the Divisional Court, came immediately after his discussion of article 14 (read with A1P1); he observed that the argument had featured prominently in Mr Wises submissions on justification in relation to article 14 (as well as in relation to article 8 which we deal with below.
It is fair to say however that at the hearing Mr Wises submissions in that connection were directed mainly to article 8.
For this reason, and because of the importance of the issue for this case and others, counsel for the Secretary of State were given the opportunity to make further written submissions. 114.
They summarised their submissions in the following six points: (i) Article 3(1) of the UNCRC is a provision of an unincorporated treaty which may only be relied on to the extent that it has been transposed into domestic law; (ii) The ECtHR uses international law when determining the meaning of provisions of the ECHR, in accordance with the Vienna Convention on the Interpretation of Treaties; (iii) Article 3(1) of the UNCRC is, as a matter of principle and in accordance with Strasbourg authority, not relevant to the question of justification of discrimination under article 14 read with A1P1.
It has no role to play in determining the meaning of article 14 (read with A1P1 or otherwise), and does not inform or illuminate the question whether the differential impact on women of the benefit cap is proportionate; (iv) Article 3(1) of the UNCRC does not supplant, dilute or compromise the Stec test which all parties have agreed, at every stage of these proceedings, applies both when considering whether the aims are legitimate and when determining whether the 2012 Regulations, having regard to their differential impact on women, are proportionate; (v) Even if the Court were to consider it foreseeable that the ECtHR may develop its case law to have the effect that a breach of article 3(1) of the UNCRC renders legislation disproportionate, there are strong constitutional reasons why the Court should refrain from going beyond the current Strasbourg jurisprudence; and (vi) In any event, the 2012 Regulations do not breach article 3(1) of the UNCRC.
The Secretary of State fully took into account the best interests of children, as a primary consideration, and these were extensively debated in Parliament. 115.
I have little difficulty with points (i), (ii), (iv) and (v).
There has been no dispute as to the application of the Stec test to the issue of proportionality (iv), and no one has argued that we should go beyond existing ECHR jurisprudence (v).
As to (i) it is of course trite law that, in this country at least, an international treaty has no direct effect unless and until incorporated by statute, but that it may be taken into account as an aid to interpretation in cases of ambiguity.
To that extent the present case is to be contrasted with cases such as ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, in which as Lady Hale explained (para 23), UNCRC article 3(1) was reflected in the relevant statutory provisions.
Ministerial statements of the governments commitment to giving due consideration to the UNCRC articles (see Lady Hale para 214), may have political consequences but are no substitute for statutory incorporation. 116.
It is equally clear (ii) that, under the ECHR and in accordance with the Vienna Convention, regard may be had to principles of international law, including international conventions, for the purpose of interpreting the terms and notions in the text of the Convention: see Demir v Turkey (2008) 48 EHRR 1272, paras 65, 67, 85.
Demir itself is a good illustration of that proposition.
For the purpose of determining whether article 11 (right to join a trade union) extended to civil servants, reference was made to article 22 of the International Covenant on Civil and Political Rights.
It was noted by the court (para 99) that the wording of that article was similar to that of article 11 of the Convention, but that it was expressed to be subject to the right of the state to exclude the armed forces and the police, without referring to members of the administration of the state.
Similarly, in Neulinger v Switzerland, to which Elias LJ referred, the court had regard to the Hague Convention on the Civil Aspects of International Child Abduction in determining whether forced return of a child to Israel would involve a breach of his rights under article 8 of the Convention.
Point (iii) international treaties and article 14 117.
Point (iii) questions the application of this approach in the context of article 14 taken with A1P1, and more specifically to the issue of justification.
There seems to be no reason in principle why the Demir approach should not apply to article 14.
Mr Drabble relies on X v Austria (2013) 57 EHRR 405, as the clearest example, in that case relating to article 14 taken with article 8.
The court held that a law preventing second parent adoption in the case of same sex marriages involved discrimination under 14, and, although the law served a legitimate aim, it had not been shown that an absolute prohibition was necessary for the protection of the families or children.
Early in its judgment (para 49) the court had quoted UNCRC article 3, and also article 21 which requires that systems of adoption shall ensure that the best interests of the child shall be the paramount consideration.
In considering the question of justification, the court listed the factors which seemed rather to weigh in favour of allowing the courts to carry out an examination of each individual case adding (with a reference to the earlier quotations): This would appear to be more in keeping with the best interests of the child, which is a key notion in the relevant international instruments (para 146) Of this case Mr Sheldon QC for the Secretary of State commented: the court carried out the proportionality exercise (in respect of article 14 read with article 8) in the usual way and only subsequently observed that the outcome would also appear to be more in keeping with the best interests of the child.
That is not the same as using the UNCRC for the purposes of carrying out the balancing exercise itself.
Still less does it involve using the UNCRC to alter the proportionality test.
If that was intended to suggest that the reference to the UNCRC was purely incidental to the courts reasoning, I cannot agree.
The prominence given to the relevant articles in the earlier exposition of the relevant law shows to my mind that it was treated as a significant part of the consideration of article 14, albeit in a very different factual context to the present case. 118.
Another Strasbourg case in which reliance was placed on the UNCRC as an aid to interpretation of the Convention, in this case in favour of the state, was Ponomaryov v Bulgaria (2011) 59 EHRR 799.
The complaint was of a violation of article 14 taken with A2/P1 (right to education), by direct discrimination on the grounds of nationality with respect to the provision of secondary education.
In dismissing the application, the court relied on UNCRC article 28 as supporting the view that the state enjoyed a greater margin of appreciation in relation to secondary as compared to primary education (para 57). 119.
There are examples also in domestic jurisprudence.
Lady Hale has referred to the judgment of Maurice Kay LJ in Burnip v Birmingham City Council [2013] PTSR 117, concerning discrimination in the application of housing benefit for a disabled person.
Although the court was able to arrive at its decision on other grounds, Maurice Kay LJ would have relied if necessary on the UN Convention on the Rights of Persons with Disabilities (CRPD) to resolve any uncertainty over the meaning of article 14 discrimination in the circumstances of the case (para 22).
Of this case Mr Sheldon comments: Even if that was a correct approach, it does not justify using a treaty involving one group (here, children) to resolve any uncertainty about a claim for discrimination brought by, and in respect of, an entirely different group (here, women).
I see no reason to question Maurice Kay LJs approach as applied to the case before him, which seems wholly consistent with the ECHR cases already cited.
I accept however that the treaty in question was directly related to the particular form of discrimination there in issue.
I will return to that point. 120.
I see no inconsistency between such reference to international treaties where relevant and the Stec test.
In Burnip.
Henderson J, giving the lead judgment, cited the passage in Stec which established the manifestly without reasonable foundation test as appropriate for review of general measures of economic or social strategy, and declined to adopt an enhanced test requiring very weighty reasons for the discrimination.
It was in this context that Maurice Kay LJ, who agreed with Henderson J on the issue of justification (para 23), drew assistance from the CRPD. 121.
Before considering the application of that approach to the present case, it is convenient to consider point (vi), that is whether the latest submissions throw any further light on the issue whether the regulations were in compliance with article 3(1).
Compliance with article 3(1) 122.
It is not in dispute that, as asserted, issues in relation to the interests of children were extensively debated in Parliament or that the views so expressed were taken into account by Ministers.
But article 3(1) is more than a restatement of the ordinary administrative law duty to have regard to material circumstances.
The principles were summarised by Lord Hodge in Zoumbas v Secretary of State for the Home Department (AF (A Child) intervening) [2013] 1 WLR 3690 (paras 10 13) in seven points.
I would emphasise the first and last: (1) The best interests of a child are an integral part of the proportionality assessment under article 8 ECHR ; (7) A child must not be blamed for matters for which he or she is not responsible, such as the conduct of a parent.
On the other hand, as he added (by reference to H (H)) 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 (para 13). 123.
In considering how the government approached that task, rather than trawling through the parliamentary debates, we are entitled to rely on the evidence given in these proceedings on behalf of the Secretary of State.
The Court of Appeal quoted (paras 32 33) the evidence of Mr Holmes that: if the level of the benefit cap was based on the number of children in a household it would undermine the intention that there should be a clear upper limit to the amount of benefit families can receive. and Agreeing to exclude child benefit from the cap would have effectively resulted in there being no limit to the amount of benefit a household could receive.
Further, Child Benefit, like other welfare benefits, is provided by the state and funded by taxpayers and therefore with the aim of reducing welfare expenditure and reducing the deficit the Government believes it is right that it is taken into account along with other state benefits when applying the cap.
It is noteworthy that, as far as Mr Holmes evidence went, the Secretary of State offered no substantive response to the specific concerns expressed by the Childrens Commissioner and others about the practical impact on children of families affected by the cap.
Of the two points made by him, the second is no more than a general statement of the desirability of limiting government expenditure, without any direct reference to the interests of children.
The first point the need for a clear upper limit begs the question whether it is consistent with the statutory framework to treat child benefits as no more than a component of the family income. 124.
The difficulty with that response, in the context of a duty to treat the best interests of the child as a primary consideration is that it ignores the distinctive statutory purpose of the child related benefits.
Lord Reed (para 35) refers to a ministerial response in the course of the Parliamentary debate, to the effect that working people on low incomes had to cope with difficult circumstances and live within their means; that their earnings were not determined by the size of their families, and that the government believed that the same principle should apply to the level of the cap. 125.
As applied to child related benefits, in my view, this was a false comparison.
No doubt for that reason it was not a point made by Mr Holmes.
The benefits are paid regardless of whether their parents are in work or not.
In this respect therefore workers and non workers alike were (before the cap) able to rely on this extra assistance in coping with difficult circumstances in the interests of their children.
Although paid to the parents, these benefits are designed to meet the needs of children considered as individuals.
As Lady Hale said in Humphreys v Revenue and Customs Comrs (summarising the case for the Revenue): The aim of child tax credit is to provide support for children.
The principal policy objective is to target that support so as to reduce child poverty.
The benefit attaches to the child rather than the parent. ([2012] 1 WLR 1545 para 25) The same could be said of child benefit. 126.
As Mr Drabble QC submitted, the cap was a complete innovation in the combined benefits/tax system, which had always contained a mechanism to adjust for family size.
The cap has the effect that for the first time some children will lose these benefits, for reasons which have nothing to do with their own needs, but are related solely to the circumstances of their parents.
It is difficult to see how this result can be said to be consistent with the best interests of the children concerned, or in particular with the first and seventh principles in Zoumbas. 127.
Lord Reed has referred to statements made to Parliament in November 2011 that excluding both child benefit and child tax credit would reduce the savings from the scheme by 80 90%, and so emasculate the scheme.
It is not clear whether these are up to date estimates, or how they relate to the regulations as opposed to the Bill.
If correct, they raise the questions why the viability of a scheme, whose avowed purpose is directed at the parents not their children, is so disproportionately dependent on child related benefits.
There is nothing in Mr Holmes evidence which addresses or answers these questions. 128.
Accordingly I remain of the view that the Secretary of State has failed to show how the regulations are compatible with his obligation to treat the best interests of children as a primary consideration.
UNCRC article 3(1) and A1P1 129.
The more difficult question, now that it has been put in issue, is how that finding in relation to the interests of children under UNCRC article 3(1) affects the resolution of issue (iii): that is the alleged justification for the admittedly discriminatory effects on women as lone parents.
As Mr Sheldon submits, even if article 3(1) had a role to play in illuminating article 14, this could only be where the alleged indirect discrimination, or differential treatment, was in respect of children.
In the present case, by contrast, the allegation is of discrimination, not against children, but against their mothers.
The children, it is said, will be treated the same whether their lone parents are male or female.
With considerable reluctance, on this issue agreeing with Lord Reed, I feel driven to the conclusion that he is right. 130.
In all the article 14 cases to which we have been referred to in this context there was a direct link between the international treaty relied on and the particular discrimination alleged: (i) In X v Austria (2013) 57 EHRR 405, where the complaint concerned discrimination by restrictions on adoption by single sex couples, the court referred not only to UNCRC article 3(1), but also to article 21 which applied the best interests principle specifically to adoption.
In Ponomaryov v Bulgaria (2011) 59 EHRR 799, where the complaint was of discrimination in respect of education, reference was made to UNCRC article 28 relating also to education. (ii) (iii) In Burnip v Birmingham City Council [2013] PTSR 117, where the alleged discrimination related to the treatment of the disabled, reference was made to the CRPD, covering the same subject matter.
In each of these cases, it can plausibly be argued that the court was using the international materials to fill out, or reinforce, the content of a Convention article dealing with the same subject matter.
They can be justified broadly as exercises in interpretation of terms and notions in the Convention, consistently with the Demir principle. 131.
There is no such connection in the present case.
The discrimination with which we are concerned under article 14 is in relation to women and their possessions.
Those concepts require no relevant illumination by way of interpretation.
It is true that the discrimination in this case is related to their responsibilities as lone parents, and to that extent, as Elias LJ accepted, the children are not strangers to the article 14/A1P1 arguments.
But that is a comment on the facts, not on the interpretation of the convention rights.
Indeed, as has been seen, it is the distinct interest of the children in the benefits as individuals that has reinforced my view of the breach under article 3(1).
As Lord Reed says (para 89) the fact that children are statistically more likely to be living with a single mother than with a single father is unrelated to the question whether the childrens interests have been treated as a primary consideration as required by UNCRC article 3(1). 132.
We have been shown no precedent in the Strasbourg jurisprudence for the use of an international treaty in this indirect way.
Mr Sheldon argues that there are strong constitutional reasons why the court should not go beyond Strasbourg on an issue of this kind.
Whether or not that is so, we have heard no argument that we should do so.
The appellants and their supporters have relied simply on the principles to be extracted from the existing case law.
Conclusion 133.
In conclusion I would dismiss the appeal, albeit on grounds much narrower than those accepted by the courts below.
I would hope that in the course of their review of the scheme, the government will address the implications of these findings in relation to article 3(1) itself.
However, it is in the political, rather than the legal arena, that the consequences of that must be played out.
LORD HUGHES: 134.
I agree with the judgment and conclusions of Lord Reed and would like him dismiss this appeal.
I add only some additional observations in view of the difference of opinion which is disclosed by the judgments of Lady Hale and Lord Kerr. 135.
There is much common ground. (i) The suggested discriminatory effect upon the victims of domestic violence adds nothing to the accepted discriminatory effect upon women.
Moreover neither of the adult appellants is suffering any of the adverse effects of the cap relied upon as affecting such victims, so that the Court of Appeal was fully justified in declining to decide the issue of such victims.
Further, the principal adverse effects peculiar to such victims which were relied upon (the treatment of refuges and the possible need for two sets of rent to be within housing benefit) have both been addressed by amendments to the original form of the Regulations.
It is agreed on all sides that the scheme has legitimate aims.
At the very least, the principal aim of discouraging benefit dependence and encouraging work is agreed to be legitimate.
For my part I agree that at a time of national economic crisis it was also legitimate to seek to reduce the overall expense on benefits, and that establishing a different balance between those who worked and paid taxes and those who did not was a further legitimate aim. (ii) (iii) A1P1 to the First Protocol is agreed to be engaged to the extent that Stec v United Kingdom (2006) 43 EHRR 1017 establishes that, although it does not give an entitlement to benefits, the ECHR does require that if they are provided they must be administered in a manner which is not discriminatory contrary to article 14.
Here a discriminatory effect of the regulations upon women is conceded, because they represent much the largest proportion of lone parents forming a household with children.
Accordingly the scheme as a whole, including its discriminatory effect, must be justified.
The test, in a case involving high level social/economic policy, is agreed by all parties to be that laid down in Stec, namely that it fails to be justified if it is manifestly without reasonable foundation. 136.
The difference of opinion reduces itself to the place of article 3 of the UN Convention on the Rights of the Child (UNCRC).
That in turn involves two questions: (a) does article 3 have legal effect in English law and if so by what (b) route? and if it does, has there been a breach of it such as to render the Regulations unlawful? The legal relevance of article 3 UNCRC 137.
Article 3 UNCRC is contained in an international treaty ratified by the UK.
It is binding on this country in international law.
It is not, however, part of English law.
Such a treaty may be relevant in English law in at least three ways.
First, if the construction (ie meaning) of UK legislation is in doubt, the court may conclude that it should be construed, if otherwise possible, on the footing that this country meant to honour its international obligations.
Second, international treaty obligations may guide the development of the common law.
For these two propositions see for example R v Lyons (Isidore) [2002] UKHL 44; [2003] 1 AC 976, para 13.
Neither has any application to this case.
This case is concerned with legislation, not with the common law, and it is not suggested that there is any room for doubt about the meaning of the regulations.
Thirdly, however, the UNCRC may be relevant in English law to the extent that it falls to the court to apply the European Convention on Human Rights (ECHR) via the Human Rights Act 1998.
The European Court of Human Rights has sometimes accepted that the Convention should be interpreted, in appropriate cases, in the light of generally accepted international law in the same field, including multi lateral treaties such as the UNCRC.
An example is Demir v Turkey (2008) 48 EHRR 1272 which concerned the scope of article 11 (right of freedom of association), and which is cited by Lord Reed at para 83 above. 138.
It was on this third basis that the UNCRC was advanced in argument before this court and, as I understand it, in the courts below.
Until post hearing submissions in this court, this argument was confined to praying in aid article 3 UNCRC upon the application or content of article 8 of the ECHR (respect for private and family life).
In turn, the complaint of infringement of article 8 was based upon the rights of the children affected by the cap, not of their mothers except to the extent that they were, as carers, directly involved in the article 8 rights of their children.
Article 3 UNCRC was not, until the post hearing submissions, advanced as relevant to the justification of the admitted indirect discrimination against women in relation to their A1P1 rights. 139.
For the reasons set out by the Court of Appeal, the article 8 rights of children are not arguably infringed by the benefit cap scheme.
Elastic as that article has undoubtedly proved, it does not extend to requiring the State to provide benefits, still less benefits calculated simply according to need, nor does it require the state to provide a home.
See Chapman v United Kingdom (2001) 33 EHRR 399, para 99; R (TG) v Lambeth London Borough Council (Shelter intervening) [2012] PTSR 364, paras 34 and 40; AM v Secretary of State for Work and Pensions [2014] EWCA Civ 286, para 22 and the cases there cited.
Winterstein v France [2013] ECHR 984 depended upon the long toleration of itinerants on the land from which they were evicted and the absence of provision of alternative accommodation, and does not lead to a different conclusion.
Moreover, the likely impact of this scheme upon some children who are members of larger families living in high rent homes is at most to make it unavoidable for the family to move; the duty of Local Authorities to provide accommodation under the Housing Act 1996, Part 7, remains.
None of the judgments suggests that article 8 is engaged.
I agree that it is not.
It follows that article 3 UNCRC cannot have effect in English law on the grounds that it is relevant to its interpretation. 140.
The additional argument now formulated before this court and accepted by Lady Hale and Lord Kerr would give article 3 UNCRC the force of domestic English law on the grounds that it bears on the issue of whether the agreed discrimination against women in relation to their A1P1 rights was justified.
Lord Kerr would additionally give article 3 direct effect on the grounds that the UKs signature to the convention is sufficient to impose a domestic duty to comply with it.
Like Lord Reed and Lord Carnwath, I am unable to accept these arguments. 141.
It may not be difficult to see that in interpreting the content of the article 8 rights of children, it may be legitimate to take into account the international obligation contained in article 3 UNCRC.
ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166 was an article 8 case where the relevance to that article of the interests of the children of a potential deportee was conceded.
Similarly, Neulinger v Switzerland (2010) 54 EHRR 1087 depended upon article 8.
It concerned an order directly about the upbringing of a child, namely an order for return to another state pursuant to the Hague Convention on the Civil Aspects of Child Abduction, and the very first words of that convention declare the interests of children to be of paramount importance in matters relating to their custody.
If article 8 rights are engaged, the question will often become: is such impairment of respect for private and family life nevertheless permissible under article 8(2)? If the article 8 rights relied upon are those of children, as was asserted here, or of their parents in the form of their relationship with their children, as in ZH (Tanzania), there is scope for the argument that an internationally recognised duty to approach the childrens interests in a particular way bears on whether article 8(2) is satisfied in the context of these regulations whether any impairment of childrens article 8 rights was permitted on the grounds that it is necessary in a democratic society in the interests of the economic well being of the country or the protection of the rights and freedoms of others, such as those taxpayers who do not claim benefits. 142.
The Demir approach is not of course limited to article 8, as that case itself shows.
And it may extend to cases where discrimination is in issue.
Opuz v Turkey (2009) 50 EHRR 695 was an article 2/article 14 case involving a complaint of failure to protect from domestic violence.
The court relied in part on the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) in determining the scope of article 14: see paras 185 187.
Ponomaryov v Bulgaria (2011) 59 EHRR 799 was a complaint of discrimination against foreign nationals by charging for education when Bulgarian nationals received free provision.
Obiter, the court referred at paras 56 57 to international conventions which indicated that the states margin of appreciation increased as one moved from primary, through secondary, to tertiary education.
Burnip v Birmingham City Council [2013] PTSR 117 was a benefits case involving A1P1 and a derivative article 14 claim.
In the Court of Appeal Maurice Kay LJ would have been prepared to adopt a similar approach by gaining assistance on the scope of article 14 from the UN Convention on the Rights of Persons with Disabilities (CRPD) if the extent of article 14 had been in doubt.
Obiter, he also offered the opinion that CRPD might illuminate the approach to justification, but the occasion to test this did not arise.
But before the Demir approach to the interpretation of the ECHR can be relevant, there has to be the necessary connection between the international law invoked and the Convention right under consideration.
This was clearly present in each of Opuz, Ponomaryov and Burnip.
In each, the international instruments referred to were directly concerned with the particular form of discrimination in issue.
Demir does not mean that the UNCRC (in this case) becomes relevant to every ECHR question which arises, simply because children are as a matter of fact affected by the decision or legal framework under consideration. 143.
It is said that the Strasbourg court has invoked article 3(1) UNCRC in the context of a discrimination claim in X v Austria (2013) 57 EHRR 405.
That was a case in which the same sex partner of a childs mother wished to adopt the child, who lived with the two ladies.
The effect of Austrian law was that adoption substituted the adoptive parent for the natural parent of the same sex.
Thus second parent adoption (adoption by the partner of the natural parent) by a same sex partner was legally ineffective, since if the adoption order were made the same sex partner of the mother would achieve parental rights, but in place of the natural mother, leaving the legal relationship of the absent father to the child unaltered.
Conversely, second parent adoption by the different sex partner of the natural parent was effective.
The claimants in that case were scrupulous in limiting their complaint about Austrian law to the resultant difference of treatment between, on the one hand, a different sex unmarried couple and, on the other, a same sex unmarried couple such as themselves.
They disclaimed any complaint about any different treatment as between married couples and unmarried couples, which the court had previously found to be within the margin of state appreciation: see Gas & Dubois v France [2014] 59 EHRR 22. 144.
The court decided the case on the grounds advanced by the claimants.
The discrimination between different sex couples and same sex couples was based upon sexual orientation alone.
Where such discrimination is in question, the margin of appreciation is narrow and proportionality requires not merely that the measure in question pursues a legitimate aim but also that it is necessary: see paras 140 141.
The relevant Convention rights to which the derivative article 14 claim to discrimination was attached were the article 8 rights of all three people, the mother, her partner and the child.
In the absence of any evidence submitted to suggest that a child was generally better brought up by a different sex couple than by a same sex couple, there was no justification for the different treatment as between such couples.
The court adopted its usual practice of setting out international instruments in the field, and thus included article 3(1) UNCRC.
The decision in question (adoption) related directly to the upbringing of the child.
It is unsurprising that the court referred (somewhat in passing) at para 146 to the fact that its conclusion was also more in keeping with the best interests of the child, which it noted to be a key notion in the relevant international instruments.
It might have added that in the great majority of developed states there is consensus that questions of a childs upbringing must be determined by his or her best interests or welfare as the dominant or paramount consideration: in England this principle is long established law and now encapsulated in section 1(1) of the Children Act 1989. 145.
At its highest, this decision is another in which the UNCRC is referred to as relevant to the content of article 8 rights, and thus to the issue of justification for discrimination in relation to such rights.
That is a very long way from saying that article 3(1) is relevant to justification upon any kind of discrimination issue, whether or not the decision is about the childs upbringing, and whether or not either the ECHR rights of the child or article 8 rights of his family are at stake.
Such issues simply did not arise in X v Austria. 146.
If the rights in question are the A1P1 property rights of women, and their associated derivative right not to be discriminated against in relation to those rights, it is an impermissible step further to say that there is any interpretation of those rights which article 3 UNCRC can inform.
In the case of article 8, the childrens interests are part of the substantive right of the parent which is protected, namely respect for her family life.
In the case of A1P1 coupled with article 14, the childrens interests may well be affected (as here), but they are not part of the womans substantive right which is protected, namely the right to be free from discrimination in relation to her property.
There is no question of interpreting that article 14 right by reference to the childrens interests.
The protected right to respect for family life under article 8 is entirely different from the protected right to property under A1P1.
Nor can the article 8 rights of the child be said to be in need of interpretation when it is clear for the reasons given in all the judgments that they are not infringed.
The necessary connection between the ECHR right under consideration and the international instrument is not present.
That can be seen by considering the position of the appropriate comparator, namely a lone non working father with the same children and household outgoings.
The interests of the children would be exactly the same in his case, but he would have no article 14 claim to discrimination. 147.
I also agree that to treat failure to comply with article 3(1) UNCRC as determinative of the present case would be tantamount to departing from the Stec test for justification which has been agreed on all sides throughout this litigation.
Was there a breach of article 3 UNCRC? 148.
It is unnecessary to decide this question, but I ought to say that in my view it is clear that there was in any event no breach of article 3. 149.
The language of article 3(1) does give rise to some difficulty.
It is in these terms: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.
This departs from the formulation of the paramountcy principle for decisions about the upbringing of a child, or for legislation designed for the protection/advancement of children, mentioned at para 142 above.
This paramountcy formulation is employed in the UNCRC but only in relation to one kind of upbringing decision, namely adoption (article 21).
The different language of article 3(1) begs two important questions: (a) what is the extent of the expression actions concerning children; and (b) what is the meaning of a primary consideration 150.
It might be thought that article 3 was intended to apply to decisions directly about a child, or perhaps to those and to others directly affecting him, such as for example decisions relating to the provision of education or child support facilities, and that a primary consideration therefore imports some priority for the best interests of children even if short of making them determinative, as the paramountcy principle does.
That might perhaps be suggested by article 3(3) which clearly is specific to the care and protection of children, while article 3(2), which requires states to take appropriate legislative and administrative measures to ensure that the child has such protection and care as is necessary for his well being, is also perfectly consistent with this.
This is not, however, the view taken in General Comment 14, adopted by the UN Committee on the Rights of the Child at its 2013 session, referred to by Lord Carnwath at para 105, and foreshadowed by earlier similar documents. 151.
That Comment suggests (at para 19) that article 3 extends well beyond decisions directly about children to those which indirectly affect either individual children or children in general, eg related to the environment, housing or transport.
If the meaning of article 3(1) is as broad as this, then all manner of court decisions may fall within it; a planning decision relating to housing development might be one, whilst the making of a possession order against a tenant who has children, or the enforcement of money judgments against the family motor car, or the sentencing of him for a serious criminal offence might be others. 152.
Pace Lord Carnwath, I do not take it as read that the Committees views, although entitled to careful consideration coming from the source that they do, can be regarded as binding upon party States as to the meaning of the treaty to which they agreed.
But it is neither necessary nor appropriate to attempt to resolve these issues in this case, especially since we heard no argument upon them.
All that needs to be said is that it is clear that the wider the reach of the concept of decisions concerning either an individual child or children in general, the less possible it is to impose the best interests of such child or children as a determinative or even priority factor over the frequently complex legal or socio economic considerations which govern such decisions.
The committees general comment gives some acknowledgement to this problem in, for example, para 20, which recognises that although all State actions may affect children, a full and formal process of assessing their best interests is not called for in every case, and in para 32 where it is stated that the concept of the childs best interests is flexible and adaptable. 153.
The Committees General Comment also realistically recognises that the relevant best interests of children will, in relation to decisions which are not simply about identified individual children, include those of children generally.
This is apparent throughout the document, including in those passages from para 102 cited by Lord Carnwath.
I respectfully agree with Lady Hale that where article 3(1) applies it is not enough to consider only the interests of children generally, without also evaluating the interests of any likely to be particularly affected by the legislation in prospect, but the converse is also true.
It is obvious that in the context of this kind of socio economic legislation, there will be a tension between, on the one hand, the interests of children generally in promoting the legitimate aims of reducing a culture of benefit dependency and encouraging work and, on the other, the special interests of those children most likely to suffer an adverse effect of the cap, such as the present appellants.
This is realistically recognised by the UN Committee in, for example, para 32 of the Comment, which reads: The concept of the child's best interests is complex and its content must be determined on a case by case basis.
It is through the interpretation and implementation of article 3, paragraph 1, in line with the other provisions of the Convention, that the legislator, judge, administrative, social or educational authority will be able to clarify the concept and make concrete use thereof.
Accordingly, the concept of the child's best interests is flexible and adaptable.
It should be adjusted and defined on an individual basis, according to the specific situation of the child or children concerned, taking into consideration their personal context, situation and needs.
For individual decisions, the child's best interests must be assessed and determined in light of the specific circumstances of the particular child.
For collective decisions such as by the legislator the best interests of children in general must be assessed and determined in light of the circumstances of the particular group and/or children in general.
In both cases, assessment and determination should be carried out with full respect for the rights contained in the Convention and its Optional Protocols. (emphasis supplied) 154.
Whilst the appellants in the present case relied upon article 3(1) as substantive and not merely procedural they did not analyse the extent to which it was asserted that priority ought to be given to childrens best interests, still less the interests of which children.
Their chief reliance was upon the suggested failure of the Secretary of State properly to have analysed and considered the best interests of children.
Relying upon paragraph 6 of the UN Committees General Comment, the principal submission of Mr Wise QC was that the article 3 obligation required (a) careful consideration of how many children will be or are likely to be affected by the cap, (b) asking what the effect on those children particularly affected by it would be, (c) asking whether the cap could be implemented in a manner protecting such children from adverse effects, and (d) asking whether the general proposition that the cap will lift children out of welfare dependency outweighs the risk to those particularly affected. 155.
Like both courts below I regard it as plain that the Secretary of State did not fail to undertake all these exercises.
There was the fullest public debate about not only the concept of the cap but its proposed details.
This country has four Childrens Commissioners, charged with the duty of monitoring childrens interests and advocating them publicly.
All participated in the debate and made strongly the case now made by the appellants that the general benefits to families and children which would be brought by the cap were outweighed by the likely adverse consequences for particular children in situations exactly like those of the present appellants.
The two Impact Assessments and the Equality Impact Assessment written by the Government recorded the likely adverse consequences for children such as these, in particular those in larger one parent families living in high rent areas.
The Parliamentary debate on the detailed proposals returned time and again to this topic.
There was a specific proposal, supported by the House of Lords, to amend the Bill by excluding child benefit from the cap, which, as Lady Hale observes, would no doubt remove the adverse impact on the appellants here relied upon; this proposal was considered but rejected by the House of Commons and withdrawn in consequence by the House of Lords.
The Secretary of State concluded, and still concludes, that to do this would drive a coach and horses through the whole policy.
The evidence could not really be clearer that the Secretary of State did indeed ask the questions which Mr Wise contends are required by article 3 UNCRC.
The appellants real complaint is that he reached what they say is the wrong value judgment when it came to balancing the interests of children (and society) in general against those of particular children likely to suffer adverse effects from the cap.
Reasonable people may well either agree or disagree with this value judgment, but to say that one disagrees is not the same as saying that the decision is unlawful.
LADY HALE: 156.
The benefit cap is one of a package of measures provided for in the Welfare Reform Act 2012.
The total amount of benefit to which a couple or a single person is entitled is capped at a prescribed sum, irrespective of how much they would otherwise be entitled to.
The bare bones of the scheme are provided for in the 2012 Act, but its detailed implementation is contained in the Benefit Cap (Housing Benefit) Regulations 2012. 157.
The appellants do not challenge the compatibility of the Act with their rights under the European Convention on Human Rights, but they do challenge the compatibility of the way in which it has been implemented by the 2012 Regulations.
They argue that it has a disproportionate impact upon lone parents and upon the victims of domestic violence; both groups are predominantly, although not exclusively, composed of women; hence the scheme is indirectly discriminatory on grounds of sex.
As the scheme falls within the ambit of the protection of property rights in article 1 of the First Protocol to the Convention, this violates their right, under article 14 of the Convention, to enjoy such rights without discrimination unless it can be justified.
The Secretary of State accepts that the scheme falls within the ambit of article 1 of the First Protocol and that it is indirectly discriminatory against lone parents and thus against women.
The question, therefore, is whether it can be justified.
A further question, which has only emerged after the hearing in April 2014, is the extent to which, if at all, the obligations of the United Kingdom under the United Nations Convention on the Rights of the Child is relevant to that issue. 158.
Both the Divisional Court and the Court of Appeal held that it can be justified: [2013] EWHC 3350 (QB) and [2014] EWCA Civ 156.
This raises several questions: whether the justification advanced relates to the scheme as a whole rather than to its discriminatory effect; what is the test to be applied in deciding whether the discrimination is justified; and what is the part played by the international obligations of the United Kingdom under the United Nations Convention on the Rights of the Child in assessing that. 159.
The benefit cap is, of course, quintessentially a matter of social and economic policy.
In such matters, as Lord Hope of Craighead observed in R v DPP, Ex p Kebilene [2000] 2 AC 326, at p 381, it will be easier for the courts to recognise a discretionary area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention.
As Lord Reed explains, the introduction of the cap was indeed extensively debated in Parliament and various amendments were proposed and resisted which would have mitigated the adverse effects with which we are here concerned.
But the details of the scheme, including those adverse effects, were deliberately left to be worked out in regulations.
It is therefore the decisions of the Government in working out those details, rather than the decisions of Parliament in passing the legislation, with which we are concerned. 160.
Furthermore, as Lord Hope went on to say in In re G (Adoption: Unmarried Couple) [2009] 1 AC 173, para 48, protection against discrimination, even in an area of social and economic policy, falls within the constitutional responsibility of the courts: Cases about discrimination in an area of social policy, which is what this case is, will always be appropriate for judicial scrutiny.
The constitutional responsibility in this area of our law resides with the courts.
The more contentious the issue is, the greater the risk is that some people will be discriminated against in ways that engage their Convention rights.
It is for the courts to see that this does not happen.
It is with them that the ultimate safeguard against discrimination rests.
Therefore, even in the area of welfare benefits, where the court would normally defer to the considered decision of the legislature, if that decision results in unjustified discrimination, then it is the duty of the courts to say so.
In many cases, the result will be to leave it to the legislature to decide how the matter is to be put right.
The scheme 161.
It is not necessary to go into the scheme in great detail, but it is necessary to understand the essentials.
Section 96(1) of the Act provides that Regulations may provide for a benefit cap to be applied to the welfare benefits to which a single person or couple is entitled.
Section 96(2) provides that where their total entitlement to welfare benefits exceeds the relevant amount, their entitlement is reduced by the amount of the excess.
This is the cap.
The relevant amount is to be specified in Regulations (section 96(5)), but is to be determined by reference to estimated average earnings (section 96(6)).
By this is meant the amount which, in the opinion of the Secretary of State, represents at any time the average weekly earnings of a working household in Great Britain after deductions in respect of tax and national insurance contributions (section 96(7)).
Welfare benefits means any benefit, allowance, payment or credit prescribed in regulations (section 96(10)); but retirement pensions and state pension credit may not be prescribed (section 96(11)).
Regulations may also provide for exceptions to the application of the cap (section 96(4)(c)) and also for the benefit or benefits from which the reduction is to be made (section 96(4)(b)). 162.
Thus it will be seen that all the details of the scheme are to be covered in the regulations.
The only principle required by the Act, should the Government decide to introduce a cap at all, is that it is set by reference to average weekly earnings net of tax and national insurance contributions.
This, as Mr Holmes, the lead official in the Department of Work and Pensions responsible for the benefit cap policy, points out, produces a much higher figure than would be produced by working 40 hours a week for the minimum wage or even the London living wage.
But the Government was left a free hand in deciding what working age benefits would count towards the cap. 163.
In fact, the cap operates by way of a deduction from housing benefit.
Hence the 2012 Regulations amend the Housing Benefit Regulations 2006, principally by introducing a new Part 8A, entitled Benefit cap.
The relevant amount is set at 350 for a single claimant (without dependent children) and 500 for all other claimants (that is, couples and lone parents with dependent children) (regulation 75G).
This is the equivalent of a gross annual salary of 35,000 a year and 26,000 net.
A long list of welfare benefits is prescribed, most importantly for our purposes including housing benefit, child benefit and child tax credit (regulation 75G).
Once the cap is reached, therefore, no account is taken of the number of children in the family.
On the other hand, the benefit cap does not apply at all where the claimant, the claimants partner or a child or young person for whom either is responsible is receiving any of a long list of benefits; these are mainly disability related but include a war pension (regulation 75F). 164.
The cap does not apply at all where the claimant is, or the claimant and her partner are jointly, entitled to working tax credit (regulation 75E(1), (2)).
This effectively exempts most working households from the cap; the rules are complicated, but a lone parent responsible for a child would qualify for working tax credit if she worked at least 16 hours a week, while a couple responsible for a child would qualify if they worked a total of 24 hours a week, as long as one of them worked for at least 16 hours a week; the normal requirement is 30 hours work a week (Working Tax Credit (Entitlement and Maximum Rate)) Regulations 2002, regulation 4, as amended by the Tax Credits (Miscellaneous Amendments) Regulations 2012, regulation 2).
Not only that, if the claimant or her partner have been employed or engaged in work for payment for 50 out of the preceding 52 weeks, the benefit cap will not apply for 39 weeks from their last day of work (regulation 75E(1), (3) (5)).
This gives a period of grace in which to find another job or to move house. 165.
The final regulation which is relevant for our purposes is that which provides, in effect, that the housing benefit payable for what is now (following a recent amendment) to be termed specified accommodation is disregarded (regulation 75C(2)(a)).
The amendment means that womens refuges are now covered, whereas previously many of them were not.
However, there is no comparable exemption for housing benefit paid in respect of temporary accommodation provided under the homelessness provisions of Part 7 of the Housing Act 1996. 166.
The benefit cap was introduced in April 2013 in four London boroughs, rolled out in July 2013 to a further 335 local authorities and in August 2013 to the remaining 40 authorities in England, Wales and Scotland.
It has not yet been implemented in Northern Ireland.
Between April 2013 and January 2014, a total of 38,655 households were capped, 47% of these in London and the vast majority in England. 167.
As Elias LJ, giving the judgment of the Divisional Court, observed at [2013] EWHC 3350 (Admin), para 11, It was obvious from the outset that the introduction of the cap would have severe and immediate consequences for claimants who had been receiving substantially in excess of the relevant amount.
To mitigate this, the Government provided additional funds to local authorities to enable them to make discretionary housing payments (DHPs) to claimants affected by the cap (along with the other purposes for which such payments may be made).
This was specifically intended as a short term solution where transitional help was necessary and not as a long term solution to the needs generated by the cap (see Holmes, Witness Statement No 1, para 130). 168.
Elias LJ continued, at para 12: The two items most likely to trigger the operation of the cap [are] housing benefit [and] the number of children in the family.
Housing benefit reflects (but does not necessarily meet in full) the cost of housing, whether social or private.
Accordingly, the cap will bear most heavily on those in receipt of benefit who live in areas where rental costs are high.
In practical terms, therefore, this means that those who live in London or in the centre of other big cities where rents tend to be high will be most likely to be affected.
It is a striking feature of the scheme and lies at the heart of this application that the cap applies equally to a childless couple in an area with cheap and plentiful social housing as it does to a lone parent mother of several children in inner London compelled to rent on the private market.
The appellants circumstances 169.
The four appellants are the lone mother and her youngest child in two families (a third family has now withdrawn from the case as the cap no longer applies to them).
The following evidence of their circumstances was before the court when the case was heard in April 2014. 170.
Ms SG and her family live in Stamford Hill, North London.
This is important because they are members of a particular orthodox Jewish sect.
The school age children attend a local Jewish school, kosher food is readily available (but expensive) in the local shops, they can walk to the synagogue and there is a support network of family and friends there.
Their lone mother has six children in all, but only three of them live with her: a son now aged four, a daughter now aged seven and another daughter now aged nine.
The family used to live in Belgium, but SG left her husband and came to live near her relatives in Stamford Hill in order to escape from her husbands abusive behaviour towards her and their eldest daughter, now aged 18.
The daughter was made a ward of court to prevent her father removing her from this country.
Because of her behavioural and psychological difficulties she was placed by the local authority in foster care within the same community.
She has since married but still lives locally and relies heavily upon her mother for support.
The oldest son studies in a yeshiva abroad and is unlikely to rejoin the family, but there are currently proceedings in Belgium about the residence of the second son, now aged 12, whom his mother earnestly hopes can return to live with the family in London. 171.
The family live in a two bedroomed flat rented from a private landlord.
This is already too small for them and would be quite unsuitable were the 12 year old boy to come and live with the family again.
When these proceedings began, the rent was 300 per week, but the landlord was proposing to put it up.
They were entitled to 289.20 housing benefit, 71.70 income support for SG, 167.30 Child Tax Credit (all means tested benefits), and 47.10 child benefit.
Hence their total benefit entitlement before the cap was 575.30 a week.
The cap has therefore resulted in a reduction of 75.30 in their weekly income.
The landlord has notified an increase in her rent to 420 from 31 January 2014, which would leave them with only 80 to live on. 172.
The Secretary of State correctly points out that housing benefit would not in any event meet such a high rent in full (because it exceeds the local housing allowance limit for that part of London).
He also argues that there are cheaper two bedroomed flats available in the area, but the appellants dispute this.
We are not in a position to resolve such factual disputes.
However, it is obvious that SG has very good reasons for wanting to continue to live in Stamford Hill, that accommodation there is in short supply because of demand from the local community, and that if she does stay there her weekly income will fall well below that which the State deems necessary for her and her three young children to live on. 173.
For a time, she did have part time work for 16 hours a week and thus the benefit cap did not apply.
But she was unable to sustain this, owing to the demands of the court proceedings relating to her children, both here and in Belgium, and the need to care for the younger children.
The 39 week grace period expired in November 2013, since when her benefits have been capped.
She has been receiving a discretionary housing payment to meet the shortfall between her rent and her housing benefit, but only until 30 June 2014, when it was due to be reviewed having regard to the steps she has taken to avoid the cap. 174.
Mrs NS is also the lone mother of three children, daughters now aged 4, 11 and 12.
There is a long history of sexual abuse and domestic violence within her marriage, much of it witnessed by the children.
She had left her husband to stay in a womens refuge with the children on two previous occasions before their final separation in December 2012.
After a period in unsuitable accommodation, she obtained orders excluding her husband from the family home, and returned there with the children in April 2013.
Her husband is prohibited from contacting the family there, but last summer they had to turn to him for help with transport when one child suffered an accident requiring surgery and the other two became ill.
NS is concerned that the local childrens services authority will consider her children to be at risk of harm if they have contact with their father. 175.
Their home is also a two bedroomed flat rented from a private landlord.
It is also too small for them but is close to the childrens schools.
The rent is 270 a week.
She is entitled to 270 housing benefit, 71.70 income support for NS, child tax credit for the children of 166.94 (although she says that she gets only 162.44), and child benefit of 47.10.
Her total entitlement therefore should amount to 555.74 (although she says that she gets only 550.44).
Whichever it is, the cap reduces it to 500. 176.
NS was awarded discretionary housing payments, but only after a delay during which arrears accrued to her rent account, and only until 31 March 2014.
The local authority has yet to decide upon its DHP budget for this year and so she does not know whether or not she will get it.
She is of course concerned that the landlord may seek to evict her if she falls into arrears. 177.
NS did not work outside the home during her marriage, nor has she done so since it ended.
She was allowed very little freedom by her husband and speaks very little English.
Why is the scheme discriminatory? 178.
It is common ground that the scheme falls within the ambit of article 1 of the First Protocol, which protects the right to peaceful enjoyment of possessions.
Possessions for this purpose includes entitlement to welfare benefits, not only those which have been paid for by national insurance contributions, but also those which the State provides on a non contributory basis to supply its people with the basic necessities of life.
As the Strasbourg court explained in Stec v United Kingdom (2006) 43 EHRR 1017, para 53: Article 1 of protocol No 1 does not include a right to acquire property.
It places no restriction on the Contracting States freedom to decide whether or not to have in place any form of social security scheme, or to choose the type or amount of benefits to provide under any such scheme.
If, however, a state does decide to create a benefits or pension scheme, it must do so in a manner which is compatible with article 14 of the Convention. 179.
It has not been argued that the benefit cap is itself a violation of article 1 of the First Protocol, on the basis that it deprives affected households of the benefits to which they would be entitled under the usual rules relating to needs related welfare benefits.
Instead, it is argued that it violates article 14, which provides that the enjoyment of the rights and freedoms set forth in the Convention shall be secured without discrimination on any ground such as sex .
It is not suggested that the scheme is directly discriminatory against women, as it affects all benefit claimants in the same way, irrespective of their sex.
However, as the Divisional Court observed, It is clear, and indeed conceded, that the benefit cap has a disproportionate adverse impact on women (para 71).
This brings it within the concept of indirect discrimination, which was recognised by the Grand Chamber of the European Court of Human Rights in DH v Czech Republic (2007) 47 EHRR 59, at para 175 (see also para 184): The court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group, and that discrimination potentially contrary to the Convention may result from a de facto situation.
The court had earlier recognised the same concept in the cases of Jordan v United Kingdom (2001) 37 EHRR 52, at para 154, and Hoogendijk v Netherlands (2005) 40 EHRR SE 189, at p 207. 180.
The prejudicial effect of the cap is obvious and stark.
It breaks the link between benefit and need.
Claimants affected by the cap will, by definition, not receive the sums of money which the state deems necessary for them adequately to house, feed, clothe and warm themselves and their children.
Furthermore, the greater the need, the greater the adverse effect.
The more children there are in a family, the less each of them will have to live on.
Ms SG, for example, will receive no more benefit if her 12 year old son rejoins the family, even though a court (either here or in Belgium) has decided that it is in his best interests to do so.
This prejudicial effect has a disproportionate impact upon lone parents, the great majority of whom are women, and is also said to have such an impact upon victims of domestic violence, most of whom are also women. 181.
The disproportionate impact upon lone parents is relatively straightforward to explain.
The relevant comparison is between those housing benefit claimants who are, and those who are not, affected by the benefit cap.
Lone parents constitute around 24% of all claimants for housing benefit, but have so far constituted between 59% and 74% of those affected by the cap.
This is more than double their proportion in the housing benefit population as a whole.
Overall some 92% of lone parents are women.
Hence it is not surprising that the Government predicted, in its first Equality Impact Assessment of the Benefit Cap (March 2011, para 27), that single women, mostly lone parents, would constitute 60% of those affected. 182.
The reasons for this are fairly obvious.
It is much more difficult for lone parents to move into paid employment, even for the 16 hours which would take them out of the cap.
It is more difficult for them to do so, the more children they have, because of the problems of delivering and collecting children from different schools or day care placements, the problems of making appropriate day care arrangements for very young children and for all children during the school holidays, the problems of responding to their childrens illnesses, accidents and to casual school closures.
The more children they have, the harder it will be for them to move into work; and the more children they have, the harsher will be the effects of the cap.
These problems arise irrespective of the ages of the children, but are obviously more acute when any or all of them are under school age. 183.
The disproportionate effect which the cap is said to have upon victims of domestic violence, most of whom will also be parents, is a little more complicated.
It stems from the limited options available to victims who wish to escape, with their children, from the violence and abuse which they are suffering at home.
Some victims are fortunate enough to be able to stay in their own homes while the perpetrator either agrees or is ordered to leave and having done so can be relied upon to stay away.
But many are not so fortunate.
Their only way of escaping the violence, at least in the first instance, is to leave home.
If they go to a refuge, the problem is that the costs may easily take them over the cap.
Under the original scheme, some refuges counted as exempt accommodation, which effectively created an exception to the cap, but many did not.
Very recently, the Government has addressed this, by amendments which will create an exception for all refuges. 184.
But not all victims can go to a refuge.
Their other alternative is to apply to the local authority for accommodation under the homelessness provisions of Part 7 of the Housing Act 1996.
Unlike the cost of refuges, the cost of other types of temporary accommodation is not exempt.
Temporary accommodation is often in the private sector and much more expensive than permanent accommodation in social or other forms of affordable housing.
Furthermore, as the intervention from Shelter makes clear, a homeless person has very little choice about where she is housed.
She has to accept any offer of suitable accommodation or risk becoming literally without a home (and even having her children taken away from her as a result).
In areas of high housing need, families may stay for a very long time in so called temporary accommodation before affordable permanent housing becomes available. 185.
Some of these victims will want to keep open the possibility of returning to the family home, or securing a transfer, once the family court has decided who is to live there.
Hence, very sensibly, the housing benefit scheme provides that in certain circumstances councils may continue to pay benefits in respect of two homes for a certain length of time (Housing Benefit Regulations 2006, regulation 7(6)(a)).
But this, of course, means that the total amount of housing benefit, when taken together with other benefits, will take the claimant over the limit where the cap applies. 186.
Thus, even with the recent change relating to refuges, the effect of the cap is to undermine the humane treatment given to victims of domestic violence both by the homelessness regime and by the housing benefit scheme.
However, although both of the families whose cases are before us have suffered from domestic violence and abuse, they have not suffered these particular adverse effects (we do not know whether Mrs NSs family was in receipt of dual housing payments between December 2012 and April 2013, but in any event that was before the cap came into force), nor do they claim to be at risk of suffering them in the future.
For this reason, the Divisional Court and the Court of Appeal declined to decide whether the cap did have a disproportionate effect upon the victims of domestic violence.
Mr Wise QC, for the appellants, complains that they should have done so.
The appellants have both suffered domestic violence and abuse and Mrs NS might well have to flee to expensive temporary accommodation while wishing to retain the family home should her husband once again try to assert his control over her. 187.
In my view, however, the problems suffered by the victims of domestic violence are principally suffered because they are parents who have every reason to separate from the other adult in the household, not only for their own sake but also for the sake of their children.
Of course, there may be some victims of domestic violence who are not responsible for the care of children, but it has not been shown how likely it is that they will be affected by the cap or how difficult they would find it to escape its adverse impact.
I would therefore treat the victims of domestic violence as a subset of lone parents, who may be more likely to be affected by the cap because of the high cost of temporary accommodation and the dual payments problem, and who will have the same problems in escaping its effects.
How is the discrimination justified? 188.
The applicable principles are set out in the Grand Chamber judgment in Stec v United Kingdom (2006) 43 EHRR 1017, para 51: Article 14 does not prohibit a Member State from treating groups differently in order to correct factual inequalities between them; indeed in certain circumstances a failure to attempt to correct inequality through different treatment may in itself give rise to a breach of the article.
A difference in treatment is, however, discriminatory if it has no objective and reasonable justification; in order 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.
The Contracting state enjoys a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment.
Two points are clear from this.
The first is that it is not the scheme as a whole which has to be justified but its discriminatory effect: see A v Secretary of State for the Home Department [2005] 2 AC 68, per Lord Bingham at para 68; AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, per Baroness Hale at para 38.
It is not enough for the Government to explain why they brought in a benefit cap scheme.
That can readily be understood.
They have to explain why they brought in the scheme in a way which has disproportionately adverse effects upon women. 189.
However, it is important to understand that what is needed to justify indirect discrimination is different from what is needed to justify direct discrimination.
In direct discrimination, it is necessary to justify treating women differently from men.
In indirect discrimination, by definition, women and men are treated in the same way.
The measure in question is neutral on its face.
It is not (necessarily) targeted at women or intended to treat them less favourably than men.
Men also suffer from it.
But women are disproportionally affected, either because there are many more of them affected by it than men, or because they will find it harder to comply with it.
It is therefore the measure itself which has to be justified, rather than the fact that women are disproportionately affected by it.
The classic example is a maximum age bar on recruitment to particular posts; it applies to all candidates, women and men; but it disadvantages women because they are more likely to have taken a career break to have or care for children than are men.
The question therefore is whether the age bar can be independently justified.
This long standing position is reflected in the definition of indirect discrimination in section 19 of the Equality Act 2010.
It was also the approach of the Strasbourg court in Hoogendijk v Netherlands (2005) 40 EHRR SE 189, a case of indirect discrimination in relation to welfare benefits. 190.
Turning to the explanations offered for the cap, it is important to recognise that the Government has never claimed that its aim is to encourage claimants to limit the size of their families or to penalise those who already have large families (had they done so, they might perhaps have faced discrimination claims on other grounds).
The evidence before the court is contained in two witness statements from Mr Holmes.
He states that the Government had three specific aims in introducing the benefit cap: (i) (ii) to introduce greater fairness in the welfare system between those receiving out of work benefits and tax payers in employment; to make financial savings (anticipated to be 110m in 2013/14 and 185m in 2014/15) and more broadly, help make the system more affordable by incentivising behaviours that reduce long term dependency on benefits; and (iii) to increase incentives to work.
This is later described as the main aim of the policy (Holmes, Witness Statement No 1, para 107).
To a great extent, these objectives overlap, as the principal aim is to make being in work more attractive than being out of work, to encourage people into work, and to reduce long term dependence on benefits, thus not only saving public money but also improving the long term future of these families.
No one can seriously doubt that these are legitimate aims which would probably be supported by most of the population.
The question, however, is whether these reasons for bringing in the cap can justify the sex discrimination involved in the way in which it has been implemented.
Before turning to that question, however, it is worth examining the criticisms made of each of the objectives claimed. (i) Fairness 191.
It is accepted that achieving fairness between those in work and those out of work is a legitimate aim.
As Elias LJ recognised, the fairness concept has sometimes been justified by relying on the notion that those on benefit should face difficult decisions of the kind facing those in work (para 94).
But there are many different ways of defining such fairness.
It could be that a family on benefits should never be better off than a working family of the same size living in the same accommodation.
It could be that a family on benefits should always be worse off than the equivalent working family.
Or it could be that a family on benefits should always be much worse off than the equivalent working family. 192.
The criticism levelled at the Governments concept of fairness, in particular in the intervention from the Child Poverty Action Group, is that the benefit cap scheme as implemented does not compare like with like.
It compares the maximum level of benefit with average earnings, thus ignoring the benefits which are also available to people who are in work.
CPAG have produced tables (not challenged in these proceedings) comparing the income available to each of the appellant families according to whether they are (a) not working but without the cap, (b) working 16 hours per week on the minimum wage, (c) working for average household earnings, and (d) working 35 hours a week for the minimum wage.
These show that both Ms SG and her children and Mrs NS and her children would be (in round figures) 94 a week better off in scenario (b) than in scenario (a), 163 better off in scenario (c), and 122 better off in scenario (d).
In other words, they would always be significantly better off in work than not in work.
CPAG have also produced tables which show that this would also be the case wherever in the country these families were living.
The effect of the cap is simply to increase the differential which is already there. 193.
Thus, it is said, there was no need to introduce the benefit cap in order to ensure that families on benefit have to make the same difficult choices that working families have to make.
They already do have to make those choices.
If this is so, the focus shifts to the other two objectives. (ii) Saving public money 194.
The savings projected by the Treasury in the 2013 budget were 110m in 2013 2014 and 185m in 2014/15.
These did not take into account the possible implementation costs or the additional funding made available for DHPs of 65m and 35m respectively.
On the other hand, nor did they take into account any resulting behavioural changes.
The aim was not merely to make savings in the short term but to produce a positive cultural shift (Holmes, Witness Statement No 2, para 36). 195.
It has to be accepted that the savings made are a drop in the ocean compared with the total benefit bill, let alone the total housing benefit bill.
The Government predicted that only 1% of housing benefit claimants would be affected by the cap.
In May 2013, there were approximately five million housing benefit claimants, yet in January 2014 there were less than 28,000 households subject to the cap, not much over half a percent of all claimants.
Lone parents subject to the cap were 1.37% of all claimants (further demonstrating that they are disproportionately affected). 196.
However, the main argument made against this aim is that, standing alone, it is not sufficient to justify discriminatory treatment in the enjoyment of a convention right.
The authority cited for this proposition is OBrien v Ministry of Justice [2013] UKSC 6, [2013] 1 WLR 522.
This was a case about discrimination between full time and part time workers, which is prohibited by the Framework Agreement on Part time Work, annexed to Council Directive 97/81/EC. 197.
However, in Andrejeva v Latvia (2009) 51 EHRR 650, the Strasbourg court accepted that the protection of the countrys economic system is a legitimate aim which is broadly compatible with the general objectives of the Convention (para 86).
They therefore looked to see whether there was a reasonable relationship of proportionality between that legitimate aim and the means employed.
As the discrimination in that case was based solely on nationality, for which very weighty reasons would be required for compatibility with the Convention, the court held that it was not justified (paras 87 88).
The same would apply to sex discrimination.
If the state introduces a benefit, for example for older people, but denies it to women on the basis that this will save money, this would be contrary to article 14 read with article 1 of the First Protocol, unless there were some other justification for the difference in treatment.
The court found such a justification in Stec, because the difference complained of was the result of the difference between the retirement ages of men and women, itself a response to the disadvantage suffered by women in the workplace.
This brings the focus back to the proportionality of any discrimination involved in a money saving measure. 198.
Mr Holmes also refers in his evidence to a clear, simple message that there has to be a maximum level of financial support beyond which claimants cannot expect the state to provide (Witness Statement No 1, para 98) and one of the key drivers for introducing the cap, that ultimately there has to be a limit to the overall amount of financial support that households in receipt of out of work benefits can expect to receive in welfare payments (para 104).
However, it is difficult to see how the delivery of such a message can be an aim in itself if the message is the product of a measure which cannot be justified. (iii) Incentivising work and promoting long term behavioural change 199.
On analysis, it is therefore said, the Governments aims come down to incentivising work and promoting long term behavioural change.
Again, no one doubts that these are legitimate aims, not only in order to save public money but also, as Mr Holmes put it, to achieve long term positive behavioural effects by changing attitudes to welfare and work and encouraging responsible life choices, which will benefit adults and children alike (Witness Statement No 1, para 121).
Put another way, it is not good for children to grow up in a household which is wholly supported by the state, if thereby they absorb the message that there will be no need for them to support themselves when they grow up. 200.
However, the Government has accepted that certain people should not be expected to seek work in order to escape the cap.
Thus retirement pension and state pension credit are not taken into account because the policy is primarily a work incentive aimed at people of working age (Holmes, Witness Statement No 1, para 100).
Thus also the cost of supported accommodation is not taken into account because households in supported accommodation are likely to be in vulnerable situations and they will not generally be in a position to make quickly the behavioural changes required to remove themselves from the cap (para 105).
Thus also the disability related exemptions mean that the cap will not apply to people who are least likely to be able to work and who perhaps have the least scope to adjust their circumstances to improve their employment prospects (para 112).
Lone parents of children under five are also not expected to seek work, but they are subject to the cap. 201.
As well as moving into work, the other choices the Government wished to encourage as a way of avoiding the cap included persuading the landlord to take less rent, moving to cheaper accommodation, reducing expenditure on non housing items, and in the case of lone parents seeking child maintenance from the other parent, which is wholly disregarded for the purpose of the cap (Holmes, Witness Statement No 1, para 124). 202.
Against this, both the appellants and the interveners argue that these expectations are simply unrealistic in the case of the families of lone parents and victims of domestic violence, upon whom the policy has such an adverse effect.
For the reasons already mentioned, lone parents, especially those with more than one child, find it particularly difficult to obtain even part time work which will fit in with their child care responsibilities.
It is accepted, of course, that there are some lone parents, even of very young children, who do manage to do this.
Adequate and subsidised day care is now more readily available.
But it is unrealistic to assume that parents will always be able to find acceptable solutions without prejudice to their childrens welfare.
The Government accepts that lone parents of children under five should not be expected to look for work, no doubt partly because of the difficulties of finding acceptable and affordable child care, but perhaps also because many parents and child care professionals consider it better for very young children to have the full time loving care of a committed parent rather than be separated from them and placed in institutional settings, however competent, for a large part of the day.
Even if we accept that it is justifiable to deny this choice to those lone parents who are subject to the benefit cap, we should not accept that their childrens welfare should be put at risk by their having to make unsatisfactory child care arrangements or (as in the case of Mrs NS) to rely upon assistance from a violent partner which the local childrens services authority fears may put the children at risk. 203.
Nor is it realistic to assume that they will eventually be able to move to cheaper accommodation.
Many private landlords, particularly in the more expensive areas, are unwilling to take tenants who are dependent on housing benefit.
In any event, they will require deposits and rent in advance, which the family will not be able to afford (unless they can persuade the local childrens services authority to help out under section 17 of the Children Act 1989).
Social housing is in short supply, with long waiting lists which may well require a qualifying period of residence in the area before a person is even placed on the list.
The allocation criteria under Part 6 of the Housing Act 1996 do give preference to those homeless families to whom the full housing duty is owed under Part 7 of that Act (1996 Act, section 167(2)(a)).
But if the family try to move to another local authority area where housing is cheaper or more plentiful, they may be refused on the ground that they have no local connection with that area.
It will be particularly difficult for them to move if they have rent arrears, but the benefit cap is very likely to lead to rent arrears unless there is a speedy grant of a discretionary housing payment to fill the gap, which certainly cannot be guaranteed. 204.
The Court of Appeal has recognised that discretionary housing payments are not an answer.
In Burnip v Birmingham City Council [2012] EWCA Civ 629, [2013] PTSR 117, the Court of Appeal held that it was unjustifiably discriminatory to limit a severely disabled man who needed an overnight carer to the housing benefit payable for a one bedroomed flat.
As Henderson J explained at para 46, where there is a gap between objectively verifiable need and the housing benefit payable, [d]iscretionary housing payments were in principle available as a possible way of bridging this gap, but they cannot in my judgment be regarded as a complete or satisfactory answer to the problem.
This follows from the cumulative effect of a number of separate factors.
The payments were purely discretionary in nature; their duration was unpredictable; they were payable from a capped fund; and their amount, if they were paid at all, could not be relied upon to cover even the difference between the one and two bedroom rates of LHA [local housing allowance], and still less the full amount of the shortfall.
To recognise these shortcomings is not in any way to belittle the valuable assistance that discretionary housing payments are able to provide, but is merely to make the point that, taken by themselves, they cannot come anywhere near to providing an adequate justification for the discrimination in cases of the present type.
The additional money made available for DHPs when the benefit cap was introduced is not ring fenced.
As Mr Holmes makes clear, these payments were never intended to be a long term solution to the problems facing claimants like these. 205.
It was predicted that there would be an increase in evictions and homelessness as a result of the benefit cap.
If the family does become homeless because of the cap, the Government hopes that neither the local housing authority nor the courts will regard them as intentionally homeless.
They will have a priority need and should therefore be owed the full housing duty under Part 7 of the 1996 Act (1996 Act, sections 189(1)(b), 193(2)).
Nevertheless, it may take a very long time before permanent accommodation becomes available, during which time they will be placed in temporary accommodation, often in the private sector.
This is known to be more expensive than permanent accommodation.
In other words, if they become homeless as a result of the cap, they are equally likely to be capped in their temporary accommodation.
They do not have a choice.
Provided the accommodation is suitable they have to take what is offered.
The Government points out that affordability is part of suitability, but there may well be nothing else available.
Local housing authorities have difficulty finding enough accommodation, and it is simply unrealistic to expect a homeless family to turn down an offer of otherwise suitable accommodation on the basis that it is not affordable.
The Government wishes to encourage local authorities to move people out of temporary accommodation as soon as possible (Holmes, Witness Statement No 1, para 114), but the question is whether depriving homeless families of the full cost of such accommodation is a proper way to put pressure on local authorities to do so. 206.
In addition, there are many other reasons why it may be quite unreasonable to expect a lone parent to move to another area.
Finding new schools for several children in an unfamiliar area is not straightforward, nor is it good for the education which will in the long term be the best way of lifting those children out of poverty.
Thus the Divisional Court concluded (at para 27, echoed almost precisely at para 22 in the judgment of the Court of Appeal): In the case of each of these claimants, therefore, there are powerful reasons why the suggested ways of mitigating the effects of the cap are not appropriate.
The sums are too great to bring [their] finances under control by prudent housekeeping; they are for various reasons not in a position to work; and they have educational and/or cultural and support reasons why they do not want to move any distance from their current homes. 207.
As CPAG point out, the Government accepted in its grounds of resistance to the claim that the aim of incentivising claimants to work may be less pertinent for those who are not required to work (such as parents with young children).
Hence it has to fall back on making fiscal savings and creating a system which is fairer as between those receiving out of work benefits and working households.
The test 208.
The Strasbourg court will, of course, allow Contracting states a margin of appreciation in assessing whether the difference in treatment is justified.
As is well known, the width of that margin differs according to the subject matter.
In Stec, the court went on to explain, in para 52: The scope of this margin will vary according to the circumstances, the subject matter and the background.
As a general rule, very weighty reasons would have to be put forward before the court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention.
On the other hand, a wide margin is usually allowed to the state under the Convention when it comes to general measures of economic or social strategy.
Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislatures policy choice unless it is manifestly without reasonable foundation. 209.
The references cited for the manifestly without reasonable foundation test were James v United Kingdom (1986) 8 EHRR 123, para 46, and National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80, both cases complaining of a violation of article 1 of the First Protocol.
In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46, [2012] 1 AC 868, both Lord Hope, at para 31, and Lord Reed, at para 124, treated this test as directed towards whether the measure is in the public interest, in other words to whether it has a legitimate aim.
They dealt separately with whether the interference with property rights was proportionate.
They relied upon cases such as Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301, at para 38, where the Strasbourg court appears to have regarded this as a separate question: An interference with the peaceful enjoyment of possessions must strike a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights.
In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions. (see also In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] 2 WLR 481, para 52).
In this case, the complaint is of discrimination in interfering with the peaceful enjoyment of possessions rather than of deprivation of possessions as such.
Nevertheless, the benefit cap does come close to a deprivation of possessions, given that it removes, by reference to a fixed limit, benefit to which the claimants would otherwise be entitled by virtue of their needs and, more importantly, the needs of their children. 210.
When it comes to justifying the discriminatory impact of an interference with property rights, a distinction might similarly be drawn between the aims of the interference and the proportionality of the discriminatory means employed.
However, it has been accepted throughout this case that the manifestly without reasonable foundation test applies to both parts of the analysis; but that, as this court said in Humphreys v Revenue and Customs Commissioners [2012] UKSC 18, [2012] 1 WLR 1545, at para 22, the fact that the test is less stringent than the weighty reasons normally required to justify sex discrimination does not mean that the justifications put forward for the rule should escape careful scrutiny.
Relevance of the United Nations Convention on the Rights of the Child 211.
In Burnips case, at para 21, Maurice Kay LJ pointed out that In the recent past, the European court has shown an increased willingness to deploy other international instruments as aids to the construction of the Human Rights Convention.
He cited, among others, the important case of Opuz v Turkey (2009) 50 EHRR 695, at para 185: When considering the definition and scope of discrimination against women, in addition to the more general meaning of discrimination as determined in its case law, the court has to have regard to the provisions of more specialised legal instruments and the decisions of international legal bodies on the question of violence against women. 212.
Burnip was concerned with discrimination against disabled people by failing to make reasonable accommodation for their special needs.
The United Nations Convention on the Rights of Persons with Disabilities (CRPD) was cited to the Court of Appeal, but not, it appears, the case of Glor v Switzerland, Application No 13444/04, 30 April 2009, where the Strasbourg court reiterated that the Convention must be interpreted in the light of present day conditions, including the European and worldwide consensus on the need to protect people with disabilities from discriminatory treatment, citing in particular the CRPD.
The Court of Appeal in Burnip felt able to determine the issue without resort to the CRPD, but had he not been able to do so, Maurice Kay LJ would have resorted to that Convention, which would have resolved any uncertainty in favour of the claimants.
He continued It seems to me that it has the potential to illuminate our approach to both discrimination and justification (para 22). 213.
Likewise, our approach to both discrimination and justification in this case may be illuminated by reference to other international instruments to which the United Kingdom is party, including not only the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), which was the relevant instrument in Opuz v Turkey, but also most notably the United Nations Convention on the Rights of the Child (UNCRC).
In Neulinger v Switzerland (2010) 54 EHRR 1087, for example, the Grand Chamber observed, at para 131: The Convention cannot be interpreted in a vacuum but must be interpreted in harmony with the general principles of international law.
Account should be taken of any relevant rules of international law applicable in the relations between the parties, and in particular the rules concerning the international protection of human rights .
It went on, at para 135, to note that there is currently a broad consensus including in international law in support of the idea that in all decisions concerning children their best interests must be paramount. 214.
This may be putting matters a little too high.
The relevant international instruments relied upon by the Grand Chamber were, principally, article 3(1) of UNCRC: In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.
This is pithily echoed in the Charter of Fundamental Rights of the European Union, article 24(2): In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. 215.
As this court recognised in ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4, [2011] 2 AC 166, para 25, a primary consideration is not the same as the primary consideration still less the paramount consideration.
Nevertheless, the obligation to treat their best interests as a primary consideration in all actions concerning children is binding upon the Government of this country in international law.
It has also become relevant in domestic law in at least two ways.
First, section 11 of the Children Act 2004 places a duty on a wide range of bodies providing public services to carry out their functions having regard to the need to safeguard and promote the welfare of children.
This duty has also been placed on the Secretary of State for the Home Department in the exercise of her functions in relation, among other things, to immigration, asylum or nationality, by section 55 of the Borders, Citizenship and Immigration Act 2009. 216.
This duty has not yet, however, been extended to all Government departments, including the Department of Work and Pensions, with whose decisions we are concerned in this case.
Nevertheless, in a Written Statement to Parliament on 6 December 2010, the Minister of State for Children and Families made a clear commitment that the Government will give due consideration to the UNCRC articles when making new policy and legislation.
In doing so, we will always consider the UN Committee on the Rights of the Childs recommendations but recognise that, like other state signatories, the UK Government and the UN Committee may at times disagree on what compliance with certain articles entails.
It is not surprising, therefore, that the Joint Committee on Human Rights, in its scrutiny of the Welfare Reform Bill, regretted that the Government had failed to carry out any detailed analysis of the compatibility of the Bill with the UNCRC (Session 2010 2012, 21st Report, Legislative Scrutiny: Welfare Reform Bill, para 1.35).
The Government has not resiled from that commitment, which is repeated in the Cabinet Office Guide to Making Legislation (July 2013, para 11.30), but it has not yet been translated into domestic law. 217.
However, the international obligations which the United Kingdom has undertaken are also taken into account in our domestic law insofar as they inform the interpretation and application of the rights contained in the European Convention, which are now rights in UK domestic law.
There is no reason at all why those obligations should not inform the interpretation of the Convention right to the enjoyment of the substantive Convention rights without discrimination just as much as they inform the interpretation of the substantive Convention rights.
ZH (Tanzania) happened to be a case about article 8, as were H (H) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25, [2013] 1 AC 338, and Neulinger itself.
The Strasbourg court has taken the UNCRC into account in construing other articles of the Convention, most notably article 6 in relation to the fair trial of juvenile offenders, in T v United Kingdom (1999) 30 EHRR 121. 218.
For these reasons, echoing Maurine Kay LJ in Burnip, I agree that our international obligations under the UNCRC and CEDAW have the potential to illuminate our approach to both discrimination and justification.
Whatever the width of the margin of appreciation in relation to the subject matter of a measure, the Strasbourg court would look with particular care at the justification put forward for any measure which places the United Kingdom in breach of its international obligations under another human rights treaty to which we are party. 219.
Hence it is no surprise that the Divisional Court held that the court should have regard to the UNCRC as a matter of Convention jurisprudence and the Secretary of State did not challenge that view in the Court of Appeal (see para 69 of their judgment) or, initially, in this court.
The Statement of Facts and Issues agreed between the parties for this court included: (c) Was the Court of Appeal wrong to have found that the discriminatory effects of the 2012 Regulations on lone parents were justified and lawful, and not contrary to article 14 (read with article 8 and/or article 1 of Protocol 1); and (d) Was the Court of Appeal wrong to have found that the respondent has complied with his obligation to treat the best interests of children as a primary consideration when implementing the benefit cap scheme? Not surprisingly, therefore, this court took it as common ground that article 3(1) of the UNCRC was relevant to the discrimination issue.
The question was whether it had been complied with.
After the hearing, however, it became clear that the Secretary of State no longer accepted that article 3(1) was relevant to whether the admitted indirect discrimination could be justified.
He was therefore permitted to file further arguments on the issue, to which the appellants and the interveners were permitted to reply.
This has had the beneficial effect of enabling us to consider the issue in more detail. 220.
The Secretary of State makes two main arguments against taking article 3(1) of UNCRC into account in deciding whether this discrimination can be justified.
The first is that the UNCRC, like other international conventions, can inform the substantive content of the Convention rights, but not the approach to proportionality and discrimination.
As to proportionality, this argument is clearly negated by the Grand Chamber decision in Neulinger v Switzerland (2010) 54 EHRR 1087, where the best interests of the child were taken into account in deciding whether the interference with the parties rights to respect for their family life, entailed in an order to return to the childs home country of Israel, was proportionate.
Reference was also made to the long line of cases dealing with the expulsion of aliens, according to which, in order to assess the proportionality of an expulsion measure concerning a child who has settled in the host country, it is necessary to take account of the childs best interests and well being (para 146).
In those cases, the best interests of a child have been taken into account in assessing the proportionality of an interference with the Convention rights of others: see Uner v Switzerland (2006) 45 EHRR 421, at paras 57 58. 221.
It is no doubt for that reason that the Secretary of State for the Home Department conceded, in ZH (Tanzania) [2011] 2 AC 166, that removing the mother would be a disproportionate interference with the childrens article 8 rights.
This concession was rightly made, irrespective of section 55 of the Borders, Citizenship and Immigration Act 2009.
The relevance of the duty in that section was to whether the decision was in accordance with the law (see para 24) rather than to its proportionality. 222.
As to discrimination, the Secretary of States argument is clearly negated by the Grand Chamber decision in X v Austria (2013) 57 EHRR 405.
This was a case of alleged discrimination on grounds of sexual orientation.
A same sex partner could not adopt so as to become a joint parent with the birth parent partner, whereas an opposite sex partner could do so.
When dealing with the relevant international law, at para 49, the court begins with the article 3(1) of the UNCRC, before turning to article 21 and other specific provisions on adoption.
When discussing the suggested justifications for the discrimination, at para 146, the court concludes that Unless any other particularly convincing and weighty reasons militate in favour of such an absolute prohibition, the considerations adduced so far would seem rather to weigh in favour of allowing the courts to carry out an examination of each individual case.
This would also appear to be more in keeping with the best interests of the child, which is a key notion in the relevant international instruments.
The footnote refers back to para 49.
In common with Lord Carnwath, I read this case as clearly indicating that the best interests of the child are to be taken into account in determining whether discrimination is justified under article 14. 223.
The second argument now advanced by the Secretary of State is that the discrimination in this case is not against the children involved but against their mothers.
It is not suggested that the rights of the children themselves have been infringed.
This case may be contrasted with Neulinger, and indeed ZH (Tanzania), in which the complaint was of interference with the childrens right to respect for their family lives, as well as their mothers.
However, the same cannot be said of X v Austria.
The child was a complainant, but it was not suggested that there had been discrimination against her; rather it was that the discrimination against her mother and her mothers same sex partner affected (but did not infringe) her right to respect for her family life.
It is difficult indeed to see how the family life of the child in that case was any more affected by the legal status of the people looking after her than is the family life of the children involved in this case by the financial situation in which the benefit cap has placed their parents. 224.
There is the further point, most clearly articulated by Lord Reed at para 89 of his judgment, that the children living with lone parent fathers suffer just as much as the children living with lone parent mothers.
Their welfare cannot therefore be relevant to justifying the discrimination between them.
However, for the reasons explained in para 189 earlier, this point does not arise when the discrimination complained of is indirect rather than direct.
It is of the nature of indirect discrimination that the measure in question applies to both men and women.
What has to be considered is whether the measure itself, which in this case I take to be the benefit cap as it applies to lone parents, can be justified independently of its discriminatory effects.
In considering whether that measure can be justified, I have no doubt at all that it is right, and indeed necessary, to ask whether proper account was taken of the best interests of the children affected by it.
Application 225.
Both the Divisional Court and the Court of Appeal concluded that the Government had complied with its obligation to treat the best interests of the children concerned as a primary consideration (paras 75 and 49, respectively).
They were, of course, correct to say that the Government was keenly aware of the impact the benefits cap would be likely to have on children (Court of Appeal, para 74(2)).
But it does not follow from that that the the rights of children were, throughout, at the forefront of the decision makers mind (para 75, emphasis supplied).
Still less does it follow that their best interests were being treated as a primary consideration.
In agreement with the powerful judgments of Lord Carnwath and Lord Kerr on this point, it is clear to me that they were not. 226.
The Governments contention was that the long term shift in welfare culture, or reversing the impact of benefit dependency on families and children, would be beneficial to children in the longer run.
This may well be so, although it is interesting how little prominence was given to this aspect of the matter in the justifications put forward by the Government for their policy.
But in any event, this is to misunderstand what article 3(1) of the UNCRC requires.
It requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question.
It cannot possibly be in the best interests of the children affected by the cap to deprive them of the means to provide them with adequate food, clothing, warmth and housing, the basic necessities of life.
It is not enough that children in general, now or in the future, may benefit by a shift in welfare culture.
Insofar as the Secretary of State relies upon this as an answer to article 3(1), he has misdirected himself. 227.
It may be worth noting that the UNCRC contains some specific obligations which go beyond treating childrens interests as a primary consideration when making decisions concerning them.
Article 27(1) provides that States Parties recognise the right of every child to a standard of living adequate for the childs physical, mental, spiritual, moral and social development.
Although parents have the primary responsibility to secure, within their abilities and financial capacities, the conditions of living necessary for the childs development (article 27(2)), States Parties have to take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing (article 27(3)).
The usual approach of the Strasbourg court is that the Convention confers no right to be provided with any particular welfare benefit but that, if it is provided, it must be provided in a non discriminatory manner.
The United Kingdom performs its obligations towards children, among other ways, through the welfare benefits system, which provides specific benefits in order that children shall be free from want.
The benefit cap deprives some children, principally those in larger families living in high cost accommodation, of provision for their basic needs in order to incentivise their parents to seek work, but discriminates against those parents who are acknowledged to be least likely to be able to do so.
The children affected suffer from a situation which is none of their making and which they themselves can do nothing about. 228.
This case is therefore very different from the case of Humphreys v Revenue and Customs Commissioners [2012] UKSC 18, [2012] 1 WLR 1545, in which the Government had to justify the discriminatory effect of paying child tax credit to the parent with the main responsibility for looking after the child, even though the care of the child was shared with another parent.
This was indirectly discriminatory against fathers, but the object was to concentrate the help for the child where it was most needed and to maximise the amount of public money available to support children.
As the Government put it, the benefit attaches to the child rather than the parent (para 25). 229.
Viewed in the light of the primary consideration of the best interests of the children affected, therefore, the indirect discrimination against women inherent in the way in which the benefit cap has been implemented cannot be seen as a proportionate means of achieving a legitimate aim.
Families in work are already better off than those on benefits and so the cap is not necessary in order to achieve fairness between them; saving money cannot be achieved by unjustified discrimination; but the major aim, of incentivising work and changing the benefits culture, has little force in the context of lone parents, whatever the age of their children.
Depriving them of the basic means of subsistence cannot be a proportionate means of achieving it.
Relief 230.
The claimants seek both declaratory relief and an order quashing Part 8A of the Housing Benefit Regulations.
The latter would not be appropriate, given that it is not suggested in this case that the implementation of the cap in relation to single person and two parent households is incompatible with the Convention rights.
It is the implementation in relation to lone parents, some of whom will be fleeing domestic violence, and their dependent children, which has been shown to be incompatible. 231.
There are several different ways in which that incompatibility might be cured, most notably perhaps by taking the child tax credit and/or child benefit payable to lone parents out of the list of welfare benefits taken into account in calculating the cap.
It is true, of course, that the Government resisted amendments to take housing benefit, child benefit and child tax credit out of the cap, on the ground that this would be to emasculate its policy objectives.
It is easy to see how this might be so, if it were done for all claimants.
But it has not been shown that taking the child related benefits out of the cap as it applies to lone parents would do so.
In any event, it is obvious that there is sufficient flexibility in the statutory scheme to enable appropriate solutions to be crafted.
It is not for this court to suggest any particular way in which the problem might be solved. 232.
In my view, therefore, the appropriate relief would be a declaration that Part 8A of the Housing Benefit Regulations is incompatible with the Convention rights in that its application to lone parents is indirectly discriminatory on grounds of sex, contrary to article 14 of the Convention read with article 1 of the First Protocol.
LORD KERR: 233.
As Lord Hughes has observed, there is much common ground among the members of the panel about the issues that arise on this appeal.
He has helpfully outlined the areas of agreement in para 135 of his judgment.
I am also in broad agreement with virtually all of Lord Carnwaths judgment (except as to outcome) and am in complete agreement with Lady Hale that the appeal should be allowed for the reasons that she has given.
On one view, therefore, there is nothing to be gained from my contributing further to the debate.
But I have changed the view that I originally held about the direct effect of article 3 of UNCRC and wish to explain why.
If I am wrong in my revised view, there remain two particular issues which separate the majority from Lady Hales approach (which I would favour as an alternative to my principal conclusion) that I believe are of vital importance and which have implications well beyond this appeal.
For that reason, I feel constrained to say something of them as well. 234.
The two issues are these: (i) if article 3 does not have direct effect, what is the use to which it may be put in considering the proportionality of a measure which interferes with a Convention right; and (ii) whether there is a sufficient identity of interest between a child and her or his lone parent so as to render discrimination against the child discrimination against the parent.
Before turning to those issues, however, I wish to begin by examining the role of unincorporated treaties.
The role of unincorporated treaties 235.
Two dominant principles have traditionally restricted the use of international treaties in British domestic law.
The first is that domestic courts have no jurisdiction to construe or apply treaties which have not been incorporated into national law; that they are effectively non justiciable.
The second is that such treaties, unless incorporated into domestic law, are not part of that law and therefore cannot be given direct effect to create rights and obligations under national or municipal law.
This is a matter of constitutional orthodoxy.
It underpinned the series of decisions in which courts consistently refused to give effect to Convention rights before the coming into force of the Human Rights Act 1998.
See, for instance, R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 748, Lord Bridge of Harwich and at 762B D Lord Ackner; NALGO (1992) 5 (Admin) LR 785, 798, Re McKerr [2004] UKHL 12; [2004] 1 WLR 807: Lord Nicholls of Birkenhead at para 25, Lord Steyn at para 48, Lord Hoffmann at para 63, Lord Rodger of Earlsferry at para 80 and Lord Brown of Eaton under Heywood at para 90. 236.
Perhaps the high water mark of the dualist conception of the restriction on the use of international law was reached in J H Rayner (Mincing Lane) Ltd v Department of Trade and Industry (International Tin Council) [1990] 2 AC 418.
The House of Lords reaffirmed the two principles of non justiciability and no direct effect.
This was on the basis that domestic courts had no competence in respect of the legal relations between sovereign states, nor was the royal prerogative reviewable.
At 499F/500C Lord Oliver of Aylmerton said: It is axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law .
That is the first of the underlying principles.
The second is that, as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament.
Treaties, as it is sometimes expressed, are not self executing.
Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. 237.
Of course the prerogative can now be reviewed, in appropriate circumstances see, for instance, Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374; R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1598, [2003] UKHRR 76.
The conduct of foreign affairs, including the making of treaties is still considered to be beyond the reach of judicial review, however.
In R (Campaign for Nuclear Disarmament) v Prime Minister of the United Kingdom [2002] EWHC 2759, 126 ILR 727 the High Court held that domestic courts will not determine the meaning of an international instrument (in this case a UN Security Council Resolution) operating purely on the plane of international law.
It was said that the only cases in which the court would pronounce on an issue of international law are those where it is necessary to do so in order to determine rights and obligations under domestic law, so as to draw the court into the field of international law (at paras 36 40, 47(i)). 238.
Despite the seemingly comprehensive ban on the use by the courts of unincorporated international treaties to recognise rights on the domestic law plane, there are three possible ways which have been considered by the courts in which such treaties may have an impact on national law (i) as an aid to statutory interpretation; (ii) as an aid to development of the common law; and (iii) as a basis for legitimate expectation.
Unincorporated treaties as an aid to statutory interpretation 239.
Where a legislative provision is ambiguous there is a presumption that Parliament intended to legislate in a manner which does not involve breach of international treaty obligations: Salomon v Commissioners of Customs and Excise [1967] 2 QB 116, 143E G; Garland v British Rail Engineering Ltd [1983] 2 AC 751, 771 (Lord Diplock).
See also Sir John Laws [1993] PL 58, 83.
While New Zealand allows non ambiguous legislation to be read down, or additional words to be read in for the purpose of consonance with international treaties (eg Sellers v Maritime Safety Inspector [1999] 2 NZLR 44, CA), this is not currently the case in the UK see Collco Dealings Ltd v Inland Revenue Commissioners [1962] AC 1, 19; Quazi v Quazi [1980] AC 744, 808D E; JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, 481F H, 500E (the International Tin Council case); R v Secretary of State for the Home Department, Ex p Brind [1991] 1 AC 696, 747 749, 760D G; Brown [1994] 1 AC 212, 256E F; J A Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419, 65; R v Lyons (Isidore) [2002] UKHL 44, [2003] 1 AC 976, 13; Boyce v The Queen [2004] UKPC 32, [2005] 1 AC 400, 25 and 81; Abdirahman v Secretary of State for Work and Pensions [2007] EWCA Civ 657, [2008] 1 WLR 254, at 35 40. 240.
But the presumption of compatibility of domestic legislation with international law is well established.
A recent example is to be found in Assange v Swedish Prosecution Authority [2012] 2 AC 471 where at para 122 Lord Dyson said: 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.
Unincorporated treaties and the development of the common law 241.
It is clear that unincorporated treaties may have a bearing upon the development of the common law: Lyons [2002] UKHL 44, [2003] 1 AC 976, 13 per Lord Bingham.
Developments of the common law should ordinarily be in harmony with the UKs international obligations: A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221 Lord Bingham at para 27.
Unincorporated treaties may also be used to resolve ambiguities in the common law: Derbyshire County Council v Times Newspapers Ltd [1993] AC 534.
See also Director of Public Prosecutions v Jones (Margaret) [1999] 2 AC 240 Lord Slynn at 265D F, Lord Hope at 277E 278F: reference to the ECHR for guidance was found to be inappropriate in context as there was no doubt about the content of the common law.
By implication, at least, where such doubt is present, consideration of an international convention or treaty such as ECHR would be appropriate in order to determine what the common law position is or should be. 242.
The proposition that the common law cannot be used to incorporate treaties through the backdoor has, however, been reasserted in, for instance, A v Secretary of State for the Home Department (No 2) [2004] EWCA Civ 1123; [2005] 1 WLR 414 Laws LJ at paras 266 267, Neuberger LJ at para 434.
Unincorporated treaties and legitimate expectation 243.
In Chundawadra v Immigration Appeal Tribunal [1998] Imm AR 161 it was argued that every citizen had a legitimate expectation that, if the ECHR was relevant to a matter under consideration, the Minister would take it into account when deciding how to exercise his powers.
The Court of Appeal refused to accept this argument, holding that it was not appropriate to introduce the Convention into domestic law by the back door in this way. 244.
Arguments based on the Australian authority of Minister of State for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273; 128 ALR 353 were considered by the Court of Appeal in Behluli v Secretary of State for the Home Department [1998] Imm AR 407, at para 415.
The court expressly refused to follow Teoh; it held that mere ratification of a treaty could not generate a legitimate expectation that the treaty would be followed.
Two months later, however, a different division of the Court of Appeal indicated a willingness to adopt and follow Teoh in relation to decisions taken under the Royal Prerogative.
In R v Secretary of State for the Home Department, Ex p Ahmed and Patel [1998] INLR 570, the Court of Appeal held that the entering into a treaty by the Crown could give rise to a legitimate expectation because, subject to any indication to the contrary, ratification amounted to a representation that the Crown would act in accordance with the obligations imposed on it by the treaty in question.
The High Court followed this approach in R v Uxbridge Magistrates' Court, Ex p Adimi [2001] QB 667, DC, (Simon Brown LJ at para 686, Newman J at paras 690 691), although apparently without having Chundawadra or Behluli cited to it. 245.
In the High Court in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326 Lord Bingham CJ rejected an attempt to base a legitimate expectation on the ratification of the ECHR, observing that ratification took place nearly half a century ago at a time when it was generally assumed that ratification would have no practical effect on British law or practice. (This view was endorsed by the House of Lords).
Laws LJ at pp 353 356, agreeing with Lord Bingham, referred to what had by then become the somewhat hackneyed theme that the legitimate expectation argument would effectively introduce the ECHR through the back door.
He acknowledged, however, that the Convention had plainly informed the common law and he noted Teoh but suggested that any extension of this area would have to be at a higher level, to overcome the House of Lords authority of Brind. 246.
The proposition that the doctrine of legitimate expectation can generate a right to rely on the provision of an unincorporated treaty in the interpretation and application of domestic law is, at least, controversial.
But treaties concerning human rights are, for reasons that I will develop, in a different position.
Human rights cases 247.
A small opening for an exception in relation to human rights treaties can perhaps be seen in Lewis v AG of Jamaica [2001] 2 AC 50 PC, where Lord Slynn, although upholding the traditional principles of non justiciability and no direct effect, acknowledged the argument that an exception might be read into these rules when the treaty in question was a human rights treaty: even assuming that that [rule] applies to international treaties dealing with human rights . : p 84.
In Foreign Relations and the Judiciary (2002) 51 ICLQ 485, 496 Lord Collins has commented on this passage: these words contemplate the possibility that unincorporated treaties relating to human rights may be given effect without legislation [I]t may be a sign that one day the courts will come to the view that it will not infringe the constitutional principle to create an estoppel against the Crown in favour of individuals in human rights cases. 248.
In Re McKerr Lord Steyn cast doubt on the applicability of the fundamental principles set out in International Tin Council so far as they governed the position in relation to human rights treaties, arguing that the rationale of the dualist theory, which underpins the International Tin Council case, is that any inroad on it would risk abuses by the executive to the detriment of citizens.
It is, however, difficult to see what relevance this has to international human rights treaties which create fundamental rights for individuals against the state and its agencies.
A critical re examination of this branch of the law may become necessary in the future at paras 49 50. 249.
While acknowledging that the point had not been the subject of argument, Lord Steyn referred to some academic criticism of International Tin Council and highlighted what he termed growing support for the view that human rights treaties enjoy a special status, citing the views of Murray Hunt (Using Human Rights Law in English Courts (1998)), at pp 26 28) and the extra judicial comments of Lord Collins quoted above. 250.
In International Law in Domestic Courts: The Developing Framework (2008) 124 LQR 388 Philip Sales and Joanne Clement attack this argument, pointing out that the rationale for International Tin Council is that the Crown cannot change domestic law by the exercise of prerogative powers as this would infringe the sovereignty of Parliament.
In adopting what might be regarded as a somewhat absolutist position, Sales and Clement argue at para 388: In a dualist state such as the United Kingdom, international law and domestic law are regarded as separate legal systems, operating on different planes.
International law does not, as such, form part of the domestic legal system.
While in particular instances rules of international law may apply in domestic law, they do so by virtue of their adoption by the internal law of the state. 251.
The Sales and Clement article provides a comprehensive survey of international law in this area.
They argue forcefully that unincorporated treaties should not be extended so as to have direct effect in national law.
The dualist structure of our law, which treats international law as operating on a separate plane, has, they suggest, been repeatedly upheld as a central constitutional, legal and political principle.
They conclude at 421: The risk of some degree of dissonance between domestic law and international law is the natural consequence of self government by states and of parliamentary sovereignty as the primary constitutional principle of government within the state, and its elimination is a matter for the political process.
It is not the proper function of the domestic courts to change domestic legal principles to eliminate such dissonance. 252.
In an article entitled Human Rights Treaties in the English Legal System published in [2011] PL, 554 576, Dr Bharat Malkani has challenged the central thesis of Sales and Clement.
He argues that one needs to question why Parliament should be treated as the proper locus of law making power.
Dr Malkani suggests that the enactment of the Human Rights Act and the incorporation of ECHR into domestic law brought about a change in the constitutional order and that parliamentary sovereignty is no longer the principal basis of the British constitution.
This was, rather, the rule of law.
On this basis he argues that the constitutional principle of parliamentary sovereignty does not require that international conventions on human rights be transformed into domestic law in order to create rights, citing Alan Brudner The Domestic Enforcement of International Covenants on Human Rights: A Theoretical Framework (1985) 35 University of Toronto Law Journal.
Brudner propounds a theory which would be regarded as highly radical in UK law to the effect that a convention while in origin a treaty between independent states, is in content the legislation of a universal community of rational beings.
On this account, he argues that since international conventions on human rights articulate principles rationally connected to the common good, they do not require to be transformed into national law. 253.
In light of the authorities that I have earlier considered, it may safely be said that such a far reaching approach is unlikely to find favour in the courts of this country.
It is perhaps noteworthy, however, that other commentators have been critical of the courts adherence to the dualist theory of international law, especially in relation to human rights conventions see, for instance, Brice Dickson, Safe in Their Hands? Britains Law Lords and Human Rights (2006) 26 Legal Studies 329, 335; D Beyleveld The concept of a human right and incorporation of the European Convention on Human Rights [1995] PL 577; M Hunt Using Human Rights Law in English Courts (Oxford: Hart, 1997). 254.
I consider that the time has come for the exception to the dualist theory in human rights conventions foreshadowed by Lord Slynn in Lewis and rather more firmly expressed by Lord Steyn in Re McKerr to be openly recognised.
This can properly be done in relation to such conventions without espousing the complete abandonment of the theory advocated by some of the commentators referred to above. 255.
If Lord Steyn is right, as I believe he is, to characterise the rationale for the dualist theory as a form of protection of the citizen from abuses by the executive, the justification for refusing to recognise the rights enshrined in an international convention relating to human rights and to which the UK has subscribed as directly enforceable in domestic law is not easy to find.
Why should a convention which expresses the UKs commitment to the protection of a particular human right for its citizens not be given effect as an enforceable right in domestic law? 256.
Standards expressed in international treaties or conventions dealing with human rights to which the UK has subscribed must be presumed to be the product of extensive and enlightened consideration.
There is no logical reason to deny to UK citizens domestic laws vindication of the rights that those conventions proclaim.
If the government commits itself to a standard of human rights protection, it seems to me entirely logical that it should be held to account in the courts as to its actual compliance with that standard.
This is particularly so in the case of UNCRC.
On its website UNICEF has stated that: The CRC is the basis of all of UNICEFs work.
It is the most complete statement of childrens rights ever produced and is the most widely ratified international human rights treaty in history. 257.
I therefore consider that article 3(1) of UNCRC is directly enforceable in UK domestic law.
A primacy of importance ought to have been given to the rights of children in devising the regulations which bring the benefits cap into force.
For the reasons given by Lady Hale, I have concluded that this has not taken place.
The alternative argument 258.
In the Court of Appeal Lord Dyson MR said at para 69: The Divisional Court held that, notwithstanding the fact that the UNCRC is an international convention which has not been incorporated into our domestic law, the court should nevertheless have regard to it as a matter of Convention jurisprudence: see Neulinger v Switzerland (2010) 54 EHRR 1087, cited by Baroness Hale in ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, para 21.
This has not been challenged by the Secretary of State on this appeal. 259.
One starts therefore with the proposition that UNCRC is, as Lord Carnwath has put it, legally relevant.
Its legal relevance stems from the fact that, as again Lord Carnwath has put it, under ECHR and in accordance with the Vienna Convention, regard may be had to principles of international law, including international conventions in order to interpret the terms and notions of the Convention Demir v Turkey (2008) 48 EHRR 1272.
Lord Carnwath has said that in the cases of X v Austria (2013) 57 EHRR 405, Ponomaryov v Bulgaria (2011) 59 EHRR 799 and Burnip v Birmingham City Council [2013] PTSR 117, the court used international materials to fill out, or reinforce, the content of a Convention article (para 130).
I would prefer to put the matter slightly differently. 260.
What the courts did in those cases, following the Demir approach was to recognise that the nature and content of Convention rights could be informed by international instruments which expressed standards that were internationally recognised.
This does not involve directly applying the provisions of an international treaty which had not been incorporated into domestic law.
It does not introduce those provisions by the back door.
Rather, it reflects the courts obligation, charged as we are with the duty of obtaining a proper understanding of the nature of an avowed right, to have regard to standards which have found expression in those treaties.
We should do this for the prosaic but extremely important reason, as I have said in para 256 above, that they have been the product of extensive and, hopefully, enlightened consideration. 261.
If the rights enshrined in those treaties are not directly enforceable in domestic law it is, of course, open to domestic courts to refuse to allow such treaties to have any influence whatever on our conclusions as to the content of the right.
Such an approach would be justified where, for instance, the right was too broadly expressed or too remote from the subject under consideration.
Or we could conclude that the right was too ambivalently stated to allow any influence to be brought to bear on the content of a right asserted under domestic law.
But where the claimed right is directly relevant to the domestic issue to be decided, then recourse to the standards that the international instrument exemplifies is not only legitimate, it is required.
How, otherwise, are we to acquire a true understanding of the proper contours and content of the right under discussion? This is not applying an unincorporated international treaty directly to domestic law.
It is merely allowing directly relevant standards to infuse our thinking about what the content of the domestic right should be. 262.
Article 3(1) of UNCRC is unquestionably directly relevant to the question of whether a primacy of importance was given to the interests of children in formulating the regulations which give effect to the benefits cap.
As I have already said, I agree with Lady Hale that it was not.
I will say no more on that topic.
The critical issue now is whether there is a sufficient connection between the interests of the children and those discriminated against, viz their lone mothers, to make discrimination against the children of those mothers discrimination against them also.
Put another way, as Lord Carnwath does in para 115 of his judgment, is there a direct link between the international treaty relied on and the particular form of discrimination alleged? The indissociability of a child and her/his lone mother 263.
In this case the government accepts that the benefits cap discriminates against women as lone parents.
Its defence of this admitted discrimination rests exclusively on its claim that it is justified by the social objectives which it pursues.
It claims, however, that justification of those objectives does not require it to give primary consideration to the impact of the benefit cap on the children of lone mothers.
That, the government says, is because the interests of lone mothers can be disassociated from those of their children.
Lord Carnwath has accepted this argument.
He considers that the interests of children are distinct from their single parent mothers.
I cannot agree. 264.
The particular species of discriminatory impact here is on women who, by reason of their position as lone mothers, claim to suffer a disproportionate interference with their Convention rights.
Justification of the interference must be related to the condition which provides the occasion for the discrimination viz the position of these women as lone parents.
A mothers personality, the essence of her parenthood, is defined not simply by her gender but by her role and responsibility as a carer of her children, particularly when she is a lone parent. 265.
Justification of a discriminatory measure must directly address the impact that it will have on the children of lone mothers because that impact is inextricably bound up with the womens capacity to fulfil their role as mothers.
If you take money away from children which mothers would receive on their behalf, money which they use to realise their role as mothers, the discrimination that you perpetrate involves withholding resources necessary to fully discharge their maternal role.
Because, therefore, one cannot segregate the interests of the deprived children from those of their mothers, the discrimination against mothers and their children is of the same stripe.
No hermetically sealed compartmentalisation of their interests is possible. 266.
A lone mothers interests, when it comes to receiving state benefits, are indissociable from those of her children.
The rate of her benefits is fixed by reference (among other things) to the number and needs of those children.
Her capacity to care for her children is likewise directly connected to the amount of state benefits that she receives.
The interests of single mothers are, therefore, inextricably bound up with the interests of their dependent children, for the trite and prosaic reason that they are parents.
Any adverse impact on a lone parents financial position is inevitably transmitted to the child because of her or his dependence (financially as well as otherwise) on the parent.
For these reasons, when one comes to consider the justification for interference with a lone parents Convention right, the interests of the children of that parent cannot be left out of account. 267.
If the disproportionate effect on lone parents can only be justified by addressing their position as the providers for dependent children, attention to the interests of those children is an integral part of the process.
How, otherwise, are their interests to be taken into account? As Lord Reed has said, regard has been had to the UNCRC by the European Court of Human Rights in the application of the ECHR, when considering how its substantive guarantees apply to children.
When considering the rights of children as a component part of their mothers rights under A1P1 and article 14, there is no reason that UNCRC should not likewise infuse the determination of what the content of those rights should be.
I therefore agree with Lady Hale that, in considering whether the particular species of interference in this case is justified, the interests of the children affected are, by reason of article 3(1) of UNCRC, to be treated as a primary consideration. 268.
Once this position is reached, the question for the government is how to meet the challenge of showing that the measures which discriminate against the child (and ergo the mother) are no more intrusive than they need to be.
In this context, I have no difficulty in accepting that the test set out in Stec v United Kingdom (2006) 43 EHRR 1017 continues to apply.
So, as a yardstick of the proportionality of this general measure of economic or social strategy, the question is whether it was manifestly without reasonable foundation.
But, if article 3(1) of UNCRC has to play its part in deciding whether the benefits cap was without reasonable foundation, it requires that first consideration be given to the best interests of the children directly affected by the decision. 270.
I would therefore allow the appeal and make the order that Lady Hale proposes. 269.
For the reasons given by Lady Hale in para 220, it cannot be in the best interests of the children affected by the cap to deprive them of the means of having adequate food, clothing, warmth and housing.
Depriving children of (and therefore their mothers of the capacity to ensure that they have) these basic necessities of life is simply antithetical to the notion that first consideration has been given to their best interests.
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The benefit cap was introduced in the Welfare Reform Act 2012 and implemented by the Benefit Cap (Housing Benefit) Regulations 2012 (the Regulations).
The main issue in this appeal is whether the Regulations are unlawful under the Human Rights Act 1998.
It is argued that the cap has an unjustifiably discriminatory impact on women in relation to their right to the peaceful enjoyment of their possessions, contrary to article 14 of the European Convention on Human Rights taken with article 1 of the First Protocol to the ECHR (A1P1).
The cap applies where the total entitlement of a single person or couple to specified welfare benefits exceeds an amount which represents the average weekly earnings of a working household in Great Britain, net of tax and national insurance contributions.
The Regulations fix the cap at 350 a week for a single claimant without dependent children, and 500 for all other claimants.
Benefits taken into account include housing benefit, child benefit and child tax credit.
The Governments justification for the scheme is that it is necessary (i) to set a reasonable limit on the extent to which the state will support non working families from public funds; (ii) provide members of households of working age with a greater incentive to work and (iii) achieve savings in public expenditure.
The cap does not apply to persons or families entitled to working tax credit.
Receipt of this benefit requires a lone parent responsible for a child to work at least 16 hours a week, and a couple with a child to work a total of 24 hours a week, with one of them working at least 16 hours.
The cap affects a higher number of women than men.
That is because the majority of non working households receiving the highest levels of benefits are single parent households, and most single parents are women.
The appellants are two lone mothers and their youngest children.
The application of the cap reduced SGs weekly income from the specified benefits by 75, and NSs by 55.
The courts below held that the indirectly discriminatory impact of the scheme upon lone parents, and therefore women, could be justified and that the scheme was therefore lawful.
The Supreme Court dismisses the appeal by a majority of 3 2.
Lord Reed gives the lead judgment, with which Lord Hughes agrees.
Lord Carnwath concurs with the result but for different reasons.
Lady Hale and Lord Kerr each give dissenting judgments.
Lord Reed notes that it was conceded that the Regulations result, indirectly, in differential treatment of men and women in relation to welfare benefits, and that the benefits constitute possessions falling within A1P1. [60 61] The question is whether the cap is a proportionate means of meeting legitimate aims.
Lord Reed accepts that the aims of the cap are legitimate. [63 66] In relation to proportionality, the appellants argued that the aim of setting a reasonable limit to benefits could be achieved by setting the cap at the average income of working households inclusive of in work benefits, rather than their average earnings exclusive of benefits.
Lord Reed notes, however, that the Act requires the cap to be set by reference to earnings. [67 69] The appellants also argued that the savings in public expenditure were marginal.
Lord Reed notes that, although the short term savings are a small proportion of the total welfare budget, they nevertheless contribute towards deficit reduction.
The cap is also intended to change behaviour over the longer term.
Other arguments focused on the impact of the cap on the families affected.
Lord Reed notes that the cap for households with children is equivalent to
a gross annual salary of 35,000, which is higher than the earnings of half of the UKs working households.
Whether the cap should be higher is a political question.
It is not the function of the courts to determine how much public expenditure should be devoted to welfare benefits.
Importantly, affected households were given advance notice and assistance to enable them to adjust. [70 75] The differential impact results from including child related benefits in the cap.
Excluding these would reduce savings by 80 90% and compromise the achievement of the caps legitimate aims.
No credible means were suggested by which those aims might be achieved without affecting more women than men. [76 77] Other arguments relied on the United Nations Convention on the Rights of the Child (UNCRC), which has not been incorporated by Parliament into UK law, but which can be relevant to the application of the ECHR.
Strasbourg cases do not support the argument that the cap impinges on the article 8 ECHR rights of children, and that therefore article 3(1) UNCRC obliged the Government to treat the best interests of children as a primary consideration. [78 80] Although the UNCRC can be relevant to questions concerning the rights of children under the ECHR, the present context is one of alleged discrimination against women in the enjoyment of their A1P1 property rights. [86 89] The argument that the Regulations were vitiated by the Governments misinterpretation of article 3(1) was no stronger.
It is firmly established that UK courts cannot interpret or apply treaties to which Parliament has not given effect. [90] Lord Reed further reasons that the question of proportionality involves controversial issues of social and economic policy, with major implications for public spending.
It is therefore necessary for the court to give due weight to the considered assessment of democratically elected institutions.
Unless manifestly without reasonable foundation, their assessment should be respected by the court.
Many of the issues in the appeal were considered by Parliament before it approved the Regulations.
The Governments view, endorsed by Parliament, that achieving its aims was sufficiently important to justify making the Regulations, despite the differential impact on men and women, was not manifestly without reasonable foundation. [92 96] Lord Hughes adds that Strasbourgs case law is a long way from saying that article 3(1) is relevant to justification of any kind of discrimination, whether or not the rights, upbringing, or family life of a child are affected. [144] Lord Carnwath agrees that article 3(1) UNCRC has no role in justifying discrimination against women: the treatment of the child does not depend on the sex of their parent. [129] It is trite law that unincorporated treaties like the UNCRC have no direct effect in domestic law unless and until incorporated by statute. [115] On compliance with article 3(1), he reasons that the Governments reliance on limiting expenditure and the need for a clear upper limit on benefits ignores the distinctive statutory purpose of child related benefits: to meet the needs of children as individuals.
The cap means children lose these benefits for reasons unrelated to their own needs.
If excluding those benefits emasculates the scheme, this raises questions about the viability of a scheme so dependent on child related benefits.
However, though the Secretary of State failed to show how the Regulations comply with article 3(1), it is in the political, rather than the legal, arena that the consequences should be played out. [123 127, 133] Lady Hale, in her dissenting judgment, reasons that the question is whether the legitimate aims of the cap justify the discrimination involved in its implementation. [189] The manifestly without reasonable foundation test applies to both the aims of the interference with property rights, and the proportionality of the discriminatory means employed. [209] The UNCRC has not yet been generally translated into domestic law, but Strasbourg case law shows that article 3(1) UNCRC is relevant to proportionality and discrimination as well as informing the substantive content of Convention rights, even in cases where the discrimination is not against the children but their mothers. [215 222] What has to be considered is whether the benefit cap as it applies to lone parents can be justified independently of its discriminatory effects.
In considering that, it is necessary to ask whether proper account has been taken of the best interests of the children affected, i.e. whether the Government complied with article 3(1).
It is clear to Lady Hale that it did not.
The cap deprives some children of provision for their basic needs, which cannot be in their best interests.
It does so in order to incentivise their parents to seek work, but discriminates against lone parents, who are least likely to be able to do so. [223 226] In light of article 3(1), the indirect sex discrimination inherent in the caps implementation is not a proportionate way of achieving its aims. [228] Lord Kerr, in his dissenting judgment, considers that the UNCRC can be directly enforceable in domestic law. [255 256] He further reasons that a mothers personality is defined not simply by her gender but by her role as carer for her children, so that justification of a discriminatory measure must directly address the impact on the children of lone mothers. [264 265]
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This appeal concerns whether certain rules of the payment card schemes operated by Visa and Mastercard have the effect of restricting competition, in breach of article 101(1) of the Treaty on the Functioning of the European Union (TFEU), and equivalent national legislation.
The rules in question provide for fees which are known as multilateral interchange fees or MIFs.
Visa and Mastercard deny that there has been any restriction of competition, and contend that, in any event, the rules in question are exempt from the prohibition in article 101(1) because they satisfy the requirements of article 101(3) TFEU.
The outline facts
These are helpfully set out in the parties statement of facts and issues, as summarised below.
The appellants, Visa and Mastercard, operate payment card schemes.
They facilitate electronic funds transfers throughout the world, most commonly through branded credit and debit cards.
The respondents, Asda Stores Ltd (Asda), Argos Ltd and others (Argos) and WM Morrison Supermarkets plc (Morrisons) (together AAM) and Sainsburys Supermarkets Ltd (Sainsburys), are retailers.
The respondents accept payments from customers by way of debit and credit cards, including Visa and Mastercard branded cards.
Visa and Mastercard each operate open four party payment card schemes (the Visa scheme and the Mastercard scheme), under which: Issuers (who are generally banks and other financial institutions) issue (i) debit and/or credit cards to their cardholder customers; and (ii) Acquirers (also generally banks or other financial institutions) provide payment services to merchants.
These are the four parties to which the term open four party payment card scheme refers.
In addition, the scheme operator (Visa or Mastercard in these cases) sets the rules of the scheme and allows institutions to join the scheme as issuers and/or acquirers.
Visa and Mastercard do not themselves issue cards or sign up merchants to accept payment transactions.
Instead, they accept as licensees all eligible financial institutions, these licensees being licensed to act, in specified territories, as issuers or acquirers or both.
The operation of the Visa and Mastercard schemes can be represented by the following diagram: Issuers and acquirers join the Visa and/or Mastercard schemes, and In summary, the Visa and Mastercard schemes operate as follows: (i) agree to abide by the rules of the schemes. (ii) A cardholder contracts with an issuer, which agrees to provide the
cardholder with a Visa or Mastercard debit or credit card, and agrees the
terms on which they may use the card to buy goods or services from merchants. (iii) Those terms may include a fee payable by the cardholder to the issuer for the use of the card, the interest rate applicable to the provision of credit, and incentives or rewards payable by the issuer to the cardholder for holding or using the card (such as airmiles, cashback on transactions, or travel insurance). (iv) Merchants who wish to accept payment cards under the scheme contract with an acquirer, which agrees to provide services to the merchant enabling the acceptance of the cards, in consideration of a fee, known as the merchant service charge (the MSC).
The acquirer receives payment from the issuer to settle a transaction entered into between cardholder and merchant, and passes the payment on to the merchant, less the MSC. (v) The MSC is negotiated between the acquirer and the merchant.
Typically, it is set at a level that reflects the size and bargaining power of the merchant, the level of the acquirers costs (including scheme fees payable to Visa and Mastercard, and any interchange fees payable by the acquirer to issuers), and the acquirers margin. (vi) The scheme rules require that, whenever a cardholder uses a payment card to make a purchase from a merchant, the cardholders issuer must make a payment to the merchants acquirer to settle the transaction. (vii) The Visa and Mastercard scheme rules make provision for the terms on which issuers and acquirers (who are members of the scheme) are to deal with each other, in the absence of any different bilateral agreement made between them.
These terms include issuers and acquirers settling transactions at the face value of the transaction (settlement at par or, as it is sometimes referred to, prohibition on ex post pricing) and also provide for the payment of an interchange fee on each transaction. (viii) Under both the Visa and Mastercard schemes, the default interchange fee (ie the MIF) which is payable by the acquirer to the issuer on each transaction is expressed either as a percentage of the value of the transaction, or as a flat figure in pence for each transaction.
Different MIFs apply to different types of transaction (such as contactless payments, or payments made where the card is not present, including internet payments).
Different MIFs also apply to transactions depending on whether the issuer and acquirer are based in the same state/region or different states/regions. (ix) Under the Visa and Mastercard schemes, issuers and acquirers are not required to contract on the basis of the MIF.
Under the rules, they are free to enter into bilateral agreements with different terms.
In practice, however, issuers and acquirers do contract on the basis of the MIF, as both trial judges below found. (a) Popplewell J stated in Asda Stores Ltd v Mastercard Inc [2017] EWHC 93 (Comm); [2017] 4 CMLR 32, para 9 in relation to the Mastercard scheme: Interchange fees can in theory be agreed bilaterally between issuers and acquirers.
In practice this is not how the interchange fee is determined.
Under the Scheme Rules (Rule 8.3), MasterCard sets the interchange fees which are to apply compulsorily in default of bilateral agreements.
These are the multilateral interchange fees or MIFs.
In practice there are no material bilateral agreements, and so the MIF always applies.
This is not surprising: in a putative bilateral negotiation between an issuer and an acquirer the issuer has no incentive to accept less than the default MIF and the acquirer no incentive to offer more. (b) Phillips J stated in Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2017] EWHC 3047 (Comm); [2018] 2 All ER 611, para 102 in relation to the Visa scheme: Although a MIF is, in theory, only a default provision applying in the absence of agreement, it was common ground that no bilateral agreements as to Interchange Fees are in fact made in the UK market.
The reason for that result is also common ground and is obvious: Issuers have no need or incentive to agree a lower fee than the MIF and Acquirers have no need or incentive to agree to a higher fee.
Both sides of the negotiation have the certainty that transactions will, in the absence of agreement, proceed on the basis of settlement at par plus an Interchange Fee set at the level of the MIF, so neither has a reason to depart from that position and certainly no incentive to incur the significant costs of entering negotiations with multiple counterparties in the (probably forlorn) hope of persuading one or more of them to agree a position which deviated from the default.
As all Acquirers are in the same position, Merchants have no ability to negotiate with them as to the MIF element of the MSC, which is passed on in full.
Witnesses called by each of the Merchants (12 in total) gave evidence that their respective Acquirers refused to negotiate the MIF element of their charge, treating it as a pass through cost set by the Scheme. (x) For most of the claim period, the MIF typically accounted for some 90% of the MSC.
Acquirers pass on all of the MIF, and the scheme fee, to merchants through the MSC, with negotiation between acquirers and merchants in respect of the MSC being limited to the level of the acquirers margin.
In the present proceedings, the MIFs at issue flow from the acquirer to the issuer.
In other words, they involve a deduction from the payment that the issuer makes to the acquirer to settle the transaction.
This is sometimes referred to as a positive MIF.
However, this is not universally the case for schemes of this kind.
In principle, interchange fees could flow in the opposite direction (ie be added to the payment made by the issuer to the acquirer).
There are some four party payment card schemes which operate on that basis.
This is sometimes referred to as a negative MIF.
Other schemes operate on the basis that, in the absence of a bilateral agreement between the issuer and acquirer, the issuer must settle the transaction at par without the deduction of an interchange fee.
It was common ground that a rule specifying the terms on which the transaction is to be settled between issuer and acquirer, at least in default of bilateral agreement, is necessary in order for a four party payment card scheme to operate.
It was also common ground that a rule providing for positive MIFs is not necessary for the operation of a four party payment card scheme.
Visa and Mastercard do not receive any part of the MIF or the acquiring bank fee.
Their remuneration comes from scheme fees paid by issuers and acquirers.
The lawfulness of those scheme fees is not the subject of these proceedings.
Four party payment card schemes, such as the Visa and Mastercard schemes, operate in what is described by economists as a two sided market: (i) On one side of the market, issuers compete with each other for the business of customers to whom they will issue cards (the issuing market). (ii) On the other side of the market, acquirers compete with each other for the business of merchants to whom they seek to offer acquiring services (the acquiring market).
These proceedings concern the effect of MIFs on competition in the acquiring market.
Four party payment card schemes are not the only type of payment card scheme.
There are also three party payment card schemes, including those operated in the UK by American Express and Diners Club.
In the original form of that type of scheme, the scheme operator (ie American Express or Diners Club) acts as both acquirer and issuer and clears payments itself.
One of the scheme rules that both the Visa and Mastercard schemes also operate is an Honour All Cards Rule (HACR).
This requires a merchant, having agreed with an acquirer to accept Visa or Mastercard branded payment cards, to accept all such cards, regardless of which issuer issued the cards.
Merchants can choose to accept only certain categories of card (for example, only debit cards), in which case they would be obliged to accept all Visa or Mastercard branded cards in that category.
The lawfulness of the HACR is not in dispute in these proceedings.
The legal framework
Articles 101(1) and 101(3) TFEU provide as follows: Article 101(1) The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: limit or control production, markets, technical (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) development, or investment; share markets or sources of supply; (c) (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Article 101(3) The provisions of paragraph 1 may, however, be declared inapplicable in the case of: any agreement or category of agreements between undertakings, associations of undertakings, practices, any decision or category of decisions by any concerted practice or category of concerted which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while impose on allowing consumers a fair share of the resulting benefit, and which does not: (a) the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; afford such undertakings the possibility of (b) eliminating competition in respect of a substantial part of the products in question.
Section 2 of the Competition Act 1998 (the 1998 Act) makes the same provision as article 101(1) in relation to agreements which may affect trade within the UK, and which prevent, restrict or distort competition within the UK.
Section 2 is the counterpart of article 101(1) and section 9 is the counterpart of article 101(3).
Section 60 of the 1998 Act sets out principles to be applied when determining questions under sections 2 and 9.
It provides as follows: Principles to be applied in determining questions (1) The purpose of this section is to ensure that so far as is possible (having regard to any relevant differences between the provisions concerned), questions arising under this Part in relation to competition within the United Kingdom are dealt with in a manner which is consistent with the treatment of corresponding questions arising in [EU] law in relation to competition within the [European Union]. (2) At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency between the principles applied, and decision reached, by (a) the court in determining that question; and (b) the principles laid down by the Treaty and the European Court, and any relevant decision of that Court, as applicable at that time in determining any corresponding question arising in [EU] law. (3) The court must, in addition, have regard to any relevant decision or statement of the Commission.
The regulatory history
Both the Visa and the Mastercard schemes have been subject to scrutiny by national and European competition authorities and regulators over many years, including in relation to MIFs.
The Court of Appeal included a summary of the regulatory background in its judgment: [2018] EWCA Civ 1536; [2019] Bus LR 198; [2019] 1 All ER 903, paras 12 36.
Of particular relevance to the appeal is the European Commission (the Commission) decision of 19 December 2007 that the Mastercard MIFs applicable within the European Economic Area (EEA MIFs) had, since 22 May 1992, been in breach of article 101(1), and Mastercard had not proved to the requisite standard that any of the first three article 101(3) exemption criteria were met: Decision C (2007) 6474 in Cases COMP/34.579 MasterCard, COMP/36.518 EuroCommerce, and COMP/38.580 Commercial Cards (the Mastercard Commission Decision).
Mastercard applied to the Court of Justice of the European Union (the CJEU) for the annulment of the Mastercard Commission Decision.
On 24 May 2012, the General Court gave judgment dismissing Mastercards application: MasterCard Inc v European Commission (Case T 111/08) [2012] 5 CMLR 5 (Mastercard GC).
Mastercard appealed the General Courts decision to the Court of Justice.
On 11 September 2014, the Court of Justice gave judgment dismissing Mastercards appeal: MasterCard Inc v European Commission (Case C 382/12 P) [2014] 5 CMLR 23 (Mastercard CJ).
The trial proceedings
The appeal relates to three sets of proceedings: the Mastercard Sainsburys proceedings, the AAM proceedings and the Visa Sainsburys proceedings.
In the Mastercard Sainsburys proceedings, Sainsburys issued a claim against Mastercard in the Chancery Division for damages for infringement of article 101(1) TFEU and section 2 of the 1998 Act, in respect of the Mastercard MIFs applicable to domestic transactions in the United Kingdom (UK MIFs) for the period 19 December 2006 onwards.
The claim was transferred to the Competition Appeal Tribunal (the CAT) on 1 December 2015.
A liability and quantum trial was heard in the CAT over 23 days in January to March 2016.
Judgment was given on 14 July 2016, with the CAT finding that, from 2006 to 2015, the Mastercard UK MIFs restricted competition by effect: Sainsburys Supermarkets Ltd v MasterCard Inc [2016] CAT 11; [2016] Comp AR 33.
Damages of around 68.5m were awarded to Sainsburys (and subsequently adjusted to take into account the impact of corporation tax).
In the AAM proceedings, Asda and Morrisons issued like claims for damages against Mastercard, ultimately limited to the Mastercard UK MIFs since 23 May 2006 and the Mastercard EEA MIFs since 23 May 2007.
Argos also issued a claim limited to the Mastercard UK MIFs since 5 October 2006, the Mastercard EEA MIFs from 5 October 2007, and Mastercards Irish domestic MIFs (Irish MIFs) from 5 October 2006 to 5 January 2007 and from 20 January 2009 onwards.
The parties various claims were combined.
A liability trial took place before Popplewell J in the Commercial Court in June to July, and September to October 2016.
On 30 January 2017, Popplewell J dismissed the claims: Asda Stores Ltd v MasterCard Inc [2017] EWHC 93 (Comm); [2017] 4 CMLR 32.
He found that, subject to what came to be called for shorthand the death spiral argument, Mastercards UK and Irish MIFs restricted competition in the acquiring market contrary to article 101(1), but that the effect of that argument was that they did not infringe that provision.
He also held that Mastercards UK, Irish and EEA MIFs were exempt under article 101(3) in any event.
In the Visa Sainsburys proceedings, Sainsburys issued like claims for damages against Visa in respect of the Visa UK MIFs since 18 December 2007.
Sainsburys claim was heard by Phillips J in the Commercial Court in a 39 day trial of liability issues in the period 14 November 2016 to 1 March 2017.
On 30 November 2017, Phillips J dismissed Sainsburys claim against Visa: Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2017] EWHC 3047 (Comm); [2018] 2 All ER 611.
Phillips J found that the Visa UK MIFs did not restrict competition in the acquiring market and the claim was dismissed (the Visa restriction judgment).
On 23 February 2018, Phillips J gave a further judgment, at the request of the parties, although it was strictly obiter.
He found that if, contrary to his conclusion in the Visa restriction judgment, the Visa UK MIFs did restrict competition, they were not exempt, at any level, under article 101(3) because Visa had not established to the requisite standard that the Visa UK MIFs caused any benefits to consumers: Sainsburys Supermarkets Ltd v Visa Europe Services LLC [2018] EWHC 355 (Comm); [2018] 4 CMLR 24 (the Visa exemption judgment).
The judgments below and their essential reasoning are summarised by the Court of Appeal at paras 37 57 of its judgment.
The Court of Appeal decision
The Court of Appeal directed that the appeals in the Mastercard Sainsburys proceedings, the AAM proceedings and the Visa Sainsburys proceedings be heard together.
There was a ten day hearing between 16 and 27 April 2018.
Judgment was handed down on 4 July 2018, overturning all four of the judgments given below.
As regards Popplewell Js judgment in the AAM proceedings, the Court of Appeal endorsed his view that Mastercards default MIFs involved a distortion of competition contrary to article 101(1), but disapproved his reasoning on the death spiral argument, with the result that the Mastercard default MIFs were found to infringe article 101(1).
The Court of Appeal also overruled the judge in relation to his conclusion on Mastercards claim of exemption under article 101(3).
It held that Mastercard had not advanced evidence at trial which was capable of substantiating its claim for exemption under that provision; therefore, the judge should have concluded that Mastercards claim for exemption failed.
Despite this ruling regarding article 101(3) in the AAM proceedings, the Court of Appeal remitted the issues arising under article 101(3) in all three sets of proceedings to the CAT, for reconsideration together on the basis of the existing evidence which had been adduced in all three sets of proceedings.
On 29 November 2018 Visa and Mastercard were given permission to appeal against the Court of Appeal decision on all grounds.
On 6 November 2019 AAM were given permission to cross appeal against the order for remittal made by the Court of Appeal.
The issues
The issues which arise on the appeal are as follows: (i) Did the Court of Appeal err in law in finding that there was a restriction of competition in the acquiring market contrary to article 101(1) TFEU and equivalent national legislation? (the restriction issue) (ii) Did the Court of Appeal find, and if so did it err in law in finding, that Visa and Mastercard were required to satisfy a more onerous evidential standard than that normally applicable in civil litigation, in order to establish that their MIFs were exempt from the prohibition on restrictive agreements pursuant to article 101(3) TFEU, because of the economic benefits to which they contributed? (the standard of proof issue) (iii) Did the Court of Appeal err in law in finding that in order to show that consumers receive a fair share of the benefits generated by the MIFs, for the purpose of satisfying the test for exemption under article 101(3) TFEU, Visa was required to prove that the benefits provided to merchants alone as a result of the MIFs outweighed the costs arising from the MIFs, without taking any account of the benefits received by cardholders as a result of the MIFs? (the fair share issue) (iv) Did the Court of Appeal find, and if so did it err in law in finding, that a defendant has to prove the exact amount of loss mitigated in order to reduce damages? (the broad axe issue)
If it arises, the issue on the cross appeal is whether the Court of Appeal erred in remitting the AAM proceedings for reconsideration in relation to exemption under article 101(3) (the remission issue).
Issue (i) The restriction issue
In the CAT proceedings, the CAT decided two issues which are no longer in dispute, namely that: (i) the MIF did not amount to a restriction of competition by object; and (ii) the restriction issue fell to be considered against a counterfactual in which the transactions would be settled at par by default, which was equivalent to a default MIF of zero.
It is also not in dispute that the setting of the UK MIF was pursuant to an agreement between undertakings within the meaning of article 101(1) (see para 95 of the CAT judgment, para 34 of Popplewell Js judgment and para 5 of the Visa restriction judgment).
The CAT considered that bilateral MIF agreements would be made in the counterfactual and made detailed findings on this basis.
Both Popplewell J and Phillips J disagreed with this conclusion.
As Phillips J stated at paras 126 129 of the Visa restriction judgment: 126. despite the fact that MIFs have provided a default level of Interchange Fee for many years bilateral agreements are unknown in the UK market.
That demonstrates the very considerable strength of the market forces which keep the Interchange Fee at the level of the default: no party has persuaded another to move away from the default and no party has volunteered to do so for some perceived benefit. 129.
In my judgment it would require clear evidence to support a finding that [bilateral agreements] would emerge in a default settlement counterfactual when they do not arise in the actual default Scheme it is clear that there is no such evidence in these proceedings.
On the contrary, the evidence was unanimous and unequivocal to the opposite effect
It is now common ground that Popplewell J and Phillips J were correct so to
It follows that the findings made by the CAT on the counterfactual on the basis of bilateral agreements being made are not relevant to the appeal.
In the AAM proceedings, Popplewell J would have found that the Mastercard MIFs were a restriction on competition were it not for the death spiral argument.
That argument was not supported on appeal.
The reason that he would otherwise have found that there was a restriction is summarised at para 156 of Popplewell Js judgment: 156.
They [the MIFs] imposed a floor below which the MSC could not fall, because acquirers had to pay at least that much to issuers and had to recoup it from the merchants, which in turn led to higher prices charged by acquirers to merchants through the MSC than if the MIF were lower or zero.
Such a floor restricts competition because it interferes with the ability of acquirers to compete for merchants business by offering MSCs below such floor.
It is no different in kind from a collective agreement by manufacturers to maintain inflated wholesale prices, which prevents wholesalers competing on the retail market below those prices.
Phillips J disagreed with this reasoning and conclusion.
His main reason for doing so is set out at para 156 of the Visa restriction judgment: 156. the situation is exactly the same at any lower level of MIF, including a zero MIF or its equivalent, a no MIF/default SAP [settlement at par] counterfactual.
At that lower level, the default settlement rule still provides a default level of Interchange Fee, and therefore (because of the lack of competitive pressure to depart from that default) both a floor and a ceiling for that fee.
The only difference is the level.
Popplewell J rejected that argument in the Asda Judgment, stating at para 160 that in a no MIF counterfactual the alleged vice is not the same as the actual: there is no floor.
However, a zero MIF or no MIF/default SAP counterfactual most certainly does give rise to a floor, both in economic terms and as a matter of logic, particularly in the context of a two sided market: it prevents the possibility of market forces driving the MIF to a negative level (equivalent to a premium on settling the transaction price).
As I have mentioned above, that is not merely a theoretical possibility, as all the expert economists recognised .
The Court of Appeal held that it was bound to follow the decision in Mastercard CJ that the MIFs in issue restricted competition within the meaning of article 101(1).
It stated that this was not a decision from which the Court either can or should depart.
Its reasoning is summarised at paras 185 186 of the judgment: 185.
Our conclusions on the primary article 101(1) issue can be summarised quite shortly.
The correct counterfactual for schemes like the MasterCard and Visa schemes before us was identified by the [Court of Justices] decision.
It was no default MIF and a prohibition on ex post pricing (or a settlement at par rule).
The relevant counterfactual has to be likely and realistic in the actual context (see the O2 Germany GmbH & Co OHG case [2006] ECR II 1231, paras 68 71 [O2 Germany v Commission (Case T 328/03)] and the [Court of Justices] decision, para 169), but for schemes of this kind, the [Court of Justice] has decided that that test is satisfied. 186.
The [Court of Justices] decision also made clear at para 195 that MasterCards MIFs, which resulted in higher prices, limited the pressure which merchants could exert on acquiring banks, resulting in a reduction in competition between acquirers as regards the amount of the merchants service charge.
This is not a decision from which this court either can or should depart.
It answers the schemes argument that, whether as a matter of evidence or not, the competitive process will not differ in the counterfactual.
The default MIFs may be a transparent common cost, which is passed on by acquirers to merchants, and which does not figure in the negotiations between them, but it does not follow that acquirers none the less compete as strongly for merchants business in relation to the acquirers margin and the additional services they offer, as they would in the absence of the default MIFs.
It follows that there are essentially two issues which arise: (i) whether, as the Court of Appeal held, the court is bound by the Mastercard CJ decision on the restriction issue; and (ii) if not, whether that decision ought to be followed.
This requires a detailed consideration of what was decided by the Commission, the General Court and the Court of Justice, and of their reasoning.
Is the court bound by Mastercard CJ?
The Mastercard Commission Decision
The decision is summarised at paras 396 405 of the Court of Appeal judgment.
The restriction of competition identified by the decision is summarised in the Executive Summary, point 2, as follows: The MIF in MasterCards scheme restricts competition between acquiring banks by inflating the base on which acquiring banks set charges to merchants and thereby setting a floor under the merchant fee.
In the absence of the multilateral interchange fee the merchant fees set by acquiring banks would be lower.
This reflects the finding made at recital 410: MasterCards MIF constitutes a restriction of price competition in the acquiring markets.
In the absence of a bilateral agreement, the multilateral default rule fixes the level of the interchange fee rate for all acquiring banks alike, thereby inflating the base on which acquiring banks set charges to merchants.
Prices set by acquiring banks would be lower in the absence of this rule and in the presence of a rule that prohibits ex post pricing.
The MasterCard MIF therefore creates an artificial cost base that is common for all acquirers and the merchant fee will typically reflect the costs of the MIF.
This leads to a restriction of price competition between acquiring banks to the detriment of merchants (and subsequent purchasers).
This is further explained at recital 448 as follows: The decisive question is whether in the absence of the MIF the prices acquirers charge to merchants at large would be lower.
This is the case, because the price each individual bank could charge to merchants would be fully determined by competition rather than to a large extent by a collective decision among (or on behalf of) the banks.
At recitals 455 to 460 the Commission addressed the argument of Mastercard and Visa (who had been allowed to participate in the proceedings) that the MIF was not a restriction because its effect would be like an excise tax.
This argument is recorded at recital 219 in the following terms: At the oral hearing Visas expert also argued that it was hard to imagine how a multilaterally set interchange fee could possibly restrict competition between acquiring banks.
Competition among acquirers could not be stronger with at par clearing than with a MIF, just as it would be hard to assume that breweries would compete more keenly if one scraps excise taxes.
This is essentially the same argument as that advanced successfully by Visa before Phillips J and again on this appeal.
In summary, in a counterfactual with settlement at par (equivalent to a zero rated MIF) there is no process of competition as to that default term of settlement, just as there would not be if there was a MIF, a common and transparent cost which is also a default term of settlement, not a price or charge.
In both the factual scenario and the counterfactual, competition is limited to the acquirers individual marginal cost and mark up.
There is accordingly no difference in the competitive process and no restriction on competition (the zero MIF argument).
The Commission rejected this argument for the following reasons: 455.
MasterCard puts forward that the interchange fee does not favour a particular acquirer or type of acquirer over other acquirers/types of acquirers.
The interchange fee is a common identical cost, borne by all acquirers, that does not influence price competition between acquirers in terms of determining the level of MSCs.
Visas expert raised a similar argument at the oral hearing by comparing the MIF to an excise tax. 457. even if one were to qualify a MIF as a kind of excise tax this is no reason why the MIF should fall outside article 81(1) of the Treaty [now article 101(1) TFEU].
The collective act of competing undertakings to raise charges for consumers is subject to the prohibition of article 81(1) of the Treaty. 458.
If the concept of a restriction of competition within the meaning of article 81(1) of the Treaty had to be interpreted as MasterCard suggests, then article 81(1) of the Treaty would be entirely deprived of its effet utile.
The MasterCard MIF not only creates an (artificial) common cost for acquirers and thereby sets a floor for the fees each acquirer charges to merchants.
Acquirers also know precisely that all of their competitors pay the very same fees.
The price floor and the transparency of it to all suppliers involved (that is to say the knowledge of each acquirer about the commonality of the MIF for all other acquirers in the MasterCard scheme) eliminate an element of uncertainty. 459.
In the absence of MasterCards MIF, the prices acquirers charge to merchants would not take into account the artificial cost base of the MIF and would only be set taking into account the acquirers individual marginal cost and his mark up. 460.
Statements of retailers demonstrate that they would be in a position to exert that pressure if acquirers were not able to refer to interchange fee as the starting point (that is to say, as the floor) for negotiating the MSC.
This is because without a default that fixes an interchange fee rate in the absence of a bilateral agreement, merchants could shop around to contract with the acquirer who incurs the lowest interchange costs.517 Acquirers who bilaterally agree to pay relatively high interchange fees to issuers would ultimately not remain competitive, as other acquirers could undercut their merchant fees by refusing to enter into bilateral agreements with issuers or by agreeing on relatively lower interchange fees.
The uncertainty of each individual acquirer about the level of interchange fees which competitors bilaterally agree to pay to issuers would exercise a constraint on acquirers.
In the long run this process can be expected to lead to the establishment of inter bank claims and debts at the face value of the payment that is without deducting any interchange fees.
A multilateral rule that by default sets a certain interchange fee rate in the absence of bilateral negotiations prevents this competitive process.
In the absence of such a rule (and in the presence of a prohibition of ex post pricing) acquiring banks would eventually end up setting their MSCs merely by taking into account their own marginal cost plus a certain mark up.
Footnote 517 to para 460 provides as follows: Note that in the Commissions view in the absence of a default MIF banks may or may not enter into bilateral agreements on interchange fees.
The existence of such bilaterally agreed interchange fees is no pre requisite for the viability of the MasterCard payment card scheme.
In the absence of a default MIF prices are established on both sides of the MasterCard scheme as set out in section 7.3.4.1, ie: each bank determines its service levels and prices in a manner that maximises its individual profits.
Mastercard GC
Mastercard applied to the CJEU for annulment of the Commissions decision.
Its application was determined by the General Court.
The General Courts decision is summarised at paras 406 411 of the Court of Appeal judgment.
On the restriction issue the General Court summarised the Commissions reasoning and conclusion as follows: 28.
According to the Commission, the members of the MasterCard payment organisation collectively exert market power vis vis merchants and their customers.
Thus, the MIF had the effect of inflating the base of the MSC, while the latter could be lower if there were no MIF and if there were a prohibition of unilateral pricing a posteriori of transactions by the issuing banks (prohibition of ex post pricing).
It follows from this that the MIF examined by the Commission in the contested decision led to a restriction of price competition between acquiring banks to the detriment of merchants and their customers (recitals 410, 411 and 522 to the contested decision).
The General Court addressed the complaints made relating to the assessment of competition in the absence of the MIF at paras 129 167.
At para 140 it made the following general observation about the purpose of article 101(1)(a): 140. it is helpful to point out that article 81(1)(a) EC [now article 101(1)(a) TFEU] expressly provides that measures which directly or indirectly fix purchase or selling prices constitute restrictions of competition, and that, according to the case law, the purpose of article 81(1)(a) EC is to prohibit undertakings from distorting the normal formation of prices on the markets (ICI v Commission (Case T 13/89) [1992] ECR II 1021, para 311).
At para 142 the General Court set out the complaint made based on the zero MIF argument: 142. the applicants submit, in essence, that the fact that the MIF had an impact on the level of the MSC does not affect competition between acquirers, because the MIF applies in the same way to all acquirers and operates as a cost that is common to all of them.
Thus, the prohibition of ex post pricing would effectively impose a MIF set at zero which, from a competitive aspect, would be equivalent to and just as transparent as the current MIF, the only difference being the level at which it is set.
The General Court rejected this argument and set out its conclusion at para 143 as follows: 143.
This line of argument cannot be accepted.
Since it is acknowledged that the MIF sets a floor for the MSC and in so far as the Commission was legitimately entitled to find that a MasterCard system operating without a MIF would remain economically viable, it necessarily follows that the MIF has effects restrictive of competition.
By comparison with an acquiring market operating without them, the MIF limits the pressure which merchants can exert on acquiring banks when negotiating the MSC by reducing the possibility of prices dropping below a certain threshold.
Mastercard CJ
Mastercard appealed against the General Courts decision to the Court of Justice.
The Advocate General recommended that the appeal be dismissed.
He summarised the Commissions reasoning and conclusion as follows: AG6 In the decision at issue, the Commission considered that the decisions setting the MIF, which it characterised as decisions of an association of undertakings within the meaning of article 81(1) EC, restrict competition between acquiring banks and thereby infringe that article and article 53 of the EEA Agreement, in that they amount in fact to setting a minimum price for the MSC AG54 In the present case, the Commission examined the competitive process that would have developed on the acquiring market in the absence of the MIF at recitals 458 to 460 to the decision at issue and concluded that, in the absence of the MIF and with a prohibition on ex post pricing, the prices charged to merchants by acquirers would only be set taking into account the acquirers individual marginal cost and his mark up.
The Court of Justices decision is summarised at paras 412 417 of the Court of Appeal judgment.
The Court of Justice explained and affirmed the General Courts conclusion at para 143 of its judgment in the following terms: 193.
In particular, while the General Court clearly explained in para 143 of the judgment under appeal that the MIF had restrictive effects in that they: [limit] the pressure which merchants can exert on acquiring banks when negotiating the MSC by reducing the possibility of prices dropping below a certain threshold, in contrast with an acquiring market operating without them, the General Court did not merely presume that the MIF set a floor for the MSC but, on the contrary, proceeded to carry out a detailed examination in paras 157 to 165 of the judgment under appeal in order to determine whether that was in fact the case.
The Court of Justice endorsed the General Courts rejection of the zero MIF argument in the following terms: 195. the appellants cannot criticise the General Court for having failed to explain how the hypothesis applied had less restrictive effects on competition than the MIF, given that the only difference between the two situations lies in the pricing level of the MIF.
As the Commission rightly points out, the judgment under appeal is not based on the premiss that high prices in themselves constitute an infringement of article 81(1) EC.
On the contrary, as is apparent from the very wording of para 143 of the judgment under appeal, high prices merely arise as the result of the MIF which limit the pressure which merchants could exert on acquiring banks, with a resulting reduction in competition between acquirers as regards the amount of the MSC.
Visa and Mastercards arguments
Ms Dinah Rose QC for Visa (whose argument is adopted and supported by Mr Mark Hoskins QC for Mastercard) submits that the Court of Appeal was wrong to conclude that it was bound by Mastercard CJ.
The decisions of the Court of Justice and the General Court depended on the factual basis of the Mastercard Commission Decision.
Crucial to that factual basis was the Commissions determination on the evidence before it that the competitive pressure which could be brought to bear on acquirers by merchants is greater in the counterfactual because of the possibility of bilateral negotiations of interchange fees and the uncertainty that that would create.
Ms Rose relies in particular on para 460 of the Mastercard Commission Decision which describes how, if there were no default MIF, merchants could shop around to contract with the acquirer who incurs the lowest interchange costs and how the uncertainty of each individual acquirer about the level of interchange fees which competitors bilaterally agree to pay to issuers would exercise a constraint on acquirers.
This is the pressure which merchants would be able to exert in the counterfactual, as borne out by statements of retailers.
This is to be contrasted with the evidence before and the findings made by Phillips J in the Visa restriction judgment.
He found that there would be no bilateral agreements in the counterfactual (para 129) and no resulting competition (para 151).
It followed that there would be no competitive pressure as found by the Commission.
Ms Rose submits that this is the pressure referred to in para 143 of Mastercard GC and para 195 of Mastercard CJ.
In para 195 the Court of Justice was making it clear that the Commissions finding of infringement had been upheld by the General Court because of the Commissions findings that MIFs limit this pressure which merchants could otherwise exert on acquirers, thereby reducing competition between acquirers.
Mastercard CJ is accordingly factually distinguishable.
It turned on the factual assessment made by the Commission which was different to that made by Phillips J.
Although Popplewell J did not make the same findings as Phillips J, he also found that there would be no bilateral agreements in the counterfactual, which is a critical difference in the factual assessment.
It is well established that a court is not bound by factual assessments made by the Commission Crehan v Inntrepreneur Pub Co (CPC) (Office of Fair Trading intervening) [2007] 1 AC 333; [2006] UKHL 38.
The Court of Appeal was therefore wrong to conclude that it was bound by Mastercard CJ.
In our judgment Visa and Mastercards arguments involve a
misinterpretation of the Mastercard Commission Decision, Mastercard GC and Mastercard CJ.
In relation to the Mastercard Commission Decision, in the section of the decision relied upon by Visa and Mastercard, recital 459, read in the context of recitals 457 and 458, is as important as recital 460.
Recital 459 bears repetition; it states: In the absence of MasterCards MIF, the prices acquirers charge to merchants would not take into account the artificial cost base of the MIF and would only be set taking into account the acquirers individual marginal cost and his mark up.
The Commission was here focusing on the process by which merchants bargain with acquirers over the MSC.
It was contrasting the position where that charge is negotiated by reference to a minimum price floor set by the MIF and one where it is negotiated by reference only to the acquirers individual marginal cost and his mark up ie between a situation in which the charge is only partly determined by competition and one in which it is fully determined by competition.
In the latter situation the merchants have the ability to force down the charge to the acquirers individual marginal cost and his mark up and to negotiate on that basis.
This is the pressure which is referred to in recital 460 of the decision.
This is made clear by the reference in the first sentence of recital 460 to that pressure ie the pressure referred to in recital 459.
It is correct that the Commission went on in recital 460 to describe the
competitive process involved if there were bilateral negotiations over interchange fees, but the ultimate point it was here making is that that process would be transient and that acquiring banks would eventually end up setting their MSCs merely by taking into account their own marginal cost plus a certain mark up.
The transient nature of such a competitive process shows that the existence of such a process cannot have been integral to the Commissions decision that there was a restriction on competition.
This is further borne out by footnote 517 in which the Commission stated that in the counterfactual banks may or may not enter into bilateral agreements on interchange fees, thereby making it clear that such agreements were not essential to its reasoning.
Mastercard GC is properly to be interpreted in a similar way.
In para 143 the General Court rejected the zero MIF argument and held that since the MIF sets a minimum price floor for the MSC (which is not determined by competition) it necessarily follows that the MIF has effects restrictive of competition.
This is the context in which the pressure referred to in the next sentence falls to be considered.
The consequence of the minimum price floor set by the MIF is that such pressure is limited to only part of the MSC ie that relating to the acquirers individual marginal cost and mark up (in the present case about 10% of the MSC).
A similar analysis applies to Mastercard CJ.
The pressure which the Court of Justice referred to at para 195 is the same as that referred to in para 143 of Mastercard GC, which the Court of Justice was endorsing.
Accordingly, we do not consider that Mastercard CJ can be factually distinguished in the manner suggested by Visa and Mastercard.
Visa and Mastercard further contend that the recent decision of the Court of Justice in Gazdasgi Versenyhivatal v Budapest Bank Nyrt (Case C 228/18) EU:C:2020:265 (Budapest Bank) established that the question whether MIFs that set a floor under the MSC restrict competition has not been settled by Mastercard CJ, but must be determined by a national court by carrying out an in depth evidential examination of its effects, and that this was contrary to the judgment of the Court of Appeal.
The Court of Justices decision in Budapest Bank was pronounced after the conclusion of the hearing of this appeal but the parties were allowed to make written submissions as to its significance.
The Advocate Generals opinion had already been referred to in argument.
Budapest Bank concerned an agreement made by banks that participated in both the Visa and Mastercard schemes in Hungary, by which they agreed on a uniform MIF that was applicable to both schemes.
It was argued by the parties in the national proceedings that the agreement had the effect of preventing the fees from escalating upwards.
The issue in the proceedings was whether the agreement had the object of restricting competition.
It did not concern whether it had the effect of so doing.
The Hungarian Supreme Court referred four questions to the CJEU for a preliminary ruling.
The second question concerned whether the MIF agreement had the object of restricting competition.
The Court of Justice ruled that it would only do so if the agreement in the light of its wording, its objectives and its context, can be regarded as posing a sufficient degree of harm to competition to be classified thus, a matter which is for the referring court to determine.
In so ruling the Court of Justice rejected the Commissions argument that, in
reliance on Mastercard CJ, the MIF agreement necessarily had the object of restricting competition.
Particular reliance is placed by Visa and Mastercard on paras 78 79 of the judgment which state: 78.
Second, as regards the acquiring market in Hungary, even assuming that the MIF Agreement had inter alia as its objective the fixing of a minimum threshold applicable to the service charges, the Court has not been provided with sufficient information to establish that that agreement posed a sufficient degree of harm to competition on that market for a restriction of competition by object to be found to exist.
It is, however, for the referring court to carry out the necessary verifications in that respect.
In particular, in the present instance, subject to those 79. verifications, it is not possible to conclude on the basis of the information produced for this purpose that sufficiently general and consistent experience exists for the view to be taken that the harmfulness of an agreement such as that at issue in the main proceedings to competition justifies dispensing with any examination of the specific effects of that agreement on competition.
The information relied on by the Competition Authority, the Hungarian Government and the Commission in that connection, that is to say, primarily, that authoritys decision making practice and the case law of the Courts of the European Union, specifically demonstrates, as things currently stand, the need to conduct an in depth examination of the effects of such an agreement in order to ascertain whether it actually had the effect of introducing a minimum threshold applicable to the service charges and whether, having regard to the situation which would have prevailed if that agreement had not existed, the agreement was restrictive of competition by virtue of its effects.
Visa and Mastercard contend that this shows that MIFs do not necessarily affect competition and that whether or not they do so is to be determined by the national court carrying out an in depth examination of its effects on competition in the actual and counterfactual markets.
It is surprising that so much reliance should now be placed by Visa and
Mastercard on Budapest Bank.
At the hearing it was recognised by Visa that it raised a different question.
As stated at para 116 of Visas written case: That case concerned the question whether an agreement between a number of Hungarian banks introducing a uniform MIF for both Visa and Mastercard credit card transactions in Hungary should be characterised as having the object of restricting competition.
It was therefore quite a different question from that which the CJEU had considered in Mastercard CJEU, in that it concerned alleged infringements by object rather than effect, and a single agreement covering both Visa and Mastercard, rather than one schemes rules applicable only to its own system.
In our judgment the case can clearly be distinguished in that: (i) it concerned restriction by object rather than effect; (ii) it involved a different type of MIF agreement and, in particular, one which was said to prevent escalating interchange fees; and (iii) it involved a different counterfactual, namely one where each scheme had its own MIF rather than there being no MIF.
The fact that the Commission sought to rely on Mastercard CJ in argument does not affect these important distinctions, all the more so given that the Commissions attempt to read across from an effect case to an object case was rejected by the Court of Justice.
In any event, in the present case there has been an examination by all courts
of the effects of the MIF on competition in the actual and counterfactual markets, including whether it operates as a price floor.
The issue is whether the effects as found are materially the same so that the same legal conclusion is to be drawn as in Mastercard CJ.
For all these reasons, in our judgment Budapest Bank does not support Visa and Mastercards case on the restriction issue.
Still less, as is boldly submitted, is it determinative in their favour.
Whether Mastercard CJ is binding depends upon whether the findings upon which that decision is based are materially distinguishable from those made or accepted in the present appeals.
We have rejected Visa and Mastercards arguments that it can be distinguished in the manner suggested by them and that their case is made out or supported by Budapest Bank.
In our judgment, the essential factual basis upon which the Court of Justice held that there was a restriction on competition is mirrored in these appeals.
Those facts include that: (i) the MIF is determined by a collective agreement between undertakings; (ii) it has the effect of setting a minimum price floor for the MSC; (iii) the non negotiable MIF element of the MSC is set by collective agreement rather than by competition; (iv) the counterfactual is no default MIF with settlement at par (that is, a prohibition on ex post pricing); (v) in the counterfactual there would ultimately be no bilaterally agreed interchange fees; and (vi) in the counterfactual the whole of the MSC would be determined by competition and the MSC would be lower.
For all these reasons we conclude that Mastercard CJ is binding and that the Court of Appeal was correct so to hold.
Should the court follow Mastercard CJ?
In the light of our conclusion that this Court is bound by Mastercard CJ this further issue does not arise.
Given the importance of the issues raised and the detailed arguments presented, we shall nevertheless briefly address it.
Under article 101(1) an agreement between undertakings which has the effect of directly or indirectly fixing purchase or selling prices is a restriction of competition under article 101(1)(a).
It is well established that the prohibition of price fixing under article 101(1)
also extends to the fixing of part of the price Krupp Thyssen Stainless GmbH v Commission of the European Communities (Joined Cases T 45/98 and T 47/98) [2001] ECR II 3757; [2002] 4 CMLR 15, paras 156 157.
The relevant selling price in the present appeals is the MSC.
On the facts as found, the effect of the collective agreement to set the MIF is to fix a minimum price floor for the MSC.
In the words of Mr Dryden, AAMs expert economist, it sets a reservation price.
That minimum price is non negotiable.
It is immunised from competitive bargaining.
Acquirers have no incentive to compete over that part of the price.
It is a known common cost which acquirers know they can pass on in full and do so.
Merchants have no ability to negotiate it down.
Whilst it is correct that higher prices resulting from a MIF do not in themselves mean there is a restriction on competition, it is different where such higher prices result from a collective agreement and are non negotiable.
Whilst it is also correct that settlement at par sets a floor, it is a floor which reflects the value of the transaction.
Unlike the MIF, it involves no charge resulting from a collective agreement, still less a positive financial charge.
There is a clear contrast in terms of competition between the real world in which the MIF sets a minimum or reservation price for the MSC and the counterfactual world in which there is no MIF but settlement at par.
In the former a significant portion of the MSC is immunised from competitive bargaining between acquirers and merchants owing to the collective agreement made.
In the latter the whole of the MSC is open to competitive bargaining.
In other words, instead of the MSC being to a large extent determined by a collective agreement it is fully determined by competition and is significantly lower.
For all these reasons, which are essentially the same as those given by the Commission, the General Court, the Court of Justice, Popplewell J and the Court of Appeal, even if we were not bound by Mastercard CJ, we would follow it and conclude that there was in the present cases a restriction on competition.
Conclusion on the restriction issue
For these reasons we dismiss the appeal on issue (i).
Issue (ii) The standard of proof issue
This ground of appeal is advanced jointly by Visa and Mastercard.
They submit that the Court of Appeal erred in law insofar as it concluded that, in relation to article 101(3) TFEU: (i) there is a specific requirement for robust and cogent evidence, which is a more onerous standard than that under the normal domestic civil standard of proof on the balance of probabilities; and (ii) there is a legal requirement that matters required to be considered have to be proved by facts and empirical data.
We are concerned here with circumstances in which a party in breach of article 101(1) seeks exemption by satisfying the requirements of article 101(3).
The following four conditions must be satisfied.
First, the anti competitive conduct must contribute to improving the production or distribution of goods or to promoting technical or economic progress.
Secondly, consumers must be allowed a fair share of the resulting benefit.
Thirdly, it must not impose on the participating undertakings any restrictions which are not indispensable to the attainment of these objectives.
Fourthly, it must not afford them the possibility of eliminating competition in respect of a substantial part of the products in question. (See, for example, GlaxoSmithKline Services Unlimited v Commission of the European Communities (Case T 168/01) [2006] ECR II 2969; [2006] 5 CMLR 29 (GlaxoSmithKline), para 234.) It is common ground between the parties that if the restriction on competition established under article 101(1) is to be justified, the burden of satisfying the four conditions set out in article 101(3) lies on the defendant.
Visa and Mastercard describe the present issue as relating to the standard of proof.
Visa and Mastercard maintain that in the first instance proceedings in the Commercial Court the judges adopted diverging views as to the standard of proof and the nature of the evidence required to satisfy that standard.
In the AAM proceedings, Popplewell J followed the orthodox common law approach that the standard of proof is the balance of probabilities and that there is no additional requirement as to the evidence which is capable of satisfying that standard.
In the context of exemption the requirement for substantiation is no more than a requirement for evidence, and the suggestion that it needs to be empirical and convincing means no more than that it must be based on evidence, not speculation, and be sufficient to convince the court to the requisite standard of proof which is the balance of probabilities.
If the epithet robust is intended to add more and connote an enhanced standard of proof, it is difficult to discern any legal basis for such an approach, (at para 305) In the Visa exemption judgment, Phillips J referred to the agreement between the parties that it was for Visa to establish on the balance of probabilities that its UK MIFs at a particular level are or were exempt.
He went on to address the relationship of that standard of proof with the requirement under EU law (citing the Mastercard Commission Decision at para 690) that the claim that a restrictive agreement creates efficiencies must be founded on detailed, robust and compelling analysis and that assumptions and deductions be based on empirical data and facts.
In my judgment the distinction being drawn is between: (a) real links to real efficiencies, capable of being observed and demonstrated on the facts by evidence (in other words, requiring empirical data); and (b) theoretical or logically assumed links and efficiencies based on broad economic or logical analysis, opinion or anecdotal evidence, perhaps sound in theory but possibly failing to take into account one or more of the many factors which arise in highly complex interactions in the real economy.
I see no difficulty in this court determining whether the former has been proved on the balance of probabilities.
That test is capable of accommodating varying requirements as to what is expected to meet the standard: contract terms must be certain, allegations of fraud must be distinctly proved and it is often said that cogent evidence is required to rebut certain presumptions.
In the case of article 101(3), it is recognised that robust analysis and cogent evidence will be required to establish, on the balance of probabilities, that a restrictive agreement in fact and in the real world (as opposed to in theory) gives rise to pro competitive effects. (at para 24) Phillips J went on to state (at para 25) that in his view this analysis did not differ significantly from that of Popplewell J.
The Court of Appeal began its consideration of the conditions for exemption under article 101(3) with the following uncontroversial statement: 77.
Pursuant to article 2 of the Modernisation Regulation [Council Regulation (EC) No 1/2003 on the implementation of Treaty competition rules (OJ 2003 L1, p 1)] the burden of proving that these cumulative conditions are satisfied is upon the schemes.
Recital 5 to the [Modernisation] Regulation makes it clear, however, that the standard of proof is for the national law, so that the usual civil standard of the balance of probabilities applies.
It then adopted para 24 of the Visa exemption judgment of Phillips J and continued: 80.
We agree with Phillips J (at para 25 of that judgment), that this analysis does not differ significantly from that of Popplewell J at para 305 of his judgment, but to the extent that there are any differences, we prefer the analysis of Phillips J.
In so far as Ms Dinah Rose QC, leading counsel for Visa, sought to argue that Phillips J adopted too prescriptive an approach and that any evidence should suffice provided it meets the civil standard of proof, we do not accept that argument.
We consider that Phillips J was right that regard should be had to the requirement of the Commission and the CJEU for cogent and convincing arguments and evidence (see GlaxoSmithKline Services Unlimited v Commission of the European Communities (Case T 168/01) EU:T:2006:265, [2006] ECR II 2969; [2006] 5 CMLR 1623 para 235, which was applied and followed in the General Courts decision in MasterCard at para 196). 81.
Although the standard of proof is a matter of English law, the nature of the evidence which will satisfy that standard must be informed by European Union law and Commission decisional practice since, ultimately, whether a party is entitled to exemption involves the application of a European treaty.
Furthermore, in that context, it is important to maintain a consistency of approach across member states as to the requirements of article 101(3).
Other passages in the judgment of the Court of Appeal (paras 85, 86 and 249) demonstrate that it considered that EU law requires cogent factual and empirical evidence to satisfy article 101(3).
In particular, the Court of Appeal (at paras 84 and 85) derived from the Commission Guidelines on the application of what is now article 101(3) TFEU (2004/C 101/8) (the Guidelines) and the EU jurisprudence on article 101(3), first, a need for the relevant benefits to be causally linked to the relevant restriction and, secondly, for that causal link to be established by facts and evidence supported by empirical analysis and data and not just economic theory.
It added (at para 86): Thirdly, as para 54 of the Guidelines makes clear, the causal link must be sufficiently direct to be capable of proof and an indirect effect will not generally be sufficient, precisely because cogent evidence of the link based on empirical analysis and data and not merely economic theory is required.
It is convenient to observe at this point that, contrary to the submission of Mastercard, the Court of Appeal did not conclude that only facts and empirical data but not economic theory may be relied upon in this regard.
The Court of Appeal made clear that its objection was to reliance solely on economic theory and that, in its view, a claim under article 101(3) must be based on empirical data and fact and not economic theory alone (paras 85 and 86).
Visa and Mastercard complain that the Court of Appeal wrongly adopted an unduly onerous standard of proof.
They take as their starting point Council Regulation (EC) No 1/2003 on the implementation of Treaty competition rules (the Modernisation Regulation).
The major change effected by the Modernisation Regulation was that whereas previously the grant of exemption from the prohibition on agreements which restrict competition had been the exclusive function of the European Commission, the Modernisation Regulation introduced a directly applicable exception system in which the competition authorities and courts of the member states have the power to apply the exemption provisions under what is now article 101(3).
The previous system of notification to the Commission for exemptions was abolished and the widespread involvement of national courts and authorities in exempting restrictive agreements was clearly contemplated.
It is in this context that recital 5 of the Preamble states: In order to ensure an effective enforcement of the Community competition rules and at the same time the respect of fundamental rights of defence, this Regulation should regulate the burden of proof under articles 81 and 82 [now articles 101 and 102] of the Treaty.
It should be for the party or the authority alleging an infringement of article 81(1) and article 82 of the Treaty to prove the existence thereof to the required legal standard.
It should be for the undertaking or association of undertakings invoking the benefit of a defence against a finding of an infringement to demonstrate to the required legal standard that the conditions for applying such defence are satisfied.
This Regulation affects neither national rules on the standard of proof nor obligations of competition authorities and courts of the member states to ascertain the relevant facts of a case, provided that such rules and obligations are compatible with general principles of Community law.
Similarly, article 2 which bears the heading Burden of proof provides: In any national or Community proceedings for the application of articles 81 and 82 of the Treaty, the burden of proving an infringement of article 81(1) or of article 82 of the Treaty shall rest on the party or the authority alleging the infringement.
The undertaking or association of undertakings claiming the benefit of article 81(3) of the Treaty shall bear the burden of proving that the conditions of that paragraph are fulfilled.
There is, accordingly, a clear allocation of the burden of proof, while questions as to the standard of proof are left to the law of the member state concerned, provided that the national rules are compatible with general principles of EU law.
Visa and Mastercard submit, therefore, that EU law expressly reserves the question of the standard of proof to national law, subject to the principles of effectiveness and equivalence.
In this regard, Visa and Mastercard rely further on the following passage in the decision of the Court of Justice in Eturas UAB v Lietuvos Respublikos konkurencijos taryba (Case C 74/14) [2016] 4 CMLR 19, paras 30 32: 30.
Although article 2 of Regulation No 1/2003 expressly governs the allocation of the burden of proof, that regulation does not contain any provisions on more specific procedural aspects.
Thus, in particular, that regulation does not contain any provision in relation to the principles governing the assessment of evidence and the standard of proof in national proceedings for the application of article 101 TFEU. 31.
That conclusion is confirmed by recital 5 of Regulation No 1/2003, which expressly states that the regulation does not affect national rules on the standard of proof. 32.
According to settled case law, in the absence of EU rules on the matter, it is for the national legal order of each member state to establish them in accordance with the principle of procedural autonomy, provided, however, that those rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by EU law (principle of effectiveness)
This passage, however, is not as helpful to Visa and Mastercard as might at first appear.
The issue in that case, which was a reference from the Supreme Administrative Court of Lithuania in proceedings where an anti competitive concerted practice was alleged, was whether certain evidence was sufficient proof of a fact which, if established, would trigger a presumption of liability under article 101(1).
The passage in the judgment of the Court of Justice at paras 30 32, cited above, was concerned with the specific question whether the dispatch of a message through an electronic system may constitute sufficient evidence to establish that the operators which used the system were aware, or ought to have been aware, of the content of that message.
Unsurprisingly, the Court of Justice held that, in accordance with the principle of procedural autonomy, the standard of proof in relation to establishing that fact was a matter for the national legal order of the member state concerned.
The Court of Justice went on, however, (at para 33) to distinguish the presumption arising under article 101(1) of a causal connection between a concertation and the market conduct of the undertakings participating in the practice.
That presumption, it emphasised, followed from article 101(1) and consequently formed an integral part of the EU law which the national court was required to apply.
The Court of Justice then went on (at paras 46 49) to address in detail the nature of the evidence that would be sufficient to rebut the presumption.
In our view, the fact that the Court of Justice in Eturas addressed, as a question of EU law, what evidence was capable of rebutting the presumption of participation in a concerted practice provides the key to resolving the present issue.
In that case Advocate General Szpunar observed (at AG100), with regard to rebuttable presumptions in competition law: Insofar as such presumptions stem from article 101(1) TFEU, as interpreted by the court, and consequently form an integral part of applicable EU law, they do not fall within the scope of the principle of the autonomy of national procedural law and are therefore binding on national authorities when they apply EU competition rules.
As Mr Nicholas Khan QC, on behalf of the Commission, put it in his oral submissions, Eturas illustrates how the nature of the evidence by which a finding of infringement can be secured or rebutted may be a question of EU law.
In the same way, the nature of the evidence by which an undertaking may establish that a restriction on competition is exempted by virtue of article 101(3) may also be a question of EU law.
In the present case, the essential complaint made by Visa and Mastercard under this ground of appeal does not relate to the standard of proof but to the nature of the evidence required to meet the standard of proof in this context.
More specifically, it relates to the type of evidence needed to establish that the benefits from the MIF rules under consideration outweigh the detriments to merchants and are indispensable for achieving those benefits.
The Court of Appeal recognised this distinction at paras 77 to 81 of its judgment, where it expressly accepted that the applicable standard of proof was the usual civil standard of the balance of probabilities but observed that the nature of the evidence which will satisfy that standard must be informed by EU law and Commission decisional practice.
While the Modernisation Regulation recognises the autonomy of member states in determining the legal test for the standard of proof under article 101(3), it does not recognise any autonomy in the member states to determine the nature of the evidence required to satisfy that standard.
The outcome on this issue, therefore, does not depend on Visa and Mastercard upholding national procedural rules about the standard of proof but on whether EU law imposes requirements as to what type of evidence is capable of discharging that burden.
It is clear, in our view, that article 101(3) does impose requirements as to the nature of the evidence which is capable of discharging the burden on an undertaking to establish an exemption under that provision.
Section 60 of the 1998 Act imports these requirements into domestic competition law.
Article 101(3) is founded on the notion that notwithstanding the existence of a restriction on competition and its likely negative effect on competition and consumers, efficiencies and benefits arising from the conduct which gave rise to the restriction may, nevertheless, justify exemption from the prohibition in article 101(1).
This is an inherently empirical proposition and necessarily requires the authority or court addressing the issue to carry out a balancing exercise a complex assessment (GlaxoSmithKline, Court of First Instance, at paras 241, 304 and 307) involving weighing the pro competitive effect against the anti competitive effect of the conduct in question.
Cogent empirical evidence is necessary in order to carry out the required evaluation of the claimed efficiencies and benefits.
To the extent that objective efficiencies caused by a restriction cannot be established empirically, they cannot be balanced with the restrictive effects.
As a result, although the standard of proof is a matter of domestic law, the nature of the evidence which will satisfy that standard must take account of the substantive requirements of article 101(3).
This view is confirmed by the practice of the Commission and the judgments of the EU courts.
The Guidelines were issued in 2004, in part to assist national courts and authorities in member states in undertaking what was for them the new role of applying article 101(3).
The Guidelines are not binding but they are based on the experience and expertise of the Commission which had previously had sole responsibility for carrying out the balancing test and granting exemptions, and they provide an analytical framework for the application of article 101(3).
In particular, they address (at paras 50 and 51) what is involved in identifying and evaluating the causal link between a restriction of competition and the creation of an efficiency and they cast light on this balancing exercise. 50.
The purpose of the first condition of [article 101(3)] is to define the types of efficiency gains that can be taken into account and be subject to the further tests of the second and third conditions of [article 101(3)].
The aim of the analysis is to ascertain what are the objective benefits created by the agreement and what is the economic importance of such efficiencies.
Given that for [article 101(3)] to apply the pro competitive effects flowing from the agreement must outweigh its anti competitive effects, it is necessary to verify what is the link between the agreement and the claimed efficiencies and what is the value of these efficiencies. 51.
All efficiency claims must therefore be substantiated so that the following can be verified: (a) The nature of the claimed efficiencies; (b) The link between the agreement and the efficiencies; (c) The likelihood and magnitude of each claimed efficiency; and (d) How and when each claimed efficiency would be achieved. (Original emphasis) This procedure requires the party seeking exemption to identify, substantiate and evaluate the claimed efficiencies and to verify their causal link with the anti competitive conduct as a pre condition to the balancing process which could not otherwise take place.
There is a requirement for detailed, empirical evidence and analysis in order that this evaluative exercise can be carried out.
In its judgment in GlaxoSmithKline (which was upheld by the Court of Justice, Third Chamber, GlaxoSmithKline Services Unlimited v Commission of the European Communities (Joined Cases C 501/06 P, C 513/06 P, C 515/06 P and C 519/06 P) [2009] ECR I 9291; [2010] 4 CMLR 2), the Court of First Instance (Fourth Chamber, Extended Composition) observed (at para 235) that a person seeking to rely on what is now article 101(3) must demonstrate that its conditions are satisfied, by means of convincing arguments and evidence.
Referring to the reviewing jurisdiction of the Court of First Instance it noted (at para 242) that it is for the court to establish not only whether the evidence relied on is factually accurate, reliable and consistent, but also whether it contains all the information which must be taken into account for the purpose of assessing a complex situation and whether it is capable of substantiating the conclusions drawn from it.
With regard to the first condition it observed (at para 248): It is therefore for the Commission, in the first place, to examine whether the factual arguments and the evidence submitted to it show, in a convincing manner, that the agreement in question must enable appreciable objective advantages to be obtained (See also paras 249, 263, 304, 307)
We are unable to accept the submission on behalf of Visa, that in GlaxoSmithKline the evidential basis for the application for article 101(3) which was accepted by the Court of First Instance was almost entirely theoretical and based on economic studies.
Having referred (at para 235) to the need for convincing arguments and evidence to demonstrate that the conditions of article 101(3) were satisfied, the General Court referred (at para 256) to the items of economic or econometric evidence submitted by GSK during the administrative procedure.
The description of that material at paras 258 and 259 shows that it essentially comprised empirical evidence.
The General Court observed (at para 263) that the factual arguments and the supporting evidence submitted by GSK appeared to be relevant, reliable and credible, having regard to their content which was corroborated in a number of significant aspects by documents originating with the Commission.
This approach was followed in the Mastercard Commission Decision.
There, the Commission stated (at recital 671): Given that for [article 101(3)] of the Treaty to apply the pro competitive effects flowing from the agreement must outweigh anti competitive effects, it is necessary to verify what the link between the agreement and the claimed efficiencies and what the value of these efficiencies are.
The Commission did not dispute that payment card schemes such as Mastercards may represent, as such, economic and technical progress.
However, it considered that the decisive question was whether the Mastercard MIF specifically contributed to that progress (at recital 679).
In addressing Mastercards balancing of demand arguments the Commission referred to the assumption underlying the Mastercard MIF that there was a perceived imbalance between the issuing and the acquiring business in the scheme.
The Commission observed (at recital 686): Also, an imbalance between issuing and acquiring cannot be assumed on the basis of cost considerations only but has to comprise an analysis of revenues as well.
A cost imbalance is as such no sufficient evidence to explain why MasterCards MIF is always paid by the acquirer to the issuer, irrespective of the concrete market situation.
If receipts (interests, money exchange fees, penalty fees, etc) or other monetary benefits (resulting from cost savings such as reduction of staff, paperwork etc) from payment card issuing provide sufficient commercial incentives for banks to invest in incremental card issuing, a transfer from acquiring to issuing may be superfluous and even counterproductive as the revenue transfer dampens card acceptance due to the increase of costs on the merchants side.
Robust empirical evidence is therefore required to establish the necessity for and the direction of a fallback interchange fee. (Original emphasis) (See also recital 720)
Similarly, in a section of the decision headed Need for empirical evidence No excessive burden of proof on MasterCard, the Commission explained (at recital 694) that Mastercard erred in its assertion that the Commission imposed an excessively high burden of proof on Mastercard if it required Mastercard to demonstrate empirically a causal link between the MIF and the actual effects on system output as well as the objective efficiencies that could result from increased system output.
It continued (at recital 695): It is on the undertakings in the first place to present to the Commission the evidence intended to establish that the agreement in question fulfils the conditions laid down by [article 101(3)] of the Treaty.
In the context of the first condition it has to be ascertained that the restrictive effects are offset by efficiencies.
In this context the undertakings concerned must demonstrate whether a MIF generates the positive effects which the underlying model claims to achieve, here: an increase of system output and possible related efficiencies.
To the extent that objective efficiencies cannot be established empirically, they cannot be balanced with the restrictive effects.
Some form of convincing empirical evidence on the actual effect of a MIF on the market is therefore required.
A footnote to the third sentence of recital 695 (footnote 840) reads: Again, it should be noted that an increase in system output does not constitute an objective efficiency if the benefits of increased card usage only accrue to banks, while customers and merchants are worse off due to higher retail prices and increased merchant fees.
Hence, evoking the maximisation of system output also requires a convincing analysis that consumers benefit from this.
On behalf of Visa and Mastercard it is submitted that these passages must be read in the context that the Commission was responding to the very different evidence put forward by Mastercard in that case, namely the Baxter framework, a different, older and less sophisticated economic theory which had been superseded by the work of Rochet and Tirole (discussed further in para 132 below).
However, the Commissions statements at recitals 686 and 695 are general statements made before consideration of the Baxter framework which is introduced at recital 703.
It is immediately preceded by the statement (at recital 702) that notwithstanding the lack of evidence to bolster Mastercards efficiency claim, the Commission has also assessed the theoretic underpinnings of Mastercards MIF.
Similarly, the schemes are not assisted by their reliance on the following passage at recital 731 of the Mastercard Commission Decision which, they maintain, describes the Commissions approach: Contrary to MasterCards perception the Commissions position is not that only the level of a MIF is a decisive criterion for assessing whether that MIF fulfils the first condition of [article 101(3)] of the Treaty.
Rather, the existence of objective appreciable efficiencies is assessed in relation to the MIF as such, the effects it produces on the market and the manner in which it is set.
In particular, the Commission verifies on the basis of the evidence submitted whether the model underlying a MIF is based on realistic assumptions (which is not the case here), whether the methodology used to implement that model in practice is objective and reasonable (which is not the case for the two methodologies used by MasterCard) and whether the MIF indeed has the positive effect on the market to the benefit of both customer groups which the model claims.
The Commission was not subscribing here to the view that convincing proof of efficiencies can be provided by economic modelling and assumptions alone.
On the contrary, the Commission made abundantly clear the need for empirical evidence in the immediately preceding recital: There is no presumption that MIFs in general enhance the efficiency of card schemes just as there is no presumption that they do not fulfil the conditions of [article 101(3)] of the Treaty and are therefore illegal.
A MIF may be used by banks to achieve efficiencies as well as to extract rents.
The Commissions conclusion on the efficiencies of a MIF will depend on the concrete evidence brought forward by the parties. (recital 730) and the immediately following recital: Any claim that a MIF creates efficiencies within the meaning of [article 101(3)] of the Treaty must therefore be founded on a detailed, robust and compelling analysis that relies in its assumptions and deductions on empirical data and facts.
MasterCard has not provided such analysis and empirical evidence, (recital 732)
The appeal against the Commission decision was dismissed by the General Court in Mastercard GC.
In those proceedings, Mastercard had complained that an excessively high burden of proof had been imposed on the applicants in relation to the conditions of what is now article 101(3) TFEU, whereas the Commission had been required to analyse the arguments and the evidence adduced by reference to the balance of probabilities alone (paras 194, 195 and 237).
In rejecting this submission, the General Court observed (at para 196) that a person who relies on [article 101(3)] must demonstrate that those conditions are satisfied, by means of convincing arguments and evidence.
At a later point in the judgment the General Court observed: 232.
So far as concerns the allegation relating to the lack of data capable of meeting the standard of economic proof demanded by the Commission, even if that were established, it does not mean that the burden of proof is eased, or even reversed, as the applicants seem to suggest.
It must be observed that such a difficulty might be regarded as having resulted from the arguments developed by the applicants during the administrative procedure. 233.
Thus, inasmuch as it is not possible to establish precisely the extent of the advantages that can be deemed to justify some financial compensation from merchants for the costs incurred by issuing banks, it is reasonable to conclude that it was for the applicants in order to prove that the MIF satisfied the first condition laid down in [article 101(3), TFEU] to identify the services provided by the banks issuing debit, charge or credit cards capable of constituting objective advantages for merchants.
It was also for them to establish that there was a sufficiently clear correlation between the costs involved in the provision of those services and the level of the MIF.
As regards the last point, it must be noted that those costs cannot be determined without taking into account other revenues obtained by issuing banks on the provision of those services or by including costs which are not directly linked to them.
This is entirely consistent with and supports our view that, in identifying what evidence may be required to discharge the burden on an undertaking claiming exemption under article 101(3), the Commission and the EU courts are not adjusting the standard of proof.
The decision of the General Court in Mastercard GC was upheld by the Court of Justice in Mastercard CJ.
Before the Court of Justice, a plea contending that the General Court had failed to apply the correct standard of proof, ie the balance of probabilities, was held inadmissible. (See Advocate General Mengozzi at paras 136 149, Mastercard CJ at paras 209 219.)
It is noteworthy that both the General Court and the Court of Justice placed reliance on the authority of GlaxoSmithKline.
The Court of Justice stated: 235.
Next, the court notes that the examination of an agreement for the purposes of determining whether it contributes to the improvement of the production or distribution of goods or to the promotion of technical or economic progress, and whether that agreement generates appreciable objective advantages, must be undertaken in the light of the factual arguments and evidence provided by the undertakings (see to that effect, in connection with a request for exemption under article 81(3) EC, judgment in GlaxoSmithKline Services Unlimited v Commission of the European Communities (C 501/06 P, C 513/06 P, C 515/06 P and C 519/06 P) EU:C:2009:610, para 102). 236.
Such an examination may require the nature and specific features of the sector concerned by the agreement in question to be taken into account if its nature and those specific features are decisive for the outcome of the analysis (see judgment in GlaxoSmithKline Services, EU:C:2009:610, para 103).
In their written cases, Visa and Mastercard submit that there is no EU law that concerns the nature of the evidence required before national courts in order to satisfy the four conditions under article 101(3).
In their submission, the EU has, by legislation, expressly deferred procedural autonomy to member states, not just in respect of the legal test for the standard of proof, but also in relation to the nature of evidence required to satisfy that domestic standard, subject only to the EU principles of equivalence and effectiveness.
In our view, this submission is contradicted by authority and is simply wrong.
While EU law has deferred to the law of member states in respect of the standard of proof under article 101(3), subject to the principles of equivalence and effectiveness, it clearly maintains its own requirements as to the type of evidence which may be capable of discharging the appropriate standard of proof.
Moreover, those requirements cannot vary depending on whether EU competition law is being applied by EU courts or authorities or the courts or authorities of member states.
As the Court of Appeal observed in the present case (at para 81), it is important to maintain a consistency of approach across member states as to the requirements of article 101(3).
It should be noted, in this regard, that the Modernisation Regulation emphasises the importance of the effective and uniform application of competition law within the EU. (See recitals 1, 14, 17, 19, 21 and 22 and article 16.) In the same way, national courts are required by section 60(2) of the 1998 Act to ensure consistency in the application of article 101 with that of the General Court and the Court of Justice.
In our view, EU law clearly requires an undertaking seeking exemption under article 101(3) to produce cogent empirical evidence in support of that claim.
Visa submits that, while in some cases it may be difficult to prove that a causal link is real without specific empirical evidence and data, it will depend on the particular circumstances of the case.
In the present case, Visa submits, a judge would be entitled to conclude that nothing more is required than the expert evidence of economists to prove that an issuing bank which receives a payment on each card transaction undertaken by its customers will probably invest more to encourage its customers to engage in a greater number of such card transactions than it would do if it did not receive any such payments.
This submission, however, grossly underestimates the complexity and subtlety of the balancing exercise required under article 101(3).
In particular, as the AAM parties point out, an assessment of any benefits accruing to consumers and merchants from MIFs will depend on a range of factors including issuer pass through (the extent to which issuing banks decide to recycle MIF revenues into promotional behaviour) and always card transactions (the extent to which cardholders alter their behaviour in the light of any incentives provided).
Thus, in the present case the Court of Appeal correctly concluded (at para 88) that establishing the requisite causal link involves two critical stages: first that the default MIFs in each case incentivise the issuers to take steps they would not otherwise have taken, and secondly that the steps taken did indeed increase card usage or increase the efficiencies of transactions which would have been card transactions anyway. (See also the judgment of Popplewell J at para 310 and the Visa exemption judgment of Phillips J at para 37.) Such factors must necessarily be taken into account in assessing whether appreciable objective advantages for consumers arise from the restriction in question so as to compensate for its competitive disadvantages.
This process necessarily requires empirical evidence.
A further demonstration of the need for empirical evidence is provided by the General Court in Mastercard GC (at para 233) where it calls, inter alia, for a comparison between the cost of providing services from which merchants are said to benefit as a result of the MIF and the level of the MIF itself: Thus, inasmuch as it is not possible to establish precisely the extent of the advantages that can be deemed to justify some financial compensation from merchants for the costs incurred by issuing banks, it is reasonable to conclude that it was for the applicants in order to prove that the MIF satisfied the first condition laid down in [article 101(3)] to identify the services provided by the banks issuing debit, charge or credit cards capable of constituting objective advantages for merchants.
It was also for them to establish that there was a sufficiently clear correlation between the costs involved in the provision of those services and the level of the MIF.
As regards the last point, it must be noted that those costs cannot be determined without taking into account other revenues obtained by issuing banks on the provision of those services or by including costs which are not directly linked to them.
Visa complains that the approach adopted by the Court of Appeal in this case is inconsistent with the object and purpose of the relevant legislation in that article 101 and the Chapter I prohibition under the 1998 Act apply to agreements between undertakings, or decisions of associations of undertakings, from the date that they are made and before they have been implemented and had any effect at all.
As a result, it is submitted, the prohibition applies before empirical, real world evidence of the type demanded by the Court of Appeal can be available.
Undertakings, it is said, must be able to make a realistic assessment, at the time of making their agreement, as to whether article 101(3) is satisfied or not and that can only be done with the best evidence that is reasonably available at the time.
In our view, there is nothing in the Court of Appeals approach which is inconsistent with the object and purpose of the legislation.
Indeed, the answers advanced by the AAM parties are, in our view, compelling.
First, the Guidelines state (at para 58) that, in cases where an agreement has yet to be fully implemented, the parties must substantiate any projections as to the date from which the efficiencies will become operational so as to have a significant positive impact in the market. (See also the General Court in GlaxoSmithKline at para 249.) Secondly, it is not the case that where, as in the present case, there is experience of restrictive measures over many years, the courts must disregard the evidence then available to them in assessing the issue of exemption.
Thus, in Krka Tovarna Zdravil d d v European Commission (Case T 684/14) [2019] 4 CMLR 14, the General Court (Ninth Chamber) observed (at para 360), with regard to the assessment of distortion of competition under article 101(1) by comparison with the situation which would have existed but for the agreement: It appears paradoxical where the clauses of an agreement have been implemented and their impact on competition can be measured by taking into account the relevant factual developments, including those subsequent to the conclusion of the agreement, which took place before the Commission issued its decision to allow the Commission to demonstrate merely the anticompetitive effects that such clauses are likely to have and, to that end, to make the comparison without taking those developments into account.
Finally, in this regard, it is necessary to say something about the reliance placed by Visa and Mastercard on the merchant indifference test (MIT).
The MIT, which is also known as the tourist test, is an economic methodology developed by Professors Rochet and Tirole, initially in a paper published in 2008.
It embodies the notion that there is a level of MIF which, when included in the MSCs paid by merchants, equalises the cost to merchants of accepting a scheme card with the cost of their accepting other methods of payment such as cash.
If the MIT is set at that level, a merchant would be indifferent as to whether a one off customer (such as a tourist) chooses to pay with cash or card, so long as he does not choose to shop elsewhere.
If, however, it is set at a higher level, while a merchant could in principle be better off by refusing to accept scheme cards because other forms of payment would be cheaper, in reality, if he did so, he would probably lose sales to rivals who did accept them (the business stealing effect).
There are must take cards that merchants cannot turn down.
The MIT seeks to put an upper limit on MIFs so that the schemes are not able to exploit their market power over merchants in this way (Rochet and Tirole, Must Take Cards: Merchant Discounts and Avoided Costs, (2011) Journal of the European Economic Association 9(3): 462 at 463).
Visa and Mastercard rely on the MIT in two ways.
First, they submit that in the EU Interchange Fee Regulation 2015 (Regulation (EU) 2015/751 of the European Parliament and of the Council on Interchange Fees for Card based Payment Transactions (OJ 2015 L123, p 1)) (the IFR) the EU legislature has endorsed the MIT test as meeting the requirements of article 101(3).
This is not correct.
While the Commission and the European Parliament accepted the MIT for the purpose of setting a cap under the Regulation, the Commission has consistently maintained that adoption of the MIT alone will not lead to automatic exemption.
This is reflected in recital 10 of the IFR: In addition to a consistent application of the competition rules to interchange fees, regulating such fees would improve the functioning of the internal market and contribute to reducing transaction costs for consumers. and in recital 14: The application of this Regulation should be without prejudice to the application of Union and national competition rules.
It should not prevent member states from maintaining or introducing lower caps or measures of equivalent object or effect through national legislation.
In enacting the IFR, the Commission and the European Parliament were concerned with regulation and were not specifically addressing issues of EU competition law.
Secondly, Visa and Mastercard submit that the Commission has repeatedly taken into account a variety of forms of available evidence, including economic theory and in particular the MIT, when examining MIFs.
In this regard, they rely in particular on a number of commitment decisions made under article 9 of the Modernisation Regulation.
It is undoubtedly correct that the Commission has in these decisions had regard to the MIT as a proxy or a benchmark.
However, it is important to bear in mind that these decisions are not instances of the application of article 101(3) but pragmatic means employed by the Commission to compromise outstanding investigations in return for commitments.
As Mr Khan explained on behalf of the Commission, whereas an infringement decision adopted pursuant to article 7 of the Modernisation Regulation would have to include an assessment of any claim by the addressee that the agreement in issue qualified for an article 101(3) exemption, a commitment decision pursuant to article 9 does not include such an assessment.
The essence of a commitment decision is that the Commission does not take a position on the existence of an infringement of article 101(1) TFEU, the approach being based on procedural economy.
Moreover, the Commission has made clear that a MIF which satisfies the MIT will not automatically be considered compliant with what is now article 101(3).
Thus, in its Memorandum of 1 April 2009 (Memo/09/143), at the time of accepting undertakings from Mastercard, it accepted that the MIT provides a reasonable benchmark for assessing a MIF level that generates benefits to merchants and final consumers.
However, it went on to point out that the general applicability of the test for the purposes of what is now article 101(3) depends on the specifics of the markets at hand.
Having listed some cautionary examples, it emphasised that where a MIF is restrictive, the parties to the agreement must demonstrate that the conditions under article 101(3) are met.
It continued: In this respect, there is a need to ascertain that the concrete model underlying a MIF is based on realistic assumptions, that the model is plausibly implemented through an objectively verifiable methodology and that the MIF indeed yields the objective efficiencies on the market which are claimed by the parties.
The methodology underlying a MIF should be transparent to the final users of a scheme.
However, if a card scheme wishes to pre determine the fees merchants pay through a MIF, it must be aware that the burden of proof to demonstrate the fulfilment of the four conditions under [article 101(3)] lies upon the scheme and its members. (at pp 6 7)
There is a further and more fundamental reason why the MIT does not assist Visa and Mastercard on the present issue.
It is not designed as a substitute for the balancing test as a means of establishing efficiencies and benefits under article 101(3).
It is, rather, designed to meet the specific concern that merchants may be vulnerable because they are typically in a poor position to resist consumers who want them to accept cards in exchange for goods or services.
As a result, the MIT seeks to ensure that the collective interchange fees do not rise above a level at which payment by card is more expensive for merchants than other methods of payment.
In a situation where a MIF satisfies the MIT and where the issuing bank recycles all of its MIF income to cardholders, there should be no net detriment to cardholders and merchants considered together.
If, on the other hand, as in the present case, the issuer pass through is less than 100% (ie the issuer retains a part of the MIF), there is likely to be a net loss to cardholders and merchants considered together.
A net benefit could still arise in these circumstances, however, if the MIF revenue passed to cardholders caused them to make greater use of their cards, so that merchants were relieved of a sufficiently large number of transactions using a more expensive form of payment, with the result that the loss to cardholders and merchants considered together from reduced issuer pass through was outweighed.
Whether this in fact occurs will depend on the extent of issuer pass through, the extent of always card transactions and the difference in cost for merchants between accepting a scheme card and an alternative form of payment.
As Mr Jon Turner QC put it on behalf of the AAM parties, the theory of the MIT does not even purport to avoid the need to address such issues, which would be essential if an appropriate balancing exercise under article 101(3) were to be carried out.
These are highly relevant matters that can be brought into account only on the basis of empirical evidence.
In the present case, the Commission intervened before the Court of Appeal and explained why Visa and Mastercard were wrong to suggest that the MIT had been treated by it as an appropriate basis for assessing the issue of exemption.
We agree with the conclusion of the Court of Appeal (at para 109), accepting the submissions of the Commission, that the Commission regards the MIT as a useful starting point but not as a substitute for the facts of the case.
It is not a silver bullet for Visa and Mastercard.
In order to obtain exemption, they still have to back up any reliance on the MIT as a benchmark with robust analysis and cogent empirical evidence.
Conclusion on the standard of proof issue
For these reasons we dismiss the appeal on issue (ii).
Issue (iii) The fair share issue
The third issue in the appeal is raised by Visa.
It concerns the interpretation of article 101(3) TFEU, under which an agreement, decision or concerted practice which is restrictive of competition is exempted from the prohibition imposed by article 101(1) provided it satisfies certain conditions.
The terms of article 101(3) have been set out at para 19 above.
As described at para 107 above, four conditions must be met before an exemption can be granted.
It is the second of those conditions which is here in issue, namely that consumers must receive a fair share of the benefits resulting from the restriction of competition.
The context in which that condition has to be considered in the present case includes the fact, explained in paras 15 16 above, that the Visa and Mastercard schemes operate in a two sided market.
On one side of the market, issuers compete with each other for the business of customers to whom they will issue cards (the issuing market).
The cardholders are the consumers in the issuing market.
On the other side of the market, acquirers compete with each other for the business of merchants to whom they seek to offer acquiring services (the acquiring market).
Merchants are the consumers in the acquiring market.
As has been explained, MIFs restrict competition in the acquiring market.
They do not restrict competition in the issuing market.
The judgments at first instance
At first instance, Phillips J concluded in the Visa restriction judgment (wrongly, as we have held) that the MIFs did not infringe article 101(1), but went on in the Visa exemption judgment to consider whether, if that was incorrect, the MIFs would have qualified for exemption under article 101(3).
He concluded that they would not.
That was because, in his opinion, they did not meet the first condition for exemption under article 101(3): it had not been proved that they produced any benefits.
He nonetheless went on to consider the second condition at paras 53 64 of the Visa exemption judgment.
He accepted Visas argument, based on its analysis of the judgment in Mastercard CJ, particularly at paras 240 243 and 247, that for the purpose of deciding whether consumers received a fair share of the resulting benefits, it was necessary in the context of a two sided market to consider the position of consumers in both markets as a whole.
Benefits accruing to cardholders as a result of MIFs could therefore be taken into account in determining whether the benefits at least equalled the disadvantages.
He considered that there must, however, be at least some objective advantages for merchants, even if they were less than the burden they suffered.
On that interpretation, the second condition could be satisfied even if merchants were worse off as a result of MIFs, provided they received some objective advantages, and the benefits to cardholders and merchants, considered in aggregate, outweighed the disadvantages.
However, given his finding that no benefits were generated by MIFs, it followed that that requirement was not met.
Phillips Js analysis differed in important respects from that adopted by Popplewell J in the AAM proceedings.
Like Phillips J, he considered that the MIFs were not prohibited by article 101(1), but went on to consider whether, if that was incorrect, they would qualify for exemption under article 101(3).
He concluded that they would, applying what we have held to be an incorrect approach to the standard of proof.
In relation to the first condition, he accepted at para 278 that, in a two sided market such as the Mastercard scheme, the relevant consumers included cardholders as well as merchants, and that the relevant benefits were not, therefore, confined to those arising on the acquiring market.
When it came to the second condition, however, since merchants were the consumers who were adversely affected by the restriction of competition caused by MIFs, he concluded at paras 280 287 that the fair share requirement would not be met unless, as a minimum, they obtained benefits from MIFs which matched the anti competitive disadvantages which MIFs imposed on them.
In addition, he considered that the MIFs must not generate unduly high profits for issuers: para 287.
On the facts, he concluded at para 409 that those requirements were met, again applying a standard of proof which we have held to be mistaken.
In the CAT proceedings, it was found on the evidence that Mastercards MIFs infringed article 101(1) and did not result in any benefits.
Accordingly, the first condition under article 101(3) was not met, and the question whether consumers received a fair share of any benefits did not arise.
The judgment of the Court of Appeal
Before the Court of Appeal, Sainsburys challenged Phillips Js interpretation of the second condition, while Visa maintained that it was correct.
Popplewell Js analysis was not challenged.
The court carefully considered the relevant sections of Mastercard GC and Mastercard CJ at paras 96 104 of its judgment.
It interpreted paras 240 243 and 247 of Mastercard CJ, in particular, as meaning that in applying both the first and the second conditions in a situation where the restriction affects two markets, if the restriction causes disadvantages overall to the consumers in the market under consideration (here the merchants in the acquiring market), those disadvantages cannot be compensated by advantages to consumers in the other market (here the cardholders in the issuing market), unless the two groups of consumers are substantially the same; which is not the position in this case.
In the Court of Appeals view, the consumers in the relevant market, here the merchants, would only receive a fair share of the benefits if the advantages to them caused by the restriction outweighed the disadvantages, so that they were no worse off.
The Court of Appeal therefore concluded that Popplewell Js analysis of the law was correct, and Phillips Js was wrong.
The parties arguments on the present appeal
In its appeal to this court, Visa challenges the decision of the Court of Appeal and argues that Phillips Js analysis of the second condition was correct.
As will be explained in greater detail, it maintains, in particular, that the issue was considered and decided, in the manner for which it contends, in Mastercard CJ, particularly at paras 241 and 247.
All parties agree that the question as to how the second condition should be applied in the context of two sided markets is a question of EU law, which has to be answered by considering the relevant jurisprudence of the CJEU.
The Mastercard Commission Decision
It is best to begin by considering the Mastercard Commission Decision, which was the subject matter of the judgments of the General Court and the Court of Justice in Mastercard GC and Mastercard CJ respectively.
The Commission concluded at recital 733 that the Mastercard MIFs did not meet the first condition of article 81(3) of the EC Treaty (now article 101(3) TFEU).
When it went on to consider the second condition, it stated at recitals 740 to 742: 740.
There is no reason to assume from the outset that an interchange fee paid by acquirers to issuers increases the utility of the payment card system to [both] groups of consumers alike.
The Commission does not dispute that merchants may benefit through enhanced network effects from the issuing side, but this does not necessarily offset their losses which result from paying inflated merchant fees.
In setting a MIF the member banks of a card scheme must guarantee a fair share of the benefits to [all] customers, not only to those that are on the side of the scheme which receives the MIF.
In a scheme where the MIF is paid by the acquirer to the issuer, the efficiencies must in particular counterbalance the restrictive effects to the detriment of merchants (and subsequent purchasers).
MasterCard has not submitted evidence in this respect. 741.
The Commission has therefore reviewed the methodologies which MasterCard uses as starting point for setting the level of the Intra EEA fallback interchange fees.
It can be left open in this case whether cardholders sufficiently benefit from MasterCards MIF.
The Commissions concerns under the second condition of article 81(3) of the Treaty in this decision relate to the customer group which bears the cost of the MIF, that is the merchants. 742.
While merchants may benefit through enhanced network effects from the issuing side, this does not necessarily offset their losses which result from paying inflated merchant fees. (Emphasis added) The Commission concluded at recital 743 that without further evidence which Mastercard failed to submit it cannot safely be assumed that Mastercard is creating objective efficiencies that benefit all customers, including those that bear the cost of its MIF (merchants and subsequent purchasers) (emphasis in original).
It is apparent from the foregoing, and perhaps especially from the passages which we have italicised in recitals 740 and 742, that the Commission proceeded on the basis that, in order for the second condition to be satisfied, it was necessary that the consumers who suffered the losses resulting from the restrictive agreement that is to say, the merchants must have those losses offset or counterbalanced by benefits enjoyed by themselves.
The Guidelines
That approach was consistent with the Guidelines.
Under the heading of General principles, they state at para 43: [T]he condition that consumers (55) must receive a fair share of the benefits implies in general that efficiencies generated by the restrictive agreement within a relevant market must be sufficient to outweigh the anti competitive effects produced by the agreement within that same relevant market (56).
Negative effects on consumers in one geographic market or product market cannot normally be balanced against and compensated by positive effects for consumers in another unrelated geographic market or product market.
However, where two markets are related, efficiencies achieved on separate markets can be taken into account provided that the group of consumers affected by the restriction and benefiting from the efficiency gains are substantially the same (57). (Emphasis added) That analysis also underpins the discussion of the second condition in paras 85 86 of the Guidelines.
The case law on which para 43 is based is cited in the footnotes.
Footnote 56 refers to the judgment of the Court of First Instance in Shaw v Commission of the European Communities (Case T 131/99) [2002] ECR II 2023, para 163, where the court observed that the assessment of countervailing benefits under article 81(3) EC had to be made within the same analytical framework as that used for assessing the restrictive effects.
Footnote 57 refers to the judgment of the Court of First Instance in Compagnie Gnrale Maritime v Commission of the European Communities (Case T 86/95) [2002] ECR II 1011.
The case concerned a price fixing agreement relating to inland transport services provided to shippers by maritime carriers as part of intermodal transport.
The alleged benefits relied on by the parties to the agreement related to maritime transport services provided to shippers by the same companies.
The court stated at para 343: For the purposes of examining the merits of the Commissions findings as to the various requirements of article 85(3) of the [EEC] Treaty and article 5 of Regulation 1017/68 [which applied competition rules to the transport sector], regard should naturally be had to the advantages arising from the agreement in question, not only for the relevant market, namely that for inland transport services provided as part of intermodal transport, but also, in appropriate cases, for every other market on which the agreement in question might have beneficial effects, and even, in a more general sense, for any service the quality or efficiency of which might be improved by the existence of that agreement.
Both article 5 of Regulation 1017/68 and article 85(3) of the Treaty envisage exemption in favour of, amongst others, agreements which contribute to promoting technical or economic progress, without requiring a specific link with the relevant market.
That passage is expressed in wide terms.
However, the last sentence is plainly concerned with the first condition of article 85(3) EEC (equivalent to article 81(3) EC and article 101(3) TFEU), and the passage as a whole responds to a criticism of the Commissions approach to the first condition: see para 305 of the judgment.
In addition, on the facts of the case, the consumers in both markets were substantially the same.
In those circumstances, it would be unsurprising if the benefits accruing to the same consumers in both markets were aggregated for the purpose of assessing compliance with article 85(3).
The Court of First Instance subsequently made a similar observation in GlaxoSmithKline at para 248, again in the context of a challenge to the Commissions application of the first condition.
The Guidelines are not legally authoritative, but they form an important element of the decentralised system for the enforcement of competition law established by the Modernisation Regulation.
National authorities and courts are expected to take due account of them in accordance with their duty of sincere cooperation: see the Opinion of Advocate General Kokott in Expedia Inc v Autorit de la concurrence (Case C 226/11) EU:C:2012:544, points 37 38.
Mastercard GC
When the Mastercard Commission Decision was challenged before the General Court, it was argued, in relation to the first condition in article 81(3) EC, that the Commission had failed to take into account the positive effects of the MIFs on the issuing market.
In response, the General Court stated at paras 228 229: 228. [I]t is indeed settled case law that the appreciable objective advantages to which the first condition of article 81(3) EC relates may arise not only for the relevant market but also for every other market on which the agreement in question might have beneficial effects, and even, in a more general sense, for any service the quality or efficiency of which might be improved by the existence of that agreement (Compagnie Gnrale Maritime v Commission of the European Communities (T 86/95) [2002] ECR II 1011 at para 343, and GlaxoSmithKlineServices (T 168/01) [2006] ECR II 2969 at para 248).
However, as merchants constitute one of the two groups of users affected by payment cards, the very existence of the second condition of article 81(3) EC necessarily means that the existence of appreciable objective advantages attributable to the MIF must also be established in regard to them. 229.
Therefore, in the absence of such proof, the applicants criticism that insufficient account was taken of the advantages of the MIF for cardholders is, in all events, ineffective.
It appears from the last sentence of para 228 that the General Court considered that it was essential, in order to satisfy the second condition of article 81(3), to prove that merchants benefited from appreciable objective advantages which were attributable specifically to the MIFs.
The court seemingly inferred that the advantages with which the first condition was concerned must, therefore, include appreciable objective advantages for merchants.
In the absence of proof of such advantages, the criticism that the Commission had taken insufficient account of the advantages for cardholders went nowhere, as the court indicated at para 229.
The General Court went on to state at para 233 that it was for the applicants (Mastercard and other financial institutions), in order to prove that the MIF satisfied the first condition, to identify the services which were capable of constituting objective advantages for merchants, and that there was a clear correlation between the costs involved in the provision of those services and the level of the MIF.
Since that had not been done, it followed that the challenge to the Commissions reasoning in relation to the first condition must be rejected: para 236.
Since the first condition was not satisfied, there was no need to examine the other aspects of the Commissions analysis: ibid.
Mastercard CJ
On further appeal to the Court of Justice, it was argued that the General Court had erred in focusing on the benefits to merchants, despite recognising in para 228 that advantages could be taken into account for any market that benefited from the existence of the agreement in question.
The General Court had thus wrongly ignored, it was argued, the significant advantages which the Mastercard system and the MIF were said to bring about for cardholders.
That argument, so far as it bore on the second condition, was considered in the Opinion of Advocate General Mengozzi.
He identified the question of law arising from the argument in relation to the second condition: AG154.
The point of law underlying that complaint is therefore whether, in order for the exemption provided for in article 81(3) EC to be applicable in such a context, it is necessary that the fair share of the profit resulting from the advantages arising from the agreement, as provided for in article 81(3) EC, be reserved for the direct consumers of the services provided on the market on which the restrictive effects for competition are produced in this case, in particular, merchants or whether it can be considered that the restrictive effects harming those consumers may be compensated by the advantages produced for consumers of the services provided on a related market, namely, in this case, cardholders.
The Advocate Generals answer to that question was that the restrictive effects harming merchants could not be compensated by the advantages produced for cardholders: in order to satisfy the second condition, merchants themselves must receive a fair share of the benefits resulting from the restrictive agreement.
He began his reasoning on this point by making some general points about the second condition: AG155.
It should be borne in mind, as a preliminary point, that the second condition in article 81(3) EC requires that, in order for a restrictive agreement to benefit from the exemption provided for in that provision, consumers must be allowed a fair share of the resulting benefits. AG156.
In that regard, it should be observed, first, that the consumers referred to in that provision must be considered to be the direct or indirect consumers of the goods or services covered by the agreement.
Secondly, it is apparent from consistent case law that, in order for an agreement restrictive of competition to be capable of being exempted under article 81(3) EC, the appreciable objective advantages created by that agreement must be of such a character as to compensate for the disadvantages which they cause for competition.
It may be inferred from that case law that, in order for a restrictive agreement to be able to benefit from the exemption, the advantages resulting from that agreement must ensure that consumers are compensated in full for the actual or probable adverse effects that they must bear owing to the restriction of competition resulting from the agreement.
In other words, the benefits arising from the restrictive agreement must counterbalance its negative effects. (Emphasis added)
It followed from the points which we have italicised that, in order for the second condition to be satisfied, the disadvantages suffered by consumers in the market where competition was restricted must be counterbalanced by advantages benefiting the same consumers, as the Advocate General went on to explain: AG157.
To my mind, however, that compensation must apply to consumers who are directly or indirectly affected by the agreement.
It is the consumers that suffer the harm caused by the restrictive effects of the agreement at issue that must, in principle, be allowed, as compensation for that harm, the fair share of the benefit resulting from the agreement referred to in article 81(3) EC.
Furthermore, as the Advocate General explained, the contrary view would result in competition authorities favouring one category of consumers at the expense of others, something which was no part of the function of competition law: AG158.
In fact, if it were possible to take into consideration the advantages resulting from an agreement for one category of consumers of certain services in order to counterbalance the negative effects on another category of consumers of other services on a different market, that would amount to allowing the former category of consumers to be favoured to the detriment of the latter category.
However, distributive logic of that type seem[s] to me, in principle, to have no connection with the practical scope of competition law.
Competition law is intended to protect the structure of the market, and thus competition, in the interest of competitors and, ultimately, consumers in general.
Conversely, it is not intended to favour one category of consumers to the detriment of a different category. (Emphasis in original)
In its judgment, the Court of Justice noted at para 208 that the General Court had rejected the submission that the Commission had erred in applying the first condition of article 81(3) EC, rendering further analysis unnecessary.
The Court of Justice then focused in its own judgment on the first condition rather than the second.
It characterised the challenge to the reasoning of the General Court at para 228 as raising in essence the question as to which markets may be regarded as generating the objective advantages that may be taken into account for the purposes of the analysis of the first condition.
In the course of its discussion of whether the first condition was met, the court explained at para 234 that the improvement, within the meaning of the first condition laid down in article 81(3) EC must in particular display appreciable objective advantages of such a character as to compensate for the disadvantages which that agreement entails for competition.
It added at para 237 that, in the case of a two sided system such as the Mastercard scheme, in order to assess whether the first condition was met, it was necessary to take into account, where appropriate, all the objective advantages flowing from the restrictive measure in both markets, and to assess whether the advantages were of such a character as to compensate for the disadvantages which the measure entailed for competition.
The court then stated at paras 240 and 241: 240.
In particular, as regards the argument that the General Court did not take into account the advantages flowing from the MIF for cardholders, it must be held that the General Court was, in principle, required, when examining the first condition laid down in article 81(3) EC, to take into account all the objective advantages flowing from the MIF, not only on the relevant market, namely the acquiring market, but also on the separate but connected issuing market. 241.
It follows from this that, should the General Court have found that there were appreciable objective advantages flowing from the MIF for merchants, even if those advantages did not in themselves prove sufficient to compensate for the restrictive effects identified pursuant to article 81(1) EC, all the advantages on both consumer markets in the MasterCard scheme, including therefore on the cardholders market, could, if necessary, have justified the MIF if, taken together, those advantages were of such a character as to compensate for the restrictive effects of those fees.
In the present appeal, Visa relies on para 241, which it describes as crucial to its argument.
That paragraph is, however, concerned with the first condition of article 81(3), not the second.
It is also qualified by the proviso contained in its final words: if, taken together, those advantages were of such a character as to compensate for the restrictive effect of those fees.
That proviso was not satisfied in the case before the Court of Justice, as it explained in para 242: However, as is recalled in para 234 of the present judgment, examination of the first condition laid down in article 81(3) EC raises the question whether the advantages derived from the measure at issue are of such a character as to compensate for the disadvantages resulting therefrom.
Thus, where, as in the present case, restrictive effects have been found on only one market of a two sided system, the advantages flowing from the restrictive measure on a separate but connected market also associated with that system cannot, in themselves, be of such a character as to compensate for the disadvantages resulting from that measure in the absence of any proof of the existence of appreciable objective advantages attributable to that measure in the relevant market, in particular, as is apparent from paras 21 and 168 to 180 of the judgment under appeal, where the consumers on those markets are not substantially the same. (Emphasis added)
The passage which we have italicised makes it clear that in a situation where the disadvantages resulting from a restriction of competition are felt on only one side of a two sided market which is the position in this case then the advantages on the other market cannot be taken into account for the purposes of the first condition of article 81(3) EC (or article 101(3) TFEU), in the absence of particular circumstances justifying such a course (as where the consumers in both markets are substantially the same), unless it has been proved that the restrictive measure also causes appreciable objective advantages in the market where the restrictive effects are felt.
Since no such advantages had been proved in the case before the court, it followed that the first condition was not satisfied.
That was confirmed by the court in para 243: In the present case, and without any distortion having been claimed in that regard, the General Court concluded in para 226 of the judgment under appeal that there was no proof of the existence of objective advantages flowing from the MIF and enjoyed by merchants.
In those circumstances, it was not necessary to examine the advantages flowing from the MIF for cardholders, since they cannot, by themselves, be of such a character as to compensate for the disadvantages resulting from those fees.
The General Court was therefore fully entitled to find, in para 229 of the judgment under appeal, that the [appellants] criticism that insufficient account was taken of the advantages of the MIF for cardholders is, in all events, ineffective.
The court went on to state in para 247, in the other passage relied on by Visa in the present appeal: As regards the appellants argument that the General Court did not explain why the first two conditions in article 81(3) EC could not be satisfied on the basis only of the advantages the MIF produce for cardholders, it is sufficient to refer to paras 240 to 245 of the present judgment.
Visa submits that, in that paragraph, the court clarified that the analysis in paras 241 243 of its judgment, which had been expressed by reference to the first condition, also applied to the second.
In our opinion, there is no warrant for that interpretation of para 247.
The court had previously explained in paras 240 245 why the challenge to the General Courts conclusion in respect of the first condition was rejected.
The court had not said anything about the second condition.
The way in which the fair share requirement should be applied in a situation where the restrictive effects were felt on only one side of a two sided market had not received any consideration.
All that the court said in substance, in para 247, was that it had already explained, in its discussion of the first condition, why the first two conditions could not be satisfied on the basis only of the advantages which the MIF produced for cardholders.
As the court had already noted at para 208, where it cited para 236 of the judgment of the General Court, where the first condition was not satisfied, there was no need to examine the other aspects of article 81(3).
If Visas argument were correct, the Court of Justice would effectively have treated the first and second conditions of article 81(3) as interchangeable: both could be satisfied by the same aggregation of the benefits on both sides of a two sided market, and the second condition would add nothing to the first.
They are, however, essentially different.
The second condition adds a distinct requirement of fairness to the considerations of economic efficiency with which the first condition is primarily concerned.
Consideration of aggregate efficiency gains across different markets may well be relevant to the first condition, in situations where restrictive measures have effects in more than one market, but they cannot ordinarily be determinative of the question, under the second condition, whether a fair share of those gains has accrued to the consumers affected by the restriction of competition.
Conclusions on the fair share issue
It follows that the Court of Appeal arrived at the correct decision on this point, albeit by reasoning which was not precisely the same as that set out above.
We therefore dismiss the appeal on issue (iii).
Having reached that clear conclusion, it is unnecessary, and would be inappropriate, for this court to make a reference to the CJEU merely for the purpose of obtaining its clarification of the effect of the second condition in article 101(3) TFEU.
It may, however, be helpful if, in addition to rejecting Visas argument, we provide some positive guidance, based upon our own understanding of the EU materials, while recognising that it lacks the authority accorded by EU law to a judgment of the CJEU.
The second condition in article 101(3) arises only if the first condition is satisfied.
In order to meet the requirements of the first condition, in a situation where there is a two sided market and the restrictive effects of the measure in question are experienced by consumers in only one of those markets, and where the consumers in both markets are not substantially the same, it has to be proved (1) that the measure causes appreciable objective advantages for consumers in the market where the restrictive effects are felt, and (2) that the objective advantages caused by the measure for consumers in both markets, taken together, compensate for the disadvantages which the measure entails for competition: see paras 240 242 of Mastercard CJ.
If the first condition is satisfied, and the second condition then has to be considered, the best available guidance from the CJEU as to how it should be applied in the context of a two sided market is the Opinion of Advocate General Mengozzi in Mastercard CJ, the matter not having been considered by the Court of Justice in its judgment in that case, or by the General Court in Mastercard GC.
The Advocate Generals reasoning in point 156 of his Opinion can be summarised in the following propositions: (1) The consumers referred to in the second condition are the direct or indirect consumers of the goods or services covered by the measure: here, the merchants. (2) Those consumers must be compensated in full for the adverse effects that they bear owing to the restriction of competition resulting from the measure.
That reasoning is consistent with the Guidelines.
It also reflects the language of the second condition.
The merchants are the consumers of the services which are subject to the restriction of competition, and are therefore the consumers which the second condition is presumably intended to protect.
If the merchants are not fully compensated for the harm inflicted on them by the restrictive measure, it is difficult to see how they can be said to receive a fair share of the resultant benefits.
As the Advocate General indicated at point 158 of his Opinion, it is not the purpose of competition law to permit anti competitive practices to harm consumers in one market for the sake of providing benefits to those in another.
Issue (iv) The broad axe issue
This issue is concerned with the degree of precision that is required in the quantification of mitigation of loss where a defendant to a claim for damages arising out of a breach of competition law asserts that the claimant has mitigated its loss through the passing on of all or part of an overcharge to its customers.
Mastercard raises this issue, which relates to a passage in the judgment of the Court of Appeal (para 331) in which the court rejected the submission that the broad axe principle of establishing recoverable loss applies to the burden on Mastercard to establish the fact and amount of pass on by Sainsburys (emphasis added).
The court continued: The broad axe principle is applicable where the claimant has suffered loss as a result of the defendants culpable conduct but there is a lack of evidence as to the amount of such loss.
There is no scope for the application of any such principle where the burden lies on the defendant to establish a pass on of the unlawful overcharge in order to reduce the amount recoverable by the claimant.
The broad axe issue which is said to arise out of this statement is: Did the Court of Appeal find, and if so, did it err in law in finding, that a defendant has to prove the exact amount of loss mitigated in order to reduce damages?.
The Court of Appeals statement is part of its discussion of a ground of appeal based on the assertion that the CAT had been inconsistent in rejecting Mastercards case that the merchants had mitigated their loss by pass on while making an allowance, when awarding compound interest, for pass on, which it estimated at 50% of the claimed loss (paras 320 342).
Mastercard has not renewed that submission in these appeals, but, as we explain below, the debate around this issue widened in the course of the hearing.
The Court of Appeals statement, which is the subject matter of this issue, must not be read in isolation.
In the following paragraph (para 332) the court stated: On the other hand, we accept Mr Hoskinss submission that in each case it is a matter for the judge to decide whether, on the evidence before her or him, the defendant can show that there is a sufficiently close causal connection between an overcharge and an increase in the direct purchasers price.
We see no reason why that increase should not be established by a combination of empirical fact and economic opinion evidence.
It is not appropriate for us on these appeals to be more specific as to the nature and type of evidence capable of satisfying a trial judge that there is a sufficiently close causal connection.
It is therefore clear that the Court of Appeal was not excluding any form of evidence as relevant to the establishment of pass on, but was drawing a distinction between the degree of precision in quantification required of the defendant pleading pass on in mitigation of loss and that which was required of the victim of the wrong in establishing its claim.
The questions which arise are whether there is a requirement in European law or otherwise a basis in principle for that distinction.
Mastercards stance at the hearing before this court was that it has to prove that the merchants passed on some of the overcharge to their customers but that having done so, the quantification of the extent of the pass on did not have to be precise where such precision could not reasonably be achieved.
The court, having regard to all of the evidence, could and should estimate the extent of the pass on in order to give adequate compensation to the claimant and avoid over compensation.
Mastercard accepts that at the trial before the CAT of Sainsburys claim against it, which covered quantification as well as liability (see para 28 above), it had not succeeded in proving that the overcharge had caused Sainsburys to raise the prices which it charged its customers.
The matter is closed in that dispute but it remains a live issue in relation to other claims.
The scope of the issue expanded as a result of exchanges with the bench during the hearing of the appeal.
On the invitation of the court, Mastercard and Visa made further written submissions on the burden of proof.
They argue that the legal burden lies on the claimant to prove its loss in the form of lost profits, that no question of mitigation of loss arises, and that there is no burden on the defendants in relation to the quantification of the merchants claims resulting from the pass on of the overcharge.
AAM and Sainsburys have lodged written submissions in reply.
In addressing the issue and these submissions, we examine, first, the requirements of EU law in relation to the claims for damages which the merchants advance; secondly, (in order to determine whether there is a question of mitigation of loss) whether the merchants are entitled in law to use the overcharge which is included in the MSC as the prima facie measure of their losses; thirdly, the burden of proof in the assessment of the damages due to the claimants; and, fourthly, the question of the degree of precision required in establishing the likely extent of any pass on.
The requirements of EU law
The claims of the merchants in these appeals are for damages for loss caused to them by the tortious acts of the operators of the payment card schemes in breach of their statutory obligations under the 1998 Act.
It is not in dispute, as we discuss below, that the fundamental principle underlying the merchants claims is that the damages to which they are entitled are compensatory; the merchants are entitled to be placed, so far as money can achieve that, in the position which they would have been in but for the tortious acts which have caused them loss.
Most of the case law of the CJEU, to which both the CAT and the Court of Appeal have referred, concerns claims for restitution arising from illegally levied taxes and similar charges such as occurred in the classic case of Amministrazione delle Finanze dello Stato v San Giorgio SpA (Case 199/82) [1983] ECR 3595.
In those cases, the CJEU recognised the right of the defendant to meet the claim for restitution with the defence of pass on so that the claimant would not be unjustly enriched.
The CJEU analysed the defence as an exception to the principle that taxes incompatible with EU law must be reimbursed: Socit Comateb v Directeur Gnrale des Douanes et Droits Indirects (Joined Cases C 192/95 to C 218/95) [1997] ECR I 165; [1997] STC 1006, para 21.
The CJEU has limited the scope of that defence; it requires that the defence be interpreted strictly because it operates as a restriction upon the EU right to repayment of the unlawfully levied taxes.
There can be no presumption that the unlawful charges have been passed on.
Whether there has been a pass on is a question of fact to be established on evidence adduced before the national court: Socit Comateb (above) para 25; Webers Wine World Handels GmbH v Abgabenberufungskommission Wien (Case C 147/01) [2005] All ER (EC) 224; [2003] ECR I 11365; [2004] 1 CMLR 7, paras 93 97.
The direct pass on of a wrongly levied tax is the sole exception to the right of reimbursement: Lady & Kid A/S v Skatteministeriet (Case C 398/09) [2012] All ER (EC) 410; [2011] ECR I 7375; [2012] 1 CMLR 14, paras 20 and 26.
In that case, the Court of Justice rejected an argument that the taxpayer would be unjustly enriched by repayment of an unlawful levy because the taxpayer would have benefited from the concomitant abolition of other levies charged on a different basis.
The benefit of the saving arising from the abolition of the other levies could not be regarded as unjust enrichment in EU law and could not be set off against the burden of the unlawful levy: para 26.
No challenge is or can be made in relation to those judgments.
But these appeals are not concerned with the EU rules on the reimbursement of unlawfully levied charges.
They are concerned with claims for damages for losses incurred as a result of breaches of competition law.
It is necessary to consider what EU law requires in relation to such claims.
The CJEU recognises that the ability of persons, who have suffered loss by the anti competitive practices of others, to obtain damages in the courts of member states by the application of the rules of national law makes an important contribution to the maintenance of effective competition in the EU: Courage Ltd v Crehan (Case C 453/99) [2002] QB 507, paras 26 27.
In para 29 of that judgment the Court of Justice sets out the essential requirements which are to govern actions in national courts for damages for breach of EU competition law.
It states: [I]n the absence of Community rules governing the matter, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of law (principle of rights conferred by Community effectiveness): see Palmisani v Istituto Nazionale della Previdenza Sociale (Case C 261/95) [1997] ECR I 4025, 4046, para 27.
In para 30 of its judgment, the Court of Justice confirmed that Community law does not prevent national courts from taking steps to ensure that the protection of rights guaranteed by EU law does not entail the unjust enrichment of those who enjoy them.
It refers in support of this principle to, among others, Hans Just I/S v Danish Ministry for Fiscal Affairs (Case 68/79) [1980] ECR 501, 523, para 26.
Hans Just is a case about the unlawful imposition of excise levies on imports, and in para 26 of that case the Court of Justice stated: There is nothing therefore, from the point of view of Community law, to prevent national courts from taking account in accordance with their national law of the fact that it has been possible for charges unduly levied to be incorporated in the prices of the undertaking liable for the charge and to be passed on to the purchasers.
In our view the reference in Courage Ltd to that paragraph in the Hans Just judgment is a recognition of the possibility and relevance of pass on.
It is not an oblique incorporation of any other rules concerning the right of a taxpayer to obtain restitution of taxes levied in breach of EU law, which is a claim with a different legal basis.
In relation to claims under national law for damages for breach of the statutory rules of competition law, the requirements of EU law are that a member state can lay down procedural rules governing actions which safeguard such rights derived from EU law, provided that the rules comply with the principle of equivalence and the principle of effectiveness: Courage Ltd (above) paras 29 30.
We are not concerned on these appeals with the principle of equivalence.
The only constraint on national law at the relevant time therefore was the principle of effectiveness which requires that the rules of domestic law do not make it practically impossible or excessively difficult to exercise rights guaranteed by EU law.
The court must therefore give effect to the rules of English law governing claims for damages for breach of statutory duty unless those rules were to conflict with the principle of effectiveness.
It is therefore a question of fact in each case, which the national court must resolve on the evidence adduced before it, whether an overcharge resulting from a breach of competition law has caused the claimant to suffer loss or whether all or part of the overcharge has been passed on by the claimant to its customers or otherwise mitigated.
The principle of effectiveness applies to the procedural and evidential rules by which the court determines whether and to what extent the claimant has suffered loss.
On 9 March 2017, the United Kingdom implemented Parliament and Council Directive 2014/104/EU of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the member states and of the European Union (OJ 2014 L349, p 1) (the Damages Directive) by bringing into effect Schedule 8A to the 1998 Act (as inserted by Schedule 1 to the Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (SI 2017/385)), which in paragraph 11(2) imposes on the defendant the burden of proving that the claimant has passed on an overcharge resulting from an infringement of competition law, and the extent to which the claimant did so.
But we are not concerned with this provision because the substantive provisions of the Damages Directive are not retrospective and the other provisions do not apply to cases of which a court was seised before 26 December 2014: article 22.
The merchants in these appeals each issued their claims before that date.
The Damages Directive does not govern these claims.
Nonetheless, the Damages Directive casts some light on the pre existing requirements of EU law, as recital 12 states that it reaffirms the acquis communautaire as to the right to compensation for harm caused by breach of EU competition law.
We return to this when we discuss the degree of precision required of the defendant.
Further, the Damages Directive has taken EU competition law in a radically different direction from the federal law of the United States in its approach to pass on.
It leaves it to the English courts to apply the normal rules of English law on mitigation of damages, including the effect of pass on.
The nature of the claims
The merchants claims are for the added costs which they have incurred as a result of the MSC, which the acquiring banks have charged them, being larger than it would have been if there had been no breach of competition law.
Sainsburys claims damages measured by the difference between the sums which it paid the acquirers through the MSC and the sums which it would have paid if the acquirers market had not been distorted by the MIF.
Similarly, AAMs principal pleaded case is that they are entitled to recover the basic amounts by which they have been unlawfully overcharged with an alternative case that in so far as the unlawful overcharges have been passed on in their selling prices to their customers, they have suffered a loss of profit on the sales of the goods concerned through a reduced volume of sales.
In each case the merchants primary claim of damages is for the pecuniary loss which has resulted directly from the breach of competition law by the operators of the schemes.
That direct loss is prima facie measured by the extent of the overcharge in the MSC.
It is trite law that, as a general principle, the damages to be awarded for loss caused by tort are compensatory.
The claimant is entitled to be placed in the position it would have been in if the tort had not been committed.
A classic statement of this principle is that of Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39; (1880) 7 R (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.
See also Watson, Laidlaw, & Co Ltd v Pott, Cassels & Williamson 1914 SC (HL) 18, 29 per Lord Shaw of Dunfermline, who spoke of the principle of restoration; One Step (Support) Ltd v Morris Garner [2018] UKSC 20; [2019] AC 649, paras 25 27 per Lord Reed.
In the United States, concerns about the complexity, uncertainty and cost of calculating the existence and effects of pass on in federal anti trust litigation have caused the US Supreme Court to exclude a defence of pass on under federal law and to allow the claimant to use the amount of the overcharge as the basis of its claim in a treble damage suit: Hanover Shoe Inc v United Shoe Machinery Corpn 392 US 481 (1968), 491 494 per White J.
By contrast, in the United Kingdom there is, as is well known, no entitlement to treble damages.
Nor is there any exclusion of pass on as an element in the calculation of damages and the normal rule of compensatory damages applies to claims for damages for breach of statutory duty: Devenish Nutrition Ltd v Sanofi Aventis SA [2008] EWCA Civ 1086; [2009] Ch 390, 477, para 147 per Longmore LJ, pp 478 479, para 151 per Tuckey LJ; Emerald Supplies Ltd v British Airways plc [2009] EWHC 741 (Ch); [2010] Ch 48, paras 36 and 37 per Sir Andrew Morritt C; W H Newson Holding Ltd v IMI plc [2013] EWCA Civ 1377; [2014] Bus LR 156, para 40 per Arden LJ.
In this respect, English law and Scots law are consistent with EU law which now requires member states to ensure that there is a pass on defence: articles 12(2) and 13 and recital 39 of the Damages Directive.
In the legal systems of the United Kingdom pass on is an element in the quantification of damages rather than a defence in a strict sense.
But so long as the UKs competition rules remain aligned to those of the EU, the pass on of an overcharge remains a relevant factor in the assessment of damages.
There are sound reasons for taking account of pass on in the calculation of damages for breach of competition law.
Not only is it required by the compensatory principle but also there are cases where there is a need to avoid double recovery through claims in respect of the same overcharge by a direct purchaser and by subsequent purchasers in a chain, to whom an overcharge has been passed on in whole or in part.
The question then arises as to whether the merchants are entitled to claim as the prima facie measure of their loss the overcharge in the MSC which results from the MIF.
The merchants say that they are so entitled because they have had to pay out more than they would have but for the anti competitive practices of the schemes and so have suffered pecuniary loss.
On the other hand, Visa in its supplementary written submissions submits that their claims are for pure economic loss and must be claims for the loss of the profit which they would have enjoyed but for the alleged wrongful act of the defendants.
We are satisfied that the merchants are correct in their submissions that they are entitled to plead as the prima facie measure of their loss the pecuniary loss measured by the overcharge in the MSC and that they do not have to plead and prove a consequential loss of profit.
There are many circumstances, which are not confined to damage to property, in which the law allows the recovery of damages without regard to the claimants profitability.
If a claimant suffers damage to property, such as a vehicle or a ship, as a result of the tortious actions of a defendant, it can claim as damages the diminution in value of the damaged property, usually measured by the cost of repairing the property, and consequential loss, such as the loss of use of the property while it was being repaired, without having to show that that expenditure diminished its overall profitability.
See, for example, Coles v Hetherton [2013] EWCA Civ 1704; [2015] 1 WLR 160; The London Corpn [1935] P 70; The World Beauty [1970] P 144.
In a claim for contractual damages resulting from the failure of a supplier to deliver goods to a purchaser, the prima facie measure of damages is the difference between the market value of those goods and the contract price which the purchaser would have had to pay: Garnac Grain Co Inc v H M F Faure & Fairclough Ltd [1968] AC 1130, 1140 per Lord Pearson.
Where charterers of a vessel redelivered the vessel two years before the contractual date on which the charterparty ended, the court accepted the owners claim for loss of profits from that charterparty during the remaining two years of the charterparty without having regard to the overall profitability of the claimant: Fulton Shipping Inc of Panama v Globalia Business Travel SAU (formerly Travelplan SAU) of Spain [2017] UKSC 43; [2017] 1 WLR 2581.
The effect of the breach on the overall profitability of the claimant in each case was not the relevant measure of damages.
Similarly, if a claimant incurs expenditure in replacing items which a supplier had failed to deliver, it is entitled to damages without having to show that the breach of contract adversely affected its overall profitability.
An illustration of this is the judgment of Leggatt J in Thai Airways International Public Co Ltd v KI Holdings Co Ltd [2015] EWHC 1250 (Comm); [2016] 1 All ER (Comm) 675.
The case concerned a claim for damages resulting from the defendants (Koitos) breach of contract through the late delivery and failure to deliver aircraft seats to Thai Airways for use in new aircraft which they had purchased.
Thai Airways, facing a shortage of aircraft to perform its planned services, leased three aircraft on short term operating leases to cover the gap in capacity and ordered replacement seats for its new aircraft from another supplier.
It claimed as damages the costs which it incurred in mitigating its loss and its principal claim was for the cost of leasing the replacement aircraft.
Leggatt J held that Thai Airways was entitled to recover among other things, the costs of leasing the replacement aircraft for two years.
Thai Airways did not attempt to base its claim on an estimate of a net loss of profits measured by the differential between what its overall profits would have been if Koito had performed its contractual obligations and the profits which Thai Airways actually made during the period of the leases of the replacement aircraft.
Having regard to the complexity of the arrangements by which the airline sought to maximise the efficiency of the use of its aircraft, that calculation would have been extremely complex.
In the present appeals, the merchants by paying the overcharge in the MSC to the acquirers have lost funds which they could have used for several purposes.
As sophisticated retailers, which obtain their supplies from many suppliers and sell a wide range of goods to many customers, they can respond to the imposition of a cost in a number of ways, as the CAT pointed out in paras 434 and 455 of its judgment.
There are four principal options: (i) a merchant can do nothing in response to the increased cost and thereby suffer a corresponding reduction of profits or an enhanced loss; or (ii) the merchant can respond by reducing discretionary expenditure on its business such as by reducing its marketing and advertising budget or restricting its capital expenditure; or (iii) the merchant can seek to reduce its costs by negotiation with its many suppliers; or (iv) the merchant can pass on the costs by increasing the prices which it charges its customers.
Which option or combination of options a merchant will adopt will depend on the markets in which it operates and its response may be influenced by whether the cost was one to which it alone was subjected or was one which was shared by its competitors.
If the merchant were to adopt only option (i) or (ii) or a combination of them, its loss would be measured by the funds which it paid out on the overcharge because it would have been deprived of those funds for use in its business.
Option (iii) might reduce the merchants loss.
Option (iv) also would reduce the merchants loss except to the extent that it had a volume effect, if higher prices were to reduce the volume of its sales and thereby have an effect on the merchants profits.
In our view the merchants are entitled to claim the overcharge on the MSC as the prima facie measure of their loss.
But if there is evidence that they have adopted either option (iii) or (iv) or a combination of both to any extent, the compensatory principle mandates the court to take account of their effect and there will be a question of mitigation of loss, to which we now turn.
Mitigation and the burden of proof
Visa and Mastercard submit that the burden is on a claimant to prove its loss taking account of any pass on.
Visa presents the merchants claims as claims for loss of profits.
On this presentation, the claim for the overcharge incorporated in the MSC is a poor surrogate for loss of profits and must be reduced by any pass on if it is to comply with the compensatory principle.
Sainsburys and AAM on the other hand submit that, as they have stated a prima facie case of their loss, it falls to the defendants to assert and prove that the merchants have mitigated their loss by passing on the relevant costs in the prices which they charged their customers.
There are two reasons why the merchants are correct in their submission that they do not have the legal burden of proving their loss of overall profits caused by the overcharge.
First, if the law were to require a claimant, which is a complex trading entity, to prove the effect on its overall profits of a particular overcharge, the claimant might face an insurmountable burden in establishing its claim.
Were there to be such a domestic rule, it would very probably offend the principle of effectiveness.
It is the duty of the court to give full effect to the provisions of article 101 by enabling the claimant to obtain damages for the loss which has been caused by anti competitive conduct.
Secondly, an exclusive focus on the claimants profits would result in it being undercompensated if the overcharge had caused it to forgo discretionary expenditure to develop its business which did not promptly enhance its profits (ie option (ii) in para 205 above).
We are also satisfied that the merchants are correct in their assertion that there is a legal burden on the defendants to plead and prove that the merchants have mitigated their loss.
See for example, The World Beauty, 154 per Lord Denning MR; OMV Petrom SA v Glencore International AG [2016] EWCA Civ 778; [2016] 2 Lloyds Rep 432, para 47 per Christopher Clarke LJ.
The statement of the Court of Appeal in para 324 of its judgment in the present case is an accurate statement of English law: Whether or not the unlawful charge has been passed on is a question of fact, the burden of proving which lies on the defendant who asserts it.
But in the context of these appeals, as we discuss below, the significance of the legal burden should not be overstated.
In some cases of mitigation, the court is concerned with additional benefits which a claimant has gained from the mitigation action which it has taken.
In such a case, it is for the defendant to show that the benefits should be set off against the prima facie claim of loss.
For example, in Thai Airways (above) it fell to Koito to prove that the net benefits that the airline received as a result of leasing the replacement aircraft during the relevant period offset the losses which it suffered from the delayed entry into service of the aircraft for which Koito failed to supply the seats.
Such cases raise delicate questions as to whether a benefit is sufficiently causally connected with the breach of contract or (in tort) the wrong or whether the benefit was the result of an independent commercial decision by the claimant.
In Fulton Shipping at para 30, Lord Clarke of Stone cum Ebony explained that there must be a sufficiently close link between the benefit and the loss caused by the wrongdoer: The relevant link is causation.
The benefit to be brought into account must have been caused either by the breach of the charterparty or by a successful act of mitigation.
In that case, by selling the vessel after the charterparty had been prematurely terminated the owners avoided a substantial capital loss occasioned by the collapse in the market for such vessels following the financial crisis in 2008.
While the premature termination of the charterparty in Fulton Shipping was the occasion for the owners decision to sell the vessel, the court held that that decision was not necessitated by the termination but was a commercial decision of the owners at their own risk.
In other cases, the court may be concerned with a failure of a claimant to act reasonably in its response to its loss.
As Leggatt J stated in Thai Airways at para 33, quoting from an article by A Dyson and A Kramer, There is No Breach Date Rule: Mitigation, Difference in Value and Date of Assessment (2014) 130 LQR 259, 263: damages are assessed as if the claimant acted reasonably, if in fact it did not act reasonably.
Thus, for example in Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 AC 353, Lord Bingham of Cornhill stated (at para 10): An injured party such as the owners may not, generally speaking, recover damages against a repudiator such as the charterers for loss which he could reasonably have avoided by taking reasonable commercial steps to mitigate his loss.
Thus where, as here, there is an available market for the chartering of vessels, the injured partys loss will be calculated on the assumption that he has, on or within a reasonable time of accepting the repudiation, taken reasonable commercial steps to obtain alternative employment for the vessel for the best consideration reasonably obtainable.
We are not concerned in these appeals with additional benefits resulting from a victims response to a wrong which was an independent commercial decision or with any allegation of a failure to take reasonable commercial steps in response to a loss.
The issue of mitigation which arises is whether in fact the merchants have avoided all or part of their losses.
In the classic case of British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, at 689 Viscount Haldane described the principle that the claimant cannot recover for avoided loss in these terms: [W]hen in the course of his business [the claimant] has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account (Emphasis added) Here also a question of legal or proximate causation arises as the underlined words show.
But the question of legal causation is straightforward in the context of a retail business in which the merchant seeks to recover its costs in its annual or other regular budgeting.
The relevant question is a factual question: has the claimant in the course of its business recovered from others the costs of the MSC, including the overcharge contained therein? The merchants, having acted reasonably, are entitled to recover their factual loss.
If the court were to conclude on the evidence that the merchant had by reducing the cost of its supplies or by the pass on of the cost to its customers (options (iii) and (iv) in para 205 above) transferred all or part of its loss to others, its true loss would not be the prima facie measure of the overcharge but a lesser sum.
The legal burden lies on the operators of the schemes to establish that the merchants have recovered the costs incurred in the MSC.
But once the defendants have raised the issue of mitigation, in the form of pass on, there is a heavy evidential burden on the merchants to provide evidence as to how they have dealt with the recovery of their costs in their business.
Most of the relevant information about what a merchant actually has done to cover its costs, including the cost of the MSC, will be exclusively in the hands of the merchant itself.
The merchant must therefore produce that evidence in order to forestall adverse inferences being taken against it by the court which seeks to apply the compensatory principle.
The degree of precision required in establishing the extent of pass on of an
overcharge
The court in applying the compensatory principle is charged with avoiding under compensation and also over compensation.
Justice is not achieved if a claimant receives less or more than its actual loss.
But in applying the principle the court must also have regard to another principle, enshrined in the overriding objective of the Civil Procedure Rules, that legal disputes should be dealt with at a proportionate cost.
The court and the parties may have to forgo precision, even where it is possible, if the cost of achieving that precision is disproportionate, and rely on estimates.
The common law takes a pragmatic view of the degree of certainty with which damages must be pleaded and proved: Devenish Nutrition Ltd v Sanofi Aventis SA [2007] EWHC 2394 (Ch); [2009] Ch 390, 408, para 30 per Lewison J.
In Livingstone v Rawyards Coal Co (above) Lord Blackburn in speaking of getting as nearly as possible to the sum which would restore the claimant, recognised that the courts task in achieving reparation is not always precise.
Similarly, Lord Shaw in Watson Laidlaw & Co Ltd (above, at 29 to 30) spoke of restoration by way of compensation being accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe and of the attempt of justice to get back to the status quo ante in fact, or to reach imaginatively, by the process of compensation, a result in which the same principle is followed.
When the court deals with claims for personal injury, loss of life or loss of reputation, it has to put a monetary value on things that cannot be valued precisely.
But the task of valuing claims for purely monetary losses may also lack precision if the compensatory principle is to be honoured, particularly when one is dealing with complex trading entities such as the merchants in these appeals.
We see this for example in AAMs alternative case which seeks to assess the loss of profit caused by the volume effect where the overcharge was passed on to their customers in the form of higher prices.
Such a claim is likely to depend in considerable measure on economic opinion evidence and involve imprecise estimates.
We see no reason in principle why, in assessing compensatory damages, there should be a requirement of greater precision in the quantification of the amount of an overcharge which has been passed on to suppliers or customers because there is a legal burden on the defendants in relation to mitigation of loss.
The contrary view appears to have been based on an application of (a) the CJEU jurisprudence relating to a defence to claims for restitution, that there should be an identifiable increase in a retail price directly attributable to the unlawful charge and (b) the requirement, discussed in Fulton Shipping, of a close causative link between a wrong and a benefit which the victim obtains as a consequence of the wrong: see the judgment of the Court of Appeal at paras 327 330, 337 340.
As we have said, the relevant requirement of EU law is the principle of effectiveness.
The assessment of damages based on the compensatory principle does not offend the principle of effectiveness provided that the court does not require unreasonable precision from the claimant.
On the contrary, the Damages Directive is based on the compensatory principle.
The European Commission has issued Guidelines for national courts on how to estimate the share of overcharge which was passed on to the indirect purchaser (2019/C 267/07) (the 2019 Guidelines) in accordance with a power conferred by article 16 of the Damages Directive.
The 2019 Guidelines make clear (para 12) that the compensatory principle underlies the entire Damages Directive and must be understood as requiring that a person entitled to claim compensation for the harm suffered must be placed in the position in which that person would have been had the infringement not been committed.
It goes on to state that pass on may be invoked by an infringer as a shield against a claim for damages and by an indirect purchaser as a sword to support the argument that it has suffered harm (paras 18 19).
Article 12.1 of the Damages Directive requires member states to ensure not only that both direct and indirect purchasers who have suffered harm should be able to claim full compensation but also that compensation exceeding the harm caused by the infringement of competition law is avoided.
Article 12.5 states: Member states shall ensure that the national courts have the power to estimate, in accordance with national procedures, the share of any overcharge that was passed on.
Similarly, in article 17.1 the Damages Directive states: Member states shall ensure that neither the burden nor the standard of proof required for the quantification of harm renders the exercise of the right to damages practically impossible or excessively difficult.
Member states shall ensure that the national courts are empowered, in accordance with national procedures, to estimate the amount of harm if it is established that a claimant suffered harm but it is practically impossible or excessively difficult precisely to quantify the harm suffered on the basis of the evidence available.
In discussing those articles of the Damages Directive, the 2019 Guidelines (section 2.3, paras 30 35) recognise that the national courts in addressing the issue of pass on will have to resort to estimates.
In para 33 the 2019 Guidelines state that the principles of equivalence and effectiveness mean, as regards the power to estimate, that national courts cannot reject submissions on passing on merely because a party is unable to precisely quantify the passing on effects.
The power to estimate requires national courts to, firstly, base their assessment on the information reasonably available and, secondly, strive for an approximation of the amount or share of passing on which is plausible (para 34).
The 2019 Guidelines note that several member states already have rules which correspond to the power to estimate which the Damages Directive envisages and (in footnote 39) refer to Lord Shaws statement in Watson, Laidlaw & Co Ltd (above) that harm may be quantified by the exercise of a sound imagination and the practice of the broad axe, and to the application of that statement by the Court of Appeal in Devenish Nutrition Ltd (above), para 110.
As the regime is based in the compensatory principle and envisages claims by direct and indirect purchasers in a chain of supply it is logical that the power to estimate the effects of passing on applies equally when pass on is used as a sword by a claimant or as a shield by a defendant.
The loss caused by the overcharge included in the MSC was an increased cost which the merchants would in all probability not address as an individual cost but would take into account along with a multiplicity of other costs when developing their annual budgets.
The extent to which a merchant utilised each of the four options, which the CAT identified and we described in para 205 above, can only be a matter of estimation.
In accordance with the compensatory principle and the principle of proportionality, the law does not require unreasonable precision in the proof of the amount of the prima facie loss which the merchants have passed on to suppliers and customers.
Conclusion on the broad axe issue
In conclusion, we do not interpret the Court of Appeal as having held that the defendants had to prove the exact amount of the loss mitigated.
But in so far as the Court of Appeal has required a greater degree of precision in the quantification of pass on from the defendant than from a claimant, the Court erred.
For these reasons, the appeal succeeds on issue (iv).
Issue (v) The remission issue: AAMs cross appeal
The cross appeal is only relevant to the AAM proceedings.
By our judgment on this appeal, we have upheld the conclusion of the Court of Appeal that the default MIFs infringed article 101(1).
Therefore, it is necessary to consider Mastercards claim in the AAM proceedings that the default MIFs should be treated as exempt under article 101(3).
This was an issue which was fully canvassed at trial before Popplewell J.
The judge correctly held that in order to qualify for exemption under article 101(3) an anti competitive restriction must meet a number of cumulative conditions.
It is the first and second conditions which are relevant for present purposes, namely that any given default MIF must: (i) contribute to improving the production or distribution of goods or to promoting technical or economic progress and (ii) allow consumers a fair share of the relevant benefits.
At trial, Mastercard had a full opportunity to present any evidence it wished in support of its case that the default MIFs at issue should be treated as exempt pursuant to article 101(3).
Popplewell J considered that Mastercard had established its case that the default MIFs were exempt.
A critical part of his reasoning was that part of the MIFs paid to issuers had been passed through to their cardholder customers in the form of incentives to encourage use of scheme credit or debit cards to purchase more goods from merchants, thereby providing (so Mastercard asserted) increased benefits for the merchants issuer pass through.
The Court of Appeal considered this aspect of Popplewell Js judgment at paras 211 271.
It held that there were a number of flaws in the judges analysis.
It noted that there was a critical gap in the evidence put forward by Mastercard: it did not provide evidence from issuers regarding the extent to which there was pass through of the MIFs to cardholders, and had not attempted to obtain such evidence (paras 242 244).
It was therefore impossible to tell to what extent (if at all) the cost to merchants of having to pay a default MIF in relation to each card transaction might be outweighed by countervailing benefits to them from use of MIF income to incentivise increased card use.
The judge had failed to carry out this balancing exercise (paras 246 248).
As the Court of Appeal noted at para 245, all that could be said was that the expert witnesses on each side agreed, purely on the basis of economic theory, that pass through could incentivise card use; but there was no empirical, factual evidence on the point as would have been necessary to show that pass through did in fact occur, the extent of it and whether incentives to cardholders would in fact have resulted in more use of scheme cards (as opposed to cardholders simply using their scheme cards all the time in any event, without being influenced by incentives, so that the merchants bore the cost of the MIFs without any corresponding benefit: the always card transactions point described at paras 250 251).
Since Mastercard could not establish by evidence the extent of pass through, it could not show the extent to which MIF revenue was used to incentivise card usage, nor whether and to what extent it did in fact stimulate additional card usage; and this was fatal to Mastercards case for exemption (paras 252 254).
Accordingly, the Court of Appeal held (at para 255) that the judge should have concluded, by reference to this always cards point, that Mastercard could not establish, even on the basis of economic theory, that the extent of pass through was such that the advantages thereby conferred outweighed the disadvantages to the relevant consumers [the merchants]; and it further held (ibid) that the various materials relied on by Mastercard did not satisfy the requirement for cogent factual or empirical evidence of pass through.
The court then proceeded to make further explicit rulings in paras 257 259 as follows: 257.
The judge should have concluded that, in the absence of any evidence as to the actual extent of the pass through, Mastercard had failed to establish by robust analysis and cogent evidence, or otherwise, a sufficient causal link between the default MIFs and any net benefits, so that their claim for exemption under article 101(3) failed. 258. [T]he judge should have concluded, on the basis of the evidence before him, that the first condition of article 101(3), the benefits requirement, was not satisfied so that Mastercard had not established entitlement to an exemption under article 101(3). 259. [Further, in relation to the second condition for an exemption under article 101(3), the fair share requirement, on the evidence advanced at trial by Mastercard] had the judge carried out the necessary balancing exercise, he would inevitably have concluded that Mastercard could not satisfy the second condition either.
As regards the evidential standard to be applied, this court has confirmed that as a matter of EU law, cogent empirical evidence is required to show that the claim for exemption is made out.
In the light of this, the Court of Appeals conclusions in the AAM proceedings, as set out above, cannot be faulted.
AAM should have succeeded on its claim under article 101(1).
So far as concerns Mastercards defence based on article 101(3), there had been a full trial on this issue and on the evidence adduced at trial the judge should have dismissed it, as the Court of Appeal rightly held.
Despite reaching this conclusion in the passages referred to above, the Court of Appeal made an order remitting the AAM proceedings to the CAT, alongside the two other sets of proceedings, for reconsideration of whether Mastercards case under article 101(3) in the AAM proceedings should have succeeded in whole or in part.
According to the order, it is not open to any party to advance a new case or to adduce any fresh evidence on the remittals for reconsideration of Mastercards and Visas cases in each set of proceedings for exemption under article 101(3), but the parties to each of the proceedings may rely on evidence from the other two proceedings if and only to the extent that it is relevant to the case on exemption advanced in the proceedings in question.
On any view, we consider that it would be impossible to justify an order in this form unless all the parties affected consented to it, since it would mean that a partys case could be determined by reference to evidence in other proceedings which it had not had a fair opportunity to controvert or subject to criticism or cross examination.
Such consent was not obtained before the Court of Appeal made its order.
Upon enquiry at the hearing in this court, it was only the parties in the Mastercard Sainsburys and Visa Sainsburys proceedings who said they were content with this order.
AAM did not.
However, the point taken by AAM in their cross appeal is a still more fundamental one.
They say that, having rightly decided that the trial judge should have dismissed Mastercards article 101(3) defence and given judgment for AAM on its claim under article 101(1), it was not open to the Court of Appeal to order that the article 101(3) issue should be remitted for reconsideration and hence permit it to be re opened by Mastercard.
This offends against the principle of finality in litigation.
The Court of Appeals reasoning on this point is at para 366: We take the view that, despite what we have said above, it is not certain that, had Popplewell J had the benefit of this judgment and thus been fully aware of the need for empirical data and facts in order to prove an exemption, MasterCards case on article 101(3) would have failed in its entirety.
It is possible, bearing in mind the acceptance by Sainsburys and the CAT in the other two cases that there was a lawful level of MIF, that the judge would have found that there was some exemptible level of MIF, albeit a lower one than he in fact found.
Altogether removing the article 101(3) issue from reconsideration could therefore result in an unjustified windfall for the AAM parties.
It seems far more just to us that the issue should be reconsidered in all three cases, based on the same principles, by the same tribunal.
There is no real injustice to the AAM parties in the course we propose, since the windfall to which we have referred would have arisen from the procedural mishap caused by the separation of three cases raising almost identical issues.
If the CAT is now able to reach a consistent conclusion in all three cases on the exemption and quantum issues, that will produce a fair and just outcome for all the parties.
It would be a triumph of form over substance if we were to hold that we were unable to reach a just solution simply as a result of a procedural accident.
In our judgment, this reasoning cannot be supported.
We accept the submission of Mr Jon Turner QC for AAM that the Court of Appeal has erred in principle by allowing Mastercard to re open the article 101(3) issue on which, as the Court of Appeal held, it had lost after a full and fair trial of the issue.
This offends against the strong principle of public policy and justice that there should be finality in litigation, which the Court of Appeal did not take properly into account.
The court was wrong to characterise victory for AAM as an unjustified windfall or the product of a procedural mishap or accident.
It was wrong to say that re opening the article 101(3) issue involved no real injustice for AAM.
Under the Civil Procedure Rules (CPR), litigation is to be conducted in accordance with the overriding objective set out in CPR Part 1, that is in a manner enabling the court to deal with cases justly and at proportionate cost.
CPR rule 52.20(2) provides that on an appeal, the appellate court has power, among other things, to (a) affirm, set aside or vary any order or judgment made or given by the lower court; (b) refer any claim or issue for determination by the lower court; or (c) order a new trial or hearing.
By virtue of CPR rule 1.2(b) the procedural rules in the CPR are to be interpreted so as to give effect to the overriding objective; and by virtue of CPR rule 1.2(a) any power conferred on a court by the CPR is to be exercised so as to give effect to it.
The higher courts have in a number of respects laid down important and binding principles regarding what justice requires in the context of litigation, and these inform the proper approach to the interpretation and application of the overriding objective.
One such principle which is well established is that there should be finality in litigation.
This is a general principle of justice which finds expression in several ways, which tend to be grouped under the portmanteau term res judicata: see Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160, paras 17 26 per Lord Sumption.
When a legal claim has finally been determined in litigation, a cause of action estoppel arises and it cannot be reopened.
A binding issue estoppel may arise in respect of a matter, other than a legal claim, which is directly the subject of determination in proceedings.
Further, parties are generally required to bring forward their whole case in one action, and attempts to revisit matters that have already been the subject of a determination (even if not formally a matter of cause of action estoppel or the subject of an issue estoppel) are liable to be barred as an abuse of process: Henderson v Henderson (1843) 3 Hare 100, 114 116 per Wigram V C; Johnson v Gore Wood & Co [2002] 2 AC 1, 31 per Lord Bingham of Cornhill and 58 59 per Lord Millett; Virgin Atlantic (above).
Under this rule, first explored in Henderson v Henderson, a party is precluded from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones (Virgin Atlantic, para 17).
As Sir Thomas Bingham MR (as he then was) explained in Barrow v Bankside Members Agency Ltd [1996] 1 WLR 257, 260: The rule in Henderson v Henderson requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided once and for all.
In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise.
The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel.
It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do.
That is the abuse at which the rule is directed.
This is a rule based on what is required to do justice between the parties as well as on wider public policy considerations.
It is a rule which is firmly underwritten by and inherent in the overriding objective.
In our view, the order made by the Court of Appeal to remit the article 101(3) issue in the AAM proceedings for reconsideration by the CAT is contrary to the principle of finality in litigation as it finds expression in the rule in Henderson v Henderson.
The trial before Popplewell J was a final trial between AAM and Mastercard of the issues between them under article 101(1) and 101(3) so far as affected Mastercards liability to AAM.
In preparing for the trial, Mastercard was aware of the significance of the issue of pass through, not least because attention had been called to that issue in the Mastercard Commission Decision (as noted in para 243 in the judgment of the Court of Appeal).
In any event, the issue of pass through was central to the way in which Mastercard sought to justify its claim for exemption under article 101(3).
It had a full and fair opportunity to adduce any evidence it wished in respect of that claim.
Yet, as the Court of Appeal found (at para 244), it did not attempt to obtain factual, empirical evidence on that issue, choosing instead to support its claim of exemption under article 101(3) by reference to economic theory.
As explained above, on the evidence adduced at trial, the Court of Appeal rightly found that the judge should have upheld AAMs claim of infringement of article 101(1) and in the course of doing so should have dismissed Mastercards defence based on article 101(3).
We agree with Mr Turners submission that in circumstances where: (i) in a final trial between private litigants to determine their rights and obligations inter se each side has had a fair opportunity to bring forward all the evidence that it wants to bring forward in support of its case, and (ii) where the appellate court has concluded that, on the basis of that evidence, one party ought to have won, the court should dispose of the matter by awarding a final remedy that reflects that outcome.
This is necessary to do justice to the parties (so that the party that has won in a fair and it might be added, very expensive contest is not deprived of the fruits of its victory), to achieve finality, and to avoid the court enlarging the dispute outside the way in which the parties have chosen to frame it.
In the adversarial system of litigation in this country, the task of the courts is to do justice between the parties in relation to the way in which they have framed and prosecuted their respective cases, rather than to carry out some wider inquisitorial function as a searcher after truth.
In Al Medenni v Mars UK Ltd [2005] EWCA Civ 1041, Dyson LJ observed (at para 21): It is fundamental to our adversarial system of justice that the parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other.
The function of the judge is to adjudicate on those issues alone.
As Lord Wilberforce stated in Air Canada v Secretary of State for Trade [1983] 2 AC 394, 438: In a contest purely between one litigant and another the task of the court is to do, and be seen to be doing, justice between the parties There is no higher or additional duty to ascertain some independent truth.
It often happens, from the imperfection of evidence, or the withholding of it, sometimes by the party in whose favour it would tell if presented, that an adjudication has to be made which is not, and is known not to be, the whole truth of the matter: yet if the decision has been in accordance with the available evidence and with the law, justice will have been fairly done.
In our view, and with respect to them, the Court of Appeal lost sight of these principles when it made an order which would permit Mastercard to reopen its case under article 101(3) and rely upon evidence (adduced in other proceedings, but new in the AAM proceedings) which was not adduced at the trial of that issue.
The matter may further be tested in various ways.
Suppose Popplewell J had determined the issues before him as the Court of Appeal held they should have been determined by him (ie on the basis that Mastercards defence under article 101(3) failed) and there had been no need for an appeal.
He would have made a final order in AAMs favour in 2017 giving judgment for them on their article 101(1) claim (necessarily thereby rejecting the article 101(3) defence), and that order would have constituted a cause of action estoppel in their favour.
There could have been no question of Mastercard seeking to reopen that order by seeking to litigate again on the same issues, by relying on new evidence as adduced in other proceedings.
It is difficult to see how it could be right for the Court of Appeal to produce a different outcome by reason of the adventitious circumstance that AAM had to go through the process of appeal to arrive at the result it was entitled to have achieved at first instance.
Alternatively, one could analyse the outcome which would have been arrived at in relation to the article 101(3) defence as a matter of issue estoppel, and the same point could be made.
Or again, one could analyse the position by reference to the rule in Henderson v Henderson and say that it would have been an abuse of process for Mastercard to have sought to re open the article 101(3) issue by reference to new evidence, the substance of which it had had the opportunity to adduce previously at trial before Popplewell J. Since it would have been unjust to allow an application by Mastercard to do that, it is difficult to see how it could be compatible with justice for the Court of Appeal to produce that same outcome by its exercise of discretion on its own initiative under CPR rule 52.20(2).
On the contrary, in our view it was contrary to justice and to the overriding objective for the Court of Appeal to make the order it did in the AAM proceedings.
It was also contrary to CPR rule 52.20(2) itself, on its proper construction, since under CPR rule 1.2(b) that provision falls to be interpreted in a way which is in conformity with the overriding objective.
This is sufficient to justify allowing AAMs cross appeal.
However, we also consider the comments made by the Court of Appeal at para 366 (above) to be misplaced.
If it is decided by the CAT after the further hearing in the Mastercard Sainsburys proceedings and the Visa Sainsburys proceedings that, on the evidence and concessions made by Sainsburys in those proceedings (concessions with which AAM do not agree and which they consider to be baseless and wrongly made), there was some level of MIFs which would have been exempt under article 101(3), with the result that Sainsburys claims for damages for breach of article 101(1) would be reduced, that would in no way show that there was an unjustified windfall for AAM arising out of a final order in their favour in the AAM proceedings.
As the Court of Appeal rightly held, after the fair trial which took place, the judge should have found that AAM succeeded in its claim.
That result is not a windfall, nor is it unjustified.
It is the just outcome of the contest fought by the parties in those proceedings.
It would have made no difference if the fact that there was a separate trial of the AAM proceedings could be described as the result of a procedural mishap or accident, or if with hindsight it might have been thought better for all three sets of proceedings to be tried together.
The fact would still remain that, as events transpired, Mastercard had lost to AAM at trial after a fair hearing on the issues between them.
However, in any event, in our view it is not correct to characterise the way in which the AAM proceedings were dealt with separately from the other proceedings and went forward to be dealt with at a separate trial as being the result of a procedural mishap or accident.
There are many sets of interchange damages claims pending against Mastercard and Visa (and other card system operators) in the court system, and it would be wholly impracticable for them all to be tried together at the same time.
In a sensible and responsible way, Visa, Mastercard, Sainsburys and AAM debated at various stages whether the proceedings involving them could be case managed or heard together, and on each occasion the judgment was made that there were good reasons why they should not be.
The fact that there have been three separate trials in the three sets of proceedings is not the result of any procedural accident, but rather of deliberate and informed choices made by the parties, courts and the CAT as to how these complex claims should be determined within the court system.
It may also be observed that, contrary to what the Court of Appeal seems to have thought it would achieve by ordering a combined hearing in the CAT in the three sets of proceedings at issue in this appeal, that combined hearing will not produce a single, comprehensive determination of liability in relation to the other interchange fee damages claims.
Those other claims will have to be determined in each case on the basis of the pleadings and the evidence adduced in that case.
Conclusion on AAMs cross appeal
For the reasons given above, AAMs cross appeal is allowed.
The order made by the Court of Appeal will be varied, to substitute an order declaring that the relevant MIFs charged to AAM in the relevant period were contrary to article 101(1) (and the equivalent provisions of UK and Irish competition law); and that Mastercard has failed to discharge the burden on it of demonstrating that a MIF set at any positive level would have met the test for exemption under article 101(3) (and the equivalent provisions of UK and Irish law).
If not settled, the AAM proceedings should then proceed to a trial on the issue of quantum of damages.
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This appeal concerns whether certain rules of the Visa and Mastercard payment card schemes have the effect of restricting competition, in breach of article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and equivalent national legislation.
The appellants, Visa and Mastercard, operate open four party payment card schemes.
Under these schemes, issuers (generally banks) issue debit and/or credit cards to cardholder customers and acquirers (also generally banks) provide payment services to merchants (such as the respondents).
The scheme operator, Visa or Mastercard, sets the rules of the scheme and allows institutions to join as issuers and/or acquirers.
The schemes operate as follows.
A cardholder contracts with an issuer, which agrees to provide the cardholder with a Visa or Mastercard debit or credit card.
It agrees terms on which they may use the card to buy goods or services from merchants, which may include a fee paid by the cardholder, an interest rate for credit, and incentives or rewards paid by the issuer to the cardholder for using the card (such as airmiles or cashback).
Merchants contract with an acquirer, which agrees to provide services to the merchant enabling acceptance of the cards for a fee.
This is known as the merchant service charge (MSC).
To settle a transaction made between a cardholder and a merchant, the issuer pays the acquirer, who passes the payment on to the merchant, less the MSC.
The rules of both schemes provide for the payment of a default interchange fee, known as the multilateral interchange fee (MIF), on each transaction, which is payable by the acquirer to the issuer.
Though under the rules acquirers and issuers are not required to contract based on the MIF, in practice they invariably do so.
Visa and Mastercard do not receive any part of the MIF or the MSC.
Their remuneration comes from scheme fees paid by issuers and acquirers.
For most of the claim period, the MIF typically accounted for some 90% of the MSC.
Acquirers passed on all of the MIF to the merchants through the MSC, with negotiation between acquirers and merchants in respect of the MSC being limited to the level of the acquirers margin.
Schemes such as the Visa and Mastercard schemes operate in a two sided market.
On one side, issuers compete for the business of cardholder customers.
On the other side, acquirers compete for the business of merchants to whom they seek to offer acquiring services.
These proceedings concern the effect of MIFs on competition in the acquiring market.
Article 101(1) TFEU prohibits agreements between companies that may affect trade between member states, and which have as their object or effect the restriction of competition.
Article 101(3) provides for
an exemption where the agreement improves the production or distribution of goods or promotes technical or economic progress while allowing consumers a fair share of the resulting benefit.
These provisions are reflected in sections 2 and 9 of the Competition Act 1998 (the 1998 Act), respectively.
The Visa and Mastercard schemes have previously been subject to scrutiny by competition authorities.
In a decision dated 19 December 2007, the European Commission decided that the Mastercard MIFs applicable within the European Economic Area (EEA MIFs) breached article 101(1) (the Mastercard Commission Decision).
Mastercard applied to the Court of Justice of the European Union (the CJEU) for annulment of the Mastercard Commission Decision, which was dismissed by a judgment of the General Court (Mastercard GC).
Mastercard appealed this decision to the Court of Justice, which gave judgment dismissing the appeal (Mastercard CJ).
The present appeal relates to three sets of proceedings.
In the first, brought by Sainsburys Supermarkets Ltd (Sainsburys) against Mastercard, the Competition Appeal Tribunal (the CAT) held that Mastercard MIFs in the UK (UK MIFs) restricted competition by effect and awarded damages to Sainsburys.
In the second, brought by Asda Stores Ltd, Argos Ltd and others, and WM Morrison Supermarkets plc (together AAM) against Mastercard, Popplewell J in the Commercial Court found that Mastercards EEA MIFs, UK MIFs and MIFs in the Republic of Ireland (Irish MIFs) did not infringe article 101 and were exempt under article 101(3) in any event.
In the third, brought by Sainsburys against Visa, Phillips J in the Commercial Court dismissed the claim and found that Visas UK MIFs did not restrict competition in the acquiring market.
At the request of the parties, Phillips J gave an additional judgment, in which he found that if the MIFs did restrict competition, they were not exempt under article 101(3).
The appeals in these three sets of proceedings were heard together by the Court of Appeal, which overturned all four judgments given below.
It held that there was restriction of competition and made various rulings as to the legal effect of article 101(3).
The Court of Appeal remitted the article 101(3) exemption issue in all three sets of proceedings to the CAT for reconsideration in the light of the legal rulings it had made and based on the evidence adduced in all three cases.
Visa and Mastercard seek to appeal the Court of Appeals decision on four grounds.
AAM seek to cross appeal against the order for remittal.
The Supreme Court unanimously upholds the conclusion of the Court of Appeal that the MIFs infringed article 101(1) and its legal rulings on article 101(3), dismissing the appeal on all grounds except the broad axe issue (defined below).
The Court allows the cross appeal.
The full Court gives the judgment.
Visa and Mastercard appeal on four grounds.
First, whether the Court of Appeal was wrong to find that there was a restriction of competition in the acquiring market contrary to article 101(1) TFEU and equivalent national legislation (the restriction issue).
Second, whether the Court of Appeal found, and if so was it wrong in finding, that Visa and Mastercard were required to satisfy a more onerous evidential standard than that normally applicable in civil litigation, in order to establish that their MIFs were exempt under article 101(3) (the standard of proof issue).
Third, whether the Court of Appeal was wrong to find that in order to show that consumers receive a fair share of the benefits generated by the MIFs, to satisfy the test under article 101(3), Visa was required to prove that the benefits provided to merchants alone as a result of the MIFs outweighed the costs arising from the MIFs, without taking any account of the benefits received by cardholders as a result of the MIFs (the fair share issue).
Fourth, whether the Court of Appeal found and, if so, was it wrong in finding, that a defendant has to prove the exact amount of loss mitigated in order to reduce damages (the broad axe issue).
Finally, AAM seek to cross appeal on the issue of whether the Court of Appeal was wrong to remit the AAM proceedings for reconsideration in relation to exemption under article 101(3) (the remission issue) [40] [41].
The restriction issue The restriction issue raises two issues for consideration: (i) whether the Court is bound by the Mastercard CJ decision; and (ii) if not, whether that decision ought to be followed [48].
The appellants argue that the Court of Appeal was wrong to conclude that it was bound by Mastercard CJ to find that there was a restriction of competition in the acquiring market contrary to article 101(1) TFEU and equivalent national legislation because Mastercard CJ is factually distinguishable [68] [72].
The Supreme Court concludes that Mastercard CJ is binding and the Court of Appeal was correct so to hold.
The essential factual basis upon which the Court of Justice held that there was a restriction on competition in Mastercard CJ is mirrored in these appeals [93] [94].
Even if the Court were not bound by Mastercard CJ, the Supreme Court would follow it and conclude that there was a restriction on competition in the present cases.
The effect of the collective agreement to set the MIF is to fix a minimum price floor for the MSC.
That minimum or reservation price is non negotiable.
Acquirers have no incentive to compete over it.
It is a known common cost which acquirers know they can pass on in full and do so.
Merchants have no ability to negotiate it down.
A significant portion of the MSC is thereby immunised from competitive bargaining and is determined by collective agreement rather than by competition.
By contrast, in the counterfactual, in which there is no MIF but settlement at par, the whole of the MSC is open to competitive bargaining and determined by competition [95] [104].
The Court therefore dismisses the appeal on the restriction issue [105].
The standard of proof issue On the standard of proof issue, the appellants submit that the Court of Appeal was wrong to conclude that, in relation to article 101(3), there is a specific requirement for robust and cogent evidence, which is a more onerous standard than the normal domestic civil standard of proof on the balance of probabilities, and that there is a legal requirement for facts and empirical data [106].
It is common ground that to justify the restriction on competition the burden of satisfying that the four conditions set out in article 101(3) lies on the defendant; the present issue relates to the standard of proof [107].
Visa and Mastercard submit that in the Commercial Court proceedings the judges adopted diverging views on the standard of proof [108].
The Court of Appeal considered that EU law requires cogent factual and empirical evidence to satisfy article 101(3) [109].
The Court considers that the essential complaint made by Visa and Mastercard here does not relate to the standard of proof but rather to the nature of the evidence required to meet the standard of proof in this context and, more specifically, the type of evidence needed to establish that the benefits from the MIF rules under consideration outweigh the detriments to merchants [115].
In the Courts view, article 101(3) imposes requirements as to the nature of the evidence that can discharge the burden to establish an exemption under that provision, which is imported into domestic competition law by the 1998 Act.
Cogent empirical evidence is required to carry out the required evaluation of the claimed efficiencies and benefits [116].
The Court therefore dismisses the appeal on the standard of proof issue [138].
The fair share issue On the fair share issue, Visa challenges the decision of the Court of Appeal, which interpreted Mastercard CJ as meaning that in a two sided market situation such as in the present case, if the restriction causes disadvantages overall to the consumers in the market under consideration (here the merchants in the acquiring market), those disadvantages cannot be compensated by advantages to consumers in the other market (the cardholders in the issuing market), unless the two groups of consumers are substantially the same, which is not the position here [144].
The Supreme Court finds that the Court of Appeal arrived at the correct decision, albeit by different reasoning.
The best available guidance from the CJEU on the application of the fair share requirement is the opinion of the Advocate General Mengozzi in Mastercard CJ, which considered that the fair share of the benefits must be received by the consumers in the same market.
The Court therefore dismisses the appeal on the fair share issue [171] [174].
The broad axe issue The broad axe issue relates to the degree of precision required in the quantification of mitigation of loss where a defendant to a claim for damages arising out of a breach of competition law asserts that the claimant has mitigated its loss through the passing on of all or part of an overcharge to its customers [175].
Mastercard submitted that it must prove that the merchants passed on some of the overcharge to their customers but the quantification of the pass on did not have to be precise if precision could not reasonably be achieved [179].
The claims of the merchants in these appeals are for compensatory damages for loss caused to them by the tortious acts of Visa and Mastercard in breach of their statutory obligations under the 1998 Act [182].
In such circumstances, EU law allows a member state to lay down procedural rules governing actions that safeguard rights derived from EU law, provided the rules comply with the principles of equivalence and effectiveness.
The only constraint on national law at the relevant time was the principle of effectiveness, which requires that the domestic rules do not make it practically impossible or excessively difficult to exercise rights guaranteed by EU law [188].
In the UK, pass on is an element in the quantification of damages that is required by the compensatory principle and required to prevent double recovery through claims in respect of the same overcharge by a direct purchaser and by subsequent purchasers in a chain [196] [197].
Visa and Mastercard have the burden of establishing that the merchants have recovered the costs incurred in the MSC but, once the defendants have raised the issue of mitigation, in the form of pass on, there is a heavy evidential burden on the merchants to provide evidence [216].
The degree of precision requires a balance between achieving justice by precisely compensating the claimant and dealing with disputes at a proportionate cost [217].
The law does not require unreasonable precision in the proof of the amount of the loss that the merchants have passed on to suppliers and customers [225].
The Supreme Court does not interpret the Court of Appeal as having held that the defendants had to prove the exact amount of the loss mitigated, but insofar as the Court of Appeal required a greater degree of precision in the quantification of pass on from Visa and Mastercard than from the merchants, the Court erred.
As a result, the appeal succeeds on the broad axe issue [226].
The remission issue The cross appeal relates only to the AAM proceedings [227].
AAM submit that the Court of Appeal erred in remitting the AAM proceedings for reconsideration of the exemption under article 101(3).
Despite reaching the correct conclusion that Mastercards defence based on article 101(3) should have been dismissed, the Court of Appeal made an order remitting the AAM proceedings to the CAT, alongside the other two sets of proceedings, for reconsideration of whether Mastercards case under article 101(3) should have succeeded in whole or in part [232] [233].
AAM submit that it was not open to the Court of Appeal to so order and to permit the issue to be re opened by Mastercard, and that it offended against the principle of finality in litigation [235].
In the Supreme Courts judgment, the Court of Appeal was wrong to allow Mastercard to re open this issue, which it had lost after a full and fair trial.
It offends against the strong principle of public policy and justice that there should be finality in litigation [237].
Accordingly, AAMs cross appeal is allowed [247].
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If a criminal who previously had leave to remain in this country is liable to deportation because of his offences, but cannot actually be deported because to remove him would infringe his rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms, with the result that the deportation order is revoked, what is the status of his previous leave to remain? It is common ground that the making of a deportation order renders his leave to remain invalid.
The question in this appeal is whether, if the deportation order is revoked, his leave revives or whether the Secretary of State is at that stage free to consider afresh what leave to grant to him.
Mr George was born in Grenada in 1984 and came to this country when 11 in 1995.
As at March 2000 he had been granted indefinite leave to remain here.
Since then, however, he has been convicted on seven different occasions of offences, some relatively minor but some not.
The convictions include five counts of supplying cocaine in January 2002, for which he was sentenced to three years detention in a Young Offenders Institution, driving whilst disqualified and without insurance in December 2003, which resulted in a sentence of eight weeks detention, and, on 7 April 2005, two counts of possession of, respectively, heroin and cocaine, with intent to supply, occasioning four years imprisonment.
On the basis of these convictions, the Secretary of State judged that his deportation would be conducive to the public good.
In January 2007 notice was duly served on him that a deportation order was to be made.
There ensued a series of unsuccessful attempts to challenge that decision, in the Asylum and Immigration Tribunal and the High Court, which lasted until April 2008.
When those rights of appeal were exhausted, the Secretary of State was able actually to make the deportation order of which advance notice had been given, and that order was made on 24 April 2008.
Mr George, however, made further application to the Secretary of State contending that to deport him would infringe his article 8 rights to respect for his private and family life.
He has a partner whom he has known since he was at school, and although they do not and have not lived together, they have a daughter born in 2005 who sees her father reasonably often and stays with him on occasion.
The Secretary of State took the view that, balancing this level of family life against Mr Georges convictions, his deportation would not amount to a breach of article 8, and she refused to revoke the deportation order.
However, after a number of intermediate stages of legal process, Mr Georges immigration appeal against that last decision was allowed by the immigration judge in a ruling promulgated on 31 March 2009.
She held that, although the case was a borderline one, the balance between the conviction history and the family life had been struck wrongly by the Secretary of State.
It is common ground that the effect of this decision was to revoke the deportation order on the grounds that to implement it would infringe Mr Georges article 8 rights to family life.
Subsequently, Mr Georges solicitors called on the Secretary of State to confirm that he had indefinite leave to remain, but she refused to do so.
Instead she granted him six months discretionary leave on 2 August 2013.
This court was told that since that expired it has been replaced with a grant of three years discretionary leave.
It appears that the Secretary of State is treating him as she treats a number of other immigrants, and is implementing what may turn out to be a pattern of successive grants of discretionary leave to remain and which may result, if all goes well, in that leave becoming indefinite, but not until something of the order of 10 years have passed.
His case, however, is that his original indefinite leave to remain has revived when the deportation order was revoked.
He advanced this case by way of application for judicial review of the Secretary of States decision not to reinstate indefinite leave to remain but instead to make grants of time limited leave.
He failed before the judge but before the Court of Appeal succeeded by a majority.
This is the appeal of the Secretary of State from the latter decision: [2013] 1 WLR 1319.
The statutory provisions for deportation
The statutory trail begins with the Immigration Act 1971 (the 1971 Act).
Although it has been amended subsequently, the relevant provisions date from its enactment and have stood (save for immaterial adjustments) for 40 years.
By section 3 it requires that those with no specific right of entry to the United Kingdom need leave to enter, which leave may be indefinite or time limited and may be subject to conditions.
Section 3(5) and (6), together with section 5, contain the provisions for deportation.
First, subsections 3(5) and (6) deal with when a person is liable to deportation.
They say: (5) A person who is not a British citizen is liable to deportation from the United Kingdom if (a) the Secretary of State deems his deportation to be conducive to the public good; or (b) another person to whose family he belongs is or has been ordered to be deported. (6) Without prejudice to the operation of subsection (5) above, a person who is not a British citizen shall also be liable to deportation from the United Kingdom if, after he has attained the age of seventeen, he is convicted of an offence for which he is punishable with imprisonment and on his conviction is recommended for deportation by a court empowered by this Act to do so.
Once a person is liable to deportation under these rules, one turns to section 5, which provides for the actual making of a deportation order: 5(1) Where a person is under section 3(5) or (6) above liable to deportation, then subject to the following provisions of this Act the Secretary of State may make a deportation order against him, that is to say an order requiring him to leave and prohibiting him from entering the United Kingdom; and a deportation order against a person shall invalidate any leave to enter or remain in the United Kingdom given him before the order is made or while it is in force. (2) A deportation order against a person may at any time be revoked by a further order of the Secretary of State, and shall cease to have effect if he becomes a British citizen.
The final stage is provided for by section 5(5) and Schedule 3, which permits the Secretary of State to give directions for removal of those against whom a deportation order is in force, which directions may stipulate such matters as the manner of removal and form of travel.
These deportation provisions remain in force and are the ones which applied to Mr George.
It should, however, be noted that since the passing of the UK Borders Act 2007 (the 2007 Act), the commonest source of a decision to deport a convicted person lies in the provisions of section 32 of that Act, styled automatic deportation.
The effect of this section is that (i) a non British citizen who (inter alia) is sentenced to a term of 12 months imprisonment or more is termed a foreign criminal, (ii) as such his deportation is deemed to be conducive to the public good for the purposes of section 3(5)(a) of the 1971 Act so that he is liable to deportation, and (iii) the making of a deportation order is mandatory rather than discretionary, and irrevocable, unless specific exceptions apply, of which one is that removal would entail infringement of Convention rights.
It follows that in Mr Georges case: i) once the Secretary of State had decided under section 3(5)(a) of the 1971 Act that his deportation would be conducive to the public good, he became liable to deportation; the notice served on him in January 2007 warned him of an impending deportation order in consequence; (ii) at that stage his indefinite leave to remain continued extant but precarious, as it did throughout the 18 months or so following, during which unsuccessful attempts were made to challenge the decision that he was liable to deportation; this is consistent with the general scheme of the immigration appeals system, under which whilst appeals are pending suitable (if varying) provision is made to preserve the position in the interim; (iii) when in April 2008 the deportation order was made under section 5(1) of the 1971 Act the consequence was that his indefinite leave to remain was invalidated under the closing words of that subsection; (iv) the immigration judges ruling in March 2009 that his article 8 rights would be infringed by deportation was made on his appeal against the refusal by the Secretary of State to revoke the deportation order; the consequence is agreed to be that the deportation order was thereby revoked; (v) he remains liable to be deported, but an order for his deportation cannot be made in his present circumstances because it would entail an infringement of his Convention rights.
The case for revival of indefinite leave to remain
For Mr George, the carefully crafted submissions of Mr Knafler QC that his indefinite leave to remain revived when the deportation order was revoked can conveniently be considered under 2 headings: (a) it is said that as a matter of construction, section 5(1) and (2) of the 1971 Act mean that upon revocation the position reverts to the status quo ante, viz the indefinite leave revives; it is said that the position is made clear by considering other statutes (b) in pari materia, in particular section 76 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), section 10 of the Immigration and Asylum Act 1999 (the 1999 Act), and the automatic deportation provisions of the 2007 Act (paragraph 7 above).
Section 5(1) & (2) of the 1971 Act
Mr Knaflers submission is that section 5(1) prescribes three consequences of a deportation order a direction to leave, a prohibition on return and the invalidation of any existing leave to remain.
Accordingly, he says, revocation under section 5(2) reverses all three consequences.
This, however, does little more than assume what it seeks to prove.
His three consequences of a deportation order are in any event of differing character; the first two require obedience by action or omission on the part of the individual, whereas the third is a statement of a legal effect.
The wording of these two sections does not by itself provide a conclusive answer to the question of whether revocation of a deportation order operates to revive leave to remain which the making of the order invalidated.
If anything, the wording tends to suggest that revocation operates as from the moment it occurs, that is to say is prospective rather than retrospective.
It is from that moment onwards that the individual is no longer under an obligation to leave, and is free to return.
Consistently with that, one might expect that the invalidation of leave which has occurred through the making of the deportation order is not undone.
Mr Knaflers associated submission is that the words shall cease to have effect in section 5(2) govern both revocation and the different trigger of the individual becoming a British citizen.
Even if they did, that does not help answer the question what is meant by cease to have effect, which could bear either a prospective or retrospective meaning, albeit it more strongly suggests the former.
But in any event, it is quite clear that these words are associated only with the citizenship trigger and not with revocation.
It makes perfectly good sense for the subsection to distinguish between them since the first depends on the act of the Secretary of State (or the Immigration Judge on appeal) whereas the latter is independent of any act of hers.
The wording of section 5(2) may by itself be capable of bearing the meaning that revocation reverses the legal effect of the deportation order and thus revives leave to remain, but if that had been the intent, one might have anticipated the statute saying so.
What is, however, completely clear is that it has been treated from the outset by relevant persons operating or commenting upon the Act as meaning that revocation did not undo the invalidation of leave to remain which had been achieved by section 5(1).
The body of evidence of this is considerable.
It includes the following. (i) Draft Immigration Rules were prepared contemporaneously with the passage through Parliament of the 1971 Act (Immigration Rules: Control after Entry (Cmnd 4610) as amended by Cmnd 4792); these were considered by both Houses prior to the completion of the Acts legislative progress; the draft rules included paragraph 58 which stated in terms: Revocation of the deportation order does not entitle the person concerned to re enter the United Kingdom; it renders him eligible to qualify for admission under the immigration rules. (ii) That provision was then repeated at paragraph 66 of the substantive Statement of Immigration Rules for Control after Entry (HC 510), which was laid before Parliament on 23 October 1972. (iii) Every subsequent Statement of Changes in Immigration Rules has contained the same proposition in identical terms, including the current one (1994) (HC 395) at paragraph 392; all have been laid before Parliament pursuant to section 3(2) of the 1971 Act, under the negative resolution procedure. (iv) Successive editions of Macdonalds Immigration Law and Practice in the United Kingdom from the first (1983) until the current 8th (2010) record this same proposition without question.
If the wording were incapable of contrary reading, an error in its interpretation in the Rules, however long perpetuated, would not reverse its correct construction.
But this wording is not clear.
Moreover, the successive assumptions in the Rules about its meaning are very relevant when one comes to consider Mr Knaflers second submission, and in particular the terms of section 76 of the 2002 Act, which is the section which persuaded the majority of the Court of Appeal that he was right.
Section 76 of the 2002 Act
Prior to this provision indefinite leave to remain could not be removed except by a deportation order and the operation of section 5(1) of the 1971 Act.
Section 76 gave the Secretary of State a new power to revoke a persons indefinite leave to remain, in three defined situations: (1) where a person is liable to deportation but cannot be deported for legal reasons, (2) where leave was obtained by deception such as would make the person liable to removal, but he cannot be removed for legal or practical reasons and (3) where he had, in specified circumstances, ceased to be the refugee which he previously had been.
Section 76(1) deals with the first situation: The Secretary of State may revoke a person's indefinite leave to enter or remain in the United Kingdom if the person (a) is liable to deportation, but (b) cannot be deported for legal reasons.
The argument which was accepted by the majority of the Court of Appeal was that this enactment, which is part of the same statutory body of immigration law as the 1971 Act, must have been passed on the assumption that it contained the only power by which such a persons leave to remain could be removed.
Mr George and others like him are people who are liable to deportation but cannot be deported for legal reasons.
That in turn meant, it was held, that the revocation of a deportation order in the case of such a person must have had the effect of reviving any leave to remain which he had.
Otherwise, so the argument ran, there would be no need for section 76(1).
It is certainly true that the two statutes are part of the same body of immigration law and should be construed consistently with one another so far as possible, although the speed and intensity of legislative change in this field undoubtedly leaves open the real possibility that not every provision is consistent with every other.
It is also clear, and conceded by the Secretary of State, that section 76(1) would apply to Mr George.
It does not, however, follow that there was no point in enacting section 76(1) unless revocation of a deportation order revived leave to remain.
In the case of Mr George the legal bar to his deportation was only upheld after the deportation order had been made.
But there will be many others who cannot be deported for similar legal reasons but in whose case this is apparent from the moment when they became liable to deportation.
There may be many convicted persons who would be deported but for obvious Convention rights bars, perhaps because the conditions in the home country would infringe article 3, or because the convict has very long standing and strong article 8 rights.
The legal bar to deportation may be recognised without dispute by the Secretary of State.
In such a case, section 76(1) adds the power, which otherwise did not exist, to revoke indefinite leave to remain.
The case for the existence of such a power is clear.
A human rights claim may well prevent actual deportation, but the individual concerned is, by definition, a person whose presence is no longer conducive to the public good.
If a deportation order cannot be made, it may make good sense to alter his status from indefinite leave to remain to limited or, more likely, conditional leave, which may give scope for control of his activities in the public interest.
Although the 2007 Act was not in existence when section 76 was enacted, its scheme for automatic deportation provides another example of a case when section 76 would be available without there being any deportation order to be revoked.
If the Secretary of State determines that section 32(5) of the 2007 Act applies to render an individual liable to deportation, it is not the making of a deportation order but the antecedent decision that the provisions of the Act apply which is appealable: see section 82(3A) of the 2002 Act, inserted by section 35(3) of the 2007 Act.
So, if challenge were made to that decision, and were upheld on human rights grounds, there would be no deportation order to be revoked, but the individuals indefinite leave to remain could be removed and replaced with a different kind of leave by acting under section 76.
A second powerful reason for rejecting the argument based upon section 76, perhaps not fully ventilated before the Court of Appeal, lies in the history set out at paragraph 12 above.
The whole basis of the decision of the Court of Appeal was that section 76 demonstrates that Parliament assumed that the effect of section 5 of the 1971 Act was to revive leave to remain if a deportation order was revoked.
But the history demonstrates that Parliament cannot have done so; on the contrary, the assumption at the time was the opposite.
A third reason was identified by Stanley Burnton LJ, dissenting in the Court of Appeal.
Quite apart from the case of the individual who remains in the United Kingdom and cannot be deported for legal reasons, he considered that there may be other situations in which revocation of a deportation order is appropriate.
One suggested case is where a person has been successfully deported and applies subsequently for limited leave to make a brief visit, perhaps to relatives, and perhaps in circumstances where it is appropriate to grant the application on compassionate grounds.
Such a person could not simply return, because the deportation order under which he was removed would prevent it.
The Secretary of State would need to revoke the deportation order and make a fresh grant of limited or conditional leave.
She could not use section 76 to do this, because such a person would not be someone who could not be deported for legal reasons.
Stanley Burnton LJ reasoned that Parliament could not have intended that in such a situation the revocation of the deportation order would have the effect of reviving an indefinite leave to remain.
This scenario gave rise to a complex debate as to whether there exist other powers by which the Secretary of State might achieve the same end, in particular by invoking article 13(7) of the Immigration (Leave to Enter and Remain) Order 2000 (SI 2000/1161) (the 2000 Order).
This Order first preserved leave which would otherwise have been treated under section 3(4) of the 1971 Act as lapsed by reason of travel outside the common travel area, and then created by article 13(7) a discretionary power to cancel it when it was only in force because thus preserved.
It is possible that this power might now be used in the scenario contemplated by Stanley Burnton LJ, although only if paragraph 321A of the Immigration Rules were first amended, for that rule presently restricts the use of article 13(7) to specific situations which do not include this scenario.
But what matters is what section 5(2) of the 1971 Act meant when it was enacted.
At that time the 2000 Order had not seen the light of day and there could be no question of applying article 13(7).
The law was, under section 3(4) of the same 1971 Act, that: A person's leave to enter or remain in the United Kingdom shall lapse on his going to a country or territory outside the common travel area (whether or not he lands there), unless within the period for which he had leave he returns to the United Kingdom in circumstances in which he is not required to obtain leave to enter; but, if he does so return, his previous leave (and any limitation on it or conditions attached to it) shall continue to apply.
This provision cannot be read, in the context of the 1971 Act where it appears, as applying to a person deported under section 5.
If it did, there would be no need for section 5(1) to make any provision at all for the deportation order to invalidate the leave to remain.
Nor, even if the effect of section 5(2) is to revive a former leave to remain if a deportation order is revoked, could this section bite at removal under the order since the formerly existing leave would at that stage be invalidated by section 5(1) and there would be nothing to lapse.
It may be uncertain how much Stanley Burnton LJs scenario was in anyones mind at the time of the passing of the 1971 Act, so its impact on the construction question which arises in this case is perhaps limited.
But the possibility that the Secretary of State might wish to revoke a deportation order of someone, either present in the United Kingdom or not, and to replace it with limited or conditional leave, must have existed then as well as now, irrespective of any question of Convention rights obstructing removal.
This part of the reasoning of Stanley Burnton LJ therefore does provide some limited additional support for the argument that section 5(2) should not be read as meaning that on revocation of a deportation order any formerly held leave to remain revives.
In the Court of Appeal, Sir Stephen Sedley observed at para 32 that if section 76 was the only route available to the Secretary of State to remove leave to remain in the circumstances of a case such as the present, that would mean that the individual would have a right of appeal (under section 82 of the 2002 Act).
Whilst that is correct, it cannot assist on the meaning of section 5(2) as at 1971 since section 76 did not then exist.
Nor does the prospect of such a right of appeal fortify the case for such as Mr George.
Anyone faced with a deportation order already has ample right of appeal and against an order which will invalidate his leave to remain as the history of this case illustrates.
There is no occasion for a legitimate claim to a further appeal.
Sir Stephen also observed at para 32 that if the Secretary of State was right, a person such as Mr George would be left in limbo, being irremovable yet having no leave to remain.
That also does not assist.
The Secretary of State accepts that some leave must be granted if removal is impossible, and has in fact made such grants to Mr George.
In any event, there would equally be a limbo if the powers under section 76 were exercised.
For these reasons, the argument from section 76 does not avail Mr George.
Section 10 of the 1999 Act
Section 10 gives the Secretary of State power to direct summary removal of specific categories of people where, essentially, their leave to remain is seriously flawed.
The two principal categories are those who have failed to observe a condition of their leave (who accordingly are outside the leave granted) and those who obtained it by deception.
The other two categories are those whose position is as a dependent family member of someone being removed under this same section and those who have ceased to be refugees within the meaning of section 76(3) of the 2002 Act (supra at paragraph 13).
The effect of removal directions is, by section 10(8) (as substituted by section 48 of the Immigration, Asylum and Nationality Act 2006), to invalidate the leave to remain.
Thus the language employed mirrors that of section 5(1) of the 1971 Act.
Mr Knafler contends that in this section a withdrawal or revocation of the removal directions would clearly revive the leave to remain and that accordingly the same must apply to revocation of a deportation order under section 5 of the 1971 Act.
The precise meaning of section 10(8) is not before this court and it would be wrong to attempt to decide it in the absence of facts raising the issue.
Much might depend on the circumstances of any withdrawal and what if any alternative step the Secretary of State attempted or purported to take.
But it should not be assumed either that the effect of the section is that withdrawal of the removal directions would reinstate the leave to remain, unaltered, or that, if it would, the same was the rule created 28 years earlier by section 5 of the 1971 Act for the different situation of a deportation order made because the presence of the individual is not conducive to the public good.
The appeal rights of those affected by section 10 summary removal directions and those facing deportation are quite different.
In any event, it is unsafe to reason from a different regime enacted 28 years afterwards to the meaning of the 1971 Act.
Automatic deportation under the 2007 Act
Mr Knafler suggests that unless section 5(2) of the 1971 Act involves revival if the deportation order is revoked, a person who successfully appeals automatic deportation will still have his leave to remain invalidated; hence, he submits, section 5(2) must involve revival.
The argument runs as follows. (A) In a non automatic case an appeal against a decision (under section 3(5) of the 1971 Act) that a persons deportation is conducive to the public good, and thus that a deportation order will follow, is appealable under section 82(2)(j) of the 2002 Act and whilst the appeal is pending no deportation order can be made: see section 79(1) of that Act; (B) when the 2007 Act scheme was introduced the decision which was made appealable is not the making of the deportation order but the antecedent decision that the individual is caught by the automatic deportation rules: section 82(3A) of the 2002 Act, as introduced by section 35 of the 2007 Act; (C) at the same time section 79 of the 2002 Act was modified by the introduction of subsections (3) and (4) which provide that the usual prohibition on making a deportation order whilst an appeal is pending does not apply but that during that time there is an exception to the rule under section 5(1) of the 1971 Act that it invalidates the leave to remain; (D) therefore it is possible that the individual could succeed in his appeal, establish that he is not caught by the automatic deportation rules, but yet there may be a deportation order which will have the effect, once the appeal is over and no longer pending, of invalidating his leave to remain.
This may or may not be a possible scenario.
The import of the 2007 Act needs to be resolved on facts arising from it and not hypothetically on a case to which it has no application.
That the legislation is not as a whole entirely cohesive is demonstrated by the fact that in a non automatic case, the appeal may be against either the decision to make a deportation order or against a refusal to revoke the order itself if matters have advanced that far; the appealable decisions are described in section 82(2)(j) and (k).
If the postulated automatic deportation case is a possible scenario, it would not of course apply except where (a) a deportation order was made, as it need not be, and (b) the effect of a successful appeal is to induce its revocation.
There are, in any event, very limited grounds on which an appeal against automatic deportation of a foreign criminal can be mounted.
The principal ones in practice may well be that Convention rights prevent deportation (exception 1 pursuant to section 33(2) of the 2007 Act).
It is not necessarily anomalous or wrong that a foreign criminal who would be deported but for a Convention bar should have his indefinite leave to remain invalidated and that the Secretary of State should be able to regulate his status in this country by means of limited or conditional leave (see below).
It is not possible to reason from a single suggested scenario under an Act of 2007 to the true meaning of a statute passed 36 years earlier.
Conclusion
The terms of section 5 of the 1971 Act are, as words, capable either of importing revival of leave or of not doing so.
Revival is not their natural meaning, because the natural meaning is that revocation takes effect when it happens and does not undo events occurring during the lifetime of the deportation order.
Revival is a significant and far reaching legal concept, and it is much more likely that it would have been specifically provided for if it had been intended.
The reasoning of the Court of Appeal, from section 76 of the 2002 Act, cannot be supported.
Whilst statutes in pari materia should be construed consistently if possible, a later statute is not a reliable guide to the meaning of an earlier one, especially in a field such as immigration where social and political pressures have led to fast moving changes in the legislation.
In particular, the history of the treatment of section 5(2) of the 1971 Act in successive rules laid before Parliament both before and ever since the 1971 Act was passed shows very plainly that there cannot have been a legislative assumption that revival was its effect.
The contrary construction, involving no question of revival, is entirely consistent with the scheme of the 1971 Act (and indeed subsequent statutes) on the topic of deportation.
The position of Mr George is not analogous to someone with a pending appeal.
His status as a person liable to deportation has long since been established; his appeal challenging it failed long ago.
Persons are liable to be deported, under any of the procedures which may apply, because their presence in the United Kingdom is judged not to be conducive to the public good.
That is true of Mr George.
If it turns out that there is a legal obstacle to actual removal, for example because of Convention rights which cannot be infringed, that does not alter the fact he is a person whose presence is not conducive to the public good.
There is no legal symmetry in indefinite leave to remain co existing with the status of someone whose presence is not conducive to the public good.
It makes perfectly good sense, whilst the legal obstacle remains, for the Secretary of State to be in a position to re visit the terms of leave to enter.
Moreover, the legal obstacle is not necessarily, or even usually, permanent.
If it arises from conditions in the individuals home country, those conditions may change or he may come into favour with the authorities when previously he was not.
If it arises from his family connections in the United Kingdom, those may easily change.
If someone in his position cannot at present be deported because to do so would infringe his article 8 rights, and if indefinite leave to remain were thereupon to revive, he would remain irremovable if he turned his back on his family, or they on him, as may not infrequently occur.
Whilst there may be different routes by which the Secretary of State could now achieve a similar result, for example via section 76 of the 2002 Act, it is clear that this was also the coherent result of the 1971 Act, from the time that it was enacted.
On its correct construction, section 5(2) of the 1971 Act does not mean that if the deportation order is revoked, the invalidation by section 5(1) of leave to remain is retrospectively undone and the previous leave to remain does not revive.
Mr George remains liable to deportation, even though it cannot at present be carried out.
His position in the United Kingdom must be regularised, but that does not entail a recognition of indefinite leave to remain.
The Secretary of States grant to him of successive limited leaves is perfectly proper.
Whether or not it may become appropriate after the passage of time to re grant indefinite leave is a matter for her.
For those reasons, the appeal of the Secretary of State should be allowed and the order of the judge dismissing the claim for judicial review should be reinstated.
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Mr George was born in Grenada in 1984 and came to the UK in 1995 at the age of 11.
In March 2000 he was granted indefinite leave to remain (ILR) in the UK.
He has a partner whom he has known since school, with whom he has a daughter born in 2005.
He and his partner do not live together: his daughter however sees him reasonably often and sometimes stays with him.
Since 2000, Mr George has been convicted of seven different offences, including supply of cocaine and possession with intent to supply heroin and cocaine.
The Secretary of State decided that Mr Georges deportation would be conducive to the public good.
From that point he was, by section 3(5) Immigration Act 1971 (the 1971 Act), liable to deportation.
Notice was served upon him, in January 2007, that a deportation order was to be made against him.
He unsuccessfully challenged that decision and, on 24 April 2008, a deportation order was made in respect of him.
The effect of that deportation order, by section 5(1) of the 1971 Act, was to invalidate his ILR.
Mr George made a further application to the Secretary of State arguing that his deportation to Grenada would be unlawful under section 6 Human Rights Act 1998 as it would breach his right to private and family life under Article 8 ECHR.
The Secretary of State rejected that application, but an immigration judge allowed his appeal on 31 March 2009.
The effect of that judgment was to revoke his deportation order.
The question in this case is Mr Georges immigration status following the making and revocation of the deportation order.
Did Mr Georges ILR, invalidated by the deportation order, revive when the deportation order was itself revoked? Mr Georges solicitors considered that it did, and called on the Secretary of State to confirm this.
The Secretary of State however considered that it did not, and instead granted six months discretionary leave to remain (DLR) on 2 August 2013.
On the expiry of that leave the Secretary of State granted a further three years DLR.
Mr George judicially reviewed the decision not to reinstate ILR.
He argued that on the true interpretation of section 5(1) (2) Immigration Act 1971, his ILR was reinstated by the revocation of the deportation order.
Subsection (1) provides that a deportation order shall invalidate any leave to remain given [to a person] before the order is made or while it is in force.
Subsection (2) provides that a deportation order may at any time be revoked by a further order of the Secretary of State, and shall cease to have effect if he becomes a British citizen.
He further argued that an interpretation of section 5 by which his ILR was revived was supported by the fact that other immigration statutes, particularly section 76 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), required that reading of the 1971 Act.
Mr Georges claim was dismissed in the High Court, but his appeal to the Court of Appeal was allowed.
The Secretary of State appealed to the Supreme Court.
The Supreme Court unanimously allows the appeal.
Lord Hughes gives the only reasoned judgment, with which the other members of the court agree.
The better reading of section 5 of the 1971 Act is that it does
not revive prior leave on a deportation orders revocation.
The other statutory provisions relied upon by Mr George do not support his case.
Mr Georges first argument is that on its natural meaning, (i) revocation of a deportation order under section 5(2) of the 1971 Act must reverse all the consequences of the order listed in section 5(1), including therefore the invalidation of the leave to remain, and (ii) that the words shall cease to have effect in section 5(2) govern both the citizenship and revocation possibilities in that subsection.
However, neither point is compelling.
The wording of the subsections does not provide a conclusive answer to the question in the appeal [10 11].
Importantly, the 1971 Act has consistently been treated as meaning that revocation does not revive prior leave to remain.
Draft Immigration Rules which made this clear were prepared (and considered by Parliament) alongside the 1971 Act, and every subsequent version of the Immigration Rules has contained the same statement.
Each version has been laid before Parliament.
Likewise, successive editions of practitioner textbooks have taken the same position [12].
Revival of prior leave to remain is not the natural meaning of section 5 of the 1971 Act.
It is a significant and far reaching legal concept, and it is likely that if intended, it would have been explicitly provided [29].
The treatment of section 5(2) of the 1971 Act in successive Rules laid before Parliament clearly demonstrates that there was no legislative assumption that the effect of revocation of a deportation order was revival of prior leave to remain [30].
Mr Georges second argument was that other immigration statutes, particularly section 76 of the 2002 Act, indicate that the proper interpretation of the 1971 Act is that revocation of a deportation order revives leave to remain. section 76 provides a power for the Secretary of State to revoke ILR if a person is liable to deportation but cannot be deported for legal reasons.
Mr George argued that this power would be superfluous if the making of a deportation order irrevocably cancelled ILR [13 14].
However, this is incorrect.
While the legal impediment to Mr Georges deportation arose only after his deportation order was made, in other cases the legal impediment would be apparent prior to this point, and so the order would never be made. section 76 provides a power for the Secretary of State to revoke ILR and instead provide for limited or conditional leave.
In any event the only import of this argument goes to Parliaments intention when it passed the 1971 Act: the legislative history set out at [12] demonstrates that Parliament intended a deportation order irrevocably to extinguish prior leave to remain [16 18].
A number of arguments based on other statutes and situations were raised.
Where an individual previously possessing ILR had been deported, that individual might need to return to the UK for a brief period.
The Secretary of State would need to revoke the deportation order and make a fresh grant of conditional leave.
It could not be right that in such a situation the previous ILR would revive, and this provided some limited support for the Secretary of States position.
The Immigration (Leave to Enter and Remain) Order 2000 did not alter this conclusion, since the issue is the construction of the 1971 Act, and the problem existed prior to 2000 [19 21].
Mr George had based an argument on an analogy with section 10 of the Immigration and Asylum Act 1999.
However, that issue was not squarely before the court, and it would be wrong to determine its interpretation in the abstract [25 26].
The same was true of the UK Borders Act 2007 [27 28].
More fundamentally, it is wrong to reason from suggested scenarios under later Acts to the meaning of an earlier Act.
Later statutes are not reliable guides to the meaning of earlier ones, particular in areas where there have been fast moving changes to the legislation [30].
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On 9 September 2004 the appellant, Steven Allison, was convicted after trial in the High Court at Glasgow of four contraventions of section 4(3)(b) of the Misuse of Drugs Act 1971.
In effect, he was found guilty of being concerned in the supplying of cocaine and three other controlled drugs at his home in Cumbernauld, at an address in Falkirk and elsewhere in the United Kingdom, between 12 November and 3 December 2003.
The trial judge, Lord Bracadale, sentenced him to 8 years imprisonment.
The appellant appealed against both his conviction and sentence.
On 7 November 2008 the appeal court (Lord Osborne, Lady Paton and Lord Philip) refused his appeal against conviction, leaving his appeal against sentence to be heard on a date to be fixed.
Among his grounds of appeal against conviction was one which was first advanced in an additional Note of Appeal.
It relates to the record of a police interview of a John Stronach.
Mr Stronach had died before the trial and the Crown introduced the interview into evidence in accordance with the procedure in section 259(5) of the Criminal Procedure (Scotland) Act 1995.
Neither before nor during the trial did the Crown disclose to the defence that Mr Stronach had a number of previous convictions and outstanding charges.
In particular, he had convictions for reset, theft by opening lockfast places, assault and robbery and assault and breach of the peace.
He also had a number of outstanding charges, including two alleged contraventions of the Misuse of Drugs Act 1971, an alleged theft by housebreaking and several alleged contraventions of the Road Traffic Act 1988.
One of the outstanding cases under the Misuse of Drugs Act related to events covered by the trial and was known to the appellants legal advisers.
The Crown disclosed the previous convictions and the other outstanding charges only while the appellants appeal was pending before the appeal court.
This prompted the appellant to lodge his additional ground of appeal: The failure on the part of the Crown to disclose to the defence the existence of all the previous convictions and outstanding charges resulted in the defence being unable to prepare and properly conduct their defence and the result was that the appellant did not receive a fair trial, as guaranteed by article 6(1) of the European Convention on Human Rights.
Following the dismissal of his appeal by the appeal court, the appellant applied for leave to appeal to the Privy Council in relation to the additional ground of appeal.
On 6 March 2009 the appeal court (Lord Osborne, Lady Paton and Lord Mackay of Drumadoon) refused the application as incompetent, on the ground that no intimation of a devolution issue had been given to the Advocate General as required by para 5 of Schedule 6 to the Scotland Act 1998.
The court went on to indicate that, if it had been open to them to grant or refuse leave, they would not have granted leave.
The appellant subsequently applied to the Privy Council for special leave to appeal.
The Board granted special leave.
Although the statement of facts and issues included an issue relating to the competency of the appeal courts decision to refuse leave, neither the advocate depute nor the Advocate General advanced any argument on the point at the hearing of the appeal.
Undoubtedly, when the appeal court determined that the Lord Advocate was not under an obligation by virtue of article 6(1) of the European Convention to disclose the outstanding charges against Mr Stronach, they were in substance determining a devolution issue in terms of para 1(d) or (e) of Part I of Schedule 6 to the Scotland Act 1998 irrespective of whether all the relevant procedural steps had been followed.
It follows, as was held in McDonald v HM Advocate 2008 SLT 993, 1002, paras 48 and 49, that an appeal on that point lies to this Court under para 13(a) of Part II of that Schedule.
Of course, the late Mr Stronachs name was never included in the list of Crown witnesses appended to the indictment for the appellants trial which may help to explain why the need to disclose his criminal antecedents was overlooked.
But, when dismissing the appellants appeal, the appeal court rightly accepted, under reference to Holland v HM Advocate 2005 1 SC (PC) 3, 24, para 72, that the failure by the Crown to disclose Mr Stronachs previous convictions had been incompatible with the appellants article 6(1) Convention rights.
Despite the further conclusion of the Privy Council in Holland, at pp 24 25, paras 73 74, that the Crown were also under an obligation to disclose material outstanding charges of which they were aware, the appeal court in the present case drew a distinction between Mr Stronachs previous convictions and his outstanding cases at the time of the trial by which the court obviously meant the charges against him which had been outstanding at the time of his death.
The court continued: We consider that, in this context, a distinction has to be made between previous convictions and outstanding cases.
While, in appropriate circumstances, the existence of previous convictions may be of importance in connection with the preparation of a defence and to the challenge that may be mounted to the credibility of a witness, we do not consider that the same may be said of outstanding cases.
Where an individual is charged with crime, he or she is presumed to be innocent until proved guilty.
If a case is outstanding, necessarily no verdict has been reached in it.
In these circumstances we have insuperable difficulty in understanding how information relating to those matters could be properly deployed in the conduct of a defence.
Previous generations of Scots lawyers and judges do not appear to have
experienced the same insuperable difficulty as the appeal court.
It is, of course, trite that an individual charged with crime is presumed to be innocent until proved guilty.
But that is not to say that he has to be treated in all respects as if he were an innocent person against whom no charge had been brought.
Most obviously, in an appropriate case, he can be remanded in custody pending trial or granted bail subject to appropriate conditions.
Similarly, depending on the offence and the terms of his contract of employment, he may be suspended from his employment.
More generally, if you know that someone has been charged with, say, fraud, you will be less inclined to enter into a commercial transaction with him; if you know that someone has been charged with sexual abuse, you will think twice before entrusting your children to her care; if you know that someone has been charged with theft, you will be less inclined to trust anything which he tells you, unless it can be confirmed from other sources.
The Privy Councils decision in Holland, that the Crown should disclose outstanding charges of Crown witnesses of which they were aware, simply reflected the common sense position that just as in everyday life judges or jurors who have to assess the credibility of a witness may properly take into account not only the fact that the witness has been convicted of various offences, but also the fact that he has been charged with others.
To judge from the passage quoted in para 7 above, the appeal court seem to have thought that this was an unprincipled and incoherent innovation.
It is noteworthy that they did not refer to any authority.
In reality, the approach of the Privy Council, in so far as it proceeds on the basis that outstanding charges may have a bearing on a witnesss credibility, merely reflects what appears to have been recognised as the proper practice in Scottish courts for more than 170 years.
At one time, in Scots law anyone convicted of serious crimes became technically infamous (infamis) and was thereafter unable to give evidence at any trial.
By the early nineteenth century this rule was proving self defeating for the authorities: all too often it was a gift to the defence since it prevented the only material witnesses to crimes from giving evidence.
So the rule was first relaxed and then eventually abolished.
The only explicit authority relating to a witness with outstanding charges comes from that era.
At a High Court trial at Dumfries, when leading a Crown witness, William Higgins, the advocate depute began by establishing that he was due to be tried at the same circuit on a charge of theft by housebreaking, aggravated by his having been previously convicted of theft and being a thief by habit and repute.
See John Hannah and Hugh Higgins, 17 September 1836, Bells Notes, p 256, in the Supplement to Humes Commentaries on the Law of Scotland respecting Crimes (1844 edition), vol 2.
Since the court ruled on the admissibility of the advocate deputes line of questioning, the defence must have objected that the Crown were, in effect, leading a witness who, if convicted of the crime in question at his trial later in the sitting, would then be unable to testify.
The court rejected the argument and allowed the question.
As the author of the Notes, Sheriff Bell, comments, The court, however, in allowing the question, must have thought it relevant to affect the credit of the witness.
The potential relevance of outstanding charges to the credibility of a witness appears to have been settled in the nineteenth century.
See, for instance, Dicksons Treatise on the Law of Evidence in Scotland (revised edition, 1887) vol 2, para 1619.
Most significantly, Macdonalds Criminal Law of Scotland (3rd edition, 1894), p 462, says: Nor may [a witness] refuse to say whether he has been convicted of or stands indicted for a crime.
This passage appears in virtually the same words in the fifth and final edition (1948), pp 297 298.
The passage could never have stood unchallenged in successive editions of the traditional vademecum of Scottish criminal practitioners and judges if it had not reflected practice in the courts.
Not surprisingly, therefore, neither the advocate depute nor the Advocate General supported the approach of the appeal court in the present case.
In Holland v HM Advocate 2005 1 SC (PC) 3 the appellant was convicted of a charge of assault and robbery at a house in Rutherglen.
The Crown failed to disclose that there were outstanding charges against the complainers, relating to drug dealing at the house in question.
The Privy Council held, at p 25, para 75, that information about these charges would have helped to complete the picture both of the complainers and of their milieu.
In other words, it would have had the potential to weaken the Crown case and so it should have been disclosed.
In his written submissions in the present appeal, the advocate depute gave examples of other situations where an outstanding charge against a Crown witness might materially weaken the Crown case or strengthen the defence case: if the witness denied he had ever been in trouble with the police, an outstanding charge could legitimately be put to him; similarly an outstanding charge might provide a potential motive for the witness giving untrue information in an attempt to curry favour with the authorities.
It is unnecessary to prolong the discussion since the Crown did not deny that the outstanding charges against Mr Stronach might have weakened the Crown case by casting doubt on his character or credibility.
It follows that, in accordance with Holland v HM Advocate 2005 1 SC (PC) 3 and HM Advocate v Murtagh 2009 SLT 1060, the failure of the Crown to disclose the outstanding charges to the defence was indeed incompatible with the appellants article 6(1) Convention rights.
At the hearing of the appeal, all this really went without saying and the only live issue was the actual significance, in the whole circumstances of the case, of the Crowns failure to disclose the charges.
The appeal court did not consider that matter, but they did, of course, consider the effect of the Crowns failure to disclose his previous convictions.
Having considered the circumstances, the appeal court were not persuaded that the failure of the Crown to disclose the previous convictions of Stronach to the appellants advisers resulted in an unfair trial and hence a miscarriage of justice.
They accordingly rejected the appellants appeal, so far as based on the Crowns failure to disclose Mr Stronachs previous convictions.
Standing that decision, at the hearing before this Court, Mr Jackson QC, who appeared for the appellant, had to argue that the failure to disclose Mr Stronachs outstanding charges made a significant difference.
In other words, the Court should conclude that there would have been a real possibility of a different outcome if the jury had been made aware, not only of Mr Stronachs previous convictions, but of the outstanding charges against him: in that event, the jury might reasonably have come to a different view as to whether the appellant was concerned in the supplying of the various drugs during the relevant period.
The case against the appellant was circumstantial.
It comprised, for the most part, evidence of observations by police officers who had conducted a surveillance operation over several weeks.
The evidence relating to Mr Stronachs statement concerned events of 24 November 2003.
DS Duncan Smith was not otherwise involved in the relevant events.
He gave evidence that, at about 12.45 pm on 24 November, when checking an address, he saw a blue Peugeot, registration number M810 UEW, parked at the appellants home at 58 Whitelees Road, Cumbernauld.
At 9.32 pm Mr Stronach was seen driving the Peugeot to a service station at Kilmarnock where he met up with a Ford Orion.
The two cars drove in convoy to Logan, near Cumnock.
There, in the car park of the Logangate Arms, the driver of the Orion spoke to Mr Stronach who did not leave his car.
Mr Stronach then drove up to Glasgow and on to the M8 where he was stopped by two police officers.
A Farm Foods bag, found in the glove compartment of the Peugeot, contained cocaine worth at least 30,000.
The police interviewed Mr Stronach on tape in the early hours of 25 November.
This is the interview which is the subject of the additional ground of appeal.
The tape recording of the entire interview was played to the jury during the evidence of DC McFadden.
In the course of the interview Mr Stronach said that he had been sent by a man called Stevie from Abronhill to sell the car.
The appellants first name is Steven and his home was in the Abronhill district of Cumbernauld.
The description of Stevie given by Mr Stronach fitted the appellant.
On 27 November the appellant left his home and drove to the house of Mr Stronachs girlfriend in Denny.
He then took Mr Stronachs passport to Airdrie Sheriff Court where it was used in connexion with his application for bail.
A receipt for the passport from the court dated 27 November was recovered from the appellants home.
Defence counsel took DC McFadden through the transcript of the interview in detail and was able to show that Mr Stronach had told many lies.
When he came to address the jury, the advocate depute accepted that he had clearly lied about his movements and about his involvement in drugs.
But the advocate depute suggested to the jury that it would be easier to accept those parts of the interview which were supported by other acceptable evidence.
In particular, he pointed to the evidence of DS Smith, who was not otherwise involved in the investigation, that the Peugeot which Mr Stronach was driving when stopped by the police had been parked outside the appellants house earlier the same day.
The advocate depute also referred to the evidence about the appellant collecting Mr Stronachs passport from his girlfriends house and taking it to Airdrie Sheriff Court in connexion with his application for bail on the drugs charges arising out of the recovery of the cocaine from the Peugeot.
The advocate depute argued that it would be a spectacular coincidence if this did not indicate that the appellant knew of Mr Stronachs involvement with drugs.
summarised the position in this way: In his supplementary report to the appeal court, Lord Bracadale, Taking into account the analysis of the interview of Mr Stronach carried out by [defence counsel] and the concessions made as to his credibility by the advocate depute, the jury would have been most likely to conclude that Mr Stronach did indeed tell many lies in the course of the interview.
They would, however, have been entitled to be selective in their view of the evidence of Mr Stronach.
Lord Bracadale then referred to Mr Stronachs previous convictions and added: In the circumstances outlined above it is difficult to see how the canvassing of the previous convictions of Mr Stronach before the jury would have bolstered the already largely successful attack on his credibility.
It is also difficult to see why knowledge of the previous convictions would have discouraged the jury from being selective in the approach to the contents of the interview of Mr Stronach.
Against that background, the appeal court were not persuaded that the failure of the Crown to disclose Mr Stronachs previous convictions resulted in an unfair trial and hence a miscarriage of justice.
For exactly the same reasons, I am not persuaded that, if defence counsel had been able to deploy Mr Stronachs outstanding charges as well as his previous convictions, this would have made any material difference.
More especially, it would not have affected the fact that the jury, who must have been well aware of the defects in Mr Stronachs statements, could still, with equal plausibility, have accepted those elements, and only those elements, in Mr Stronachs account which were corroborated by other acceptable evidence.
I am accordingly satisfied that there is no real possibility that the jury would have come to a different verdict on the four charges against the appellant if they had been made aware, not only of Mr Stronachs previous convictions, but of the outstanding charges against him as well.
There has therefore been no miscarriage of justice.
I would accordingly dismiss Mr Allisons appeal and remit the case to the appeal court to proceed as accords.
LORD HOPE
make the same order as he proposes.
The point of principle which this case raises is whether a failure to disclose outstanding charges against a Crown witness is incompatible with the accuseds article 6(1) Convention rights.
Had it not been for the passage in the opinion of the appeal court which Lord Rodger has quoted in para 7 of his judgment, I would not have thought that there was now any room for dispute on the point.
In McDonald v HM Advocate [2008] UKPC 46. 2008 SLT 993, para 51 Lord Rodger said that the decisions of the Board in Holland v HM Advocate [2005] UKPC D 1, 2005 SC (PC) 3 and Sinclair v HM Advocate [2005] UKPC D 2, 2005 SC (PC) 28 had answered this question.
Included within the general description of disclosable material are two classes of material, namely police statements of any witnesses on the Crown list and the previous convictions and outstanding charges relating to those witnesses.
I agree with Lord Rodger that the appeal must be dismissed, and I would
The rule of law on which that classification is based is that of fairness.
In McLeod v HM Advocate (No 2) 1998 JC 67, Lord Justice General Rodger said that our system of criminal procedure proceeds on the basis that the Crown have a duty at any time to disclose to the defence information which would tend to exculpate the accused.
In Sinclair v HM Advocate, para 33 I said that the prosecution is under a duty to disclose to the defence all material evidence in its possession for or against the accused, and that for this purpose any evidence which would tend to undermine the prosecution case or to assist the case for the defence is to be taken as material.
Sometimes the proposition is worded differently.
In HM Advocate v McDonald [2008] UKPC 46, 2008 SLT 993, para 50 Lord Rodger said: Put shortly, the Crown must disclose any statement of other material of which it is aware and which either materially weakens the Crown case or materially strengthens the defence case (disclosable material) Lord Bingham of Cornhill used the same formula when describing the golden rule in R v H and others [2004] UKHL 3, [2004] 2 AC 134, para 14 when he said: Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.
In HM Advocate v Murtagh [2009] UKPC 36, 2009 SLT 1060, para 11, I said, under reference to McLeod, Holland, Sinclair and McDonald, that it was well settled that the Crown must disclose any statements or other material of which it is aware which either materially weakens the Crown case or materially strengthens the case for the defence: see also Lord Rodger, para 48.
These formulations should however be regarded as expressing what has been described as the golden rule in shorthand.
After all, they are describing a decision about disclosure which must normally be taken before the trial.
It is a decision which will be based on an assumption as to what may happen in the future.
So the question the Crown must ask itself is what the possible effect would be likely to be if the material were to be disclosed.
As I said in R v Brown (Winston) [1998] AC 367, 374, it would be contrary to the principle of fairness for the prosecution to withhold from the defendant material which might undermine their case against him or which might assist his defence.
Lord Collins, referring to what I said in that case, also used the word might" in Murtagh, para 75.
That is the way Lord Rodger has expressed the position that the Crown has adopted in this case in para 14, above, and I respectfully agree with it.
As for the point that troubled the appeal court, it is true that a distinction can be drawn between previous convictions and outstanding charges.
But that does not mean that it can be assumed that information about outstanding charges of Crown witnesses can never affect their credibility.
It is enough, for the disclosure rule to apply to them as a class, that they might do so.
Of course the person concerned is presumed to be innocent until proved guilty.
But if he is asked the question whether he has ever been in trouble with the police, he must answer it.
A false or evasive answer might well be thought by a jury to undermine his credibility.
Other circumstances may be envisaged where the fact that charges have been brought against the witness may have that effect.
The application of the rule to outstanding charges, as the Crown accepts, is really just based on common sense and every day experience.
No one should now be in any doubt that the disclosure rule applies to them, or as to the reasons why this is so.
LORD WALKER
that he gives I would dismiss this appeal.
I am in full agreement with the judgment of Lord Rodger.
For the reasons I agree with the judgment of Lord Rodger and, for the reasons that he gives, I agree with the judgment of Lord Rodger and, for the reasons that he gives,
LORD BROWN
I too would dismiss this appeal.
LORD KERR
I too would dismiss this appeal.
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On 9 September 2004 the appellant, Steve Allison, was convicted after trial in the High Court at Glasgow of four contraventions of section 4(3)(b) of the Misuse of Drugs Act 1971.
In effect, he was found guilty of being concerned in the supplying of cocaine and three other controlled drugs.
The trial judge sentenced him to 8 years imprisonment.
The appellant appealed against both his conviction and sentence.
On 7 November 2008 the appeal court (Lord Osborne, Lady Paton and Lord Philip) refused his appeal against conviction, leaving his appeal against sentence to be heard on a date to be fixed.
One of his grounds of appeal, which was first advanced in an additional Note of Appeal, related to the record of a police interview of a John Stronach.
Mr Stronach had died before the trial and the Crown introduced the interview into evidence in accordance with the procedure in section 259(5) of the Criminal Procedure (Scotland) Act 1995.
Neither before nor during the trial did the Crown disclose to the defence that Mr Stronach had a number of previous convictions and that there were outstanding charges against him.
One of the outstanding cases was under the Misuse of Drugs Act and related to events covered by the trial and it was therefore known to the appellants legal advisers.
The Crown disclosed the previous convictions and the other outstanding charges only while the appellants appeal was pending before the appeal court.
This prompted the appellant to argue that the Crowns failure to disclose to the defence the existence of all the previous convictions and outstanding charges was incompatible with his article 6 Convention rights.
As a result, the defence had been unable to prepare and conduct their defence properly and appellant did not receive a fair trial.
When dismissing the appellants appeal, the appeal court accepted that the failure by the Crown to disclose Mr Stronachs previous convictions had been incompatible with the appellants article 6(1) rights.
Having considered the circumstances of the case, however, the appeal court was not persuaded that the Crowns failure had resulted in an unfair trial and hence a miscarriage of justice.
The appeal court drew a distinction between Mr Stronachs previous convictions and the outstanding charges against him.
Because of the presumption of innocence, the appeal court did not consider that the existence of outstanding charges could be of importance in connection with the preparation of a defence or with any challenge that might be mounted to the credibility of a witness.
The Supreme Court unanimously dismisses the appeal, with Lord Rodger delivering the leading judgment of the Court.
The Court disagrees with the appeal courts view in relation to outstanding charges.
It is, of course, trite that an individual charged with crime is presumed to be innocent until proven guilty.
But that is not to say that he has to be treated in all respects as if he were an innocent person against whom no charge has been brought (para 9).
The Privy Councils decision in Holland v HM Advocate 2005 1 SC (PC) 3, that the Crown should disclose outstanding charges of Crown witnesses of which they are aware, simply reflects the common sense position that just as in everyday life judges or jurors who have to assess the credibility of a witness may properly take into account not only the fact that the witness has been convicted of various offences, but also the fact that he has been charged with others.
This approach merely reflects what appears to have been recognised as the proper practice in Scottish courts for more than 170 years (para 10).
In the present case, the Crown does not deny that the outstanding charges against Mr Stronach might have weakened the Crown case by casting doubt on his character or credibility.
Indeed the Crown accepts that, in accordance with Holland and HM Advocate v Murtagh 2009 SLT 1060, the failure to disclose the outstanding charges to the defence was incompatible with the appellants article 6(1) rights (para 14).
The only live issue in the appeal, therefore, is the actual significance, in the whole circumstances of the case, of the Crowns failure to disclose the outstanding charges.
Having considered the circumstances of the case against the appellant, the Court is not persuaded that, if defence counsel had been able to deploy Mr Stronachs outstanding charges as well as his previous convictions, this would have made any material difference (para 22).
The Court is satisfied that there is no real possibility that the jury would have come to a different verdict on the charges against the appellant if they had been made aware, not only of Mr Stonachs previous convictions, but of the outstanding charges against him as well.
There has therefore been no miscarriage of justice (para 23).
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This appeal was heard by this Panel on 10 and 11 February 2010.
On 14 April 2010, while we were still considering our decision upon it, we were asked to consider applications for permission to appeal in two other cases in which foreign national prisoners had been detained pending their deportation after completing their sentences of imprisonment.
Walumba Lumba, a citizen of the Democratic Republic of Congo, sought permission to appeal from a decision of the Court of Appeal [2010] EWCA Civ 111, [2010] 1 WLR 2168, dismissing his appeal from a decision of Collins J [2008] EWHC 2090 (Admin) on his claim for judicial review to refuse him a declaration that his detention by the Secretary of State for the Home Department was unlawful, for a mandatory order for his release and for damages.
Mr Lumba together with Kadian Mighty, a citizen of Jamaica, also sought permission to appeal against the Court of Appeals decision dismissing their appeals from a decision of Davis J [2008] EWHC 3166 (Admin) to dismiss their claims for judicial review of the Secretary of States decision to detain them prior to their deportation and for damages for unlawful detention.
We decided to give permission to appeal in both cases, and a direction was given that the appeals should be heard by a panel of nine Justices.
As there was plainly a close relationship between the issues raised in those cases and this, we decided to withhold delivery of our judgments in this case until after the decision of nine Justices in the cases of Mr Lumba and Mr Mighty had been given.
Following the delivery of the judgment of their cases in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12, [2011] 2 WLR 671 on 11 March 2011 the parties were invited to make written submissions in light of that judgment.
Having received and considered their submissions, we are now in a position to give our judgment in this case.
The appellant is a national of Zimbabwe.
He entered the United Kingdom with leave as a visitor and was then given leave to remain for one year as a student.
But he overstayed his leave and, following his conviction for several criminal offences, he was sentenced to a period of imprisonment.
The Secretary of State decided that he should be deported.
On 8 March 2006 he was detained pending the making of a deportation order.
He remained in detention for 27 months until 13 June 2008 when he was released on bail by the Asylum and Immigration Tribunal.
On 12 November 2007 while still detained he sought judicial review by means of a mandatory order for his immediate release, a declaration that he was unlawfully detained and damages.
On 25 January 2008 Munby J granted a declaration that the appellant had been detained unlawfully for various distinct periods amounting to about 19 months and he gave directions for the assessment of damages: [2008] EWHC 98 (Admin).
But he declined to make an order for his release.
The Secretary of State appealed against the declaration.
The appellant appealed against the refusal of an order for his release, but he was later granted bail and that appeal was not proceeded with.
On 6 November 2008 the Court of Appeal (Laws, Keene and Longmore LJJ) allowed the Secretary of States appeal, holding that the appellants detention had been lawful throughout.
It remitted a new point which had been raised about the legality of the appellants detention during periods when Munby J held that he was lawfully detained for determination by the High Court: [2008] EWCA Civ 1204, [2009] 1 WLR 1527.
The appellant now appeals to this court against the decision by the Court of Appeal that he is not entitled to damages for false imprisonment.
Anonymity
The appellant has been referred to hitherto in these proceedings as SK (Zimbabwe).
Mr Tam QC for the respondent invited the court to maintain the order for the appellants anonymity in accordance with the practice for asylum cases recognised by the Court of Appeal.
He suggested that references in the appellants application for asylum might expose him to risk if he were to be returned to Zimbabwe.
Mr Husain for the appellant on the other hand did not ask for the order to be maintained.
He did not suggest that there were any reasons for concern in his case.
He said that he adopted a position of neutrality on this issue.
There is no doubt that the court has power to make an anonymity order to restrain publication of a person named in its proceedings.
In an extreme case, where he or his family are in peril of their lives or safety, this may help to secure his rights under articles 2 and 3 of the European Convention on Human Rights: In re Guardian News and Media Ltd [2010] UKSC 1, [2010] 2 WLR 325, para 26.
Those are the rights that are most likely to be relevant if he is seeking asylum.
It may also be made to secure that other persons, such as the press, show respect for his private and family life under article 8 of the Convention.
But in such cases the persons article 8 rights must be balanced against the article 10 rights of the press and the general public interest in his being identified: In re Guardian News and Media Ltd, para 76.
As the decision in that case shows, however, much will depend on the circumstances of each case.
It is no longer the case that all asylum seekers as a class are entitled to anonymity in this Court.
The making of such an order has to be justified.
I am not persuaded that an order for the appellants anonymity is justified in this case.
It must be recognised, of course, that lifting the order for his anonymity is not entirely without risk.
It is rarely possible to predict with complete confidence what risks a failed asylum seeker will face when he is returned to his home country.
But the position that the asylum seeker himself adopts will always be an important factor.
He is likely to be in the best position to assess the risks and to say whether or not he needs anonymity for his protection.
His counsel, Mr Husain, is very experienced in these matters and well able to form a sound judgment as to whether this is necessary or desirable.
I would have expected him to inform the court if there were any grounds at all for wishing to preserve the appellants anonymity.
Had he done so I would, of course, have given a good deal of weight to his submissions.
As it is, in view of the position that he has adopted on the appellants behalf, I am not persuaded that there is anything to prevent his being identified in this case.
I would set aside the anonymity order, and name the appellant as Shepherd Masimba Kambadzi.
The appellants case
The context for the appellants claim of damages for false imprisonment is provided by the provisions for the regulation of entry and stay in the United Kingdom which are set out in Part 1 of the Immigration Act 1971, as amended.
His case, put very simply, is that the discretionary power to detain that is vested in the Secretary of State by paragraphs 2(2) and (3) of Schedule 3 to the 1971 Act was not exercised throughout his period of detention in the way it should have been according to the published policy, that for periods when his detention was not reviewed in accordance with the policy it was not authorised and that he is entitled to damages for false imprisonment because his continued detention was unlawful during those periods.
A description of the statutory background and the system which, according to his own policy, the Secretary of State had undertaken to operate provides the starting point for an examination of this argument.
The facts of this case are best understood in the light of that background.
The statutory background
Section 4 of the 1971 Act provides that the power to give or refuse leave to enter the United Kingdom shall be exercised by immigration officers and that the power to give leave to remain in the United Kingdom, or to vary any leave, shall be exercised by the Secretary of State.
Section 3(5) renders a person who is not a British citizen liable to deportation if the Secretary of State deems his deportation to be conducive to the public good.
Section 4 gives effect to Schedule 2, paragraph 1(3) of which 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.
Section 5(3) of the 1971 Act gives effect to Schedule 3 with respect to the removal from the United Kingdom of persons against whom deportation orders are in force and the detention and control of persons in connection with deportation.
Paragraph 2 of Schedule 3 appears under the heading Detention or control pending deportation.
It provides in subparagraphs (2) and (3): (2) Where notice has been given to a person in accordance with regulations under section 105 of the Nationality, Immigration and Asylum Act 2002 (notice of decision) of a decision to make a deportation order against him, and he is not a detained person in pursuance of the sentence or order of a court, he may be detained under the authority of the Secretary of State pending the making of the deportation order. (3) Where a deportation order is in force against any person, he may be detained under the authority of the Secretary of State pending his removal or departure from the United Kingdom and if already detained by virtue of sub paragraph (1) or (2) above when the order is made, shall continue to be detained unless he is released on bail or the Secretary of State directs otherwise. [emphasis added]
At first sight, the effect of paragraph 2(3) of the Schedule is that, once notice has been given of a decision to make a deportation order against him, the person may lawfully be detained until he is removed or departs.
But, as Munby J observed in para 9 of his judgment, the powers conferred by those paragraphs are not unfettered.
In R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, 706 Woolf J said: Although the power which is given to the Secretary of State in paragraph 2 to detain individuals is not subject to any express limitation of time, I am quite satisfied that it is subject to limitations.
First of all, it can only authorise detention if the individual is being detained pending his removal.
It cannot be used for any other purpose.
Secondly, as the power is given in order to enable the machinery of deportation to be carried out, I regard the power of detention as being impliedly limited to a period which is reasonably necessary for that purpose.
The period which is reasonable will depend upon the circumstances of the particular case.
What is more, if there is a situation where it is apparent to the Secretary of State that he is not going to be able to operate the machinery provided in the Act for removing persons who are intended to be deported within a reasonable period, it seems to me that it would be wrong for the Secretary of State to exercise his power of detention.
In addition, I would regard it as implicit that the Secretary of State should exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time.
This statement was referred to with approval in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97.
Lord Browne Wilkinson said of the power to detain pending removal in the Hong Kong Ordinance at p 111A D: Their Lordships have no doubt that in conferring such a power to interfere with individual liberty, the legislature intended that such power could only be exercised reasonably and that accordingly it was implicitly so limited.
The principles enunciated by Woolf J in the Hardial Singh case [1984] 1 WLR 704 are statements of the limitations on a statutory power of detention pending removal.
In the absence of contrary indications in the statute which confers the power to detain pending removal their Lordships agree with the principles stated by Woolf J.
In A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68, para 8 Lord Bingham of Cornhill said that Woolf Js guidance in Hardial Singh had never been questioned.
In R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888, [2003] INLR 196, para 46, Dyson LJ said that counsel had correctly submitted that the following four principles (the Hardial Singh principles) emerge from it: (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 reasonable diligence and expedition to effect removal.
It was common ground in R (Lumba) v Secretary of State for the Home Department [2011] 2 WLR 671 that in this passage the effect of Woolf Js judgment was correctly summarised and it was approved as an accurate statement of the relevant principles: see, eg, paras 171 174.
As Lady Hale said at para 199, the detention must be for the statutory purposes of making or implementing a deportation order and for no other purpose.
The cases were reviewed by Lord Brown of Eaton under Heywood in R (Khadir) v Secretary of State for the Home Department [2005] UKHL 39, [2006] 1 AC 207, where the power to detain was exercised under Schedule 2 in the context of removing those refused leave to enter.
Lord Brown said that, while it went without saying that the longer the delay in effecting someones removal the more difficult it becomes to justify the continued detention meanwhile, that was by no means to say that he does not remain liable to detention: para 31.
In para 33 he said: To my mind the Hardial Singh line of cases says everything about the exercise of the power to detain (when it properly can be exercised and when it cannot); nothing about its existence.
This case is about the way in which the power to detain can properly be exercised, but it raises issues about the existence of the power too.
Does the Secretary of States failure to comply with his published policy for regular reviews to monitor changing circumstances deprive him of his executive power to continue to detain the detainee? Or does his power continue until a review shows that continued detention is no longer appropriate? I think that an examination of the Hardial Singh principles may help to resolve these questions, as they give rise to the need for these reviews.
But it is clear that the appellant cannot succeed in his claim by relying solely on those principles.
Mr Husain for the appellant submits that, while the Secretary of States decision to detain was lawful at its inception, it could become unlawful with the passage of time.
There was no challenge to the judges findings that throughout the period that the appellant was detained the Hardial Singh principles were complied with.
In the Court of Appeal Laws LJ said that the judge was entitled to be so satisfied: [2009] 1 WLR 1527, para 36.
But Mr Husains case is that the matter does not rest there.
He says that the Secretary of States published policy also regulates the existence of the power to continue detention, and that it must be followed in the absence of good reason not to do so.
The published policy
Before I come to the published policy I should mention that the Secretary of State was given power by the Immigration and Asylum Act 1999 to make rules for the regulation and management of detention centres.
Rule 9 of the Detention Centre Rules 2001 (SI 2001/238) provides: (1) Every detained person will be provided, by the Secretary of State, with written reasons for his detention at the time of his initial decision, and thereafter monthly. (2) The Secretary of State shall, within a reasonable time following any request to do so by a detained person, provide that person with an update on the progress of any relevant matter relating to him.
Rule 9(3) sets out a list of relevant matters for the purposes of that paragraph.
In the Court of Appeal, para 45, Keene LJ said that it was clearly implicit in the rule that the Secretary of State has to reconsider the justification for detention, month by month, in the light of changing circumstances.
At para 46 he said: The need for such regular reviews stems from the necessity for the Secretary of State to monitor changing circumstances in a given case lest his power to detain, on the principles set out in Ex p Hardial Singh [1984] 1 WLR 704, no longer exists.
Even if the power still exists, he has a discretion to exercise which he must also keep under review.
The importance of the detainee receiving regular statements of the reason why he is still detained is self evident: he needs to be in a position to know whether he can properly challenge the Secretary of States decision in the courts by way of an application for habeas corpus or judicial review or whether he can apply for bail on a meaningful basis.
So the requirements imposed by rule 9 cannot be treated lightly, especially when one is dealing with administrative detention which deprives a person of his liberty without a court order.
I agree with these observations, but I would prefer to apply them to the system of review that is set out in the policy rather than to the system required by rule 9(1).
This is because it seems to me that the 2001 Rules are concerned with the regulation and management of detention centres, not with the way the discretion to detain is exercised.
This is what the explanatory note says, and I think that Keene LJ was right to conclude in para 47 that rule 9(1) is not concerned with limiting the Secretary of States power to detain.
In any event the appellant was detained in prison conditions to which the Rules do not apply for the first 14 months of the period of his detention.
It was not until April 2007 that he was moved to a detention centre and the Rules applied to his case.
I come then to the Secretary of States policy.
It is to be found in a document issued by the Home Office called the Operations Enforcement Manual.
Various versions of this manual have been existence since at least 2001.
Mr Tam informed the Court that it was safe to proceed on the basis that the version used in these proceedings, which was downloaded in 2007, was the one that was in circulation while the appellant was being held in detention.
Chapter 38 of the manual is entitled Detention and Temporary Release.
It is here that the published policies regulating the exercise of the Secretary of States discretion, in accordance with the Hardial Singh principles, are set out.
Paragraph 38.1, headed Policy refers to the 1998 White Paper Fairer, Faster and Firmer: a Modern Approach to Immigration and Asylum (1998) (Cm 4018) in which it was said there was a presumption in favour of temporary admission or release and that detention would most usually be appropriate to effect removal, initially to establish a persons identity or basis of claim or where there is reason to believe that the person will fail to comply with any conditions attached to the grant of temporary admission or release.
It refers also to the 2002 White Paper Secure Borders, Safe Haven: Integration with Diversity in Modern Britain (2002) (Cm 5687) in which the principles stated in the 1998 White Paper were reiterated.
These criteria are said to represent the Governments stated policy on the use of detention.
There then follows this important acknowledgement of the significance of the policy in public law: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy. [emphasis added] Under the sub heading Use of Detention these words appear: In all cases detention must be used sparingly, and for the shortest period necessary.
Paragraph 38.3 is headed Factors influencing a decision to detain (excluding pre decision fast track cases).
It contains the following instructions: 1.
There is a presumption in favour of temporary admission or temporary release. 2.
There must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified. 3.
All reasonable alternatives to detention must be considered before detention is authorised. 4.
Once detention has been authorised it must be kept under close review to ensure that it continues to be justified. 5.
Each case must be considered on its individual merits.
Various factors which must be taken into account when considering the need for initial or continued detention are then set out.
They include, among other things, the likelihood of the person being removed and, if so, after what timescale; whether there is any history of previous absconding or of failure to comply with conditions of temporary release or bail; and whether there is a previous history of complying with the requirements of immigration control.
Paragraph 38.5 is headed Levels of authority for detention.
It states: Although the power in law to detain an illegal entrant rests with the [immigration officer], or the relevant non warranted immigration caseworker under the authority of the Secretary of State, in practice, an officer of at least [Chief Immigration Officer] rank, or a senior caseworker, must give authority.
Detention must then be reviewed at regular intervals (see 38.8).
Paragraph 38.5.2 states that the decision as to whether a person subject to deportation action should be detained under Immigration Act powers is taken by a senior caseworker in the Criminal Casework Directorate.
Paragraph 38.6 is headed Detention Forms.
The opening sentence states: The Government stated in the 1998 White Paper that written reasons for detention should be given in all cases at the time of detention and thereafter at monthly intervals. [emphasis in the original] The authority to detain is known as Form IS91.
Paragraph 38.6.1, which is headed Form IS91RA Risk Assessment, states: Once it has been identified that the person is one who should be detained, consideration should be given as to what, if any, level of risk that person may present whilst in detention. [Immigration officers] should undertake the checks detailed on form IS91RA part A Risk Factors (in advance, as far as possible, in a planned operation/visit when it is anticipated detention will be required.
Paragraph 38.6.2, which is headed Form IS9I Authority to Detain, states that once the Detainee Escorting and Population Management Unit has decided on the location for detention they will forward a form to the detaining office detailing the detention location and the assessment of risk, which is attached to form IS91 and served on the detaining agent.
If there is an alteration in risk factors a new form IS91 is issued.
Paragraph 38.8 is headed Detention Reviews.
It is on its provisions that the appellants argument that from time to time during the period of his detention he was detained unlawfully depends.
It identifies the grade of officer by whom initial detention must be authorised.
It then states: Continued detention in all cases of persons in sole detention under Immigration Act powers must be subject to administrative review at regular intervals.
At each review robust and formally documented consideration should be given to the removability of the detainee.
A formal and documented review of detention should be made after 24 hours by an Inspector and thereafter, as directed, at the 7, 14, 21 and 28 day points.
At the 14 day stage, or if circumstances change between weekly reviews an Inspector must conduct the review.
In [the Criminal Casework Directorate] an [higher executive officer] reviews detention up to 2 months. [A senior executive officer/Her Majestys inspector] reviews detention up to 4 months, the Assistant Director/Grade 7 up to 8 months, the Deputy Director up to 11 months and the Director up to 12 months and over. [emphasis in the original]
The facts
The appellant arrived in this country on 30 October 2002 as a visitor with six months leave to enter.
On 9 May 2003 he applied for leave to remain for two years as a student.
He was granted leave for one year until 30 April 2004.
After that date he remained here without leave.
On 9 December 2005 he was convicted on two counts of common assault and one count of sexual assault on a female.
He was sentenced to 12 months imprisonment and ordered to be registered as a sex offender for five years.
The judge did not recommend deportation.
But on 7 March 2006, the day before he was due to be released from prison after serving six months of his sentence including time spent on remand, the Secretary of State decided to make a deportation order against him.
He was detained under paragraph 2(2) of Schedule 3 to the 1971 Act and remained in custody at HMP Woodhill.
On 24 March 2006 the appellant claimed asylum.
On 11 April 2006 he asked the Secretary of State to move him from the prison to a detention centre, but his request was ignored.
On 18 April 2006 the Citizens Advice Bureau wrote two letters to the Secretary of State on his behalf.
In one it requested his urgent transfer to a detention centre.
In the other it appealed against the notice of decision to make a deportation order.
On 20 April 2006 and again on 3 May 2006 the Citizens Advice Bureau wrote to the Secretary of State on the appellants behalf contending that his continued detention was unlawful.
Munby J said in para 19(xvi) that these letters were clearly relying upon the Hardial Singh principles, but they went unanswered.
On 17 May 2006 the appellant, who had now been moved to HMP Lincoln, applied for bail.
His application was refused on 19 May 2006.
He applied for bail again on 15 September 2006.
On 19 September 2006 the Secretary of State refused his application for asylum.
Two days later, on 21 September 2006, the Asylum and Immigration Appeals Tribunal heard his appeals against the decision to deport, the refusal of asylum and a refusal to grant him relief on human rights grounds.
The tribunal refused bail, having noted that he had previously committed an offence under the Bail Act 1976.
On 4 October 2006 the Tribunal issued its decision dismissing all three appeals.
It stated that the appellant, believing that he had a poor case in resisting deportation, had sought to bolster his prospects of success by inventing a false claim and that the Secretary of State was right to conclude that his deportation was necessary as the offences which he had committed were serious and he had been assessed as presenting a medium risk of sexual or violent offending upon his release.
On 4 May 2007 he was moved from HMP Lincoln to Campsfield Immigration Removal Centre.
On 6 July 2007, following a hearing for the reconsideration of his appeals that had been ordered in January 2007, the tribunal refused his appeals following reconsideration.
On 24 August 2007 a deportation order was made and served on the appellant.
As the appellant is a national of Zimbabwe, it is to Zimbabwe that the Secretary of State proposes to deport him.
But two years previously on 4 August 2005 Collins J ordered by consent that removal of 30 Zimbabweans be suspended pending resolution of the issue in a test case, and the enforced return of failed Zimbabwean asylum seekers was suspended by the Secretary of State.
The position as at the date of the hearing of this appeal was that no enforced returns of Zimbabwean failed asylum seekers had taken place since that date.
By a letter dated 8 March 2006 the appellant was informed that he was to be detained and that his detention would be reviewed on a regular basis.
If the reviews had been carried out in accordance with the policy set out in paragraph 38.8 of the manual they would have occurred on 10 March 2006 (after 24 hours), 16 March 2006 (7 days), 23 March 2006 (14 days), 30 March 2006 (21 days) and 6 April 2006 (28 days).
They would have been carried out thereafter at monthly intervals.
As to the monthly reviews, the paragraph 38.8 provides that the first two monthly reviews must be carried out by a Higher Executive Officer, the next two by a Senior Executive Officer or one of Her Majestys Inspectors, the next four by an Assistant Director or Grade 7 civil servant, the next three by a Deputy Director and, in the case of the monthly reviews in the second year of detention, by a Director.
By the date of the hearing before Munby J the appellant had been entitled to 22 monthly reviews of the lawfulness of his detention in addition to the initial five reviews in the first month.
In the event he had had only 10 reviews up to the date of the hearing.
Of these, only six were conducted by officials of the required seniority.
Of these, two were disavowed by the Secretary of State as flawed by material errors of fact.
The details of the Secretary of States failure to carry out reviews at the required frequency and by the appropriate persons are set in the judgment of Munby J at paras 43 51 and 124 127 and in paras 11 13 of the judgment of the Court of Appeal.
The judge described the picture that emerged from his analysis of the Secretary of States file as deeply disturbing and profoundly shocking.
The Secretary of State has acknowledged that reviews should have been carried out.
He has not sought to justify or excuse in any way their absence in the appellants case.
He also accepts that these failures cannot be extenuated by the appellants own bad character or his previous conduct.
It is now known, following disclosures that were made prior to the hearing of R (WL) Congo v Secretary of State for the Home Department [2010] EWCA Civ 111, [2010] 1 WLR 2168 by the Court of Appeal, that from April 2006 to September 2008 the Home Office applied an unpublished detention policy to all foreign national prisoners following the completion of their prison sentences pending their deportation.
This followed the revelation on 25 April 2006 that during the past seven years over 1,000 such prisoners had been released from prison on completion of their sentences without being considered for deportation or deported.
Illegal migrants and paedophiles, a toxic mix.
The tabloids will go bananas.
The words of a contemporary diarist, Chris Mullin, Decline and Fall (2010), p 94, capture the atmosphere of disaster that was engendered among ministers by this announcement.
A few days later Charles Clarke was removed from his post and was replaced on 4 May 2006 as Home Secretary by Dr John Reid.
A practice of blanket detention was then instituted with a ruthless determination that precluded consideration of the merits of any individual case and was wholly at odds with the presumption in the published policy in favour of temporary admission or temporary release.
It remained in place until November 2007 when it was replaced by another unpublished policy which permitted release only in exceptional circumstances.
It was not until 9 September 2008 that a revised detention policy was published.
This course of events may explain the Secretary of States failure to carry out reviews at the required frequency and by the appropriate persons in the appellants case.
But his case has been conducted throughout so far on the basis that the policy that was being applied to him was the published policy.
The new issues that he has raised in light of these disclosures are presently stayed for determination by the High Court: see Laws LJ [2009] 1 WLR 1527, paras 42 44.
The issues
Munby J held that the appellant was unlawfully detained for the periods which he specified by reason of the Secretary of States failures to carry out the reviews required by rule 9(1) and the manual.
The basis for that finding is to be found in the following passage in his judgment [2008] EWHC 98 (Admin), para 68: Integral to the scheme endorsed by Parliament in its approval of rule 9(1) of the Detention Centre Rules 2001, and integral to the policy laid down by the Secretary of State in paragraph 38.8 of the Operations Enforcement Manual, is the principle that someone is not to be detained beyond a certain period without there being a review undertaken at regular intervals and moreover, as required by the Secretary of States policy, a review undertaken at increasing high levels of seniority within the Home Office as the period of detention grows.
Those reviews are fundamental to the propriety of the continuing detention, they are required in order to ensure that the continuing detention can still be justified in the light of current, and perhaps, changed circumstances, and they are, in my judgment, a necessary prerequisite to the continuing legality of the detention.
In para 122 he said that, to the extent that the appellants detention had been unlawful as a matter of domestic law it had also, by parity of reasoning, been unlawful by virtue of section 6 of the Human Rights Act 1998, and that there was nothing in the circumstances of his case to give him a remedy under section 6 where there would not be a remedy under domestic law.
So in practical terms the claim under article 5 of the Convention added nothing.
In the Court of Appeal Laws LJ said that the issue was one of statutory construction: [2009] 1 WLR 1527, para 21.
Ex p Hardial Singh showed that paragraph 2(2) of Schedule 3 to the 1971 Act was subject to implied limitations.
The question, as he saw it, was whether a further limitation was to be found such that on a proper construction of paragraph 2(2) the power was subject to compliance with the rule and the manual: para 23.
Summarising his conclusions, with which the other members of the court agreed, he said that compliance with the rules and the manual as such was not a condition precedent to a lawful decision pursuant to paragraph 2(2): para 25.
The statute did not make it so, nor did the common law or the Convention.
The Hardial Singh principles had to be complied with, but this was subject to control by the courts, principally by way of judicial review.
In that event the particular context would be the vindication of those principles, but in this case it was plain that the appellant was held in compliance with them throughout the period of his detention.
Mr Husain accepted that the Hardial Singh principles had throughout been complied with.
On the other hand there had been repeated failures to comply with the system of review set out in the manual.
Paragraph 38.8 of the manual states that continued detention in all cases under Immigration Act powers must be subject to administrative review at regular intervals.
These reviews were essential to the continued legality of the exercise by the Secretary of State of his discretion to detain.
He accepted that not all public law errors or policy defaults will render detention unlawful.
The question will always be whether the error is sufficiently linked to the decision to detain or to continue detention.
In this case the reviews required by the policy must be seen as the authority on which continued legality of the detention rests.
He accepted that if his case were to succeed at common law his case under article 5 would not add anything.
But in case it were necessary to address this argument he submitted that the appellant was entitled to the implied protections prescribed by article 5(1)(f).
There had been a clear breach of national procedural rules because the Secretary of State had failed to comply with the rules and with the published policy, which he was required to follow unless there were good reasons not to do so.
This was irrespective of whether the requirements that had been breached were conditions precedent to the exercise of the power to detain.
As to the effect of the decision in Lumba, Mr Husain submitted that it was now clear that it was not a defence for the Secretary of State to show that the detention complied with the Hardial Singh principles and the requirements of the statute.
Nor was it a defence for him to show that had the public law error not been committed the detainee would have been detained in any event.
The serial failure to conduct the proper detention reviews was a material public law error, as it was essential to the legality of a temporarily unlimited and otherwise unchecked power to continue detention.
The initial detention authority by the Secretary of States executive order was to be contrasted with orders to detain by a court.
The reviews were an important safeguard.
The failure to conduct them amounted, on the facts of this case, to an abuse of the power to detain.
For the Secretary of State Mr Tam accepted that the Hardial Singh principles imposed implied limits on the exercise of the powers of detention that were set out in the statute.
But he submitted that there was no provision or rule that limited the Secretary of States authority to detain in any other way.
Things had not been done, probably in violation of his duty in public law, for which legal remedies might have been available.
But the claim in this case was a very specific one.
The question was not whether there had been a breach of the law.
The appellant was seeking damages for false imprisonment.
There was no basis for such a claim, as the detention was at all times within the original authority to detain under the powers that were to be found in the statute.
That would have been plain from the documents that were available in his case had his continued detention had been challenged by judicial review.
In the light of the judgments in Lumba, the central question for the court was whether each relevant breach of the procedural requirement to review detention was material in public law terms, that is to say whether it bore on and was relevant to the decision to detain.
There was a difference between a requirement that was procedural only and a failure to apply a substantive rule which was capable of affecting the decision to detain or not to detain.
A pure omission to review detention at the times specified by the policy was not material, at least in a case such as this where, had the review been carried out, the application of the substantive rules would have resulted in a decision to continue detention.
But he accepted that if that submission was rejected, an omission to make a new decision by way of a detention review which was material in the Lumba sense must inevitably have the effect that the next period of detention was not authorised and the tort of false imprisonment was made out.
The common law remedy
The issue as to whether the appellant is entitled to damages, as focussed by these arguments, is a narrow one.
It is common ground that the appellant was lawfully detained at the outset, as his detention was with a view to the making of a deportation order.
There was a serious breakdown thereafter in the system of reviews mandated by the manual.
But it is also common ground, as the judge found, that the Hardial Singh principles were complied with throughout the entire period.
As Mr Tam points out, the continued detention could at all times have been justified by the Secretary of State had he been faced with an application for judicial review.
Until 24 August 2007, when the deportation order was made and served on the appellant, the appellant was being detained under paragraph 2(2) pending the making of a deportation order.
From that date onwards he was being detained under paragraph 2(3) because he had not been released on bail and the Secretary of State had not directed otherwise.
On the other hand Mr Tam accepts that the breakdown in the system was a breach of a duty owed by the Secretary of State to the appellant in public law.
The appellant could have obtained a mandatory order at any time requiring the reviews to be carried out if he had asked for this.
The focus of attention therefore is on the authority to detain.
Is the review essential to the legality of the continued detention? Or is it a sufficient answer to the claim for damages for the Secretary of State to say that, unless and until he directed otherwise, the authority to detain is there throughout in terms of the statute? I have not found this an easy question to answer.
I do not accept the Court of Appeals view that the question is one of statutory construction.
We are dealing in this case with what the Secretary of State agrees are public law duties which are not set out in the statute.
Of course it is for the courts, not the Secretary of State, to say what the effect of the statements in the manual actually is.
But there is a substantial body of authority to the effect that under domestic public law the Secretary of State is generally obliged to follow his published detention policy.
In R (Saadi) v Secretary of State for the Home Department [2001] EWCA Civ 1512, [2002] 1 WLR 356, para 7, Lord Phillips of Worth Matravers MR, delivering the judgment of the court, said that lawful exercise of statutory powers can be restricted, according to established principles of public law, by government policy and the legitimate expectation to which such policy gives rise.
In Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139, para 54 the Master of the Rolls, again delivering the judgment of the court, said: Our domestic law comprehends both the provisions of Schedule 2 to the Immigration Act 1971 and the Secretary of States published policy, which, under principles of public law, he is obliged to follow.
In D v Home Office (Bail for Immigration Detainees intervening) [2005] EWCA Civ 38, [2006] 1 WLR 1003, para 132 Brooke LJ said that what the law requires is that the policies for administrative detention are published and that immigration officers do not stray outside the four corners of those policies when taking decisions in individual cases.
Wade and Forsyth, Administrative Law 10th ed, (2009), pp 315 316 states that the principle that policy must be consistently applied is not in doubt and that the courts now expect government departments to honour their statements of policy.
Policy is not law, so it may be departed from if a good reason can be shown.
But it has not been suggested that there was a good reason for the failure of officials of the required seniority to review the detention in this case and to do so in accordance with the prescribed timetable.
Mr Husain submitted that the effect of the statements in the manual was not just to create a legitimate expectation that the reviews would be carried out.
He said that, as the discretion to detain under the statute had to be exercised reasonably according to the Hardial Singh principles, the authority for continued detention was dependent on decisions taken each time it was reviewed.
Moreover an unlawful detention was not rendered lawful because there were circumstances that might have made it lawful.
He sought support for that proposition in Clarke LJs observation in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 666, that the detention in that case was unlawful because it was not reviewed until some event occurred to make it lawful.
But that was a case where the plaintiff was detained under the Police and Criminal Evidence Act 1984, section 34(1) of which provided that a person arrested for an offence shall not be kept in detention except in accordance with the provisions of Part IV of the Act.
Section 40, which was in Part IV, required reviews of the detention of person police custody at stated intervals.
It was clear, as Clarke LJ said in the passage at p 666 that Mr Husain referred to, that the plaintiff was not being detained in accordance with the relevant provisions of the Act.
As Mr Husain pointed out, the Secretary of State accepts that where the authorising statute provides that a particular procedural step is a precondition to the legality of the detention a failure to carry out the required step means that the detention is unlawful and entitles the detainee to damages for false imprisonment.
That is what was decided in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662.
But that case, as Mr Tam put it, was all about the statute.
The situation in this case is quite different, as there is no mention of the need for reviews in relevant paragraphs in the authorising statute.
I agree with both Laws LJ in the Court of Appeal, para 25, and Lord Brown (see para 100, below), that Roberts provides little, if any, assistance on the effect of the Secretary of States failure to comply with his published policy.
On the other hand the appellants argument that where the published policy is departed from the detention is unlawful finds some support in Nadarajah v Secretary of State for the Home Department [2004] INLR 139.
Two appeals were before the court in that case.
The appellants had both been detained on the ground that their removal from the United Kingdom was imminent.
The Secretary of States published policy was not to treat removal as imminent once proceedings which challenged the right to remove had been initiated.
It was also the policy of the immigration service when considering the imminence of removal to disregard information from those acting for asylum seekers that proceedings were about to be initiated.
But this policy had not been made public and it was held that the Secretary of State could not rely on it.
In para 54 the Master of the Rolls, Lord Phillips of Worth Matravers, said that he was obliged to follow his published policy.
Asking itself the question whether the appellants detention had been lawful, the court held that it was not.
In para 68, referring to Nadarajahs case, Lord Phillips said: The only basis upon which the Immigration Service could treat his removal as imminent was by applying that aspect of the Secretary of States policy which had not been made public, namely that no regard would be paid to an intimation that judicial review proceedings would be instituted.
The Secretary of State cannot rely upon this aspect of his policy as rendering lawful that which was, on the face of it, at odds with his policy, as made public.
In other words, it was unlawful for him to depart from his published policy unless there were good reasons for doing so.
In para 72, referring to the case of the other appellant, he said that his detention was unlawful for the same reason as Nadarajahs detention was unlawful.
In consequence of that decision he was entitled to damages: see para 15.
In Mohammed Holgate v Duke [1984] AC 437, 443, Lord Diplock said that the Wednesbury principles are applicable not only in proceedings for judicial review but also for the purpose of founding a cause of action at common law for trespass by false imprisonment.
It may be that not every public law error will justify resort to the common law remedy in every case.
But I do not think that it is necessary to show that there was bad faith or that the discretion was exercised for an improper purpose in the present context.
Where there is an executive discretion to detain someone without limit of time, the right to liberty demands that the cause of action should be available if the discretion has not been lawfully exercised.
In R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58 Lord Bridge of Harwich said that the tort of false imprisonment has two ingredients: the fact of imprisonment and the absence of lawful authority to justify it.
The requirements of the 1971 Act and Hardial Singh principles are not the only applicable law with which the Secretary of State must comply.
Nadarajahs case shows that lawful authority for an executive power of detention may also be absent when there is a departure from the executives published policy.
As Lord Brown points out, the published policy in Nadarajahs case entitled the detainee to release because it narrowed the grounds on which the power of detention was exercisable: para 107, below.
In this case the policy was different because it was concerned not with the grounds for detention but with procedure.
All it did was to provide that the detention would be reviewed by designated officers at regular intervals.
Of course I agree with him that the policies are different.
But I do not think that this difference means that Nadarajah offers no assistance in this case.
On the contrary, it seems to me to indicate that a failure by the executive to adhere to its published policy without good reason can amount to an abuse of power which renders the detention itself unlawful.
I use this expression to describe a breach of public law which bears directly on the discretionary power that the executive is purporting to exercise.
The importance of the principle that the executive must act within the law was emphasised by Lord Bingham in his seminal Sir David Williams lecture, The Rule of Law [2007] CLJ 67, 72, when he said: The broader and more loosely textured a discretion is, whether conferred on an official or a judge, the greater the scope for subjectivity and hence for arbitrariness, which is the antithesis of the rule of law.
This sub rule requires that a discretion should ordinarily be narrowly defined and its exercise capable of reasoned justification.
That is a proposition which can be applied to this case.
The published policy narrowed the power of executive detention by requiring that it be reviewed regularly.
This was necessary to meet the objection that, unless it was implemented in accordance with a published policy, the power of executive detention was being applied in a manner that was arbitrary.
So it was an abuse of the power for the detainee to be detained without his detention being reviewed at regular intervals.
Applying the test proposed by Lord Dyson in Lumba, it was an error which bore on and was relevant to the decision to detain throughout the period when the reviews should have been carried out: [2011] 2 WLR 671, para 68.
The authorities relied on by the Secretary of State
Mr Tam referred to a series of cases where detention was held not to be unlawful despite errors of public law.
In R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58 the appellant Hague had been segregated under a procedure which was not lawful which it was claimed amounted to false imprisonment, and another prisoner named Weldon claimed that he had been falsely imprisoned and battered by certain prison officers.
Those claims were rejected, in short because the sentence of imprisonment provided lawful authority for the prisoners detention, that this could not be read as subject to any implied term with respect to the prison rules and that an otherwise lawful detention was not rendered unlawful by the conditions of detention.
Mr Tam said that it was authority for the view that a public law error made in relation to a persons detention may entitle the person to seek judicial review but does not necessarily give rise to a remedy in damages.
I would not quarrel with that proposition, but it begs the question whether the present case is one where a remedy in damages is available.
Cullen v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 39, [2003] 1 WLR 1763 was a case about the right of access to a solicitor.
The appellant was arrested under section 14(1)(b) of the Prevention of Terrorism (Temporary Provisions) Act 1982.
He asked to see a solicitor but his right to do so was deferred while he was in police custody.
In contravention of the relevant statute the deferral was made before the appellant requested access and he was not given the reasons for delaying access.
He claimed damages for false imprisonment.
Lord Hutton said in para 48 that he saw no substance in this submission as he had been lawfully arrested and after his arrest was lawfully detained under the provisions of the statute.
The premature authorisation and the breach of the requirement for reasons to be given did not render the detention unlawful.
Lord Millett said in para 61 that compliance was not a condition of lawful detention.
This decision indicates that the critical question is likely to be whether breaches of this kind undermine the lawful authority for the detention.
On the view that was taken of the statute that applied in that case, they did not.
The facts of this case, which concerns the Secretary of States discretion to maintain detention in accordance with his published policy, are quite different.
In R (Saadi) v Secretary of State for the Home Department [2002] UKHL 41, [2002] 1 WLR 3131, which was concerned with the lawfulness of detention under paragraphs 2(1) and 16(1) of Schedule 2 to the 1971 Act, Lord Slynn of Hadley said at para 48 that the Secretary of States giving of no or wrong reasons did not affect the legality of the detention.
Mr Tam said that no hint was given in that case that this failure gave rise to a problem as to its legality.
But Collins J said that it was not argued in that case that the muddle about reasons rendered the decision to detain unlawful: [2001] EWCA Civ 1512, [2002] 1 WLR 356, para 16.
Nor was the effect of a failure to review in issue.
In R (Munjaz) v Mersey Care NHS Trust [2003] EWCA Civ 1036, [2004] QB 395 two psychiatric patients challenged the lawfulness of the policy on seclusion that was applied in their respective hospitals.
Referring to what was decided in R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, Hale LJ said that a person who had been deprived of his liberty in pursuance of a lawful power to detain cannot through the medium of a tort of false imprisonment complain about the conditions in which he is detained, at least by those who are lawfully detaining him: para 49.
There had been a breach of the statutory code of practice, but this did not amount to false imprisonment: para 82.
Mr Tam said that these observations supported his argument.
But he accepts that Hague, Cullen and Munjaz were not concerned with the question whether the person concerned should be detained at all, but only with the conditions of detention (Hague and Munjaz) or the ancillary matter of legal advice while in detention (Cullen).
It should also be noted that in Munjaz, para 77, Hale LJ said that if an individual decision has been taken unlawfully in public law terms and results in actions which are tortious if taken without lawful excuse, then tortious remedies will be available.
The context is different, of course.
And the claim for a remedy under the tort of false imprisonment was rejected.
But her observation is entirely consistent with what was said in Nadarajah v Secretary of State for the Home Department: see para 39, above.
The question as to the lawfulness of continued detention was directly in issue in R (Walker) v Secretary of State for Justice (Parole Board intervening) [2009] UKHL 22, [2010] 1 AC 553.
That case arose out of the Secretary of States failure to provide the systems and resources that prisoners serving indeterminate sentences for public protection needed to demonstrate to the Parole Board by the time of the expiry of their tariff periods that it was not longer necessary for the protection of the public for them to remain in detention.
There was a breach of the Secretary of States public law duty to provide these facilities.
But, as I noted in para 5, counsel for the prisoners accepted that they were unable to challenge the legality of the warrant which authorised their continued detention.
That provides the context for the passage in the speech of Lord Brown of Eaton under Heywood in paras 36 and 37 on which Mr Tam relies, where he said: 36.
It is one thing to say as indeed is now undisputed that the Secretary of State was in breach (even systemic breach) of his public law duty to provide such courses as would enable IPP prisoners to demonstrate their safety for release and, to some extent at least, course enabling them to reduce the risk they pose, duties inherent in the legislation (the legislations underlying premise as Laws LJ described it [2008] 1 All ER 138, paras 24, 50); quite another to say that such breach of duty results in detention being unlawful.
I respectfully agree with the Court of Appeal that it does not. 37.
The remedy for such breach of public law duty indeed the only remedy, inadequate in certain respects it may be is declaratory relief condemning the Secretary of States failures and indicating that he is obliged to do more Past failures do not sound in
damages
In my own speech in Walker, para 6, I said that in terms of the statute the detention was lawful until the Parole board gave a direction for the prisoners release.
The default position was that until the direction was given the protection of the public required that the prisoner should be confined.
I do not think that Lord Browns observations can be applied to the different statutory regime that we are concerned with it this case.
I agree with him that Walker is no more helpful to the respondents case than Roberts is to the appellant: para 104, below.
For the same reason I do not think that the decision in Dunn v Parole Board [2008] EWCA Civ 374, [2009] 1 WLR 728, where the Court of Appeal applied the same approach where the Parole Board had failed to conduct a timely review and the appellant remained in detention as authorised by the statute, is of any assistance in this case.
Discussion
I cannot find in these authorities anything that requires us to hold that the claim for damages for false imprisonment is untenable or which points conclusively in the other direction.
I would start therefore with principle that must lie at the heart of any discussion as to whether a persons detention can be justified.
The liberty of the subject can be interfered with only upon grounds that the court will uphold as lawful: R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19, 35; see also Tam Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97, per Lord Browne Wilkinson at p 111B.
In Ex p Evans (No 2), p 42, Lord Hobhouse of Woodborough said: Imprisonment involves the infringement of a legally protected right and therefore must be justified.
If it cannot be lawfully justified, it is no defence for the defendant to say that he believed that he could justify it.
We are dealing in this case with the power of executive detention under the 1971 Act.
It depends on the exercise of a discretion, not on a warrant for detention issued by any court.
That is why the manner of its exercise was so carefully qualified by Woolf J in Hardial Singh.
The power to detain must be exercised reasonably and in a manner which is not arbitrary.
If it is not, the detention cannot be lawfully justified.
The initial decision to detain will be held to be lawful if it is made under the authority of the Secretary of State pending the making of a deportation order.
But it cannot be asserted, in the light of what was said in Hardial Singh, that the initial decision renders continued and indefinite detention lawful until the deportation order is made whatever the circumstances.
Nor can it be said that it has that effect after the deportation order is made pending the persons removal from the United Kingdom when the person is being detained under paragraph 2(3).
The authority that stems from the initial decision is not unqualified.
The question then is what is to be made of the Secretary of States public law duty to give effect to his published policy.
In my opinion the answer to that question will always be fact sensitive.
In this case we are dealing with an executive act which interferes with personal liberty.
So one must ask whether the published policy is sufficiently closely related to the authority to detain to provide a further qualification of the discretion that he has under the statute.
Unlike the 2001 Rules, chapter 38 of the manual is concerned with the lawfulness of the detention.
That is made clear in the opening paragraphs: see para 18, above.
It has been designed to give practical effect to the Hardial Singh principles to meet the requirement that, to be lawful, the measures taken must be transparent and not arbitrary.
It contains a set of instructions with which officials are expected to comply: see Schedule 2 to the 1971 Act, para 1(3).
As I see it, the principles and the instructions in the manual go hand in hand.
As Munby J said in para 68, the reviews are fundamental to the propriety of continued detention.
The instructions are the means by which, in accordance with his published policy, the Secretary of State gives effect to the principles.
They are not only commendable; they are necessary.
The relationship of the review to the exercise of the authority is very close.
They too go hand in hand.
If the system works as it should, authorisation for continued detention is to be found in the decision taken at each review.
References to the authority to detain in the forms that were issued in the appellants case illustrate this point.
Form IS 151F, which is headed Monthly Progress Report to Detainees, concludes at the top of page 3 of 3 with the words Authority to maintain detention given, on which the officers comments are invited and beneath which his decision is recorded.
The discretion to continue detention must, of course, be exercised in accordance with the principles.
But it must also be exercised in accordance with the policy stated in the manual.
The timetable which paragraph 38.8 sets out is an essential part of the process.
These are limitations on the way the discretion may be exercised.
Following the guidance that Nadarajah v Secretary of State for the Home Department [2004] INLR 139 provides (see paras 39 and 40, above), I would hold that if they are breached without good reason continued detention is unlawful.
In principle it must follow that tortious remedies will be available, including the remedy of damages.
There remains however the question of causation: what if the Secretary of State is able to show that, despite the failure to give effect to the policy, continued detention was nevertheless compatible with the Hardial Singh principles? Is it an answer for the Secretary of State to say that, as he could have authorised continued detention had lawful procedures been followed, no tort was committed? Is there room in such a situation for an award of damages?
These questions are brought into sharp focus in this case.
Mr Husain accepts that the Secretary of State would have been able to justify the need for the appellants detention under the Hardial Singh principles at all times had he been required to do so.
But in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 667, Clarke LJ said that it was nothing to the point to say that the detention would have been lawful if a review had been carried out or that there were grounds which would have justified detention.
The statutory requirement with which he was dealing in that case existed in order to ensure that members of the public were not detained except in certain defined circumstances.
In all other circumstances, he said, every member of the public is entitled to his liberty.
I would apply that reasoning to this case.
It is true that the reviews were not required by the statute.
But there was a public law duty to give effect to the provisions about reviews in the manual.
If the reviews were not carried out unless for good reason, which is not suggested in this case continued detention was not authorised by the initial decision to detain.
It is no defence for the Secretary of State to say that there were good grounds for detaining the appellant anyway.
Unless the authority to detain was renewed under the powers conferred by the statute he was entitled to his liberty.
The decision in Lumba leads inevitably to this conclusion.
As for the question of damages, the decision on this point in Lumba was that the appellants were entitled to no more than nominal damages as their detention was at all times justifiable.
But this cannot be assumed to be so in every case, and in this case the facts have still to be established.
So I would not foreclose entirely the possibility that the appellant in this case is entitled to more than a purely nominal award.
The public law duty exists for the protection of everyone, from the most undeserving to the most vulnerable.
The detention of children, those suffering from physical or mental illness and those who have been traumatised by torture are perhaps the most obvious examples.
Paragraph 38.8 states that children are reviewed on a regular basis to ensure that the decision to detain is based on the current circumstances of the case and that detention remains appropriate.
This sentence makes explicit in the case of children what must be taken to be the purpose of the reviews in all cases.
The difference is that the system provides for more frequent reviews in the case of children.
In any event, false imprisonment is a trespass against the person which is actionable without proof of special damage: Murray v Ministry of Defence [1988] 1 WLR 692, 701 702, per Lord Griffiths; Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, 666 669, per Lord Clarke.
There may well be issues as to quantum in cases of that kind.
As Smith LJ said in Iqbal v Prison Officers Association [2009] EWCA Civ 1312, [2010] QB 732, para 83, an award of damages for false imprisonment is based on normal compensatory principles: see also Langley v Liverpool City Council [2005] EWCA Civ 1173, [2006] 1 WLR 375, para 70.
It may be that the conclusion in this case will be that an award of nominal damages is all that is needed to recognise that the appellants fundamental rights have been breached.
But that does not affect the issue of principle.
I would hold therefore that the appellant is entitled to the remedy he seeks at common law.
There will, of course, have to be an inquiry as to the quantum of damages if the amount is not agreed.
Article 5
The appellants alternative claim is that he has an enforceable right to compensation under article 5(5) of the Convention.
He maintains that his detention did not satisfy the requirements of article 5(1)(f).
It was not lawful, and it was not in accordance with a procedure prescribed by law.
He relies on what the Grand Chamber said in Saadi v United Kingdom (2008) 47 EHRR 17, para 74, and in A v United Kingdom (2009) 49 EHRR 29; Application No 3455/05, 19 February 2009, para 164 as to what was needed to avoid the detention being branded as arbitrary.
The protections referred to in these passages are, as Mr Husain points out, redolent of the Hardial Singh principles.
It is agreed on both sides that the article 5 claim adds nothing to the claim at common law if that claim succeeds: see R (I) v Secretary of State for the Home Department [2003] INLR 196, per Simon Brown LJ at para 8; R (Munjaz) v Mersey Care NHS Trust [2004] 2 QB 395, per Hale LJ at para 70.
Indeed there are reasons for thinking that the Hardial Singh principles are in some respects more favourable to detainees than Strasbourg requires, as Lord Brown indicates: see para 94, below; Chahal v United Kingdom (1996) 23 EHRR 413, para 112; Saadi v United Kingdom, para 72.
So, as I would hold that the appellant succeeds on his common law claim, I propose to say no more about this alternative, except to note that article 5(5) gives a right to compensation where there has been a contravention of any of the provisions of the article.
This would have provided the appellant with a remedy if, although there was a breach of the public law duty to conduct reviews, he was not entitled to claim damages at common law for false imprisonment.
As it is, for the reasons I have given, I consider that he is entitled to that remedy and at least to nominal damages.
Conclusion
For these reasons, and for those given by Lady Hale and Lord Kerr with which I am in full agreement, I would allow the appeal.
I would restore the declaration that was made by Munby J that the appellants detention by the Secretary of State was unlawful for the periods stated by him, except for a period of one month beginning on 6 December 2007 when the only defect in the decision to continue detention was that the review was carried out by an official of the wrong grade: see R (Lumba v Secretary of State for the Home Department [2011] 2 WLR 671, para 68 per Lord Dyson.
I would also restore his orders as to the assessment, if the parties are not agreed, of the quantum of damages.
LADY HALE
Mr Shepherd Kambadzi may not be a very nice person.
He is certainly not a very good person.
He has overstayed his welcome in this country for many years.
He has abused our hospitality by committing assaults and sexual assault.
It is not surprising that the Home Secretary wishes to deport him.
But in R (Roberts) v Parole Board [2005] UKHL 45, [2005] 2 AC 738, para 84, Lord Steyn quoted the well known remark of Justice Frankfurter in United States v Rabinowitz (1950) 339 US 56, p 69, that It is a fair summary of history to say that the safeguards of liberty have frequently been forged in controversies involving not very nice people.
Lord Steyn continued: Even the most wicked of men are entitled to justice at the hands of the state.
And I doubt whether Mr Kambadzi is the most wicked of men.
He had come to the end of the time he was due to serve as a result of his crimes.
He may even have been expecting to be released from prison on 8 March 2006.
If so, it must have come as a cruel shock when he was kept in prison (indeed for many months in the same prison where he had been serving his sentence), because the Home Secretary had decided to make a deportation order against him and at the same time to exercise the power to authorise his detention under paragraph 2(2) of Schedule 3 to the Immigration Act 1971.
This gives the Secretary of State an apparently open ended power to authorise the detention of a person who has been served with a notice of intention to deport pending the making of the deportation order.
The order was in fact made more than a year later, after which Mr Kambadzi was detained under paragraph 2(3) of the Schedule, which again gives an apparently open ended power to authorise detention pending his removal or departure from the United Kingdom.
No court had ordered or authorised or approved this detention.
The trial judge who sentenced Mr Kambadzi for his crimes had not even recommended it.
A Government official decided to lock him up, on the face of it until a Government official decided to take the next step.
But no one suggests that paragraph 2 of Schedule 3 gives the Government an unlimited power to authorise a persons indefinite detention without trial.
Everyone knows that there are limits.
Everyone also knows that if those limits are exceeded, the detention becomes unlawful.
Everyone also knows that a person who is unlawfully detained is entitled, not only to be released, but to claim compensation for having been unlawfully detained.
The person responsible for the unlawful detention is liable even if he acted in good faith and without any negligence: see R v Governor of Brockhill Prison, Ex p Evans (No 2) [2001] 2 AC 19 (compare the statutory protection given to those who detain mentally disordered or incapacitated people under the Mental Health Act 1983 or the Mental Capacity Act 2005: see s 139(1) and Schedule A1, para 3 respectively).
All this is Hornbook law.
The only question, therefore, is what the limits are to the Home Secretarys powers.
In particular, are there procedural as well as substantive limits? The substantive limits were established as long ago as 1983, in the powerful extempore judgment of Woolf J in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704, and approved by the Privy Council in Tan Te Lam v Superintendent of the Tai A Chau Detention Centre [1997] AC 97.
The detention has to be pending the deportation order or the removal, as the case may be, and cannot therefore be imposed for any other purpose.
If it becomes clear that the purpose cannot be carried out, the detention becomes unlawful.
In Tan Te Lam, above, the detention of these particular Vietnamese boat people became unlawful once it was clear that the Vietnamese Government did not regard them as Vietnamese nationals and would not have them back.
It was also held in Hardial Singh that the Secretary of State cannot detain a person for longer than is reasonable in all the circumstances.
This can depend upon the reasons for the delay.
The Secretary of State has to exercise all reasonable expedition to ensure that the steps are taken which will be necessary to ensure the removal of the individual within a reasonable time: Hardial Singh, at p 706F.
If the Secretary of State is dragging his feet, then the period may become unreasonable.
But if the detainee is unjustifiably stringing things out, for example by launching an obviously bogus asylum claim, it will not.
In this case, Munby J held that the Home Secretary did indeed intend to deport Mr Kambadzi and that this was still a possibility.
He had been detained for a very long time (22 months by the time that Munby J decided the case in January 2008).
But for most of that time he had been pursuing a claim for asylum, which was clearly bogus, through all possible appellate routes.
Thereafter he could not be deported because the Home Secretary had temporarily suspended removals to Zimbabwe.
But there remained some prospect of achieving this.
Hence the detention was substantively justified in accordance with the Hardial Singh principles.
But Munby J held that the detention had, for much of those 22 months, been unlawful because of the failure of the Secretary of States officials to conduct the regular reviews laid down in his own Operations Enforcement Manual.
No one doubts that the failure to conduct these reviews was unlawful, and that the Secretary of State could have been obliged by judicial review proceedings to comply with his stated policy, unless he had a good reason not to do so in the individual case: see the Court of Appeals judgment in this case at [2009] EWCA Civ 1204, [2009] 1 WLR 1527, para 25.
The issue is whether that unlawful failure has also rendered the detention unlawful.
The Manual seemed to think that it did.
It stated that the purpose of the reviews was to ensure that the detention continued to be justified: see para 38.3.4.
Further than that, it declared, at para 38.1: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy.
The Court of Appeal took the same view in Nadarajah v Secretary of State for the Home Department [2003] EWCA Civ 1768, [2004] INLR 139.
At para 54, Lord Phillips stated that: Our domestic law comprehends both the provisions of Schedule 2 to the Immigration Act 1971 and the Secretary of States published policy, which, under principles of public law, he is obliged to follow.
The failure to follow that published policy rendered the detentions unlawful in that case.
The policy which was in question there related to the considerations that the Secretary of State would take into account in deciding to detain.
It went further than the bare bones of the Hardial Singh principles.
Nadarajah was a case principally brought under article 5 of the European Convention on Human Rights.
The question, therefore, was whether the detention was lawful in the sense that it complied with the Convention standards of legality.
It is not surprising that the Court held that, to be lawful, a decision to detain had to comply, not only with the statute, but also with the Secretary of States published policy.
But it is also not surprising that the majority of this Court has now held, in R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671, that a failure to comply with the Secretary of States published policy may also render detention unlawful for the purpose of the tort of false imprisonment.
While accepting that not every failure to comply with a published policy will render the detention unlawful, I remain of the view that the breach of public law duty must be material to the decision to detain and not to some other aspect of the detention and it must be capable of affecting the result which is not the same as saying that the result would have been different had there been no breach (see the Lumba case, para 207).
The question remains, however, whether a material breach of a public law duty to conduct regular reviews that is, a procedural obligation has the same consequence as a material breach of a public law duty to detain only if certain criteria are fulfilled.
For the sake of the argument before this Court, we have to assume that the case falls into the former category breach of a procedural obligation even though the co incidence of timing and the evidence of the secret policy which emerged in Lumba might suggest that the real reason why the reviews were not conducted as required by the policy was that they would be a waste of time all these people were going to be detained under the new and secret criteria in any event.
But might there be a distinction between the substantive limitations on the power to detain and the procedural requirements for exercising it?
Sometimes a statute puts the effect of a failure to follow procedural requirements beyond doubt.
The Police and Criminal Evidence Act 1984, section 34(1), states that A person . shall not be kept in police detention except in accordance with the provisions of this Part of this Act; those provisions require regular reviews; failure to conduct those reviews on time renders detention beyond the time when they should have been conducted unlawful: see Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662, CA.
Sometimes a statute does not say in so many words that failing to comply with one of its procedural requirements will render the resulting detention unlawful, but the courts will construe the statute to mean that it does.
An example is the prohibition in the Mental Health Act 1983, section 11(4)(a), of making an application for compulsory admission to hospital if the patients nearest relative objects: Re S C (Mental Patient: Habeas Corpus) [1996] QB 599, CA.
In these cases, it is irrelevant that the person concerned could have been lawfully detained had the correct procedures been followed.
Sometimes, however, the court will conclude that the lawfulness of detention does not depend upon the fulfilment of a particular statutory requirement.
For example, in R (D) v Secretary of State for the Home Department [2006] EWHC 980 (Admin), it was common ground that failing to comply with the requirement in the (Immigration) Detention Centre Rules 2001 SI 2001/238 that immigration detainees be given a medical examination within 24 hours of arrival did not render the detention unlawful unless the detainees could show that it would have led to their earlier release.
In short, there are some procedural requirements, failure to comply with which renders the detention unlawful irrespective of whether or not the substantive grounds for detention exist, and some procedural requirements, failure to follow which does not have this effect.
If the requirement is laid down in legislation, it will be a matter of statutory construction into which category it falls.
A clear distinction can be drawn between a requirement which goes to whether or not a person is detained and a requirement which goes to the conditions under which a person is detained.
If the grounds exist for detaining a person in a mental hospital, for example, and the procedures have been properly followed, it is not unlawful to detain him in conditions of greater security than are in fact required by the nature and degree of his mental disorder.
The same analysis applies to requirements which are imposed, not by statute, but by the common law.
There are some procedural requirements which go to the legality of the detention itself and some which do not.
The common law imposed a requirement that an arrested person be told, at the time, the real reason why he was being arrested.
It did so for the very good reason that the arrested person had to know whether or not he was entitled to resist arrest.
Mr Leachinsky was told that he was being arrested under the Liverpool Corporation Act 1921, but this Act gave the police officers no power to arrest him without a warrant.
They did have power to arrest him on reasonable suspicion of having committed a felony.
But, as they had not told him this, his detention was unlawful and he was entitled to damages for false imprisonment: see Christie v Leachinsky [1947] AC 573.
As Lord Simonds put it, at p 592, if a man is to be deprived of his freedom he is entitled to know the reason why.
It is not statute, but the common law, indeed the rule of law itself, which imposes upon the Secretary of State the duty to comply with his own stated policy, unless he has a good reason to depart from it in the particular case at the particular time.
Some parts of the policy in question are not directly concerned with the justification and procedure for the detention and have more to do with its quality or conditions.
But the whole point of the regular reviews is to ensure that the detention is lawful.
That is not surprising.
It was held in Tan Te Lam, above, that the substantive limits on the power to detain were jurisdictional facts, so the Secretary of State has to be in a position to prove these if need be.
He will not be able to do so unless he has kept the case under review.
He himself has decided how often this needs to be done.
Unless and until he changes his mind, the detainees are entitled to hold him to that.
Just as Mr Leachinskys detention was unlawful even though there were in fact good grounds for arresting him, the detainees detention is unlawful during the periods when it has not been reviewed in accordance with the policy, irrespective of whether or not the review would have led to their release.
In my view, Munby J was right to hold that the reviews were fundamental to the propriety of the continuing detention and a necessary prerequisite to the continuing legality of the detention: see [2008] EWHC 98 (Admin), para 68.
It follows also, from the decision in Lumba, that the fact if it be a fact that had the requisite reviews been held, the decision would have been the same makes no difference.
However, the result of any review, had it been held, cannot be irrelevant to the quantum of damages to which the detainee may be entitled.
False imprisonment is a trespass to the person and therefore actionable per se, without proof of loss or damage.
But that does not affect the principle that the defendant is only liable to pay substantial damages for the loss and damage which his wrongful act has caused.
The amount of compensation to which a person is entitled must be affected by whether he would have suffered the loss and damage had things been done as they should have been done.
A differently constituted majority in Lumba has now clearly rejected the view, taken by some members of the Court, that deliberate breaches of constitutional rights might attract a conventional sum in vindicatory damages even if the officials conduct were not so egregious as to attract exemplary or punitive damages.
That view has, of course, to be respected.
I have reached these conclusions without reference to the Strasbourg case law under article 5 of the European Convention on Human Rights.
I did initially think that article 5 might supply the answer to what, on any view, is not an easy question.
Article 5 lays down an exhaustive list of the circumstances in which a person may be deprived of his liberty.
These include, in article 5(1)(f), the lawful arrest or detention of a person against whom action is being taken with a view to deportation or extradition.
The requirement of lawfulness is not limited to complying with the substantive and procedural provisions of the domestic law.
The Convention itself imports extra requirements in order to ensure that the detention is not arbitrary.
Some of these are procedural.
Thus the detention of persons of unsound mind under article 5(1)(e), even if formally authorised, must be regularly reviewed in order to ensure that the criteria for detention still exist: see X v United Kingdom (1982) 4 EHRR 118.
A principle of domestic law which allows people to be de facto detained without any formality at all contravenes article 5(1)(e) (as well as article 5(4)) even though the criteria for detention do exist: see HL v United Kingdom (2005) 40 EHRR 761.
The Strasbourg court has not yet (so far as we are aware) addressed the procedural protection which may be required in order to prevent detention by the executive under article 5(1)(f) becoming arbitrary.
The notion of arbitrariness for the purpose of article 5(1)(f) is, however, different from the notion of arbitrariness for the purpose of article 5(1)(b), (d) and (e).
It does not require that the detention be necessary in order to achieve the stated aim: see Chahal v United Kingdom (1997) 23 EHRR 413; Saadi v United Kingdom (2008) 47 EHRR 427.
But in Chahal, the Court did endorse the Hardial Singh principles, which incorporate a reasonable time limit on the detention.
It is not impossible, therefore, that the Court would also impose a requirement for regular reviews.
But it cannot be assumed that it would do so, or that it would expect these to be as rigorous as those which the Secretary of State has imposed upon himself.
Thus, while the article 5 jurisprudence does not detract from the conclusions reached on domestic law, it does not add anything to them.
For those reasons, I would allow the appeal and make the order proposed by Lord Hope, although I would not hold out much hope that Mr Kambadzi will be entitled to more than a nominal sum in damages.
My reasons for reaching this conclusion are, I believe, no different from those of Lord Hope and Lord Kerr.
But because the Court is so narrowly divided, I thought it necessary to reason the matter through for myself.
The decision in Lumba has confirmed and strengthened me in these conclusions, although I acknowledge that, as this case was presented to us, the departure from published departmental policy was of a different kind from the departure in that case.
Nevertheless, it was so obvious and so persistent and so directly related to the decision to continue to detain that it was clearly material in the Lumba sense.
Whether in reality it was a Lumba case is not for this Court to decide.
LORD KERR
I agree with Lord Hope that this appeal should be allowed for the reasons that he has given.
I also agree that the anonymity order should be set aside.
As Lord Hope has said, it may be safely assumed that an asylum seeker will be alive to the risks that disclosure of his identity will entail and his stance on the question of anonymity, especially if he expresses no desire that it be maintained, will be of importance in striking the balance between avoiding unnecessary risks to the asylum seekers safety and the principle of open justice.
The critical question in this appeal is whether compliance with the duty to review underpins the legality of the detention.
It is accepted that there is a duty to review.
It is further accepted that this duty had not been complied with.
Does that make the detention unlawful? The respondent says that it does not, arguing that the situation encountered here is not comparable to that which demands compliance with a statutory obligation on which the condition of lawfulness of the detention depends.
It is suggested that a failure to observe a public law duty should not render unlawful a hitherto lawful detention because there can be no sufficient nexus between such a failure and the lawfulness of the detention.
One can acknowledge the initial appeal of the respondents argument.
If a statute prescribes certain conditions that must be met in order that a person may be lawfully held in detention, where one of those conditions remains unfulfilled, the detention may be regarded as automatically unlawful.
By contrast, the failure to fulfil a duty owed at public law will not necessarily render invalid a detention made on foot of a valid authorisation.
The essential question must be whether there is an adequate connection between compliance with the duty and the lawfulness of the detention.
The respondents argument proceeds on the premise that there can never be such a close link.
The appellants case is that it depends on the circumstances some public law duties are so closely linked to the continued legality of the detention that a failure to comply with them transforms it from a condition of lawfulness to one which is unlawful.
The case can be approached in a relatively simplistic way.
The appellant has a legal entitlement to have the justification for his detention reviewed.
This is not disputed.
Likewise it is not challenged that where there has been a violation of that right, the appellant must have a remedy.
Is that remedy to be confined to a declaration and/or an injunction? And if he is entitled to these forms of relief, why should he not be entitled to maintain an action for damages for false imprisonment? Given that what is at stake is the appellants liberty; that there is a presumption in favour of his release; that scrupulous adherence to the review standards is clearly contemplated in the language of the policy document; and that, plainly, these are considered to be vital safeguards of the detainees interests, I can discern no reason in principle to restrict the availability of all remedies that the law will conventionally afford for unlawful detention.
On the contrary, it appears to me that access to the full panoply of such remedies is required in order that those fundamental interests are afforded proper protection.
Another way of approaching the questions that arise on the appeal is to ask whether the initial authority to detain could be regarded as comprehensive of the issues which are germane to the continued lawfulness of detention.
Quite clearly, detention which is lawful initially can be transformed to a condition of illegality see R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704.
In his argument to this court on behalf of the Secretary of State, Mr Tam QC has asserted that where the detention is initially lawful, it cannot become unlawful, absent an undermining of the initial authority to detain.
But there was no undermining of the initial authority in that sense in Hardial Singh yet the initially lawful detention became unlawful.
That transformation occurred by a means other than by operation of an express statutory pre condition or by the extinction of the initial authority to detain.
In Hardial Singh it was held that there were implicit limitations on the statutory power to continue to detain.
If, for instance, the original purpose of detention viz to deport became incapable of fulfilment, the detainee could no longer be lawfully held.
Why should implicit limitations in the form of an effective review of the continuing justification for detention not be recognised in the present case? Where someone is detained beyond the immediate post detention period, there may be two aspects to the question whether his detention is lawful.
First there must be an initial valid authorisation; secondly, there must be compliance with such public law duties as touch directly on the question of whether he should continue to be detained.
That proposition can perhaps be best exemplified in the context of a review of the justification of the reasons for continued detention by considering the purpose of that review.
One starts with the unexceptionable proposition that it would be indisputably unlawful to hold someone in detention if there was no justification for it.
Since, self evidently, an original justification for detention may prove, in light of events and circumstances that occur subsequently, to no longer obtain, periodic review of the justification for continued detention is required.
The purpose of the review is to determine whether there are still good grounds to continue to hold the person in detention.
If the review discloses that there are no such grounds, continued detention is unquestionably illegal.
A person detained after it had been shown that there was no good reason for his continued detention would undoubtedly have the right to claim compensation for false imprisonment.
As Lord Hope has said, support for the proposition that a departure from published policy as to detention will render it unlawful is to be found in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139.
Lord Brown has sought to distinguish that case from the present appeal on the basis that in Nadarajah the grounds on which the power of executive detention could be exercised had been narrowed but that no such narrowing of powers occurred here.
But if the published policy in Nadarajah narrowed the grounds on which someone could be lawfully detained, why should the same consequence not accrue in the present case? In Nadarajah the stated policy was to release those whose removal was not imminent.
Here it is to the effect that persons will only be detained if there is continuing justification for it, as verified by a prescribed system of review.
Lord Brown suggests that in Nadarajah the detainee was entitled to release and in the present case that the appellant was entitled 'merely' to be reviewed for release.
I respectfully disagree that such a distinction can be drawn.
The essence of the appellant's entitlement was that he would be released unless continued justification for his detention existed.
The review was the means by which the existence of the justification was to be established.
It is not comprehensive of the detainee's entitlement.
As in Nadarajah the appellant in the present case is entitled to be released in accordance with the terms of the relevant policy, if justification for his continued detention no longer obtains.
What if no review takes place? If it is illegal to hold a person in detention where it has been established that there are no good grounds for doing so, can it be lawful to hold someone without examining whether such grounds continue to exist? In my view it cannot.
Since it has been recognised that, in cases such as the appellants, periodic review is necessary in order to vouch the continued justification for detention, where that review does not take place, the detention can no longer be considered justified.
The justification for continued detention cannot be said to exist and, absent such justification, the detention is unlawful.
Likewise, in my opinion, where the review does take place but does not partake of the quality or character required to justify the continuance of detention, it becomes unlawful and gives rise to a right to claim false imprisonment.
I believe that Munby J was right in his characterisation of the system of review as being integral to the lawfulness of the detention (para 68 of his judgment).
It was not only so stated in the policy document, this concept pervades the entire approach of government to this type of detention.
I accept, of course, that the Executive cannot make law and that the policy document should not be construed as a statute but it is not irrelevant that the Home Secretary made an unequivocal statement that failure to comply with the policy would be a breach of the law.
This surely provides the foundation for a finding that the requirement of review is intimately connected to the continuing lawfulness of the detention and that it therefore constitutes an implicit limitation on the statutory power to detain.
The majority in R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671, has held that causation is not a necessary ingredient for liability.
In that case the argument on behalf of the detained persons was put in this way: a public law error that bears directly on the decision to detain will mean that the authority for detention is ultra vires and unlawful, and will sound in false imprisonment.
That argument was accepted by the majority of the court in Lumba.
The public law error in the present case bore directly on the decision to detain in that it was made without the necessary review of the justification for detention.
As the majority in Lumba also held, however, causation is relevant to the question of the recoverability of damages.
For the reasons that I gave in my judgment in that case, I consider that if it can be shown that the claimant would not have been released if a proper review had been carried out, this must have an impact on the quantum of compensation and that nominal damages only will be recoverable.
LORD BROWN (with whom Lord Rodger agrees)
Does a failure to comply with a published policy periodically to review the exercise of a statutory power of executive detention constitute not merely the breach of a public law duty but in addition the tort of false imprisonment? Does it, in other words, undermine the lawfulness of continuing detention? That essentially is the issue before the Court on this appeal.
Lord Hopes judgment contains a very full account of the facts, the arguments and the authorities relevant to this appeal so that my own judgment can be correspondingly short.
The Immigration Act 1971, as amended, (the 1971 Act) provides (by paragraphs 2(2) and (3) of Schedule 3) that, in a case like this, once notice of intention to deport has been given, the Secretary of State may detain the person pending the making of the deportation order (paragraph 2(2)) and, once the deportation order has been made, the detainee shall continue to be detained [pending his removal or departure] unless he is released on bail or the Secretary of State directs otherwise (paragraph 2(3)).
One suspects that when these provisions were enacted nearly 40 years ago Parliament envisaged the deportation process taking place within a comparatively short timescale, perhaps months at most.
As it is, however, the process regularly stretches to years and not infrequently the position arises where, for one reason or another, it proves impossible for a considerable time to deport anyone to a particular country because of conditions there.
In the past this has been true at various times of Somalia, of Afghanistan, of Iraq, and of Kosovo.
Since 2005 it has also been true of Zimbabwe which is why this appellant, although given notice of an intention to deport him on 8 March 2006, and made subject to a deportation order on 24 August 2007, remains in this country to this day.
More particularly, this is the background to his detention under Schedule 3 to the 1971 Act (following completion of a prison sentence) from 8 March 2006 to 13 June 2008 when, after 27 months of Schedule 3 detention, he was finally released on bail.
That the Secretary of States power to detain people under paragraph 2 of Schedule 3 (the paragraph 2 power as for convenience I shall call it) is not unlimited is plain and undisputed.
This was first established by Woolf J in R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 704, approved by the Privy Council in Tan Te Lam v Superintendent of Tai A Chau Detention Centre [1997] AC 97 and subsequently distilled by Dyson LJ in R (I) v Secretary of State for the Home Department) [2003] INLR 196, para 46 into four propositions (which, again for convenience, I shall call the Hardial Singh principles), as follows: (i) The Secretary of State must intend to deport the person and can only use the power to detain for that purpose. (ii) The deportee may only be detained for a period that is reasonable in all the circumstances. (iii) If, before the expiry of the reasonable period, it becomes apparent that the Secretary of State will not be able to effect deportation within that reasonable period, he should not seek to exercise the power of detention. (iv) The Secretary of State should act with reasonable diligence and expedition to effect removal.
Although suggested by the appellant to be broadly similar to the protections implied by the ECtHR into article 5(1)(f) of the Convention to ensure proportionality and guard against arbitrariness, to my mind the Hardial Singh principles, certainly as applied in a succession of later cases, are in fact more favourable to detainees than Strasbourg requires.
In particular Strasbourg has consistently stated that there is no requirement that the detention be reasonably considered necessary, for example to prevent the person concerned from committing an offence or fleeing (para 72 of the Grand Chambers judgment in Saadi v UK (2008) 47 EHRR 427, following Chahal v UK (1996) 23 EHRR 413, para 112).
Domestic case law, by contrast, holds that with regard to the second Hardial Singh principle the deportee may only be detained for a period that is reasonable in all circumstances [t]he likelihood or otherwise of the detainee absconding and/or re offending [is] an obviously relevant circumstance (my judgment in I at para 29, echoed by Dyson LJ at paras 48 and 49).
I may note at this point that, notwithstanding that the full width of the Hardial Singh principles was clearly recognised by Munby J in the present case (paras 79 120), his conclusion was that none of them had been breached at any time, a conclusion unchallenged in the Court of Appeal.
It follows that not merely was the appellant in a formal sense a person liable to be detained under the third Schedule (in the same way that the unsuccessful appellant in R (Khadir) v Secretary of State for the Home Department [2006] 1 AC 207 was held liable to detention and thus eligible for temporary admission under the second Schedule even though it might well have been unreasonable and in breach of the Hardial Singh principles actually to have detained him); here the appellant was liable to be detained in the fuller sense that throughout the period of his detention it would have been a lawful and reasonable exercise of the paragraph 2 power actually to detain him.
On what basis, then, is it said that the appellants detention was unlawful so as to give rise to a claim for damages for false imprisonment? The argument revolves around the Secretary of States published policy: chapter 38 of the Departments Operations Enforcement Manual (the OEM) under the heading Detention and Temporary Release.
The policy (at 38.3) includes a presumption in favour of temporary admission or temporary release, provides that [t]here must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified and that [a]ll reasonable alternatives to detention must be considered before detention is authorised, and dictates that [o]nce detention has been authorised, it must be kept under close review to ensure that it continues to be justified.
Paragraph 38.8 then specifies how both the initial detention and any continued detention thereafter are to be authorised and kept under review, expressly providing both for the frequency and for the level of seniority of the reviews required.
In the event, as Munby J recorded (para 48), although entitled (by the date of the first instance hearing) to no fewer than 22 monthly reviews of the lawfulness of his detention, the appellant had had the benefit of only ten reviews, of which only six were conducted by officials of the requisite seniority, and of those six, two had had to be disavowed as fatally flawed.
Paragraph 38.1 of the policy, headed General, states: To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with this stated policy.
In a sense the question now before us is quite simply: is that statement accurate? Munby J in effect held that it was, not only as to the substantive requirements to justify continuing detention but as to the review requirements also.
At para 68 of his judgment, having referred to rule 9(1) of the Detention Centre Rules (which, like Lord Hope, I think to be of only peripheral relevance) he continued: [I]ntegral to the policy laid down by the Secretary of State in paragraph 38.8 of the Operations Enforcement Manual, is the principle that someone is not to be detained beyond a certain period without there being a review undertaken at regular intervals and moreover, as required by the Secretary of States policy, a review undertaken at increasingly high levels of seniority within the Home Office as the period of detention grows longer.
Those reviews are fundamental to the propriety of the continuing detention, they are required in order to ensure that the continuing detention can still be justified in the light of current, and perhaps changed, circumstances, and they are, in my judgment, a necessary prerequisite to the continuing legality of the detention.
That paragraph identifies the critical question: is the holding of the reviews required by the OEM a necessary prerequisite to the continuing legality of the detention? In addressing this question it is convenient first to distinguish the present case from certain other authorities strongly relied upon by the respective parties.
The appellant (supported by the Intervener) seeks to pray in aid the Court of Appeals decision in Roberts v Chief Constable of the Cheshire Constabulary [1999] 1 WLR 662.
The case turned on the proper construction of Part IV of the Police and Criminal Evidence Act 1984 (the Part containing each of the sections to which I now refer).
The detainee, following arrest, was initially kept in police detention pursuant to section 37.
Section 40(1) provided that: Reviews of the detention of each person in police detention in connection with the investigation of an offence shall be carried out periodically in accordance with the following provisions of this section.
Section 40(3)(a) provided that the first review shall be not later than six hours after the detention was first authorised.
Central to the decision that, no such review within six hours having taken place, the detainees continued detention (until the point two hours, twenty minutes later when his detention was reviewed) had been unlawful (notwithstanding that had he been reviewed at the six hour point he clearly would still have been detained), was section 34(1) which provided that: A person arrested for an offence shall not be kept in police detention except in accordance with the provisions of this Part of this Act.
Munby J appears to have thought Roberts strongly supportive of the appellants case.
Laws LJ, giving the leading judgment in the Court of Appeal, thought otherwise.
As he pointed out ([2009] 1 WLR 1527, para 25): [T]he requirement of periodic review, on the proper construction of the statute, had to be satisfied as a condition precedent to the legality of the suspects detention.
It was made so by the express terms of section 34(1).
But there is no analogue to section 34(1) of PACE to be found in paragraph 2(2) of Schedule 3 to the Immigration Act 1971.
There is no reference in the sub paragraph, express or implied, to the Rules or the manual or to any Rules that might be made under powers in the Immigration Act or to any manual, or instructions, that might be issued by the Secretary of State.
I cannot see how compliance with the letter of the Rules or manual could be said to be a sine qua non of a lawful exercise of the power to detain unless paragraph 2(2) (or other main legislation) made it so.
But it does not.
I agree with Laws LJ that Roberts provides little if any assistance to the appellant here.
The respondent for his part seeks to rely on R (Walker) v Secretary of State for Justice (Parole Board intervening) [2010] 1 AC 553 in support of his argument that a failure in the review process does not undermine the legality of (the unreviewed) continuing detention.
Walker was concerned with a number of appeals by IPP prisoners justifiably complaining of the Secretary of States systemic failures to provide the necessary resources and systems to enable such prisoners to demonstrate to the Parole Board that they could safely be released.
The Divisional Court held in one of the cases, R (Wells) Parole Board [2008] 1 All ER 138, para 47: To the extent that the prisoner remains incarcerated after tariff expiry without any current and effective assessment of the danger he does or does not pose, his detention cannot in reason be justified.
It is therefore unlawful.
The Court of Appeal and the House of Lords disagreed.
As I put it (at paras 36 37): It is one thing to say as, indeed, is now undisputed that the Secretary of State was in breach (even systemic breach) of his public law duty to provide such courses as would enable IPP prisoners to demonstrate their safety for release and, to some extent at least, courses enabling them to reduce the risk they pose, duties inherent in the legislation (the legislations underlying premise [as it was described in the court below]); quite another to say that such breach of duty results in detention being unlawful.
I respectfully agree with the Court of Appeal that it does not.
The remedy for such breach of public law duty indeed the only remedy, inadequate though in certain respects it may be is declaratory relief condemning the Secretary of States failures and indicating that he is obliged to do more.
By the same token, submits Mr Tam QC, the undisputed (and here too systemic) breaches of the Secretary of States public law duty to review, consistently with his published policy, the justifiability of the appellants (and doubtless very many other detainees) continuing detention, although (as in Walker) deeply to be regretted and strongly to be condemned, does not result in the unreviewed detention being unlawful.
To my mind, however, Walker is no more helpful to the respondents case than Roberts is to the appellants.
Again, as in Walker, the primary legislation made the position clear: IPP prisoners were expressly made subject to the statutory requirement (under section 28 of the Crime (Sentences) Act 1997) that they were not to be released until the Parole Board was satisfied that their continuing confinement was no longer necessary for the protection of the public.
In the same way that Schedule 3 to the 1971 Act contains no analogue to section 34(1) of PACE, so too it contains no analogue to section 28 of the 1997 Act.
Laws LJ below identified (at para 21) the essential question here to be: What is the reach [of the paragraph 2 power] and characterised it as a question of statutory construction.
At paragraph 35 he summarised his conclusions upon the question as follows: (i) Compliance with the Rules and manual as such is not a condition precedent to a lawful detention pursuant to paragraph 2(2).
Statute does not make it so (contrast section 34(1) of PACE, and the Roberts case [1999] 1 WLR 662).
Nor does the common law, or the law of the Convention. (ii) Avoidance of the vice of arbitrary detention by use of the power conferred by paragraph 2(2) requires that in every case the Hardial Singh principles should be complied with. (iii) It is elementary that the power exercised, being an act of the executive, is subject to the control of the courts, principally by way of judicial review.
So much is also required by Convention article 5(4).
The focus of judicial supervision in the particular context is upon the vindication of the Hardial Singh principles. (iv) In the event of a legal challenge to any particular case the Secretary of State must be in a position to demonstrate by evidence that those principles have been and are being fulfilled.
However the law does not prescribe the form of such evidence.
Compliance with the Rules and the manual would be an effective and practical means of doing so.
It is anyway the Secretary of States duty so to comply.
It is firmly to be expected that hereafter that will be conscientiously done.
Mr Raza Husains attack upon that paragraph centres upon the proposition that, following the initial exercise of the paragraph 2 power, the Secretary of State has a continuing discretion whether to maintain the detention and is under a duty to exercise that discretion regularly in accordance with the published policy.
So much Mr Tam accepts and, indeed, he further accepts that every failure to review a detention by the specified time or by the specified level of decision maker constitutes a breach of the Secretary of States public law duty.
Of course, as Mr Husain recognises, not all breaches of public law duties arising in the context of detention would render its continuation unlawful see, for example, Cullen v Chief Constable of the Royal Ulster Constabulary [2003] 1 WLR 1763.
The key question, he submits, is whether the breach is sufficiently closely linked to the detention decision.
Here, he contends, it plainly was.
The authority (Roberts aside) upon which Mr Husain principally relies is the decision of the Court of Appeal in R (Nadarajah) v Secretary of State for the Home Department [2004] INLR 139 (a report dealing also with Amirthanathans appeal I shall call them respectively N and A).
That case too concerned the Secretary of States detention policy under chapter 38 of the OEM but not, as here, the review provisions rather the statement that one of the reasons for detaining an asylum seeker is that his removal from the UK is imminent.
What was not part of the published policy and so was not publicly known was the Departments further policy, when considering the imminence of removal, to disregard information from those acting for asylum seekers that proceedings were about to be instituted, however credible that information might be.
Ns solicitors had given notice of his intention to seek judicial review of the Secretary of States decision to certify his case as manifestly unfounded.
As solicitors similarly had notified his intention to exercise his right of appeal against the Secretary of States rejection of his Human Rights Act claim to remain.
The detentions of both on the ground that their removal was imminent were held unlawful.
It was, said the Court of Appeal (at para 68), at odds with [the Secretary of States] policy, as made public.
Additionally, in As case, it was clear that he had in fact been kept detained so as to facilitate the obtaining of the documentation needed for his removal.
This too was at odds with the Secretary of States policy, as made public (para 72).
I confess that for a time I was persuaded by the appellants argument and thought it supported by the authority of Nadarajah.
In the end, however, I have reached the contrary view.
Nadarajah now seems to me clearly distinguishable.
Not because, as the Court of Appeal noted in that case at para 69, had Ns solicitor been aware of the Secretary of States unpublished policy she would have instituted judicial review proceedings earlier, so that the departure from the published policy was in fact causative of Ns continued detention.
Rather Nadarajah is distinguishable because it is one thing, as there, to adopt a published policy which in substance narrows the grounds on which an executive power of detention is exercisable (the stated policy there being to release those whose removal was not imminent); quite another, as here, to have a policy and programme for review which dictates only the procedure whereby detention will regularly be reviewed.
In the former case, under the published policy the detainee was entitled to release; in the latter case, he was not he was entitled merely to be reviewed for release.
Naturally, upon the intended reviews, the detainee would be released if, as a matter of substance, his continuing detention were found no longer justifiable according to the published policy.
The difference, however, seems to me crucial.
In the one case a breach of policy renders continuing detention unlawful.
In the other it does not.
Lady Hale, at para 72 of her judgment, suggests an analogy between the present case and Christie v Leachinsky [1947] AC 573 which established the common law requirement that an arrested person be told, at the time, the reason for his arrest.
For my part I find the suggestion unpersuasive.
As Lady Hale herself observes, the requirement was imposed for the very good reason that the arrested person had to know whether or not he was entitled to resist arrest.
Lord Simonds put it thus (p591): it is the corollary of the right of every citizen to be thus free from arrest [unless, that is, someone has the right to arrest him] that he should be entitled to resist arrest unless that arrest is lawful.
How can these rights be reconciled with the proposition that he may be arrested without knowing why he is arrested? and a little later (p.592): . the subject is entitled to know why he is deprived of his freedom, if only in order that he may, without a moments delay, take such steps as will enable him to regain it.
No such consideration arises or could arise in the present content.
Their Lordships in Christie v Leachinsky would, I think, be astonished at the suggestion that any failure to give effect to a self imposed requirement for periodic review of the continuing detention of those awaiting deportation similarly renders that detention unlawful.
I fear that they would be scarcely less surprised by the further suggestion (at para 77 of Lady Hales judgment) that, assuming such detention to be unlawful, it is to be compensated by no more than a nominal sum in damages.
Indeed it seems to me that that very suggestion illustrates the ineptness of the proposed analogy between the two cases in the first place.
The majoritys proposed solution to this case would quite simply devalue the whole concept of false imprisonment.
Nothing that I have said should be taken to depreciate the desirability and importance of reviews under chapter 38 nor to excuse the Departments lamentable failures to conduct them, certainly in the appellants case and very probably in a host of others.
As the courts below rightly observed, these matters go to the liberty of the subject and the picture which emerges is deeply disturbing, indeed profoundly shocking (Munby J, para 137).
One obvious consequence of such serial failures is that it creates a substantially greater risk of detainees bringing successful proceedings for breach of the Hardial Singh principles (or, indeed, assuming they are still more favourable to detainees, the Secretary of States published policy statements going to the substantive criteria for release, as in Nadarajah itself) principles and statements to which the reviews are intended and likely to give effect.
And, of course, as the Hardial Singh line of authority (and, indeed, Nadarajah) clearly establishes, a successful claim on these grounds carries with it a right to damages for false imprisonment, a right to damages, moreover, which, unlike that arising upon a failure to review such as envisaged by the majority (and, indeed, such as arose in Roberts see p669H), would naturally be untroubled by any question of causation.
I recognise, of course, that, on this approach, it is only in cases where the detainee can show that he should have been released that the respondent will be required to pay, financially, for failures in the review process.
Where, as here, all that can be shown is a series of public law breaches failures to comply with his own published policy as to reviews the only remedy, as in Walker, is by way of declaratory relief.
Unsatisfactory though in one way this is, to treat a failure in the review process (perhaps merely a review held a day late or by someone of insufficient seniority and perhaps in respect of an obviously dangerous detainee) as of itself giving rise (as in Roberts) to a claim for false imprisonment would to my mind be unsatisfactory too.
There may well be altogether too many people (above all children and other likewise vulnerable people) locked up awaiting deportation.
Plainly a wise Secretary of State would instigate and operate a practicable and robust system for minimising the use made of the paragraph 2 power.
As it is, like any other public body failing to comply with their published policy, he commits a breach of his public law duty, always a regrettable state of affairs.
That said, however, a detainee, once properly detained, in my opinion remains lawfully imprisoned unless and until released on bail or by the Secretary of States direction or he establishes an entitlement to release pursuant to the Hardial Singh principles or other substantive policy statements governing how the Secretary of State will exercise his paragraph 2 power.
This appellant could establish no such entitlement.
In my judgment he remained lawfully imprisoned until he was bailed.
It will be noted that I have not hitherto referred to article 5(1)(f) of the Convention save only to observe (at para 94) that domestic law is in fact more favourable to detainees awaiting deportation than Strasbourg requires.
Since it now appears that this is to be a minority judgment, I need say no more than that there is nothing in the existing Strasbourg jurisprudence which would warrant a conclusion that a failure to give effect to the Secretary of States self imposed requirement for detention reviews would result in unlawful detention under the Convention irrespective of whether it constitutes false imprisonment under the common law. (I do not think I am in disagreement with the majority as to this see, for example, para 76 of Lady Hales judgment.) Nor, of course, is there any question here of a breach of article 5(4) of the Convention: the requirements of that provision are amply satisfied by the detainees right to seek bail or, indeed, judicial review.
I would dismiss this appeal.
The above (paras 90 113) is the judgment I wrote before an enlarged court of nine of us in November 2010 heard, and subsequently, on 23 March 2011, gave judgment in, R (Lumba and Mighty) v Secretary of State for the Home Department [2011] UKSC 12; [2011] 2 WLR 671 (Lumba).
Given that a majority of the court (6:3) held that the particular public law breaches committed by the Secretary of State there resulted in the appellants being falsely imprisoned albeit a differently constituted majority (also 6:3) held that they can recover no more than nominal damages should I (must I) now change my judgment and agree with the majority that Mr Kambadzi too was falsely imprisoned?
I have concluded not: it by no means follows from the majority view on liability in Lumba that there is liability here too and to my mind it would be still more undesirable to find liability established here than the minority of us thought it to be in Lumba itself.
That the two cases are different is plain enough.
As Lord Dyson observed in para 61 of his lead judgment: A somewhat similar problem arose in R (SK Zimbabwe) v Secretary of State for the Home Department In that case the unlawfulness lay in the failure of the Secretary of State to comply with her policy which prescribed the procedural requirements for reviews of FNPs who are already in detention.
The present case concerns the substantive requirements for the initial detention of FNPs as well as their continued detention.
Lady Hale too (para 198) recognised that on the issue of liability Lumba is a stronger case than is still before the court in SK (Zimbabwe) because the illegality alleged (and now admitted) went to the criteria for detention rather than to the procedure for authorising it.
Although, obviously, the court in Lumba was not required to consider the consequences in terms of liability of a public law failure to comply with the Secretary of States self imposed requirements for the review of continuing detention, there appear to me a number of passages in the judgments of those holding liability to be established there, strongly suggesting that they might well have taken a very different view in the present case.
This is perhaps plainest at paras 193 and 194 of Lord Walkers judgment: It is a big step to extend the [Anisminic] principle to a claim for damages for false imprisonment, where a defendant may have his professional reputation at stake and may not enjoy the procedural protections which attend judicial review (strict time limits, and the discretionary nature of the remedy granted).
I would prefer a more demanding test, that in a case where an extant statutory power to detain has been wrongly used there would be a private law claim only if the misuse amounted to an abuse of power (including but not limited to cases of misfeasance or other conscious misuse of power). 194 However, it is in my opinion unnecessary to decide the point in these appeals because the conduct of officials, including some senior officials, of the Home Office between April 2006 and September 2008 amounted to a serious abuse of power.
Lord Dyson SCJ has . described in restrained language how senior officials were well aware of the risk (indeed the likelihood) of challenge and decided to run the risk, (including the proposal to let immigration judges take any hit), and how further damaging facts were disclosed by stages, some before Davis J, some before the Court of Appeal and some only in this court.
Wherever the line is to be drawn (if, as I think, a line does need to be drawn between public law errors in detention policies which do or do not give rise to an action for false imprisonment) these appeals must in my view fall on the wrong side of the line from the Secretary of States point of view.
Given that a line is to be drawn between public law errors amounting to the sort of serious misconduct which Lord Walker was clearly intending to denote by his use of the expression abuse of power and other public law errors which do not give rise to actions for false imprisonment, it is very far from obvious that Lord Walker would regard the failures in the review process here as an abuse of power.
Lord Collins too, having referred (at para 220) to the Home Offices deliberate decision . to continue an unlawful policy and to the cynical nature of its approach generally in these cases, expressed himself (at para 221) satisfied that the serious breach of public law in this case has the result that the detention of the appellants was unlawful (emphasis added).
Even Lord Dyson (para 68) expressly accepted that: It is not every breach of public law that is sufficient to give rise to a cause of action in false imprisonment.
In the present context, the breach of public law must bear on and be relevant to the decision to detain.
Thus, for example, the decision to detain made by an official of a different grade from that specified in a detention policy would not found a claim in false imprisonment.
It seems clear, therefore, that Lord Dyson would have rejected Mr Kambadzis case at least in respect of the four monthly reviews carried out by officials of the wrong grade although, I acknowledge, it is unclear what conclusion he would have reached with regard to the twelve omitted reviews.
Of course, the three of us who dissented on liability in Lumba would by definition conclude that Mr Kambadzi must fail on liability in the present case.
As for why, liability in Lumba notwithstanding, it would be wrong to find false imprisonment established here too, let me illustrate what seems to me the absurdity of such conclusion by the example I gave (at para 357) in Lumba: it would result in a detainee whose detention is reviewed every second month instead of monthly as the published policy dictates, alternat[ing] yo yo like between lawful detention and false imprisonment.
To hold that false imprisonment is the consequence of a failure to comply with the substantive requirements for the initial detention of FNPs as well as their continued detention (Lord Dyson at para 61, quoted above) is one thing; to hold that the same consequence follows a failure to comply with the procedural requirements for reviews of FNPs who are already in detention (ibid) is quite another and to my mind a step altogether too far.
I therefore remain of the view, the authority of Lumba notwithstanding, that this appeal should be dismissed.
On the issue of anonymity I agree with Lord Hope.
As was recently established by the Courts comprehensive and authoritative judgment given by Lord Rodger in In re Guardian News and Media Ltd [2010] 2 AC 697, the general rule is that parties to proceedings are named and that an anonymity order has to be justified.
In my opinion there is no justification for such an order here and, indeed, Mr Husain on behalf of the appellant suggests none and seeks no such order.
There may, of course, be good reason in certain asylum cases for maintaining the asylum seekers anonymity notwithstanding that his claim fails: the very fact of his having made a claim, albeit unsuccessful, could on occasion tip the balance and give rise to a genuine fear of persecution or article 3 ill treatment where previously none existed.
Doubtless in any such case counsel, certainly counsel as expert and experienced as Mr Husain, would duly seek the necessary anonymity order.
Given, however, that this appellants asylum claim was clearly bogus, it is unsurprising that no such application was made here and it is to my mind inconceivable that the appellants known involvement in these proceedings could give rise to any bona fide further asylum claim.
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The issue in this appeal is whether a failure by the Respondent to comply with a procedural requirement in its policy relating to the detention of foreign national prisoners results in their detention being unlawful, so as to allow the detainee to advance a claim in tort for false imprisonment.
Shepherd Masimba Kambadzi is a Zimbabwean national.
He entered the UK lawfully, but remained here after his leave to remain expired.
In 2005, he was convicted of assault and sexual assault, sentenced to one years imprisonment and ordered to be registered as a sex offender for five years.
Prior to his being released from prison, the Respondent decided to make a deportation order against the Appellant.
Paragraph 2(2) of Schedule 3 to the Immigration Act 1971 (the 1971 Act) gives the Secretary of State the power to detain foreign nationals pending the making of a deportation order and the Appellant was detained under that power on 7 March 2006.
On 24 August 2007, a deportation order was made against the Appellant, after which he was detained under paragraph 2(3) of Schedule 3 to the 1971 Act.
In all, he was detained for 27 months until 13 June 2008, when he was granted bail.
He has not yet been returned to Zimbabwe because of conditions in that country.
The common law has recognised limits on the extent of the power to detain under paragraphs 2(2) and (3) of Schedule 3 to the 1971 Act (the Hardial Singh principles, set down in R v Governor of Durham Prison Ex p Hardial Singh [1984] 1 WLR 904).
The Respondent had a policy which detailed how the power to detain was to be exercised.
It provided, for example, that all reasonable alternatives to detention must be considered before detention was authorised.
The policy also provided for detention to be subject to review at regular intervals.
It specified the frequency of review and the grade of official which was to carry them out.
The policy required the Appellants detention to be reviewed on five occasions during the first month and then monthly thereafter.
The Appellants detention was not reviewed in accordance with that policy.
By the date of the first instance hearing of this claim, he had been entitled to 22 monthly reviews of the lawfulness of his detention, in addition to the five reviews which should have taken place in the first month.
His detention had been reviewed only ten times.
Only six of those reviews had been conducted by officials of the required seniority and, of those six, two were flawed by material errors of fact.
The substantive requirements for detaining the Appellant were, however, met throughout the period of his detention: had the Respondent carried out the reviews, it could justifiably have decided to continue to detain him.
While still detained, the Appellant raised a judicial review, seeking a declaration that he was unlawfully detained and damages.
At first instance, Munby J granted a declaration that the Appellant had been unlawfully detained for various periods amounting to about 19 months and gave directions for the assessment of damages, but he declined to order his release. (The Appellant was subsequently granted bail in other proceedings.) The Court of Appeal allowed the Secretary of States appeal and held that the Appellants detention had been lawful throughout.
Although the Supreme Court heard the appeal in February 2010, it delayed handing down its judgment so as to be enable a court of nine Justices to consider the case of R (Lumba) v Secrteary of State for the
Home Department [2011] UKSC 12.
That case also considered the legality of the detention of foreign national prisoners where the Secretary of State has not complied with the terms of the published policy relating to detention.
The Supreme Court, by a majority, allows the appeal.
Lord Hope gives the leading judgment; Lady Hale and Lord Kerr issue separate concurring judgments.
The majority holds that the Appellants detention was unlawful for the periods in respect of which no review was carried out and that he does have a claim in tort for false imprisonment in respect of those periods.
The amount of damages is yet to be ascertained, but will be nominal if it is found that the Appellant would have been detained even if his detention had been reviewed as the policy required.
Lord Brown gives a dissenting judgment, with which Lord Rodger agrees.
The Secretary of State was under a public law duty to adhere to the terms of the policy relating to reviews unless there were good reasons not to: [36], [39], [66].
The majority of the Court holds that the Respondents unlawful failure to review the Appellants detention, as required by the policy, resulted in his detention being unlawful.
The court rejects the argument that because the breach of public law related to a procedural requirement, it did not affect the legality of the detention: [69] [73], [85].
Some procedural requirements go to the legality of the detention and some do not: [71].
The policy was sufficiently closely related to the authority to detain to qualify the Secretary of States discretion under the 1971 Act: [51].
The very point of the review was to ensure that the detention was lawful: [73], [86].
The public law error bore directly on the decision to detain the Appellant and therefore satisfied the test adopted by the majority in Lumba for determining when a public law error will result in detention being unlawful: [42], [88].
The Appellants detention was not unlawful, however, where the only defect in the decision to continue detention was that the review had been carried out by an official of the wrong grade: [60].
As the Court also held in Lumba, it was no defence to the claim that there were grounds which justified the Appellants detention: [54], [73], [88].
False imprisonment is a trespass to the person and actionable in itself, without proof of loss or damage: [74].
The result of the reviews which should have taken place is, however, relevant to assessing damages.
A defendant is liable only for the loss which his wrongful act has caused.
The full facts of this case are yet to be established, but if it is found that the claimant would not have been released had proper reviews been carried out, he will only be entitled to nominal damages: [55] [56], [74], [89].
Lord Brown (with whom Lord Rodger agrees) would have held that the failure to review the Appellants detention did not result in the Appellants detention being unlawful.
They hold that the policy did not confer upon the Appellant an entitlement to be released, but only an entitlement to be reviewed for release: [107].
Once properly detained, a detainee remains lawfully imprisoned unless and until released on bail or by the Secretary of States direction, or he establishes a substantive entitlement to release: [111].
Lumba does not compel the majoritys result, because it was concerned with a substantive entitlement under the policy and not a procedural one, and because it also held that not every breach of public law resulted in detention being unlawful: [116] [118].
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This is a remarkable case in more than one respect.
The appeal depends upon whether the Court is bound to stay action 2006 Folio 815 (the 2006 proceedings) under Article 27 of Regulation 44/2001 of the Council of the European Union (the Regulation) and, if not, whether it should do so under Article 28.
Before Burton J (the judge), the respondents expressly disclaimed any intention to rely upon Article 27 but relied upon Article 28 in support of a submission that the court should stay the 2006 proceedings in favour of proceedings in Greece.
The judge refused to grant a stay and gave summary judgment for the appellants against the respondents.
The judge granted the respondents permission to appeal to the Court of Appeal on various grounds, including a ground based on Article 27.
The Court of Appeal (Longmore, Toulson and Rimer LJJ) held that it was bound to stay the action under Article 27.
It also gave some consideration to Article 28 but held that it was not necessary to reach a final conclusion in that regard because of its decision under Article 27.
It declined to consider the issues relevant to summary judgment on the ground that, if there was to be a stay, those issues should be determined by the courts in Greece.
The facts and the 2006 proceedings
I can take the relevant events from the judgment of Longmore LJ in the Court of Appeal.
He in turn took them from the judgment of the judge.
On 3 May 2006 the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth, with considerable loss of life.
Her owners were Starlight Shipping Company (Starlight).
They made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of the assured, namely Starlight.
The insurers also said that Starlight had failed properly to report and repair damage to the vessel in accordance with Class Rules.
Starlight, through their solicitors Messrs Ince & Co, made a number of
serious allegations against the insurers which fell into two categories, as summarised by Longmore LJ at para 4: (1) allegations of misconduct by the insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours (described for some reason as malicious scuttlebutt) against Starlight in the course of purported investigation of their claims; and (2) deliberate failure by the insurers to pay up under the policy, said to have had consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage.
The insurers also relied upon material non disclosure.
Those allegations were made before the issue of proceedings and, in particular, in a letter dated 18 July 2006 from Ince & Co to the insurers solicitors, who were Hill Dickinson LLP, then Hill Taylor Dickinson, whom I will together call HD.
On 15 August 2006 Starlight issued the 2006 proceedings in the Commercial Court against various insurers.
The first four defendants have been described as the Company Market Insurers (CMI) and the fifth to seventh defendants as the Lloyds Market Insurers (LMI).
The policies issued by both the CMI and the LMI contained exclusive jurisdiction clauses.
They provided for English law and each party expressly agreed to submit to the exclusive jurisdiction of the Courts of England and Wales.
Overseas Marine Enterprises Inc (OME) were identified in the policies as managers.
In paras 5 to 8 of his judgment Longmore LJ spelled out in some detail
issues between the parties in the 2006 proceedings.
It is plain that the points raised by Ince & Co to which I have referred were both pleaded and central to the issues between the parties in those proceedings.
Thus, in para 7 Longmore LJ referred to a witness statement in which Mr Crampton of Lax & Co, who were now acting for Starlight, asserted that the allegations made by the insurers in defence of the claim were based on false evidence which they had obtained from the bosun.
He also relied upon significant payments said to have been made to the bosun on behalf of the insurers in this connection.
In addition, a witness statement was introduced in support of a proposed
amendment of the claim form alleging that Starlight had sustained losses beyond the measure of indemnity in the relevant policy.
It was alleged that, but for the failure of the insurers to pay under the policy, Starlight would have purchased a replacement vessel and had lost between US$ 45 million and US$ 47.7 million by way of increased capital cost and chartering losses.
However, on 14 December 2007, Tomlinson J refused to allow the amendment on the basis of the decision of the Court of Appeal in Sprung v Royal Insurance [1999] Lloyds Rep IR 111, approving the decision in The Italia Express (no. 2) [1992] 2 Lloyds Rep 281.
As Longmore LJ explained in para 1, as a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim.1 The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately 1 Toulson LJ noted at paras 74 and 75 that the present state of English law was criticised by the Law Commission and the Scottish Law Commission in para 2.87 of a joint consultation paper on Insurance Law; Post Contract Duties (LCCP201/SLCDP152) published on 20 December 2011.
The Commissions have provisionally proposed that the law should be reformed. withholds sums which he knows to be due under a policy.
If parties agree that English law is to apply to a policy of insurance, this principle is part of what they have agreed.
English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim.
In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment.
The trial was fixed for 14 January 2008.
The settlements
On 13 December 2007, which was the day before the hearing before Tomlinson J referred to above, the 2006 proceedings had been settled between Starlight and OME and the LMI for 100% of the claim, but without interest and costs, in full and final satisfaction of the claim.
It was a term of the settlement agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between Starlight and the LMI was accordingly made on 20 December 2007, backdated to 14 December, in these terms: Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter.
A similar settlement agreement dated 3 January 2008 was made between Starlight and OME and the CMI and a similar Tomlin Order was made on 7 January 2008, but with immediate effect.
In each settlement agreement the Assured were defined as being [OME] and Starlight as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T.
The CMI settlement agreement then provided: 1.
Each Underwriter agrees to pay on or before 18 January 2008 their due proportions of the sum of US$16m being 100% of their due proportions of the sum insured being 50% of the US$32m without interest or costs. 2.
The Assured and Claimant agree to accept the EURO equivalent of each Underwriters due proportion of US$16m in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of Alexandros T, including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved. 3.
The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under Policy No 302/CF000220Z. 4.
Following the signing of this agreement, and in consideration of the promises herein, the Claimant and the Underwriters will apply to stay the Proceedings as against the Underwriters, the Proceedings to be stayed for all purposes save for the purposes [of] carrying the terms agreed herein into effect, such stay to have effect from the first obtainable date after 27 December 2007 5.
Following the due and proper payment by the Underwriters of the amount specified in paragraph 1 above, the Assured and Claimant and the Underwriters agree to file a consent order dismissing the Proceedings, with no order as to costs. 6.
This agreement is subject to English law and to the exclusive jurisdiction of the High Court in London. 2.
The underwriters agree to pay on or before 24 December 2007 the sum of US$8M being 100% of their due proportions of the sum insured being 25% of US$32m without interest or costs 3.
The Assured and claimant agree to accept the EURO equivalent of US$8M in full and final settlement of all and any claims it may have under Policy No against the Underwriters signing below in relation to the loss of Alexandros T 4.
The Assured and Claimant agree to indemnify the underwriters signing below against any claim that might be brought against them by any of the Assureds or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of
Alexandros T or under Policy
The LMI settlement agreement provided in similar but not identical terms: 5.
This agreement is subject to English law and the jurisdiction of the High Court of London.
The Greek proceedings
After setting out the terms of the settlement agreements, Longmore LJ wryly observed at the end of para 12 of his judgment that one might have expected that to be that, but it was not to be.
He described what then happened in paras 13 to 15.
More than three years later, in April 2011, nine sets of Greek proceedings, in materially identical form, (Greece 1), were issued by Starlight, by OME, by their co assureds under an associated Fleet Policy and by individual officers of those companies, against the LMI and the CMI, some of their employees or underwriters, and HD and some of their partners and employees (the HD defendants).
The claims are for compensation for loss of hire and loss of opportunity by Starlight totalling approximately US$ 150 million and for pecuniary compensation due to moral damage amounting to 1 million.
The claims also include similarly substantial claims by the other claimants in respect of alleged acts, all done unlawfully and in breach of good faith for the alleged purpose of avoiding the performance by the defendants of their legal obligations.
All the claims rely upon breaches of the Greek Civil and Criminal Code.
However the factual allegations, which Longmore LJ noted had been said by the judge to be entirely familiar, include the allegation that the appellants were responsible for using false affidavits of witnesses (primarily Mr Miranda) with intention to harm the claimants, described thus by Mr Crampton in a statement summarising the Greek claims: The underwriters pursued this criminal effect by intentionally fabricating false evidence with the purpose that the underwriters (who were responsible for the payment of insurance indemnity for the vessel) avoid paying this insurance indemnity, contrary to their contractual obligations and their legal obligations and in particular contrary to the provisions of the insurance contract, providing for the timely payment of the insurance indemnity.
They also include the claim that the appellants were asserting and disseminating false information to third parties, although they were aware of their falsity, damaging the claimants reputation and credibility with the purpose that the underwriters (who were responsible for the payments of the insurance indemnity for the vessel) avoid paying the insurance indemnity, contrary to their contractual obligation and their legal obligation and in particular contrary to provisions of the insurance contract providing for the timely payment of the insurance indemnity Mr Crampton then turned to what he called the [i]ntentional fabrication of false evidence for defrauding the English court and [t]he moral instigation alternatively complicity of the underwriters to perjury and on the defrauding of the court by the underwriters.
He summarised the position in this way in paragraph 20 of his witness statement: The essence of the complaint against the Defendants in the Greek proceedings concerns the allegation that the Defendants obtained false evidence in Greece from the bosun of the Alexandros T, Aljess Miranda This evidence was then deployed in these proceedings in England and also in the Greek proceedings.
There is a substantial section of the Greek pleadings relating to the financial consequences of the failure by the insurers to comply with their obligations under the policy and the way in which they allegedly handled the investigations.
In a further set of proceedings, known as Greece 2, two additional heads of loss are claimed by Starlight and OME, arising out of substantially the same allegations.
As Longmore LJ put it in para 15, in apparent recognition of the problem raised by the fact that such claims had either not been brought in England or had been ruled out as a matter of English law by Tomlinson J, Mr Crampton, in paragraph 27 of his witness statement, explained that the claims are advanced in two ways in the Greek pleadings: first, that as a result of the underwriters intention to avoid payment of the insurance indemnity, eventually resulting in late payment of the policy proceeds, the claimants missed the opportunity to use the policy proceeds to invest in three vessels (not just the one referred to in the 2006 proceedings); and, secondly, that, as a result of the defendants actions in acquiring the false evidence of Mr Miranda, his clients were not able to insure the vessels and without insurance they would not have been able to trade them and could not purchase them.
He stated that his clients would amend their pleadings prior to the hearing of the disputes in Greece so as to clarify this head of claim, such that no claim is made in respect of the late payment of the policy proceeds.
The expert evidence from the defendants is that it is not possible to amend the pleadings in the Greek courts, but, treating the proposed draft amendment, which he exhibited, as a clarification, it did not seem to the judge that it in any way cured the defect, if defect there was.
It is further said that the insurance of the three potential new vessels was rendered impossible, since all the London insurers refused to quote for the vessels because of the refusal of the defendant underwriters to quote for them and because of the defamatory accusations spread as to the unseaworthiness of the Alexandros T.
All these allegations arise out of the alleged manner in which the defendants handled Starlight's claim in respect of the Alexandros T, and, even though the consequences and the consequential losses have expanded, and the claim for moral damages has been included, and although it seems that Starlight now rely on an expanded affidavit of Mr Miranda, the allegations, even though put into the context of Greek law, were said by the judge to be materially identical to those made prior to the settlement agreement.
The acts complained of are all said to have constituted delicts under Greek law akin to the torts of defamation and malicious falsehood under English law.
The present position
Since the issue of the Greek proceedings, as Longmore LJ explained in para 16 (and the judge at his para 14), the insurers have taken further steps and brought further proceedings in England as follows.
By applications issued in the 2006 proceedings on 25 July and 3 August 2011, the CMI and the LMI respectively sought, pursuant to the Tomlin Orders (if necessary after lifting the stay imposed by them) summary relief pursuant to CPR Part 24 by way of declarations and damages against Starlight.
The LMI, because permission was given to them to join OME as a third party, also sought summary relief pursuant to Part 24 against OME (which filed an acknowledgment of service and a defence) to enforce the LMI settlement agreement, to which it also was a party.
In addition, fresh proceedings (2011 Folio 702) were commenced by the LMI, without prejudice to their case that sufficient relief could and would be obtained in the 2006 proceedings, against both Starlight and OME, and, after an acknowledgment of service and defence were filed, an application was made under Part 24 for similar relief to the claim in the 2006 proceedings.
The LMI also brought fresh proceedings (2011 Folio 1043) against Starlight's co assured and, again after acknowledgments of service and defence had been filed, sought declaratory relief and damages for breach of the exclusive jurisdiction clause in their insurance policies, by virtue of the issue of the Greek proceedings by those co assured.
Also in fresh proceedings (2011 Folio 894), the CMI brought claims against OME and the same co assured in respect of similar claims for breach of the exclusive jurisdiction clause in the policy, and in respect of OME by reference to breach of the terms of the settlement agreement.
Judgment in default was entered by the CMI against all those defendants on 26 October (amended on 14 November) 2011.
Those proceedings are not the subject of this appeal and no issue therefore currently arises with respect to them.
Finally, and by separate application, the HD defendants were joined as defendants in the 2006 proceedings so that, in due course, they too might be able In summary, the claims made in the various proceedings are these. to claim relief by seeking declaratory relief within the original proceedings.
Starlight and their associates applied to stay both the 2006 proceedings in their current form and 2011 Folios 702 and 1043.
(a) The 2006 proceedings. (1) The CMI claim against Starlight and, through Part 20 proceedings, against OME (i) a declaration that the Greek claims fall within the terms of the release in the CMI settlement agreement; (ii) a declaration that the bringing of the Greek claims was a breach of the release in the settlement agreement; (iii) damages for breach of the release in the settlement agreement; (iv) a declaration that the bringing of the Greek claims was a breach of the jurisdiction clauses in the settlement agreement and the policies; (v) damages for breach of the jurisdiction clauses in the policies and CMI settlement agreement; and (vi) an indemnity under clause 3 of that agreement in respect of claims brought by Starlight and/or its associated companies in the various Greek proceedings; (2) the LMI claim against Starlight (i) declarations that the LMI settlement agreement settles any claim against them by Starlight in respect of the loss of the Alexandros T and covers Starlights claims in the Greek proceedings (para 3); (ii) a declaration that Starlight is in breach of that agreement in bringing the Greek proceedings; (iii) damages for breach of the settlement agreement; and (iv) a declaration that the agreement entitles the LMI to an indemnity against Starlight in respect of the matters covered by the indemnity, which includes all claims by Starlight and its associated companies in the Greek proceedings; and (3) the LMI claims against OME by Part 20 proceedings: (i) like relief to that which the LMI claim against Starlight, as summarised above; and possibly (ii) damages for breach of the exclusive jurisdiction clause in the policy, although this claim is not repeated among the prayers. (b) Action 2011 Folio 702.
The LMI claim against Starlight and OME: (i) declarations that the LMI settlement agreement settles any claim against them by Starlight and/or OME in respect of the loss of the Alexandros T and covers Starlights and/or OMEs claims in the Greek proceedings; (ii) damages for breach of that agreement; (iii) damages for breach of the jurisdiction clause in the policy; and (iv) damages for breach of the jurisdiction clause in the settlement agreement. (c) Action 2011 Folio 1043.
The LMI claim against five of Starlights co assureds for breach of their policy jurisdiction clauses.
The decisions of the judge and the Court of Appeal
The insurers sought to enforce the settlement agreements referred to in the Tomlin Orders and, in a judgment handed down on 19 December 2011, having refused a stay under Article 28, the judge held that they were entitled to summary judgment for (inter alia) a declaration that the matters sought to be raised in Greece were part of the settlement of the claim and that Starlight (and OME) are bound to indemnify the insurers against any costs incurred and any sums that may be adjudged against them in the Greek proceedings.
As stated above, the Court of Appeal held that it was bound to stay the 2006 proceedings and 2011 Folio 702 and 1043 under Article 27, made no final determination of the position under Article 28 and declined to consider the issues of summary judgment.
The Court of Appeal also held that it was not too late for the respondents to rely upon Article 27 or Article 28.
The issues
In this Court the appellants challenge the correctness of the Court of
Appeals conclusion under Article 27 and, on the respondents cross appeal, submit that the judge was correct to refuse a stay under Article 28.
If the appellants succeed under both articles, the case will have to be remitted to the Court of Appeal to consider the respondents appeal from the summary judgment granted by the judge.
Article 27
The questions for decision under Article 27 are whether, in the events which happened, the Court of Appeal was wrong to hold that it was not too late for the respondents to rely upon Article 27, whether the proceedings in Greece and the proceedings in England involve the same cause of action, whether they are between the same parties and which court was the court first seised.
For reasons which will appear, I will defer consideration of the too late point until after consideration of the other issues.
Article 27 must be construed in its context.
The immediate context of Articles 27 and 28 is that they form part of Section 9 of Chapter II of the Regulation, which must be read in the light of Recitals 2 and 15 of the preamble.
It is apparent from Recital 2 that the Regulation aims, in the interests of the proper functioning of the internal market, to put in place: Provisions to unify the rules of conflict of jurisdiction in civil and commercial matters and to simplify the formalities with a view to rapid and simple recognition and enforcement of judgments from Member States bound by this Regulation.
Recital 15 provides: In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States.
There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending.
For the purposes of this Regulation that time should be defined autonomously.
The mechanism referred to in Recital 15 is provided by Section 9 of Chapter II of the Regulation, which includes Articles 27 and 28: Section 9 Lis pendens related actions Article 27 1.
Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2.
Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.
Article 28 1.
Where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings. 2.
Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3.
For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
Article 29 Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.
Article 30 For the purposes of this Section, a court shall be deemed to be seised: 1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or 2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court."
The Regulation is the successor to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (the Brussels Convention), in which the equivalent provisions to Articles 27 and 28 were Articles 21 and 22 respectively.
The Court of Justice of the European Union (the CJEU) has held that the principles developed in its case law with regard to Articles 21 and 22 of the Brussels Convention apply equally to Articles 27 and 28 of the Regulation: see Folien Fischer AG v Ritrama SpA (Case C 133/11) [2013] QB 523 at paras 31 and 32.
The CJEU was of course previously the European Court of Justice (ECJ).
Although some of the decisions to which I refer were made by the ECJ, for simplicity I will refer to all the European decisions as those of the CJEU.
The CJEU has laid down a number of general principles which are of some importance.
They include the important principle that a court in a Member State must not grant an anti suit injunction to restrain the bringing or continuing of proceedings in another Member State, whether to restrain an abuse of process or to restrain proceedings brought or continued in breach of an exclusive jurisdiction clause: see eg Turner v Grovit (Case C 159/02) [2005] 1 AC 101 and West Tankers Inc v Allianz SpA (The Front Comor) (Case C 185/07) [2009] 1 AC 1138.
They also include the following, with specific reference to Articles 27 and
First, the purpose of Article 27 is to prevent the courts of two Member States from giving inconsistent judgments and to preclude, so far as possible, the non recognition of a judgment on the ground that it is irreconcilable with a judgment given by the court of another Member State: Gubisch Maschinenfabrik KG v Palumbo (Case C 144/86) [1987] ECR 4861 at para 8.
Second, the objective of Article 28 is to improve co ordination of the exercise of judicial functions within the European Union and to avoid conflicting and contradictory decisions, thus facilitating the proper administration of justice: see eg The Tatry (Case C 406/92) [1999] QB 515 at paras 32, 52 and 55 and Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, per Lord Saville at 39F H. The CMI claims: same causes of action? 28.
It is convenient to consider first the position of the CMI claims.
The first specific question is whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings, by which I mean Greece 1 and Greece 2.
The principles of EU law which are relevant to the determination of this question are in my opinion clear.
They have been considered in a number of cases in the CJEU and are essentially as submitted on behalf of the CMI.
They may be summarised in this way. i) ii) iii) iv) The phrase "same cause of action" in Article 27 has an independent and autonomous meaning as a matter of European law; it is therefore not to be interpreted according to the criteria of national law: see Gubisch at para 11.
In order for proceedings to involve the same cause of action they must have "le mme objet et la mme cause".
This expression derives from the French version of the text.
It is not reflected expressly in the English or German texts but the CJEU has held that it applies generally: see Gubisch at para 14, The Tatry at para 38 and Underwriting Members of Lloyds Syndicate 980 v Sinco SA [2009] Lloyd's Rep IR 365, per Beatson J at para 24.
Identity of cause means that the proceedings in each jurisdiction must have the same facts and rules of law relied upon as the basis for the action: see The Tatry at para 39.
As Cooke J correctly stated in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyd's Rep 665 at para 42, The expression 'legal rule' or 'rule of law' appears to mean the juridical basis upon which arguments as to the facts will take place so that, in investigating 'cause' the court looks to the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is co incidence between them in the actions in different countries, making due allowance for the specific form that proceedings may take in one national court with different classifications of rights and obligations from those in a different national court.
Identity of objet means that the proceedings in each jurisdiction must have the same end in view: see The Tatry at para 41, Gantner Electronic GmbH v Basch Exploitatie Maatschappij BV (Case C 111/01) [2003] ECR I 4207 at para 25, Primacom at para 42 and Sinco at para 24. v) The assessment of identity of cause and identity of object is to be made by reference only to the claims in each action and not to the defences to those claims: see Gantner at paras 24 32, where the CJEU said this in relation to Article 21 of the Brussels Convention: . in order to determine whether two claims brought between the same parties before the courts of different Contracting States have the same subject matter, account should be taken only of the claims of the respective applicants, to the exclusion of the defence submissions raised by a defendant.
See also to similar effect Kolden Holdings Ltd v Rodette Commerce Ltd [2008] 1 Lloyd's Rep 434, per Lawrence Collins LJ at para 93 and Research in Motion UK Ltd v Visto Corporation [2008] 2 All ER (Comm) 560, per Mummery LJ at para 36. vi) It follows that Article 27 is not engaged merely by virtue of the fact that common issues might arise in both sets of proceedings.
I would accept the submission on behalf of the CMI that this is an important point of distinction between Articles 27 and 28.
Under Article 28 it is actions rather than claims that are compared in order to determine whether they are related. vii) After discussing Gubisch, The Tatry, Sarrio, The Happy Fellow [1998] 1 Lloyds Rep 13 and Haji Ioannou v Frangos [1999] 2 Lloyds Rep 337, Rix J summarised the position clearly and, in my opinion, accurately in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692 at 697: It would appear from these five cases, of which the first two were in the European Court of Justice, and the latter three in the domestic Courts of England, that, broadly speaking, the triple requirement of same parties, same cause and same objet entails that it is only in relatively straightforward situations that art 21 bites, and, it may be said, is intended to bite.
After all, art 22 is available, with its more flexible discretionary power to stay, in the case of related proceedings which need not involve the triple requirement of art 21.
There is no need, therefore, as it seems to me, to strain to fit a case into art 21.
The European Court, when speaking in Gubisch (at para 8) of the purpose, in the interests of the proper administration of justice within the European Community, of preventing parallel proceedings in different jurisdictions and of avoiding in so far as it is possible and from the outset the possibility of irreconcilable decisions, was addressing arts 21 and 22 together, rather than art 21 by itself.
Thus a prime example of a case within art 21 is of course where party A brings the same claim against party B in two jurisdictions.
Such a case raises no problem.
More commonly, perhaps, the same dispute is raised in two jurisdictions when party A sues party B to assert liability in one jurisdiction, and party B sues party A in another jurisdiction to deny liability, or vice versa.
In such situations, the respective claims of parties A and B naturally differ, but the issue between them is essentially the same.
The two claims are essentially mirror images of one another.
Gubisch and The [Tatry] are good examples of this occurrence.
On the other hand, Sarrio v KIA is a case where the same claimant was suing the same defendant on different bases giving rise to different issues and different financial consequences, and where liability on one claim did not involve liability (or non liability) on the other.
Haji Ioannou v Frangos illustrates the situation where even though the cause is the same, and even though there is some overlap in the claims and issues, nevertheless different claims, there the proprietary claim to trace, may raise sufficiently different issues of sufficient importance in the overall litigation for it to be concluded that the objet differs.
The authority of The Happy Fellow at first instance may be somewhat shaken by the reservations expressed by Lord Justice Saville on appeal, but it too may be said to illustrate the process of analysing the claims and issues in the respective proceedings to identify whether they are the same.
Where, for instance, there is no dispute over a shipowners right to limit should he be found liable (a separate question, which need not even be resolved at the time when a limitation action is commenced or a decree given), I do not for myself see why it should be held that the liability action and the limitation action involve the same cause of action for the purposes of art 21.
How do these principles provide an answer to the question whether the 2006 proceedings involve the same cause or causes of action as the Greek proceedings? It is necessary to consider the claims advanced by the CMI and the LMI separately and, in the case of each cause of action relied upon, to consider whether the same cause of action is being relied upon in the Greek proceedings.
In doing so, the defences advanced in each action must be disregarded.
The essential question is whether the claims in England and Greece are mirror images of one another, and thus legally irreconcilable, as in Gubish and The Tatry, in which case Article 27 applies, or whether they are not incompatible, as in Gantner, in which case it does not.
Thus in Gantner a claim for damages for repudiation of a contract and a claim for the price of goods delivered before the repudiation could both have succeeded and the fact that a set off of the damages would make the price less beneficial to the seller did not make them incompatible.
And in Maersk Olie & Gas A/S v Firma M de Haan en W De Boer (Case C 39/02) [2004] ECR I 9657 owners of a vessel which damaged a pipeline (owned by Maersk) sought a declaration that they were entitled to limit their liability under the 1957 International Convention relating to the Limitation of Liability of Owners of Sea going Ships and the Dutch legislation that gave effect to it and that a limitation fund be established.
Maersk subsequently commenced proceedings in Denmark claiming compensation for damage to the pipeline.
The CJEU held that the causes of action were not the same: see paras 35 to 39.
The CJEU underlined both the principle in Gantner that account should be taken only of the claims and not of the defences advanced and the principle in The Tatry that the cause of action comprised both the facts and the legal rule invoked as the basis of the application.
It held on the facts, at para 38, that: the unavoidable conclusion is that, even if it be assumed that the facts underlying the two sets of proceedings are identical, the legal rule which forms the basis of each of those applications is different.
The action for damages is based on the law governing non contractual liability, whereas the application for the establishment of a liability limitation fund is based on the 1957 Convention and the Netherlands legislation which gives effect to it.
The CJEU thus distinguished Gantner and The Tatry on the basis that in those cases, by contrast, the claim brought in the second set of proceedings mirrored that brought in the first set.
What then is the position on the facts? The CMI advance the claims referred to in para 18 above under three heads, each of which relies upon provisions either of the CMI settlement agreement or the policies.
It is convenient to consider the claims under the three heads in this order: indemnity, exclusive jurisdiction and release.
Indemnity claims
These are based on clause 3 of the settlement agreement set out above.
The claims are simple.
By clause 3 the Assured as defined agreed to indemnify the CMI against any claim that might be brought against them by any of the Assureds or the Claimants associated companies or organisations or by any mortgagee in relation to the loss of Alexandros T or under the relevant policy.
The CMI say that the Greek proceedings are in respect of such claims and that they are entitled to be indemnified against the consequences of those proceedings.
They say that that claim under clause 3 does not give rise to the same claim or cause of action as any claim or cause of action in the Greek proceedings.
They say that, on the contrary, it assumes that the Greek proceedings will proceed and that the claimants in Greece may succeed.
I would accept that submission.
In my opinion, none of the causes of action relied upon in the Greek proceedings has identity of cause or identity of object with the CMIs claim for an indemnity.
As to cause, the subject matter of the two claims is different.
The former are claims in tort (or its Greek equivalent) and the claim for an indemnity is a claim in contract.
As to object, that of the Greek proceedings is to establish a liability under Greek law akin to tort, whereas, as for example in the case of a claim on an insurance policy, the object of the CMIs claim is to establish a right to be indemnified in respect of such a liability.
Further, whereas Starlight and its co assureds and the individual officer claimants in the Greek proceedings are seeking each to recover its or his own loss, the indemnity clause will, if the indemnity claim is otherwise good, entitle the CMI to recover from Starlight not just any sum awarded in Greece to Starlight, but also any sums awarded to any of Starlights co claimants.
So the object of the English indemnity claim against Starlight differs from, and is in fact much wider than, the object of Starlights claim in the Greek proceedings.
Moreover, the claim for an indemnity in the 2006 proceedings in England does not interfere in any way with the Greek proceedings or vice versa.
There is no attempt in Greece to impugn the settlement agreements or the indemnity agreements contained in them.
The respondents do not assert, for example, that the indemnities do not apply to some or all of the Greek claims.
I would determine this point in favour of the CMI on this simple basis.
The CMIs cause of action for an indemnity under clause 3 of the settlement agreement is not the same cause of action as any of the causes of action relied upon in Greece, which are tortious.
The respective causes of action have neither the same object (le mme objet) nor the same cause (la mme cause).
Exclusive jurisdiction clauses
The same is in my opinion true of the CMIs claims that the respondents have brought the proceedings in Greece in breach of the exclusive jurisdiction clauses in the settlement agreement and/or in the insurance policies.
Clause 6 of the settlement agreement expressly provides that it is subject to English law and the exclusive jurisdiction of the High Court in London.
The CMI say that, in bringing the Greek proceedings, the respondents are in breach of clause 6 and that they are entitled to damages as a result.
They do not seek an anti suit injunction to restrain the Greek proceedings.
They simply seek a declaration that the claims brought by Starlight and OME in Greece 1 and Greece 2 fall within the scope of the settlement agreement.
Moreover the respondents do not assert in the Greek proceedings that the settlement agreements do not preclude the bringing of their claims in Greece.
It may be that the reason they do not advance that argument is that they would be met with the response that a dispute as to the meaning and effect of the settlement agreements is subject to the English jurisdiction clause so that the court in Greece would have to decline jurisdiction.
However that may be, they do not in fact advance the argument.
It follows that in this respect too the Greek proceedings are not the mirror image of the English proceedings or vice versa and that the cause or causes of action based on an alleged breach of clause 6 of the CMI settlement agreements are not the same cause or causes of action as are advanced by the respondents in Greece.
They do not have le mme objet et la mme cause.
As I see it, the position is the same in the case of the alleged breach of the exclusive jurisdiction clauses in the insurance policies.
There is an established line of cases in England to the effect that claims based on an alleged breach of an exclusive jurisdiction clause or an arbitration clause are different causes of action from claims for substantive relief based on a breach of the underlying contract for the purposes of Article 21 of the Brussels Convention and Article 27 of the Regulation: see eg Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 WLR 588 per Steyn LJ (giving the judgment of the Court of Appeal) at 595H 596C; Alfred C Toepfer International GmbH v Molino Boschi Sarl [1996] 1 Lloyds Rep 510 per Mance J at 513; Toepfer International GmbH v Socit Cargill France [1997] 2 Lloyds Rep 98, per Colman J at 106; Sinco per Beatson J at paras 50 and 54; and WMS Gaming Inc v Benedetti Plus Giocolegale Ltd [2011] EWHC 2620 (Comm) per Simon J at para 32.
Those cases support the conclusion that the claims of the CMI in the 2006 proceedings for breach of the exclusive jurisdiction clauses in the insurance policies (or indeed in the settlement agreement) do not involve the same cause or causes of action within the meaning of Article 27 as the respondents claims in (or akin to) tort in the Greek proceedings.
I understand that this point has been reserved for decision by the Court of Appeal but, as I see it at present, nothing in the relief sought by the CMI offends the principle of mutual trust and confidence which underlies the Regulation: see eg Erich Gasser GmbH v MISAT Srl (Case C 116/02) [2005] QB 1.
The CMI do not seek to stop the Greek proceedings or to restrain Starlight and OME from pursuing them.
They merely seek declarations as to the true position under the settlement agreements which are both governed by English law and subject to the exclusive jurisdiction of the English courts and under the clauses in the insurance contracts which also provide for the exclusive jurisdiction of the English courts.
This has the advantage that the courts with exclusive jurisdiction decide what is the true meaning of the settlement agreements and the jurisdiction clauses.
Release
The same is also, in my opinion, true of the claims based on what are called the release provisions in the CMI settlement agreement.
It is said that the provision that the sums agreed to be paid under the CMI settlement agreement are to be paid in full and final settlement of all and any claims it may have under the policy precludes the payment of any further sums arising out of the loss of the vessel insured.
It is said that, in the light of the agreement, the CMI are entitled to a declaration that the Greek claims fall within the terms of the agreement, that they are entitled to a declaration that the bringing of those claims is a breach of the agreement and that they are entitled to damages for that breach.
The question is whether these claims involve le mme objet et la mme cause as the claims in the Greek proceedings.
In my opinion they do not for the same reasons as in the case of the claims for an indemnity and the claims arising out of the exclusive jurisdiction clauses.
The Greek claims are claims in tort and these are contractual claims.
The factual bases for the two claims are entirely different.
Moreover the object of the two claims is different.
This is to my mind clear in the case of the claims for damages for breach of the release provisions in the settlement agreements and for a declaration that the bringing of the Greek claims is a breach of the settlement agreement.
The nature of the claims is almost identical to the nature of the claims for breach of the jurisdiction agreements.
In both cases the alleged breach is the bringing of the claims in Greece.
Moreover, like the claims for an indemnity, the claim for damages for breach of the settlement agreement assumes that the claims in Greece may succeed.
Is the position different in respect of the claim for a declaration that the Greek claims fall within the terms of the release in the settlement agreements? In my opinion the answer is no.
All these claims have the same thing in common.
It is that the legal basis for the claims in Greece is different from the legal basis of the claims in England.
In Greece the legal basis for the claims is tortious, whereas in England the legal basis of the claims is contractual.
It is thus not a case like Gubisch, where, as the CJEU put it at para 15, the same parties were engaged in two legal proceedings in different Contracting States which were based on the same cause of action, that is to say the same contractual relationship.
The cause was therefore the same.
Equally the objet of the actions was the same, namely to determine the effect if any of the contract.
As the CJEU put it at para 16, the action to enforce the contract was aimed at giving effect to it, while the action for its rescission or discharge was aimed precisely at depriving it of any effect.
The question whether the contract was binding lay at the heart of the two actions.
That is not true here because the object of the English action is to enforce the contract, whereas the object of the Greek proceedings is to establish a different liability in tort.
Lord Mance takes a different view in one respect.
So far as the claims for damages for breach of the releases in the settlement agreements, the claims for a declaration and damages for breach of the jurisdiction clauses and the claims for indemnities are concerned, there is no difference between us.
However, so far as the claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreements is concerned, Lord Mance takes a different view.
He notes in para 140 the terms in which the claims are pleaded.
The formulation in paragraph 18(a) above, which was adopted by the respondents, is in fact derived from the declaration made by the judge.
However, to my mind nothing turns on this difference.
Moreover, I do not see that it makes any difference that the respondents discharged their obligations under the settlement agreements.
The critical point is that on the facts here the legal basis of the claims in tort in Greece is different from the legal basis of the contractual claims in England.
It is true that, if successful, a declaration that the tortious claims have been settled or released will or may afford the appellants a defence to the Greek proceedings but the cases show that defences are irrelevant.
Viewed through the perspective of the claims, the two claims are not the mirror image of one another.
Even if (contrary to my view) the two sets of proceedings had in this respect le mme objet they did not have la mme cause, whereas the cases show that, in order to involve the same cause of action, they must have both le mme objet et la mme cause.
The position would be different if the CMI were to advance a claim in the English proceedings claiming a declaration that they are not liable to the respondents in Greece.
That claim would be the mirror image of the claims being brought by the respondents in Greece and would fall within the principles laid down in Gantner and The Tatry.
In fact, after the judge had delivered his judgment, the CMI did, as I understand it, make an application for such a negative declaration in the light of the fact that Starlight and OME had commenced Greece 2.
We were told that in the event the application was never determined and that the CMI do not pursue it.
It has been confirmed that any such claim has now been abandoned.
For these reasons, subject to a possible reference to the CJEU discussed in paras 58 59 below, I would hold that Article 27 does not apply to any of the causes of action advanced by or against the CMI.
I appreciate that, in reaching these conclusions I have reached a different
view from that of the Court of Appeal.
Before I express my reasons, I should say that I suspect that the focus of the argument in the Court of Appeal was somewhat different from that in this Court.
The reasons are I think twofold.
First, in para 40 of his judgment Longmore LJ distinguished Sinco on the basis that the difference between this case and that is that in that case, in contradistinction to this, there was no settlement agreement which could, as he put it, supposedly deny the Greek claimants the right to bring proceedings at all.
I do not see that as correct.
As explained above, the CMI do not seek to deny the respondents the right to commence proceedings in Greece but merely say that the causes of action in the two sets of proceedings are different.
The second point is perhaps more significant.
In para 46 Longmore LJ correctly notes that the CMIs case is that the bringing of the Greek proceedings is a breach of the jurisdiction clauses in the policies and a breach of the terms of the settlement agreement and, again correctly, states that the primary relief claimed by the CMI in England is a declaration that Starlight will be liable to indemnify the CMI against any costs incurred in the Greek proceedings and any liability in those proceedings.
I have already given my reasons for concluding that those are different causes of action from the causes of action in tort relied upon by the respondents in Greece.
They are not a mirror image of one another.
As I see it, the Court of Appeal treated the question as a broad one focusing on the overall result in each jurisdiction.
This can be seen from paras 47 to 50 of Longmore LJs judgment.
In paras 46 and 47 he summarised the claims of both the CMI and the LMI.
He then said this at paras 48 and 49: 48.
It is clear that the first 3 paragraphs of the LMI application are in terms an assertion that LMI are not liable in respect of the claims in Greece.
CMI's allegation that the Greek claimants are in breach of the settlement agreements is in effect a similar assertion.
It may be said that there are other causes of action in the English proceedings which are not exactly mirror images of the allegations in the Greek proceedings but to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements.
The claims for damages and indemnity are in any event parasitic on the central contention that, once a settlement had been reached, all matters in issue had been compromised.
It is, of course, elementary that Article 27 has regard to causes of action rather than proceedings and that is why it is necessary to concentrate on the allegations relating to the settlement agreement.
It is certainly the case that there is a considerable risk of inconsistent judgments if one of the sets of proceedings is not stayed and the rationale behind Article 27 therefore favours a stay if the Greek court was the court first seised. 49.
I therefore conclude that, in so far as the English proceedings assert non liability by reason of the settlement agreements, there is an identity of issues and the respective causes of action are the same.
To the extent that allegations are made in England that the Greek parties are in breach of the settlement agreements or in breach of the exclusive jurisdiction clauses in either the insurance policy or the settlement agreements themselves (and that they should therefore indemnify the insurers for the cost of the Greek proceedings) they are parasitic and dependent on the basic cause of action in England for a declaration of non liability.
They cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek actions in tort has been resolved.
In my opinion that analysis is not consistent with the principles laid down
by the CJEU set out above.
As already stated, those principles require a comparison of the claims made in each jurisdiction and, in particular, consideration of whether the different claims have le mme objet et la mme cause without regard to the defences being advanced.
As I see it, Article 27 involves a comparison between the causes of action in the different sets of proceedings, not (as in Article 28) the proceedings themselves.
In para 48 Longmore LJ recognises that there are causes of action in the English proceedings which are not (as he puts it) exactly mirror images of the allegations in the Greek proceedings but says that, to the extent that they are not, they are essentially the same in the sense that the key assertion in Greece is that there are non contractual claims and the key assertion in England is that those non contractual claims have been compromised by the settlement agreements.
And at the end of para 49 he says that the claims in England cannot proceed in their own right until the underlying question of the ambit of the settlement agreements as a defence to the Greek action in tort has been resolved.
I respectfully disagree with that approach.
It focuses on the nature of the
settlement agreements as a defence to the Greek action in tort, which the authorities in the CJEU show is irrelevant.
Given the fact that defences are irrelevant, the analysis cannot involve a broad comparison between what each party ultimately hopes to achieve.
The analysis simply involves a comparison between the claims in order to see whether they have the same cause and the same object.
In so far as Andrew Smith J treated the question as a broader one in Evialis SA v SIAT [2003] 2 Lloyds Rep 377 I respectfully disagree with him, although, as Beatson J observed in Sinco at para 50, Evialis was distinguishable on the facts because the insured had brought a substantive claim in the English proceedings in addition to their claim in the Italian proceedings, which rendered the former a mirror image of the latter.
This case can be distinguished on the same basis, at least in the case of the CMIs claims.
I also note in connection with Sinco that at para 40 Longmore LJ observed that the difference between that case and this was that in that case there was no settlement agreement which could supposedly deny the right of the Greek claimants to bring proceedings at all.
For the reasons I have given I would respectfully disagree with that approach.
A settlement agreement might be a defence to a claim.
It could not deny the right of the Greek claimants to bring proceedings at all.
For these reasons I would hold that Article 27 has no application to the case of the CMI.
Moreover, subject to one point discussed at paras 58 59 below, I would not order a reference to the CJEU on this question because the relevant principles are clearly set out in its jurisprudence and are acte clair.
In these circumstances, where none of the causes of action in the English proceedings is the same as the causes of action in the Greek proceedings, it is not necessary in the case of the CMI to consider the other issues which might arise, namely the position in relation to other parties and which court was the court first seised for the purposes of Article 27.
The LMI claims: same causes of action?
Save possibly for two points, the position of the LMI is essentially the same as in the case of the CMI.
The first point is that the jurisdiction clause in clause 5 of the LMI settlement agreement differs from that in clause 6 of the CMI settlement agreement in that it does not expressly provide for the exclusive jurisdiction of the High Court in London but merely for the jurisdiction of the High Court in London.
However, subject to its detailed provisions, Article 23 of the Regulation provides that, where parties have agreed that a court or the courts of a Member State shall have jurisdiction, that court or those courts shall have jurisdiction and, moreover, that such jurisdiction shall be exclusive unless the parties have agreed otherwise.
The question whether the parties had agreed otherwise was discussed by the judge at paras 19 to 23 of his judgment, where he held that the parties had not agreed otherwise and that clause 5 of the LMI was an exclusive jurisdiction clause.
No appeal was brought against that part of the judges ruling.
The second point is this.
I had understood during the argument that the LMI were seeking a negative declaration of the kind which the CMI were not.
It now appears that I was mistaken.
I understand that the LMI had indicated an intention of doing so if the CMI proceeded with an application for permission to do so but, since they did not, nor did the LMI, who have now expressly stated that, like the CMI, they will not do so.
As I see it, in these circumstances the position of the LMI is the same as that of the CMI.
The causes of action advanced in England in the 2006 action and in 2011 Folio 702, as summarised on behalf of the LMI, are claims by the LMI against Starlight and OME based on clauses 3, 4 and 5 of the LMI settlement agreement.
Those advanced in 2011 Folio 1043 are claims by the LMI against the co assureds to enforce the English jurisdiction clause in the insurances.
Since, on this basis, the relief sought by the LMI is not a declaration of non liability, the conclusions and reasoning set out above on the question whether the causes of action are the same apply to it.
It follows that I would allow the appeals of both the CMI and the LMI on the Article 27 point.
However these conclusions are subject to the question whether any of the issues discussed above should be referred to the CJEU.
Left to myself, I would not refer any of them because the principles of European law are clear and the only question is how they should be applied in the instant case.
However, Lord Mance has arrived at a different view from me on the question whether Article 27 applies to the claims by both the CMI and the LMI for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled.
In short he is of the view that those claims are essentially for declarations of non liability.
In these circumstances, I have reached the conclusion that the position is the same as I previously considered it to be when I thought that the LMI were seeking a declaration of non liability.
That is that, unless the CMI and the LMI abandon those claims within 14 days, we should refer the question whether the claims for those declarations involve the same cause of action as the claims in Greece within the meaning of Article 27.
Lord Neuberger has also given reasons why, absent such abandonment, this question should be referred.
On the other hand, if the CMI and the LMI do abandon those claims, I would allow both their appeals under Article 27 and refuse a mandatory stay of the proceedings under it.
If they do not abandon those claims, I would allow the appeals under Article 27 in respect of the other claims but refer the question referred to above to the CJEU and defer a decision on that issue until the CJEU has determined the question.
Seisin under Article 27
It is not I think in dispute (and is in any event correct) that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings.
In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, for example, to the extent that the LMI in action 2011 Folio 702 are seeking declarations relying on the settlement agreement as a settlement of or defence to Starlight's and OME's claims in the Greek proceedings, the English courts were only seised of that action in 2011.
It follows that, in each of those cases the court first seised was the Greek court and not the English court, and that, to the extent that the LMI advance claims for a declaration that the Greek claims fall within the terms of the release in the settlement agreement or that under the agreement the tort claims have been settled, unless the English court is the court first seised, they will be entitled to a stay under Article 27.
The same is essentially true of the CMI claims.
The question is which court is first seised of what in circumstances where some of the claims brought in England are different from and based on different causes of action from those brought in Greece and one of them in each case, namely the claim for the declaration or declarations referred to above, is based on the same cause of action.
The approach of the parties is starkly different.
It is submitted on behalf of the appellants that the answer is to be found in the language of Articles 27 and 30 and is that the court first seised is that in which the proceedings were first brought and that the court remains the court first seised of the proceedings even where those proceedings are subsequently amended by the addition of new claims or otherwise.
It is submitted on behalf of the respondents, by contrast, that if a new claim is added by amendment, the court is seised of the proceedings so far as that amendment is concerned when the amendment is made and not at the time of the institution of the original, unamended proceedings.
It seems to me that there is considerable force in the appellants analysis of the language of the Regulation but the respondents case has support both in the English cases and in the textbooks.
In the course of this judgment I will consider the issues (interesting as they are) only briefly because I have reached the conclusion that, if the appellants persist in their claims for the declarations referred to in paras 58 and 59 above and this issue is critical for the resolution of the appeal, the proper course is to refer the question to the CJEU.
The case for the appellants can be summarised thus.
Article 27 is concerned with proceedings involving the same cause of action.
So, for the purposes of deciding whether to grant a stay of its proceedings under Article 27, the court must compare the cause or causes of action in each set of proceedings.
It is Article 30 that determines when the court is deemed to be seised and, by Article 30(1), it provides that (subject to the limited exceptions at the end of Article 30(1) and in Article 30(2)), it is deemed to be seised when the document instituting the proceedings or an equivalent document is lodged with the court.
Where the question is which of two courts is first seised, the two dates on which the courts are deemed to be seised are compared and the court deemed to be seised first is the court first seised.
The appellants also rely upon the transitional provisions in Article 66, which they say support the proposition that proceedings have only one date upon which they are instituted and is inconsistent with the idea that they can have several such dates as and when new claims are added by amendment.
The appellants say that in this case the answer is that the English court was the court first seised because the Greek court was not seised until some five years later.
They say that this is a simple rule which is easy to apply and that there is no warrant in the language of the Regulation for concluding that it was intended that the court should be seised anew each time a new claim is added by amendment, which would be complicated and unnecessary and give rise to endless interlocutory disputes.
The appellants criticise Longmore LJ for asking in para 52 whether it can be said that the English court was first seised of the relevant causes of action now pursued in Greece and for noting that Article 27 only has regard to "causes of action" rather than proceedings.
They say that that is inconsistent with Articles 27 and 30 because Article 27(1) uses the word "proceedings" twice and it is used again in Article 30(1).
They recognise that for the purpose of deciding whether there is le mme objet or la mme cause the court must look to the claims made but, for the purpose of deciding which court is deemed to be "first seised" under Article 27, the autonomous test in Article 30 is applied.
Finally, they say that Article 30 does not mention "causes of action" and that the Court of Appeal overlooked the word "proceedings" used twice in Article 27, and did not refer to Article 30 at all.
Moreover, although the word "proceedings" is not defined in the Regulation, it appears nearly 50 times in the Regulation used as a word of general application.
The uses of the word show that issues or causes of action (or claims) may change during the course of the "proceedings".
The appellants further criticise Longmore LJ in the Court of Appeal by reference to paras 53 and paras 64 66.
They contrast the reference in para 53 to Article 27 having regard only to causes of action rather than proceedings, with the reference in para 64, with apparent approval, to this quote from the judgment of Saville LJ in The Happy Fellow at pages 17 18: article 21 is concerned with proceedings and article 22 with actions.
The questions are whether the proceedings involve the same cause or object or whether the actions are related.
It is thus a misreading of the Convention to ask which Court is first seised of issues which are or might be raised within the proceedings or actions.
If such were the case, then the articles would achieve precisely the opposite of their intended purpose which is, to achieve the proper administration of justice within the Community . " Saville LJ was there considering the position under what is now Article 28.
However the appellants say that the word action in Article 28 means the same as proceedings in Article 27 and that Longmore LJ was correct in paras 64 66 and wrong in para 53.
Although the appellants case has to my mind the merit of simplicity and of the avoidance of time consuming and expensive satellite litigation, the respondents say that it is simplistic and contrary to both principle and authority.
It is fair to say that there is considerable support in the authorities and the text books for the proposition that the new claims added to the 2006 proceedings, which were founded on the Greek proceedings and thus made second in time, were new claims, that the English court should be regarded as seised of them only when they were added to the 2006 proceedings and that the Greek court was the court first seised within the meaning of Article 27.
In the important case of FKI Engineering Ltd v Stribog Ltd [2011] 1 WLR 3264, which was itself a case on Article 28, the Court of Appeal considered Article 27 and a number of cases decided under it.
At para 84 Rix LJ said that the essence of the cases was that, where the same cause of action or the same parties are introduced only by way of service, or amendment, the relevant proceedings are only brought at the time of such service or amendment, not at the time of the institution of the original, unamended proceedings.
Neither Mummery LJ nor Wilson LJ expressed a different view.
The respondents also rely upon Sinco per Beatson J at paras 61 to 68 and, in that connection, upon this comment in Briggs on Civil Jurisdiction and Judgments, 5th edition, 2009 at para 2.235, page 327, note 1: In [Sinco] the proposition that an English court was first seised of a claim for damages for breach of a jurisdiction clause, which could only have been brought before the English court after the objected to proceedings were instituted before the foreign court, was rather challenging.
And in Research in Motion UK Ltd v Visto Corporation [2007] EWHC 900 (Ch), Lewison J said at para 19: It is also common ground that the counterclaim is to be treated as an action in its own right for the purposes of the judgment regulation.
It seems to me that once RIM's English non infringement action is out of the way the only relevant proceedings are Visto's counterclaim and the Italian proceedings.
Of those two, the Italian court is plainly the first seised.
Indeed it cannot be otherwise since the very fact of the Italian claim is part of the foundation of the counterclaim.
The respondents rely upon Briggs at para 2.235, where, as I read it, their case is supported, although some doubts are expressed as to the desirability of this approach.
The respondents also relied upon the 15th edition, 2012 of Dicey, Morris and Collins on The Conflict of Laws at paras 12 060 and 12 069, where they say this: 12 060.
Each lis between a plaintiff and a defendant has to be considered individually to determine which court was seised of it first in time, and article 27 applied accordingly. 12 069.
Where a claim form which has been issued and served is amended by the addition of an additional claim, or by the introduction of a claim or counterclaim against another party, the material question is whether the date of seisin in respect of the additional claim is the date on which the amended claim form is reissued (which may, depending on the circumstances, be only after obtaining the permission of the court), or the date of the original issue.
As it is difficult to see how a court can be said to be seised of a claim which has not been made and does not appear in the claim form, it cannot be correct that as long as a claim form has been issued and served, the court already has temporal priority over any issue which may later be added by amendment.
It would follow from a conclusion that the court is not seised of the new claim until the amended claim form is reissued that the defendant may be able to pre empt the amendment by commencing an action of his own in another Member State.
The court seised with such pre emptive proceedings will obviously be regarded as being seised later than the court before which the original action was brought, but institution of the later action may serve to prevent the proposed, and now duplicative, amendment of the original action; and there is no basis in the Regulation for refusing to give effect to a use of the rules which might be characterised as sharp practice.
Finally, the respondents rely upon Fentiman on International Commercial Litigation, 2010, at para 11.27: Principle suggests that an amended claim arising from the same facts as the original claim might be consolidated with the original claim for the purposes of Article 30 but not where the facts arose subsequently.
In the latter case it does no violence to the expressions 'actions' or 'proceedings' to differentiate the claims.
While these expressions of view undoubtedly provide strong support for the respondents submissions, some of them seem to me to be expressed in a somewhat tentative way and I am not sure that the textbook writers grapple with the points made by the appellants on the language of the Regulation.
However that may be, as indicated earlier, I am of the opinion that this issue is by no means acte clair and, if the appellants maintain their claim or claims in England for a declaration that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled, I would refer an appropriate question to the CJEU before forming a concluded view with regard to the applicability to that claim or claims.
If they abandon them, I would hold that the respondents are not entitled to a stay under Article 27, refuse them a mandatory stay in respect of all the claims and allow the appellants appeal.
Article 28
The question whether those claims which are not within Article 27 should be stayed depends upon whether they should be stayed under Article 28.
As stated above, in the exercise of his discretion the judge refused the respondents application for a stay under Article 28.
The appellants say that he was right to do so.
The respondents case is that the English court was second seised for the purpose of Article 28 and that a stay should be granted as a matter of discretion.
Seisin under Article 28
It is plain from the express terms of Article 28(1) that the discretion in Article 28 is limited to any court other than the court first seised.
It follows that, if the English court was first seised, it has no discretion to stay.
Article 28 moreover applies to related actions pending in the courts of different member states and, by Article 28(3), actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
It is not in dispute in these appeals that the various proceedings are related proceedings for the purposes of Article 28 and I would in any event so hold.
The questions remain whether the actions are pending, whether the English court is the court first seised and, if it is not, how the discretion should be exercised.
In Stribog the Court of Appeal considered the correct approach to Article 28.
It held that two questions arise, namely (1) whether the two sets of proceedings are related, taking account of any amendments which have been made at the time of the enquiry and (2) which set of proceedings were commenced first? Rix LJ expressed the position clearly at paras 119 and 120.
He explained that it is only when there are related and pending actions in separate member states that Article 28 comes into issue.
The question whether they are related is, as he put it, the Article 28(3) question.
He then said: 119.
The question of when seisin occurs and thus which of the courts is the court first seised is the article 30 question.
FKIs submission in effect seeks to roll the two questions together and ask: which of the two courts is the first to be seised of an action which at the time of its seisin was a related action? This is the concept of the first related action, a concept found in neither article 28 nor article 30.
Stribog on the other hand asks: once you have found two related and pending actions and seek to stay one of them, invoking article 28, which of the two courts was the first to achieve seisin of one or other of those actions? 120.
In my judgment, the latter question is the correct one, and is to be preferred to the former .
See also per Mummery LJ at paras 40 to 44, where he stressed in particular that the question is whether the court concerned is seised of an action and not of a particular issue in an action.
He also stressed that the time at which the comparison between the two actions is made is the time of the hearing of the application for the stay.
Wilson LJ noted at paras 132 134 that Mummery and Rix LJJ asked the relevant questions in a slightly different order: Mummery LJ asked which court was first seised in a pending action before asking whether the actions were related, whereas Rix LJ preferred to ask them in the reverse order.
Wilson LJ said that he did not see why the order matters but that Rix LJ seemed to have the terminology of Article 28 on his side.
I agree.
The question whether the actions are pending is closely related to the question whether the English court remains first seised.
The respondents say that there was no action pending in England when the Greece 1 proceedings were commenced.
In the alternative they say that, if the original action is still alive, the English court is not first seised because the claims now brought are entirely new claims, which they say should be equated with new proceedings.
I will consider these points in turn.
On the first point, the appellants say, by contrast, that the 2006 proceedings are still on foot, and thus pending, having been stayed but not finally concluded.
I would accept the appellants submissions.
The settlement agreements were in this respect in identical terms.
It was a term of them that Starlight would obtain a stay by way of Tomlin Orders.
The orders were both in the same terms, which are standard in such cases, and (as quoted in para 7 above) provided that save for the purposes of carrying into effect the terms agreed all further proceedings shall be stayed.
It appears to me that, on the true construction of those orders, the actions remained unstayed for the purposes of carrying into effect the terms agreed and were otherwise stayed.
As I see it, in so far as the actions remained unstayed, it follows that the court remained seised of them, presumably at least until there was no longer any need for the terms agreed to be carried out.
It is plain from the language of Article 28(1) that the court first seised means the court first seised of the action, which must mean first seised of the proceedings, not of particular claims or causes of action within the proceedings.
It seems to me to follow that, in so far as the appellants are seeking to enforce the provisions of the settlement agreements, as they are, the English court remains first seised.
I arrive at this conclusion by a construction of Article 28(1) and of the Tomlin Order.
The appellants were able to pursue these claims without issuing further proceedings.
In this regard I would accept the analysis of the judge at paras 24 to 29.
I would adopt the analysis of Sir Andrew Morritt V C in Bargain Pages Ltd v Midland Independent Newspapers Ltd [2003] EWHC 1887 (Ch) and I would not follow the reasoning of the Court of Appeal in Hollingsworth v Humphrey, (1987) CAT 1244.
What then of the parts of the actions which are stayed under the Tomlin Orders? These would include the claims for breach of the exclusive jurisdiction clauses in the policies of insurance, which do not depend upon the terms of the settlement agreements.
The appellants rely upon principles developed by the English courts as a matter of English, not European, law.
However, this is in my opinion a permissible approach.
Article 30 of the Regulation provides for the circumstances in which a court is deemed to be seised.
I recognise of course that the concept of seisin is an autonomous European law device but Article 30 does not make express provision for the circumstances in which it ceases to be seised.
In these circumstances, it seems to me to be appropriate for national courts to have regard both to the nature of seisin in European law and to their own procedural rules in deciding whether their courts are no longer seised of a particular set of proceedings.
The appellants rely upon the decision of the Court of Appeal in Rofa Sport Management AG v DHLK International (UK) Ltd [1989] 1 WLR 902, where the Court of Appeal held that a stay of proceedings is not equivalent to a dismissal or discontinuance and therefore that an action in which all further proceedings have been stayed, even if by consent of all parties after a settlement, remains in being.
See in particular per Neill LJ at 909H to 910D and 911A C. He concluded that, for the sake of clarity and certainty, the word stay in an order should not be treated as a possible equivalent of a dismissal or discontinuance.
Although the action cannot continue without an order of the court, nor can it, he said, be regarded as dead in the same way as an action which has been dismissed or discontinued by order.
I agree.
The reasoning in Rofa supports the conclusion that in circumstances in which the 2006 proceedings have been stayed and not dismissed or discontinued the court remains seised of them.
It is not and could not be disputed that the court was seised of the proceedings in accordance with Article 30 when the claim form in the 2006 proceedings was issued.
It is not suggested that the appellants failed to take any of the steps referred to in Article 30(1) or (2) which would have nullified that effect.
The question is whether anything happened subsequently from which it can be inferred that the court was no longer seised.
I would answer that question in the negative.
Although Rofa was not a decision on the construction of the Regulation, the correct approach is to consider whether anything occurred which could lead to the conclusion that the approach adopted there should not be applied to the stay incorporated in the Tomlin Orders and, if not, whether there is anything which leads to the conclusion that the court is not still seised of the proceedings.
I would answer both those questions in the negative.
Although it is true that the CMI settlement agreements contained a provision that, on payment of the settlement sum, the parties would file a consent order dismissing the proceedings, no such consent order was made or filed.
The LMI settlement agreement does not contain any such provision.
In all these circumstances, I can see no sensible basis upon which it can be said that the English court is no longer seised of the proceedings.
There remain significant disputes arising out of the settlement agreements and the insurances.
The second point taken on behalf of the respondents under this head is that, even if the original action is still alive, the claims now brought are new claims, which should be equated with, or treated as, new proceedings.
They rely upon this dictum of Rix LJ in Stribog at para 129: Seventhly, there is nothing in the ECJ or English jurisprudence to support the judges approach in this case.
It is possible that the introduction of entirely new causes of action or parties is to be recognised as the bringing of entirely new proceedings, so that the timing of seisin (the article 30 question) has to be looked at from that point of view, as occurs for the purposes of article 27.
Even so, it is not clear to me that in this connection article 27 and article 28 work in the same way: for article 27 is worded in terms of the bringing of actions with the same parties and the same cause of action (Where proceedings are brought in the courts) whereas article 28 is worded in terms of the pendency of related actions (Where related actions are pending in the court) (emphasis added).
That emphasises that the article 28 question is asked with relation to pending actions, and not, as the article 27 question is asked, with relation to the bringing of actions.
In any event, the judge is in my respectful judgment mistaken to think that any amendment is analogous to the bringing of new causes of action or the addition or substitution of new parties.
For my part, I would not accept that approach as applied to Article 28.
In para 68 above I referred to the statement of Rix LJ at para 84 of Stribog.
In para 63 of his judgment in the instant case Longmore LJ quoted para 84, where Rix LJ said that, where proceedings are amended to add new claims, the court is only seised of the relevant proceedings so far as the new claims are concerned at the time of the amendment.
Immediately after the quote, Longmore LJ correctly pointed out that those observations were made in relation to Article 27 and not Article 28.
He then quoted the second sentence from the above quotation from para 129 of Rix LJs judgment.
Longmore LJ then asked whether this tentative expression of view in relation to "the introduction of entirely new causes of action" being tantamount to "the bringing of entirely new proceedings" means, for the purpose of this case, that the Greek courts are to be regarded as first seised of the relevant related action? He said at para 64 that, in his opinion it did not.
He gave two reasons.
He said that in the first place Rix LJ had already quoted the passage from the judgment of Saville LJ in The Happy Fellow which I set out in para 66 above.
At para 65 Longmore LJ said that, in the second place, Rix LJ provided his tentative response to his tentative view in the remainder of paragraph 129 which he then quoted.
That response is to my mind telling.
Longmore LJ then expressed his conclusion at para 66.
He expressed doubt about Rix LJs distinction between entirely new causes of action as opposed to partially new causes of action.
However that may be, his conclusion seems to me to be contained in the last two sentences of para 66: As Saville LJ said in The Happy Fellow it is a misreading of Article 28 to ask which court is first seised of issues; it must likewise be wrong in an Article 28 context to ask which court is first seised of causes of action.
That is Article 27 territory because, for the purpose of Article 28, one has to ask which court is first seised of an action, not a cause of action and, still less, an issue.
On that basis Longmore LJ concluded at para 67 that, if the original English action and the subsequent Greek actions are related, as he concluded they are, it was the English court that was the court first seised.
I agree.
First, the contrary view seems to me to be inconsistent with the two stage approach to Article 28 adopted in Stribog.
As Longmore LJ observed at para 66, in the context of Article 28 it is wrong in principle to ask which court is first seised of a cause of action, because Article 28 is concerned with related actions as a whole.
Secondly, I would accept the appellants submission that on the facts of this case the claims now brought are not (as Rix LJ put it) entirely new.
On the contrary, applying the broad and common sense approach favoured by Lord Saville in Sarrio, the claims now brought by the appellants are unquestionably related to the original action within the meaning of Article 28.
I would only add in conclusion that it seems to me that it would be very odd
indeed if a court which is seised of proceedings and stays those proceedings by way of a Tomlin order on the express terms that it retains jurisdiction to take further steps by way of implementation or policing of the order were prevented from exercising that jurisdiction, either by lifting the stay or otherwise, on the ground that it was no longer seised of the proceedings.
It seems to me to be at least arguable that those steps should properly be treated as part of the existing proceedings.
They might perhaps be treated as part of the same procedural unit as discussed by the CJEU in Purrucker v Vallz Prez (No 2) (Case C 296/10) [2011] Fam 312 at para 80.
The case was on very different facts but was concerned with two paragraphs in a regulation which were identical to Articles 27 and 30 of the Regulation.
In any event to treat the enforcement action as something entirely new seems to me to be wrong.
It is never easy to decide what is an entirely new claim, what is a new claim and what is an expansion of an old claim.
These claims are not new or entirely new because they are brought by way of enforcement of the outcome of the original dispute, in the same way as execution on a money judgment.
In these circumstances it makes sense to hold that these claims, which largely arise out of the settlement agreements, arise out of the attempts made by the respondents to avoid the effect of those agreements and, in particular, the exclusive jurisdiction agreements.
This solution would, as I see it, be consistent with the overall policy of the Regulation to avoid a multiplicity of proceedings.
However, I can see that there is scope for argument under this head and, if the issue of first seised were critical to the decision, it might be appropriate to refer an appropriate question to the CJEU.
I therefore turn to the issue of discretion on the assumption that the English court is second seised for the purposes of Article 28.
Discretion
On that assumption, the question arises whether the action or actions should be stayed as a matter of discretion.
The judge held that no such stay should be granted.
Given that the shape of the case has changed considerably since the matter was before the judge, it appears to me that this Court should consider for itself whether to grant a stay.
I have reached the clear conclusion that it should not.
I have reached that conclusion essentially for the reasons advanced on behalf of the appellants.
They may be summarised in this way.
In Owens Bank Ltd v Bracco (Case C 129/92) [1994] QB 509, at paras 74 79, Advocate General Lenz identified a number of factors which he thought were relevant to the exercise of the discretion.
They can I think briefly be summarised in this way.
The circumstances of each case are of particular importance but the aim of Article 28 is to avoid parallel proceedings and conflicting decisions.
In a case of doubt it would be appropriate to grant a stay.
Indeed, he appears to have approved the proposition that there is a strong presumption in favour of a stay.
However, he identified three particular factors as being of importance: (1) the extent of the relatedness between the actions and the risk of mutually irreconcilable decisions; (2) the stage reached in each set of proceedings; and (3) the proximity of the courts to the subject matter of the case.
In conclusion the Advocate General said at para 79 that it goes without saying that in the exercise of the discretion regard may be had to the question of which court is in the best position to decide a given question.
On the facts here those questions can be considered together.
As I see it, the issues are not dissimilar from those considered by Cooke J in Primacom at para 65, where he said this: Even if I had found that these two sets of proceedings and the German proceedings were related within the meaning of article 28, 'the strong presumption' which 'lies in favour of the applicant' on an application for a stay would be overridden here by virtue of the terms of the SSFA.
Although the ECJ decision in Gasser means that a stay is mandatory where article 27 applies, there is no reason why weight should be given to that decision in the context of article 28, where a discretion is given to the court, the jurisdiction of which has been agreed by the parties as exclusive.
It is nothing to the point that an English court could not have issued an anti suit injunction to prevent the German proceedings (as per C 159/02 Turner v Grovit [[2005] 1 AC 101]).
The injustice of giving precedence to proceedings brought in breach of an exclusive jurisdiction clause where the parties have agreed that England is the appropriate forum is self evident.
To breach the clause and to gain the benefit of priority for the German courts by such breach offends justice, where the court has a discretionary decision to make.
In my opinion, similar considerations apply here.
Although the true
construction of the settlement agreements and the question whether Starlight and OME are in breach of them is ultimately a matter for the court which finally determines the summary judgment application or for the court at trial, there is a strong argument (to put it no higher) that the Greek proceedings have been brought by Starlight and OME in breach of the settlement agreements, which are subject to the exclusive jurisdiction of the English courts and/or in breach of the exclusive jurisdiction clauses in the insurance contracts.
I would reject the submission that those considerations are impermissible in the light of the decision in Gasser.
It was there held that, if the criteria for ordering a mandatory stay under Article 27 are satisfied, then the court second seised must stay its proceedings even if the court second seised has jurisdiction under an exclusive jurisdiction clause falling within Article 23.
That conclusion was reached on the basis that, under Article 27, where there are two sets of proceedings which involve the same cause of action and the same parties, the court second seised is obliged to order a stay.
The Regulation only permits one set of proceedings to continue.
The position is quite different under Article 28, which clearly contemplates that where there are two related sets of proceedings they may proceed in parallel.
That conclusion follows from the proposition that the grant of a stay is discretionary and not mandatory.
In these circumstances, I can see no reason why, in exercising that discretion under Article 28, the court second seised should not take into account the fact that the parties had previously agreed (or arguably agreed) an exclusive jurisdiction clause in favour of that court.
On the contrary, depending upon the circumstances of the particular case, that seems to me to be likely to be a powerful factor in support of refusal of a stay.
After all, Recital 14 expressly provides: The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation.
There is a close relationship between the claims in England and the subject matter of the claims in Greece.
The natural court to consider the issues raised by the CMI and the LMI is the High Court in England because they raise contractual questions governed by English law and because it is at least arguable that the parties have agreed that they should be decided by the High Court, where the proceedings are more advanced than in Greece.
After all, the judge granted summary judgment as long ago as December 2011.
The court in Greece will then have the benefit of the decision of the court which, in the Advocate Generals language, is in the best position to decide these issues.
Once there is a final judgment of the English courts, it will be recognisable in Greece, as elsewhere in the EU and will assist the Greek court.
In this way, the principles of mutual trust upon which the Regulation is founded will be respected and there will be no risk of irreconcilable judgments.
In these circumstances I would uphold the decision of the judge in refusing
a stay under Article 28.
There is no need for a reference to the CJEU because the question I would have referred does not arise given my conclusion on the exercise of discretion.
It was at one time suggested that there is a referable question as to whether Article 28 gives the court second seised a choice between staying the proceedings under Article 28(1) and declining jurisdiction under Article 28(2).
However, that suggestion was abandoned before the hearing.
I would in any event have rejected it as unarguable.
There is no support whatever for it in the language of Article 28 and none of the sources referred to supports the conclusion.
The discretion is to stay or not to stay under Article 28(1) and to decline or not to decline jurisdiction under Article 28(2).
The Court may thus both refuse to stay and refuse to decline jurisdiction.
As the Advocate General explained in Bracco, all depends upon the circumstances.
Too late?
The remaining question is whether the Court of Appeal was wrong to reject submissions made on behalf of the appellants that it was too late for the respondents to rely upon Article 27.
This is another part of the case where the facts seem to me to be startling.
The appeal on this point is brought by the LMI and not the CMI but it is I think accepted that, if the appeal succeeds, the CMI will be able to take advantage of it.
The most important point raised by this part of the appeal is whether the courts had a discretion to hold that the LMI should not be permitted to rely upon various procedural acts and omissions on the part of the respondents in response to their attempt at a late stage to rely upon Article 27 of the Regulation or whether, once the point was brought to its attention, the Court of Appeal was bound to consider Article 27 (as quoted at para 24 above) because it expressly provides that, where the conditions are satisfied any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.
I have reached the conclusion that the answer is that the appellants were entitled to rely upon the acts or omissions of the respondents and that, having regard to what had happened before Judge Mackie QC and the judge, the Court of Appeal was not bound to take the point of its own motion.
Moreover, subject to a possible reference, I would hold that the Court of Appeal should have considered the acts or omissions of the respondents and have held that it was too late for the respondents to rely upon Article 27.
The question of the scope of the Court of Appeals duty to take the point of its own motion in circumstances of this kind is however an important point on the construction of Article 27 and, if it were necessary for the determination of the appeal, I would refer it to the CJEU.
However, if the LMI abandon their claim or claims for a declaration of non liability a reference will not be necessary for the determination of the appeal.
If they do not, my present view is that it will.
The relevant chronology, which I take from the Statement of Facts and Issues, is briefly as follows.
I will omit references to the CMI proceedings, in which the applications were heard at the same time as those in the LMI proceedings.
By application notice dated 3 August 2011, the LMI applied for wide ranging relief against Starlight to enforce the LMI settlement agreement.
By application notice dated 18 August 2011 the LMI sought permission to join OME and to serve OME out of the jurisdiction.
As explained earlier, the LMI commenced 2011 Folio 702 against Starlight and OME in order to enforce the LMI settlement agreement.
They also commenced 2011 Folio 1043 only against the co assureds, which was an action founded solely on the exclusive jurisdiction clause in the policies.
On 20 September 2011 the LMI obtained permission from Judge Mackie QC to issue a Part 20 claim against OME in 2006 Folio 815 and, lest it be needed, to serve that Part 20 claim form and the claim forms in 2011 Folios 702 and 1043 out of the jurisdiction and to serve them on Lax & Co in London.
The applications were supported by a witness statement by their solicitor, Mr Zavos, in which he referred both to possible stays under Article 27 and Article 28 giving reasons why stays should not be granted.
The orders gave notice to each of Starlight, OME and the co assureds that: You may apply within seven days after the date of service of this Order on you to have the Order set aside or varied.
This time limit does not apply to an application to dispute the jurisdiction of the Court in respect of which the procedure in CPR Part 11 as modified by CPR Part 58 applies No such application was made.
Starlight did not serve evidence within the time provided in the CPR.
However, on 4 November 2011 they served evidence which included an express request by Mr Crampton of Lax & Co that the relief sought by the appellants on the merits be denied, alternatively that the matter be referred to a full trial, with provision for disclosure and exchange of witness and expert evidence.
On 7 November Starlight, OME and the co assureds each filed a defence on the merits in the relevant action, having first obtained an extension of time for doing so.
Each of the defences included a paragraph which stated: The claims in the Greek Proceedings fall outside the jurisdiction clause in the policy and the jurisdiction clause in the Settlement Agreement.
It is respectfully denied therefore that the High Court of Justice of England and Wales has jurisdiction to determine the
claims in the Greek Proceedings
The grounds on which Starlight, OME and the co assureds opposed the appellants claims and applications for summary relief, were in summary that the claims brought in the Greek proceedings (1) did not fall within the scope of the releases contained in the LMI settlement agreement or the CMI settlement agreement; (2) did not fall within the scope of the indemnities contained in the settlement agreements; and (3) did not fall within the scope of the jurisdiction clauses contained in the settlement agreements or in the policies.
Following service of the defences, the LMI applied for summary judgment in all the actions and all the applications were fixed to be heard on 28 and 29 November at the same time as the application for summary relief against Starlight in the 2006 proceedings.
In their skeleton argument prepared for those hearings, which were served on 23 November 2011, the LMI included the following: 71.
There has been no application for a mandatory stay under Article 27 of the Judgments Regulation in respect of the [LMIs] claims to enforce the jurisdiction clause in the contract of insurance, and to enforce the terms of the [LMI] Settlement Agreement.
This is (no doubt) because the claims are different claims from the claims advanced by the Assureds in Greece.
On 25 November 2011, Starlight, OME, and the co assureds, through their former counsel, James Drake QC and Emma Hilliard, provided their skeleton argument to the court, which expressly disavowed any application under Article 27, in these terms: 69.
It is well established that in order for Article 27 to operate there must, when comparing the two sets of proceedings in issue, be three identities: of parties, of cause, and of objet: see generally Briggs & Rees, Civil Jurisdiction and Judgments (5th ed 2009) at paras 2 227 to 2 231. 70.
Starlight does not here contend that there is here an identity of cause and objet between the Greek proceedings and the Insurers applications.
Although designed to preclude in so far as possible, and from the outset a clash of verdicts, the operation of Article 27 (as distinct from Article 28) is highly restricted in its actual operation.
Comparison must be made between the claims made in the two actions, regardless of possible defences, to see whether they proceed on essentially the same facts and under the same rule of law.
In the footnotes they referred to the cases I have discussed earlier, including Gubisch, Gantner and The Tatry.
It is thus plain that before the matter came before the judge the respondents had made a clear and reasoned decision not to rely upon Article 27.
Moreover, there is no reason to think that the judge did not consider the points they made and accept them.
They relied only on Article 28.
They did so pursuant to an application made by application notice dated 24 November 2011.
However that application was out of time.
So, by further application notices in each action dated 28 November 2011, the respondents applied for permission to make the Article 28 application out of time, and for relief from sanctions pursuant to CPR Part 3.
The sanction referred to was that imposed by CPR Part 11, which provides that a defendant who files an acknowledgment of service and fails to apply to the court within the time allowed under the CPR for an order declaring that it has no jurisdiction or should not exercise any jurisdiction which it may have, is to be treated as having accepted that the court has jurisdiction to try the claim: CPR rule 11(5).
As stated in para 19 above, the judge dismissed the stay application under Article 28 and held that the appellants were entitled to summary judgment.
He held that (1) each of the claims made by Starlight, OME, and the co assureds against the appellants in Greece is in breach of the exclusive English jurisdiction agreement in the policies; (2) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the jurisdiction agreements in the settlement agreements which provide for exclusive English jurisdiction; (3) each of the claims made by Starlight and OME against the appellants in Greece is in breach of the terms of the settlement agreements; (4) each of Starlight, OME and the co assureds is liable in damages to the insurers for breach of contract and under Section 50 of the Senior Courts Act 1981; and (5) each of Starlight and OME is bound to indemnify and hold the insurers harmless against each of the claims in the Greek proceedings pursuant to the indemnities in the settlement agreements.
The judge handed down his judgment on 19 December 2011 and fixed 2 February 2012 for the hearing of consequential applications.
In the meantime, on 7 December 2011 Thomas Cooper had replaced Lax & Co as the respondents solicitors.
On 24 January 2012 draft grounds of appeal were served which included for the first time reliance on Article 27.
They were considered in a somewhat amended form by the judge.
The judge granted permission to appeal on a number of grounds including the Article 27 point.
As to that he said that he would not have given permission on that point alone, as he put it, not least because the Article 27 case could become the subject of an independent application at first instance at any time hereafter.
He recognised that this would have the effect of turning the Court of Appeal into a first instance court but concluded that it could be argued without the need for further evidence and without a great addition of time.
In the Court of Appeal the appellants relied upon the provisions of CPR Part 11, but the Court of Appeal held that it did not apply because applications under Articles 27 and 28 are not challenges to the jurisdiction.
It further held that it was bound to take the Article 27 point of its own motion.
The LMI say that the Court of Appeal was wrong on both points.
CPR Part 11 provides, so far as relevant as follows: (1) A defendant who wishes to (a) dispute the court's jurisdiction to try the claim; or (b) argue that the court should not exercise its jurisdiction, may apply to the court for an order declaring that it has no such jurisdiction or; should not exercise any jurisdiction which it may have. (2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10. (3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the courts jurisdiction. (4) An application under this rule must (a) be made within 14 days after filing an acknowledgment of service; and (b) be supported by evidence. (5) If the defendant (a) files an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim. (6) An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including (a) setting aside the claim form; (b) setting aside service of the claim form; (c) discharging any order made before the claim was commenced or before the claim form was served; and (d) staying the proceedings.
In an action in the Commercial Court such as this CPR 11(4) is varied by CPR 58.7(2) so that the application under CPR 11(1) must be made within 28 days after filing an acknowledgment of service and not 14 days.
As I understand it acknowledgments of service were filed in each case.
The position under CPR Part 11 is different from the position under the former Rules of the Supreme Court, under which the equivalent rule, namely RSC Order 12 rule 8(1), did not include an application for a stay.
By contrast CPR 11(1)(b) applies to an application for an order that the court should not exercise its jurisdiction.
An application for a stay is precisely that.
An application for a stay under Article 27 is thus an application within CPR 11(1)(b).
The applicant must file an acknowledgment of service and must make an application within 28 days.
The respondents did not do that.
Nor did they seek an extension of time to so do within the CPR.
It is arguable that the effect of CPR 11(5) is that their failure to do so means that they are treated as accepting that the court both has jurisdiction and that it is free to exercise it.
The difficulty is that the wording of paragraph (5) may only relate to the existence of the jurisdiction rather than the exercise of it.
This point was left open in Texan Management Ltd v Pacific Electric Wire & Cable Company Ltd [2009] UKPC 46 at paras 68 and 69.
However that may be, the LMI rely upon the voluntary submission to the jurisdiction evidenced by the acknowledgment of service and the service of a defence.
They also rely upon the clear and unequivocal statement of the respondents position in their skeleton argument before the judge.
It is plain from the terms of the concession quoted at para 106 above that serious thought had been given to the question both of whether to make the concession and of the basis on which it was to be made.
In these circumstances, unless there is some rule of European law to the contrary, it appears to me that the Court of Appeal should have considered whether, in the exercise of their discretion to permit argument on a new point, they should exercise that discretion in favour of the respondents or not.
Moreover, it appears to me that, given the clear basis on which the concession was made and, given that the judgment had proceeded on that basis, the Court of Appeal should have held that it had a discretion under CPR rule 11(1) to permit an application under the rule to be made out of time but should have refused to exercise it.
However it is said that on the true construction of Article 27, the court, including on these facts the Court of Appeal, has a duty to consider the application of Article 27 of its own motion whenever the point is taken.
This strikes me as extremely improbable.
I would accept the submissions of the LMI in this respect.
The CJEU has recognised the importance of national rules of procedure.
Thus, for example, in Shevill v Presse Alliance SA (Case C 69/93) [1995] 2 AC 18 the CJEU said: 35. the object of the [Brussels] Convention is not to unify the rules of substantive law and of procedure of the different contracting states, but to determine which court has jurisdiction in disputes relating to civil and commercial matters in relations between the contracting states and to facilitate the enforcement of judgments: see Kongress Agentur Hagen G.m.b.H vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845, 1865, para. 17. 36.
Moreover, the court has consistently held that, as regards procedural rules, reference must be made to the national rules applicable by the national court, provided that the application of those rules does not impair the effectiveness of the Convention: paragraphs 19 and 20 of [Kongress Agentur Hagen G.m.b.H. vs Zeehaghe B.V. (Case C 365/88) [1990] E.C.R. 1 1845]."
I would accept the LMIs submission that Article 27 is part of European law and overrides national law which is incompatible with it.
It does not however follow from this proposition that English procedural rules were overridden.
A national procedural rule must not impair the effectiveness of Article 27.
It must not render the exercise of rights conferred by EU law impossible or excessively difficult: Amministrazione delle Finanze dello Stato v SpA San Giorgio (Case 199/82) [1983] ECR 3595, [1985] 2 CMLR 658.
This is the principle of effectiveness, which involves considering whether the rule can operate consistently with Article 27, or whether it is incompatible with it.
The procedural rule should not be less favourable than those governing similar domestic actions, which is the principle of equivalence: see eg Interfact Ltd v Liverpool City Council [2011] QB 744, Kapferer v Schlank and Schlick GmbH (Case C 234/04) [2006] ECR I 2585 at paras 19 to 22, Kbler v Austria (Case C 224/01) [2004] QB 848; and Eco Swiss China Time Ltd v Benetton International NV (Case C 126/97) [1999] ECR I 3055.
I refer only to Interfact, where the Court of Appeal refused to exercise its discretion to allow cases to be reopened under CPR 52.17, so as to give a remedy for infringement of a provision of European law.
Lord Judge CJ, delivering the judgment of the Court of Appeal, said : 41 In general, EU law does not require national courts to disapply their own procedural rules in order to secure the vindication of EU rights.
In Kapferer v Schlank & Schick GmbH the Austrian Supreme Court was seised of an appeal in which the respondent had failed to lodge within the time stipulated a respondent's notice taking a point on jurisdiction under the Brussels Convention.
The court referred to the Court of Justice the questions whether it was, nevertheless, bound to take the point of EU law of its own motion and whether EU law required a national court to review and set aside a final judicial decision in circumstances where it later became apparent that the decision of the court was in breach of EU law.
The Court of Justice held that a national court is not so bound 44 . [Kapferer] establishes as a matter of general principle that EU law does not require a national court to reopen a final judicial decision, even if failure to do so would make it impossible to remedy an infringement of a provision of EU law: see the Kapferer case, at para 21; Amministrazione dell'Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl (Case C 2/08) [2009] ECR I 7501, para 23; Asturcom Telecommunicaciones SL v Rodrguez Nogueira (Case C 40/08) [2010] 1 CMLR 865 para 37. 49.
The Court of Justice has upheld national time limits and limitation periods on grounds of legal certainty and the need to ensure finality in decision making, even though the effect has been to preclude enforcement of an EU law right: see, for example, Palmisani v Istituto Nazionale della Previdenza Sociale (INPS) (Case C 261/95) [1997] ECR I 4025; Fantask A/S v Industriministeriet (Ehrvervsministeriet) (Case C 188/95) [1997] ECR 1 6783.
Finally, I would accept these submissions made by the LMI.
Under English law a final judgment on the merits should not be set aside without very solid grounds: Brown v Dean [1910] AC 373 at 374, per Lord Loreburn.
Interest republicae ut sit finis litium.
This is part of the common tradition of the legal systems of the Member States: Rewe Zentralfinanz eG and Rewe Zentral AG v Landwirtschaftskammer fr das Saarland (Case C 33/76) [1976] E.C.R. 1989.
As quoted above, in Interfact the Court of Appeal rejected the argument that, where an appellate court has a discretion to exercise under national procedural law to allow a final judgment to be challenged on appeal, it must exercise that discretion so as to remedy the infringement of EU law.
In my judgment, there is no sensible basis upon which it can be said that the time limit under CPR 11(4), which can in an appropriate case be extended under CPR 3.1(2)(a), is contrary to EU law.
The time limit satisfies the principle of equivalence because it is the same rule that applies in all cases.
It fulfils a legitimate aim, namely making sure that points going to whether the proceedings are to be tried on their substantive merits in England are taken promptly and without unnecessary costs.
It satisfies the principle of legal certainty because parties need to know where they stand.
The absence of a time limit would allow a litigant to take the point years afterwards.
Moreover, the time limit does not render the right to apply for a stay under Article 27 (or Article 28) impossible or excessively difficult to exercise.
It allows sufficient time for the point to be raised, especially given the express rule permitting an extension of time in appropriate cases.
As to the expression of its own motion in Article 27, there are a number of different parts of the Regulation that have a similar provision.
On the facts here the potential for a stay under Article 27 was before the courts on at least two occasions.
The position was explained to Judge Mackie QC on the without notice application referred to above.
There is no reason to think that he did not give consideration to the position.
More importantly perhaps the position was explained to the judge in the skeleton arguments to which I have referred.
He was given both reasons and authority on the question whether a stay should be granted under Article 27.
It seems to me that the judge was entitled to accept those submissions, which were made on the respondents behalf by experienced counsel and solicitors.
For these reasons I would hold that the Court of Appeal should have refused to allow the respondents to rely upon Article 27 in the Court of Appeal.
That said, I would accept that the meaning and effect of the duty to consider Article 27 of its own motion are matters of some potential importance and I have (somewhat reluctantly) reached the conclusion that they are not acte clair.
I would therefore refer an appropriate question to the CJEU if it were necessary in order to resolve the appeal.
If the appellants abandon the claims to the declarations referred to in paras 58 and 59 above, such a reference will not be necessary because, for the reasons given above, I would allow the appeals under Article 27 in their entirety.
It seems to me that rather different considerations apply to Article 28 and that the Court of Appeal were entitled to consider Article 28 as part of the appeal from the decision of the judge who had considered it in detail.
CONCLUSIONS
For these reasons I would invite the CMI and the LMI to consider whether they wish to pursue their claims for declarations (referred to in paras 58 and 59 above) that the Greek claims fall within the terms of the release in the settlement agreements or that under the agreements the tort claims have been settled.
As Lord Neuberger observes, those are the claims described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) above.
They should indicate their position within 14 days of this judgment being handed down.
If they persist in their claims, some limited questions should be referred to the CJEU as described above.
The decision whether to stay those claims would then await the result of the reference, although I would allow the appeal under Article 27 in respect of the other claims.
If they abandon them, I would allow all the appeals of both the CMI and the LMI under Article 27.
I would in any event dismiss the respondents cross appeal under Article 28 and I would hold that their application for a stay under Article 28 should be refused as a matter of discretion.
The parties should make written submissions on the form of order and costs within 21 days of the handing down of this judgment.
Finally, I would like to thank all counsel and solicitors for their assistance in this unusual and in some respects difficult case.
LORD NEUBERGER
Subject to one point, I entirely agree with Lord Clarkes reasoning and conclusions.
The one point concerns the issue discussed in paras 44 46 and 58 59 of Lord Clarkes judgment and in Lord Mances judgment.
That issue is whether (i) LMIs claim in England for a declaration that the Greek claims have been settled, and (ii) CMIs claim in England for a declaration that the Greek claims were compromised (the English declaration claims, described in para 18(a)(1)(i), 18(a)(2)(i) and 18(b)(i) of Lord Clarkes judgment) should be stayed under Article 27.
In my view, if that issue remains live, it should be referred to the CJEU, as I do not regard it as acte clair.
I see the force of Lord Clarkes view that the English declaration claims do not have le mme objet et la mme cause, if one gives that expression a very narrow effect.
I also accept that, particularly in the light of the existence of Article 28, there is good reason to give Article 27 a relatively narrow meaning, as Rix J pointed out in Glencore International AG v Shell International Trading and Shipping Co Ltd [1999] 2 Lloyds Rep 692, 697.
I also accept that the decisions of the CJEU cited by Lord Clarke at paras 26 28 of his judgment support the contention that Article 27 has a relatively narrow ambit of application.
However, it is also important to appreciate that the fundamental purpose of Article 27, as explained by the CJEU, is to ensure that judgments obtained in one member state are enforceable in other member states, and that the consequence of this is that one should avoid mutually inconsistent judgments.
The purpose of Article 27 is to help achieve that end.
It seems to me that, if the Greek court were to give Starlight and OME judgment for a particular sum in respect of its Greek claims, and the English court were to give judgment in favour of LMI and CMI in the form of a declaration that those very claims have been settled or compromised, the two judgments would be incompatible as a matter of principle and logic.
It is not possible for a court to award a claimant damages in respect of a claim which has been compromised with the defendant.
To put the point another way, to say that a defendant currently owes a claimant damages in respect of a claim which the defendant has settled or compromised with the claimant involves an illogicality.
Accordingly, it seems to me that there is a real case for saying that the English declaration claims should be stayed.
The difference between the English declaration claims and CMIs and LMIs claims in England for an indemnity and damages for breach of the settlement agreements (the English indemnity and damages claims, as described in paras 18(a)(1)(iii), (v) and (vi), 18(a)(2)(iii) and (iv) and 18(b)(ii), (iii) and (iv) of Lord Clarkes judgment) may appear to be relatively small, but I believe that there is a crucial distinction, as a result of which it is acte clair that the English damages and indemnity claims do not fall foul of Article 27.
The crucial difference is that, if those claims were successful, they could not lead to inconsistent judgments in England and Greece.
I accept that, if they were successful, the English indemnity and damages claims could be fairly said to neutralise, at any rate in commercial terms, any benefit to Starlight and OME of a judgment in the Greek claims.
However, crucially in my view, success for LMI and CMI in the English indemnity and damages claims would not be logically inconsistent in any way with success for Starlight in the Greek claims.
It is not inconsistent (although it is commercially pointless) to say that a defendant is liable to pay a claimant a sum by way of damages, while the claimant is bound to indemnify the defendant in respect of the whole of that sum (or is bound to pay an equivalent sum to the defendant).
Indeed, the indemnity is not merely logically consistent with the liability: it is positively meaningless without the liability for damages, and the liability for damages, though rendered nugatory by the indemnity, is not logically inconsistent with the indemnity.
LORD MANCE
General
I am in substantial but not complete agreement with the reasoning and conclusions reached in the course of the judgment prepared by Lord Clarke, although, ultimately, as will appear, we agree on the proper disposition of these appeals.
The differences between Lord Clarke and myself relate to the significance and operation of article 27 of the Council Regulation (EC) No 44/2001 (the Brussels Regulation) with regard to the respondents Greek claims.
I have no difficulty in agreeing with Lord Clarkes conclusions regarding the English claims made by CMI and LMI for damages for (i) breach of the exclusive jurisdiction clauses in the Settlement Agreements and insurance policies and (ii) indemnity under clauses 3 and 4 of the respective Settlement Agreements.
Such claims do not assert that there is no tort liability because of the Settlement Agreements.
They assert (i) that the respondents are claiming in the wrong jurisdiction and (ii) that the respondents have agreed to indemnify them in respect of any tort claims (valid or not) by the respondents themselves as well as by others arising from the loss of the vessel.
However, I do not accept the reasoning by which Lord Clarke reaches his conclusions with regard to these claims for damages and the further release claims (as Lord Clarke conveniently calls them) which he addresses in paras 40 to 59 of his judgment.
This difference becomes important in relation to the first head of the release claims, as I shall show.
One strand of Lord Clarkes reasoning is that the English claims based on the Settlement Agreements cannot be the mirror image of the Greek tort claims, because they involve contract and tort claims and cannot constitute the same cause of action: para 34, third sentence, para 41, second and third sentences and para 43, second and last sentences.
Another strand is that it is relevant or conclusive that the English and Greek claims do not interfere with each other, and, in particular, that the Greek claims do not impugn the settlement agreements: para 35, first and second sentences and para 37, in its entirety.
Neither of these strands of reasoning is in my opinion sustainable, for reasons which I will explain.
The release claims
The release claims need a little analysis.
There are three heads.
The first head is summarised by the respondents themselves and by Lord Clarke (para 18(a)) as involving claims for declarations that the Greek claims fall within the terms of the release.
But this head is in fact pleaded by LMI as a claim for a declaration that the Greek claims have been settled (application notice, para (1) 1 and 3), while CMI plead that the Greek claims were compromised (particulars of additional claim, para 10) and follow this with a claim for a declaration that the Greek claims fall within clause 2 of the CMI Settlement Agreement (particulars of additional claim, para 27(a)).
These are clear statements (right or wrong as they may prove to be) that the Greek claims have been settled or compromised within the terms of the Settlement Agreements.
The second and third heads are claims for a declaration that the bringing of the Greek claims was a breach of the release in each of the Settlement Agreements and for damages for such breach.
They must stand or fall together.
They raise different considerations from the first head.
The first head of release claim
The English claims that the Greek claims have been settled or were compromised are in my opinion mirror images of the Greek tort claims.
The English pleas mean, and can only mean that the English claimants are not liable for the Greek tort claims.
The legal effect of these English statements is (under English eyes and, I am confident, European law) that the Greek claims are no more.
If an English court were to give a judgment to that effect, and there was no prior Greek judgment or other reason for non recognition, the Greek court ought under the Brussels Regulation to accept it.
It cannot make any difference to the application of article 27 that the reason for non liability is a contractual settlement agreement.
The only point of enforcing the contract is to show that there are no valid Greek tort claims.
The Greek claims aim to enforce tort liabilities.
The first head of the English claims aims to establish that there are no such valid tort liabilities, because they have been settled.
The Greek and English claims cannot stand together.
The concepts used in article 27 (such as cause of action or the concept of same object which one must read into the English text) are autonomous European concepts: Gubisch v Palumbo Case 144/86, [11] and The Tatry Case C 406/92, [47].
In the latter case, the European Court of Justice said that the cause of action comprises the facts and the rule of law relied on as the basis of the action and that the object of the action for the purposes of article [27] means the end the action has in view [39] [41].
An analysis of the cases helps to understand what was meant.
Gubisch v Palumbo happened to concern a situation where the mirror image claims were in a general sense contractual.
The German claim was for the price of machinery delivered.
The later Italian claim by the buyer was, firstly, that there was no liability because he had revoked his offer before it had reached the seller for acceptance strictly, this was not a contractual claim, but a claim that there was no contract and, secondly, that, if there was a contract, his consent was vitiated and the contract should be set aside for mistake or on the ground of the sellers fraud, or, thirdly, that any contract had been discharged on account of the sellers late delivery.
Both the question referred and the Court of Justices summary of the facts embraced all three aspects of the Italian claim: see e.g. judgment [2] and [4].
The subsequent reasoning and the answer given refer to mirror image claims, one seeking enforcement, the other seeking rescission or discharge, of a contract: see [13] and [15] and the Courts answer.
The Court said [17] that it must be held that the two actions have the same subject matter, for that concept cannot be restricted so as to mean two claims which are entirely identical.
The absence of express reference at these points to the first Italian claim (that no contract had ever been concluded) cannot mean that the Court was drawing any distinction between that claim and the other two.
On the contrary, the inference is that it saw it as posing no different issue.
It could not have made any difference to the Court of Justices conclusions if, instead of or in addition to some or all of the pleas actually made in the Italian proceedings, the Italian claimants had alleged that the contract had been rescinded or discharged under some separate subsequent agreement, whether, for example, by novation or by some compromise relating to the parties past dealings or outstanding issues.
Nor, in a situation in which concurrent contract and tort claims are possible (see e.g. Henderson v Merrett Syndicates Ltd [1994] UKHL 5; [1995] 2 AC 145), could it be crucial to the application of article 27 whether the foreign claim was being pursued in contract or tort, when the later English claim asserted a settlement agreement wide enough to cover both.
Lord Clarke cites at para 28(iii) a useful encapsulation by Cooke J in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyds Rep 665, [42], of the meaning of the expression legal rule or rule of law which the Court of Justice used in The Tatry Case C 406/92, [39].
Cooke J suggested that, in investigating cause, it was necessary, after looking at the basic facts, to look at the basic claimed rights and obligations of the parties.
Here, the basic claimed rights and obligations of the parties are, in Greece, that the English claimants are liable in tort, and, in England, under the first head which asserts that the Greek claims have been settled, that there is no or no further liability for the Greek claims.
The way in which article 27 was applied in The Tatry is also of interest.
Having said that the cause of action comprises the facts and the rule of law relied on as the basis of the action [39], the Court of Justice went on: 40 Consequently, an action for a declaration of non liability, such as that brought in the main proceedings in this case by the shipowners, and another action, such as that brought subsequently by the cargo owners on the basis of shipping contracts which are separate but in identical terms, concerning the same cargo transported in bulk and damaged in the same circumstances, have the same cause of action.
Here, the English claim that the Greek claims fall within the release and have been settled or compromised concerns, and seeks to negative, the same tort claims as the Greek actions seek to enforce.
It can make no difference that the Greek claimants have not sought, pre emptively, to refer to, address or impugn in their Greek claims a possible defence (the Settlement Agreements) that might be raised in the Greek proceedings.
One would not expect them to do so, any more than the German claimants in Gubisch v Palumbo addressed or would be expected to address every or any of the multiple arguments that the Italian claimants later deployed.
The fact that the English claims do not seek directly to interfere with the Greek claims is also irrelevant.
It would anyway be impermissible to claim in England an injunction restraining the Greek proceedings, but, quite apart from that, article 27 and the principle in Gubisch v Palumbo do not depend upon one set of proceedings seeking directly to prevent another.
They derive from the principle that Member States must recognise each others judgments, and the aim of avoiding inconsistent judgments.
As to the same object, the end which the Greek and English proceedings have in view is the same in each case, to decide the issue of liability for the torts alleged in Greece.
That this is what is meant by the same object is clear from both Gubisch v Palumbo and The Tatry.
The matter is directly addressed in the latter case in paras 42 to 45: 42 The question accordingly arises whether two actions have the same object when the first seeks a declaration that the plaintiff is not liable for damage as claimed by the defendants, while the second, commenced subsequently by those defendants, seeks on the contrary to have the plaintiff in the first action held liable for causing loss and ordered to pay damages. 43 As to liability, the second action has the same object as the first, since the issue of liability is central to both actions.
The fact that the plaintiff's pleadings are couched in negative terms in the first action whereas in the second action they are couched in positive terms by the defendant, who has become plaintiff, does not make the object of the dispute different. 44 As to damages, the pleas in the second action are the natural consequence of those relating to the finding of liability and thus do not alter the principal object of the action.
Furthermore, the fact that a party seeks a declaration that he is not liable for loss implies that he disputes any obligation to pay damages. 45 In those circumstances, the answer to the fifth question is that, on a proper construction of Article 21 of the Convention, an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.
The reference in [44] to a partys claim for a declaration of non liability implying that it disputes any obligation to pay damages is equally applicable to the present English claims that the Greek tort claims fall within the release or have been settled or compromised.
The English claims imply that the Greek claims are disputed.
In short, the issue of liability is central to both the Greek and the English proceedings here, as it was to the Dutch and English proceedings in The Tatry.
Not merely the same cause of action but also the same object is involved in the present case, as it was in The Tatry.
The two sets of proceedings would, if pursued to judgment, lead to judgments which were legally and directly incompatible.
It is therefore necessary under article 27 to consider whether it is the Greek or the English courts which fall in this connection to be regarded as first seised.
The second and third heads of the release claims
The second and third heads are more elusive.
Claims for a declaration that the bringing of the Greek claims was a breach, and for damages for the breach, of the release in the Settlement Agreements may on one view be seen as little different from the claims made under the first head.
But I have come to the conclusion that this would be wrong.
The second and third heads postulate, and for present purposes at least we must accept, that the releases contain some positive continuing promise which the respondents by their Greek claims are now breaching.
The terms of the releases were in each case (clause 2 in the case of CMI, clause 3 in the case of LMI) that the respondents would accept underwriters due proportion of the relevant payment in full and final settlement of all and any claims it may have under Policy no. against the Underwriters in relation to the loss of Alexandros T. One must make the assumption, for present purposes, that the Greek tort claims fall within this agreement.
The difficulty is that the agreement was performed, in the sense that there was not merely an accord, but an accord and satisfaction.
All policy claims were thus not just agreed to be settled, but they actually were settled, and, if and to the extent that that is the nature of the second and third heads of English release claim, they would not in reality differ from the first head.
The question therefore arises, what if any outstanding promise could there be left to perform which the second and third heads claim to enforce? I have come to the conclusion that the acceptance of the sums paid in full and final settlement involves, certainly very arguably, a continuing outstanding promise not further to pursue claims of the nature identified in clauses 2 and 3 respectively.
Even after the settlement, the pursuit of such claims could cause CMI and LMI loss.
Most obviously, such loss could consist in the costs of defending the Greek claims.
If they let the Greek proceedings go undefended, it could, subject to issues arising from the potential recognition of any Greek judgment under the Brussels Regulation, include the amount of any judgment awarded against them in the Greek proceedings.
Likewise potentially, though subject to additional questions arising from any potential issue estoppel or application of the rule in Henderson v Henderson (1843) 3 Hare 100, even if they unsuccessfully defended the Greek claims.
The consequences
Accordingly, the second and third heads of release claims, analysed as I have analysed them, are outside the scope of article 27.
As regards the first head, the remaining issue is whether the Greek or the English courts fall for the relevant purpose to be regarded as first seised.
In so far as the first head of release claims was added into the pre existing English proceedings by an amendment made after the Greek proceedings were begun, is it to be viewed discretely as a new claim of which the English court is second seised? Or does it fall to be viewed as part, by amendment, of a single set of English proceedings commenced well before any Greek proceedings?
I agree with Lord Clarke at para 60 that a court is only seised of claims by or against new parties from the date that those parties are added to the proceedings.
In relation to the 2006 proceedings, the English court was only seised of claims against OME once OME was joined to the proceedings on 20 September 2011 and, as against OME therefore, the English courts were only seised of the first head of release claims made by CMI and LMI in 2011.
Since the first head of release claims is in my opinion the mirror image of the Greek tort claims, article 27 must, on that basis, apply to preclude the pursuit of the first head of release claims as against OME in England.
The respondents submit that article 27 also applies to preclude the pursuit in the English proceedings of the first head of claim against Starlight, which was party to the English proceedings from their outset.
The Court of Appeal accepted this submission.
CMI and LMI challenge it.
Lord Clarke has in his paras 61 to 71 set out and discussed the respective submissions.
To my mind, the sense of the Regulation as well as the case law and the academic guidance all point in one direction.
The chronological priority contemplated by the Regulation cannot be gained, or subverted, by the addition by amendment of a new claim in proceedings otherwise second brought (any more than it can be affected by the addition of new claimants or defendants, as Lord Clarke accepts: para 60).
To the authorities under the current Regulation to which Lord Clarke refers, I would only add that similar thinking is to be found under the predecessor provisions of Article 21 and 22 of the Brussels Convention in the decisions at both levels in Grupo Torras SA v Shekh Fahad Al Sabah [1995] 1 Lloyds Rep 374, 418 419 (Mance J) and [1996] 1 Lloyds Rep 7, 24 (CA).
Conclusion
It follows that the conclusions I would reach, were all the issues to be finally decided now, would be that: The first head of English release claims would be precluded under i) article 27, having regard to what I conclude are in this respect the prior Greek claims. ii) All the remaining heads are outside the scope of article 27 and are permissible.
It is however necessary to consider whether these conclusions are founded on principles of European law which are so clear that no reference to the Court of Justice is required.
A reference to the Court of Justice
In relation to the conclusion expressed in para 161ii, we are all in agreement in our conclusions.
Any differences in reasoning regarding article 27 are irrelevant, and no reference is necessary.
As to para 161i, Lord Clarke would reach the opposite conclusion to that which I have expressed and he considers in the light of my judgment that a reference is called for, if the English appellants persist in their first head of release claims.
With the latter view I agree.
The differences between Lord Clarkes and my reasoning are not, I believe, simple differences regarding the application to facts of clear principles of European law.
I might by myself have thought that all the relevant principles of European law were clear, but I certainly do not dissent from the proposition that the differences, being material to our respective conclusions, require a reference.
If the appellants wish to persist in, rather than abandon, the first head of release claims, there should accordingly be a reference as Lord Clarke suggests.
Ultimately, therefore, although by different reasoning, Lord Clarke and I arrive at the same conclusions regarding the appropriate disposition of these appeals.
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On 3 May 2006, the vessel Alexandros T sank and became a total loss 300 miles south of Port Elizabeth with considerable loss of life.
Her owners were Starlight Shipping Company (Starlight).
Starlight made a claim against their insurers, who denied liability on the basis that the vessel was unseaworthy with the privity of Starlight.
In response, Starlight made a number of serious allegations against their insurers including allegations of misconduct involving tampering with and bribing of witnesses.
On 15 August 2006, Starlight issued proceedings in the Commercial Court against various insurers (the 2006 proceedings).
One group of insurers was described as the Company Market Insurers (CMI) and the other group was described as the Lloyds Market Insurers (LMI).
Before the hearing, the 2006 proceedings were settled between Starlight and the insurers and the proceedings were stayed by way of a Tomlin Order.
In April 2011, nine sets of Greek proceedings, in materially identical form, were issued by Starlight although they were expressed as torts actionable in Greece.
The insurers sought to enforce the earlier settlement agreements.
Starlight applied for a stay of these proceedings, firstly pursuant to Article 28 then Article 27 of Council Regulation (EC) No 44/2001 (the Regulation) The judge refused to grant a stay under Article 28 and gave summary judgment to the insurers.
The Court of Appeal held that it was bound to stay the 2006 proceedings under Article 27, which provides for a mandatory stay, and it was not therefore necessary to reach a final determination of the position under Article 28.
Before the Supreme Court, the insurers challenge the correctness of the Court of Appeals conclusion under Article 27 and submit that the judge was correct to refuse a stay under Article 28.
Starlight cross appeal on the Article 28 point.
Subject to the possibility of a reference to the CJEU on some limited questions, the Supreme Court unanimously allows the CMIs and LMIs appeal.
Lord Clarke gives the lead judgment, with which Lord Sumption and Lord Hughes agree.
Lord Neuberger agrees adding a short judgment of his own.
Lord Mance agrees with the result.
Article 27 Article 27 must be construed in its context.
The purpose of Article 27 is to prevent the courts of two Member States from giving inconsistent judgments and to preclude, so far as possible, the non
recognition of a judgment on the ground that it is irreconcilable with a judgment given by the court of another Member State [23, 27].
In the case of each cause of action relied upon, it is necessary to consider whether the same cause of action is being relied upon in the Greek proceedings.
In doing so, the defences advanced in each action must be disregarded [29].
The essential question is whether the claims in England and Greece are mirror images of each other and thus legally irreconcilable [30].
There are three heads of claim in England: indemnity, exclusive jurisdiction and release [32].
None of the causes of action relied upon in the Greek proceedings has identity of cause or identity of object with the CMIs claim for an indemnity.
The subject matter of the claims is different.
The Greek proceedings are claims in tort (or its Greek equivalent) and the claims in England are claims in contract.
As to object, that of the Greek proceedings is to establish a liability under Greek law akin to tort, whereas the object of the CMIs claim is to establish a right to be indemnified in respect of such a liability and to claim damages for breach of the exclusive jurisdiction clauses [34].
The same is true of the CMIs claims in respect of the exclusive jurisdiction clauses in the settlement agreement and/or in the insurance policies [36].
The causes of action based upon an alleged breach of the settlement agreement are not the same causes of action as are advanced in Greece [37].
The same is also true of the claims based on the release provisions in the CMI settlement agreement [40].
The Greek claims are claims in tort and the English proceedings are contractual claims.
The factual bases for the two claims are entirely different.
Moreover, the object of the two claims is different [41].
The Supreme Court is unanimous that that is the position with regard to the claims for damages for breach of the release provisions in the settlement agreements.
However, in so far as the insurers claim declarations, while the majority reaches the same conclusion, Lord Mance reaches a different conclusion on the basis that the claims for declarations in the two jurisdictions are mirror images of each other.
The court unanimously decides that, unless the insurers abandon those claims for declarations, the relevant question should be referred to the CJEU for an opinion [59].
In the event, the CMI have now abandoned their claims for declarations based on the release provisions and it is not necessary to refer the question to the CJEU.
It follows that the CMIs appeals under Article 27 are allowed.
The position of the LMI is essentially the same as in the case of the CMI [55].
If the LMI do the same within the time permitted, their appeals will also be allowed under Article 27.
A similar position has been reached in respect of LMIs submission that the appeals under Article 27 should have been rejected by the Court of Appeal as being too late [123].
Article 28 The discretion to stay claims under Article 28 is limited to any court other than the court first seised [74].
On the assumption that the English court is second seised for the purposes of Article 28, the question arises whether the actions should be stayed as a matter of discretion [91].
The circumstances of each case are of particular importance but the aim of Article 28 is to avoid parallel proceedings and conflicting decisions.
In a case of doubt it would be appropriate to grant a stay [92].
However, the natural court to consider the issues raised by CMI and LMI is the High Court in England because they raise contractual questions governed by English law and because it is at least arguable that the parties have agreed that they should be decided by the High Court, where the proceedings are more advanced than in Greece [96].
The decision of the judge in refusing a stay under Article 28 is upheld and the cross appeal is dismissed [97, 125].
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This is an application by the Attorney General for Northern Ireland to refer to this court what is claimed to be a devolution issue.
The reference is made under paragraph 34 of Schedule 10 to the Northern Ireland Act 1998.
In material part it provides: the Attorney General for Northern Ireland may refer to the Supreme Court any devolution issue which is not the subject of proceedings.
By virtue of paragraph 1(b) of Schedule 10, a devolution issue includes a question whether a purported or proposed exercise of a function by a Minister or Northern Ireland department is, or would be, invalid by reason of section 24 of the 1998 Act.
And section 24, among other things, provides (in subsection 1(a)) that a Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the rights under the European Convention on Human Rights (ECHR).
By the Welfare Reform (Northern Ireland) Order 2015 (Commencement No 8 and Transitional and Transitory Provisions) Order 2017, the Secretary of State for Work and Pensions commenced a number of universal credit provisions for claims on or after 27 September 2017 where the claimant resides in an area known as No 1 relevant districts.
Although it is for the Secretary of State to appoint the dates for commencement, he does so by a legislative technique which, the Attorney General contends, requires action by the Northern Ireland Department for Communities, which is one of the Northern Ireland ministerial departments.
The 2017 Order defines the No 1 relevant districts as the postcodes specified in the table in the List of the No 1 Relevant Districts.
It is the Department for Communities which must issue such lists.
The same holds true for a second order made by the Secretary of State relating to No 3 relevant districts and No 2 relevant districts.
The commencement order was drafted so that Universal Credit could come into effect if the Department published a list of postcodes, which postcodes together make up the district within which the benefit will commence.
The basis for the Attorneys reference is his assertion that the universal credit provisions in question breach articles 8, 12 and 14 of the ECHR and article 1 of the first protocol to the ECHR and are therefore invalid per section 24 of the 1998 Act.
The Attorney General submits that a devolution issue arises because the provision of lists by the Department for Communities is necessary in order to give effect to the Secretary of States commencement orders.
The Department refutes this, contending that its role in issuing the relevant lists amounts to nothing more than providing administrative support to the Secretary of State.
The commencement orders define the relevant territories by reference to lists of postcodes issued by the Department.
The lists were not prepared, however, pursuant to any statutory or other power and do not have any independent legal force or effect, the Department says.
They are incorporated by reference into the commencement orders and therefore have legal effects solely by reason of the act of the Secretary of State, not the act of the Department.
Discussion
Acts by the Secretary of State or by departments in Westminster do not come within the purview of section 24 of the 1998 Act.
In order for a devolution issue to arise, therefore, it must be shown that an act has been carried out or a function has been discharged by a Northern Ireland Minister or a Northern Ireland department.
Section 1(1) of the Northern Ireland (Welfare Reform) Act 2015 stated that
Her Majesty could make provision for, inter alia, social security and child support maintenance in Northern Ireland by way of an Order in Council.
Section 1(2) stipulated that such an Order in Council could confer power on the Secretary of State or a Northern Ireland department to make regulations relating to such payments.
The Welfare Reform (Northern Ireland) Order 2015 was made on 9 December 2015, pursuant to the 2015 Act.
Article 4 provides that until such date as appointed by the Secretary of State, a function conferred on a Northern Ireland department under the 2015 Order to make Regulations for social security and child support maintenance is to be exercised by the Secretary of State rather than by the Northern Ireland department.
It also provides that any statutory provision relating to social security and child support maintenance may be exercised by the Secretary of State (as well as by the Northern Ireland department otherwise entitled to exercise the function).
These provisions were deemed to be necessary because of disagreements over welfare reform among the Northern Ireland political parties.
They were important, the department argued, because they concentrated the power to make regulations relating to welfare provision in the office of the Secretary of State.
Actions taken by the Secretary of State could not constitute devolution issues.
On one view, it would be anomalous that the provision of lists of postcodes, something entirely ancillary to the introduction of the welfare provision reforms, could be used as a hook on which to hang the argument that a devolution issue arose.
The contrary view is that the provision of postcodes was indispensable to the effective introduction of the welfare reforms.
Without them, the commencement orders could not operate.
Conceivably, they could have been compiled by a Westminster department which would have rendered the act of preparing the lists immune from challenge as a devolution issue.
But, in fact, they were not.
A Northern Ireland department prepared the lists.
Their existence was integral to the operation of the welfare reforms.
The act of preparing the lists and providing them to the Secretary of State constituted an act for the purpose of section 24 of the 1998 Act.
It is, I believe, important to recognise that the distinct prohibitions in section 24 are disjunctive.
Thus, it is forbidden to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights.
The section comprehends, therefore, not only the enactment of subordinate legislation but also acts which may be ancillary or even incidental to that enactment.
On a theoretical or technical level, therefore, the compiling of lists of postcodes and providing them as a means of facilitating the introduction of the commencement orders is an act or the discharge of a function under paragraph 1(b) of Schedule 10 to the 1998 Act.
Matters do not end there, however.
Paragraph 2 of Schedule 10 to the 1998 Act provides that a devolution issue shall not be taken to arise in any proceedings merely because of any contention of a party to the proceedings which appears to the court or tribunal before which the proceedings take place to be frivolous or vexatious.
It would be wrong to characterise the Attorneys application for a reference as frivolous or vexatious but it would be equally wrong to lose sight of two important and correlated aspects to the application.
First, the application is not principally directed at the act of preparing the postcode lists on the basis that that act was incompatible with the ECHR.
The avowed incompatibility is said to depend on its being shown that the introduction of Universal Credit is not compatible with the ECHR.
The gravamen of the charge is not to the mode of introduction of the measure but to its impact.
In Attorney General for Northern Irelands Reference [2019] UKSC 1, this court held that where precisely the same issue as the Attorney sought to refer to this court as a devolution issue arose in pending proceedings in Northern Ireland, it was not appropriate to accept the reference.
This court must retain a discretion whether to deal with a reference on a devolution issue where that issue is to be raised in proceedings where the actual claimed incompatibility of the measure occupies centre stage, as opposed to its appearance via a side wind as here.
And it is, of course, the case that this issue will come before this court on appeal from a decision of the English Court of Appeal (R (C) v Secretary of State for Work and Pensions [2019] EWCA Civ 615; [2019] 1 WLR 5687) which is due to be heard on 20 22 October 2020.
It will be open to the Attorney to apply to intervene in that appeal.
This leads to the second reason for refusing to accept the reference.
The fundamental underpinning of the Attorneys case is that the introduction of Universal Credit in Northern Ireland is incompatible with the ECHR.
It is not that a means of identifying the areas where it is to be introduced sequentially was incompatible.
In this connection a passage from Reed and Murdoch: Human Rights Law in Scotland, 4th ed (2017) is instructive.
At para 1.148 the authors state: Although the term act has been given a wide construction, there remains the critical question whether the act is incompatible with the Convention rights. what is meant by incompatible has proved to be a difficult question.
Although it has been said on a number of occasions that the essence of the word incompatible is that there is an inconsistency between one thing and another, that explanation does not resolve all the difficulties that have arisen.
Whether an act is inconsistent with a Convention right may not be obvious: it may not depend on a but for causal test or involve a remoteness test (ie whether any infringement of Convention rights will be the direct or proximate result of the act under challenge).
Other approaches have been to ask whether the act under challenge is precluded by the Convention right in question, or whether the act involves an infringement of the Convention right.
The latter formulations have the advantage of requiring analysis of the precise bearing of the Convention right, as understood in the Strasbourg and domestic jurisprudence, on the specific act under challenge, rather than falling back on concepts, such as those of causation or remoteness, borrowed from other areas of domestic law.
The relative isolation of the act (in this case the compilation and the provision of the postcode lists) from the actual introduction of Universal Credit in the areas covered by them throws into stark relief the inappropriateness of regarding the preparation of the lists as an act sufficient to give rise to a devolution issue.
Conclusion
I would therefore refuse to accept the Attorneys application to refer this issue to the court under paragraph 34 of Schedule 10 to the 1998 Act.
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This is an application by the Attorney General for Northern Ireland under paragraph 34 of Schedule 10 to the Northern Ireland Act 1998 (the 1998 Act).
Paragraph 34 provides that the Attorney General may refer to the Supreme Court any devolution issue which is not the subject of proceedings.
A devolution issue includes a question whether a purported exercise of a function by a Northern Ireland Department is or would be invalid by reason of section 24 of the 1998 Act. section 24(1)(a) provides that a Department of Northern Ireland has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the rights guaranteed by the European Convention on Human Rights (the ECHR).
By the Welfare Reform (Northern Ireland) Order 2015 (Commencement no. 8 and Transitional and Transitory Provisions) Order 2017, the Secretary of State commenced a number of universal credit provisions for claims on or after 27 September 2017 where the claimant resides in an area known as no. 1 relevant districts.
Although it is for the Secretary of State to appoint the dates for commencement, he does so by a legislative technique which requires action by the Northern Ireland Department for Communities (part of the Northern Ireland Executive).
The 2017 Order defines the no. 1 relevant districts as the postcodes specified in the table in the List of the no. 1 Relevant Districts.
It is the Department for Communities which must issue such lists.
The same holds true of a second order made by the Secretary of State relating to no. 3 relevant districts and no. 2 relevant districts.
The basis for the Attorney Generals reference is his assertion that the universal credit provisions in question breach Article 1 Protocol 1, Articles 8, 14 and 12 of the ECHR and are therefore invalid per section 24 of the Northern Ireland Act 1998.
The Attorney General submits that the provision of lists by the Department for Communities is necessary in order to give effect to the Secretary of States commencement orders and thus constitutes an act, per section 24 of the 1998 Act, which is incompatible with the ECHR and invalid.
It is for this reason that the Attorney General submits that the publication of lists by the Department for Communities raises a devolution issue under Schedule 10 of the 1998 Act.
The Department for Communities refutes this, contending that the provisions under challenge concentrated the power to make welfare provision in the office of the Secretary of State.
The Department for Communities submits that its role in issuing the lists amounts to nothing more than providing administrative support to the Secretary of State, and that the lists have legal effects solely by reason of the act of the Secretary of State, not the act of the Department.
The publication of lists is not, therefore, an act raising a devolution issue under section 24 of the 1998 Act.
The Supreme Court unanimously refuses to accept the Attorney Generals application to refer this issue to the court under paragraph 34 of Schedule 10 to the 1998 Act.
Lord Kerr, with whom Lady Hale and Lord Reed agree, gives the judgment.
The Court notes that acts by the Secretary of State for Northern Ireland or by departments in Westminster do not come within the purview of section 24 of the 1998 Act.
For a devolution issue to arise, it must be shown that an act or function has been carried out by a Northern Ireland minister or department, and that the act in question is invalid by reason of section 24 [6].
The prohibitions in section 24 are disjunctive: it is forbidden to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with the ECHR.
Acts ancillary to the enactment of subordinate legislation are thus in principle capable of being caught by section 24.
It is therefore possible, on a theoretical or technical level, to consider that the Departments provision of the postcode lists in question amounts to such an ancillary act [11].
There are, however, two reasons that the provision of such lists cannot be said to raise a devolution issue.
First, as the Court held in AGNIs reference [2019] UKSC 1, where the Attorney General sought to refer to this court a devolution issue that arose in parallel pending proceedings, it was considered not to be appropriate to accept the reference.
The same holds true here: a challenge to the universal credit provisions will come before this court shortly on appeal from a decision of the English Court of Appeal.
It will be open to the Attorney General to apply to intervene in that appeal [12].
Second, the fundamental underpinning of the Attorney Generals case is that the introduction of universal credit in Northern Ireland by act of the Secretary of State is incompatible with the ECHR.
It is not that the Departments act in identifying the areas where universal credit is to be introduced that is incompatible.
The publication of the lists itself is not an act sufficient to give rise to an incompatibility with the ECHR.
For a devolution issue under Schedule 10 to arise, it must be shown that the departmental act under challenge is capable of being incompatible with the ECHR.
Because the publication of lists is not in itself capable of giving rise to an incompatibility, it is not appropriate to accept a reference under paragraph 34 [13 14].
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It has been hard wired into the mind of many family lawyers in England and Wales that, were a parent to remove a child from a state in which they were habitually resident to another state with the settled intention that they would cease to reside in that first state and make their home in that second state, the child would be likely to lose habitual residence in the first state immediately upon the removal and, until later acquiring habitual residence in the second state, would be likely not to be habitually resident anywhere.
The absence of habitual residence anywhere places a child in a legal limbo.
The main question raised by this appeal, which arguably the lower courts were not free to answer, is whether the expectation of family lawyers about the point at which habitual residence is lost requires adjustment in the light of this courts recent adoption of the European concept of habitual residence.
The courts answer to this question should enable it to determine whether the lower courts were correct to conclude that, on the relevant date, the child at the centre of this appeal was in the limbo to which I have referred.
The child is B, a girl, who was born in April 2008 and so is now aged seven.
The women who are the two central parties to this appeal were living in England in a same sex relationship from 2004 to 2011.
Other than biologically, B is the product of their relationship.
The respondent is the biological mother of B and her father is an unknown sperm donor of Asian ethnicity.
The appellant has strong claims also to be described as a mother.
Nevertheless, in order to avoid confusion, it is better to refer to the central parties as the appellant and the respondent respectively.
The appellant, who continues to live in England, is a British national, aged 35, of Indian ethnicity.
The respondent is a British national, aged 45, of Pakistani ethnicity.
B, likewise, is a British national.
On 3 February 2014 the respondent took B to live in Pakistan, where they have remained ever since.
On 13 February 2014, aware that the respondent had removed B from her home but unaware that she had taken her abroad, the appellant issued an application under the Children Act 1989 (the 1989 Act) for leave to apply for what were then still described as orders for shared residence of B or for contact with her.
On 6 June 2014, having learnt that the respondent had taken her to Pakistan, the appellant also applied for orders that B should be made a ward of court and be returned to England.
On 31 July 2014 Hogg J dismissed both of the appellants applications: [2014] EWHC 3017 (Fam).
And on 6 August 2015 the Court of Appeal (Sir James Munby P, Black and Underhill LJJ), by a judgment of the court delivered by Black LJ, dismissed her appeal: [2015] EWCA Civ 886.
In 2000, prior to her relationship with the appellant, the respondent had begun to investigate the possibility of her conceiving a child by artificial means and in 2001 she had made unsuccessful attempts to do so.
In 2004 their relationship began and they set up home together; but they never entered into a civil partnership.
In 2005 and 2006, as a couple, they together explored that same possibility.
At their joint request, a licensed hospital administered two cycles of intrauterine insemination (IUI) to the respondent but the treatment was unsuccessful.
Then they made a joint application to their local authority for assessment as potential adopters.
Six months later, however, at the instigation of the appellant, who did not feel ready to be a parent, they withdrew their candidacy.
Ultimately, in April 2007, they applied to another licensed hospital for the respondent to have further IUI treatment under the National Health Service.
I see no reason, wrote the counsellor, why this couple should not be treated.
On this occasion the treatment was successful and in April 2008 B was born.
Shortly prior to Bs birth the appellant and the respondent had bought a house in their joint names.
They lived there together with B until December 2011, when in acrimonious circumstances their relationship finally broke down and the appellant left.
Upon Bs birth the respondent gave up work for a year.
The appellant took two weeks of paternity leave and a further two weeks of holiday, whereupon she resumed full time employment.
Most of Bs care was undertaken by the respondent but, when she got home, the appellant helped to care for her, for example to give her a bath and put her to bed; and at weekends, as co parents, they took B out, in particular to visit members of their families.
Living within easy reach of them were the appellants parents, the respondents parents and her two sisters, together with various young cousins of B. She became close to these relations, who all remain resident in England today.
When in 2009 the respondent resumed work, the appellants parents looked after B for two days each week but, when she began to attend a nursery, their care of her was reduced to one day each week.
When she began to talk, B began to call the respondent mama and the appellant mimi.
On behalf of B, the respondent wrote Mothers Day cards to the appellant; on one of them she wrote I cant believe how lucky I am to have you as my Mama.
Following her departure from the family home, the appellant continued to pay half the mortgage instalments referable to it and to make other payments which she describes as for Bs maintenance and which the respondent describes as her continuing contribution to utility bills.
The respondent accuses the appellant of withdrawing from many aspects of parenting, for example in relation to Bs schooling; but on any view the appellant pressed for contact with B and on any view the respondent was to some extent resistant to it.
Over the following two years the respondent progressively reduced the level of the appellants contact with B from six hours every week in the first few months, to three hours every fortnight in the following year and then to only two hours every three weeks in the year prior to the move to Pakistan.
The appellant was not content with the reduction in her contact with B, nor with the ostensible difficulties placed by the respondent in the way of her seeing B on a number of the pre arranged days.
Bad tempered emails passed between them.
By November 2012 the appellant was inviting the respondent, albeit unsuccessfully, to join her at family mediation.
Then, in October 2013, the appellant wrote to the respondent a letter before action.
She expressed concern about the effect on Bs emotional wellbeing of the minimal contact which the respondent had allowed to take place between them and she invited her to consent to a shared residence order, pursuant to which B would stay with the appellant on three nights each fortnight and for further periods during school holidays.
The respondent does not appear to have replied to the letter.
Meanwhile the respondent had begun privately to consider whether to take B to live in Pakistan, where, according to her, certain unidentified members of her wider family remain.
In June 2013 she had been made redundant and life had become particularly difficult for her.
In November 2013 she went alone to Islamabad and there she discussed with a friend the possibility of entry into a business partnership with him and looked at a possible school for B.
In December 2013, following her return to England, the respondent secretly decided to move there with B as soon as possible.
Also in December 2013 the respondent took B on holiday to Morocco.
On the first occasion of contact following their return B handed a Moroccan card to the appellant.
On the card B had written To mimi I missed you so much love [B] and she had drawn hearts and kisses.
At around that time the respondent at last agreed to attend a mediation session with the appellant.
It took place on 15 January 2014.
The respondent made no mention of her imminent departure with B to Pakistan and it is hard to avoid the conclusion that the session was a charade.
It was agreed that the next session would take place on 5 February 2014.
The last occasion of direct contact between the appellant and B took place on 26 January 2014.
According to the appellant, B told her that she was moving and that she was scared that the appellant would not be able to find her.
The next occasion of contact was fixed to take place three weeks later, namely on 16 February 2014.
Late in January, by email, the appellant asked the respondent to agree to change the date.
There was no reply.
On 7 February the appellant sent a further email.
It bounced back.
The appellant discovered that the respondents facebook and twitter pages had been closed.
Then, on 8 February, the appellant received a letter from the respondent.
It had been posted by someone in England on 6 February.
In it the respondent gave no indication of the whereabouts of herself and B. She wrote Ive enclosed the house key as I have now moved our communication has been so strained and stressful I will be in touch in a few weeks, once we settle, to establish what you have decided to do about the house.
The respondents removal of B to Pakistan on 3 February 2014 was lawful.
The absence of the appellants consent did not vitiate it.
The appellant has never been Bs legal parent.
Had the insemination which led to Bs conception occurred after 6 April 2009, and had the respondent so agreed in writing, the appellant would have been treated in law as Bs parent: sections 43 and 44 of the Human Fertilisation and Embryology Act 2008.
Had she thereupon been registered as a parent, the appellant would also have acquired parental responsibility for B: section 4ZA(1)(a) of the 1989 Act.
Alternatively, if the appellant had secured a shared residence order referable to B prior to 3 February 2014, she would have acquired parental responsibility for her under the former version of section 12(2) of the 1989 Act.
In the event, however, she never had parental responsibility for B.
Later the respondent was to give the following evidence, which Hogg J accepted, about the circumstances of herself and B in Pakistan in the weeks following their arrival on 4 February 2014: (a) (b) she arrived in Islamabad on a visa which entitled her to remain with B in Pakistan for about three months; she stayed with B in the home of her potential business partner for about the first three weeks; (c) on 10 February she began working in partnership with him; (d) on 18 February she registered B at an English speaking school (being other than the one which she had previously considered), at which on the following day B began to attend; (e) on 19 February she entered into an agreement to rent a two bedroom flat for one year with effect from 1 March; (f) on (presumably) 1 March she moved with B into the flat; and (g) on 18 April she was issued with a National Identity Card which entitled her to reside with B in Pakistan indefinitely.
On 24 July 2014, five days before the beginning of the hearing before Hogg J, the appellant spoke to B by telephone.
Since then there have been five further occasions of contact by telephone.
No other contact has taken place between them since the move to Pakistan.
PROCEEDINGS
When on 13 February 2014 the appellant issued her application under the 1989 Act, she remained unaware of Bs whereabouts so she also issued an application under section 33 of the Family Law Act 1986 for orders that specified public authorities should disclose to the court all their information relating to Bs whereabouts.
An order was made against the Child Benefit Office but it yielded no relevant information.
In April 2014, still unaware of the whereabouts of the respondent and B, the appellant secured an order for substituted service of her applications upon the respondent, namely by post to the address of her parents.
The respondent says that in his mind her father had somehow been able to avoid directly confronting her sexuality, her intimate relationship with the appellant and the circumstances of Bs conception; and that, when he opened the envelope, he was deeply shocked and angry about what he perceived to be the respondents dishonour of the family.
There may well be grounds for criticising the appellant for having invited the court to order that the substituted service should be at the parents address as opposed, for example, at the address of one of the respondents sisters.
At all events the service led to the respondents instruction of English solicitors who, on 9 May 2014, informed the appellants solicitors that the respondent and B had gone to Pakistan.
Later the respondent divulged that she and B were in Islamabad but, for reasons unexplained to the court, she has never disclosed their precise address there.
The appellants belated discovery that B was abroad led her, on 6 June 2014, to issue a further application, namely for orders to be made by the High Court in the exercise of its inherent jurisdiction over B, as a British subject, that she be made a ward of court and be at once brought back to England.
On 9 June 2014, apprised of the fact that the respondent disputed the courts jurisdiction to make any of the orders sought by the appellant, Moylan J directed that the issue of jurisdiction be determined at a hearing beginning on 29 July 2014 and he ordered that the respondent should attend it in person.
By a recital to his order, Moylan J also invited the respondent to reflect upon the practical availability of any forum, other than in England and Wales, in which she and the appellant might safely and realistically resolve their disputes.
In due course, having presumably reflected upon it, the respondent averred that the correct jurisdiction in which to raise any issues in relation to B was that of Pakistan.
Four days before the hearing fixed to begin on 29 July 2014, Peter Jackson J heard an application by the respondent to vary the order that she should attend it in person.
She asserted that her father had been so outraged by what he had learnt from the court documents as to have threatened to break her legs and that, were she to come to England, she would be at risk of physical harm, perhaps even of death, at his hands or at those of the local community.
Instead the respondent offered to give evidence at the substantive hearing by video link.
On the undertaking of the appellant not to inform the respondents family that the hearing was about to take place, the judge refused the respondents application and made a further order for her attendance in person.
Nevertheless the respondent refused to comply with the orders for her attendance before Hogg J in person.
She did not even give evidence to her by video link.
She gave evidence only by telephone.
On 31 July 2014, following receipt of evidence relevant to jurisdiction from the appellant in the witness box as well as from the respondent by telephone, Hogg J gave judgment.
It was, as she noted, common ground that prior to 3 February 2014 the respondent and B had been habitually resident in England.
Notwithstanding her inability to have observed the respondent during cross examination about her motives, Hogg J found that, when departing for Pakistan on that date, the respondent had genuinely intended to make a new life for herself and for B there and that her motivation had not been to evade the appellants increasing demands to be allowed to play a fuller role in Bs life.
So she held that the respondent had thereupon lost her own habitual residence in England.
She accepted that the appellant had been a significant person in Bs life, particularly prior to the breakdown of the relationship between the two women; that the appellant still had much to offer B; and that B had said that she would miss the appellant and had wished to remain in touch with her.
But, asked Hogg J, was Bs wish to remain in touch with the appellant enough to sustain a continuation of her habitual residence in England? Her answer was no.
Accordingly she held that B had also lost her English habitual residence on 3 February 2014 and thus that the court had no jurisdiction to determine the application issued by the appellant on 13 February 2014 pursuant to the 1989 Act.
It was nevertheless probable, observed the judge, that neither the respondent nor B had acquired habitual residence in Pakistan by that date.
Then Hogg J addressed the appellants application for the exercise of her inherent jurisdiction over B as a British subject.
She noted the appellants central contention that, in the light of societys attitude in Pakistan towards homosexual acts, she would not be able even to present her case, as a same sex parent, to the courts there; and the appellants wider contentions that, as a lesbian, the respondent was putting herself and B at risk by living in Pakistan and that, while B needed in due course to develop a fuller understanding of the circumstances of her conception and early home life, she would, were the respondent to have told her the truth about them, put herself at risk even by speaking about them in Pakistan.
The judge, however, accepted that the respondent was well aware of the difficulties which would attend her entry into a same sex relationship in Pakistan.
The judge held that the jurisdiction over a British subject who was neither habitually resident nor present in England and Wales should be exercised only if the circumstances of the case were dire and exceptional and that those of the present case did not so qualify.
This case before me, concluded Hogg J, is at heart one of contact in the old fashioned terminology and about making arrangements for seeing a significant person in [Bs] life.
Then she observed that, had the respondent made an application for permission to remove B to Pakistan, it would have stood a very good chance of success and that there would have been plans, if not orders, for the appellant to have indirect contact.
With respect to Hogg J, others might attribute a somewhat lower chance of success to the respondents hypothetical application; and counsel have been unable satisfactorily to explain the judges apparent suggestion that the extent of Bs contact with the appellant for which the court would have provided would have been no more than indirect.
In the appellants appeal to the Court of Appeal against the orders of Hogg J the Reunite International Child Abduction Centre (Reunite) was permitted to intervene.
By its judgment, the court concluded that Hogg J had been entitled to hold that on 3 February 2014 B had lost her English habitual residence.
It also concluded that, although the attenuation, or even the ultimate loss, of her relationship with the appellant would be a real detriment to B, the circumstances were not so exceptionally grave as to justify exercise of the inherent jurisdiction by reference to her nationality.
The Court of Appeal correctly observed that there was no direct evidence to substantiate the appellants asserted inability to present her case to the courts of Pakistan.
But it surveyed a mass of general material about the attitude of society in Pakistan to same sex relationships and concluded from it that, although the issue of sexual relations between women was unexplored territory in law, there was in Pakistan pervasive societal and state discrimination, social stigma, harassment and violence against both gay men and lesbian women, together with a lack of effective protection by the state against the activities of non state actors.
So the Court of Appeal proceeded on the basis not challenged by the respondent in the course of this further appeal that courts in Pakistan would be unlikely to recognise that the appellant had any relationship with B which would entitle her to relief and that therefore she would have no realistic opportunity to advance her claim there.
CONSEQUENCE
The consequence of the conclusions reached in the lower courts, in both of them by judges of great experience in the field of family law, is that applications intended to secure for B a continuing relationship with the woman who, with the respondents consent, has acted as one of her parents and who, even for the two years following the separation, managed to maintain a significant, loving presence in her life have been dismissed without any appraisal of Bs welfare; without any knowledge of her current situation; without any collection of her wishes and feelings; and in circumstances in which no such applications can be entertained in any other court.
Is it correct that, by the clandestine removal of her to Pakistan, the respondent has placed Bs interests beyond all judicial oversight? The Court of Appeals affirmative answer is arresting.
It demands this courts close scrutiny.
HABITUAL RESIDENCE
(a) Principle
A childs habitual residence in a state is the internationally recognised threshold to the vesting in the courts of that state of jurisdiction to determine issues in relation to him (or her).
Article 8 of Council Regulation (EC) No 2201/2003 (Regulation B2R) provides that the courts of an EU state shall have jurisdiction in matters of parental responsibility over a child habitually resident there at the time when the court is seised.
By way of exception, article 12 confers jurisdiction on a state which has other links with the child but only where the parties have accepted its jurisdiction.
Article 13 provides that, where a childs habitual residence cannot be established (which means where the child is not habitually resident in any EU state) and where article 12 does not apply, jurisdiction vests in the courts of the state in which the child is present.
Article 14, entitled Residual jurisdiction provides that, where no court of a member state has jurisdiction under the preceding articles, jurisdiction shall be determined by the laws of each state.
A childs habitual residence is also the thread which unites the provisions of the Hague Convention on the Civil Aspects of International Child Abduction 1980 (the 1980 Convention).
This Convention applies to a child habitually resident in a contracting state immediately before his wrongful removal or retention: article 4.
It is the law of that state which dictates whether his removal or retention was wrongful: article 3(a).
It is that state to which, subject to exceptions, other contracting states must order the child to be returned: article 12.
Under the Hague Convention on Jurisdiction etc 1996 it is, again, the courts of the contracting state of the childs habitual residence which, as against other contracting states, has jurisdiction to make orders for his protection: article 5(1).
Regulation B2R extends beyond the identification of jurisdiction as between EU states themselves.
It binds each EU state irrespective of whether the other state with potential jurisdiction is an EU state.
Thus the Family Law Act 1986 (the 1986 Act) now provides, by section 2(1)(a), that an order under section 8 of the 1989 Act may be made only if the court has jurisdiction under Regulation B2R or if other conditions, irrelevant for present purposes, are satisfied.
By her application issued on 13 February 2014 the appellant applied for leave to apply for orders under section 8 of the 1989 Act and the result is that the court has jurisdiction to determine her application only if B was habitually resident in England and Wales on the date of its issue.
Two consequences flow from the modern international primacy of the concept of a childs habitual residence.
The first is that, as Reunite submits to this court and as the respondent broadly accepts, it is not in the interests of children routinely to be left without a habitual residence.
In that event the machinery of international instruments designed to achieve an orderly resolution of issues relating to them does not operate as primarily intended.
Indeed, if they are unilaterally removed from a state in which they were not habitually resident, those aggrieved by their removal can have no recourse to the 1980 Convention.
In In re F (A Minor) (Child Abduction) [1992] 1 FLR 548, 555, Butler Sloss LJ accepted that for that reason it was important that, where possible, a child should have an habitual residence.
Indeed, in his article entitled The Concept of Habitual Residence in the Juridical Review 1997, p 137, Dr Clive, the great Scottish family law jurist, wrote at p 143 that with the increasing importance of habitual residence as a connecting factor, it is not sensible to have a situation in which people are routinely without a habitual residence.
In the absence of the habitual residence of children anywhere, Regulation B2R provides a fall back jurisdiction based on their presence.
But, in the context of adult disputes about them, the presence of children in a particular state on a particular day is an unsatisfactory foundation of jurisdiction because, by moving them from one state to another, one of the adults can so easily invoke a favourable jurisdiction or pre empt invocation of an unfavourable one.
The second consequence is that the interpretation in the courts of England and Wales of the concept of habitual residence should be consonant with its international interpretation: see the judgment of the Court of Justice of the European Union (the CJEU) in Proceedings brought by A [2010] Fam 42, para 34.
Its traditional interpretation in England and Wales has been substantially influenced by the stance adopted by one or both of the parents, often at the expense of focus on the childs own situation.
By way of example, our courts had accepted a proposition that one parent with parental responsibility could not achieve a change in the childs habitual residence without the consent of the other parent with parental responsibility: Re M (Abduction: Habitual Residence) [1996] 1 FLR 887, 892 E H and 896 B.
This court has now held that proposition to be wrong: In re R (Children) [2015] UKSC 35; [2016] AC 760.
By way of another example, our old law largely proceeded by reference to a proposition that a childs habitual residence would necessarily follow the habitual residence of the parent with whom he lived: see the discussion of it in In re LC (Children) [2014] UKSC 1; [2014] AC 1038, para 33.
But it was held in the LC case, at paras 34 to 37, that the international interpretation of habitual residence required that proposition to be relaxed.
The present case requires the court to turn its attention to a third aspect of the concept of a childs habitual residence, namely the circumstances in which he loses it, and to ask itself whether the longstanding domestic analysis of those circumstances, yet again heavily dependent on parental intention, is consonant with the modern international concept.
The domestic analysis to which I have referred is to be found in the decision of the House of Lords in In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562.
The facts have some similarities with those of the present case although the latter has features which may more strongly militate against any immediate loss of the childs habitual residence upon removal.
On 21 March 1990 the mother removed the child, aged two, from Australia, where he had been habitually resident, to England with the intention of permanently residing here.
She did so without the knowledge of the father who also resided in Australia but who, not having been married to the mother, had at that time no rights of custody in relation to the child.
So the mothers removal of him was not wrongful within the meaning of the 1980 Convention.
On 12 April 1990, however, an Australian judge conferred rights of custody on the father.
So was the mothers retention of the child in England after that date wrongful within the meaning of the 1980 Convention? It was wrongful only if the child had continued to be habitually resident in Australia on that date.
The appellate committee held that, while he had not by then acquired habitual residence in England, he had lost his habitual residence in Australia upon his removal three weeks earlier.
It is well known that, in giving the only substantive speech in the J case, Lord Brandon of Oakbrook made, at pp 578 579, four preliminary points.
The first was that the expression habitual residence should be given its natural meaning.
The second was that an issue about a persons habitual residence in a particular country was one of fact.
The fourth, which may remain correct notwithstanding the decision in the LC case, was that the habitual residence of a child aged only two who was in the sole lawful custody of his mother would be the same as hers.
It is the validity of Lord Brandons third point, for which he cited no authority, that is central to the present appeal.
Hogg J quoted it in full.
Lord Brandon said: The third point is that there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead.
Such a person cannot, however, become habitually resident in country B in a single day.
An appreciable period of time and a settled intention will be necessary to enable him or her to become so.
During that appreciable period of time the person will have ceased to be habitually resident in country A but not yet have become habitually resident in country B.
In the light of his third and fourth points Lord Brandon concluded as follows: The mother had left Western Australia with a settled intention that neither she nor J should continue to be habitually resident there.
It follows that immediately before 22 March 1990, when the retention of J in England by the mother began, both she and J had ceased to be habitually resident in Western Australia. (emphasis supplied)
The analysis by the CJEU of the concept of a childs habitual residence is located in its judgments in Proceedings brought by A, cited in para 31 above, and in Mercredi v Chaffe [2012] Fam 22.
In Proceedings brought by A the issue for determination in Finland was whether children taken into care in November 2005 had then been habitually resident there.
They had lived with their mother in Sweden for four years until the summer of 2005, when they had returned to Finland, where they had lived on campsites and not been sent to school.
The courts ruling, at p 69, was as follows: 2.
The concept of habitual residence under article 8(1) of [Regulation B2R] must be interpreted as meaning that it corresponds to the place which reflects some degree of integration by the child in a social and family environment.
To that end, in particular the duration, regularity, conditions and reasons for the stay on the territory of a member state and the familys move to that state, the childs nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration.
The court had also suggested, at para 40, that the intention of the parents to settle permanently with the child in another member state, manifested by certain tangible steps such as the purchase or lease of a residence there, might indicate what, perhaps significantly, the court chose to describe as a transfer of habitual residence.
In the Mercredi case the issue for determination in England and Wales was whether a baby aged two months, lawfully removed by the French mother from the UK to La Runion, remained habitually resident here five days later when the English court became seised of the British fathers application.
The CJEU carefully followed its ruling in Proceedings brought by A but, by reference to the different facts, chose also to stress, at paras 53 and 56, that the analysis of the social and family environment of a pre school child would differ from that of a school age child and would include consideration of the geographic and family origins of the parent who had effected the move and of the family and social connections of that parent and the child with the state to which they had moved.
In A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1, this court held that the criterion articulated in the two European authorities (some degree of integration by the child in a social and family environment), together with the non exhaustive identification of considerations there held to be relevant to it, governed the concept of habitual residence in the law of England and Wales: para 54(iii) and (v) of Lady Hales judgment, with which all the members of the court (including Lord Hughes at para 81) agreed.
Lady Hale said at (v) that the European approach was preferable to the earlier English approach because it was focussed on the situation of the child, with the purposes and intentions of the parents being merely one of the relevant factors.
It is worthwhile to note that the new criterion requires not the childs full integration in the environment of the new state but only a degree of it.
It is clear that in certain circumstances the requisite degree of integration can occur quickly.
For example article 9 of Regulation B2R, the detail of which is irrelevant, expressly envisages a childs acquisition of a fresh habitual residence within three months of his move.
In the J case, cited above, Lord Brandon suggested that the passage of an appreciable period of the time was required before a fresh habitual residence could be acquired.
In Marinos v Marinos [2007] EWHC 2047 (Fam); [2007] 2 FLR 1018, para 31, Munby J doubted whether Lord Brandons suggestion was consonant with the modern European law; and it must now be regarded as too absolute.
In A v A, cited above, at para 44, Lady Hale declined to accept that it was impossible to become habitually resident in a single day.
But do the two European authorities assist in identifying the object of central relevance to this appeal, namely the point at which habitual residence is lost?
Yes, in two ways.
The first is indirect.
Recital 12 to Regulation B2R states: The grounds of jurisdiction in matters of parental responsibility established in the present Regulation are shaped in the light of the best interests of the child, in particular on the criterion of proximity.
By proximity, the court clearly meant the practical connection between the child and the country concerned: Lord Hughes in A v A, cited above, at para 80(ii).
In its analysis of the concept of habitual residence the CJEU, both in Proceedings brought by A at para 35 and in the Mercredi case at paras 46 and 47, stressed the significance of recital 12.
Of course it does not follow that the court can construe a childs habitual residence by reference to the result which best serves his interests.
The effect of the recital is more subtle and more limited yet nevertheless significant: where interpretation of the concept of habitual residence can reasonably follow each of two paths, the courts should follow the path perceived better to serve the interests of children.
Or, to be more specific to the facts of the present case: if interpretation of the concept of habitual residence can reasonably yield both a conclusion that a child has an habitual residence and, alternatively, a conclusion that he lacks any habitual residence, the court should adopt the former.
The second is arrestingly direct.
In her Opinion in Proceedings brought by A Advocate General Kokott said: 45.
It is also conceivable in exceptional cases that during a transitional stage there will no longer be habitual residence in the former state while the status in the new state has not yet crystallised into habitual residence.
Precisely for such a case, article 13 of [Regulation B2R] confers a residual jurisdiction on the courts of the member state in which the child is present.
In its judgment in the same case the court said: 43.
However, it is conceivable that at the end of [the integration] assessment it is impossible to establish the member state in which the child has his habitual residence.
In such an exceptional case, and if article 12 . is not applicable, the national courts of the member state in which the child is present acquire jurisdiction . pursuant to article 13(1) .
The courts reference to a situation in which it is impossible to establish the childs habitual residence might at first sight seem ambiguous.
Is it referring to a situation in which the child has an habitual residence somewhere but the evidence does not enable the court to identify the state in which he has it? The answer is clearly no.
The court is referring to a situation in which a child has no habitual residence.
The court is expressly indorsing para 45 of the Advocate Generals Opinion (note its repetition of her words conceivable and exceptional) but is recasting her point within the slightly ambiguous language of article 13 of B2R, namely where a childs habitual residence cannot be established.
In A v A, cited above, Baroness Hale, at para 54(viii), referred to para 45 of the Advocate Generals Opinion and to para 43 of the courts judgment in Proceedings brought by A and observed that it was possible for a child to have no habitual residence.
Lord Hughes, at para 80(ix), indorsed the European courts conclusion by saying that the circumstances in which a child had no habitual residence would be exceptional.
I conclude that the modern concept of a childs habitual residence operates in such a way as to make it highly unlikely, albeit conceivable, that a child will be in the limbo in which the courts below have placed B.
The concept operates in the expectation that, when a child gains a new habitual residence, he loses his old one.
Simple analogies are best: consider a see saw.
As, probably quite quickly, he puts down those first roots which represent the requisite degree of integration in the environment of the new state, up will probably come the childs roots in that of the old state to the point at which he achieves the requisite de integration (or, better, disengagement) from it.
One of the well judged submissions of Mr Tyler QC on behalf of the respondent is that, were it minded to remove any gloss from the domestic concept of habitual residence (such as, I interpolate, Lord Brandons third preliminary point in the J case), the court should strive not to introduce others.
A gloss is a purported sub rule which distorts application of the rule.
The identification of a childs habitual residence is overarchingly a question of fact.
In making the following three suggestions about the point at which habitual residence might be lost and gained, I offer not sub rules but expectations which the fact finder may well find to be unfulfilled in the case before him: the deeper the childs integration in the old state, probably the less fast (a) his achievement of the requisite degree of integration in the new state; (b) the greater the amount of adult pre planning of the move, including pre arrangements for the childs day to day life in the new state, probably the faster his achievement of that requisite degree; and (c) were all the central members of the childs life in the old state to have moved with him, probably the faster his achievement of it and, conversely, were any of them to have remained behind and thus to represent for him a continuing link with the old state, probably the less fast his achievement of it.
Lord Brandons third preliminary point in the J case, set out in para 34 above, should no longer be regarded as correct; and Hogg J fell into error in being guided by it.
As exemplified by the terms in which Lord Brandon applied it to the facts of that case, also set out in para 34, his analysis of a childs habitual residence afforded to parental intention a dispositive effect inconsistent with the child focussed European concept now adopted in England and Wales; and the result of his analysis was to consign a large number of children to the limbo of lacking any habitual residence in circumstances in which the modern law expects such a result to be exceptional, albeit conceivable.
It is nevertheless fruitless to inquire whether the conclusion of the appellate committee about the childs loss of habitual residence in Australia within three weeks of his move would remain valid today.
(b) Application
It follows that, in asking whether Bs wish to remain in touch with the appellant was enough to sustain a continuation of her habitual residence in England on 13 February 2014, Hogg J should now be seen to have asked herself far too narrow a question.
The question is whether B had by then achieved the requisite degree of disengagement from her English environment; and highly relevant to the answer will be whether she had by then achieved the requisite degree of integration in the environment of Pakistan.
In my opinion each of the following factors might contribute to a conclusion that B had by that date achieved the requisite degree of disengagement from her English environment: (a) B went to Pakistan with the respondent, who was her biological mother, her primary carer and the person who alone had parental responsibility for her; (b) Bs removal to Pakistan was lawful; (c) B knew that she was going to live in Pakistan; (d) part of Bs ethnic heritage was in Pakistan and certain members of her wider family, albeit unidentified, apparently remain living there; (e) the respondent took B to Pakistan in the genuine belief that they would have a better life there and with the intention that they would settle there; and (f) two months earlier the respondent had conducted a reconnoitre of possible arrangements for their future life in Islamabad.
In my opinion each of the following factors might contribute to a conclusion that B had not by that date achieved the requisite degree of disengagement from her English environment: she had never previously set foot in Pakistan; (a) B had lived in England throughout the five years of her life; (b) (c) her language was English and she barely spoke Urdu; (d) she was a British subject; the appellant, who was a central figure in Bs life, indeed probably the (e) second most important figure, had been left behind in England; (f) Bs removal was effected without the appellants knowledge, still less approval; (g) B was aware that her removal was to be kept secret from the appellant; (h) B retained significant emotional links with the appellant and feared that she would miss her following the move to Pakistan; (i) other important adult figures in Bs life, in particular both sets of grandparents and two aunts, together with various young cousins, had also been left behind in England; (j) the home in which B had lived throughout her life had not been sold and remained available for her immediate re occupation with the respondent; (k) by 13 February 2014 B had been present in Pakistan for only nine days; (l) at that time she and the respondent had the right to remain there for only about three months; (m) they were then staying temporarily with a friend of the respondent; (n) no independent accommodation had by then been secured by the respondent; and (o) B was not then even attending school in Pakistan nor even registered with a school there.
(c) Conclusion
I conclude that, taken cumulatively, the factors set out in para 50 are stronger than those set out in para 49 and compel a conclusion that on 13 February 2014 B retained habitual residence in England.
Accordingly the appellants application issued on that date under the 1989 Act can and should proceed to substantive determination.
The judge may wish to consider whether to make B a party to the application, acting by a childrens guardian, and, if so, whether to invite the guardian to instruct an independent social worker to interview B in Pakistan and to explore the circumstances of her life there.
Were the courts eventual conclusion to be that it was in Bs interests to return to England, either occasionally, in order to spend time with the appellant here, or even permanently, in order to reside here again whether mainly with the respondent or otherwise, its order could include consequential provision under section 11(7)(d) of the 1989 Act for the respondent to return her, or cause her to be returned, to England for such purposes.
NATIONALITY
There is accordingly no need to consider whether, on the footing that she had no jurisdiction to determine the appellants application under the 1989 Act, Hogg J was entitled to decline to exercise her inherent jurisdiction to make B, as a British subject, a ward of court and to order (or even to consider whether to order) the respondent to return her, at any rate on a temporary basis, to England.
In A v A, cited above, this court held that the prohibition comprised in sections 1(1)(d), 2(3) and 3(1) of the 1986 Act against making an order in wardship proceedings for the care of, or contact with, a British child neither habitually resident nor present in England and Wales did not preclude a bare order for his return to England: para 28 (Lady Hale, with whom the other members of the court agreed).
This court has received extensive submissions from both of the central parties and from each of the three interveners about the proper exercise of the courts power or indeed the discharge of its alleged duty to exercise its inherent jurisdiction where no other jurisdiction exists in which the welfare of a British child can be addressed.
With apologies to the solicitors and counsel who, all unremunerated, have laboured to craft them, I decline to lengthen this judgment by addressing almost all of these submissions.
I do, however, agree with Lady Hale and Lord Toulson when, in para 60 below, they reject the suggestion that the nationality based jurisdiction falls for exercise only in cases at the extreme end of the spectrum.
I consider that, by asking, analogously, whether the circumstances were sufficiently dire and exceptional to justify exercise of the jurisdiction, Hogg J may have distracted herself from addressing the three main reasons for the courts usual inhibition about exercising it.
In para 59 below Lady Hale and Lord Toulson identify those reasons and I agree that arguably none of them carries much force in the present case.
To my mind the most problematic question arises out of the likelihood that, once B was present again in England pursuant to an order for her return, the appellant would have issued an application for orders relating to care of her or contact with her.
The question would be whether in such circumstances an order for her return would improperly have subverted Parliaments intention in enacting the prohibitions comprised in sections 1(1)(d), 2(3) and 3(1) of the 1986 Act.
Or, in such circumstances, should the interests of the child prevail and indeed would Parliament have so intended?
THE DISSENTING JUDGMENTS
In para 65 below Lord Sumption complains that the only proposed ground for allowing the appeal is that it is highly unlikely, albeit conceivable that one habitual residence will be lost before another is acquired.
There, with respect, Lord Sumption misunderstands my judgment.
What I suggest in para 45 above is that the modern concept of habitual residence operates in the expectation that an old habitual residence is lost when a new one is gained.
The mere unlikelihood of the correctness of an outcome favoured by a judge would be a disgraceful ground for allowing an appeal.
The ground for allowing this appeal is that the modern concept of habitual residence identifies the point of its loss as being the stage when the person achieves the requisite degree of disengagement from the old environment (para 48 above); that intention, in this case parental intention, is no longer dispositive in this respect (para 47 above); that highly relevant to the persons achievement of that requisite degree of disengagement is his achievement of the requisite degree of integration in the new environment (para 48 above); and that, by application of the modern concept, B had not lost her habitual residence in England by 13 February 2014 (para 51 above).
In para 72 below Lord Sumption quotes from para 44 of the Opinion of Advocate General Kokott in Proceedings brought by A, cited above.
Might I suggest that inadvertently Lord Sumption has in this regard been too selective? The Advocate General suggests: 44. all the circumstances of the individual case must be taken into account where there is a change of place.
An indication that the habitual residence has shifted may in particular be the corresponding common intention of the parents to settle permanently with the child in another state.
The parents intention may manifest itself, for example, in external circumstances such as the purchase or lease of a residence in the new state, notifying the authorities of the new address, establishing an employment relationship, and placing the child in a kindergarten or school.
As a mirror image, abandoning the old residence and employment and notifying the authorities of departure suggest that habitual residence in the former state is at an end.
I have set the words quoted by Lord Sumption in italics.
My understanding, however, is that in para 44 the Advocate General recommends a composite consideration of all the circumstances both in the new environment and, as a mirror image, in the old environment in order to determine whether habitual residence has shifted from the latter to the former.
She does not suggest consideration only of severance of links with the old environment with a view to determining whether, even if no new habitual residence has been gained, the old one has been lost.
For it is only in the next paragraph that she turns to that possibility.
Both Lord Sumption at para 70 and Lord Clarke at para 92 consider that it makes no sense to regard a person as habitually resident in England and Wales if she is not resident there at all because she has left it to live permanently elsewhere.
With respect, my view is different.
For me it makes no sense to regard a persons intention, in this case a parents intention, at the moment when the aeroplane leaves the ground as precipitating, at that moment, a loss of habitual residence.
At all events, and more importantly, I remain clear that such is not the modern law.
LADY HALE AND LORD TOULSON:
We agree fully with Lord Wilsons reasoning and conclusion on the issue of habitual residence.
He has described the identification of a childs habitual residence as overarchingly a question of fact (para 46).
At the risk of appearing pedantic, we would prefer to describe it as a mixed question of fact and law, because the concept is a matter of law but its application is a matter of fact.
We do not, however, understand Lord Wilson to be laying down a rule of law that a child must always have an habitual residence: rather that, as a matter of fact, the loss of an established habitual residence in a single day before having gained a new one would be unusual.
In this particular case, although the respondent said that her intentions were permanent, looked at from the childs point of view, on the relevant date they had been in Pakistan for only nine days, they had no home there, and she had not yet been entered into a school.
Had the respondent then changed her mind and decided that the move was a bad idea, it is unlikely that a court would have held that the habitual residence of either of them had changed during those few days.
Lord Wilsons conclusion on the issue of habitual residence makes it unnecessary to reach a decision on the hypothetical question whether it would have been right for the court to exercise its jurisdiction founded on Bs nationality if she had no habitual residence at the time when these proceedings began.
It is not in doubt that the restrictions on the use of the inherent or parens patriae jurisdiction of the High Court in the Family Law Act 1986 do not exclude its use so as to order the return of a British child to this country: this court so held in A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1.
The Court of Appeal devoted a large proportion of their judgment to this aspect of the case.
Their approach is summed up in para 45: Various words have been used down the years to describe the kind of circumstances in which it may be appropriate to make an order only under extraordinary circumstances, the rarest possible thing, very unusual, really exceptional, dire and exceptional at the very extreme end of the spectrum.
The jurisdiction, it has been said must be exercised sparingly, with great caution and with extreme circumspection.
We quote these words not because they or any of them are definitive they are not but because, taken together, they indicate very clearly just how limited the occasions will be when there can properly be recourse to the jurisdiction.
Lord Wilson has listed a number of important issues to which that question would have given rise and which must wait for another day.
It is, however, one thing to approach the use of the jurisdiction with great caution or circumspection.
It is another thing to conclude that the circumstances justifying its use must always be dire and exceptional or at the very extreme end of the spectrum.
There are three main reasons for caution when deciding whether to exercise the jurisdiction: first, that to do so may conflict with the jurisdictional scheme applicable between the countries in question; second, that it may result in conflicting decisions in those two countries; and third, that it may result in unenforceable orders.
It is, to say the least, arguable that none of those objections has much force in this case: there is no applicable treaty between the UK and Pakistan; it is highly unlikely that the courts in Pakistan would entertain an application from the appellant; and it is possible that there are steps which an English court could take to persuade the respondent to obey the order.
The basis of the jurisdiction, as was pointed out by Pearson LJ in In re P (GE) (An Infant) [1965] Ch 568, at 587, is that an infant of British nationality, whether he is in or outside this country, owes a duty of allegiance to the Sovereign and so is entitled to protection.
The real question is whether the circumstances are such that this British child requires that protection.
For our part we do not consider that the inherent jurisdiction is to be confined by a classification which limits its exercise to cases which are at the extreme end of the spectrum, per McFarlane LJ in In re N (Abduction: Appeal) [2012] EWCA Civ 1086; [2013] 1 FLR 457, para 29.
The judgment was ex tempore and it was not necessary to lay down a rule of general application, if indeed that was intended.
It may be that McFarlane LJ did not so intend, because he did not attempt to define what he meant or to explain why an inherent jurisdiction to protect a childs welfare should be confined to extreme cases.
The judge observed that niceties as to quite where the existing extremity of the jurisdiction under the inherent jurisdiction may be do not come into the equation in this case (para 31).
There is strong reason to approach the exercise of the jurisdiction with great caution, because the very nature of the subject involves international problems for which there is an international legal framework (or frameworks) to which this country has subscribed.
Exercising a nationality based inherent jurisdiction may run counter to the concept of comity, using that expression in the sense described by US Supreme Court Justice Breyer in his book The Court and the World (2015), pp 91 92: the court must increasingly consider foreign and domestic law together, as if they constituted parts of a broadly interconnected legal web.
In this sense, the old legal concept of comity has assumed an expansive meaning.
Comity once referred simply to the need to ensure that domestic and foreign laws did not impose contradictory duties upon the same individual; it used to prevent the laws of different nations from stepping on one anothers toes.
Today it means something more.
In applying it, our court has increasingly sought interpretations of domestic law that would allow it to work in harmony with related foreign laws, so that together they can more effectively achieve common objectives.
If a child has a habitual residence, questions of jurisdiction are governed by the framework of international and domestic law described by Lord Wilson in paras 27 to 29.
Conversely, Lord Wilson has identified the problems which would arise in this case if B had no habitual residence.
The very object of the international framework is to protect the best interests of the child, as the CJEU stressed in Mercredi.
Considerations of comity cannot be divorced from that objective.
If the court were to consider that the exercise of its inherent jurisdiction were necessary to avoid Bs welfare being beyond all judicial oversight (to adopt Lord Wilsons expression in para 26), we do not see that its exercise would conflict with the principle of comity or should be trammelled by some a priori classification of cases according to their extremity.
LORD SUMPTION (dissenting) (with whom Lord Clarke agrees):
Introduction
I regret that I am unable to agree with the opinion of the majority.
The reason, in summary, is that while the test for what constitutes habitual residence is a question of law, whether it is satisfied is a question of fact.
The judge directed herself in accordance with all the relevant authorities.
She heard the evidence of both ladies in addition to reviewing a substantial volume of other material.
She found as a fact that the child lost her habitual residence in the United Kingdom on 3 February 2014, when she left the United Kingdom with the Respondent to start a new life in Pakistan with no intention of returning.
That finding was upheld by the Court of Appeal.
It followed that the child was not habitually resident in the United Kingdom on 13 February when these proceedings were begun, even though by then she was probably not yet sufficiently integrated into the life of Pakistan to have acquired habitual residence there.
The sole ground on which it is now proposed to set the judgment aside is that it is highly unlikely, albeit conceivable that habitual residence will be lost before a new habitual residence has been acquired.
I remain uncertain whether this is said to be a principle of law or a proposition of fact.
So far as it is a principle of law, it appears to me to be wrong.
So far as it is a proposition of fact, the judge addressed all the relevant considerations in making her findings.
It is said that this result leaves the child in a jurisdictional limbo because on that footing she has no habitual residence anywhere.
In my opinion, there is no jurisdictional limbo.
Habitual residence is the primary test for jurisdiction, but it is not the only one.
In English and EU law, in the absence of an ascertainable habitual residence, jurisdiction may be founded on the presence of the child.
No attempt has been made to prove that the law of Pakistan is any different, and I would be very surprised if it was.
The real objection to the courts of Pakistan is not that they lack jurisdiction but that they are likely to disapprove of same sex relationships and will not necessarily recognise a non genetic family relationship.
That is a source of legitimate concern to the English courts, but it is not a basis on which they are entitled to claim jurisdiction.
Loss of habitual residence
I will deal first with the suggestion that there is something wrong in principle with a finding that a former habitual residence has been lost before a new one has been obtained.
The habitual residence of a child is the primary basis of jurisdiction in member states of the European Union, by virtue of article 8 of Council Regulation (EC) 2201/2003.
In Proceedings brought by A (Case C 523/07) [2010] Fam 42, the Court of Justice held that this meant that the presence of the child within the jurisdiction of a state must be: not in any way temporary or intermittent and that the residence of the child reflects some degree of integration in a social and family environment.
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 child's nationality, the place and conditions of attendance at school, linguistic knowledge and the family and social relationships of the child in that state must be taken into consideration.
As the Advocate General pointed out in para 44 of her opinion, the parents intention to settle permanently with the child in another member state, manifested by certain tangible steps such as the purchase or lease of a residence in the host member state, may constitute an indicator of the transfer of the habitual residence.
Another indicator may be constituted by lodging an application for social housing with the relevant services of that state. (paras 38 40) This statement was substantially repeated in Mercredi v Chaffe (Case C 497/10PPU) [2012] Fam 22, and was adopted by this court as part of the domestic law of England in A v A (Children: Habitual Residence) [2014] AC 1.
Recital (12) of the Council Regulation recites that the grounds of jurisdiction in matters of parental responsibility established in the present Regulation are shaped in the light of the best interests of the child.
In the context of article 12 of the Regulation, the Court of Justice has recently drawn attention to this recital in E v B (Case C 436/13) [2015] Fam 162, para 45.
But its value, as both the recital and the judgment make clear, is as a guide the interpretation of the Regulations jurisdictional rules.
It explains why the social integration test of habitual residence has been adopted.
Now that it has been adopted, the task of the courts is to apply it.
The recital is not a licence to treat questions of jurisdiction as discretionary or to import legal qualifications into the essentially factual exercise of determining where a child is socially integrated and where she is not.
A person may be resident in a country without being habitually resident there.
It is inherent in the concept of a habitual residence that in many, probably most cases, a new residence may not become habitual until some time has elapsed.
The same is true of the integration test for habitual residence which has been adopted by EU and English law.
Integration into the social and family environment of a new place of residence cannot always be achieved at once.
However, it is self evidently easier to lose a habitual residence at once.
This is because the severance of old links is a unilateral act.
It can be achieved faster than the acquisition of new ones which involve the engagement of other people and institutions.
It makes no sense to regard a person as habitually resident in the United Kingdom if she is not resident there at all because she has left it to live permanently elsewhere.
The fact that there is a house in the United Kingdom which could be reoccupied or that there are friends or relations in the United Kingdom to which the child could return are irrelevant if (as the judge accepted) the child had been lawfully and permanently removed from the country.
Of course this does mean that there may be a period during which the child, although resident in a particular country is not habitually resident anywhere.
Other jurisdictional tests, such as presence within the jurisdiction, nationality or domicile would have had the advantage of allowing a seamless transition from one status to another.
But the law has not adopted these tests.
Instead it has adopted a test which by its nature is liable to produce a hiatus.
This is simply an inescapable consequence of the concept of a habitual residence in a case where a child migrates from a familiar to an unfamiliar place.
The courts have had no difficulty in accepting these as obvious propositions of fact.
Advocate General Kokott in Proceedings brought by A (Case C 523/07) acknowledged that abandoning the old residence and employment and notifying the authorities of departure suggest that habitual residence in the former state is at an end (para 44) and that in exceptional cases during a transitional stage there will no longer be habitual residence in the former state while the status in the new state has not yet crystallised into habitual residence (para 45).
She thought that such situations would be exceptional, but in the nature of things they can be no more exceptional than the facts which give rise to them.
In In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, 578 579, Lord Brandon, speaking for a unanimous appellate Committee, observed that: there is a significant difference between a person ceasing to be habitually resident in country A, and his subsequently becoming habitually resident in country B. A person may cease to be habitually resident in country A in a single day if he or she leaves it with a settled intention not to return to it but to take up long term residence in country B instead.
The courts have more recently expressed reservations about parts of this passage, mainly because it tends to overstate the difficulty of acquiring a new habitual residence.
As Baroness Hale observed in A v A (Children: Habitual Residence), supra, at para 44, this is best seen as helpful generalisations of fact, which will usually but not invariably be true.
That is of course because habitual residence is a question of fact, as Lord Brandon himself had pointed out immediately before the passage cited.
She went on, in the same paragraph, to adopt that part of Lord Brandons generalisation which is directly relevant to the present case: I would not accept that it is impossible to become habitually resident in a single day.
It will all depend on the circumstances.
But I would accept that one may cease to be habitually resident in one country without having yet become habitually resident in another.
If an old habitual residence cannot be lost until a new one has been acquired, it must therefore be by virtue of some rule of rule of law by which regardless of the facts the severance of the childs links with her former habitual residence is somehow deemed in law to be suspended pending the acquisition of a new habitual residence.
Yet it is far from clear to me how this is to be reconciled with what is an essentially a factual enquiry, as every court which has hitherto considered this question has emphasised.
In A v A, at para 39 Baroness Hale deprecated the tendency of the courts to overlay the factual concept of habitual residence with legal constructs.
These observations were later repeated by Baroness Hale in In re L (A Child) (Custody: Habitual Residence) [2014] AC 1017 at paras 20 21, and more recently by Lord Reed, with whom every other member of this court agreed, in the Scottish case of In re R (Children) [2016] AC 76, para 17.
The judgment of the Court of Appeal, delivered by Black LJ, put the point, at para 29, in terms which I cannot improve upon: The arguments advanced by the appellant and also on behalf of the intervener, Reunite, appeared at times to amount to an invitation to swathe habitual residence in sub principles, or glosses, or comments, in a way which would fly in the face of the determinedly factual approach of the European jurisprudence and the Supreme Court.
So, for example, we were invited to say that it would only be in exceptional cases that a child would lose one habitual residence before acquiring another it may be that there will turn out to be relatively few cases in which the habitual residence of a child does not transfer seamlessly from one country to another, but if so, that will be because the facts tend to be that way and not because the courts impose upon themselves the artificial discipline of only finding it otherwise in exceptional circumstances.
A jurisdictional limbo?
The notion that there must be a seamless transfer of habitual residence is a classic legal construct, which has no place in the essentially factual enquiry involved in identifying a childs habitual residence.
The reason given by the majority for adopting that notion is not that it is factually impossible, or virtually so, for a child to have no habitual residence.
Their reason is that it is legally undesirable because it produces a jurisdictional limbo.
However it may be described by its authors, I find it impossible to regard this as anything other than a proposition of law.
And I respectfully suggest that it is not correct.
Article 13 of the Council Regulation provides for residual jurisdiction to lie with the courts of the country where the child is present in a case where a childs habitual residence cannot be established.
As Advocate General Kokott pointed out at para 45 of her advice in Proceedings brought by A, supra, article 13 was included precisely in order to cover the situation where a former habitual residence has been lost but the childs status in her new home has not yet crystallised into habitual residence.
A similar provision appears in article 6(2) of the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co operation in Respect of Parental Responsibility and Measures for the Protection of Children.
Jurisdiction based on presence is also provided for by sections 2 and 3 of the Family Law Act 1986 in cases where neither the Council Regulation nor the 1996 Hague Convention applies, and it serves the same function in that context.
For this reason, there is no need for a principle of seamless transfer except in cases where the child has been removed to a state (if indeed there is such a state) where there is no jurisdiction founded on the presence of the child within its territory.
It may well be true, as Lord Wilson observes (para 30), that jurisdiction based on presence is unsatisfactory because in a case where a child has no habitual jurisdiction it allows an adult to move a child to a jurisdiction thought to be favourable to his or her case.
However, in the first place, adults can do that anyway.
Secondly, for better or for worse that is what the Regulation, the Conventions and the Act provide.
And third, the English courts have no right under the Family Law Act to assert jurisdiction simply on the ground that they do not approve of the law or practice which would be applied in the courts of the country where the child is located.
So far as this is a problem, the solution to it is not to construct an artificial habitual residence in the place which the child has left for good.
It is for the English courts to be more ready than they have traditionally been to recognise that a new habitual residence can be rapidly acquired.
The Council Regulation assumes that it will normally have been acquired in three months: see article 11(7); and in A v A Baroness Hale declined to assume that it could not be acquired in a single day.
It should be noted that the present issue would not arise in a case where the child was wrongfully removed in breach of rights of any persons rights of custody.
This is because article 10 of the Council Regulation confers jurisdiction on courts of the country where the child was habitually resident immediately before his removal.
There are similar provisions in article 4 of the 1980 Hague Convention on the Civil Aspects of International Child Abduction and article 7 of the 1996 Hague Convention.
The fact that the child may have no habitual residence for a period after his removal is therefore irrelevant.
The appellants difficulty in this case is that she had no parental rights at the time of the childs departure from the United Kingdom.
She was not registered as a parent at birth.
There was no civil partnership, no adoption, no parental rights agreement and no court order recognising her status with regard to the child.
The judge found that the respondent was not trying to escape from the jurisdiction of the English court.
She was in law the childs sole parent who was absolutely entitled to exercise her parental rights by removing her to Pakistan.
Although Lord Wilson characterises the removal as secret and clandestine, the judge made no finding of underhand conduct which could warrant these pejorative epithets.
The Judges findings
The judge directed herself in accordance with the observations of Lord Brandon in In re J, so far as these were approved and explained by the Supreme Court in A v A and In re L.
She concluded that the child was too young to have a habitual residence other than that of the woman who had always been her primary carer and on whom she was wholly dependent.
That seems an obvious conclusion in the case of a five year old child, but at the very least it was a permissible one.
I do not understand the majority to dissent from it.
The judge then set out at paras 27 28 her reasons for concluding that the habitual residence of both of them in the United Kingdom was lost when they left for Pakistan: 27.
The mother said she left this jurisdiction to make a new life in Pakistan.
She had actually been thinking about it seriously since July of last year.
She made her fact finding trip in November following which she made a decision.
She had the support of her family.
They knew what she was about.
She and [B] said their goodbyes to school, to the family.
They left their home, packed up their possessions and the mother sent a letter with the keys of the house to the applicant.
She is admittedly still paying her share of the mortgage to preserve her share of the asset, that matter has yet to be resolved between the two ladies.
She had the intention to set up a new life.
She had lost her job.
She was finding it financially difficult to be in this country even when she was working and she had laid the ground for a new life in Pakistan.
It is important to note what she did immediately upon arrival in Pakistan.
Until the end of April she was unaware of the applicants application to this court, but the mother found herself a new home and a school for the child to which they both moved in on 19 February, just 15 days after their arrival.
They had previously been staying with friends.
She had work already upon her arrival, at which she has continued, and she made an application for an ID card, which she obtained before she became aware of these proceedings. 28.
As I have said, I am not satisfied she was running away as alleged by the applicant, and I accept her intention that she intended to create a new life for herself and for [B] in Pakistan.
On that basis, she lost her habitual residence here.
Next the judge considered the perception of the child.
Without making any finding about the appellants evidence that the child wished to keep in touch with her, the judge held that even if she did, that did not mean that her habitual residence remained in the United Kingdom after 3 February 2014: The mother is the sole legal parent and in moving her she had planned a life away from this country.
It was not a wrongful removal.
She was exercising her parental responsibility. [B]s wish to remain in touch is something that I must consider.
It does not necessarily mean that the child has to remain in the country.
There are many children throughout the world who remain in touch with families or members of a family or even friends when they are relocated by their parents.
This is another relocation and a child wishing to remain in touch with a significant person.
In my view her wish to remain in touch with the applicant does not justify making or continuing an individual habitual residence in this country when the mother has abandoned her own.
This is a classic evaluative judgment on a question of fact with which this court should in principle decline to interfere, just as the Court of Appeal declined to do so.
If it was legally possible for the respondent and the child to terminate their previous habitual residence in the United Kingdom before their residence in Pakistan became habitual, then it is difficult to envisage a clearer case of it than this one.
That leaves only the possibility that it might not be legally possible to create such a hiatus.
But the authorities in this court which show that it is legally possible are consistent, recent and in my respectful opinion plainly right.
Inherent jurisdiction
The inherent jurisdiction of the High Court with respect to children originated in an age where the civil courts had no statutory family jurisdiction.
It is based on the concept of a quasi parental relationship between the sovereign and a child of British nationality.
It enables the courts to make a British child a ward of court, even if the child is outside the jurisdiction when the order is made.
The continued existence of an inherent jurisdiction in an age of detailed and comprehensive statutory provision is something of an anomaly.
The basis of the jurisdiction is, moreover, difficult to reconcile with the content of the statutory rules about jurisdiction.
It is based on nationality, whereas the statutory rules are based on habitual residence and presence.
Nonetheless, its survival was implicitly recognised by sections 1(1)(d) and 2(3) of the Family Law Act 1986, which prohibited the exercise of the jurisdiction so as to give care of a child to any person or provide for contact with or the education of a child, unless either the court had jurisdiction under the Council Regulation or the 1996 Hague Convention or, if neither of these applied, the child is present or habitually resident in the United Kingdom.
Its survival in other cases was acknowledged by this court in A v A, supra, subject to the proviso that its exercise would call for extreme circumspection (paras 63, 65).
The case law, which fully bears out that proviso, is summarised in the judgment of the Court of Appeal, and I will not repeat that exercise here.
The appellant in the present case invites the court, on the footing that there is no statutory jurisdiction, to use its inherent jurisdiction to order the return of the child to the United Kingdom.
Such orders have been made in two classes of case, both of which can broadly be described as protective.
The first comprises abduction cases before the enactment of a statutory jurisdiction to deal with them.
The second comprises cases where the child is in need of protection against some personal danger, for example where she has been removed for the purpose of undergoing a forced marriage or female genital mutilation.
All of the modern cases fall into this last category.
A dissenting judgment is not the place for a detailed examination of the ambit of the inherent jurisdiction.
Nor is such an examination required in order to determine this appeal.
For present purposes, it is enough to make three points.
First, the jurisdiction is discretionary, and should not be overturned in the absence of some error of principle or misunderstanding of the facts, unless the judge has reached a conclusion that no judge could reasonably have reached.
The judge declined to exercise the jurisdiction because the appellant had been entitled to exercise her parental rights by taking the child to Pakistan and there was no reason to regard the child as being in danger there.
In those circumstances, the admitted detriment to the child in being deprived of face to face contact with the appellant could not justify requiring the respondent to bring the child back.
The Court of Appeal reached the same conclusion for substantially the same reason.
The situation, they said (para 53), falls short of the exceptional gravity where it might indeed be necessary to consider the exercise of the inherent jurisdiction.
I agree with this, but on any view I think that it was a view that a judge could reasonably take.
Secondly, the inherent jurisdiction should not be exercised in a manner which cuts across the statutory scheme.
If, as Lady Hale and Lord Toulson suggest, the use of the inherent jurisdiction is not reserved for exceptional cases, the potential for it to cut across the statutory scheme is very considerable.
I have no doubt that it would do so in this case.
In the first place, it would fall to be exercised at a time when the child will have been with her mother in Pakistan for at least two years, and will probably have become habitually resident there.
Secondly, it seems plain that if an application under the inherent jurisdiction had been made by, say, an aunt or a sister of the respondent, there could be no ground for acceding to it.
It is necessary to make this point in order to remind ourselves that it is to protect her relationship with the child on the basis that she should be regarded as a co parent that the appellant is invoking the inherent jurisdiction of the court.
The real object of exercising it would be to bring the child within the jurisdiction of the English courts (i) so that the court could exercise the wider statutory powers which it is prevented by statute from exercising while she is in Pakistan, and (ii) so that they could do so on different and perhaps better principles than those which would apply in a court of family jurisdiction in Pakistan.
Thirdly, this last point is reinforced by the consideration that the appellants application in the English courts is for contact and shared residence.
This is not relief which the statute permits to be ordered under the inherent jurisdiction, in a case where there is no jurisdiction under the Council Regulation or the 1996 Hague Convention.
I do not accept that the inherent jurisdiction can be used to circumvent principled limitations which Parliament has placed upon the jurisdiction of the court.
For these reasons, in addition to those given by the judge and the Court of Appeal, I do not think that an order for the childs return could be a proper exercise of the courts powers.
Third, if there were grounds for believing the child to be in danger, or some other extreme facts justifying the exercise of the inherent jurisdiction, it would no doubt be possible in the exercise of the courts inherent jurisdiction to direct an independent assessment of the situation of the child in Pakistan.
Unless the facts were already clear, that would be the least that a court should do before it could be satisfied that she should be compulsorily returned to this country.
In the present case, that assessment would also have to take account of the impact on the child of her removal for the second time of her life from a place where she is by now presumably settled, as well as the impact on her of the disruption of her primary carers life which would be involved in requiring her to abandon her life and job in Pakistan to return to a country where she has no job, is estranged from her family and has no desire to reside.
But we are not in that territory.
The courts below have held that there are no such grounds, and we have no basis on which to disagree with them.
The mere absence of statutory jurisdiction in the English courts cannot possibly be a reason for exercising the inherent jurisdiction.
On the contrary, in a case like this it is a reason for not doing so.
Given that the inherent jurisdiction exists to enable the English court to exercise the sovereigns protective role in relation to children, from what is it said that B needs to be protected? As I understand it, the suggestion is that she needs to be protected from the presumed unwillingness of the courts of Pakistan to recognise the status of the appellant in relation to the child in the way that the English court would now do if they had statutory jurisdiction.
I cannot regard this as a peril from which the courts should rescue the child by the exercise of what is on any view an exceptional and exorbitant jurisdiction.
Disposition
For these reasons, I would dismiss the appeal.
LORD CLARKE:
essentially for the reasons he gives.
Habitual Residence
Hogg J held that B lost her habitual residence here when she was taken to Pakistan and the Court of Appeal held that there was no reason to interfere with that conclusion.
Hogg J is a very experienced family lawyer.
So too are at least two members of the Court of Appeal, namely Munby P and Black LJ, who gave the judgment of the court to which all three members contributed.
My principal reason for preferring the opinion of Lord Sumption to that of the majority is that there is, in my opinion, no principled basis for holding that the decision of Hogg J was wrong, either in law or on the facts.
She was entitled to reach the conclusions which she did and the Court of Appeal were right to dismiss the appeal from her decision.
In short I agree with Lord Sumptions conclusion at para 80 that Hogg Js judgment is a classic evaluative judgment on a question of fact with which this court should decline to interfere, just as the Court of Appeal declined to do.
In this appeal I have reached the same conclusions as Lord Sumption,
In particular, after setting out her conclusions of fact at paras 26 to 28, Hogg J was in my opinion entitled to hold (as she did at para 29) that, when the mother lost her habitual residence on leaving the United Kingdom, so did B. I agree with Lord Sumption that there is nothing wrong in principle with a finding that a former habitual residence has been lost before a new one has been obtained.
All depends upon the facts of the particular case.
On the facts here I agree with him (at para 96) that it is self evidently easier to lose a habitual residence at once than acquire a new one and that it makes no sense to regard a person as habitually resident in the United Kingdom if she is not resident at all because she has left to live permanently elsewhere.
Finally, I agree with him that if, as Hogg J held here, the child had been lawfully and permanently removed from the country, the fact that there is a house in the UK which could be reoccupied or there are friends and relations to whom the child could return is irrelevant.
In para 28 of the judgment in the Court of Appeal, after referring to a number of recent cases including A v A (Children: Habitual Residence) [2013] UKSC 60; [2014] AC 1, Black LJ said this: The European formulation of the test (to be found in Proceedings brought by A [2010] Fam 42 at para 2, as quoted in A v A at para 48) is the correct one, namely that the concept of habitual residence must be interpreted as meaning that it corresponds to the place which reflects some degree of integration by the child in a social and family environment.
The inquiry is a factual one, requiring an evaluation of all relevant circumstances in the individual case.
It focuses upon the situation of the child, with the purposes and intentions of the parents being merely among the relevant factors.
It should not be glossed with legal concepts.
And, as Lord Reed observed at para 18 of In re R (Children) [2015] UKSC 35; [2015] 2 WLR 1583, when the lower court has applied the correct legal principles to the relevant facts, its evaluation will not generally be open to challenge unless the conclusion which it reached was not reasonably open to it.
I respectfully agree.
Black LJ then set out her para 29, which is quoted with approval by Lord Sumption.
Finally, in para 30 she expressed the view that Hogg Js approach to habitual residence was in line with the authorities.
She then specifically (and correctly) considered Bs position separately from that of her mother and concluded: [Hogg J] described in her judgment the situation in this country and the situation in Pakistan in such a way as to show that she had looked both at what P was leaving and what was awaiting her in Pakistan.
In short, she applied the proper principles to the relevant facts and there is no reason to interfere with her finding that P lost her habitual residence here when she left for Pakistan.
Again, I agree.
For these reasons, which are essentially the same as those given by Lord Sumption, namely that neither Hogg J nor the Court of Appeal erred in fact or law, I would have dismissed the appeal on the habitual residence point.
Inherent jurisdiction
I agree with Lord Sumption that the appeal on this ground should also be dismissed.
I do so for essentially the same reasons as on the habitual residence point, namely that Hogg J made no error of fact or law and that the Court of Appeal correctly so held.
I agree with Lady Hale and Lord Toulson that the court must approach the use of the inherent jurisdiction with great caution and circumspection for the reasons they give.
However, I agree with Lord Sumption that on the facts of this case it should not use the inherent jurisdiction to order B to be returned to the jurisdiction in order to enable it to exercise its statutory jurisdiction in circumstances in which it would not otherwise have that jurisdiction.
This is not to say that there may not be circumstances in which it would be appropriate for the English court in another case to consider the welfare of the child more generally without requiring his or her return to the jurisdiction, at any rate in the first instance.
As ever, all will depend on the circumstances.
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The girl at the centre of this appeal, B, is a British national now aged 7.
The Respondent (a British national of Pakistani ethnicity) is Bs biological mother and was previously in a same sex relationship with the Appellant (a British national of Indian ethnicity), who has strong claims also to be described as a mother of B.
The couple lived in England and set up home together, but they never became civil partners.
Following IUI treatment, given to them both as a couple, the Respondent gave birth to B in April 2008.
The Respondent undertook most of Bs care but the Appellant also helped care for her and, as co parents, they took B out at weekends, in particular to visit members of their families.
In December 2011, the relationship broke down acrimoniously and the Appellant left the family home.
Over the next two years, the Respondent progressively reduced the level of the Appellants contact with B. The Appellant objected and suggested mediation.
Meanwhile, the Respondent decided privately to move with B to live in Pakistan where she says members of her wider family remain.
She did not share this decision with the Appellant.
On 3 February 2014 the Respondent moved to Pakistan with B where they have remained ever since.
Although the Appellant did not consent to it, Bs removal to Pakistan was lawful.
On 13 February 2014, unaware where the Respondent had taken B, the Appellant applied under the Children Act 1989 (1989 Act) for orders for shared residence of B, or for contact with her.
This application depended upon showing that B was habitually resident in England at the time it was issued (i.e. 13 February 2014).
Subsequently, having learned that the Respondent had taken B to Pakistan, the Appellant also applied for orders under the courts inherent jurisdiction over B (as a British national) that she be made a ward of court and returned to England.
In July 2014 Hogg J held that (a) the English court had no jurisdiction to determine the Appellants 1989 Act application because B had lost her habitual residence immediately upon her removal to Pakistan on 3 February 2014; and (b) the inherent jurisdiction over a British national who was neither habitually resident nor present in England should be exercised only if the circumstances were dire and exceptional, and this was not such a case.
On 6 August 2015, the Court of Appeal dismissed the Appellants appeal.
The Appellant appeals to the Supreme Court in respect of both applications.
The Supreme Court allows the appeal on the Appellants application under the 1989 Act by a majority of 3:2 (Lord Clarke and Lord Sumption dissenting) on the basis that B remained habitually resident in England on 13 February 2014.
Lord Wilson gives the lead judgment.
Habitual residence
Lord Wilson (with whom Lady Hale and Lord Toulson agree) observes that two consequences flow from the modern international primacy of the concept of a childs habitual residence.
First, it is not in the interests of children routinely to be left without a habitual residence [30].
Second, the English courts interpretation of the concept of habitual residence should be consonant with its international interpretation [31].
The present case, however, involved a third aspect of the concept of habitual residence: the circumstances in which a child loses his or her habitual residence [32].
The traditional English law approach to this issue is heavily dependent upon parental intention.
In particular, in In re J (A Minor), Lord Brandon observed that a person may cease to be habitually resident in a country in a single day if he or she leaves it with a settled intention not to return and settle elsewhere [33 34].
Lord Wilson notes that the Supreme Court in A v A held that the English concept of habitual residence should be governed by the criterion set out in the CJEU jurisprudence: namely, that there be some degree of integration by the child in a social and family environment.
This focuses on the childs situation, with parental intention being merely one relevant factor [35 38].
Lord Wilson identifies two points in the CJEU jurisprudence relevant to the issue of when habitual residence is lost.
First, the effect of Recital 12 to the Brussels II Regulation is that, where the interpretation of the concept of habitual residence can reasonably follow two paths, the courts should follow the path perceived better to serve the interests of children.
Second, the CJEU has indorsed the view that, although it is conceivable that a child may have no habitual residence, this will only be in exceptional cases [40 44].
Lord Wilson concludes that the modern concept of a childs habitual residence operates in such a way as to make it highly unlikely, albeit conceivable, that a child will be left without a habitual residence; the concept operates in the expectation that, when a child gains a new habitual residence, he or she loses their old one.
Lord Brandons observation in In Re J should no longer be regarded as correct, and Hogg J fell into error in being guided by it [45 47].
Lord Wilson therefore states that the correct question is whether B had by 13 February 2014 achieved the requisite degree of disengagement from her English environment [48].
He concludes that, taken cumulatively, the factors pointing to the conclusion that B had not by 13 February 2014 achieved the requisite degree of disengagement compel the conclusion that she retained habitual residence in England [49 50].
Accordingly, the Appellants application under the 1989 Act can and should proceed to substantive determination by the High Court (Family Division) [51].
Lord Sumption (dissenting) considers that Hogg J made no error of law and, having heard and reviewed the evidence, was entitled to find that B lost her habitual residence in England on 3 February 2014 [64 80].
Lord Clarke agrees [89 95].
Inherent jurisdiction Given the majoritys conclusion on habitual residence, it is unnecessary to decide whether the inherent jurisdiction can be exercised.
Lady Hale and Lord Toulson observe that none of the reasons for caution when deciding whether to exercise the inherent jurisdiction has much force in this case.
They consider that the jurisdiction is not confined to exceptional circumstances; it could have been exercised if the court held that B required protection [59 62].
Lord Wilson agrees, but leaves open the question of whether it would have been appropriate to exercise the inherent jurisdiction in this case [53].
Lord Sumption (dissenting) considers that, unless the inherent jurisdiction is reserved for exceptional cases, it may be exercised in a manner which cuts across the statutory scheme.
He considers that the jurisdiction could not have been exercised in this case [81 87].
Lord Clarke, noting that the jurisdiction must be exercised with great caution, agrees that it should not be used on the facts of this case [96 97].
This summary is provided to assist in understanding the Courts decision.
It does not form part of the reasons for the decision.
The full judgment of the Court is the only authoritative document.
Judgments are public documents and are available at: http://supremecourt.uk/decided cases/index.html
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The Mental Capacity Act 2005 established a comprehensive scheme for decision making on behalf of people who are unable to make the decision for themselves.
The decision maker whether a carer, donee of a power of attorney, court appointed deputy or the court stands in the shoes of the person who is unable to make the decision known as P and makes the decision for him.
The decision has to be that which is in the best interests of P.
But it is axiomatic that the decision maker can only make a decision which P himself could have made.
The decision maker is in no better position than P. So what is the decision maker to do if he has reached the conclusion that a particular course of action is in the best interests of P but the body who will be required to provide or fund that course of action refuses to do so? Specifically, what is the role of the Court of Protection where there is a dispute between the providers or funders of health or social care services for a person who lacks the capacity to make the decision for himself and members of his family about what should be provided for him?
The facts
MN is a profoundly disabled young man, born in November 1993, so now in his early twenties.
In the words of the trial judge, Eleanor King J, at [2013] EWHC 3859 (COP), [2014] COPLR 11, para 6, he has severe learning and physical disabilities together with autism and an uncommon epileptic condition resulting in frequent seizures and risk of sudden death.
A nurse has to be available at all times to administer emergency drugs to MN if the need arises.
MN had poor muscle tone and uses a wheelchair.
He is doubly incontinent.
MN has the cognitive ability of a child aged less than 1 year.
He has no speech but can express his feelings by facial expression, sounds and gestures.
MN needs help with feeding as he is vulnerable to choking; he requires 2:1 care with his personal care and accessing the community.
Overall MN has to have his carers nearby at all times and during the night MN has one sleeping member of staff and one member of staff who stays awake to look after him.
MN is one of six siblings.
He has two brothers, BN and DN, who are also profoundly disabled and live in residential care.
He has two sisters who continue to live with their parents and another brother who lives independently.
As Bracewell J put it in care proceedings in the Family Division: To care for three such children, requiring constant 24 hour supervision is a Herculean task which this family as a team has undertaken with love and total commitment.
The closeness of the family is striking.
The physical care and attention to safety has been exemplary.
All the family have been involved with every aspect of minute by minute care and supervision.
There is no doubt that love and commitment have been shown to these children to the highest degree.
Nevertheless, despite these heroic efforts, the family were unable to cater for all their childrens needs, nor were they able to co operate with the authorities in doing so.
Hence the need for care proceedings.
A care order was made in respect of MN in December 2001 when he was just eight years old.
Bracewell J found that his father had a long history of obstruction of professionals, of refusal to co operate with authority and of being intimidating to anyone with whom he disagreed.
At its height, he received a custodial sentence for assaulting a social worker.
An application to discharge the care order was refused in July 2005 when MN was 11.
Bracewell J found that history had repeated itself in the intervening years.
Accordingly, MN was still in the care of the local authority in August 2011.
He was due to reach the age of 18 in November 2011, on which date the care order would come to an end (Children Act 1989, section 91(12)).
The local authority, predicting that the parents would not see eye to eye with the authorities about what would then be best for MN, issued proceedings in the Court of Protection, seeking orders that: (1) MN reside in such accommodation and receive such education and care as directed by the local authority. (2) MNs contact with his mother, father and other family members be regulated by the local authority and be supervised by such persons when appropriate as the local authority directed.
On MNs 18th birthday, responsibility for his care was taken over by the National Health Service, now the local Clinical Commissioning Group (CCG) responsible for commissioning care for him.
MN has been assessed as having a primary health need (under regulation 21 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012, SI 2012/2996).
Two days later, with the permission of the Court, he moved to the residential care home where he now lives.
It was not in dispute that MN lacks the capacity both to conduct this litigation and to make decisions about his residence, education or the arrangements for his care or contact with his family.
Declarations to that effect have been made by consent.
He is represented by the Official Solicitor in these proceedings.
The Official Solicitor instructed an independent social worker to report on MNs best interests in respect of his residence, care, education and contact.
The social worker has produced three reports in the course of these protracted proceedings.
His position since 2011 has been that the care home where MN lives provides a safe, settled and supportive environment for him.
The parents have for the time being accepted that this is where he should stay, although it is clear that their ultimate aim is for him to come and live with them.
Despite their difficulties in working with MNs father and mother, the care home has instigated much more relaxed arrangements for contact with MN.
At the time of the hearing before Eleanor King J, the plan was that, providing they gave the home one hours notice (as did the families of all the other residents), they could visit whenever they chose during the day.
There are also periodic meetings at a caf and arrangements for him to meet his brothers BN and DN, who are also in residential care.
Thus, by the time of the hearing, the issues between the CCG and the parents had narrowed to two.
First, the parents wished for MN to come and visit them in their home, some six miles away from his care home.
An occupational therapist had assessed the home and concluded that it could accommodate MN and his wheelchair for a short visit.
But trained carers would have to go with him, be allowed into the home to settle him down, and wait outside while he was there (the parents have been reluctant to allow professionals into their home).
One of the carers would have to be trained to administer emergency medication if required.
Only the care home manager and her deputy were willing to do this, the rest of her staff fearing that the parents would not co operate, would interfere with the care they provided for MN and would be aggressive and intimidating towards them.
Hence the care home was unwilling to facilitate MNs visits to the family home, which would therefore require alternative carers to be trained and paid to do so.
Second, MNs mother wished to be allowed to assist the care home staff with his intimate care when she was visiting him there.
The independent social worker thought that MNs interaction with his mother in this way could form an important element in his quality of life, provided that she was able to work with the staff.
Once again, the care home was not willing to allow this.
This was due partly to fears as to the mothers co operation but also because the parents had declined an offer of the necessary training in manual handling.
MN is a grown man whose limbs can thrash around, particularly if he has a fit, which can happen at any time without warning.
The final hearing of the application, initially made by the local authority but now maintained by both the CCG (as lead applicant) and the local authority, was listed for three days in November 2013.
Voluminous evidence no fewer than 2,029 pages, including 1,289 pages of expert evidence, contained in five lever arch files and position statements had been filed.
The independent social worker was due to attend.
The CCG had written in October making its final proposals for contact between MN and his family.
The CCGs position was that it was not in MNs best interests for his mother to be involved in his personal care or for him to have visits to the family home.
The staff were unwilling to facilitate this and the CCG was not prepared to fund alternatives.
The Official Solicitor, for MN, supported the CCGs position.
The parents disputed their position and the reasons for it.
In particular, they claimed that the care homes fears about lack of co operation were unwarranted and that the mother was now prepared to undergo the necessary training.
At 11.32 pm on the day before the hearing was due to begin, counsel for the local authority emailed the other parties to give notice of her intention to argue that the Court of Protection had no jurisdiction to decide the issues.
The matters that the parents wanted were not on the table given that the CCG had said that it was not willing to allow or to arrange them, or to commission staff or to fund the necessary resources.
These were public law decisions which could only be challenged by way of judicial review.
The Court of Protection could only decide between the available options, making a choice that MN could make if he were able, and it was inappropriate to use the proceedings to try and obtain a best interests declaration in order to influence a public law decision.
It was, to say the least, unfortunate that the legal issue was raised so late in the day.
It had been foreshadowed in a position statement from the local authority in August 2013 but at a directions hearing later that month directions were given for the filing of further evidence and the parties had prepared for a three day trial of the disputed issues of fact.
No skeleton argument raising a preliminary issue of law had been filed.
The parents came to court expecting the court to consider the contact issue over three days in which witnesses would be called and cross examined, after which the court would decide whether what they wanted or what the authorities proposed was in MNs best interests.
They could be forgiven for feeling a burning sense of injustice at what took place instead.
On the first day, Eleanor King J heard argument on the legal issue, which she labelled jurisdictional issues in her judgment.
Counsel for the parents raised no objection, being aware of the issue and familiar with the authorities.
Written submissions on human rights issues were also made on behalf of the father and responded to jointly by the CCG and local authority.
The judge then spent the next day writing a judgment, correctly described by Sir James Munby P in the Court of Appeal as detailed and careful: [2015] EWCA Civ 411; [2016] Fam 87, para 50.
She delivered this on the third day (and perfected it later).
She accepted the argument put forward by the local authority and CCG and declined to embark upon a hearing of the evidence or resolving the factual disputes.
Her conclusion was that the Court of Protection has no greater powers than the patient would have if he were of full capacity.
As she explained, at para 53: If MN had capacity, but required the type of nursing care he currently needs due only to his physical needs, he might wish his mother to assist with his personal care.
The care providers may, as here, be unwilling to allow this for whatever reason; perhaps health and safety issues or difficult relationships with MNs mother.
MN with capacity would have the following options: (i) accept the conditions of residence at the care providers establishment, (ii) privately fund his care elsewhere, or (iii) seek to negotiate with the ACCG in the hope of them agreeing to fund his removal to a different residential unit which would allow his mother to assist with his personal care.
What MN with capacity would not be able to do is to force, by way of court order or otherwise, the care providers to agree to his mother coming into their facility and assisting with his intimate care.
Judicial review was the only proper vehicle through which to challenge unreasonable or irrational decisions made by care providers and other public authorities.
In rare cases where a public authority might be acting in breach of convention rights by refusing to fund a particular form of care that could be raised in the Court of Protection by way of a formal application under section 7 of the Human Rights Act 1998.
In this case, as contact at the family home was not an available option now or in the foreseeable future, the court should not embark upon a best interests analysis of contact at the parents house as a hypothetical possibility.
Hence she was satisfied that the contact plan now proposed by the CCG was in MNs best interests.
She therefore made a comprehensive order, among other things, declaring (1) that it was in MNs best interests to continue to reside and receive care at his current care home or, should that come to an end for any reason or the CCG or public body responsible for his residence and care decide that it is no longer in his interests, to move to and reside and receive care at a placement identified by them; and (2) that it was in MNs best interests to have contact with his parents and other members of his family in accordance with the detailed plan set out in a schedule.
Both parents appealed to the Court of Appeal.
The President observed that the appeal raised fundamental questions as to the nature of the Court of Protections jurisdiction and, in particular, the approach it should adopt when a care provider is unwilling to provide, or to fund, the care sought, whether by the patient or, as here, by the patients family (para 9).
In his extensive review of the authorities, he took as his starting point the principle in A v Liverpool City Council [1982] AC 363, that the wardship jurisdiction of the High Court in relation to children should not be used to circumvent or challenge the statutory powers and duties of local authorities in relation to children in their care (para 11).
He concluded that the judge was right in all respects and essentially for the reasons she gave (para 79).
He gave four reasons why the Court of Protection should not embark on the kind of process for which the parents contended: first, it is not its proper function to embark upon a factual inquiry into some abstract issue the answer to which cannot affect the outcome of the proceedings before it; second, it should not embark upon such an enquiry in order to provide a platform or springboard for possible future proceedings in the administrative court; third, such an exercise runs the risk of confusing the different perspectives and principles governing the exercise by the Court of Protection of its functions and the exercise by a public authority of its functions; and fourth, it would risk exposing the public authority to impermissible pressure (para 82).
This appeal
The father, with the mothers support, now appeals to this Court.
On behalf of the father, Ms Kerry Bretherton QC makes essentially the argument that she made below.
The Court of Protection has power under section 16(2)(a) of the Mental Capacity Act 2005 to make a decision on any matter in relation to which P lacks the capacity to decide.
Among the examples given in section 17 of the use of the courts powers under section 16 in relation to personal welfare is deciding what contact, if any, P is to have with any specified person.
Hence the court has jurisdiction to make that decision.
Any decision made on behalf of a person who lacks capacity must be made in his best interests.
Only once that decision is made should the funding options be considered.
She accepts that the court has no power to order the CCG to fund what the court considers to be in Ps best interests.
But the CCG can be expected to give careful consideration to the courts findings on disputed issues of fact, such as, in this case, the willingness of the parents to co operate with the authorities and the care home staff and what would actually be required to make their proposals viable.
If the CCG maintains its refusal to fund whatever the court thinks best, that can be challenged in judicial review proceedings, albeit only on the usual judicial review grounds, or under the Human Rights Act 1998 on human rights grounds.
In other words, as Eleanor King J put it, Best interests first; Judicial Review second (para 51).
Otherwise, a public authority would be able to cut off the Court of Protections best interests inquiry at the outset, simply by refusing to provide or fund anything other than its own proposals.
Ms Weereratne QC, on behalf of the mother, supports that case.
She emphasises that there were factual disputes relevant to the two issues in the case which were important to MNs quality of life; that the individuals preferences are at the centre of the care planning process and that it is the function of the Court of Protection to substitute for the preferences of a person who cannot decide or articulate them for himself; and that this approach would be more consistent with the equality and non discrimination principles of the United Nations Convention on the Rights of Persons with Disabilities, which are taken into account by the European Court of Human Rights in its interpretation of the Convention rights: see, most recently, AN v Lithuania, Application No 17280/08, Judgment of 31 May 2016, where the court cited article 12 of the Convention (para 69) and held that where a measure of protection is necessary, it should be proportionate to the degree of incapacity and tailored to the individuals circumstances and needs (para 124).
The approach adopted in the courts below was supported, albeit with nuanced variations, by Mr Hugh Southey QC on behalf of the CCG and Mr Richard Gordon QC on behalf of the Official Solicitor as litigation friend of MN.
Despite the wealth of authority cited in the courts below, the applicable principles are readily established from a combination of the fundamental purpose and specific provisions of the 2005 Act and the decisions of this Court and its predecessor in the House of Lords.
The Mental Capacity Act 2005
The Mental Capacity Act 2005 had its origins in a project begun by the Law Commission in 1989, with the encouragement of, among others, the Mental Health Sub Committee of The Law Society.
The Commission published four Consultation Papers: Mentally Incapacitated and Decision Making: An Overview (CP No 119, 1991); Mentally Incapacitated Adults and Decision Making: A New Jurisdiction (CP No 128, 1993); Mentally Incapacitated Adults and Decision Making: Medical Treatment and Research (CP No 129, 1993); and Mentally Incapacitated Adults and Other Vulnerable Adults: Public Law Protection (CP No 130, 1993).
The Commissions Report, Mental Incapacity (Law Com No 231), was published in 1995.
This was followed by a Consultation Paper issued by the Lord Chancellors Department, Who Decides? Making Decisions on behalf of Mentally Incapacitated Adults (1997, Cm 3803), which followed closely the Law Commissions proposals.
The Governments conclusions were set out by the Lord Chancellors Department in Making Decisions: The Governments proposals for making decisions on behalf of mentally incapacitated adults (1999, Cm 4465).
This adopted most of the principles put forward and recommendations made by the Law Commission.
After pre legislative scrutiny by the Joint Committee on the Draft Mental Incapacity Bill (Session 2002 03, HL 189, HC 1083), the Bill which became the Mental Capacity Act was passed by 2005 and came into force in 2007.
Both the Law Commissions and the Governments consultations revealed wide spread support for legislation along the lines proposed amongst health and social care professionals, carers and voluntary organisations catering for mentally disabled adults and their families and carers, as well as among lawyers and the judiciary.
The Law Commissions project had begun before the decision of the House of Lords in In re F (Mental Patient: Sterilisation) [1990] 2 AC 1.
At that time, there was no person with legal authority to make decisions on behalf of an adult who was unable to make them for himself, unlike the parent of a child who lacked the competence to do so.
There was no jurisdiction in any court to appoint such a person or to take the decision itself.
The old but little used power of the old Court of Protection to appoint a committee of the person was abolished when the Mental Health Act 1959 came into force.
But there was no statutory procedure under the 1959 Act to take its place.
A person who did have capacity was not able to appoint another person to make decisions about his personal welfare, as opposed to his property and affairs, should he lose capacity in the future.
Hence, the decision in In re F was greeted with great relief, especially among health care professionals.
The House of Lords held that the defence of necessity meant that it was lawful for such professionals and other carers to do what was in the best interests of a person who lacked the capacity to decide for himself whether it should be done.
That principle has found its way, with qualifications, into section 5 of the 2005 Act.
The House of Lords also held that the High Court had an inherent jurisdiction to make declarations in advance that a particular course of action would, or would not, be lawful in accordance with that principle.
Nevertheless, there was still support for legislation.
This would have four main purposes: it would place the necessity principle on a statutory footing; it would clarify the tests, both for incapacity and for the best interests principle; it would provide for lasting powers of attorney in relation to personal welfare decisions as well as decisions relating to property and affairs; and it would provide a new jurisdiction, in a newly constituted Court of Protection, with powers actually to take decisions on behalf of people unable to take them for themselves, or to appoint deputies to do so, as well as to make declarations as to whether or not they lacked that capacity and as to whether or not a particular course of action or inaction would be lawful.
Since that time, the inherent jurisdiction of the High Court has been held to encompass situations in which the necessity doctrine does not arise, because there is no tort to which a defence is required, but there is still jurisdiction to declare whether something is, or is not, in a persons best interests: see St Helens Borough Council v PE [2006] EWHC 3460 (Fam); [2007] 2 FLR 1115.
It has also been held that the 2005 Act has not abolished the inherent jurisdiction, which continues to exist alongside the new jurisdiction: see Westminster City Council v C [2008] EWCA Civ 198; [2009] Fam 11.
Nevertheless, the great majority of cases are brought in the Court of Protection.
It will be apparent from the above account that the jurisdiction of the Court of Protection (and for that matter the inherent jurisdiction of the High Court relating to people who lack capacity) is limited to decisions that a person is unable to take for himself.
It is not to be equated with the jurisdiction of family courts under the Children Act 1989, to take children away from their families and place them in the care of a local authority, which then acquires parental responsibility for, and numerous statutory duties towards, those children.
There is no such thing as a care order in respect of a person of 18 or over.
Nor is the jurisdiction to be equated with the wardship jurisdiction of the High Court.
Both may have their historical roots in the ancient powers of the Crown as parens patriae over people who were then termed infants, idiots and the insane.
But the Court of Protection does not become the guardian of an adult who lacks capacity and the adult does not become the ward of the court.
So what powers does the court have? By section 15(1) and (2) it has power to make declarations as to (a) whether a person has or lacks capacity to make a decision specified in the declaration; (b) whether a person has or lacks capacity to make decisions on such matters as are described in the declaration; (c) the lawfulness or otherwise of any act (including an omission or course of conduct) done, or yet to be done, in relation to that person.
It will be seen from this that the Act focusses on capacity in relation to a specific decision or matter.
This is consistent with the underlying principles of the Act.
By section 1(2), a person must be assumed to have capacity unless it is established that he lacks it.
Under section 2(1), the question is whether a person lacks capacity in relation to a matter.
There will be people, of whom MN is probably one, who lack capacity in relation to virtually every decision in their life.
But the Act recognises that capacity is variable and may fluctuate.
A person may be perfectly capable of taking some decisions but not others.
A person may be perfectly capable of taking the decision at some times or in some circumstances but not in others.
In the Court of Appeal in this case, Sir James Munby P pointed out that the still inveterate use of orders in the form of declaratory relief might be thought to be in significant part both anachronistic and inappropriate (para 88).
The scope of the declarations which may be made by the Court of Protection under section 15 may be narrower than the scope of those which may be made in the High Court: see XCC v AA [2012] EWHC 2183 (COP); [2013] 2 All ER 988.
But the Court of Protection has the much wider powers of making decisions and appointing deputies under section 16 (para 88).
And declarations have no coercive effect (para 90).
All in all, he concluded it might be thought that, unless the desired order clearly falls within the ambit of section 15 , orders are better framed in terms of relief under section 16 (para 91).
With respect, this is a view that I share.
Section 16 applies if a person (P) lacks capacity in relation to a matter or matters concerning (a) Ps personal welfare, or (b) Ps property and affairs (section 16(1)).
The court may then (a) by making an order, make the decision or decisions on Ps behalf in relation to the matter or matters, or (b) appoint a person (a deputy) to make decisions on Ps behalf in relation to the matter or matters (section 16(2)).
But (a) a decision by the court is to be preferred to the appointment of a deputy to make a decision, and (b) the powers conferred on a deputy should be as limited in scope and duration as is reasonably practicable in the circumstances (section 16(4)).
This approach is consistent with the least restrictive alternative principle, enacted in section 1(6): Before the act is done, or the decision is made, regard must be had to whether the purpose for which it is needed can be as effectively achieved in a way that is less restrictive of the persons rights and freedom of action.
It also points up another distinction between the 2005 Act and the Children Act 1989: the 2005 Act does not contemplate as a norm the conferring of the full gamut of decision making power, let alone parental responsibility, over an adult who lacks capacity.
Note that a court order under section 16(2)(a) simply makes the decision.
There is no need to declare that the decision made is in Ps best interests, and that may be another reason for preferring orders to declarations.
Section 16 also confers various ancillary powers upon the court (sections 16(5), (7) and (8)).
It also provides that the court may make the order, give the directions or make the appointment on such terms as it considers are in Ps best interests, even though no application is before the court for an order, directions or an appointment on those terms (section 16(6)).
In this respect, the powers of the court do resemble those of the family courts in relation to children, as do its more flexible procedures (of which more later).
Section 17(1) provides that: The powers under section 16 as respects Ps personal welfare extend in particular to (a) deciding where P is to live; (b) deciding what contact, if any, P is to have with any specified persons; (c) making an order prohibiting a named person from having contact with P; (d) giving or refusing consent to the carrying out or continuation of a treatment by a person providing health care for P; (e) giving a direction that a person responsible for Ps health care allow a different person to take over that responsibility.
This is not an exhaustive list and there are various limitations on the powers of deputies (sections 17(2), 20).
But it is worth noting that section 17(1) does not say, for example, (a) deciding that a named care home must accommodate P, or (b) deciding that a particular person must go and see P whether he wants to or not, or (d) deciding that a person providing health care must provide a particular treatment for P, or (e) deciding that a named person must take over responsibility for Ps health care.
This is consistent with what was said in the Law Commissions report (Law Com No 231), at para 8.19: Some consultees asked whether the courts power to make an order about where the person should live might provide a route to challenge a care plan made by a local social services authority under the National Health Service and Community Care Act 1990.
We trust it is clear from the draft Bill that the court only has power to make any decision which the person without capacity could have made.
Its role is to stand in the shoes of the person concerned.
If that person has no power, under the community care legislation, to demand the provision of particular services then the court can do no such thing on his or her behalf.
The Government echoed this in its white paper, Making Decisions (Cm 4465), at para 7.18: The Law Commission stressed that the court should have no powers to make decisions which the person without capacity could not have made, even if they had retained their capacity.
The court could not, for example, refuse basic care.
It is also consistent with what was said in this Court in Aintree University Hospitals NHS Foundation Trust v James [2013] UKSC 67; [2014] AC 591, at para 18: 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.
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.
Eleanor King J provided an excellent example of how that principle applies to the circumstances of this particular case, in the passage quoted at para 14 above.
Of course, a person who has the capacity to take a decision for himself may do so for a good reason, a bad reason or no reason at all.
The 2005 Act reflects this by providing, in section 1(4), that A person is not to be treated as unable to make a decision merely because he makes an unwise decision.
Courts and people who take decisions on behalf of a person who is unable to take them for himself, on the other hand, have to take such decisions in the best interests of that person.
Section 1(5) provides that An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests.
Section 4 then goes into some detail about the steps which must be taken to arrive at the conclusion as to what is in his best interests.
These include considering his past and present wishes and feelings, the beliefs and values likely to influence his decision if he had capacity, and other factors which he would be likely to consider if able to do so (section 4(6)).
In other words, it is a decision about what would be best for this particular individual, taking into account, so far as practicable, his individual characteristics, likes and dislikes, values and approach to life.
He must also be involved in the decision as far as reasonably practicable (section 4(4)).
So how is the courts duty to decide what is in the best interests of P to be reconciled with the fact that the court only has power to take a decision that P himself could have taken? It has no greater power to oblige others to do what is best than P would have himself.
This must mean that, just like P, the court can only choose between the available options.
In this respect, the Court of Protections powers do resemble the family courts powers in relation to children.
The family court must also decide what is in the best interests of the child although in the Children Act 1989 this concept is not express but implicit in the courts duty to regard the welfare of the child as its paramount consideration (1989 Act, section 1(1)).
But the court cannot oblige an unwilling parent to have the child to live with him or even to have contact with him, any more than it can oblige an unwilling health service to provide a particular treatment for the child.
This was explained in the case of Holmes Moorhouse v Richmond upon Thames London Borough Council [2009] UKHL 7; [2009] 1 WLR 413, at para 30: When any family court decides with whom the children of separated parents are to live, the welfare of those children must be its paramount consideration: the Children Act 1989, section 1(1).
This means that it must choose from the available options the future which will be best for the children, not the future which will be best for the adults.
It also means that the court may be creative in devising options which the parents have not put forward.
It does not mean that the court can create options where none exist. (Emphasis supplied)
The Holmes Moorhouse case is important for another reason.
It demonstrates how the family court is operating on a different plane and on different principles from a public authority which is deciding how to exercise its statutory powers and duties to provide services.
The parents of three children had separated, the mother remaining in the matrimonial home and the father being ordered to leave.
The family court made a shared residence order, by consent, that the children should live with each parent.
The father then applied to the local authority to be housed under its duties to the homeless under Part 7 of the Housing Act 1996.
These duties vary depending, among other things, upon whether an applicant is in priority need.
Those in priority need include A person with whom dependent children reside or might reasonably be expected to reside (section 189(1)(b)).
The father argued that it was reasonable to expect the children to live with him as the family court had ordered that they should.
The local authority decided that it was not.
The Court of Appeal held that the shared residence order meant that it was.
The House of Lords disagreed.
Lord Hoffmann explained, at para 14, that the questions for the family court and for the local authority were not the same: The question which the housing authority therefore had to ask itself was whether it was reasonably to be expected, in the context of a scheme for housing the homeless, that children who already had a home with their mother should be able also to reside with the father.
In answering this question, it would no doubt have to take into account the wishes of both parents and the children themselves.
It would also have to have regard to the opinion of a court in family proceedings that shared residence would be in the interests of the children.
But it would nevertheless be entitled to decide that it was not reasonable to expect children who were not in any sense homeless to be able to live with both mother and father in separate accommodation.
The authority was entitled to take into account the fact that housing was a scarce resource, the claims of other applicants and the scale of its responsibilities, when deciding the issue of reasonableness for this purpose.
Nor should a family court use its own powers as a way of putting pressure upon the local authority to decide in a particular way.
Other service providing powers and duties also have their own principles and criteria, which do not depend upon what is best for the service user, although that will no doubt be a relevant consideration.
The Care Act 2014, which is not relevant in this particular case but will be relevant in many which come before the Court of Protection, creates a scheme of individual entitlement to care and support for people in need of social care.
But it has its own scheme for assessing those needs (section 9) and its own scheme for determining eligibility (section 13) and then deciding how those eligible needs should be met (section 24).
The Act even provides for the possibility of introducing appeals to a tribunal (section 72), although this has not yet been done.
The National Health Service also has its own processes for assessing need and eligibility, albeit not in a legislative context which recognises individual legal entitlement.
Decisions can, of course, be challenged on the usual judicial review principles.
Decisions on health or social care services may also engage the right to respect for private (or family) life under article 8 of the European Convention on Human Rights, but decisions about the allocation of limited resources may well be justified as necessary in the interests of the economic well being of the country (see McDonald v United Kingdom [2015] 60 EHRR 1).
Here again, therefore, the legal considerations, both for the public authority and for the court, are different from those under the 2005 Act.
Discussion
So how does all this fit together in a case such as this? It is perhaps unfortunate that the issue was described in the Court of Protection as one of jurisdiction and that term was used in the statement of facts and issues before this Court.
The issue is not one of jurisdiction in the usual sense of whether the court has jurisdiction to hear the case.
After all, the Court of Protection made the orders which it was asked to make in this case and no one has suggested that it had no jurisdiction to do so.
It was seized of an application properly made by the authorities responsible for providing services for MN.
The context was a care order giving the local authority parental responsibility for him which was about to come to an end.
No doubt if there had been no dispute with the family about his care, there would have been no need to make an application.
Section 5 of the 2005 Act gives a general authority, to act in relation to the care or treatment of P, to those caring for him who reasonably believe both that P lacks capacity in relation to the matter and that it will be in Ps best interests for the act to be done.
This will usually suffice, unless the decision is so serious that the court itself has said it must be taken to court.
But if there is a dispute (or if what is to be done amounts to a deprivation of liberty for which there is no authorisation under the deprivation of liberty safeguards in Schedule A1 to the 2005 Act) then it may be necessary to bring the case to court, as the authorities did in this case.
The court clearly has jurisdiction to make any of the orders or declarations provided for in the Act.
The question is not strictly one of jurisdiction but of how the case should be handled in the light of the limited powers of the court.
What may often follow such an application will be a process of independent investigation, as also happened in this case, coupled with negotiation and sometimes mediation, in which modifications are made to the care plan and areas of dispute are narrowed, again as happened in this case.
But it does not follow that the court is obliged to hold a hearing to resolve every dispute where it will serve no useful purpose to do so.
The Court of Protection has extensive case management powers.
The Court of Protection Rules do not include an express power to strike out a statement of case or to give summary judgment, but such powers are provided for in the Civil Procedure Rules, which apply in any case not provided for so far as necessary to further the overriding objective.
The overriding objective is to deal with a case justly having regard to the principles contained in the 2005 Act (Court of Protection Rules 2007, rule 3(1)).
Dealing with a case justly includes dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues and allocating to it an appropriate share of the courts resources (rule 3(3)(c) and (f)).
The Court will further the overriding objective by actively managing cases (rule 5(1)).
This includes encouraging the parties to co operate with one another in the conduct of the proceedings, identifying the issues at an early stage, deciding promptly which issues need a full investigation and hearing and which do not, and encouraging the parties to use an alternative dispute resolution procedure if appropriate (rule 5(2)(a), (b)(i), (c)(i), and (e)).
The courts general powers of case management include a power to exclude any issue from consideration and to take any step or give any direction for the purpose of managing the case and furthering the overriding objective (rule 25(j) and (m)).
It was held in KD and LD v Havering London Borough Council [2010] 1 FLR 1393 that the court may determine a case summarily of its own motion, but their power must be exercised appropriately and with a modicum of restraint.
The court is clearly entitled to take the view that no useful purpose will be served by holding a hearing to resolve a particular issue.
In reaching such a decision, many factors might be relevant.
In a case such as this, for example: the nature of the issues; their importance for MN; the cogency of the parents demands; the reasons why the CCG opposed those demands and their cogency; any relevant and indisputable fact in the history; the views of MNs litigation friend; the consequence of further investigation in terms of costs and court time; the likelihood that it might bring about further modifications to the care plan or consensus between the parties; and generally whether further investigation would serve any useful purpose.
In this case, consideration along those lines would no doubt have produced the following conclusions.
The issues had been narrowed.
They were important for MN but not as important as the basic question of where he should live.
There were good reasons, not least in the history, for thinking that the parents wishes were impracticable and that the CCG had good reasons for rejecting them.
The Official Solicitor supported this.
In the light of the length of time the proceedings had already taken, and the modifications to the care plan which had been made in the course of them, it was unlikely that investigation would bring about further modifications or consensus.
And it would be disproportionate to devote any more of the courts scarce resources to resolving matters.
Case management along these lines does not mean that a care provider or funder can pre empt the courts proceedings by refusing to contemplate changes to the care plan.
The court can always ask itself what useful purpose continuing the proceedings, or taking a particular step in them, will serve but that is for the court, not the parties, to decide.
Conclusion
This was not a case in which the court did not have jurisdiction to continue with the planned hearing.
It was a case in which the court did not have power to order the CCG to fund what the parents wanted.
Nor did it have power to order the actual care providers to do that which they were unwilling or unable to do.
In those circumstances, the court was entitled to conclude that, in the exercise of its case management powers, no useful purpose would be served by continuing the hearing.
I accept that Eleanor King J did not put it in quite these terms (no doubt reflecting the way the issue was argued before her).
However, that is the substance of what she was doing and she was entitled in the circumstances to do it.
I would therefore dismiss this appeal and uphold the orders she made, albeit not for precisely the same reasons.
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The issue in this appeal is the role of the Court of Protection where there is a dispute between the providers or funders of health or social care services for a person who lacks the capacity to make decisions for himself and members of his family about what should be provided for him.
N is a profoundly disabled man, now in his twenties, who is part of a large, close and loving family.
His disabilities require that carers are in attendance throughout the day and night.
His parents have been unable to co operate with the authorities in meeting his needs and a care order was made in respect of N when he was eight.
This necessarily came to an end when he was eighteen.
Shortly before that point, the local authority issued proceedings in the Court of Protection seeking orders pursuant to the Mental Capacity Act 2005 (the MCA) that it was in Ns best interests for N to reside in a care home and for contact with his parents to be regulated and supervised by the local authority.
Responsibility for his care passed to the National Health Service when he turned 18.
It was not in dispute that N lacked the capacity to make decisions about his residence or contact with his family, nor that for the time being the care home provides a safe and settled environment for N.
By the time of the hearing the issues between Ns parents and the respondent clinical commissioning group had narrowed to whether N could visit the family home and whether his mother could assist care home staff with his intimate care when she was visiting him there.
The respondent considered that neither was in Ns best interests: the first would require additional trained carers which it was not prepared to fund, and the care home staff had concerns about the second, after the parents had declined an offer of the necessary training in manual handling.
At the hearing the respondent argued that the Court of Protection, on Ns behalf, could only decide between the available options and that it was inappropriate to try to obtain a best interests declaration to put pressure on the respondent to make further funding available.
The judge agreed that she could not consider the parents proposals for this reason, and she declared that the contact plan proposed by the respondents was in Ns best interests.
The Court of Appeal upheld the judges decision.
The Supreme Court unanimously dismisses Ns parents appeal.
Although the Court of Protection had jurisdiction to continue with the planned hearing, it did not have power to order the respondent to fund the parents plan, nor to order the actual care providers to do that which they were unwilling or unable to do.
The judge had therefore been entitled to conclude that no useful purpose was served by continuing the hearing.
Lady Hale, with whom all the Justices agree, gives the only judgment.
The jurisdiction of the Court of Protection is limited to decisions that a person (P) could take if he had the capacity to do so.
It is not to be equated with the jurisdiction of the courts to make orders in respect of children: under the MCA the court does not become the guardian of an adult who lacks capacity and the adult does not become the ward of the court [24].
The MCA focuses on capacity in relation to a specific decision or matter.
Rather than granting declaratory relief available under section 15, it is better if possible for the court to make orders under section 16 [26].
There is scope under section 16 for the court to make a decision on Ps behalf, or to appoint a deputy to make such decisions, and the courts powers set out in section 17 include the power to decide where P is to live and what contact, if any, P is to have with any specified persons.
These powers do not extend to decisions compelling third parties to accommodate, or meet, or to provide services or treatments for P [29].
The fact that the court has no greater power to take a decision than P would have had himself means that it too can only choose between the available options.
It resembles the inability of the family court in children cases to oblige an unwilling parent to have the child to live with him, or to oblige an unwilling health service to provide a particular treatment for the child [35].
Nor can the court use its powers to put pressure upon a local authority to make particular decisions in exercise of its statutory powers and duties to provide public services.
Such decisions can instead be challenged on judicial review principles, where the legal considerations for the public authority and for the court will be different from those under the MCA [37].
It was unfortunate in Ns case that the issue was described as one of jurisdiction since the Court of Protection clearly has jurisdiction to make declarations and orders under the MCA.
The question was rather how Ns case should be handled in the light of the limited powers of the court [38].
The court has wide case management powers, which include the identification of issues which need full investigation, and it is entitled to take the view that no useful purpose will be served by holding a hearing to resolve other issues [41].
In this case, there were good reasons for thinking that Ns parents wishes were impracticable and that the respondent had good reasons for rejecting them.
The Official Solicitor supported the respondent.
It was unlikely that investigation would bring about any further modifications or consensus and it would be disproportionate to devote any more of the courts scarce resources to resolving matters [42].
Accordingly, since the court did not have power to order the respondent to fund what Ns parents wanted, nor to order the actual care providers to do that which they were unwilling or unable to do, the judge was entitle to conclude (as in substance she had) that no useful purpose would be served by continuing the hearing [44].
The appeal is therefore dismissed.
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The issue on this appeal is whether and if so in what circumstances the Financial Services Authority (FSA) should, as a condition of obtaining a freezing injunction under section 380(3) of the Financial Services and Markets Act 2000 (FSMA) and/or section 37(1) of the Senior Courts Act 1981 (SCA), be required to give to the court a cross undertaking in damages in favour of third parties affected by the injunction.
The answer I would give is that there is no general rule that an authority like the FSA acting pursuant to a public duty should be required to give such an undertaking, and that there are no particular circumstances why it should be required to do so in the present case.
The issue has been argued as a matter of principle between the FSA and Barclays Bank plc (Barclays), a potentially affected third party.
However, a brief statement of the background is appropriate.
On 20th December 2010 proceedings were commenced by the FSA against three defendants (Sinaloa Gold plc, a person or persons trading as PH Capital Invest and a Mr Glen Lawrence Hoover) on the basis that (a) Sinaloa was promoting the sales of shares without being authorised to do so and without an approved prospectus, contrary to FSMA sections 21 and 85, (b) PH Capital Invest and Mr Hoover were knowingly engaged in this activity, and (c) PH Capital Invest was as an unauthorised person carrying on regulated activities in breach of FSMA section 19 in various other respects.
which Mr Hoover was the sole authorised signatory.
Before issuing these proceedings, the FSA had on 17th December 2010 obtained without notice an injunction freezing the defendants assets under sections 380(3) FSMA and/or 37(1) SCA.
Barclays were notified of the order on 20th December 2010, and the injunction was continued by David Richards J at a hearing on notice on 31st December 2010.
Sinaloa Gold plc had six bank accounts at Barclays, in respect of all of
As originally issued, Schedule B to the injunction, headed Undertakings given to the Court by the Applicant, read: (1) The Applicant does not offer a cross undertaking in damages. (4) The Applicant will pay the reasonable costs of anyone other than the Respondents which have been incurred as a result of this order including the costs of finding out whether that person holds any of the Respondent's assets and if the court later finds that this order has caused such person loss, and decides that such person should be compensated for that loss, the Applicant will comply with any order the court may make. (italics added) By the time the injunction was continued, the possible inconsistency between paragraphs (1) and (4) was observed, and the FSA was required to agree to add at the end of paragraph (1) the phrase save to the extent provided in paragraph (4) below, without prejudice to its right to apply to vary paragraph (4).
On 12th January 2011 the FSA applied to have the words which I have italicised in paragraph (4) removed.
Barclays intervened to oppose the application, which was refused by HHJ David Hodge QC on 25th January 2011 [2011] EWHC 144(Ch).
On 18th October 2011 the Court of Appeal reversed his decision and ordered a cross undertaking in the terms of paragraph (4) without the italicised words [2012] Bus LR 753.
The effect was to preserve the undertaking in respect of costs incurred by third parties (which the FSA did not dispute), but to eliminate any requirement that the FSA give an undertaking in respect of losses incurred by third parties.
Barclays now appeals by permission of this Court.
The FSA and FSMA
The FSA is governed by FSMA.
Schedule 1 to FSMA makes provision about its status, including an exemption from liability in damages (paragraph 12 below).
The FSA was given general functions which in discharging it must, so far as is reasonably possible, act in a way which is compatible with defined regulatory objectives and which it considers most appropriate for the purpose of meeting those objectives: FSMA, section 2(1) and (4).
Its general functions include making rules, preparing and issuing codes, giving general guidance and determining general policy and principles by reference to which to perform particular functions.
The regulatory objectives include maintaining market confidence in the UK financial system (section 3), protecting and enhancing the stability of the UK financial system (section 3A, as inserted by section 1(3) of the Financial Services Act 2010), securing the appropriate degree of protection for consumers (section 5) and reducing the extent to which it is possible for a business carried on by a regulated person or in contravention of the general prohibition to be used for a purpose connected with financial crime (section 6).
Section 19 in Part II of FSMA prohibits any person from carrying on, or
purporting to carry on, a regulated activity in the UK unless authorised (under sections 40 to 43 in Part IV) or exempt.
This is the general prohibition, for contravention of which penalties are set by section 23.
Section 21 contains specific restrictions on financial promotion, including communicating an invitation or inducement to engage in investment activity in the course of business, with penalties for contravention being set by section 25.
Section 85 prohibits dealing in transferable securities without an approved prospectus.
Section 380(3) provides that, if, on the application of the FSA or the Secretary of State, the court is satisfied that any person may have contravened, or been knowingly concerned in the contravention of, a relevant requirement it may make an order restraining him from disposing of, or otherwise dealing with, any assets of his which it is satisfied he is reasonably likely to dispose of or otherwise deal with.
A relevant requirement includes a requirement which is imposed by or under this Act (section 380(6)(a)) and so includes the requirement under section 19 to be authorised or exempt before carrying on a regulated activity.
Under Part IV of FSMA, permission may be given subject to such requirements as the FSA thinks appropriate (section 43), which may include an assets requirement prohibiting the disposal of, or other dealing with, any of the permitted persons (As) assets or their transfer to a trustee approved by the FSA (section 48(3)).
Under section 45(4), the FSA may on its own initiative vary a previously included Part IV permission to include an assets requirement.
Under section 48(4) and (5), if the FSA imposes an assets requirement and gives notice to any institution with which a person (A) keeps an account, the notice has the effect that (a) the institution does not act in breach of any contract with A in refusing any instruction from A in the reasonably held belief that complying would be incompatible with the requirement and (b) if the institution complies with the instruction, it is liable to pay to the FSA an amount equal to that transferred from or paid out of As account.
In relation to authorised persons, the FSA thus enjoys a right to impose a freezing order without going to court and without any occasion arising on which a cross undertaking could be required of it.
The FSA also enjoys an exemption from liability in damages, set out in paragraph 19 of Schedule 1 to FSMA: (1) Neither the Authority nor any person who is, or is acting as, a member, officer or member of staff of the Authority is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of the Authority's functions. (2) Neither the investigator appointed under paragraph 7 nor a person appointed to conduct an investigation on his behalf under paragraph 8(8) is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of his functions in relation to the investigation of a complaint. (3) Neither sub paragraph (1) nor sub paragraph (2) applies (a) if the act or omission is shown to have been in bad faith; or (b) so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.
Paragraph 19(1) of Schedule 1 would protect the FSA, if it was, for example, the subject of a claim by A on whom it had imposed an assets requirement under section 45(4), by an institution to which it had notified the imposition of such a requirement under sections 48(4) and (5) or by any other third person.
Paragraphs 7 and 8 of Schedule 1 require the FSA to establish a scheme for the independent investigation of complaints against it (other than complaints more appropriately dealt with in another way, e.g. by referral to the Upper Tribunal under the appeals procedure contained in Part IX of FSMA or by the institution of other legal proceedings), and the issue and, where appropriate, publication of reports on such complaints.
The present issue
The issue now before the Supreme Court raises for consideration: (a) whether and how far the position of the FSA, seeking an interim injunction pursuant to its public law function and duty, is to be equated with that of a person seeking such an injunction in pursuance of private interests; (b) whether and how far the position regarding the giving of any cross undertaking differs according to whether it is to protect a defendant or a third party; and (c) whether there is any coherent distinction between cross undertakings in respect of third party losses and costs.
Taking the first point, I propose to start with the requirements which apply when a claimant is pursuing private interests.
Since the first half of the 19th century such claimants have when seeking an interim injunction been required to give the usual undertaking.
That means an undertaking to abide by any order this Court may make as to damages in case the Court shall hereafter be of opinion that the Defendants . shall have sustained any by reason of this order which the [claimant] ought to pay: see e.g. Tucker v New Brunswick Trading Company of London (1890) 44 Ch D 249, 251.
The practice regarding defendants is reflected in CPR 1998, Practice Direction (PD) 25A 5.1(1), requiring, unless the court orders otherwise, an undertaking to pay any damages which the respondent sustains which the court considers the applicant should pay.
But modern practice, reflected in PD 25A 5.1A, also provides that, when the court orders an injunction it should consider whether to require an undertaking by the applicant to pay any damages sustained by a person other than the respondent, including another party to the proceedings or any other person who may suffer loss as a consequence of the order.
Asset freezing (formerly Mareva) injunctions were developed by the courts in the late 1970s and 1980s.
Because of their particular, potentially stringent effects, they are separately regulated in the rules.
PD 25A 6 annexes a sample wording which may be modified in any particular case.
In addition to an undertaking in the usual form in favour of the defendant, it includes an undertaking in favour of third persons in identical form to paragraph (4) of that originally required in this case (paragraph 6 above).
The history of the undertaking in favour of third persons can be traced back to a statement by Lord Denning MR in Prince Abdul Rahman Bin Turki Al Sudairy v Abu Taha [1980] 1 WLR 1268, 1273 and to decisions by Robert Goff J in Searose Ltd v Seatrain UK Ltd [1981] 1 WLR 894 and Clipper Maritime Co Ltd of Monrovia v Mineralimportexport [1981] 1 WLR 1262.
In Searose, Robert Goff J, building on Lord Dennings statement, held that, where a bank had to incur costs in identifying whether a bank account existed within the terms of a Mareva injunction, it should be entitled to an undertaking to cover its reasonable costs, before it incurred them.
In Clipper Maritime the freezing injunction obtained by the claimants covered cargo or bunkers belonging to the defendants Mineralimportexport on board a vessel which was on time charter to Mineralimportexport and which was in the port of Barry.
Its effect might have been to inhibit the port authority in its use of the port and to cause it loss of income.
An undertaking was required to cover any actual income lost to the port authority.
In the later case of Galaxia Maritime SA v Mineralimportexport [1982] 1 WLR 539, the defendants were again Mineralimportexport and a freezing injunction was initially granted to prevent them from removing from the jurisdiction (just before Christmas) a cargo on a third partys vessel which was only on voyage charter to Mineralimportexport.
The Court of Appeal categorically refused to continue the interim injunction on any terms, since it could effectively block the third partys vessel indefinitely.
Under the standard forms of injunction currently in use for both ordinary interim injunctions and freezing injunctions, the enforcement of the undertaking is expressed to be in the courts discretion.
There is little authority in this area.
Neill LJ undertook a useful review of the general principles in Cheltenham and Gloucester Building Society v Ricketts [1993] 1 WLR 1545, 1551D 1552D.
The position regarding undertakings in favour of defendants has been more recently reviewed in Commercial Injunctions, by Steven Gee QC, 5th ed (2004 and First Supplement), paragraphs 11.017 11.032, while the authorities on undertakings in favour of third parties are covered in paragraphs 11.008 11.012.
An inquiry into damages will ordinarily be ordered where a freezing injunction is shown to have been wrongly granted, even though the claimant was not at fault: paragraph 11.023.
But, depending on the circumstances, it may be appropriate for the court to await the final outcome of the trial before deciding whether to enforce: see the Cheltenham and Gloucester case, p.1552B.
However, Professor Adrian Zuckerman has pointed out (The Undertaking in Damages Substantive and Procedural Dimensions [1994] CLJ 546, 562) that it does not follow from a defendants success on liability that he did not in fact remove (or seek to remove) assets from the reach of the claimant, justifying an interim freezing order.
The court retains a discretion not to enforce the undertaking if the defendants conduct makes it inequitable to enforce: F Hoffmann La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295, 361E, per Lord Diplock.
It seems likely that compensation is assessed on a similar basis to that upon which damages are awarded for breach of contract: Cheltenham and Gloucester, p.1552C D, per Neill LJ.
The position regarding third persons is necessarily different in certain respects.
The purpose of the cross undertaking is to protect them so long at least as they are innocent third persons not implicated in the alleged wrongdoing or conduct justifying the freezing order whether or not the freezing order was justified as against the defendant.
That purpose goes back to the orders first made in the Searose and Clipper Maritime cases.
I turn to the position of an authority acting in pursuit of public functions.
The leading authority is the Hoffmann La Roche case.
Following a report by the Monopolies Commission the Department of Trade and Industry made an order under the relevant monopolies legislation: the Regulation of Prices (Tranquilising Drugs) (no. 3) Order 1973 (SI 1973 No 720), setting maximum prices for certain drugs.
Hoffmann La Roche issued proceedings claiming that the Monopolies Commission report had been unfair and contrary to natural justice and was invalid, and that the Regulations based upon it were likewise ultra vires and invalid.
The Department issued proceedings, and sought an injunction to restrain Hoffmann La Roche from charging prices in excess of the Order prices under a provision in the primary legislation (section 11 of the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948) which provided that compliance with any such order shall be enforceable by civil proceedings by the Crown for an injunction or for any other appropriate relief.
The issue argued was whether the Department should be required to give a cross undertaking in damages in order to obtain the order.
The House recognised the general rule requiring a cross undertaking as a condition of the grant of an interim injunction in ordinary litigation: see e.g. per Lord Reid at p 341B.
It recognised that, since the Crown Proceedings Act 1947, there was no continuing justification for the former blanket practice whereby the Crown was not required to give any such undertaking in any circumstances (even in cases where it was asserting proprietary or contractual rights which a private person could have and enforce): per Lord Reid at p 341C and Lord Diplock at p 362B H.
But it considered, by a majority, that the Crown remains in a position different from that of any private individual when it brings what Lord Diplock described as a law enforcement action: p 363B.
The majority did not express itself with one voice regarding the implications of this distinction.
Lord Reid thought special circumstances or special reason to be required before the Crown should have to expose itself by cross undertaking: p 341E and G. Lord Cross of Chelsea however accepted that it might be fair to require that the Crown give a cross undertaking where the defendants defence was that what he is doing or proposing to do was not prohibited by the order in question, but that, where as here the defence was that what was on the face of it the law of the land was not in fact the law, exceptional circumstances would be required before the court should countenance the possibility that the Crown might be deterred from applying for an interim injunction by the need to give a cross undertaking: p 371D G. Lord Morris of Borth y Gest also focused on the apparent unlawfulness of the sales in excess of the order prices which Hoffmann La Roche was threatening.
Lord Diplock saw no reason, since the Crown Proceedings Act, for a rigid rule that the Crown itself should never be required to give the usual undertaking in damages in a law enforcement action, but equally no basis for the converse proposition that the court . ought always to require an undertaking: p 364C D: this was because (p 364E): When . a statute provides that compliance with its provisions shall be enforceable by civil proceedings by the Crown for an injunction, and particularly if this is the only method of enforcement for which it provides, the Crown does owe a duty to the public at large to initiate proceedings to secure that the law is not flouted .
Lord Diplock continued (p 364F G): I agree therefore with all your Lordships that the practice of exacting an undertaking in damages from the Crown as a condition of the grant of an interlocutory injunction in this type of law enforcement action ought not to be applied as a matter of course, as it should be in actions between subject and subject, in relator actions, and in actions by the Crown to enforce or to protect its proprietary or contractual rights.
On the contrary, the propriety of requiring such an undertaking from the Crown should be considered in the light of the particular circumstances of the case.
In concluding that no cross undertaking should be required, Lord Diplock repeated that the Crown was seeking to enforce the law by the only means available under the governing statute, and he, like Lord Morris and Lord Cross, stressed that Hoffmann La Roche was threatening to breach an apparently valid order approved by each House of Parliament: pp 364H 365B.
On this basis, he also said (p 367A C): So in this type of law enforcement action if the only defence is an attack on the validity of the statutory instrument sought to be enforced the ordinary position of the parties as respects the grant of interim injunctions is reversed.
The duty of the Crown to see that the law declared by the statutory instrument is obeyed is not suspended by the commencement of proceedings in which the validity of the instrument is challenged.
Prima facie the Crown is entitled as of right to an interim injunction to enforce obedience to it.
To displace this right or to fetter it by the imposition of conditions it is for the defendant to show a strong prima facie case that the statutory instrument is ultra vires.
However, he went on (p 367C D): Even where a strong prima facie case of invalidity has been shown upon the application for an interim injunction it may still be inappropriate for the court to impose as a condition of the grant of the injunction a requirement that the Crown should enter into the usual undertaking as to damages.
For if the undertaking falls to be implemented, the cost of implementing it will be met from public funds raised by taxation and the interests of members of the public who are not parties to the action may be affected by it.
Lord Wilberforce, dissenting in Hoffmann La Roche, was unenthusiastic about English laws unwillingness to accept that a subject should be indemnified for loss sustained by invalid administrative action (p 359A), but rested his dissent ultimately on the fact that, without a cross undertaking, the Crown in Hoffmann La Roche would be put in a position where, if it ultimately lost the action, the injunction would have enabled it (through the National Health Service) to profit during the period while the injunction precluded Hoffmann La Roche from selling to the National Health Service at market, rather than order prices.
Kirklees Metropolitan Borough Council v Wickes Building Supplies Ltd [1993] AC 227 was another case concerned with a claim to enforce apparently valid legislation, this time by a local authority and relating to Sunday trading.
Lord Goff of Chieveley at p 274C D read the speeches in Hoffmann La Roche as dismantling an old Crown privilege and substituting for it a principle upon which, in certain limited circumstances, the court has a discretion whether or not to require an undertaking in damages from the Crown as law enforcer.
In extending the principle to all public authorities, he said (p 274D E): The principle appears to be related not to the Crown as such but to [T]he the Crown when performing a particular function. considerations which persuaded this House to hold that there was a discretion whether or not to require an undertaking in damages from the Crown in a law enforcement action are equally applicable to cases in which some other public authority is charged with the enforcement of the law: see e.g. Lord Reid, at p. 341G, Lord Morris of Borth y Gest, at p. 352C, and Lord Cross of Chelsea, at p. 371B G.
In In re Highfield Commodities Ltd [1985] 1 WLR 149 Sir Robert Megarry V C interpreted Hoffmann La Roche as deciding that no cross undertaking should be required of the Crown unless the defendant showed special circumstances justifying the requirement.
In Attorney General v Wright [1988] 1 WLR 164 Hoffmann J regarded as undeniable (even if, to some eyes, not particularly attractive) the potency of the principle that Crown officials should not be inhibited from performing their duty to take action to enforce the law by the fear that public funds may be exposed to claims for compensation by people who have thereby caused [sic] loss (p 166C D).
On the facts, however, he required an undertaking to be given by the receiver of, and to be met out of the funds of, the charity for whose benefit the Attorney General was suing to recover property.
Although the Attorney General was not suing to protect any proprietary or contractual right of the Crown, he was suing in the proprietary interests of the charity, which could be expected to give an undertaking.
In Director General of Fair Trading v Tobyward Ltd [1989] 1 WLR 517, Hoffmann J said that, whatever one might say about the policy, it is well established that the usual practice is that no cross undertaking is required when the Crown is seeking an interim injunction to enforce the law (p 524E H).
In Securities and Investments Board v Lloyd Wright [1993] 4 All ER 210, Morritt J addressed the issues on the basis of defence counsels concession that it would not be appropriate that there should be a cross undertaking of damages in a law enforcement action (p 213H J), and in Customs and Excise Commissioners v Anchor Foods Ltd [1999] 1 WLR 1139 at p 1152C D, Neuberger J said that it would ordinarily not be right to require a cross undertaking in damages from Customs, but ordered one because of the unusual facts of this case, in which Customs was, to protect its right to VAT, seeking to halt a sale of business at an independent valuation to a new company.
Finally, the Court of Appeal in United States Securities and Exchange Commission v Manterfield [2009] EWCA Civ 27, [2009] Lloyds Rep FC 203 applied the line of authority including Kirklees, In re Highfield and Lloyd Wright when endorsing the exercise of the judges discretion to dispense with the giving of a cross undertaking by the United States Securities and Exchange Commission.
The Commission was seeking a freezing order in aid of Massachusetts proceedings brought in the interest of investors generally to recover assets obtained by Manterfield in the course of a fraudulent investment scheme involving the sale of limited partnership interests in an unregistered fund.
Presenting the present appeal for Barclays, Mr Richard Handyside QC did not mount a direct attack on Hoffmann La Roche itself.
Rather he submitted that it was distinguishable because it concerned enforcement of an apparently valid executive order in relation to which the only defence was that the order was invalid, and that the later authorities referred to in the preceding paragraph had read it too broadly.
Mr Handyside did however also refer to Professor Zuckermanns article, which was avowedly critical of the decision in Hoffmann Roche.
Professor Zuckermanns reasons included Lord Wilberforces, and he also argued that a cross undertaking can encourage greater care before interfering with a citizens liberty.
He questioned the weight placed in Hoffmann La Roche on the presumption of validity of the relevant law.
Mr Handyside submits that the same criticism applies, a fortiori, to the weight placed by Hoffmann J on the apparent strength of the complaint of misleading advertising on which the injunction was based in Tobyward.
There is considerable general force in this particular criticism of Hoffmann La Roche.
The purpose of a cross undertaking in favour of a defendant is to cover the possibility of loss in the event that the grant of an injunction proves to have been inappropriate.
To refuse to require a cross undertaking because it appears, however strongly, unlikely ever to be capable of being invoked misses the point.
The remoteness of the possibility of loss might indeed be thought to be a reason why the public authority would be unlikely to be inhibited from seeking injunctive relief by fear that public funds may be exposed to claims for compensation.
I note that, although Lord Diplock attached some significance to the strength of the Crowns case in Hoffmann La Roche, he did not confine his comments on the difference between private litigation and law enforcement action to cases where the Crowns case was founded on apparently well founded legislation; on the contrary: see paragraph 24 above.
In any event, however, this particular criticism does not impinge on the general distinction drawn in Hoffmann La Roche and subsequent cases between private litigation and public law enforcement action.
In private litigation, a claimant acts in its own interests and has a choice whether to commit its assets and energies to doing so.
If it seeks interim relief which may, if unjustified, cause loss or expense to the defendant, it is usually fair to require the claimant to be ready to accept responsibility for the loss or expense.
Particularly in the commercial context in which freezing orders commonly originate, a claimant should be prepared to back its own interests with its own assets against the event that it obtains unjustifiably an injunction which harms anothers interests.
Different considerations arise in relation to law enforcement action, where a public authority is seeking to enforce the law in the interests of the public generally, often in pursuance of a public duty to do so, and enjoys only the resources which have been assigned to it for its functions.
Other than in cases of misfeasance in public office, which require malice, and cases of breach of the Convention rights within section 6(1) of the Human Rights Act 1998, it remains the case that English law does not confer a general remedy for loss suffered by administrative law action.
That is so, even though it involves breach of a public law duty.
In the present context, the fact that an injunction is discharged, or that the court concludes after hearing extended argument that it ought not in the first place to have been granted, by no means signifies that there was any breach of duty on the public authoritys part in seeking it.
As I have said, Mr Handyside does not take issue with this general distinction, and the appeal has been argued accordingly.
Mr Handyside does, however, take issue with the way in which Hoffmann La Roche has been interpreted as indicating that public authority claims to interim injunctions should be approached.
Hoffmann la Roche has been understood at first instance as involving a usual or normal rule that a cross undertaking will not be required from the Crown.
Mr Handyside submits that this understanding goes further than justified.
In Hoffmann La Roche, only Lord Reid spoke of a general rule according to which special circumstances or reason must exist before a cross undertaking should be required from the Crown.
Lord Morris was silent.
But Lord Diplock said that the practice of exacting an undertaking ought not to be applied as a matter of course and should, on the contrary. be considered in the light of the particular circumstances of the case.
This was a more neutral formulation, but still indicates a need to identify particular circumstances before a cross undertaking is required.
Lord Morris and Lord Cross focused on the particular circumstance that the only defence involved a challenge to the validity of an apparently valid order.
However, I do not regard that as a satisfactory demarcation of any distinction between public and private claims: paragraph 29 above.
For reasons indicated in paragraph 31 above, there is in my view a more general distinction between public and private claims.
Ultimately, there is a choice.
Either the risk that public authorities might be deterred or burdened in the pursuit of claims in the public interest is accepted as a material consideration, or authorities acting in the public interest must be expected generally to back their legal actions with the public funds with which they are entrusted to undertake their functions.
That latter approach could not be adopted without departing from Hoffmann La Roche, and Hoffmann La Roche draws a distinction between public and private claims which depends upon accepting the former approach.
Hoffmann La Roche stands at least for the proposition that public authority claims brought in the public interest require separate consideration.
Consistently with the speeches of Lord Reid and Lord Diplock (and probably also of Lord Cross), it indicates that no cross undertaking should be exacted as a matter of course, or without considering what is fair in the particular circumstances of the particular case.
A starting point along these lines does not appear to me to differ significantly from the practice subsequently adopted at first instance: see paragraph 27 above.
I accept its general appropriateness.
Mr Handyside further submitted that, in whatever sense Hoffmann La Roche is understood, it concerned only the protection of defendants.
The present appeal concerns the protection of third persons, who, unless the contrary is shown, are to be taken as having no involvement in the breach of the law alleged against the defendants.
The present appeal certainly proceeds on the basis that Barclays had no such involvement.
However, the distinction which Mr Handyside suggests does not in my opinion hold good.
Speaking generally, a cross undertaking in relation to a defendant protects against the event that no injunction should have been granted, either when it was granted or in the light of the defendants ultimate success at trial.
While it is possible to conceive of a case in which an injunction was wrongly granted on the material then available, but the defendant is at trial found to have breached the law, it is unlikely that the cross undertaking would then be enforced.
A cross undertaking in relation to third persons protects against the event that an innocent third person, without involvement in whatever breach of the law is alleged against the defendant, suffers loss or expense through the grant of the injunction, whether this should or should not have occurred.
In either case, therefore, it is loss caused by the grant of an injunction in circumstances where the person incurring the loss is essentially innocent that is covered by the cross undertaking.
Finally, Mr Handyside submits that no sensible distinction can exist between a cross undertaking in respect of costs, which the FSA has accepted that Barclays should receive (paragraphs 6 and 7 above), and the cross undertaking in damages, which is at issue on this appeal.
The FSA has, he submits, in effect, undermined its own case by conceding the former.
This is not convincing.
First, the appeal raises an issue of general principle, which cannot be resolved by a concession in a particular case.
Second, there is to my mind a pragmatic basis for a distinction between specific costs and general loss.
The rationale of Hoffmann La Roche, that public authorities should be able to enforce the law without being inhibited by the fear of cross claims and of exposing financially the resources allocated by the state for their functions, apply with particular force to any open ended cross undertaking in respect of third party loss.
It does not apply in the same way to a cross undertaking in respect of third party expense.
Even in a private law context, this distinction may sometimes be relevant to bear in mind.
So Neuberger J thought in Miller Brewing Co v Mersey Docks & Harbour Co [2004] FSR 5, 81 paragraphs 44 45 (paragraphs not touched by criticism levelled at the actual decision in Mr Gees work on Commercial Injunctions, paragraph 11.015, into which it is unnecessary to go).
The present case
The present case resembles Hoffmann La Roche, Kirklees, Tobyward and Lloyd Wright.
It is a case of a public authority seeking to enforce the law by the only means available under the governing statute.
The FSA was acting under its express power to seek injunctive relief conferred by section 380(3).
It was acting in fulfilment of its public duties in sections 3 to 6 of FSMA to protect the interests of the UKs financial system, to protect consumers and to reduce the extent to which it was possible for a business being carried on in contravention of the general prohibition being used for a purpose connected with financial crime.
I therefore approach this appeal on the basis that there is no general rule that the FSA should be required to give a cross undertaking, in respect of loss suffered either by the defendants or by third parties.
It is necessary to consider the circumstances to determine whether a cross undertaking should be required in this particular case.
The circumstances include some further background considerations.
First, there is no general duty in English public law to indemnify those affected by action undertaken under legislative authority.
Innocent third parties may be affected in situations ranging from the Victorian example of trains run on an authorised railway line (Hammersmith and City Railway Company v Brand (1869) LR 4 HL 171) to the erection of a barrier on a pavement (Dormer v Newcastle upon Tyne Corp [1940] 2 KB 204) to police closure of a street following an incident.
Secondly, if one focuses attention on acts for which fault might be alleged to attach to the FSA, the FSA will be liable in the unlikely event of a misfeasance in public office or in the event that its conduct amounts to a breach of the Human Rights Act Convention rights.
But there is no basis in FSMA for treating the FSA as having a wider statutory or common law responsibility even to innocent third parties.
Thus, thirdly, if the FSA were to fail to take appropriate steps to shut down unlawfully conducted activity, innocent third persons might suffer loss, but they could have no claim against the FSA.
Fourthly, even in a case of positive action taken by the FSA affecting innocent third persons, the general protective duties and objectives of FSMA could not involve under FSMA or at common law any assumption of responsibility towards or any liability for breach of a duty of care enforceable at the instance of third persons: see e.g. Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 1 WLR 1057, Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] 1 AC 853 and Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28, [2007] 1 AC 181.
Paragraph 19 of Schedule 1 to FSMA in any event provides expressly that they do not.
The present appeal concerns the fourth situation, in that the FSA was taking positive action to shut down what it alleged to be unlawful activity.
An interim injunction obtained in such a situation may cause innocent third persons loss.
They clearly could not complain about loss arising from an unlawful scheme being closed down.
But, if the scheme proved after all to be lawful, they might be seen to have sustained loss which they should not in a perfect world have suffered.
However, the FSA has powers under Part IV of FSMA allowing it without any application to the court to freeze the assets of an authorised person, in a way which could equally cause loss to innocent third persons.
If the exercise of a Part IV freezing power should subsequently transpire to have been inappropriate, no basis exists upon which such third persons could claim to be indemnified in respect of such loss.
Indeed paragraph 19 of Schedule 1 to FSMA would again clearly exclude the FSA from any risk of liability: see paragraph 12 above.
There would be an apparent imbalance, if the FSA were required to accept potential liability under a cross undertaking when it addresses the activities of unauthorised persons and has therefore to seek the courts endorsement of its stance in order for a freezing order to issue.
The Respondent sought also to gain assistance from paragraph 19 of Schedule 1 to FSMA.
A cross undertaking is colloquially described as being in damages, and liability under it is measured on ordinary damages principles.
But it is clear that it does not involve a liability for damages in a conventional legal sense.
The cross undertaking is to the court.
Liability under it, when the court in its discretion determines that the cross undertaking should be enforced, is in a sum assessed by the court, albeit using similar principles to those by which it measures damages.
Accordingly, it is common ground that paragraph 19 cannot directly apply to prevent the FSA from being required to give, or from enforcement of, a cross undertaking.
On the other hand, as the Court was told without contradiction, the enactment of paragraph 19 was not based and did not follow upon any consideration of the possibility that the FSA might be required to give a cross undertaking before being granted an injunction under section 380(3).
That possibility was, so far as appears, not in the legislators mind, one way or the other.
In Lloyd Wright (paragraph 27 above), Morritt J considered in a context paralleling the present a predecessor to paragraph 19 which existed in the form of section 187(3) of the Financial Services Act 1986.
He rejected a submission of the Securities and Investment Board that this prevented the court from requiring a cross undertaking.
But he went on (p 214h): Rather, it seems to me to be a clear pointer in the exercise of the discretion, which the court undoubtedly has, to indicate that no such cross undertaking should be required where the designated agency is, in fact, seeking to discharge functions exercisable pursuant to a delegation under the 1986 Act.
It seems to me that that is a matter which, in the exercise of my discretion, I should take into account in concluding that no cross undertaking should be required.
It is unnecessary on this appeal to express any view on the correctness of treating paragraph 19 as a clear pointer in a context where that paragraph cannot ex hypothesi apply.
In the light of the factors identified in paragraphs 36 to 38, there is on any view no reason to move away from the starting position, which is that the FSA should not have to give any cross undertaking in order to obtain an injunction under section 380(3).
HHJ Hodge QC considered that such a cross undertaking in favour of innocent third parties should be required as a matter of course, from the moment when any freezing order was first granted on an ex parte basis (para 66).
The Court of Appeal was in my view right to disagree and substituted for the undertaking as originally given an undertaking in the limited form (i.e. excluding the italicised words) indicated in paragraphs 6 and 7 above.
I would therefore dismiss this appeal.
Further observations
A further word is appropriate regarding the positions at the initial stage, where injunctive relief is sought on an ex parte (or without notice) basis, and at the later stage, when the matter comes before the court on notice to both parties as well perhaps as to third persons, such as Barclays.
Normally, there would only be a very short period before an on notice hearing could occur, and normally one would expect any third person affected by an injunction to become aware of this risk, even if not given formal notice of the injunction by the FSA.
Loss could in theory be sustained by either a defendant or a third person in that short period.
But any cross undertaking required as a condition of the grant of interim injunctive relief on a without notice basis would have to be in general and unqualified terms, and therefore be of the kind which could cause most concern to a regulator worried about risk and resource implications.
The present appeal concerns the position of the FSA at the without notice and on notice stages.
The starting position at each stage should in my view be that no cross undertaking should be required unless circumstances appear which justify a different position.
Any inhibition on the part of a public authority about giving an undertaking is likely to be greater, rather than less, at a without notice stage.
To require a blanket undertaking in favour of third parties at that stage would provide no incentive to third parties to come forward and identify any real concerns that they might have.
The better approach is in my view to regard the starting position, that no cross undertaking should be required, as being as applicable at the without notice stage as it is at the on notice stage.
A defendant or a third party who is or fears being adversely affected by an injunction obtained under section 380(3) can and should be expected to come forward, to explain the loss feared and to apply for any continuation of the injunction to be made conditional on such cross undertaking, if any, as the court may conclude should in all fairness be required to meet this situation.
Finally, whenever the court is considering whether to order an interim injunction without any cross undertaking, it should bear in mind that this will mean that the defendant or an innocent third party may as a result suffer loss which will be uncompensated, even though the injunction later proves to have been unjustified.
This consideration was rightly identified by Neuberger J in Miller Brewing at paragraph 40.
Conclusion
For the reasons given in paragraphs 1 to 41, I would dismiss this appeal.
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On 20 December 2010, the Financial Services Authority (FSA), acting in pursuance of its public duties under sections 3 to 6 of the Financial Services and Markets Act 2000 (FSMA), made a without notice application for a freezing injunction against Sinaloa Gold and PH Capital Invest under section 380(3) of FSMA.
The FSA alleged that both companies were involved in promoting the sale of shares in Sinaloa without proper authorisation and an approved prospectus and that PH Capital Invest had breached FSMA in various other respects.
Schedule B to the injunction stated that the FSA gave no cross undertaking in damages.
However, under Schedule B, the FSA undertook to cover both costs and losses incurred by third parties as a result of the injunction.
The undertaking in respect of third party losses was inadvertent and the FSA applied to have it removed.
Barclays with whom Sinaloa Gold plc had six bank accounts intervened to oppose this application.
The application to have the undertaking removed was refused in the High Court.
However, this decision was reversed in the Court of Appeal.
The effect of the Court of Appeals decision was to preserve the undertaking in respect of third party costs but eliminate the undertaking in respect of third party losses.
Barclays appealed to the Supreme Court.
The Supreme Court unanimously dismisses the appeal.
There is no general rule that an authority such as the FSA, acting pursuant to a public law duty, should be required to give a cross undertaking in respect of losses incurred by third parties.
Further, there are no particular circumstances which mean that the FSA should be required to give such a cross undertaking on the facts of this case.
The judgment of the Court is given by Lord Mance.
Whilst there is no continuing justification for the former blanket practice whereby the Crown was not required to give a cross undertaking in any circumstances, a general distinction still exists between private claims and law enforcement actions [33].
In a private claim, a claimant seeking an injunction will ordinarily be expected to give a cross undertaking in damages to the defendant(s) and to third parties.
This can be justified on the basis that such a claimant should be prepared to back its own interest with its own assets against the event that it obtains the injunction unjustifiably with the result that harm is caused to the interest of another [30].
However, different considerations arise in relation to law enforcement actions, where a public authority is seeking to enforce the law in the interests of the public generally, often in pursuance of a public duty to do so, and enjoys only the resources which have been assigned to it for its functions [31].
In these circumstances public authorities cannot generally be expected to back their legal actions with the public funds with which they are entrusted for the purpose of undertaking their functions [33].
Such a requirement may inhibit public officials from fulfilling their public duties for fear of exposing public funds to claims for compensation.
The position regarding the giving of any cross undertaking cannot differ according to whether it is intended to protect a defendant or a third party [14, 34].
In both instances the cross undertaking covers the loss caused by the grant of an injunction in circumstances where the person incurring the loss is essentially innocent [34].
A pragmatic distinction can be drawn between an undertaking in respect of costs and an undertaking in damages.
Public authorities should be able to enforce the law without being inhibited by the fear of cross claims and the exposure of their resources, and this applies with particular force to any open ended undertaking in respect of third party loss.
It does not apply with the same force to a more limited cross undertaking in respect of third party costs [35].
There are no special circumstances why the FSA should be required to give a cross undertaking in respect of losses suffered by third parties on the particular facts of this case.
In a case such as the instant one, where the FSA takes positive action to shut down allegedly unlawful activity, it does not in the course of so doing assume any responsibility towards or liability for breach of a duty of care enforceable at the instance of third parties [37 38].
The FSA enjoys a further power to freeze the assets of a permitted person, without making any application to a court, under Part IV of the FSMA.
In the exercise of its powers under Part IV the FSA is excluded from any risk of liability by virtue of paragraph 19 of Schedule 1 to FSMA.
There would therefore be an apparent imbalance were the FSA required to accept potential liability in cases such as the instant one concerned with the activities of unauthorised persons [37 38].
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The Scottish Parliament was established by section 1 of the Scotland Act 1998.
It was opened on 1 July 1999.
Section 29(1) of the Act provides: An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament.
This provision lies at the heart of the scheme of devolution to which the Act gives effect.
Section 29 has to be read together with Schedule 4 which protects certain enactments from modification, and then with section 30 and Schedule 5 which defines reserved matters.
These are matters reserved to the UK Parliament, and which are therefore excluded from the legislative competence of the Scottish Parliament.
The area of competence that is identified by this group of provisions forms the basis for a series of sections that are designed to ensure that the Scottish Parliament confines itself to the defined areas of competence: section 31 (scrutiny of Bills before introduction), section 32 (the responsibility of the Presiding Officer), section 33 (reference of Bills to the Judicial Committee now the UK Supreme Court for scrutiny), section 35 (the power of the Secretary of State to intervene in certain cases) and sections 98 to 103 and Schedule 6 (post enactment adjudication of issues about legislative competence by the courts).
The White Paper, Scotlands Parliament, Cm 3658 (1997), para 4.3, contrasted this scheme of devolution with that which had been laid down by the Scotland Act 1978, which was repealed because less than 40 per cent of the persons entitled to vote in the referendum which was required by section 85 of that Act voted in favour of it.
Under that Act legislative competence was to be transferred to the Scottish Assembly in specifically defined particular groups, further defined by reference to a long list of existing statutes.
That scheme, which would have required frequent updating by the UK Parliament, was seen to be incompatible with the aim that the White Paper expressed of ensuring maximum clarity and stability.
While the scheme in the 1998 Act may not strike one as a model of clarity, it does appear so far to have achieved the aim of stability.
Of course, harmony between the governments at Westminster and Holyrood until the May 2007 elections to the Scottish Parliament contributed to this process, as did frequent use of legislative consent motions (also known as Sewel motions, named after Lord Sewel, Parliamentary Under Secretary of State for Scotland during the passage of the Scotland Act 1998) passed by the Scottish Parliament agreeing that the UK Parliament might pass legislation on a devolved issue extending to Scotland.
But it is a remarkable fact that the myriad of devolution issues that have come before the courts for determination since May 1999 have been devoted almost exclusively to the exercise of functions in criminal cases by the Lord Advocate.
Logan v Harrower [2008] HCJAC 61, 2008 SLT 1049 was the first case that brought the extent of the legislative competence of the Scottish Parliament under judicial scrutiny on grounds other than compliance with Convention rights.
As in the case of the appeals that are now before this court, it arose of out of a prosecution for contraventions of section 103(1)(b) of the Road Traffic Act 1988.
There was no appeal against the appeal courts determination to the Judicial Committee.
The question whether an Act of the Scottish Parliament is within the legislative competence of the Parliament is a devolution issue: Schedule 6, para 1(a).
So it is for the courts to decide whether an Act which is challenged is within or outside competence.
But the judicial function in this regard has been carefully structured.
It is not for the judges to say whether legislation on any particular issue is better made by the Scottish Parliament at Holyrood or by the UK Parliament at Westminster.
How that issue is to be determined has already been addressed by the legislators.
It must be decided according to particular rules that the Scotland Act 1998 has laid down.
But those rules, just like any other rules, have to be interpreted.
That is the courts function.
It is for the court to say what the rules mean and how, in a case such as this, they must be applied in order to resolve the issue whether the measure in question was within competence.
These proceedings
Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the offence of driving while disqualified under section 103(1)(b) of the Road Traffic Act 1988 may be prosecuted in Scotland either summarily or on indictment.
As originally enacted, the maximum punishment for that offence if prosecuted summarily in Scotland was six months or the statutory maximum fine or both.
If it was prosecuted on indictment in Scotland the maximum sentence was twelve months or a fine or both.
By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, the provisions of which I shall examine in more detail later, the Scottish Parliament increased to twelve months the maximum sentence that might be imposed for this offence under the 1998 Act by the sheriff sitting summarily.
That section came into force on 10 December 2007: the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Commencement No 2 and Transitional Provisions and Savings) Order 2007 (SSI 2007/479).
Sean Martin was charged on summary complaint at Oban with a co accused named Rodney Cuthill.
The complaint contained fourteen charges, of which charges 1, 2, 8 and 9 were directed against Martin.
In charges 1 and 8 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988, and that he committed those offences while on bail.
On 14 December 2007 he pled guilty to charges 1 and 8 and to the other two charges.
On 17 December 2007 he was sentenced to 12 months imprisonment on charges 1 and 8, of which four months was attributed to the fact that he committed the offences while on bail.
On 12 March 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the ground that the relevant provisions of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 were beyond the legislative competence of the Scottish Parliament.
On 28 March 2008 he was granted interim liberation pending the determination of his Bill of Suspension.
Ross Miller was charged on summary complaint at Stirling.
The complaint contained three charges.
In charge 1 it was alleged that he drove a motor vehicle on a road while disqualified, contrary to section 103(1)(b) of the Road Traffic Act 1988.
On 24 April 2008 he pled guilty to charge 1 and to one of the other charges and was remanded in custody.
On 14 May 2008 he was sentenced to seven months imprisonment on charge 1, back dated to 24 April 2008.
On 20 June 2008 he presented a Bill of Suspension to the High Court of Justiciary in which he sought suspension of the sentence of imprisonment on the same grounds as Martin.
He applied for interim liberation, but on 3 July 2008 he withdrew that application.
Unlike Martin, he has now served his sentence.
The two Bills of Suspension came before the appeal court for a hearing on 6 January 2009.
Devolution minutes identifying the devolution issue in these proceedings had also been lodged.
The court saw no reason for distinguishing these cases from its previous decision in Logan v Harrower, in which it held that the increase in the sentencing power of the sheriff sitting summarily by section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 was within the legislative competence of the Scottish Parliament.
As nothing had been said to suggest that that decision was wrong, it refused to pass the Bills.
It also refused the devolution minutes.
On 30 January and 24 February 2009 respectively it granted the appellants leave to appeal to this court.
As this narrative shows, the only reasoned decision on this issue by the appeal court is to be found in Logan v Harrower.
In para 24 of that case, Lord Nimmo Smith, delivering the opinion of the court, said: We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences.
As provided by para 3 in part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the Road Traffic Offenders Act 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45.
The legislative competence rules
The scheme of devolution of legislative power which the Scotland Act 1998 sets out recognises that it was not possible, if a workable system was to be created, for reserved and devolved areas to be divided into precisely defined, watertight compartments.
Some degree of overlap was inevitable, for the reasons explained by Lord Rodger in his discussion of the division of responsibility on matters of policy; see paras [73] and [74].
This is a familiar phenomenon in the case of federal systems such as those in Canada and Australia, where legislative competence is divided between the Dominion and the Provinces or the Commonwealth and the States.
In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna (1947) LR 74 Indian Appeals 23 the Judicial Committee rejected the argument that the principles which obtain in Canada and Australia had no application in India.
Lord Porter gave this explanation at p 42: It is not possible to make so clean a cut between the powers of various legislatures: they are bound to overlap from time to time.
The rule that was evolved by the Judicial Committee was to examine the statute that was impugned to ascertain its pith and substance, or its true nature and character, to determine whether it was legislation with respect to matters that were in the prohibited or permitted sphere.
The phrase pith and substance was first used by Lord Watson in Union Colliery Co of British Columbia Ltd v Bryden [1899] AC 580, 587.
The phrase true nature and character was first used in Russell v The Queen (1882) 7 App Cas 829, 839 840.
The principles that these phrases embody are sometimes referred to, by a word that went out of fashion in mediaeval times, as the respection doctrine.
In Prafulla Kumar Mukherjee v Bank of Commerce Ltd, Khulna having referred to the rule and found that it applied to Indian as well as Dominion legislation, Lord Porter went on to say this at p 43: No doubt experience of past difficulties has made the provisions of the Indian Act more exact in some particulars .
But the overlapping of subject matter is not avoided by substituting three lists for two, or even by arranging for a hierarchy of jurisdictions.
Subjects must still overlap, and where they do the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found.
If these questions could not be asked, much beneficent legislation would be stifled at birth, and many of the subjects entrusted to provincial legislation could never effectively be dealt with.
The same point had already been made by Lord Atkin in Gallagher v Lynn [1937] AC 863, which was an appeal from Northern Ireland.
Section 4 of the Government of Ireland Act 1920 provided that the Parliament of Northern Ireland had power to make laws for the peace, order and good government of Northern Ireland, but not to make laws in respect of, among other things, trade with any place out of Northern Ireland.
He held that an Act regulating the supply of milk in Northern Ireland which imposed controls on every person who within Northern Ireland sold or exposed for sale milk, whether produced within or without the territory of Northern Ireland, was a law for the peace, order and good government of Northern Ireland in respect of precautions taken to secured the health of its inhabitants, not a law in respect of trade.
At p 870, explaining what was meant by the pith and substance doctrine, he said: If, on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorized field.
The legislation must not under the guise of dealing with one matter in fact encroach upon the forbidden field.
Nor are you to look only at the object of the legislator.
An Act may have a perfectly lawful object, eg to promote the health of the inhabitants, but may seek to achieve that object by invalid methods, eg a direct prohibition of any trade with a foreign country.
The rule that was evolved and applied in these cases, among others, provides the background to the scheme that is now to be found in the Scotland Act.
It was referred to at the committee stage in the House of Lords by Lord Sewel: Hansard HL Debates (21 July 1998), vol 592, col 818 et seq.
The scheme seeks to give effect to the rule.
Lord Sewel, recognising that a degree of trespass into reserved areas was inevitable, said that it was intended that any argument as to whether a provision in an Act of the Scottish Parliament relates to a reserved matter must be decided by reference to its pith and substance or its purpose and if its purpose is a devolved one it is not to be outside legislative competence merely because it affects a reserved matter: col 819.
The question whether that aim has been achieved must be determined by examining the provisions of the Scotland Act in which the scheme is laid out.
While the phrase pith and substance was used while these provisions were being debated, it does not appear in any of them.
The idea has informed the statutory language, and the rules to which the court must give effect are those laid down by the statute.
As to what they mean, the Scotland Act provides its own dictionary.
Section 29, which must now be quoted in full, provides as follows: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply (a) it would form part of the law of a country or territory other than Scotland, or confer or remove functions exercisable otherwise than in or as regards Scotland, (b) it relates to reserved matters, (c) it is in breach of the restrictions in Schedule 4, (d) it is incompatible with any of the Convention rights or with Community law, (e) it would remove the Lord Advocate from his position as head of the systems of criminal prosecution and investigation of deaths in Scotland. (3) For the purposes of this section, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise.
The paragraphs of section 29(2) that require to be examined in this case are paras (b) and (c).
The first question is whether section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 relates to a reserved matter.
Reserved matters are the matters reserved to Westminster by section 30(1) of the Scotland Act, which gives effect to the list of matters in Schedule 5.
Para 1 of Part II of Schedule 5 provides that the matters to which any of the sections in the Part apply are reserved matters for the purposes of the Act.
Head E Transport lists among the subject matter of section E1, which applies to Road Transport, the following: (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988.
Section 45 of the 2007 Act does not refer expressly to any of the provisions of the Road Traffic Act 1988 or the Road Traffic Offenders Act 1988.
But, as it applies to offences under enactments passed before the 2007 Act generally, it must be taken to refer to them by implication.
Their subject matter is a reserved matter.
The question whether a provision relates to a reserved matter in terms of section 29(2)(b) is to be determined by reference to the purpose of the provision, applying the rule set out in section 29(3).
This rule lays down the primary test of what is meant by purpose.
But it is necessary to have regard also to section 29(4) which deals with a special category of overlap between reserved matters and matters which are not reserved that is in point in this case.
This is because section 126(5) of the Scotland Act provides that references in the Act to Scots criminal law include criminal offences, jurisdiction, evidence, procedure and penalties and the treatment of offenders, and because section 45 of the 2007 Act deals with what the head note to Part 3 of that Act refers to as penalties.
The list of reserved matters has been drawn up by reference to different aspects of executive or governmental responsibility.
But the spheres of activity embraced by Scots private law and Scots criminal law, which are not reserved, do not respect those boundaries.
They extend across all of them.
The regulation of both devolved matters and reserved matters within Scotland is likely to involve questions of Scots private law and Scots criminal law.
Section 29(4) does not apply if, applying the test laid down by section 29(2), the provision in question has already been found otherwise to relate to a reserved matter.
That is the effect of para (a) of this subsection.
It does apply, however, if it makes modifications of Scots private law or Scots criminal law as it applies to reserved matters: para (b).
Here too the boundary between what is reserved and what is not reserved is to be determined by applying a purpose test.
The key word here is consistently.
If the purpose is to make the relevant rule of Scots criminal law apply consistently to reserved matters and otherwise, it will pass the test.
The provision will not then fall to be treated as relating to a reserved matter, and thus outside the legislative competence, because it is caught by section 29(2)(b).
The question whether the provision is in breach of any of the restrictions in Schedule 4 must also be addressed in this case.
The paragraphs in that Schedule that need to be considered are paras 2 and 3, which so far as relevant provide as follows: 2 (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent to that the rule in question is special to a reserved matter 3 (1) Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision. (2) In determining for the purposes of sub paragraph (1)(b) what is necessary to give effect to the purpose of a provision, any power to make laws other than the power of the Parliament is to be disregarded.
There is obviously some duplication between section 29 and the provisions of this Schedule.
At first sight, paragraph 2(1) declares what the reader already knows, having studied section 29(4).
But, in contrast to section 29(4) which deals with the question whether a provision relates to a reserved matter, para 2(1) refers to the law on reserved matters.
The meaning of this expression is set out in para 2(2)(a).
The starting point is that the law on reserved matters as a whole is protected from modification by the Scottish Parliament.
This appears to withdraw the protection that is given by section 29(4) to modifications of a rule of Scots private law or Scots criminal law as it applies to reserved matters whose purpose was to make the law apply consistently to reserved matters and otherwise.
But paragraph 2(1) is itself qualified by the opening words of paragraph 2(3).
The words is special to a reserved matter are the key words in this subparagraph.
The contrast which they suggest is between a rule of Scots criminal law which is special to a reserved matter on the one hand and one which is general in its application on the other because it extends to both reserved matters and matters which have not been reserved.
There is a strong family likeness between the two tests, as Lord Walker says: see para [54].
But a modification which survives the test in section 29(4) will have to pass the tests in Schedule 4: section 29(2)(c).
If it passes the test in paragraph 2(3), paragraph 2(1) will not apply.
It will have no need of the protection that is given by paragraph 3 to modifications that fall within the scope of that paragraph.
This analysis shows that the questions which lie at the heart of this case are: (1) whether the purpose of section 45 was to make a modification to Scots criminal law as defined in section 126(5); (2) if so, whether its purpose was to make the law apply consistently to reserved matters and otherwise; and (3) if it passes those tests, whether the rule that it sought to modify was special to a reserved matter within the meaning of paragraph 2(3) of Schedule 4.
Section 45 of the 2007 Act
Section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is one of a group of sections dealing with sentencing powers which appear in Part 3 of the Act under the heading Penalties.
Two sections require to be noticed in addition to section 45.
First there is section 43, which deals with common law offences.
It amends section 5 of the Criminal Procedure (Scotland) Act 1995, which deals with the sheriffs summary jurisdiction and powers, in two respects: in section 5(2)(d), the power to impose imprisonment is raised from any period not exceeding three months to twelve; and section 5(3) is repealed.
Secondly, there is section 44, which increases the maximum sentence of imprisonment for a list of particular summary only statutory offences which had attracted a maximum sentence in excess of the previous common law maximum but were below the new maximum of twelve months for offences dealt with summarily.
Section 45 is headed Other statutory offences.
It is not necessary for the purposes of this case to quote it in full.
The provisions that are relevant provide as follows: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1). (3) Without prejudice to subsections (1) and (2), the Scottish Ministers may by order amend the specification of a maximum term of imprisonment in a relevant penalty provision so as to specify, in relation to the relevant offence to which it applies, that the maximum term of imprisonment to which a person is liable on summary conviction is 12 months. (6) In this section, a relevant offence is an offence under a relevant enactment or instrument which is (a) triable either on indictment or summary complaint, and (b) punishable on summary conviction with a maximum term of imprisonment of less than 12 months. (7) In this section a relevant enactment is an Act passed before this Act It is common ground that the Road Traffic Offenders Act 1988 is a relevant enactment and that a contravention of section 103(1)(b) of the Road Traffic Act 1988 is a relevant offence for the purposes of this section.
What was the purpose of section 45?
Section 29(3) of the Scotland Act provides that, when consideration is being given to the purpose of the provision, regard is to be had to its effect in all the circumstances.
One of the circumstances to which it is proper to have regard is the situation before the provision was enacted, which it was designed to address.
Reports to and papers issued by the Scottish Ministers prior to the introduction of the Bill, explanatory notes to the Bill, the policy memorandum that accompanied it and statements by Ministers during the proceedings in the Scottish Parliament may all be taken into account in this assessment.
The sentencing powers of the sheriff, sitting as a court of summary jurisdiction, are regulated by statute.
Section 7(5) of the Criminal Procedure (Scotland) Act 1995 provides that a stipendiary magistrate shall have the summary criminal jurisdiction and powers of a sheriff.
Prior to the commencement of the Criminal Proceedings etc (Reform) (Scotland) Act 2007, section 5(2) of the 1995 Act provided inter alia as follows: The sheriff shall, without prejudice to any other or wider powers conferred by statute, have power on convicting any person of a common law offence . (d) to impose imprisonment, for any period not exceeding three months.
Section 5(3) of the 1995 Act provided that the maximum sentence for a second or subsequent offence involving violence or dishonesty was six months.
The effect of these provisions was that the power of the sheriff or stipendiary magistrate to impose a sentence of imprisonment was limited to a maximum of three months in the case of common law crimes (except in the case of certain types of repeat offences) and, in the case of statutory offences, to the maximum laid down by the relevant statute.
In the case of a contravention of section 103(1)(b) of the Road Traffic Act 1988, section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provided that the maximum if the offence was prosecuted summarily in Scotland was six months.
In November 2001 the Minister of Justice appointed a committee under Sheriff Principal John McInnes QC to review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and the district courts as they related to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland.
In the report which it presented to Ministers in January 2004 the Summary Justice Review Committee identified a need to relieve pressure on the higher courts.
This implied a need to move cases from the High Court of Justiciary to the sheriff and jury court, and in turn a need to move cases from the sheriff and jury court to summary procedure.
In para 7.87 of its report it recommended that, to equip summary judges with the disposals that would be necessary to deal with cases that would be heard summarily in the future, the criminal jurisdiction of judges sitting summarily should be increased to a maximum of twelve months detention or imprisonment or a 20,000 fine.
Having consulted on this recommendation among other proposals, the Scottish Ministers decided to accept it.
In March 2005 the Minister for Justice published Smarter Justice, Safer Communities Summary Justice Reform Next Steps (Scottish Executive, March 2005).
In para 4.10 reference was made to the recommendations that the Committee had made which were designed to promote case handling at a more appropriate level: Recognising the pressures on the solemn system, the Committee recommended that the sentencing powers of a sheriff sitting without a jury should be raised to one year in custody or a fine of 20,000, enabling the transfer of the least serious solemn business to the summary courts In para 4.50 it was stated that it was proposed to implement the reports recommendations in relation to the custodial sentencing powers of sheriffs sitting summarily.
The Criminal Proceedings etc (Reform) (Scotland) Bill was introduced into the Scottish Parliament in February 2006.
In para 186 of the explanatory notes to the Bill it was said of section 35 (which became section 45 when the Bill was passed) that it brought the maximum summary prison sentences for certain statutory offences into line with the new maximum sentence for common law offences set out in what is now section 43 of the Act.
In the Policy Memorandum which accompanied the Bill it was stated in para 6 that the Bill made provision in eight main policy areas, including: increases in the criminal sentencing powers of the summary courts, ensuring that those courts can deal with an appropriate range of cases in terms of both severity and caseload, and do so more quickly than is currently the case.
In para 206 it was stated that the Executive believed that professional sheriffs should be able to deal with a wider range of cases under summary procedure than they were currently entitled to, including some that would attract a higher penalty.
The theme that is apparent from these earlier documents was picked up by the Justice 1 Committee in its report on the general principles of the Bill: Justice 1, 10th Report 2006, Stage 1 Report on Criminal Proceedings etc (Reform) (Scotland) Bill, 5th July 2006.
In para 293 of its report the Committee said that one of the principal drivers for the reforms proposed by the Bill was that justice should be dispensed at the appropriate level and that this meant, among other things, the granting of significantly increased sentencing powers to sheriffs sitting without a jury.
In para 294 it said that it broadly accepted that there was merit in some cases being dealt with at lower levels of the judicial system than was the case at present.
Introducing the stage 1 debate in the Parliament on 14 September 2006, the Minister for Justice said that the Bill made a number of changes to the detailed law of criminal procedure, that each of these changes played its part in speeding up the system as a whole, that the Bill would ensure that increased sentencing powers for sheriffs would ease the pressure on the higher courts and that the bill was to be regarded as part of the executives wider work to reform the summary justice system: Scottish Parliament Official Report, cols 27664 6.
In my opinion this material shows conclusively that the purpose of section
45 of the 2007 Act was to contribute to the reform of the summary justice system by reducing pressure on the higher courts.
An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process.
The jurisdiction of the sheriff sitting summarily is defined by reference to the penalties that the sheriff can impose.
These are pre eminently matters of Scots criminal law: see section 126(5).
As it was to a rule of Scots criminal law that the provision was directed, I would hold that it does not relate to a reserved matter within the meaning of section 29(2)(b).
Was it to make the law apply consistently?
Section 45 of the 2007 Act forms part of a group of sections, all directed to a reform or modification of the sentencing powers of the sheriff sitting summarily.
The leading provision is section 43, which increased the maximum sentence for common law offences from three (or, in the case of some repeat offences, six) months to twelve months.
It is obvious however that to have left the matter there would have led to an imbalance in the system between how common law offences were to be dealt with on the one hand and how statutory offences were to be dealt with on the other.
The reform that this would have achieved would have been incomplete and confusing.
To achieve its object it had to be extended across the board to statutory offences as well.
To draw a line between statutory offences relating to reserved matters and those relating to matters that were not reserved would have been even more confusing.
When they were dealing with an offence created by a United Kingdom statute, prosecutors and sheriffs would have had to check in each case whether they were on the right side of the line.
Statutory offences of all kind form a large part of the diet of the summary courts.
To achieve a complete and worthwhile reform of the summary justice system a modification of the sentencing power across the whole range of statutory offences was required.
In my opinion the purpose of the modification in section 45 must be taken to have been to make the law relating to the increased sentencing power of the sheriff sitting summarily apply consistently to reserved matters and otherwise.
I would hold that section 45 is not to be treated as relating to a reserved matter under section 29(4).
Is the rule special to a reserved matter?
The question that must now be addressed is that set out in para 2(3) of Schedule 4: is the rule of Scots criminal law that the Act seeks to modify special to a reserved matter? To answer it, one must first identify the rule of Scots criminal law that is being modified.
Then one must ask whether that rule is special to a reserved matter.
Identifying the rule is a crucial step towards reaching the right answer to the question whether the modification that is proposed is within the competence of the Scottish Parliament or must be dealt with at Westminster.
I agree with Lord Rodger that, unlike section 29(3) and (4), para 2 of the Schedule concentrates on the rule of law that is being modified by the enactment and makes no mention of the purpose of the modification: see para [122].
But the purpose of the enactment may nevertheless be referred to in order to identify the rule of law that is being modified.
I think that it is clear that any modification of the maximum punishment
that can be imposed for the offences that the road traffic legislation has created must be held to be a matter for the United Kingdom Parliament at Westminster.
The rule of Scots law as to the maximum term of imprisonment that can be imposed would fall to be treated as a rule that was special to a reserved matter.
So would any other limits on the extent of the penalties or as to the scope of offences that the Road Traffic legislation lays down.
The Calman Report, Serving Scotland Better: Scotland and the United Kingdom in the 21st Century, June 2009, considered in paras 5.167 181 certain aspects of road traffic regulation including drink driving limits and speed limits.
As the authors of the report were right to recognise, under the current legislation any alteration to those limits that might be thought to be acceptable in Scotland would not be within the legislative competence of the Scottish Parliament.
Some concern was expressed during the progress of the Bill as to whether this reform might lead to what was referred to as sentence drift a tendency on the part of sheriffs to impose higher sentences for these offences than they would previously have regarded as appropriate.
But it is plain that this was not what the reform was intended to do, and there is no evidence that this has in fact happened.
So I do not think that it would right to say that the purpose of section 45 was to achieve an overall increase in the sentences that sheriffs were imposing.
Had that been the purpose, it would have gone some way to identifying the rule of law that was being modified.
As it is, the rule cannot be identified by that route.
Section 33 of and Part I of Schedule 2 to the Road Traffic Offenders Act 1988 provide that the maximum sentence of imprisonment for the offence under section 103(1)(b) of the Road Traffic Act 1988 if prosecuted summarily in Scotland is six months and that it is twelve months if prosecuted in Scotland on indictment.
They contain, in effect, two rules of Scots criminal law.
One is a rule as to the overall maximum sentence, which is twelve months imprisonment.
That, plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter.
The other is a rule about Scots criminal jurisdiction and procedure, which is not reserved.
It is that rule which determines the procedure under which the maximum sentence can be imposed.
The purpose of the modification that section 45 makes is to enable more statutory offences to be prosecuted summarily.
The maximum sentence of imprisonment for the offence if prosecuted in Scotland remains twelve months.
The modification relates to the procedure which determines whether the sheriff has jurisdiction to impose the maximum sentence.
It extends the power that is given to him when he is sitting summarily.
It seems to me therefore that the rule of Scots law that is being modified is the rule of procedure, not the rule of Scots law as to the maximum sentence for the offence.
The rule of procedure is a rule that applies generally to the way cases are dealt with in the sheriff court.
It is not special to the Road Traffic Offenders Act 1988.
The purpose of para 2(3) of Schedule 4 to the 1998 Act, as I understand it, is to avoid the fragmentation of rules of Scots criminal law which are of general application into some parts which are within the Scottish Parliaments competence and some parts which are not.
It is, of course, the case that the difference between the maximum sentence that could be imposed by a sheriff sitting summarily and that which could be imposed by him in solemn proceedings was prescribed in Schedule 2 to the Road Traffic Offenders Act 1988.
But in doing so the Schedule was basing itself on a distinction between two forms of Scots criminal procedure which apply generally.
I think that it was within the competence of the Scottish Parliament to extend its general reform of that procedure to the forms of procedure referred in this and other statutes that deal with reserved matters, otherwise fragmentation would occur.
I am not confident that it helps to reason by way of examples.
Each case must be taken on its own merits.
In case of doubt, the words to the extent only suggest that a generous application of para 2(3) which favours competence is to be preferred, as opposed to one which applies it narrowly.
And the key to the decision in this case lies in identifying the rule in question, which is achieved by examining the purpose of the provision which is under scrutiny.
One could, of course, say that Schedule 2 contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment, and that as both are reserved matters it was not open to the Scottish Parliament to alter either of them.
But that, in my opinion, would be to carry the process of analysis too far.
The word special indicates that, in cases such as this where the decision depends on the exercise of judgment, the purpose of the provision may be the best guide.
So, in agreement with Lord Walker and Lord Brown and respectful disagreement with Lord Rodger and Lord Kerr, I would hold that section 45 was not directed to a rule which was special to a reserved matter within the meaning of para 2(3) of Schedule 4, that para 2(1) of the Schedule does not apply, that it survives scrutiny under section 29(2)(c) and there is no need to refer to para 3.
Had it been necessary to refer to para 3, I would have held that section 45 of the 2007 Act was not saved by it.
On this point I disagree with the appeal court in Logan v Harrower.
A decision as to the procedure under which a sentence of more than six months could be imposed was not a modification of an incidental or consequential nature.
It was an important change in the procedure which one would expect to see set out in the body of the enactment, not in a schedule of the kind that generally deals with matters that are merely incidental or consequential on provisions found elsewhere in the enactment.
Section 104 of the Scotland Act enables Her Majesty in Council or a Minister of the Crown, with the consent of both Houses of the United Kingdom Parliament, to make such provision as is considered necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament.
As the explanatory notes to that section point out, the power to make provision consequential on legislation under paragraph 3 of Schedule 4 is very limited.
Among other things, it does not enable the Scottish Parliament to legislate otherwise than as a matter of Scots law.
It does not have power under that provision to make any consequential provisions that require to take effect elsewhere in the United Kingdom.
Examples of the use that is made of the power under section 104 are to be found in the Adults with Incapacity (Scotland) Act 2000 (Consequential Modifications) (England, Wales and Northern Ireland) Order 2005 (SI 2005/1790) and the Police, Public Order and Criminal Justice (Scotland) Act 2006 (Consequential Provisions and Modifications) Order 2007 (SI 2007/1098).
There are many others.
Lord Rodger in para [81] has mentioned some of them.
The use of section 104 is not confined to cross border matters.
The power was used in connection with the reforms introduced by the 2007 Act to make the powers to impose sanctions under the Road Traffic Offenders Act 1988 available in the justice of the peace courts that were to be established under the 2007 Act, and to make the same powers available in the district courts during the phased introduction of the justice of the peace courts: see the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (SI 2007/3480).
I agree with Lord Rodger that the scheme for adjusting the sheriffs summary criminal jurisdiction in relation to statutory offences could have been dealt with in this way, had this been thought to be necessary.
But the modification that was required in their case was to a procedural route that was already available for dealing with these offences in the sheriff court.
For the reasons that I have given I consider that the judgment that was made that the modification was within the legislative competence of the Scottish Parliament was correct, and that the use of the section 104 power was not necessary.
Conclusion
The result of this analysis is that section 45 of the 2007 Act survives scrutiny.
Endorsing what the appeal court decided in Logan v Harrower but differing from it as to the reason why the section is not in breach of the restrictions in Schedule 4, I would hold that the provision is within the legislative competence of the Scottish Parliament.
I would therefore dismiss these appeals.
Bearing in mind that the appellant Martin who is on interim liberation has not yet served the sentence that the sheriff imposed on him, I would remit both cases to the appeal court for any further orders that may be required.
Had I been in favour of allowing the appeals I would have made an order under section 102(2)(a) of the 1998 Act removing the retrospective effect of the decision that, so far as it purports to modify the penalty provision for a contravention of section 103(1)(b) of the Road Traffic Act 1988 in Part I of Schedule 2 to the Road Traffic Offenders Act 1988, section 45(2) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 is outside the competence of the Scottish Parliament.
I would also have made an order under section 103(2)(b) suspending its effect for two months to allow the defect to be corrected as it seems to me that, in a case of this kind, these two orders go hand in hand.
LORD WALKER
The Scotland Act 1998 is on any view a monumental piece of constitutional legislation.
Parliament established the Scottish Parliament and the Scottish Executive and undertook the challenging task of defining the legislative competence of the Scottish Parliament, while itself continuing as the sovereign legislature of the United Kingdom.
That task is different from defining the division of legislative power between one federal legislature and several provincial or state legislatures (as in Canada or Australia, whose constitutional difficulties the Judicial Committee of the Privy Council used to wrestle with, often to the dissatisfaction of those dominions).
The doctrine of pith and substance mentioned by Lord Hope in his judgment is probably more apt to apply to the construction of constitutions of that type.
But both have to face the difficulty of defining (necessarily in fairly general and abstract terms) permitted or prohibited areas of legislative activity.
The difficulties (viewed from the perspective of Northern Ireland) are discussed in Harry Calverts Constitutional Law in Northern Ireland, which, though written as long ago as 1968, still provides a very helpful commentary.
It shows how different forms of words have come to be recognised as indicating a more or less proximate (or direct, or crucial) connection between a proposed enactment and an area of legislative activity.
Calvert quotes (from an unidentified source), at pp 180 181, the argument of the Attorney General for Northern Ireland when Lynn v Gallagher [1937] AC 863 was before the House of Lords: The crux of this whole legislation lies in three words, the words in respect of used in section 4(1) of the Government of Ireland Act, 1920.
These three words are the apt words to indicate the true subject matter of an enactment but they are not, we submit, the apt words to indicate merely the results of an enactment.
They are possibly rather stronger than a word such as concerning, and than the phrase in relation to, but they certainly must have a different meaning, unless they may be construed contrary to the general use of language, from the word affecting.
In the British North America Act the words used are in relation to and these words in respect of do not occur in it.
We submit that these words in respect of are no weaker than the words there used.
Calvert also quotes, at p 179, Higgins J in McArthur Ltd v Queensland (1920) 28 CLR 530, 565: We have to determine in each case what is the subject of the legislation what subject is the Act with respect to what it effects not what things or operations it may indirectly affect.
These background matters must have been in the mind of those who undertook the drafting of the Scotland Act (and in particular the provisions directly relevant to these appeals).
But in the Scotland Act Parliament has gone further, and has used more finely modulated language, in trying to explain its legislative purpose as regards reserved matters.
The Court has to consider two groups of provisions, each of which has a particular nexus with reserved matters as defined in Schedule 5 of the Act.
The first group of provisions consists of section 29(2)(b) as explained and qualified by subsections (3) and (4).
The second group consists of section 29(2)(c) and Schedule 4, paras 2 and 3.
All these provisions are set out in Lord Hopes judgment (paras 16 and 20) and I need not repeat them.
But it is worth considering the manner in which reserved matters are defined in Schedule 5 (to which both groups of provisions are linked).
Schedule 5, Part I, contains general reservations: the constitution, political parties, foreign affairs, public service, defence and treason.
Part II then contains specific reservations under eleven heads (themselves elaborately subdivided and made subject to exceptions).
Although termed specific, some of these are expressed in general terms.
For instance, Head A1, Fiscal, economic and monetary policy, is as follows: Fiscal, economic and monetary policy, including the issue and circulation of money, taxes and excise duties, government borrowing and lending, control over United Kingdom public expenditure, the exchange rate and the Bank of England.
Exception Local taxes to fund local authority expenditure (for example, council tax and non domestic rates).
Many of the specific reservations in Part II are expressed as the subject matter of a particular statute (or part of a statute).
For example Head E.1, Road Transport, includes The subject matter of . (d) the Road Traffic Act 1988 and the Road Traffic Offenders Act 1988 (subject to an exception for a few sections of the Road Traffic Act 1988).
The use of the expression subject matter has been described (in an unsigned editorial in (1998) 19 Statute Law Review v) as an elegant drafting device but as having potential difficulties.
So I come back to the first group of provisions, consisting of subsection (2)(b) of section 29 as explained and qualified by subsections (3) and (4).
Its structure appears reasonably straightforward.
Section 29(2)(b) prohibits legislation by the Scottish Parliament which relates to reserved matters.
That is an expression which is familiar in this sort of context, indicating more than a loose or consequential connection, and the language of section 29(3), referring to a provisions purpose and effect, reinforces that.
Section 29(4) adds to the reach of section 29(2) (as is clear from section 29(4)(a)) as regards modifications of Scots private law, or Scots criminal law, as it applies to reserved matters.
Scots private law and Scots criminal law are widely defined in section 126 (4) and (5).
Paragraph 29(4)s default position is restrictive: the modification is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise.
Here the law in question must mean the relevant rule of Scots private law or Scots criminal law.
The second group of provisions consists of section 29(2)(c) and Schedule 4, paras 2 and 3.
Para 2(1) contains a general prohibition on modification (including amendment or repeal) of the law on reserved matters, that composite expression being defined in sub paragraph (2) by reference to the subject matter of an enactment or non statutory rule.
So reading Schedule 4, para 2(1) and (2) together with Schedule 5, Part II, Head E1(d), we see that (if those provisions stood alone) an Act of the Scottish Parliament could not modify the Road Traffic Offenders Act 1988, because the subject matter of that Act is a reserved matter.
As I understand it the Court is agreed (although not for identical reasons) that the legislation now in point, section 45 of the Criminal Proceedings etc (Reform)(Scotland) Act 2007, does not infringe section 29(2)(b) of the Scotland Act.
The Court is however divided as to the effect of section 29(2)(c).
Lord Rodger and Lord Kerr take the view that section 45 of the 2007 Act infringes section 29(2)(c) and Schedule 4, para 2 (being special to a reserved matter for the purposes of para 2(3) and not being saved by para 3, relating to incidental or consequential modifications).
I agree that para 3 is not in point.
The crucial provision is para 2(3).
But it is important, in my view, to try and see it as part of a rational and coherent scheme defining the legislative competence of the Scottish Parliament.
That is easier said than done, as the division within the Court indicates.
When I first studied this second group of provisions I got the impression that they replicated, but in different language, the effect of what I have called the first group of provisions, and that it was hard to discern the legislative scheme or purpose underlying this.
I still have difficulty with this.
But I think the answer may be that section 29(2) is dealing comprehensively with the scope of any new legislation enacted by the Scottish Parliament, whereas Schedule 4 is (as its heading indicates) concerned with the protection of some existing legislation (or some non statutory rule of law) which has a reserved matter as its subject matter.
However the statute book is already so heavily burdened that almost any new legislation is likely to modify existing legislation, and in Scotland a lot of new legislation will have the effect of modifying Scots private law or Scots criminal law.
So in most cases both groups of provisions will be in point.
Section 29(4) is concerned with a provision which makes a modification to Scots private law or Scots criminal law as it applies to reserved matters; in that case it is necessary to enquire whether its purpose is to make the law in question apply consistently to reserved matters and otherwise (that is, to non reserved matters).
Schedule 4, para 2(3) is concerned with the modification of a rule of Scots private law or Scots criminal law to the extent that the rule in question is special to a reserved matter.
There is to my mind an obvious degree of affinity between these two enactments, in that a provision intended to produce consistency in a rules application across the board (that is, to reserved matters and non reserved matters alike) is unlikely to apply to a rule which is special to a reserved matter.
Special is to be contrasted with general and a measure intended to produce consistency across the board is general by its very nature.
The two statutory tests are not identical (if Parliament had intended them to be identical it would no doubt have used the same words in each).
Nevertheless they have a strong family likeness, and it would be rather surprising if a provision came within the legislative competence of the Scottish Parliament under section 29(4) but failed on the test in Schedule 4, paragraph 2(3).
In applying each test it is necessary to identify the rule of Scots criminal law which is to be modified.
It is to be found in sections 9 and 33 of, and Schedule 2 to, the Road Traffic Offenders Act 1988, so far as they apply to an either way offence under section 103(1)(b) of the Road Traffic Act 1988 committed in Scotland.
These provisions are part of Scots criminal law, and they relate (almost by definition, having regard to the wording of Head E1(d)) to a reserved matter.
It is also necessary to identify the purpose of the provision which makes the modification, that is section 45 of the 2007 Act.
Its purpose was (as Lord Hope says in his judgment, para [31]) to contribute to the reform of the summary justice system by reducing pressure on the higher courts.
An increase in the sentencing powers of sheriffs when they were dealing with statutory offences was seen as a necessary of this process.
Similarly in Lord Rodgers view (para [105]) it was to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment.
Lord Rodger gives a very similar explanation of the purpose of section 45 in para [113] of his judgment.
In my opinion this statutory purpose includes achieving consistency in the sheriffs sentencing powers, on summary conviction, as between reserved and non reserved matters.
Lord Rodger accepts this in para [116] of his judgment, but reaches a different conclusion on the similar point (not, I accept, exactly the same point) arising under Schedule 4, paragraph 2(3).
I would accept that on my interpretation both section 29(4) and Schedule 4, para 2(3) may produce some difficult borderline cases, and some results which might appear anomalous.
Perhaps they would do so on any interpretation, since in the Scotland Act Parliament was attempting to define legislative competence across the whole broad expanse of what are now regarded as the concerns of government.
But (with great respect to the contrary views of Lord Rodger and Lord Kerr) I do not see this as a difficult borderline case.
The relevant rule of Scots criminal law to be modified is not that driving while disqualified is a criminal offence, nor that it is a criminal offence punishable by imprisonment, nor that the maximum term of imprisonment is 12 months.
All that has been enacted by the Westminster Parliament, and is left untouched.
The rule to be modified is whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed.
That is to my mind a general matter relating to the Scottish system of criminal justice, and is not something special to the reserved matter of road transport.
For these reasons, and for the fuller reasons in the judgment of Lord Hope, while respecting the closely argued contrary views of the minority, I agree with Lord Hope and Lord Brown that the appeals should be dismissed and the cases remitted to the Appeal Court for any further orders that may be required.
LORD BROWN
Section 33 of and Part 1 of Schedule 2 to the Road Traffic Offenders Act 1988 (the RTOA), as originally enacted, provided that the offence of driving while disqualified (the offence) under section 103(1)(b) of the Road Traffic Act 1988 (the RTA) could be prosecuted in Scotland either summarily or on indictment; if summarily, the maximum punishment was six months imprisonment (and/or a fine); if on indictment, twelve months (and/or a fine).
The RTOA and the RTA are reserved matters.
By section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) the Scottish Parliament purported to increase from six months to twelve months the maximum sentence that could be imposed for the offence by the sheriff sitting summarily. (Although immaterial to this appeal, it may be noted that in England and Wales the offence was, and remains, triable summarily only and subject to a maximum sentence of six months imprisonment.)
The sole issue for determination on this devolution appeal is whether section 45 of the 2007 Act was within the Scottish Parliaments legislative competence within the meaning of section 29 of the Scotland Act 1998 (the 1998 Act).
Section 29 has already been set out in full by other members of the Court and I need not repeat it.
So too the relevant paragraphs of Schedule 4 to the 1998 Act (referred to in section 29(2)(c)).
Before coming to the single point on which the Court is divided it is worth noting the following basic matters.
First, that section 45 of the 2007 Act, the enactment impugned, did not increase the maximum penalty available for the offence in Scotland: that remained at twelve months imprisonment; what changed was that the sheriff could impose this maximum sentence no less when sitting as a court of summary jurisdiction than as a court of solemn jurisdiction.
Secondly, that the essential purpose of section 45 (indeed, of sections 43 to 49 of the 2007 Act as a whole) was not to increase the penalties imposed by the Scottish courts but rather, by enlarging the sheriffs summary sentencing powers, to reallocate business within the court system to have more cases tried summarily instead of by a jury, summary trials generally being simpler, faster and cheaper than jury trials.
Thirdly, that had the 2007 Act, directed as it was to reallocating court business in this way and to standardising the sheriffs summary sentencing powers for the future, not included within its provisions modification of the RTOA and the RTA in the way described, it would have created a striking contrast between the sheriffs summary powers when dealing with reserved matters and those available to him in other cases.
Of course, as Lord Rodger points out, any such anomaly or inconsistency could if necessary be cured by resort to section 104 of the 1998 Act.
But was that the only lawful means of achieving the desired consistency in this case? That is the question.
I understand all of us to agree that section 45 does not fall foul of section 29(2)(b) of the 1998 Act.
It does not relate to a reserved matter having regard to section 29(3) and is not to be deemed to relate to reserved matters by virtue of section 29(4).
On this latter point, in common with Lord Hope, I regard section 45 as making modifications of Scots criminal law as it applies to reserved matters but as doing so for the purpose of making Scots criminal law (as to the allocation of court business) apply consistently.
What critically divides the Court is the question raised under section 29(2)(c): as to whether section 45 is in breach of the restrictions in Schedule 4.
I do not pretend to find paragraphs 2 and 3 of Schedule 4 entirely easy to follow and naturally I recognise the force of Lord Rodgers reasoning.
For my part, however, I remain unpersuaded that section 45 modifies the law on reserved matters within the meaning of paragraph 2(1), given that (by virtue of paragraph 2(3)) paragraph 2(1) applies in relation to a rule of Scots criminal law only to the extent that the rule is special to a reserved matter (which I do not regard the unamended 6 months limits of the sheriffs summary jurisdiction to be).
Even, however, were I persuaded that section 45 is to be regarded as modifying the law on reserved matters within the meaning of paragraph 2, I would conclude here that paragraph 2 is then disapplied by paragraph 3 since such modification is to be seen merely as incidental to a provision being made (for reallocation of court business and the standardisation of the sheriffs summary sentencing powers) in relation to unreserved matters and has no greater effect on reserved matters than is necessary to give effect to such purpose.
Given that the Scottish Parliament is plainly intended to regulate the Scottish legal system I am disinclined to find a construction of Schedule 4 which would require the Scottish Parliament, when modifying that system, to invoke Westminsters help to do no more than dot the is and cross the ts of the necessary consequences.
I too, therefore, would dismiss these appeals.
LORD RODGER
Does an enactment of the Scottish Parliament relate to reserved matters? Does it modify a rule of Scots criminal law that is special to a reserved matter? These are the key questions in the present appeals.
The answers depend on the interpretation of section 29(2)(b) and (c) of the Scotland Act 1998 (the 1998 Act), along with paras 2 and 3 of Part I of Schedule 4 to the Act.
Viewed in isolation, para 2, in particular, can appear to use impenetrable language to erect an arbitrary restriction on the Parliaments powers.
Matters become clearer, however, when the provisions are seen in their setting in life.
A useful starting point is the situation before 1999.
Policy responsibility before devolution
Until devolution took effect, leaving aside the fluctuating position of Northern Ireland, the central government of the United Kingdom was carried on by a single executive and a single Parliament.
The executive was responsible for, and could determine, all areas of policy for the entire United Kingdom.
Similarly, Parliament could legislate to give effect to the chosen policy in all parts of the United Kingdom.
In practice, Parliament did not always insist on the law being uniform
throughout the United Kingdom.
To take only the most obvious example, Parliament did not intervene to impose uniformity on the private or criminal laws of England and Scotland.
Instead, when legislation was to apply in both jurisdictions, where necessary, it included provisions that were tailored to fit the underlying law of both systems.
So, for instance, the Rehabilitation of Offenders Act 1974 had to take account of differences in the two systems of criminal procedure.
Sometimes, even if Parliament was legislating for England and Wales only, for example, the legislation could not be effective unless some provisions were made to extend to Scotland and vice versa.
To take another obvious example, aspects of the legislation on detained patients in the Mental Health Act 1983 and the Mental Health (Scotland) Act 1984 had a cross border dimension and would have been unworkable if various provisions of the English Act had not extended to Scotland and various provisions of the Scottish Act had not extended to England.
When the legislation was being prepared, officials and, if necessary, ministers in the various departments, including the Scottish Office, would discuss the proposals and try to iron out any difficulties.
Even where there was no particular cross border dimension, legislation proposed by one department might have an impact on matters for which another department was responsible.
Proposed legislation on, say, education might have an impact on employment; legislation on care in the community might raise law and order questions; legislation on transport might affect the environment; legislation on planning might affect trade and industry.
And so on.
More particularly, to be effective, legislation on a matter for which one department had responsibility might require that a piece of legislation falling within another departments sphere of responsibility should be amended.
So, when a policy was being worked up and incorporated into a Bill, while one department would take the lead, very frequently officials and ministers from a number of departments would be involved.
Suppose, for instance, the Home Office and the Scottish Office had proposed legislation to adjust the jurisdiction of the courts by increasing the sentencing powers of summary courts in both England and Wales and in Scotland.
Suppose also that, in order to be effective, the reforming legislation would have had to modify the penalty provisions for offences in various Acts, such as the Road Traffic Offenders Act 1988 (the RTOA).
In that event, officials of the lead departments would have consulted officials and ministers from all the departments, including the Department of Transport, having responsibility for the Acts which it was proposed should be modified.
Sometimes the impact of the proposed legislation on a different area would be relatively insignificant perhaps involving little more than updating statutory references or bringing the language of existing legislation into conformity with the language of the proposed legislation.
In such cases the main task of the other departments might well be to help the lead department and the Bill team by identifying provisions that would require to be modified in this way.
But sometimes the impact would be more significant and would trench on issues of policy.
Then there could well be differences of opinion among the departments concerned as to the best way forward.
If officials could not resolve them, the disputed issues could be taken for decision to the appropriate cabinet committee and ultimately, if necessary, to the full cabinet or to the Prime Minister.
The result would be a Bill which made all the necessary amendments, whatever the subject matter of the legislation being amended and irrespective of the department which had responsibility for that subject.
Policy responsibility after devolution
In the 1998 Act and the corresponding Acts for Wales and Northern Ireland, Parliament devolved legislative and executive authority in varying degrees.
The powers of the Scottish Parliament are to be found in sections 28 and 29 of the 1998 Act.
Section 28(1) of the 1998 Act provides that, subject to section 29, the Scottish Parliament may make laws.
In terms of section 29(1), an Act of the Scottish Parliament is not law so far as any of its provisions is outside the legislative competence of the Parliament.
Under section 29(2) a provision is outside that competence in various circumstances in particular, if, (b), it relates to reserved matters or, (c), it is in breach of the restrictions in Schedule 4.
Leaving aside certain matters where powers are shared (section 56), it is immediately obvious that the overall scheme was to devolve power to the Scottish Executive and Scottish Parliament, but to except certain reserved matters, which are identified in Schedule 5 to the 1998 Act.
All other matters are devolved matters although that term is not used since the Act concentrates on identifying the matters lying outside the competence of the Scottish Parliament and Scottish Executive.
So far as these reserved matters are concerned, policy responsibility in respect of Scotland remains with the United Kingdom government and the United Kingdom Parliament retains the sole responsibility for legislating on them.
The purpose of a provision and its validity
It is convenient at this stage to notice that, under section 29(3) of the 1998 Act, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter and so is outside the competence of the Parliament under section 29(2)(b) is to be determined by reference to the purpose of the provision.
Sometimes the clearest indication of the purpose of a provision will be found in a report which gave rise to the legislation or in a report of one of the committees of the Parliament.
But very often the purpose of a provision will be clear from its context in the Act in question.
For example, the subject matter of the Carriage of Goods by Sea Act 1992 is a reserved matter: para 1 and Section E3 of Part II of Schedule 5 to the 1998 Act.
Obviously, therefore, if the Scottish Parliament purported to pass a Carriage of Goods by Sea (Scotland) Act with the sole purpose of repealing the 1992 Act in Scots law, its purpose would relate to a reserved matter and so its provisions would be outside the competence of the Parliament by virtue of section 29(2)(b).
In practice, such a clear example would be unlikely to get past the legal advisers to the Scottish Parliament.
In real life the problem is likely to arise in more complex situations.
But assume, for example, that the purpose of an Act is to increase the sentencing powers of the lower courts in Scotland so as to allow them to deal with more serious cases.
The purpose of the Act plainly relates to a devolved, rather than a reserved, matter.
So its provisions will not be outside the competence of the Scottish Parliament by reason of section 29(2)(b).
Does it follow that all of its provisions are automatically within the competence of the Scottish Parliament? By no means.
For example, any provision which was incompatible with rights under the European Convention on Human Rights or with Community law would be outside competence by reason of section 29(2)(d) even if that provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland.
Similarly, any provision which was in breach of the restrictions in Schedule 4 to the 1998 Act would be outside competence again, even though the provision was designed to help achieve the purpose of increasing the sentencing powers of the lower courts in Scotland.
Quite simply, therefore, even if the purpose of an Act is within the competence of the Scottish Parliament in terms of section 29(2)(b) of the 1998 Act, the Parliament cannot achieve that purpose by enacting provisions which are beyond its competence for one of the reasons listed in the other paragraphs of that subsection.
As Lord Atkin put it in Gallagher v Lynn [1937] AC 863, 870, an Act may have a perfectly lawful object but may seek to achieve that object by invalid methods.
In other words, the fact that a provision may have a lawful (devolved) purpose does not validate the provision if, for some other reason, it is outside the competence of the Parliament.
So, in particular, the mere fact that the purpose of a provision is to increase the sentencing powers of the sheriff, sitting as a court of summary jurisdiction, will not validate it if the provision is outside the competence of the Parliament because it purports to modify a rule of Scots criminal law that is special to a reserved matter: section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act.
Section 104 orders
The fact that the powers of the Scottish Parliament are subject to these limitations means that there is now a stark contrast between the position in England and Scotland.
For England, one executive and one Parliament continue to have the necessary powers to determine policy in all subject areas and to put it into effect by legislation.
For Scotland, however, the necessary powers are divided between two executives and two legislatures.
Even though the legislative arrangements for Scotland have changed in this way, the nature of the problems to be tackled by legislation has not changed.
So, for example, some measures, like mental health legislation, which are devolved matters, still have a cross border dimension.
Similarly, proposed legislation in one field, which happens now to be devolved, may require substantial amendment to legislation in another field, which happens now to be reserved.
In these situations the Scottish Parliament will not have all the powers that are needed to make a fully effective reform.
So its legislation can take the matter only so far.
If it is to be fully effective, the legislation passed by the Scottish Parliament will require to be topped up by legislation of the United Kingdom Parliament dealing with any aspects which are beyond its competence.
The need to provide for such situations was foreseen by those who drafted the 1998 Act.
Section 104, which is designed to be used when they arise, is therefore a key element of the scheme for devolution.
It contains a tailor made mechanism for using the powers of the United Kingdom Parliament to supplement legislation of the Scottish Parliament, without the need for full scale legislation by Parliament: (1) Subordinate legislation may make such provision as the person making the legislation considers necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament or made by legislation mentioned in subsection (2). (2) The legislation is subordinate legislation under an Act of Parliament made by a member of the Scottish Executive, a Scottish public authority with mixed functions or no reserved functions, or any other person (not being a Minister of the Crown) if the function of making the legislation is exercisable within devolved competence.
Of course, the Scottish Parliament and Scottish Executive cannot compel a Minister of the Crown to exercise the power under section 104.
The intention underlying section 104 and indeed the whole scheme of devolution is, however, that the redistribution of powers should not impair but improve the government of the United Kingdom as a whole.
It proceeds on the basis that both administrations can be expected to co operate appropriately.
In particular, it presupposes that the United Kingdom ministers and Parliament will not be indifferent to the effectiveness of legislation passed by the Scottish Parliament.
Not surprisingly, therefore, since devolution, ministers have made more than 40 orders under section 104.
Some of the section 104 orders have concerned matters with a cross border aspect.
When legislating for England and Wales, Parliament can, of course, still include any provisions which require to extend to Scotland in order to make the legislation effective though, doubtless, only after discussion with the Scottish Executive and their officials.
But, as already noted, it is outside the competence of the Scottish Parliament to make any provision that would form part of the law of England and Wales: section 29(1) and (2)(a) of the 1998 Act.
So the Scottish Parliament cannot make any changes to English law which may be needed in order to make its legislation on the devolved matter effective.
Section 104 comes to the rescue.
For instance, following the enactment of the Mental Health (Care and Treatment) (Scotland) Act 2003 by the Scottish Parliament, a Scotland Office minister used his power under section 104 of the 1998 Act to make the Mental Health (Care and Treatment) (Scotland) Act 2003 (Consequential Provisions) Order 2005 (No 2078; S 9), amending the law of, inter alia, England and Wales in order to facilitate the removal of detained patients from Scotland to England or Wales.
But section 104 may also be needed in cases where proposed changes in the law on one subject require changes in the law on another subject.
Given the large measure of devolution in matters such as justice, education and health, many of the subjects that are likely to be affected by legislation of the Scottish Parliament will fall within the sphere of responsibility of the Scottish Executive.
If the proposed amendments to existing legislation are uncontroversial, then officials can deal with them.
If there are disputes on significant matters of policy between, say, the education and criminal justice directorates, it will be for the Scottish Ministers and their officials to thrash them out and incorporate the agreed policy into legislation for the consideration of the Parliament.
Again, whatever the principal subject matter of an Act may be, it can be expected to include the necessary amendments to all the relevant legislation on other devolved matters.
After, as before, devolution, however, legislation on a subject which is now a reserved matter is liable to have an impact on a subject which is now devolved.
For example, legislation on asylum seekers (a reserved matter) might have an impact on the legislation relating to accommodation for homeless persons (a devolved matter).
Given the continuing power of Parliament to legislate for Scotland (section 28(7)), there would be no difficulty in incorporating all the necessary changes into the legislation on asylum seekers presumably, after the Home Office had discussed the proposals with the Scottish Executive, just as, formerly, the Home Office would have discussed them with the Scottish Office.
The converse situation is where the Scottish Executive and Parliament wish to legislate on a matter which has implications for what is now a reserved matter.
If, in the days before devolution, effective legislation could often only be prepared and introduced once policy issues in a number of discrete areas had been hammered out, the position must be the same after devolution.
Likewise, if different departments were the guardians of policy on different matters before devolution, the same must apply after devolution the difference being that the Scottish Ministers and their directorates are now responsible for policy on devolved matters, the United Kingdom government and its departments for policy on the other (reserved) matters.
Under section 54 of the 1998 Act, the competence of Scottish ministers is, of course, modelled on the competence of the Scottish Parliament.
Suppose, for instance, that the Scottish Executive wanted to introduce legislation changing the system of accommodation for homeless persons in Scotland, but the reform would involve modifying provisions in a (reserved) Act on asylum seekers.
If similar legislation had been proposed by the Scottish Office before devolution, the Scottish Office and the Home Office would have discussed the relevant policy issues.
Eventually, the government as a whole would have reached a view on them and this view would have been reflected in the resulting legislation if any.
Obviously, after devolution, exactly the same policy issues would present themselves.
By devolving power over Scottish housing policy to the Scottish Executive and the Scottish Parliament, Parliament cannot have intended to remove from the United Kingdom government the power to take all the necessary decisions on asylum matters.
So, in principle, the position after devolution must remain the same as before.
If the Home Office and the United Kingdom Parliament were content with
the proposed changes to the legislation on asylum seekers, there would be no difficulty: they could be made by order under section 104 of the 1998 Act.
One example of such an order dealing with a reserved matter is the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008 (No 1889), article 6 of which amends the list of disqualifying offices in Part 3 of Schedule 1 to the House of Commons Disqualification Act 1975.
Another example is more immediately relevant to the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (the 2007 Act) which gives rise to these appeals.
The Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007 (No 3480; S 7) repeals or amends provisions of the RTOA.
I return to this order briefly at para 151 below.
On the other hand, if agreement could not be reached and proposed Scottish housing legislation would involve changes to legislation on asylum seekers which the United Kingdom government regarded as unacceptable, it would have to be either dropped or modified.
This would not be to single out Scottish housing legislation exactly the same would apply to any similar proposal from the ministry with responsibility for housing in England.
The only difference is that, for England, the dispute would have to be settled by ministers and departments within the United Kingdom government, whereas, for Scotland, it would have to be settled between a minister and department in Westminster and a minister and directorate in Edinburgh or, ultimately, between the United Kingdom government and the Scottish Executive.
If, therefore, the Scottish Parliament persisted in legislating on the matter, despite the United Kingdom governments opposition, one would expect to find that the relevant provisions affecting asylum seekers would be outside its competence and so not law.
By no means all encroachments by the Scottish Parliament into the territory of reserved matters are going to be dramatic or unacceptable.
As already explained, legislation on a devolved matter is quite likely to entail some change in a reserved matter.
Section 29(2)(c) recognises this reality.
It proceeds on the basis that, even when the legislation of the Scottish Parliament does not relate to a reserved matter and so must relate to a devolved matter the legislative package, as a whole, may require to have some impact on the law on reserved matters, if it is to be effective.
Section 29(2)(c) and Schedule 4 are designed to show how far, in this respect, the Scottish Parliament can go by itself.
Consistently with the general structure of the Act, these provisions prescribe what modifications of the law on reserved matters lie outside the competence of the Scottish Parliament since they would truly be a matter for the consideration of the United Kingdom government and Parliament.
If a proposed reform includes aspects which fall outside the competence of the Scottish Parliament in this way, that does not mean that the reform cannot go ahead: if the United Kingdom government and Parliament are content, these aspects can be addressed by an appropriate order under section 104.
Incidental or consequential modifications
I shall have to look at paras 2 and 3 of Part I of Schedule 4 to the 1998 Act in more detail in due course, but it is convenient to notice one aspect at this stage.
As in pre devolution days, a piece of legislation on what is now a devolved matter may require essentially minor and technical modifications to the law on what are now reserved matters.
Obviously, the Scottish Parliament should be able to make these modifications for itself.
And para 3(1) of Part I of Schedule 4 makes it clear that it can provided that the modifications do not go further than is necessary.
Referring back to the restriction imposed by para 2, para 3(1) provides: Paragraph 2 does not apply to modifications which (a) are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and (b) do not have a greater effect on reserved matters than is necessary to give effect to the purpose of the provision.
The paragraph refers to modifications which are incidental to, or consequential on, provision made . which does not relate to reserved matters.
The adjectives suggest the kinds of relatively minor modifications which are often to be found in schedules, rather than cluttering up the body of a traditional United Kingdom statute.
The wording of a form to be used in making an application or carrying out a transaction is an example of the kind of incidental matter which is usually consigned to a schedule.
As mentioned already at para 72 above, typical consequential amendments are concerned to modernise the language of an existing provision or to update legislative references.
Amendments of this kind are also usually found in a schedule to an Act.
Precisely because they raise no separate issue of principle, amendments of these kinds can be safely stowed away in a schedule, which is unlikely to be debated in any detail, if at all.
If the legislature approves the main provisions, then it must equally approve these technical and mechanical changes which are needed to give effect to the main provisions.
Similarly, it is easy to see that a modification of that kind to the law on a reserved matter, following on from legislation on a devolved matter, would be unlikely to raise any issue of principle to which the relevant United Kingdom minister or Parliament would object.
So the Scottish Parliament can deal with it.
That is what para 3(1) provides.
In the unlikely event that a problem arose, the Secretary of State could make an order under section 35(1)(b) of the 1998 Act prohibiting the Presiding Officer from submitting the Bill for Royal Assent.
With that rather lengthy introduction, I can now turn to examine the particular problem which gives rise to these appeals.
The problem in these appeals
Put briefly, section 45 of the 2007 Act purports to provide inter alia that a person convicted on summary complaint of a contravention of section 103(1)(b) of the Road Traffic Act 1988 (the RTA) is liable to a maximum term of imprisonment of 12 months rather than of 6 months, as originally provided in section 33 of, and Part I of Schedule 2 to, the RTOA.
The effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the RTOA is a reserved matter.
So the enactment that comprises section 33 of, and Part I of Schedule 2 to, that Act is the law on a reserved matter.
The appellants maintain that, to the extent that it purported to modify the maximum term of imprisonment on summary conviction laid down by the RTOA, section 45 was special to this reserved matter and so outside the competence of the Scottish Parliament by reason of section 29(2)(c) of, and para 2 of Part I of Schedule 4 to, the 1998 Act.
It is therefore not law.
It follows, they say, that the maximum term of imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA remains 6 months.
If so, the terms of imprisonment, of over 6 months, imposed on the appellants for their respective contraventions of section 103(1)(b) of the RTA, were incompetent and the bills of suspension must be passed and the sentences quashed.
The same point came before the criminal appeal court (Lord Nimmo Smith, Lord Eassie and Lord Wheatley) in Logan v Harrower 2008 SLT 1049.
The court held that section 45 of the 2007 Act was within the competence of the Parliament.
In the present cases the appeal court simply followed that decision and, without issuing any written judgment, refused to pass the bills of suspension.
Summary jurisdiction before the 2007 Act
Before looking in detail at the provisions of the 1998 Act, it is necessary to examine the position on summary jurisdiction before section 45 of the 2007 Act was brought into force on 10 December 2007.
Following the enactment of the Criminal Procedure (Scotland) Act 1995 (the 1995 Act), the only provision dealing with the summary jurisdiction and powers of the sheriff to impose a sentence of imprisonment was section 5 of that Act.
By section 5(1) the sheriff, sitting as a court of summary jurisdiction, was to continue to have all the jurisdiction and powers exercisable by him at the commencement of the Act.
Section 5(2) then provided that, without prejudice to any other or wider powers conferred by statute, on convicting any person of a common law offence, the sheriff was to have power, (d), to impose imprisonment, for any term not exceeding 3 months.
By subsection (3), in the case of a second or subsequent conviction of an offence inferring dishonest appropriation of property (or attempt) or of an offence inferring personal violence, the sheriff was to have power to impose a term of imprisonment not exceeding 6 months.
Since this was the only general provision dealing with the extent of the sheriffs summary powers of imprisonment, under the 1995 Act there was no general provision of any kind in Scottish criminal procedure which prescribed the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose where someone was convicted of a statutory offence.
The limit depended on what the legislature had provided for the particular offence.
So, if you wanted, for example, to know the maximum sentence of imprisonment available on a conviction, on summary complaint, under the Knives Act 1997 you would look at sections 1(5)(a) and 2(2)(a) of that Act.
Similarly, for a summary conviction of a contravention of section 103(1)(b) of the RTA, you would look in Part I of Schedule 2 to the RTOA.
Often you would find that the maximum penalty on summary conviction was 3 or 6 months.
But, even as long ago as 1871, section 7 of the Prevention of Crime Act permitted the sheriff to impose 12 months imprisonment on summary conviction of an offence against the Act.
And, if you looked at section 25 of, and Schedule 4 to, the Misuse of Drugs Act 1971 today, you would see that the maximum sentence on summary conviction of various offences is 12 months imprisonment.
In 2004 the Summary Justice Review Committee chaired by Sheriff Principal McInnes QC recommended that, in order to relieve pressure on the courts of solemn jurisdiction, the criminal jurisdiction of judges sitting summarily should be increased: they should be able to impose a maximum sentence of 12 months imprisonment or detention and a maximum fine of 20,000.
The first group of sections in Part 3 of the 2007 Act (sections 43 to 49) was designed to give effect to a slightly modified version of the Committees recommendation.
Sections 43 to 45 dealt with the recommendation on imprisonment for the sheriff court.
Section 46 dealt with the justice of the peace court, while sections 47 and 48 were designed to increase the maximum available fine to 10,000, rather than 20,000, as contemplated by the Committee.
Section 49 dealt with compensation orders.
The intention behind the relevant provisions of the 2007 Act therefore was that sheriffs sitting as a court of summary jurisdiction should be able to deal with more serious contraventions of the common law and statute law not that they should impose higher sentences for the same conduct.
The anticipated benefits of the reform were thought to outweigh the admitted risk that the effect of increasing the sentences which the summary courts could impose would be an undesirable upward drift in the level of sentences.
The appeal court has the necessary powers to check any such tendency in an appropriate case.
The reform as carried out by the 2007 Act
So far as imprisonment is concerned, the reform was effected by three separate provisions.
The first, section 43, dealt with the power of imprisonment for common law offences.
Most common law offences, such as assault, are triable either on summary complaint or on indictment.
For these cases the reform was effected simply by substituting 12 months for 3 months in section 5(2)(d) of the 1995 Act.
So now the maximum penalty for all common law offences is 12 months.
Section 5(3), being no longer needed, was repealed.
No common law offence falls within the area of reserved matters and so no issue as to legislative competence arises.
The second provision was in section 44, which deals with certain specified offences that can be tried only on summary complaint.
Again, the maximum term of imprisonment is increased to 12 months.
The reform was effected by amending the penalty provisions in the individual statutes creating the offences.
Since none of the offences falls within the area of reserved matters, again no issue as to legislative competence arises.
Section 45 completed the scheme by dealing with statutory offences which are triable either on indictment or on summary complaint (either way offences) and which are punishable on summary conviction with a maximum term of imprisonment of less than 12 months (subsection (6)).
Section 45(1) and (2) provide: (1) The maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence is, by virtue of this subsection, 12 months. (2) Accordingly, the specification of a maximum period of imprisonment in every relevant penalty provision is, in relation to any relevant offence to which it applies, to be read subject to subsection (1).
By section 45(2) the specification of a maximum period of imprisonment in any relevant penalty provision in any Act passed before the 2007 Act is to be read subject to section 45(1).
In short, section 45 was intended to introduce a novel, general, provision for determining the maximum term which a sheriff, sitting as a court of summary jurisdiction, could impose by way of imprisonment in respect of either way statutory offences which had previously attracted a maximum sentence of less than 12 months imprisonment.
In all such cases the sheriff is now to be able to impose a maximum sentence of 12 months imprisonment.
In order to achieve its purpose, section 45 had to do two things.
First, it had to make provision for the maximum term of imprisonment to which a person is liable on summary conviction of a relevant offence to be 12 months.
That is what subsection (1) does.
But, by itself, that provision would not have worked or, at the very least, would have left the position unclear.
By the very terms of subsection (6)(b), section 45 applies only to offences where the statutory maximum term of imprisonment on summary complaint has already been fixed at less than 12 months.
In other words, if it is to work, section 45 must also, secondly, increase the previous maximum term of imprisonment for the offences in question when tried on summary complaint.
So the new rule in section 45(1) has to be made to prevail over, and to supersede, any penalty provision providing for a lower maximum term of imprisonment on summary conviction of any either way offence in any relevant enactment.
That is what subsection (2) is designed to do.
The present case shows subsection (2) in action.
Section 33 of the RTOA provides: (1) Where a person is convicted of an offence against a provision of the Traffic Acts specified in column 1 of Part I of Schedule 2 to this Act or regulations made under any such provision, the maximum punishment by way of fine or imprisonment which may be imposed on him is that shown in column 4 against the offence and (where appropriate) the circumstances or the mode of trial there specified. (2) Any reference in column 4 of that Part to a period of years or months is to be construed as a reference to a term of imprisonment of that duration. (6) (5) (b) Summarily, in Scotland. (c) On indictment, in Scotland. (7) (4) Punishment Disqualification Endorsement Penalty points The table below sets out the entry relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA: (3) (2) (1) Provision General Mode of creating nature of prosecution offence offence Offences under the Road Traffic Act 1988 RTA Driving (a) Summarily, (a) 6 months Discretionary. Obligatory. 6 in England and or level 5 on section while 103(1)(b) disqualified. Wales. the standard scale or both. (b) 6 months or the statutory maximum or both. (c) 12 months or a fine or both.
Taking section 33 and the table together leaving the 2007 Act on one side on a summary conviction of a contravention of section 103(1)(b) of the RTA in Scotland, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months.
A contravention of section 103(1)(b) of the RTA is a relevant offence in terms of section 45(6) of the 2007 Act.
Similarly, section 33 of, and Part I of Schedule 2 to, the RTOA constitute a relevant penalty provision in terms of section 45(7) of the 2007 Act.
So, by virtue of section 45(2), the specification of a maximum period of imprisonment of 6 months on summary conviction in column 4 of Part I of Schedule 2 is to be read subject to section 45(1) of the 2007 Act.
In other words, the relevant entry in column 4 of the Schedule is to be read subject to the requirement that the maximum term of imprisonment on summary conviction of any relevant offence (including a contravention of section 103(1)(b) of the RTA) is to be 12 months.
Section 45(3) of the 2007 Act gives the Scottish Ministers power by order actually to amend the specification of a maximum term of imprisonment in a relevant penalty provision.
But the Court was told that the Ministers had not exercised that power in respect of Part I of Schedule 2 to the RTOA.
An order amending the figure in column 4 of the Schedule from 6 to 12 would make the position clearer for anyone consulting it.
But it would not change the substance.
If section 45 was within the competence of the Scottish Parliament in this regard, section 45(1) prevails over the Schedule and provides that the maximum term of imprisonment for someone convicted on summary complaint of a contravention of section 103(1)(b) of the RTA is 12 months.
Therefore, even if section 45 does not technically amend the figure in column 4 of the Schedule, it certainly purports to supersede, and thereby modify, the law comprising section 33 of the RTOA and the relevant entry in the Schedule.
Similarly, it purports to supersede and modify all the other comparable penalty provisions which prescribe the maximum term of imprisonment that can be imposed, on summary conviction, for either way offences in statutes dealing with reserved matters.
In short, section 45 purports to modify, inter alia, the maximum term of imprisonment to which someone is liable on summary conviction of a contravention of section 103(1)(b) of the RTA by increasing it from 6 months to 12 months.
The issue in the appeals is whether, in so far as it purports to make this modification of the provisions of the RTOA, section 45 of the 2007 Act is outside the competence of the Scottish Parliament in any of the ways specified in section 29(2) of the 1998 Act.
In fact, the parties are agreed that the only relevant limits are those in section 29(2)(b) and (c).
Therefore, the Court has to decide whether section 45 of the 2007 Act falls foul of the limits in section 29(2)(b) and (c) and para 2 of Part I of Schedule 4.
It is convenient to start with section 29(2)(b).
Is section 45 beyond the competence of the Scottish Parliament because it relates to a reserved matter?
In para 75 above, I have given a hypothetical example of an Act of the Scottish Parliament whose purpose would obviously relate to a reserved matter.
The Act would therefore be outside its competence.
Sometimes, of course, the purpose of a provision may be obscure.
And, even when it is not obscure, people may describe the purpose in slightly different ways.
But, having regard to its background and its context, I would identify the purpose of section 45 of the 2007 Act as being to adjust the jurisdiction of the Scottish courts by making 12 months the maximum term of imprisonment to which a person is liable on summary conviction of any either way statutory offence.
For the sake of brevity, I shall refer to this purpose as being to increase the sheriffs summary sentencing powers.
The jurisdiction and sentencing powers of the Scottish courts are not reserved matters.
So the purpose of the section can on no view be said to relate to reserved matters.
This is so, even though, in order to achieve its purpose, as part of the scheme for adjusting the jurisdiction of the Scottish courts, the section does undoubtedly purport to affect reserved matters, viz, by modifying the relevant penalty provision in the RTOA and, as the advocate depute accepted, by modifying penalty provisions for either way offences in any other statutes falling within the scope of the reserved matters in Schedule 5 to the 1998 Act.
An example would be the maximum term of imprisonment on summary conviction of a corrupt practice under section 168(1)(b) of the Representation of the People Act 1983.
Section 29(4) of the 1998 Act has also to be considered, however, since it contemplates the possibility that a provision whose purpose does not otherwise relate to a reserved matter may nevertheless be treated as relating to a reserved matter and so fall outside the competence of the Scottish Parliament.
Subsection (4) applies to a provision which makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters.
So the subsection would apply only if section 45 could be said to make a modification to Scots criminal law as it applies to reserved matters.
The advocate depute argued that subsection (4) did not apply to a case like the present because it was restricted to cases where the provision in question applied only to reserved matters.
Although no such qualification appears in the wording, he submitted that it was implicit since, if a provision applied to both reserved and devolved matters, its purpose would, inevitably, be to make the law apply consistently to reserved matters and otherwise.
I accept that, where a provision applies to both reserved and devolved matters, its effect may be to make the law apply consistently to both.
But its purpose may be different.
It is possible, for example, to conceive of a situation where the purpose of a provision was actually to make a modification in relation to the criminal law applying to a particular reserved matter, but the provision was made to apply, incidentally, to devolved matters.
Section 29(4) must be apt to catch a case of that kind.
That said, I am very doubtful whether subsection (4) applies in this case.
The words of the subsection obviously cover a case where some general provision of Scots private or criminal law applies to reserved matters.
For example, it would cover modifications to the general law on limitation as it applied to actions relating to some reserved matter; or modifications to, say, the general law of criminal procedure as it applied to an accuseds trial, on summary complaint or on indictment, for some offence constituting a reserved matter.
In such cases the provision modifies the law applying to the reserved matter; it does not modify the reserved matter itself.
But Parliament provides that, subject to the unless clause, it is none the less to be treated as relating to the reserved matter.
In the present case, by contrast, section 45 actually modifies the reserved matter or, rather, the law on the reserved matter viz, the penal provision in Part I of Schedule 2 to the RTOA.
In my view section 29(4) is not designed to cover a provision of this kind.
Therefore, as far as section 29(2)(b) is concerned, the position is regulated by section 29(3).
Even if this were considered to be too narrow a construction of section 29(4) of the 1998 Act, section 45 of the 2007 Act would still not fall to be treated as relating to the reserved matter of the RTOA.
A provision which makes modifications of Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law apply consistently to reserved matters and otherwise.
The phrase, the purpose of the provision, must refer to the same purpose in both subsection (3) and subsection (4).
Part of the purpose of section 45 as described in para 112 above is indeed to make the law on the sheriffs power to imprison apply consistently to all either way statutory offences, whether constituting reserved matters in terms of Schedule 5 or not.
So section 45 is not to be treated as relating to a reserved matter under section 29(4).
In effect, the unless clause in section 29(4) allows the Scottish Parliament to make a general reform of Scottish private or criminal law, even though it modifies the law which applies to reserved matters.
Again, this is not surprising since the United Kingdom Parliaments legislation on particular topics has always been framed and operated against the background of the general private and criminal law as it applies in the various jurisdictions from time to time.
Equally, any reform of the general law has to take account of all the matters to which it actually applies.
In agreement with all of your Lordships, I am therefore satisfied that section 45 of the 2007 Act is not outside the competence of the Scottish Parliament by reason of relating to a reserved matter.
The question then arises: even though the purpose of section 45 is one that the Scottish Parliament can legitimately pursue, is the section nevertheless to some extent outside its competence because it is in breach of a restriction in para 2 of Part I of Schedule 4 to the 1998 Act? This question has to be addressed in stages.
Does section 45 modify the law on a reserved matter?
As already explained, under section 29(2)(c) of the 1998 Act, section 45 will be outside the competence of the Scottish Parliament so far as it breaches any of the restrictions in Schedule 4 to the 1998 Act.
The relevant paragraphs for present purposes are paras 2 and 3.
Paragraph 2 provides: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter or the subject matter of the rule is (a) interest on sums due in respect of taxes or excise duties and refunds of such taxes or duties, or (b) the obligations, in relation to occupational or personal pension schemes, of the trustees or managers.
At first sight, para 2(1) appears to impose a very drastic limit on the competence of the Scottish Parliament: an Act of the Parliament cannot modify (which includes amending or repealing section 126(1)) the law on reserved matters.
If that were all that para 2 said, then it would prevent the Scottish Parliament from ever touching legislation on reserved matters even if the purpose of the provision related to a devolved matter.
In effect, it would make section 29(2)(b) superfluous.
But para 2(1) is actually qualified by para 2(3) and does not apply to modifications falling within the scope of para 3.
Section 29(3) and (4) focus on the provision which is being enacted and on its purpose.
By contrast, para 2 of Part I of Schedule 4 focuses on the rule of law that is being modified by the enactment and makes no mention whatever of the purpose of the modification.
Paragraph 2(2)(a) defines the law on reserved matters as any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament.
As explained in para 95 above, the effect of para 1 and Section E1 of Part II of Schedule 5 to the 1998 Act is that the subject matter of the RTOA is a reserved matter.
So the enactment comprising section 33 of, and the relevant entry in Part I of Schedule 2 to, that Act is part of the law on this reserved matter.
This conclusion supports my earlier conclusion that these provisions are not provisions of Scots criminal law, as it applies to reserved matters in terms of section 29(4)(b).
A provision cannot be both the law on a reserved matter and the law as it applies to the self same reserved matter.
As I have already explained at para 110 above, section 45 of the 2007 Act undoubtedly purports to supersede and modify the enactment in section 33 of, and the relevant entry in Part I of Schedule 2 to, the RTOA.
Therefore the power of the Scottish Parliament to enact section 45 for reserved statutes depends on whether the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act applies to the modification made by section 45.
Does section 45 fall within para 3(1) of Part I of Schedule 4?
In Logan v Harrower 2008 SLT 1049, 1054, at para 24, giving the opinion of the appeal court, Lord Nimmo Smith said this: While we were not fully addressed on the extent to which recourse may legitimately be had to extra statutory materials as an aid to the construction of a statutory provision such as section 45, in order to discover whether its purpose is such as to bring it within the proviso to section 29(4), it appears to us to be legitimate to have regard to the passages in the Policy Memorandum and Explanatory Notes, quoted above, which contain express statements about its purpose.
From these it may be taken, as the advocate depute submitted, that the purpose and of the provision in section 45 of the 2007 Act is to increase generally the criminal sentencing powers of the sheriff, sitting as a court of summary jurisdiction, and that the provision, construed in this light, fulfils this purpose.
We agree with the advocate depute that, in the present case, the purpose of the provision is to make Scots criminal law with regard to penalties, procedure and jurisdiction in the sheriff court apply consistently to both common law offences and statutory offences.
As provided by paragraph 3 in Part I of Schedule 4 to the Scotland Act, the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to RTOA 1988 are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin; and the modifications do not have a greater effect upon reserved matters than is necessary to give effect to the purpose of the provision in section 45.
Lord Nimmo Smith had already explained, at para 22 of the courts opinion, that the argument before the court had centred on section 29(4) of the 1998 Act.
And para 23 and the first three sentences of para 24 contain the reasoning by which the court concluded that section 45 of the 2007 Act was not to be treated as relating to reserved matters by reason of section 29(4).
In the final sentence of para 24 the appeal court moved on to consider whether, nevertheless, section 45 was in breach of the restriction in para 2(1) of Part I of Schedule 4 to the 1998 Act.
The court held that it was not on the view that the modifications made by section 45 of the 2007 Act to the reading of Part I of Schedule 2 to the RTOA are merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin.
The appeal court had in mind para 3(1) of Part I of Schedule 4 which is set out in para 91 above.
In other words, the court held that the modifications made by section 45 were incidental to, or consequential on, provision made which did not relate to reserved matters.
So the prohibition in para 2(1) did not apply to those modifications.
In my view the reasoning is unsound.
I have already indicated, at paras 91 93 above, that para 3(1) appears to be intended to cover the kinds of minor modifications which are obviously necessary to give effect to a piece of devolved legislation, but which raise no separate issue of principle.
Indeed the amendments to the RTOA replacing references to the district court with references to the justice of the peace court in para 7 of the Schedule to the 2007 Act are as good an example as any of minor consequential amendments to the law on reserved matters which para 3(1) of Part I of Schedule 4 to the 1998 Act permits the Scottish Parliament to make.
In fact, para 444 of the Explanatory Notes says that Paragraph 7 is consequential upon the establishment of JP courts and inserts references to that court in place of the district court.
But the modifications made by section 45 of the 2007 Act are of a completely different character and the draftsman clearly thought so, since they are effected not in the Schedule but by a separate section in the body of the Act.
Section 45 is one of three sections (the others being 43 and 44) which combine to alter the jurisdiction of the sheriff sitting as a court of summary jurisdiction.
None of the sections can be regarded as incidental to, or consequential on, another: they are all independent and deal with distinct aspects of the situation.
Needless to say, the relevant paragraphs of the Explanatory Notes do not suggest that section 45 is to be regarded as merely consequential or incidental.
Moreover, section 45 applies to any penalty provision in a relevant enactment which, by subsection (7), covers any Act passed before the 2007 Act.
These are the words which bring in, for example, the RTOA.
So the modifications of the law on reserved matters made by section 45 are effected by exactly the same words as the modifications of the law on devolved matters.
Both sets of modifications play an equivalent part in the overall scheme the modifications to reserved penalty provisions are of no less importance than the modifications to devolved penalty provisions.
Neither can be regarded as incidental to, or consequential on, the other.
Despite this, in Logan v Harrower the appeal court considered that the modifications to the law in Part I of Schedule 2 to the RTOA were merely incidental to, or consequential on, the more general aspect of the provision, which relates generally to the powers of the sheriff in relation to statutory offences, whatever their origin.
The reasoning is not easy to follow.
It is enough, however, to observe that neither section 45 nor any other provision in the 2007 Act actually has any separate more general aspect relating generally to the powers of the sheriff in relation to statutory offences.
So there is no separate devolved provision of that kind and, more particularly, no separate provision made which does not relate to reserved matters in relation to which the modifications to the RTOA made by section 45 could ever be regarded as incidental or consequential.
For these reasons, like Lord Hope, I am satisfied that para 3(1) of Part I of Schedule 4 to the 1998 Act does not have the effect of preventing para 2 from applying to section 45 of the 2007 Act.
It is therefore necessary to look at the qualification to para 2(1) which is to be found in para 2(3), and which the appeal court did not consider in Logan v Harrower because of their conclusion on para 3(1).
Is the rule of law in the RTOA special to a reserved matter under para 2(3)?
Unquestionably, section 33 of the RTOA and the relevant entry in Part I of Schedule 2 comprise a rule of Scots criminal law to the effect that, on a summary conviction of a contravention of section 103(1)(b) of the RTA, the maximum punishment by way of imprisonment which may be imposed on the offender is 6 months.
That is the rule which section 45 purports to modify.
Paragraph 2(1) of Part I of Schedule 4 prevents the Scottish Parliament from modifying a rule of Scots criminal law only to the extent that the rule is special to a reserved matter.
So the Court has to decide whether this rule is special to a reserved matter.
The advocate depute argued that the rule is not special to this reserved matter or indeed to any other reserved matter: the rule simply prescribes a maximum penalty of 6 months imprisonment for a conviction on summary complaint and that is a penalty that is found in many statutes, on both reserved and devolved matters.
To be special, the penalty would have to be one that was not prescribed for an infringement of any statute dealing with a devolved matter.
In theory, for instance, it would have applied if the unique penalty for an infringement of section 103(1)(b) of the RTA had been per impossibile say, whipping.
Then, because that was a penalty which was found only within the sphere of reserved matters, the Scottish Parliament would be prevented from modifying it.
It is fair, however, to say that the advocate depute was unable to point to any actual rule of Scottish criminal law or procedure to which, on his preferred construction, para 2(1) would apply.
Although I was initially attracted by the advocate deputes argument, it cannot be right, since, on his construction, the limit makes no sense whatever.
Why should the Scottish Parliaments power to modify an enactment whose subject matter is a reserved matter depend on whether there happens to be some comparable enactment dealing with a completely different devolved matter? More particularly, why should the Scottish Parliament be entitled to modify the maximum term of 6 months imprisonment on summary conviction of a contravention of section 103(1)(b) of the RTA in Part I of Schedule 2 to the RTOA simply because there happen to be a number of either way offences in the devolved area where the maximum term of imprisonment on summary conviction is also 6 months? Of course, the Parliament can alter the penalty provision for those offences because it is its business to make such amendments where appropriate.
But that is, of itself, no reason why it should become the Scottish Parliaments business for whatever purpose to modify the penalty provision which Parliament has deliberately chosen to enact for a specific offence for which Parliament retains responsibility.
The general point can be illustrated by reference to limitation periods.
As Mr Johnston QC points out, in Prescription and Limitation (1999), Appendix II, p 371, the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) does not say that its provisions are not to apply where other enactments establish a prescriptive or limitation period for specific rights or remedies.
Nevertheless, as he goes on to say, on general principles of statutory construction, it can be assumed that an enactment of a special nature takes precedence over an enactment of a general nature: the 1973 Act is therefore displaced by more specific provision in other enactments.
Mr Johnston then gives a useful table listing a range of enactments which contain their own specific limitation periods.
By contrast, there are many statutes which provide for civil liability but do not contain any separate, specific, provision on limitation of proceedings brought for their breach.
For example, a breach of a duty under the Provision and Use of Work Equipment Regulations 1998 (No 2306) is actionable: section 42 of the Health and Safety Act 1974.
But there is no special rule of law on the limitation of proceedings for such a breach: the general rule of law in the 1973 Act applies.
Therefore, if the Scottish Parliament chose to alter that general rule in the 1973 Act, it could do so and the new period would apply to actions for breach of the Regulations.
This is so, even though Part I of the Health and Safety Act is a reserved matter: para 1 and Section H2 of Part II of Schedule 5 to the 1998 Act.
Many statutes do make special provision on limitation, however.
For example, under section 568(5) of the Companies Act 2006, an action for loss suffered because of a contravention of the pre emption provision in a companys articles must be brought within 2 years.
That is unquestionably the law on a reserved matter as defined in para 2(2) of Part I of Schedule 4 to the 1998 Act.
It is surely unthinkable that, even as part of an exercise to tidy up the Scots law of limitation of actions, the Scottish Parliament would be able to alter that period, which is special in the sense that, instead of relying on the general law of limitation, Parliament has deliberately selected 2 years as being appropriate for proceedings of that particular kind.
Leaving aside any other possible difficulties, if the Scottish Parliament could change the period, the result would be to introduce a difference between English and Scots law in an area where Parliament, legislating after devolution, must have considered that the same special rule should continue to apply in both jurisdictions.
Equally surely, the power of the Scottish Parliament to alter the period in section 568(5) of the Companies Act could not be affected because, if you rooted around in the statute book, you could find that, under section 5 of the Limitations of Actions and Costs Act 1842, the limitation period for actions brought under local and personal Acts (which would, usually at least, concern devolved matters) happened also to be 2 years.
Likewise, it would be irrational to conclude that, if the Scottish Parliament were to repeal or amend section 5 of the 1842 Act so that it no longer provided for a period of 2 years, this would somehow simultaneously remove a power which the Parliament had hitherto enjoyed to amend the limitation period under section 568(5) of the Companies Act 2006.
Quite simply, the two enactments have nothing to do with one another.
Conversely and reverting to penalties it would be absurd to hold that the Scottish Parliament could not modify a penalty provision so long as it was special to, in the sense of unique to, a reserved matter, but could give itself the power to do so by enacting the same penalty for a devolved matter.
Besides being absurd, this would offend against the principle that the limits on the competence of the Scottish Parliament are fixed by the 1998 Act and cannot be altered except by new legislation by Parliament or by Order in Council under section 30(2).
What, then, do the critical words mean? In my view, a statutory rule of law is special to a reserved matter if it has been specially, specifically, enacted to apply to the reserved matter in question as opposed to being a general rule of Scots private or criminal law which applies to, inter alia, a reserved matter.
Only general rules whose subject matter is listed in sub paras (a) to (e) of para 2(3), as amended, are protected from modification.
If interpreted in this way, para 2(3) means that para 2(1) prevents the Scottish Parliament from modifying any enactment which must be taken to reflect the conscious choice of Parliament to make special provision for the particular circumstances, rather than to rely on some general provision of Scottish private or criminal law.
Whether or not to modify such an enactment involves questions of policy which must be left for the consideration of the United Kingdom government and Parliament which are responsible for the matter.
On this interpretation, paras 2(1) and (3) place a comprehensible limit on what the Scottish Parliament can do.
I return to the particular problem in these appeals.
Suppose that, instead of increasing the maximum term of imprisonment available on summary conviction of a contravention of section 103(1)(b) of the RTA from 6 to 12 months, the Scottish Parliament had chosen to reduce it to 3 months perhaps as part of a general package of reductions in sentences designed to save money by cutting expenditure on criminal justice.
The purpose of the legislation would plainly relate to a devolved matter.
Nevertheless, the Scottish Parliament could not achieve that purpose by modifying the RTOA in that way because the maximum term of imprisonment on summary conviction of the offence had been specially chosen by Parliament.
The modification would therefore be outside the competence of the Scottish Parliament by virtue of para 2 of Part I of Schedule 4.
And it would rightly be outside competence because it would inevitably involve significant road traffic policy issues which, under the 1998 Act, it would be for the United Kingdom government (more particularly, the Secretary of State for Transport) and Parliament to evaluate.
For instance, would it be acceptable if the average sentence for driving while disqualified fell because prosecutors were reluctant to mount the more complicated and time consuming sheriff and jury trials necessary to attract a prison sentence of more than 3 months? Would the potential cost cutting advantages of the policy outweigh this possible disadvantage? Mutatis mutandis, the Secretary of State for Transport and the United Kingdom government as a whole would have to consider these issues if the Ministry of Justice made an equivalent proposal for England and Wales.
If they ultimately agreed, Parliament would be asked to legislate to amend the RTOA.
In the case of Scotland, if the United Kingdom government and Parliament were content, the necessary changes could be made by a section 104 order.
If a reduction in the maximum term of imprisonment on summary conviction would be outside the competence of the Scottish Parliament in this way, the same must apply to an increase.
For these reasons I conclude that the rule of Scots criminal law prescribing the maximum term of imprisonment for a summary conviction of a contravention of section 103(1)(b) of the RTA, in Part I of Schedule 2 to the RTOA, is special to that reserved matter, in the sense that Parliament has chosen it specifically for that offence.
So, by virtue of para 2(1) of Part I of Schedule 4 to the 1998 Act, the Scottish Parliament has no power to modify it.
A majority of your Lordships have reached the opposite view.
At para 34 of his judgment, Lord Hope accepts that, when considering para 2 of Part I of Schedule 4, the starting point is identifying the rule of Scots criminal law that is being modified.
Then one must ask whether that rule is special to a reserved matter.
Naturally, I agree.
Lord Hope takes the view that the purpose of the enactment may be referred to in order to identify the rule of law that is being modified.
I see no room for that approach in this case.
Here, the purpose of the enactment is clear and undisputed: to increase the sheriffs summary sentencing powers.
If, however, you want to know which rules of Scottish criminal law the enactment is modifying in order to achieve that purpose, you simply have to look at the perfectly clear terms of section 45 and apply them to the penal provisions in question.
I agree with Lord Hope when he says, at paras 35 and 37, that the rule of Scots law as to the maximum term of imprisonment that can be imposed i e the maximum period of 12 months on indictment, set out in the relevant part of column 4 of the Schedule falls to be treated as a rule that is special to a reserved matter.
I have explained my reasons for taking that view.
These cannot, of course, be Lord Hopes reasons.
But he gives no explanation for his view beyond the assertion that it plainly, is a rule which is special to the Road Traffic Acts and it is a reserved matter.
In para 39 Lord Hope considers that it would be to carry the process of analysis too far to say that the Schedule contains two maximum sentences, one for summary proceedings and the other for proceedings on indictment.
But that is precisely what Parliament does say in section 33(1) of the RTOA read together with the relevant entry in the Schedule (referring to the maximum punishment by way of imprisonment and giving different figures depending on the mode of trial).
Lord Hope also thinks that it would be carrying the process of analysis too far to say that both of these maximum sentences are special.
Apparently this is because such a decision depends on an exercise of judgment in which the purpose of the provision (here, section 45) may be the best guide.
But, as the cross headings show, para 2 of Part I of Schedule 4 is designed to protect the law on reserved matters from modification.
It is therefore necessary to identify which rules of Scots criminal law are to be regarded as special to a reserved matter in terms of para 2(3) and so protected from modification.
Since, ex hypothesi, these rules cannot be modified, they cannot be identified by reference to the purpose of a provision which purports to modify them.
In the end, therefore, all we know is that, for some unstated reason, the maximum sentence which can be imposed on conviction of a contravention of section 103(1)(b) of the RTA in a prosecution on indictment is a rule which is special to the Road Traffic Acts, but the maximum sentence which can be imposed for the same offence in a summary prosecution is not.
In para 59 of his judgment Lord Walker identifies what the relevant rule of Scots criminal law to be modified is not: it is not that driving while disqualified is a criminal offence (agreed), nor that it is a criminal offence punishable by imprisonment (agreed), nor that the maximum term of imprisonment is 12 months (also agreed, since, again, this must be a reference to the maximum term of imprisonment in a prosecution on indictment).
The inference seems to be that these rules might indeed be special to a reserved matter and beyond the reach of the Scottish Parliament.
As Lord Walker says, however, all these rules have been left untouched.
You then eagerly wait to hear about the rule that has not been left untouched: that the maximum term of imprisonment is 6 months in a summary prosecution.
But you wait in vain.
Instead, the rule to be modified turns out to be whether (and if so to what degree) the option of summary trial before the sheriff should reduce the maximum sentence that can be passed.
With great respect, that does not really look much like a rule of Scots criminal law.
But, whatever the description, it is actually the product of the two specific rules of Scots criminal law as to the maximum term of imprisonment for a contravention of section 103(1)(b) of the RTA in summary and indictment proceedings respectively.
That product can itself be modified only by modifying either or both of these specific rules.
By enacting section 45, the Scottish Parliament purported to modify the rule that the maximum term of imprisonment for this offence in summary proceedings is 6 months.
The unavoidable question is whether that rule is special to a reserved matter in terms of para 2(3) of Part I of Schedule 4 to the 1998 Act.
But that question is neither posed nor answered.
Having bowed politely in the general direction of the argument, Lord Brown rests his conclusion on simple assertion.
Until now, judges, lawyers and law students have had to try to work out what Parliament meant by a rule of Scots criminal law that is special to a reserved matter.
That is, on any view, a difficult enough problem.
Now, however, they must also try to work out what the Supreme Court means by these words.
It is a new and intriguing mystery.
Conclusion
In my view, so far as it relates to the penalty provision in the RTOA relating to contraventions of section 103(1)(b) of the RTA, section 45 was outside the competence of the Scottish Parliament.
There was, of course, nothing to prevent the Scottish Parliament from increasing the maximum term of imprisonment which a sheriff, sitting as a court of summary jurisdiction, could impose.
That is what section 45(1) does and, by itself, the provision is unobjectionable since it merely deals with the jurisdiction of the sheriff.
But any increase in jurisdiction brought about by section 45(1) would remain subject to all the penalty provisions in statutes which stipulate a lower maximum term of imprisonment on summary conviction.
So subsection (2) was introduced in order to modify all those provisions.
Modification of penal provisions in statutes falling within the devolved sphere causes no difficulty.
But, for the reasons I have explained, modifying a specific penal provision in a statute within the reserved area is outside competence essentially, because it involves making a significant change to law which Parliament has decided is to be its own responsibility.
Of course, it is true that the purpose of section 45 is to increase the sheriffs summary sentencing powers.
That is why section 45 does not relate to reserved matters and so is not beyond the competence of the Scottish Parliament by virtue of section 29(2)(b).
But a purpose of increasing the summary sentencing powers of sheriffs or other lower court judges is not a passport that entitles the Scottish Parliament to disregard the prohibitions in the other paragraphs of section 29(2) and to sweep aside any provision of the RTOA which stands in its way.
The competent end does not justify the use of means which are beyond competence.
If evidence to support that simple proposition were needed, it is to be found in the Criminal Proceedings etc (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007, which was made under section 104 of the 1998 Act shortly before the 2007 Act came into force.
The order was not mentioned by counsel on either side.
Its purpose was, first, to repeal the provisions of the RTOA which prevented the district court (and its successor, the justice of the peace court) from imposing the penalty of disqualification for traffic offences, and then to amend section 34 so as to include the district court (and, hence, the justice of the peace court) among the courts with the power to impose that penalty for such offences.
Even though these changes were clearly part of the overall scheme in the 2007 Act, to allow the lower courts to hear more serious cases by increasing their sentencing powers, it was recognised that the section 104 order was needed to carry out this particular aspect of the scheme.
By contrast, the minor consequential amendment to section 248C(1) of the 1995 Act, relating to the disqualification power for other offences, was made by section 80 of, and para 26 of the Schedule to, the 2007 Act.
In order to achieve another part of the scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of the lower courts, section 45 of the 2007 Act purports to modify, inter alia, the enactment relating to contraventions of section 103(1)(b) of the RTA in Part I of Schedule 2 to the (reserved) RTOA.
As a result, the maximum term of imprisonment that can be imposed for that offence by a court of summary jurisdiction in Scotland is intended to be twice what can be imposed by the equivalent court in England.
Of course, it is not essential that the two jurisdictions should march exactly in step on this matter as is plain from the availability of indictment proceedings with a maximum sentence of 12 months imprisonment in Scotland, but not in England.
But that is a disparity which Parliament chose to introduce.
Whether a further disparity between the jurisdictions should indeed be introduced is precisely the kind of issue like the issue as to whether the district court or justice of the peace court, rather than just the sheriff court, should have power to disqualify for road traffic offences which the 1998 Act intends that Parliament should decide.
This need cause no difficulty for the Scottish Executives scheme to adjust the jurisdiction of the Scottish courts by increasing the sentencing powers of sheriffs in summary cases if the United Kingdom government and Parliament are content that the maximum available term of imprisonment for this offence on summary conviction should be increased in this way.
Provided the draft is approved by both Houses of Parliament, the appropriate order can be made under section 104 of the 1998 Act: sections 114 and 115 and paras 2 and 3 of Schedule 7.
This is indeed precisely the kind of situation for which section 104 was designed.
Applying section 101 of the 1998 Act, I would therefore hold that the definition of relevant penalty provision in section 45(7) of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not include a provision of a relevant enactment or instrument which is special to a reserved matter within the meaning of para 2(3) of Part I of Schedule 4 to the Scotland Act 1998.
It follows that section 45 does not modify the maximum term of imprisonment of 6 months on summary conviction of a contravention of section 103(1)(b) of the Road Traffic Act 1988 in column 4 of Part I of Schedule 2 to the Road Traffic Offenders Act 1988.
I would accordingly allow the appeals, pass the bills of suspension, quash the sentence imposed by the sheriff court in each case for the contravention of section 103(1)(b) of the Road Traffic Act 1988 and remit to the appeal court to proceed as accords.
LORD KERR
The legislative competence of the Scottish Parliament is self evidently a subject of fundamental importance.
As the appeals in these cases amply demonstrate, however, it is impossible to devise a comprehensive charter which, for every conceivable situation, infallibly prescribes the limits of that legislatures enacting power.
This, it seems to me, is the inevitable consequence of the transfer by the United Kingdom government of some or even many powers to a devolved administration while retaining or, as it is more usually put, reserving, certain other matters to Parliament in Westminster.
Whether a particular Act of the Scottish Parliament falls within its legislative competence will, for the most part therefore, depend on a consideration of the particular provisions of the enactment in question.
The quest will usually begin with section 29 of the Scotland Act 1998.
It stipulates (in subsection (1)) that any provision of an Act of the Scottish Parliament is not law so far as it is outside the legislative competence of the Parliament.
Subsection (2) (b) states that a provision is outside the competence of the Scottish Parliament if it relates to reserved matters.
The issue as to whether a provision does so relate is to be determined in accordance with subsection (3) which, so far as is material, provides: the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances.
Subsection (3) has a number of component parts, each of which deserves careful consideration.
The first is that which specifies that it is subject to subsection (4).
This latter subsection (to which I shall turn presently) is a deeming provision designed to expand the category of cases in which a change in the law is to be considered to relate to reserved matters because it modifies Scots private or criminal law as it applies to reserved matters.
The need to enlarge the group in this way appears to me to clearly indicate that the construction to be placed on the expression relates to reserved matters must be suitably restrained.
If, in every instance where a provision of the Scottish Parliament touched on a reserved matter, it was to be considered to relate to a reserved matter, subsection (4) would not be needed.
The phrase needs a more careful and restricted application, therefore.
Guidance as to the extent of the restriction is provided by the next component part of section 29 (3).
The resolution of the question whether a particular provision relates to a reserved matter is to be determined by reference to the purpose of the provision.
One is immediately thereby drawn to an examination of the objective of the legislation and of the particular provision within it.
Before dealing with the result of that examination, it is useful to note the next component part of subsection (3).
It is to the effect that the determination (by reference to its purpose) whether an Act of the Scottish Parliament relates to a reserved matter is to be conducted having regard to (among other things) its effect in all the circumstances.
It seems to me obvious that the way in which the subsection is structured signifies that the effect of the provision is subordinate to its purpose in the inquiry as to whether it relates to a reserved matter.
Indeed, the assessment of the effect of the provision is directly linked to the search for its purpose.
This is unsurprising.
As Lord Brown pointed out in the course of argument, one will customarily expect that the purpose of a particular provision is to bring about a desired effect.
The other things, apart from the effect of the provision, which are to be taken into account in ascertaining its purpose are not specified in subsection (3).
Mr Brown on behalf of the appellant, Mr Miller, accepted (sensibly and correctly, in my view) that these would include statements by those responsible for the legislation which purported to identify the reasons for its enactment.
The genesis of the legislation under challenge here is the report of the Committee appointed in November 2001 to review summary justice in Scotland under the chairmanship of Sheriff Principal John McInnes QC.
The formal remit of the Committee was stated to be: To review the provision of summary justice in Scotland, including the structures and procedures of the sheriff courts and district courts as they relate to summary business and the inter relation between the two levels of court, and to make recommendations for the more efficient and effective delivery of summary justice in Scotland.
In paragraph 9 of its summary of recommendations the Committee recorded its proposal that the criminal jurisdiction for judges in summary cases should be a maximum 12 months detention or imprisonment and a 20,000 fine.
The reasons for this particular recommendation are discussed throughout the report.
In paragraph 7.72 on page 78 at paragraph (iv) it is explained that the view of the majority of the Committee was that there was a need to relieve pressure on the higher courts.
This required the lower courts to take on more serious cases.
Consequently, some increase in sentencing powers for the judges in those courts was required.
The Committee recognised that recommending an increase in the sentencing powers of the courts of summary jurisdiction could give rise to what is described in the report as sentence drift, that is a tendency to increase the normal sentencing range because of the availability of the increase in the statutory maxima.
It made clear its express disavowal of any intention to bring about sentence drift in paragraph 7.89 of the report where the following appears: In proposing an increase in sentencing powers, we are clear that we do not intend any uplift of the going rate for all offences, but rather we wish to extend the range of offences that can appropriately be dealt with in the summary courts.
The Ministerial response to the McInnes recommendations was contained in a report entitled, Smarter Justice, Safer Communities Summary Justice Reform published in March 2005.
In paragraph 4.10 the Scottish Executive signalled its acceptance of the proposal that there be an increase in the sentencing powers of a sheriff sitting without a jury in summary proceedings, stating that this form of proceeding was generally simpler and faster than trials in a solemn court.
The report also acknowledged the concern that there might be upward sentence drift but recorded the Committees finding that there was no evidence that this was linked to an increase of sentencing powers in summary proceedings (para 4.51).
The Bill which was to give effect to the recommendations of the McInnes Committee (among other matters), the Criminal Proceedings etc. (Reform) (Scotland) Bill, was introduced to the Scottish Parliament on 27 February 2006.
Clause 35, which became section 45 of the enacted legislation, dealt with certain statutory offences (including driving whilst disqualified) and provided for a new maximum term of imprisonment of twelve months to which a person summarily convicted of such an offence would be liable.
The Bill was considered by the Justice 1 Committee of the Scottish Parliament on 19 April 2006.
In answer to a question from a member of the Justice Committee concerning the possibility of an increase in the prison population because of the enlarged sentencing powers of the sheriff courts in summary proceedings, Noel Rehfisch of the Scottish Executive Justice Department said this, at Scottish Parliament Official Report, cols 2838 2839: it is clear that the intention of the changes is not to be more punitive in respect of any particular offence.
For example, for any statutory offence that can be tried only summarily at present, the sentencing limit will not change.
The increase to 12 months is about providing headroom in the summary system to deal with slightly more serious cases that, in the view of the McInnes Committee which ministers accepted could relevantly, competently and capably be dealt with in the sheriff summary court.
On two occasions in recent years there have been increases in the maximum sentencing level in the sheriff solemn courts.
The same sheriffs, albeit with a jury, are responsible for determining sentences in those cases.
To date, there is no evidence that those increases have led to what might popularly be described as sentence drift.
We are confident that the judiciary will continue to consider individual cases on their merits.
The measures are about having the appropriate level of business in certain sectors of the system.
These comments were reflected in the 10th report of the Justice 1 Committee published on 5 July 2006.
At paragraph 135 of the report the following appears: In oral evidence Executive officials stated that these provisions are about seeking some form of business redistribution to ensure that every level of the system deals with the business that it ought to deal with and managing that as effectively as possible.
Indeed, in the Policy Memorandum [containing the Executives comments on the provisions of the Bill], the Executive refers to its policy of creating a flexible court capacity to ensure that cases can be dealt with quickly and at the appropriate level. and at paragraph 136: The Executives expectation is that this redistribution of cases would represent a downward shift of around 500 to 550 cases per year from sheriff and jury to sheriff summary procedure.
The Executive has also stated that the provisions in the Bill are not designed to be more punitive in relation to any particular offences.
The Scottish Prison Service referred in oral evidence to its view that it does not expect the Bill to have a significant impact on the prison population.
It appears to me from all this material that the purpose of section 45 of the 2007 Act is unmistakably clear.
As the advocate depute submitted, it is to effect a reallocation of business within the court structure.
The means by which this is achieved is an increase in the sentencing powers available to sheriffs sitting in their summary jurisdiction.
The greater maximum penalty is not an end in itself nor is it intended that that the going rate for relevant offences should be increased.
This is merely the mechanism by which the quite different purpose of providing for a more expeditious dispatch of business can be achieved.
This conclusion is reinforced by the consideration that defendants charged with relevant offences are not exposed to a greater penalty in the summary proceedings than they formerly faced if prosecuted for the same offences on indictment.
In this context, I should say that I consider that the analogy which the appellants sought to draw with the decision of the Divisional Court in Northern Ireland in the case of Reg (Hume) v Londonderry Justices [1972] N. I. 91 is misconceived.
In that case the Parliament of Northern Ireland, in exercise of its powers under section 4 of the Government of Ireland Act 1920 to make laws for the peace, order and good government of Northern Ireland, had purported (by a regulation made in a statutory rule and order by the Minister of Home Affairs) to authorise certain members of Her Majestys forces to require an assembly of persons to disperse if a breach of the peace was apprehended.
The Divisional Court held that the regulation was made in breach of section 4 (3) of the 1920 Act which forbade the making of laws by the Northern Ireland Parliament in respect of Her Majestys forces.
It had been argued on behalf of the respondent that the pith and substance of the regulation was the peace, order and good government of Northern Ireland and that the conferring of powers on members of the armed forces was merely incidental.
This argument was rejected, Lowry LCJ observing (at page 111) that both the object and the method of achieving it must be valid.
Since the method in that case had been expressly forbidden, the regulation could not be rescued from its invalidity because it was for a permitted object.
By contrast, in the present case the method (enlargement of the sentencing powers in sheriff summary proceedings) of achieving the object (the more efficient and expeditious prosecution of offences) is not expressly forbidden.
For these reasons, and for the reasons more fully given by Lord Hope and Lord Rodger, I am therefore satisfied that section 45 of the Criminal Proceedings etc (Reform) (Scotland) Act 2007 does not relate to reserved matters within the meaning to be ascribed to that condition in section 29 (2) (b) of the Scotland Act 1998.
I turn to briefly consider section 29 (4).
It provides: (4) A provision which (a) would otherwise not relate to reserved matters, but (b) makes modifications of Scots private law, or Scots criminal law, as it applies to reserved matters, is to be treated as relating to reserved matters unless the purpose of the provision is to make the law in question apply consistently to reserved matters and otherwise.
As I have already observed, this is a deeming provision which expands the category of cases in which a change in the law is to be considered to relate to reserved matters, although not so relating for the purposes of section 29 (3).
Modifications of Scots private or criminal law are to be treated as relating to reserved matters subject to two important qualifications.
The first of these is that such modifications are confined to the law as it applies to reserved matters.
The advocate depute argued that section 45 of the 2007 Act modified Scots criminal law generally and on that account could not be said to apply solely to reserved matters.
It appears to me, however, that this first qualification is not designed to exclude from the ambit of section 29 (4) modifications that relate to both reserved and devolved matters.
It was suggested in argument that the purpose of the provision was to prevent the Scottish legislature from targeting reserved matters.
This may well be correct but that objective is likely to be severely curtailed if a measure of the Scottish Parliament applying to reserved and devolved measures which were unrelated to each other was exempt from the reach of section 29 (4) and it appears to me that this must be the logical conclusion of the advocate deputes argument.
A final determination of this issue is not, in my opinion, strictly necessary, however, because it is quite clear that the impugned legislation comes squarely within the second qualification in section 29 (4).
A provision, the purpose of which is to make the law apply consistently to reserved matters and otherwise, is not caught by the subsection.
It is unquestionably clear that section 45 of the 2007 Act has that precise purpose and for that reason it does not come within section 29 (4).
The final and, to my mind, most troubling issue arises from section 29 (2) (c) of the 1998 Act.
It states that a provision is outside the competence of the Scottish Parliament if it is in breach of the restrictions in Schedule 4 to the Act.
Paragraph 2 of that Schedule contains the following material provisions: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, the law on reserved matters. (2) In this paragraph, the law on reserved matters means (a) any enactment the subject matter of which is a reserved matter and which is comprised in an Act of Parliament or subordinate legislation under an Act of Parliament, and (b) any rule of law which is not contained in an enactment and the subject matter of which is a reserved matter, and in this sub paragraph Act of Parliament does not include this Act. (3) Sub paragraph (1) applies in relation to a rule of Scots private law or Scots criminal law (whether or not contained in an enactment) only to the extent that the rule in question is special to a reserved matter .
Section 45 of the 2007 Act self evidently relates to a rule of Scottish criminal law.
Is the rule special to a reserved matter? Lord Hope has concluded that the rule is not special to a reserved matter because it does not increase the penalty that can be imposed in respect of the offence but has merely changed the procedural route by which the enlarged penalty can be imposed.
It is concerned with a rule of procedure that applies generally to prosecutions for offences in the sheriff court.
On this analysis, section 45 is not to be regarded as directed to a rule which is special to a reserved matter.
By contrast, Lord Rodger considers that a statutory rule is special to a reserved matter if it has been enacted in order to apply specifically to the rule in question.
I have not found it easy to reach a view as to which of these competing and persuasively argued positions is to be preferred.
It is clear that paragraph 2 (3) contemplates an ambit or scope of application for a particular rule beyond its possible impact on reserved matters.
It is only on the extent to which the application of the rule is special to reserved matters that the denial of legislative competence is engaged.
In this context, special to may be regarded as connoting having a specific effect on reserved matters.
Where an act of the Scottish Parliament seeks to modify a rule of Scots law which has an effect on reserved matters that act will be outside the legislative competence of the Scottish Parliament.
But where the rule of Scots law being modified is not special to reserved matters, Parliaments legislative power remains intact.
Viewing the effect of the provision in this way, I have concluded that where an act of the Scottish Parliament modifies a statutory rule which has a specific effect on a reserved matter it comes within the prohibition contained in paragraph 2 (1) of Schedule 4 to the 1998 Act.
I therefore agree with Lord Rodger that section 45 is caught by that paragraph.
The question then arises whether the section can be saved by recourse to paragraph 3 of Schedule 4 to the 1998 Act which provides: (1) Paragraph 2 does not apply to modifications which are incidental to, or consequential on, provision made (whether by virtue of the Act in question or another enactment) which does not relate to reserved matters, and do not have greater effect on reserved matters than is necessary to give effect to the purpose of the provision.
Both Lord Hope and Lord Rodger have concluded that a statutory provision that alters the sentencing power of the sheriff court sitting in its summary jurisdiction cannot be regarded as coming within this provision.
Although I was initially attracted by the notion that the increase in sentencing powers was incidental to a provision being made for the reallocation of court business, I have come to the view that this cannot be right.
The increase in sentencing powers is the provision concerned.
It is not incidental to another permissible statutory rule.
It cannot be saved by paragraph 3, therefore.
In the result, I agree with Lord Rodger that this appeal should be allowed.
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As originally enacted, s.33 and Part 1 of Schedule 2 to the Road Traffic Offenders Act 1988 (the RTOA) provided that the maximum sentence that a Sheriff sitting summarily could impose in respect of the offence of driving while disqualified (s.103(1)(b) of the Road Traffic Act 1988 (the RTA)) was six months imprisonment or the statutory maximum fine or both.
If the offence was prosecuted on indictment, the maximum sentence was 12 months imprisonment or a fine or both.
Following a recommendation by a committee appointed to review the provision of summary justice in Scotland that the criminal jurisdiction of judges sitting summarily should be increased to a maximum of 12 months, the Criminal Proceedings etc (Reform)(Scotland) Act 2007 (the 2007 Act) was enacted by the Scottish Parliament.
S.45 of that Act increased the maximum sentence that sheriffs sitting summarily could impose for the offence of driving while disqualified to 12 months imprisonment.
On 17 December 2007 and 14 May 2008, respectively, in summary proceedings Sean Martin and Ross Miller were each sentenced by Sheriffs to periods in excess of six months imprisonment for driving while disqualified contrary to s.103(1)(b) of the RTA.
They both sought to challenge their sentences on the basis that amending the relevant provisions of the 2007 Act were outside the legislative competence of the Scottish Parliament.
The High Court of Justiciary (the HCJ) dismissed the appeals, holding that the increase in the sentencing power of Sheriffs sitting summarily by s.45 of the 2007 Act was within the Scottish Parliaments legislative competence.
The HCJ gave the Appellants permission to appeal to the Supreme Court.
The Supreme Court, by a majority of three to two (Lord Rodger and Lord Kerr dissenting), dismisses the appeals.
The Court holds that the provision in question was within the Scottish Parliaments legislative competence.
Lord Hope delivered the leading judgment on behalf of the majority.
Majority Judgments The answer to the question raised by this case is to be found by applying the rules laid down in s 29 and Part 1 of Schedule 4 the Scotland Act 1998 which determine whether a provision of an Act is
outside the Scottish Parliaments legislative competence.
Three questions arise in this case: (1) whether the purpose of s.45 was to modify Scots criminal law as defined in s.126(5) of the Scotland Act; (2) if so, whether its purpose was to make the law apply consistently to reserved matters and otherwise; and (3) if (1) and (2) are answered in the affirmative, whether the rule that s.45 modified was special to a reserved matter within the meaning of para 2(3) of Schedule 4 [para [22]].
The purpose of s.45 of the Criminal Proceedings etc (Reform)(Scotland) 2007 Act The available material conclusively demonstrates that the purpose of s.45 was to contribute to the reform of summary justice by reducing pressure on the higher courts.
The jurisdiction of a Sheriff is defined by the penalties which he can impose and his powers in this respect are quintessentially matter of Scots criminal law.
S.45 was directed to a rule of Scots criminal law, so it does not relate to a reserved matter within the meaning of s.29(2)(b) of the Scotland Act 1998 [para [31]].
Was s.46 concerned to ensure that law applied consistently between reserved and non reserved matters? S.45 is one of a group of related provisions contained in the 2007 Act increasing the summary sentencing powers of Sheriffs in respect of a number of common law and statutory offences.
If the 2007 Act had increased the sentencing power in respect of common law but not statutory offences the reform would have been incomplete and confusing.
This problem would have been exacerbated if the reform had attempted to distinguish between statutory offences related to reserved matters and those which did not.
The purpose of s.45 was to ensure that the law relating to the sentencing powers of Sheriffs was consistent as between offences concerning reserved matters and otherwise.
Consequently, s.45 is not related to a reserved matter for the purpose of s.29(4) of the Scotland Act 1998 [paras [32] [33]].
Is the sentencing jurisdiction of a Sheriff in relation to road traffic offences special to the Road Traffic Offenders Act 1988 and the Road Traffic Act 1988? In identifying the rule of law that is being modified for the purpose of the test established by para 2(3) of Schedule 4, regard may be had to the purpose of the legislative provision effecting the modification [para [34]].
The key to the decision in this case lies in identifying the rule that is being modified.
This is achieved by examining the purpose of the legislative provision which is under scrutiny [para [38] and [39]].
S.33 and Part 1 of Schedule 2 to the RTOA and s.103(1)(b) of the RTA contain, in effect, two rules of Scots criminal law.
Firstly, that the overall maximum sentence in respect of driving while disqualified is 12 months.
Secondly, the route by which the maximum sentence can be imposed.
The former provision is plainly a rule that is special to the RTOA and RTA and is a reserved matter that the Scottish Parliament has no power to modify.
However, the latter is a rule concerning Scots criminal jurisdiction and procedure which is not reserved.
The change in the law effected by s.45 does not alter the maximum period of imprisonment for the offence of driving while disqualified.
It relates to the procedure which determines whether the sheriff has power to impose that sentence.
The rule of Scots law being modified is the rule of Scots criminal procedure.
This rule of procedure is not special to the RTOA or RTA [para [37]].
Had it been necessary to address the point, para 3 of Schedule 4 (which provides that legislation having incidental or minor effects upon reserved matters shall be within competence) could not, contrary to the conclusion reached by the HCJ, render s.45 within the Scottish Parliaments legislative competence. s.45 constituted an important modification to a rule of Scots criminal procedure that could not be regarded as incidental or consequential [para [40]].
Accordingly the court holds that s.45 is within the legislative competence of the Scottish Parliament.
The appeals are dismissed and remitted to the HCJ for any further orders that may be required [para [43]].
Dissenting Judgments Lord Rodger agreed that s.45 did not relate to a reserved matter [para [119]].
But he would have held that the provision of the RTOA prescribing the maximum term of imprisonment for a summary conviction for driving while disqualified is special to a reserved matter, in the sense that the United Kingdom Parliament has chosen it specifically for that offence.
Lord Rodger did not agree that the purpose of the modifying provision can be a relevant consideration in identifying the rule of Scots law that is being modified for the purpose of para 2(3) of Schedule 4 [para [143]].
He also did not agree that the purpose of a provision which purports to modify a rule of Scots law can be used to determine whether that rule is special to a reserved matter [para [145]].
Lord Kerr agreed with Lord Rodger.
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Is a person who has been extradited to this country for trial on a criminal charge, and who prior to his extradition was guilty of contempt of court by disobeying a court order, open to punishment for his contempt although it was not the basis of his extradition? The answer depends in part on the proper interpretation of the so called specialty or speciality provisions of the Extradition Act 2003 and partly on the law relating to contempt.
The speciality principle (widely recognised in extradition law and extradition treaties) prohibits a person who has been extradited for a particular offence or offences from being dealt with by the requesting state for another offence or offences committed (or alleged to have been committed) before his extradition, subject to such exceptions as may be contained in the relevant statute or treaty.
Mr OBrien appeals against a decision of the Criminal Division of the Court of Appeal (Gross LJ, Openshaw J and Judge Milford QC) [2012] 1 WLR 3170, upholding an order of the Common Serjeant (Judge Barker QC) committing him to prison for 15 months for contempt of court in disobeying a restraint order made against him under section 41 of the Proceeds of Crime Act 2002 (POCA).
The appellant does not dispute that he was guilty of contempt, but he submits that his committal was unlawful by reason of the specialty provisions of Part 3 of the Extradition Act 2003.
After committing the contempt the appellant fled to the USA, from where he was extradited to the UK for other reasons.
It is submitted that it was not thereafter open to the English court to punish him for his earlier contempt, for which he had not been extradited.
The Court of Appeal certified the following points of law of general public importance: i.
Whether a contempt of court constituted by breach of a restraint order made under section 41 of the Proceeds of Crime Act 2002 constitutes a civil or criminal contempt. ii.
If the answer to i) is a civil contempt, whether Section 151A of the Extradition Act 2003 and/or article 18 of the United Kingdom United States Extradition Treaty 2003 preclude/s a court from dealing with a person for such a contempt when that person has been extradited to the United Kingdom in respect of criminal offences but not the contempt in question.
In 2009 the Appellant came under investigation on suspicion of involvement in a large scale scheme to defraud investors, commonly known as a boiler room fraud.
On 24 September 2009 the Common Serjeant made a restraint order against him under section 41 of POCA.
It required the appellant, among other things, to make disclosure of his assets, not to remove assets from England and Wales, and to repatriate within 21 days any moveable asset in which he had an interest outside England and Wales.
The order was prefaced in the usual way with a penal notice, that is, a warning that if he disobeyed the order he may be held to be in contempt of court and imprisoned, fined or have his assets seized.
In this respect the order followed the standard form of freezing order in civil proceedings (originally known as a Mareva order), on which the statutory criminal restraint order provisions were modelled.
The appellant failed to comply with the restraint order and he fled the jurisdiction.
On 18 December 2009 the Common Serjeant found that he was in contempt of court, issued a warrant for his arrest and adjourned the imposition of a penalty.
Six months later the Appellant was traced to Chicago.
The Serious Fraud Office (SFO) by now wanted his extradition in order to prosecute him on charges relating to the alleged fraud.
They sought the assistance of the US authorities and a federal arrest warrant was issued against him.
On 8 October 2010 he was arrested in Chicago and appeared before the local US District Court.
He consented to his extradition in accordance with the UKs request but did not waive entitlement to the benefit of the specialty principle.
The SFO was initially under the impression that as a matter of law the appellants contempt was criminal in nature.
However, the United Kingdom United States Extradition Treaty 2003 limited extradition to offences punishable by imprisonment for 12 months or more, and in the USA the maximum sentence for the appellants contempt, if punishable as a misdemeanour, would have been six months imprisonment.
In those circumstances the SFO was concerned that there might be complications if the appellant were returned to the UK under an extradition order for prosecution for the boiler room fraud but at the same time was subject to a bench warrant for the earlier contempt.
This concern led the SFO to apply to the Common Serjeant to set aside the bench warrant, and on 30 November 2010 he did so.
On 2 December 2010 the appellant was returned to the UK.
He was arrested, charged with various offences of fraud and remanded in custody.
On further consideration, the SFO came to the view that the appellants contempt was not a criminal offence and so was not affected by the specialty principle.
It therefore applied to the Common Serjeant for the appellants committal.
The appellant objected that the court had no jurisdiction to hear the application.
In a judgment delivered on 1 April 2011 the Common Serjeant rejected the appellants objection.
After reviewing the authorities he concluded that the contempt was not a criminal offence, but was a civil contempt, and that the specialty principle therefore did not afford the appellant any protection.
The Court of Appeal upheld the Common Serjeants decision.
For the avoidance of doubt, the question whether the appellants contempt constituted a civil or criminal contempt made no difference to the jurisdiction of the Criminal Division to hear his appeal, by virtue of section 13 of the Administration of Justice Act 1960 and section 53 of the Senior Courts Act 1981.
Section 13 of the 1960 Act provides that an appeal shall lie from any order or decision of a court in the exercise of jurisdiction to punish for contempt of court (including criminal contempt), and that such an appeal from the Crown Court shall lie to the Court of Appeal.
Section 53 of the 1981 Act provides that the Criminal Division of the Court of Appeal shall exercise the jurisdiction of the Court of Appeal under the former section in relation to appeals from orders and decisions of the Crown Court.
Grounds of appeal
Mr Alun Jones QC advanced two arguments on behalf of the appellant.
His primary submission was that on the appellants extradition to the UK the Crown Court had no power to deal with him for his earlier contempt, no matter whether it constituted a civil or a criminal contempt.
If he failed on that point, his second submission was that the appellants contempt should be classified as criminal.
The first point depends on the proper construction of the Extradition Act.
The second depends on the law of contempt.
Extradition Act 2003
Part 1 of the Extradition Act deals with extradition from the UK to category 1 territories.
Part 2 deals with extradition from the UK to category 2 territories.
Part 3 deals with extradition to the UK from category 1 and 2 territories.
The USA is a category 2 territory.
The appellants argument is clear and simple.
Part 3 should be regarded as a self contained code governing extradition to the UK.
It comprises sections 142 155A (section 155A, as inserted by section 42 of, and paragraph 24 of Schedule 13 to, the Police and Justice Act 2006) but the important provisions for the purposes of the appellants argument are sections 148 and 151A (as inserted by section 76(3) of the Policing and Crime Act 2009).
Section 148(1) provides: Conduct constitutes an extradition offence in relation to the United Kingdom if these conditions are satisfied (a) the conduct occurs in the United Kingdom; (b) the conduct is punishable under the law of the relevant part of the United Kingdom with imprisonment or another form of detention for a term of 12 months or a greater punishment.
The appellants contempt occurred in the United Kingdom and was punishable under section 14(1) of the Contempt of Court Act 1981 with imprisonment for longer than 12 months.
He submits that it was therefore an extradition offence within the definition of section 148.
Section 151A provides: (1) This section applies if a person is extradited to the United Kingdom from a territory which is not (a) a category 1 territory, or (b) a territory falling within section 150(1)(b) [which does not include the USA]. (2) The person may be dealt with in the United Kingdom for an offence committed before the persons extradition only if (a) the offence is one falling within subsection (3), or (b) the condition in subsection (4) is satisfied. (3) The offences are (a) (b) (c) (a) (b) the offence in respect of which the person is extradited; an offence disclosed by the information provided to the territory in respect of that offence; an offence in respect of which consent to the person being dealt with is given on behalf of the territory. (4) The condition is that the person has returned to the territory from which the person was extradited, the person has been given an opportunity to leave the United Kingdom. (5) A person is dealt with in the United Kingdom for an offence if (a) (b) the person is tried there for it; the person is detained with a view to trial there for it.
For reasons which I will explain, section 148 has no direct application to the extradition of a person to the United Kingdom from the United States.
However, two matters are not in dispute.
First, it is common ground that if the appellants contempt amounted to an offence within the meaning of section 151A, it was not open to a court in the United Kingdom to deal with him for that contempt.
Secondly, although an offence (in section 151A) is wider than an extradition offence (in section 148) in that it is not limited to an extraditable offence, it is not suggested that the meaning of the word offence itself varies in different sections of the Act.
If it means a criminal offence in one section it must mean a criminal offence in the other.
For completeness it is right to record that the United Kingdom United States Extradition Treaty 2003 (Cm 7146) contains the following specialty clause in article 18(1): A person extradited under this Treaty may not be detained, tried, or punished in the Requesting State except for: (a) any offense for which extradition was granted, or a different denominated offense based on the same facts as the offense on which the extradition was granted, provided such offense is extraditable, or is a lesser included offense Article 2.1 provides: An offense shall be an extraditable offense if the conduct on which the offense is based is punishable under the laws in both States by deprivation of liberty for a period of one year or more or by a more severe penalty.
Those provisions of the Treaty run in tandem with the Act but do not give rise to a separate argument.
The argument clearly and forcefully presented by Mr Jones depends for its persuasiveness on reading section 148 in isolation.
However, for a proper understanding of its purpose and construction it is necessary to see how the section fits into the structure of the Act.
Parts 1, 2 and 3 of the Act each contains a definition of extradition offence, which have in common that they refer to conduct punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment.
In Part 1 the relevant sections are 64 and 65; in Part 2 the relevant sections are sections 137 and 138.
The full definitions vary according to whether the extradition is outwards or inwards, the territories concerned, and whether the person subject to the proceedings has already been sentenced, but there is a common structure.
The Extradition Act 2003 replaced the Extradition Act 1989.
The need for new legislation arose from the Council Framework Decision of 13 June 2002 on the European arrest warrant and surrender procedures between member states (2002/584/JHA).
Those states are designated as category 1 territories under the 2003 Act, and Part 1 of the Act implements the Framework Decision in relation to arrest warrants issued by them.
The rationale of the Framework Decision is summarised in para (5) of the 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 co operation 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. [Emphasis added.]
Article 1.1 provides: 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. [Emphasis added.]
It follows that under the Framework Decision it is a prerequisite of a valid arrest warrant that the conduct of which the person is accused or has been convicted constitutes a criminal offence under the law of the requesting state.
The process by which Part 1 of the 2003 Act gives effect to the Framework Decision is linear, by which I mean that it sets out a series of stages and what is required at each stage.
Section 2 sets out the formal requirements of a European Arrest Warrant; it must specify the offence of which the person is accused or has been convicted.
Section 3 authorises the arrest of the person who is the subject of a European Arrest Warrant.
The arrested person must be brought before a judge within 48 hours (section 6).
If the judge is satisfied that the person brought before him is the subject of the arrest warrant, he must fix a date for the extradition hearing and deal with various procedural matters (section 8).
At the initial stage of the extradition hearing, section 10(2) requires the judge to decide whether the offence specified in the Part 1 warrant is an extradition offence.
In order to decide that question the judge must apply either section 64 or section 65.
Section 64 applies to a person who has not been sentenced, ie someone who has been accused but not tried or who has been convicted but not sentenced.
Section 65 applies to a person who is alleged to be unlawfully at large after conviction and has been sentenced for the offence.
The question whether the offence specified in the warrant is an extradition offence for the purposes of Part 1 depends on (a) the nature of the offence, in particular whether it is included in the European Framework list of extraditable offences or, if not, whether it would constitute an offence under the law of the United Kingdom if committed in the United Kingdom and (b) the length of the term of imprisonment to which the person either might be sentenced or has been sentenced.
Thus section 64 provides (in relation to a person not sentenced for the specified offence): (2) The conduct constitutes an extradition offence in relation to the category 1 territory if these conditions are satisfied (a) the conduct occurs in the category 1 territory and no part of it occurs in the United Kingdom; (b) a certificate issued by the appropriate authority of the category 1 territory shows that the conduct falls within the European framework list; (c) the certificate shows the conduct is punishable under the law of the category 1 territory with imprisonment or another form of detention for a term of 3 years or a greater punishment. (3) The conduct also constitutes an extradition offence in relation to the category 1 territory if these conditions are satisfied (a) the conduct occurs in the category 1 territory; (b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom if it occurred in that part of the United Kingdom; (c) the conduct is punishable under the law of the category 1 territory with imprisonment or another form of detention for a term of 12 months or a greater punishment (however it is described in that law).
Section 65 contains analogous provisions in relation to sentenced offenders.
Extradition to non EU Member States with which the UK has extradition arrangements (category 2 territories) is governed by Part 2 of the 2003 Act.
The process begins with a request through diplomatic channels but the judicial process in the UK follows a similar pattern to that set out in Part 1.
At an initial stage the judge has to decide under section 78(4) whether the offence specified in the request for extradition is an extradition offence.
For that purpose the judge has to apply section 137 (in relation to a person who is accused of the offence or has been convicted but not sentenced) or section 138 (in relation to a person who has been sentenced for the offence).
Those sections closely resemble sections 64 and 65 in Part 1.
Thus section 137(2), which is the counterpart to section 64(2), provides: The conduct constitutes an extradition offence in relation to the category 2 territory if these conditions are satisfied (a) the conduct occurs in the category 2 territory; (b) the conduct would constitute an offence under the law of the relevant part of the United Kingdom punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment if it occurred in that part of the United Kingdom; (c) the conduct is so punishable under the law of the category 2 territory (however it is described in that law).
The function of the definition of extradition offence in sections 64 and 65 of Part 1 and sections 137 and 138 of Part 2 is to differentiate between an offence for which a person may be extradited and one for which he may not.
To be an extradition offence, it must not only be a criminal offence but it must satisfy the prescribed criteria.
That accords not only with the scope of extradition under the Framework Decision but also with the essential nature of extradition as historically it has always been understood in the United Kingdom.
The Extradition Act 1870 (33 and 34 Vict, c 52) set out in the language of its preamble: the law relating to the surrender to foreign states of persons accused or convicted of the commission of certain crimes within the jurisdiction of such states, and to the trial of criminals surrendered by foreign states to this country.
Such persons were referred to in the Act as fugitive criminals.
The Extradition Act 1989 defined the term extradition crime as: Conduct in the territory of a foreign state.which, if it occurred in the United Kingdom, would constitute an offence punishable with imprisonment for a term of 12 months, or any greater punishment, and which, however described in the law of the foreign state, is so punishable under that law.
The word offence in that definition clearly referred to a criminal offence because that was the word being defined.
The effect of the definition was to narrow the class of crimes constituting extradition crimes to those of sufficient seriousness to warrant extradition.
Similarly, section 2(1)(a) of the 1989 Act contained a definition of extradition crime in language which closely resembles section 137(2) of the 2003 Act.
There is a difference in the introductory words in that section 2(1) of the 1989 Act began with the words Extradition crime means, whereas section 137(2) of the 2003 Act begins with the words the conduct constitutes an extradition offenceif, but I would reject the idea that the change of wording reflects a subtle intention to widen the concept of an extradition offence so as to include non criminal conduct.
To change the law in that respect would have been a significant step which one would expect to have been highlighted at that time.
Part 3, under which the present appeal arises, is the reciprocal of Parts 1 and 2 in that it is concerned with extradition from category 1 and category 2 territories to the UK.
Extradition from a category 1 territory is a judicial process under the Framework Decision.
Sections 142 to 149 implement that process.
Under section 142 a judge may issue a part 3 warrant if satisfied among other things that there are reasonable grounds for believing that the person has committed an extradition offence or that the person is unlawfully at large having been convicted of an extradition offence.
Section 148 applies in this context.
Section 148 has no direct application in relation to the extradition of a person from a category 2 territory, as in the present case, because the UK judiciary is not involved in the process of obtaining the extradition of a person from a category 2 territory.
The process of extradition from a category 2 territory is triggered not by a warrant issued by a UK judge but by a request from the Government to the foreign state.
For that reason sections 142 149 have no counterpart in relation to extradition from category 2 territories.
In any event, however, it is in my judgment clear for the reasons set out above that nothing can constitute an extradition offence (whether for the purposes of Part 1, Part 2 or Part 3) unless it is a criminal offence under the law of the relevant state.
Not every alleged criminal offence will amount to an extradition offence, but it is a necessary pre condition of an extradition offence that the conduct or alleged conduct is proscribed by the criminal law of the relevant state.
For those reasons I would reject Mr Joness principal argument.
Civil or criminal contempt
A restraint order under section 41 of POCA is an interim remedy.
Its aim is to prevent the disposal of realisable assets during a criminal investigation or criminal proceedings.
Under section 41(7) the court may make such order as it believes is appropriate for the purpose of insuring that the restraint order is effective.
This may include, for example, an order requiring disclosure of assets by the person against whom the restraint order is made.
A restraint order may also be reinforced by the appointment of a receiver under section 48 and the court may order any person who has possession of realisable property to which the restraint order applies to give possession of it to the receiver.
POCA does not provide that it is an offence to disobey or obstruct a restraint order or a receivership order, but the Crown Court has an inherent power to treat such behaviour as contempt of court, for which it may impose punishment under section 45 of the Senior Courts Act 1981.
Rule 59.6 of the Criminal Procedure Rules 2013 (SI 2013/1554) provides that an applicant who wants the Crown Court to exercise that power must comply with the rules set out in part 62 (Contempt of Court).
There is a distinction long recognised in English law between civil contempt, ie conduct which is not in itself a crime but which is punishable by the court in order to ensure that its orders are observed, and criminal contempt.
Among modern authorities, the distinction was explained in general terms in Home Office v Harman [1983] 1 AC 280 (in particular by Lord Scarman at p 310) and Attorney General v Times Newspapers Ltd [1992] 1 AC 191 (in particular by Lord Oliver at pp 217 218).
Breach of an order made (or undertaking obtained) in the course of legal proceedings may result in punishment of the person against whom the order was made (or from whom the undertaking was obtained) as a form of contempt.
As Lord Oliver observed in Attorney General v Times Newspapers Ltd, although the intention with which the person acted will be relevant to the question of penalty, the liability is strict in the sense that all that is required to be proved is the service of the order and the subsequent doing by the party bound of that which was prohibited (or failure to do that which was ordered).
However, a contempt of that kind does not constitute a criminal offence.
Although the penalty contains a punitive element, its primary purpose is to make the order of the court effective.
A person who commits this type of contempt does not acquire a criminal record.
A criminal contempt is conduct which goes beyond mere non compliance with a court order or undertaking and involves a serious interference with the administration of justice.
Examples include physically interfering with the course of a trial, threatening witnesses or publishing material likely to prejudice a fair trial.
The distinction is not unique to English law.
A similar distinction is recognised in the U.S.A.
In Turner v Rogers 564 US 1 (2011) the US Supreme Court had to decide whether the Due Process Clause of the US Constitution granted an indigent defendant a right to state appointed counsel in civil contempt proceedings which might lead to his imprisonment.
Justice Breyer, at page 8, said that civil contempt differs from criminal contempt in that it seeks only to coerce the defendant to do what the court had ordered him previously to do.
If a victim of the appellants fraud had obtained a freezing order against him similar to the restraint order made under section 41 of POCA, there is no doubt that the claimant would have been entitled to bring contempt proceedings against the appellant after his extradition to the United Kingdom.
The case would be analogous to Pooley v Whetham (1880) LR 15 Ch D435.
An order was made in litigation between Mr Pooley and a bank that Mr Pooley was to give up possession of certain property to a receiver and manager appointed by the court.
Mr Pooley disobeyed the order and went to Paris, where he was arrested under a warrant issued under the Extradition Act 1870 for an alleged offence of fraud.
After his return Mr Pooley was acquitted for the fraud for which he had been extradited to stand trial, but the bank sought to proceed against him for his earlier contempt.
It was argued unsuccessfully on his behalf that the proceedings contravened section 19 of the 1870 Act, which provided that a person who was arrested under the Act should not be triable or tried for any offence committed prior to his arrest other than a crime for which the surrender was granted.
The Court of Appeal held that the process instituted by the bank was not a proceeding for punishing a crime.
It was a process for the purpose of enforcing civil rights.
Mr Jones submitted that the position is different with a restraint order under section 41, because it is not an order obtained in order to protect an applicants civil rights but is an order obtained by the state in the course of a criminal investigation.
The Common Serjeant and the Court of Appeal rejected this argument and I agree with them.
It is necessary to look at the nature and purpose of the order.
It is fallacious to argue that because the order was made by a criminal court, rather than a civil court, disobedience to the order amounts to a crime, whereas it would not have been a crime to disobey a similar order imposed by a civil court.
The question whether a contempt is a criminal contempt does not depend on the nature of the court to which the contempt was displayed; it depends on nature of the conduct.
To burst into a court room and disrupt a civil trial would be a criminal contempt just as much as if the court had been conducting a criminal trial.
Conversely, disobedience to a procedural order of a court is not in itself a crime, just because the order was made in the course of criminal proceedings.
To hold that a breach of a procedural order made in a criminal court is itself a crime would be to introduce an unjustified and anomalous extension of the criminal law.
Civil contempt is not confined to contempt of a civil court.
It simply denotes a contempt which is not itself a crime.
Conclusion
I would dismiss the appeal and would answer the questions certified by the (i) a contempt of court constituted by a breach of a restraint order made under section 41 of POCA is not itself a crime. (ii) section 151A of the Extradition Act 2003 and article 18 of the United Kingdom United States Extradition Treaty 2003 do not preclude a court from dealing with the person for such a contempt when that person has been extradited to the United Kingdom in respect of criminal offences.
Court of Appeal as follows:
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This appeal concerns the principle that an individual extradited to the UK to face trial may only be tried for crimes allegedly committed before the extradition if those crimes form the basis of the extradition request (the specialty principle), and its application to contempt of court proceedings.
In 2009 Mr OBrien came under investigation on suspicion of involvement in a large scale scheme to defraud investors, commonly known as a boiler room fraud.
On 24 September 2009 the Common Serjeant of London made a restraint order against him under section 41 of the Proceeds of Crime Act 2002 (POCA).
This order required Mr OBrien (amongst other things) to make disclosure of his assets, not to remove assets from England and Wales, and to return to England and Wales within 21 days any moveable asset in which he had an interest outside England and Wales.
The order contained a penal notice, warning Mr OBrien that if he disobeyed the order he could be found to be in contempt of court.
Mr OBrien disobeyed the order and fled to the United States.
On 18 December 2009 the Common Serjeant found that he was in contempt and issued a bench warrant for his arrest.
Mr OBrien was traced to Chicago.
The Serious Fraud Office (SFO) sought his extradition to face charges relating to the alleged boiler room fraud.
Mr OBrien consented to his extradition on 8 October 2010.
Since there was a concern that the outstanding bench warrant could complicate the extradition, the SFO applied to the Common Serjeant to set aside the bench warrant, which he did on 18 November 2010.
Mr OBrien was returned to the UK on 2 December 2010.
He was arrested, charged with various fraud offences, and remanded in custody.
Meanwhile the SFO had reviewed its concerns about the contempt allegation, and re applied to the Common Serjeant for Mr OBriens committal for contempt.
Mr OBrien challenged the courts jurisdiction to hear the application.
That challenge was rejected by the Common Serjeant and by the Court of Appeal.
Mr OBrien now appeals to the Supreme Court on two grounds, namely that: On the correct construction of the Extradition Act 2003, the specialty rule applies to any extradition offence, defined as conduct occurring in the UK and punishable under the law of the UK with imprisonment or detention for 12 months or more (by reference to sections 148 and 151A of the Extradition Act 2003 (the 2003 Act)).
Mr OBriens contempt satisfies these criteria and so falls within the specialty rule; or In the alternative, Mr OBriens contempt of court is a criminal contempt constituting a criminal offence, and so falls within the specialty rule.
The Supreme Court dismisses the appeal.
The judgment of the Court is given by Lord Toulson.
On the first issue, the Court holds that section 151A does not directly apply to this case [34 35].
In any event, the sections relied upon by Mr OBrien cannot be read in isolation, and reading the Act as a whole it is clear
that conduct constituting an extradition offence must be a criminal offence under the law of the requesting state (here the UK) [36].
On the second issue, the Court holds that there is a material distinction between civil and criminal contempt.
The latter involves a serious interference with the administration of justice [41].
The former is an inherent power used by a senior court in order to ensure that its orders are observed.
Its primary purpose is to ensure that the courts orders are observed, and the contemnor does not acquire a criminal record [39 40].
In this case Mr OBriens disobedience to the Common Serjeants order constitutes civil contempt, which does not constitute an extradition offence [45].
First Ground: Mr OBrien argued that if his contempt satisfied the definition of extradition offence in section 148 of the 2003 Act, section 151A precluded a United Kingdom court dealing with him for that contempt [14 16].
Mr OBriens argument required reading these two sections in isolation.
However, it is necessary to see how those sections fit into the structure of the 2003 Act [20].
Each of Parts 1 3 of the 2003 Act contain a similar definition of extradition offence, in each case referring to conduct punishable with imprisonment or another form of detention for a term of 12 months or a greater punishment, with a common structure across the definitions [21].
The Extradition Act 1989 was replaced by the 2003 Act in order to implement, in Part 1 of the 2003 Act, an EU Framework Decision [22].
Under the Framework Decision, it is a prerequisite of a valid arrest warrant that the conduct of which the person is accused or has been convicted constitutes a criminal offence under the law of the requesting state [25].
In relation to Part 1 (dealing with extradition from the UK to other Member States), the definition of extradition offence accordingly requires that an offence either be a listed extraditable offence or an offence under the law of the United Kingdom [28].
A similar scheme is in place in relation to extradition from the UK to those non EU countries with which the UK has extradition arrangements, governed by Part 2 of the 2003 Act.
So, sections 137 and 138 of the 2003 Act require that an extradition offence concerns conduct which would constitute an offence under UK law [29 30].
That accords with the essential nature of extradition as it has been understood in the UK [31 33].
Part 3 of the 2003 Act deals with extradition to the UK. section 148 (within Part 3) has no direct application to this case, since the UK judiciary is not involved in the process of obtaining Mr OBriens extradition [35].
Nonetheless section 151A should be understood in the light of the wider scheme of the 2003 Act.
It is clear that nothing can constitute an extradition offence unless it is a criminal offence under the relevant state, here the UK [36].
Second Ground: A restraint order under POCA is an interim remedy, aiming to prevent the disposal of realisable assets during a criminal investigation.
The Crown Court has an inherent jurisdiction to treat breach of such orders as contempt of court [37 38].
There is a well recognised distinction between criminal contempt, covering conduct itself a crime, and civil contempt, covering conduct which is not itself a crime but is punishable by the court in order that the courts orders be observed.
A civil contemnor does not receive a criminal record [39 41].
If a victim of Mr OBriens fraud had obtained a freezing order against him similar to the POCA restraint order and Mr OBrien had disobeyed and absconded, the victim would clearly have been able to bring contempt proceedings following his extradition [43].
There is no relevant difference with a POCA order.
The key is the nature and purpose of the order, not the court in which the order was made [44].
Mr OBriens contempt was civil, and his committal is not barred by the specialty principle.
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The council appeals against the decision that it is liable to pay compensation under section 106 of the Building Act 1984, for loss to a business on Hastings Pier arising from its closure during 2006 under the councils emergency powers.
The respondent (Manolete) pursued the claim as assignee of Stylus Sports Ltd (Stylus), which owned and operated the business at the relevant time, but went into liquidation in late 2011.
The only issue in the appeal is whether Stylus was itself in default within the meaning of that section, so precluding it from making a claim.
The statutory provisions
As explained more fully by Jackson LJ in the Court of Appeal ([2014] 1 WLR 4030, [2014] EWCA Civ 562, 46 paras 46ff), the 1984 Act is one of a sequence of public health statutes, going back to the 19th century, which among other matters have dealt with the regulation of new buildings and the control of dangerous structures.
The 1984 Act draws together a number of such provisions, including building regulations (Part I), supervision of construction work other than by local authorities (Part II), and Other provisions about buildings (Part III).
Within Part III, and relevant to this case, are section 77 (Dangerous building) and 78 (Dangerous building emergency measures).
Section 77 enables the council to apply to the magistrates court in relation to a building or structure which is in such a condition, or is used to carry such loads, as to be dangerous.
Under subsection (1), the court may either (a) where danger arises from the condition of the building or structure, order the owner to execute work necessary to obviate the danger or to demolish it, or (b) where danger arises from overloading of the building or structure, make an order restricting its use until a magistrates court, being satisfied that any necessary works have been executed, withdraws or modifies the restriction.
By section 77(2)(b) if the person against whom an order is made under subsection (1)(a) above fails to comply with the order within the time specified, the local authority may execute the order and (b) recover the expenses reasonably incurred by them in doing so from the person in default.
Under section 78 (directly relevant to this case), where it appears to the authority that a building or structure or part of it is in such a state, or is used to carry such loads, as to be dangerous, and that immediate action should be taken to remove the danger, they may take such steps as may be necessary for that purpose, having given notice if reasonably practicable to the owner and occupiers.
Compensation is governed by section 106 (in Part IV of the Act): (1) A local authority shall make full compensation to a person who has sustained damage by reason of the exercise by the authority, in relation to a matter as to which he has not himself been in default, of any of their powers under this Act. (emphasis added) By section 106(2) any dispute arising as to the fact of damage, or as to the amount of compensation is to be determined by arbitration.
section 106 must be read with section 78(7): In the context of a claim resulting from emergency action under section 78, (7) Where in consequence of the exercise of the powers conferred by this section the owner or occupier of any premises sustains damage, but section 106(1) below does not apply because the owner or occupier has been in default (a) the owner or occupier may apply to a magistrates court to determine whether the local authority were justified in exercising their powers under this section so as to occasion the damage sustained, and (b) if the court determines that the local authority were not so justified, the owner or occupier is entitled to compensation, and section 106(2) and (3) below applies in relation to any dispute as regards compensation arising under this subsection.
The default on which the council relies includes alleged breaches (actual or prospective) of the duties imposed by the Occupiers Liability Act 1957 and the Health and Safety at Work etc Act 1974.
In short the former (by section 2) imposes on occupiers of premises the common duty of care; that is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.
The latter, by section 2, imposes on an employer the duty to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all his employees, and in particular to maintain any place of work (including means of access and egress) in a condition that is safe and without risks to their health.
The facts
The history of the pier structure is described in the report by engineers for the council (the Gifford report) in June 2006, which led directly to their decision to close the pier: The original Hastings Pier was opened in 1872.
It was built to a length of 277m with its timber deck bearing on wrought iron lattice trusses, all supported on three rows of cast iron screw piles via cast iron columns; the columns were braced with wrought iron ties secured with cast iron clamps.
The width varied from 13.6m at the Central Section to 60m at Head and 39.6m at the landward end.
Repairs utilising steel trusses and steel columns have been undertaken at various times since following a fire in 1917 to the Pier Head, partial demolition (sectioning) and actual bomb damage during the 1939 45 war, and widening to both sides of the Pier They commented on the general state of the pier: Experience has shown the typical life of Victorian piers to be approximately 100 years; during this time continual maintenance would have been required, including the replacement [of] some critical elements.
After this time, major reconstruction works would be required if continued use of the pier were to be viable.
The general condition of Hastings Pier fits this pattern.
In recent years the freehold of the pier was owned by Ravenclaw Investments Incorporated (Ravenclaw), a company registered in Panama, and managed on their behalf by Boss Management UK Ltd (Boss).
Stylus occupied two units, C2 and C15, close to the entrance to the pier at the northern (town) end.
They operated a bingo hall in unit C2 and an amusement arcade in unit C15.
The units were held respectively under leases from Ravenclaw dated 14 August 2001 and 10 October 2001.
The premises as so leased were confined generally to the internal non structural walls, and internal surfaces, and specifically excluded any main structural parts of the premises or of the building (Schedule 1).
Ravenclaw as landlord was responsible for repair and when necessary renewal of the structure including the support structure of the pier.
In 2004 Stylus became concerned about the structural integrity of the pier.
They commissioned a full structural engineering survey of the pier by Hamill Davies Limited.
The report (the HDL report), produced in September 2004, was provided both to Ravenclaw and in January 2005 to the council.
It advised that urgent work was required to repair piles at the far end of the pier (some distance beyond the Stylus units).
This should be done ideally within the next two months to avoid the worst of the winter weather; and the deck area supported by these piles should be closed to the public until this work is completed.
They also advised that future work should be carried out to the structure of the pier in the area of the Stylus units.
Of this they said: With regard to the remaining work it is understood that this cannot be undertaken immediately.
However this work should be completed within one year, with regular monitoring of the defective areas until this can be achieved.
Unless this is carried out we judge there to be an unacceptable risk to the public.
There is no evidence of action by Ravenclaw or the council to remedy the structural defects in response to this report, other than some limited work by Ravenclaw in the winter of 2005 2006.
Meanwhile the public continued to use the pier, and the pier facilities (including the bingo hall and the amusement arcade) remained open for business.
In early April 2006 a council officer inspected the underside of the pier, when a section of tension cord fell from the pier.
The council commissioned Gifford to report on the structural stability of the pier.
Their brief included appraisal of its structural integrity and any potential risks to the public.
The areas chosen were those that would be subjected to the greatest crowd loading in the event of mass evacuation of the buildings, ie the designated escape routes (report para 1.3).
In May 2006 the council tried without success to compel Ravenclaw to commission a full structural assessment of the Pier.
On 15 June 2006 they asked Boss, as agents for Ravenclaw, to close off the pier beyond the front facade, but that request was not complied with.
The Gifford report, received by the council on 16 June 2006, identified serious structural defects, and recommended a full structural survey as a matter of urgency.
It recommended by way of immediate restrictions a) Access resulting in the potential for crowd loading on the Central Section and beyond should be prohibited until either, as a minimum, the presently identified defects in the area of the Central Section bounded by Columns 197 216 211 200 have been rectified or alternative safe access routes have been provided. b) Access by shop tenants or others for the purpose of maintenance need not be restricted. (para 6.1) The columns there identified were beneath the Stylus premises.
On 16 June the Council exercised its emergency powers under section 78 of the 1984 Act to close the pier to the public from the front facade onwards.
A barrier was erected across the frontage with a notice saying danger keep out.
A letter was delivered on the same day to tenants of units on the pier stating that the pier was being closed from the main entrance building onwards, including the Bingo Hall and Amusement arcade.
The letter indicated that the council had had concerns about the pier for some time and had served notice on the owners requiring them to carry out a survey of the structure.
It continued: In recent days the council has become aware that major events were still being booked for the Pier ballroom; two of these have been booked for July and one in August.
As a result of its concerns over the Pier structure the Council commissioned consulting engineers Gifford of Southampton to look at a specific area of concern under the main covered walkway around the main facade entrance.
This inspection was carried out yesterday.
It has been established that at least five trusses have failed in this area.
Our consultant is of the opinion that it is unsafe to allow large numbers of people onto the Pier.
This area provides the only method of access onto and off the Pier.
Any emergency affecting the rest of Pier, including the ballroom, requiring evacuation would mean crowds of people walking over the area where we have been specifically advised that crowds are unsafe.
As a result the council has had no option other than to use its emergency powers to close much of the Pier immediately.
The letter noted that, despite previous attempts to resolve the situation, the Pier management were continuing to plan for large events.
On the same day the council applied to Hastings Magistrates Court under section 77(1)(b) of the 1984 Act.
The initial hearing at the Magistrates Court took place on 21 June 2006.
A representative of Stylus attended and asked to be included in the proceedings.
After adjournments, at the substantive hearing on 12 September the court made an order under that section prohibiting public access to the pier until the necessary remedial works had been carried out.
Meanwhile, in July 2006 Stylus instructed HDL to undertake an inspection of the area beneath its units.
It also instituted proceedings against Ravenclaw to require them to carry out the works of repair under the lease, and obtained summary judgment, but that was not complied with by Ravenclaw.
In May 2007 Stylus began itself to carry out the necessary remedial works under its own premises.
Those having been completed, the magistrates court on 4 July 2007 varied its order so as to permit public access to its premises.
On 8 November 2006 Stylus had notified the council of its intention to claim compensation under section 106(1) of the 1984 Act, for losses allegedly suffered as a result of the closure of the pier between 16 June and 12 September 2006.
In late 2011 Stylus went into liquidation, and in January 2012 the liquidator of Stylus assigned Stylus claim against the Council to Manolete, the present respondents.
The present proceedings in the Technology and Construction Court (begun under CPR Part 8, on the basis that there would be no substantial dispute of fact) sought a declaration that the council were liable to pay compensation: [2013] EWHC 842 (TCC); [2013] 2 EGLR 17.
The proceedings below
Before Ramsey J the council raised a number of defences including the one now in issue, which he summarised: That the Council is not liable under section 106 of the 1984 Act because the claimant was in default for the purposes of that section because of the breach of section 2 of the Occupiers Liability Act 1957 and/or because it took a lease of the Pier past the end of its design life from a company registered outside the jurisdiction and was aware by the very latest in 2004 that there were serious problems with the structure of the Pier but took no adequate steps to ensure the Pier was repaired or the public excluded. (para 14) He noted that in submissions the council had relied also on the duties under the Health and Safety at Work etc Act 1974.
He rejected the defence, holding that the reference to default should be read as default in respect of obligations imposed by the 1984 Act itself.
In support he cited authorities under previous statutes using the same expression, in particular Neath Rural District Council v Williams [1951] 1 KB 115.
He added: If that is not so and if it were necessary to see whether a party was in breach of any provision of other statutes, as is submitted here, then the scope of enquiry would be large and would require investigation of further factual matters to determine whether there was a default in terms of those statutes. (para 46) He also rejected a separate defence that, absent section 78, Stylus would have had no action in tort in any event.
That is no longer in issue.
In the Court of Appeal [2014] 1 WLR 4030 Jackson LJ agreed that default was limited to default under the 1984 Act.
He reviewed at length the legislative history, dating from the Metropolitan Buildings Act 1844.
He noted that compensation provisions, substantially in the same form as section 106, had appeared in the Public Health Acts of 1875 and 1936.
He referred to Hobbs v Winchester Corpn [1910] 2 KB 471, which he read as treating the words in default as directed to default under the Act of 1875.
However, he accepted the submission of counsel for the authority that in both the 1875 and 1936 Act it should be read as extending also to related statutes: He points out that in many instances a building owner would be in breach of local Building Acts and Improvement Acts.
If the local authority intervened in order to protect public safety, it would be absurd if the building owner could recover compensation under section 308.
I accept that submission.
In my view the default proviso in the 1875 Act was referring to a default under the 1875 Act or related Acts. (para 52 emphasis added) However, the same extension was not required under the 1984 Act, because There are no local byelaws or parallel statutes directed to the same subject matter as the 1984 Act.
The 1984 Act and the Regulations made under it are comprehensive. (para 76) A narrow construction was supported also by looking at the statute as a whole: Where the same phrase occurs more than once it should generally be construed in the same way on each occasion The phrase in default occurs in three significant places in the 1984 Act, namely in section 77(2)(b), section 78(7) and section 106(1).
In both sections 77(2)(b) and sections 78(7) default has a narrow meaning.
It clearly refers to a failure to perform obligations under the 1984 Act.
This circumstance is a pointer towards construing default in section 106 narrowly, namely as meaning breach of an obligation under the 1984 Act. (paras 74 75) In agreement with the judge he concluded: The phrase in default in section 106 of the 1984 Act means in breach of an obligation arising under the 1984 Act.
The provision does not require the court or the arbitrator to conduct a wide ranging review of other legislation and the common law in order to see whether the claimant is in breach of any duties arising outside the 1984 Act. (para 79)
The court had some sympathy for the argument that the council should not be obliged to compensate Stylus for being prevented from admitting the public to dangerous premises.
But, given that the true culprit Ravenclaw was beyond the reach of enforcement procedures, the court was faced with the familiar problem of deciding which of the surviving parties should bear the loss, the answer to which depended on the statutory scheme.
He added: [Stylus] has acted responsibly at all stages.
It did its utmost to compel the landlord to carry out remedial works.
Ultimately it stepped into the breach and did the works itself.
If the local authority had wished to avoid liability to pay compensation under section 106, it could have brought proceedings under section 77 of the 1984 Act sooner and thereby avoided the need to take emergency action under section 78.
Finally, on this point, [the councils] general arguments will still be available at the quantum hearing before the arbitrator.
The local authority will be entitled to argue that even if it had not fenced off the pier, [Stylus] could have made little use of its two units. (paras 81 82)
Finally he considered and rejected a separate argument on behalf of the council that the claim was precluded by the ex turpi causa principle, on the basis that to admit the public would have been contrary to its statutory responsibilities: the motivation for the local authoritys closure of the pier to the public on 16 June 2006 was the likelihood of large crowds accessing the pier on and after 17 June for reasons unconnected with [Stylus] business.
As at 16 June 2006 [Stylus] had not incurred liability to any member of the public for breach of the Occupiers Liability Act 1957.
Nor can I see any basis for saying that [Stylus] had committed any breach of the statutory duties which it owed to its employees under the Health and Safety at Work etc Act 1974 . (paras 91 92) In his view, the default proviso was the control mechanism which eliminates claims that are unacceptable on grounds of public policy.
It left no room for the application of the ex turpi causa rule (para 94).
He added: 95.
Having said that, I do accept that the structural condition of the pier will be relevant to the quantum of the claim.
The local authority will be entitled to argue in the arbitration due to be held under section 106(2) that the loss of profit caused by the local authoritys conduct must be substantially reduced by reason of the structural condition of the pier.
Indeed the local authority would be entitled to argue that the quantum is reduced to nil, although on the evidence which I have seen that outcome seems unlikely.
The submissions in summary
In this court Mr Gasztowicz QC for the council submits that the courts were wrong to treat the word default as confined to default under the 1984 Act.
That is supported both by ordinary meaning of the word and by the legislative history.
The authorities referred to by the judge and the Court of Appeal do not lead to a different conclusion.
Stylus was in default in the relevant sense because it was in breach of its obligations under the 1957 Act and 1974 Acts in relation to the very matter in relation to which the statutory power was exercised, namely the admission of the public to premises which when they were admitted were dangerous (to them and employees) (printed case p 30)
He relies in particular on Stylus own evidence which showed that: i) It had received the September 2004 HDL report showing that urgent repairs were necessary to protect the public, including work in the Stylus area of the pier, which if not carried out within at most a year from September 2004 would mean there would be an unacceptable risk to the public; ii) No further report had been obtained giving a different assessment on the state of the Pier in this area two years on; iii) Notwithstanding the contents of the report the necessary work was not done prior to closure.
Although the primary responsibility for repair lay with the freeholders, Stylus had the ability to carry them out in default (Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] 1 Ch 592, 608), as indeed it did following the court order.
By continuing to invite the public to its premises it was causing loading by the public resulting in them and its employees being made subject (in the words of the HDL report) to unacceptable risk.
For Manolete, Mr Bowdery QC (who did not appear below) supports the view of the courts below on the interpretation of the word default, but submits also that the appeal fails on the facts.
As the Court of Appeal held, the council was unable to show that Stylus was in default of any legal obligation under either of the statutes relied on or otherwise.
Furthermore, there was nothing to show that the council had ever regarded Styluss use of its own premises as dangerous to the public or its employees, following its receipt of the HDL report in early 2005.
As the correspondence showed, and the Court of Appeal found, the motivation for the use of emergency powers was the prospect of large crowds at events unconnected with the use of the Stylus premises.
Discussion
With respect to the courts below, while recognising the somewhat different emphasis of the arguments in this court, there is a danger of over complication.
If one takes the words of section 106(1) at face value, they do not appear to pose any great difficulty either of interpretation or of application to the facts of this case.
The section gives a right to compensation to a person who has sustained damage by reason of the exercise of any of the authoritys powers under the Act in relation to a matter as to which he has not himself been in default.
This raises two questions: Is that a matter as to which the claimant has been in default? i) What was the matter in relation to which the authority has exercised its powers? ii)
It is important to keep in mind that the relevant power is the power to take emergency action under section 78.
The claim is for loss resulting from that emergency action, not from the order of the magistrates court, which itself carries no right to compensation.
That is why the claim is limited to the period from the date of closure until the order made on 12 September.
This point gains emphasis from section 78(7).
Even a claimant in default (in the relevant sense) is not precluded from seeking compensation, if the court determines that the authority were not justified in using their emergency power, rather than first seeking an order from the magistrates under section 77.
The right to compensation provides an important check on the unbridled use of that emergency power under section 78, in respect of which (unlike section 77) there is no right of objection or recourse to the court.
The councils decision to act under section 78 in this case is not itself in issue.
But it is necessary to identify the matter which led it to take such emergency action, rather than applying first to the magistrates court.
That is clearly identified by the evidence, in particular the letter sent to the tenants at the time.
It was not the general state of the pier, nor even the specific repairs identified in the HDL report on which Mr Gasztowicz relies.
The council had been aware of those matters at least since the receipt of that report in 2005, but had not thought it necessary to close the pier, nor to take any legal action against Stylus at that stage.
If they had wished to do so, there appears no reason why they could not have applied to the court for the appropriate order, giving Stylus the opportunity to make representations.
No issue of compensation would have then arisen.
As is clear from the councils letter to tenants, the matter which triggered the action in June 2006 was the state of the pier combined with fear of possible collapse from crowd loading during the events planned for that month, particularly the risk of overloading in an emergency evacuation.
Stylus was not legally responsible for the state of the pier, nor was it responsible for the events which triggered the councils action.
Whatever may have been its position as respects its clients and employees, it was not in default as to the matter which led to the councils use of section 78.
On this simple basis, in my view, the company is entitled to succeed.
That conclusion makes it strictly unnecessary to address the view of the courts below that default in section 106 referred only to default under the 1984 Act itself.
However, the council, no doubt supported by others with like responsibilities, is understandably concerned as to the potential implications of this limitation for future cases.
There seem to have been four main points leading to this conclusion: (i) the legislative history, (ii) other references to default in the 1984 Act, (iii) the wide scope of the factual inquiry implicit in the alternative approach, and (iv) various authorities under the predecessor statutes.
None of these considerations in my view supports the conclusion.
The first three points can be dealt with shortly.
The legislative history tends if anything to support the opposite view.
The use over more than 100 years of the same formula in statutes which, though covering the same general subject matter, included a varying range of powers, makes it unlikely that it was linked specifically to the particular provisions of each statute.
Jackson LJ was forced to accept that the similar formula in the Public Health Acts 1875 (section 308) and 1936 (section 278) must be read as extending to default under related Acts, such as local Building Acts and Improvement Acts (paras 52, 55).
I agree, but related is an imprecise term, not supported by anything in the wording of the section itself.
Once that extension is accepted, it is difficult to understand why it should not extend to other forms of legal default.
Secondly, the other references to default referred to by Jackson LJ do not assist.
In section 77(2)(b), the default in question is specified by the section itself, that is failure to comply with the magistrate courts order.
That throws no light on its meaning where it is not so limited.
Section 78(7) is related directly to section 106 and poses the same issue as is now before us.
Thirdly, the courts concern as to the wide ranging nature of the factual inquiry implied by the authoritys suggested approach is understandable, but it does not arise if the inquiry is limited in the way I have suggested above.
As to the authorities, the only one referred to by the Court of Appeal was Hobbs v Winchester Corpn [1910] 2 KB 471, which related to the equivalent compensation provision in the 1875 Act (section 308).
Meat had been seized under section 116 of the 1875 Act as unfit for human consumption.
Although the butcher was acquitted of any offence under section 117 of that Act, on the grounds that he was unaware that it was unfit for consumption, it was found that he was nonetheless in default for the purpose of section 308, so that his claim for compensation failed.
Since the only default relied on by the authority was default under the 1875 Act, that case throws no light on the nature of the default which might be relevant in other cases.
Mr Bowdery relies also on Place v Rawtenstall Corpn (1916) 86 LJKB 90, under a provision in a local Act giving the authority a defence from civil liability for damage caused in exercise of their statutory powers in default of the owner or other person required to do such work, and in the absence of negligence: section 257 of the Rawtenstall Corporation Act 1907 (emphasis added).
The authority had served notice under that Act requiring the claimant to convert a pail closet on his premises into a water closet and to connect it to a sewer.
He failed to comply, and the authority carried out the work themselves, but did so by carrying out a larger project serving some other houses.
In doing so, they used pipes larger than would have been needed by the claimant, thus causing subsidence to his property.
It was held that the authority could not rely on his default to defeat his claim for damages.
The judgment confirmed the essential principle that statutes interfering with common law rights should be strictly construed, and that it was for the authority to establish that the work which they have done is strictly work done in default of the owner.
The problem for the authority was that the work was not limited to the work the owner would have done to carry out the work for his own house, but comprised much more.
There was no finding that the damage was only caused by the work which Mr Place was required to do (pp 92 94 per Scrutton J).
That seems to me a decision turning on its own particular facts, which throws no light on the meaning of the word default in the present context.
I should also mention two authorities referred to in argument on the word default in the provisions relating to statutory nuisances under the 1875 and 1936 Acts.
Clayton v Sale Urban District Council [1926] 1 KB 415 concerned action by the authority in respect of an alleged statutory nuisance caused by flooding.
Under section 94 of the 1875 Act they could serve an abatement notice on the person by whose act default or sufferance the nuisance had arisen.
The authority argued that the nuisance had arisen by the default of the owner, in failing to repair the bank.
It was argued that there could not be default by the owner within the meaning of the section unless there had been a breach of an obligation arising independently of the section from an agreement or otherwise, and that he was not under any agreement or covenant or otherwise to construct or to repair the flood bank (pp 423 424).
This argument was rejected.
Lord Hewart CJ said: In my opinion the act, default, or sufferance referred to in section 94 of the Public Health Act 1875, is an act, default, or sufferance related to the nuisance which it is sought to abate, and default no less than sufferance within the meaning of that section can occur without the breach of an obligation arising from contractual agreement. (p 425) He referred to the common law duty of the owner of a vacant piece of land to prevent that land from being a public nuisance (citing Attorney General v Tod Heatley [1897] 1 Ch 560, 566).
Contrary to Mr Bowderys submissions, that is to my mind clear authority at that level that the word default in a comparable context was not confined to default under the statute itself.
Neath Rural District Council v Williams [1951] 1 KB 115 concerned the equivalent provision of the 1936 Act (section 93).
A watercourse on the defendants land had become silted by natural causes and caused flooding.
Section 259(1)(b), under which a watercourse in such a condition was a statutory nuisance, was subject to a proviso that no liability was imposed on any person other than the person by whose act or default the nuisance arises or continues.
It was held that, absent any relevant legal duty on him under statute or at common law to take positive action to remove the nuisance, the defendant was not in default.
In the words of the headnote: in the case of a natural stream a landowner had no duty at common law to keep the bed clear by removing obstructions which might arise from natural causes, and the proviso to (section 259(1)) was designed to prevent any additional duty from being cast on the landowner Lord Goddard CJ expressed some doubt about the actual decision in Clayton but felt able to distinguish it on the basis that it was concerned with the words act, default or sufferance whereas the proviso to section 259(1)(b) referred only to act or default (p 126).
However, he did not doubt the proposition that default could arise from breach of a duty outside the Act itself.
Ramsey J, at para 43, referred to a passage in the judgment of Lord Goddard CJ, who said: I do not think that in this case default could mean merely doing nothing, unless an obligation to do something were imposed by the Act.
There was no act of the defendants which caused the obstruction either to arise or to continue In the present case, on the facts found by the justices, there is nothing to show that the defendants did anything which caused this obstruction to arise or to continue; nor do I think that there is anything which can properly be called a default on their part (pp 126 127, emphasis added).
This passage cannot be taken as implying that only a duty under the 1936 Act itself was thought relevant.
It must be read in the context of the judgment as a whole, in which the possibility of a common law duty had previously been discussed and dismissed (pp 120, 123).
I conclude that there is nothing in the factors relied on in the courts below which requires the words in default to be limited to default under the 1984 Act.
They were right in my view to hold that the authority had no defence in principle to the claim for compensation, not because (as they held) there was no default under the 1984 Act, but because it was not default by Stylus which led to the emergency action under section 78.
It is important to emphasise that this conclusion does not limit in any way the issues which may be taken into account by the arbitrator in assessing compensation attributable to that action, including the statutory and common law responsibilities of Stylus to its clients and employees.
As Jackson LJ indicated (para 95), it will be open to the authority to argue that the consequent loss of profit to the business must be substantially reduced due to the structural condition of the pier and the implications it would have had for the continuation of its business quite apart from the effects of the emergency notice.
Mr Gasztowicz drew our attention to an earlier paragraph of Jackson LJ (para 79) which might suggest a more limited role for the arbitrator.
Having agreed with the judge that the phrase in default means in breach of an obligation under the 1984 Act, he added: The provision does not require the court or the arbitrator to conduct a wide ranging review of other legislation and the common law in order to see whether the claimant is in breach of any duties arising outside the 1984 Act. (emphasis added) I do not fully understand the inclusion in that passage of a reference to the arbitrator, as well as the court.
In so far as it implies a limitation on the scope of the arbitrators function it is inconsistent with the later paragraph to which I have referred, and which in my view expresses the correct position.
For these reasons, albeit differing in some respects from those of the courts below, I would dismiss the appeal.
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In June 2006 the Appellant, Hastings Borough Council (the Council), exercised its emergency powers to restrict public access to Hastings Pier on account of its being in a dangerous condition as a result of serious structural defects.
The Respondent, Manolete Partners PLC (Manolete), pursued a claim for compensation against the Council for loss to business as a result of the Councils emergency closure of the pier.
Manolete brought the claim as an assignee of the business Stylus Sports Ltd (Stylus), which went into liquidation in late 2011.
Stylus had leased two units from the freeholder of the pier, Ravenclaw Investments Incorporated (Ravenclaw), and had operated a bingo hall and amusement arcade.
Two years before the closure of the pier, Stylus had commissioned a structural engineering survey of the pier, which advised that urgent and future work, within a year, was required to the structure of the pier to prevent an unacceptable risk to the public.
Ravenclaw, which was responsible as landlord for repair and renewal of the pier structure, did not take action to remedy the defects identified.
Nor did the Council, and the pier remained open to the public.
In April 2006, a section of tension cord fell from the pier.
This led the Council to attempt, unsuccessfully, to compel Ravenclaw to take action, and to commission its own structural integrity report, which in June 2006 recommended immediate restrictions on access to the pier.
The Council exercised its emergency powers under section 78 of the 1984 Act, and in September 2006 obtained a court order under section 77, prohibiting public access to the pier until the necessary remedial works had been carried out.
Section 106 of the Building Act 1984 (the 1984 Act), requires compensation to be paid for loss to a business resulting from emergency action, but only where the owner or occupier of the premises has not been in default.
The Council alleged that Stylus had breached the Occupiers Liability Act 1957, which imposes a duty of care towards visitors, and the Health and Safety at Work Act 1974, which imposes a duty on an employer to ensure the safety of his employees and the safety of the workplace.
The Council sought to rely on these alleged breaches to establish a default, thereby precluding Manolete from making a compensation claim under the 1984 Act.
This defence was rejected by the Technology and Construction Court and the Court of Appeal, on the basis that the reference to default was limited default in respect of obligations imposed by the 1984 Act itself.
The Supreme Court unanimously dismisses Hastings Borough Councils appeal.
Lord Carnwath gives the judgment, with which the other Justices agree.
Section 106 of the 1984 Act gives a right to compensation to a person who has sustained damage by reason of the exercise of the authoritys powers under the Act in relation to a matter as to which he has not himself been in default.
This requires firstly, identification of the matter in relation to which authority has exercised its powers, and secondly, consideration of whether that is a matter as to which the claimant has been in default [25].
The relevant power is the power to take emergency action under section 78 of the 1984 Act, and the claim for compensation is limited to the period from the date of the Councils emergency closure of the pier until the court order in September 2006 [26].
The matter which led the Council to take such emergency action was identified in the letter sent by the Council to the tenants at the time, which was the state of the pier combined with fear of possible collapse from crowd loading during the events planned for that month, in particular the risk of overloading in an emergency evacuation.
The trigger was not the general state of the pier or the specific repairs identified in the report commissioned by Stylus.
Whatever Stylus position towards its clients and employees, it was not in default as to the matter which led to the Councils exercise of its section 78 powers, and on this basis, Manolete is entitled to succeed in its claim for compensation [27 8].
Although not strictly necessary to determine the present appeal, Lord Carnwath addresses the issue of whether default in section 106 is limited to default under the 1984 Act itself, as this may impact on future cases.
Lord Carnwath finds that the legislative history and the authorities under the predecessor statutes support the conclusion that the default is not limited to the particular provisions of each statute, but extends to other forms of legal default.
Concerns as to the wide scope of the factual inquiry do not arise if the inquiry is limited to the two stage assessment set out above [30 5].
The Court of Appeals conclusion that the Council had no defence in principle to the claim for compensation was correct, not because, as they so held, there was no default under the 1984 Act, but because it was not Stylus default which led to the Councils emergency action [36].
Lord Carnwath emphasises that this does not limit the issues which can be taken into account by the arbitrator in assessing the level of compensation payable.
The arbitrator may take account of Stylus statutory and common law responsibilities to its clients and employees, the structural condition of the pier and the implications it would have had for the continuation of business quite apart from the effects of the emergency action [37].
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The Home Secretary determines to exercise his power to remove a foreign national from the UK.
The foreign national contends that the determination is unlawful on the ground that her removal would violate her right to respect for her private life under article 8 of the European Convention on Human Rights and section 6(1) of the Human Rights Act 1998 (the 1998 Act).
Section 117B(5) of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) provides that little weight should be given to a private life which she established at a time when her immigration status was precarious.
What does the word precarious mean in this context? This is the primary question posed by the present appeal.
Introduction
The foreign national is Ms Rhuppiah.
On 22 August 2014, in the First tier Tribunal, First tier Tribunal Judge Blundell (to whom I will refer as Judge Blundell) reluctantly dismissed her challenge under article 8 to the Home Secretarys determination, dated 6 June 2013, to remove her from the UK.
Judge Blundell concluded that her private life in the UK had been established at a time when her immigration status had been precarious within the meaning of section 117B(5), which had come into force less than a month earlier; and he considered himself in effect bound by the subsection to dismiss her appeal against the determination.
Her further appeals to the Upper Tribunal and then to the Court of Appeal both failed.
By its decision dated 2 August 2016, [2016] EWCA Civ 803, [2016] 1 WLR 4203, the Court of Appeal (Sales LJ, who gave the substantive judgment, and Moore Bick LJ and Sir Stephen Richards, who agreed with it) upheld Judge Blundells conclusion that the establishment of Ms Rhuppiahs private life in the UK had occurred at a time when her immigration status had been precarious.
Now she appeals against the decision of the Court of Appeal.
Within the well known structure of article 8, the primary question arises as part of the inquiry into whether the proposed interference with Ms Rhuppiahs private life in the UK is proportionate.
Therefore, in determining this appeal, this court, like the Upper Tribunal and the Court of Appeal, must ask itself whether Judge Blundell was wrong to hold that at the relevant time her immigration status had been precarious: see the judgment of Lord Carnwath in R (R) v Chief Constable of Greater Manchester Police [2018] UKSC 47, [2018] 1 WLR 4079, paras 53 to 64.
As it happens, Ms Rhuppiahs appeal has recently become academic.
This occurred on 9 February 2018; and explanation of it requires reference to the Immigration Rules HC 395 (the rules).
The Home Secretary has set out in the rules, indorsed by Parliament, the provisions which, in his opinion reflective of his policy, should in principle govern his determination of claims to resist removal from the UK on the part of those in breach of immigration laws by reference to their right to respect for their private or family life under article 8.
He recognises, however, that his obligation under section 6 of the 1998 Act, like that of a court hearing an appeal against his determination when based on article 8, is to act compatibly with rights under article 8 and that such compatibility may not always coincide with compatibility with his rules.
So, like the courts, the Home Secretary has to allow for the possibility that a person may be entitled to resist removal under article 8 even when he or she cannot do so under the rules.
But article 8 itself, as interpreted by the European Court of Human Rights (the ECtHR), confers upon the relevant policy maker, who in the UK is the Home Secretary, a limited discretion in relation to the determination of claims made under it.
So, when a person claims to resist removal by reference to article 8 outside the rules, the Home Secretary is entitled, and a court hearing an appeal against his determination is required, to weigh in the balance against the claim the fact that it could not have succeeded under the rules: see the judgment of Lord Reed in R (Agyarko) v Secretary of State for the Home Department [2017] UKSC 11, [2017] 1 WLR 823, at paras 46 and 47.
In these proceedings Ms Rhuppiah has been resisting removal by reference to article 8 outside the rules.
What happened on 9 February 2018 was that the Home Secretary decided that she had recently become able to resist removal by reference to article 8 under the rules.
As I will explain, Ms Rhuppiah entered the UK on 16 September 1997 and has lived here continuously ever since.
Paragraph 276ADE(1) of the rules specifies the requirements to be met by an applicant for leave to remain in the UK on the ground of private life in the UK; and they include, at (iii), that he or she has lived continuously in the UK for at least 20 years.
It follows that on 16 September 2017 Ms Rhuppiah began to satisfy the requirement at (iii); she also satisfied the other requirements.
Paragraph 276BE(1) provides that, if the requirements of para 276ADE(1) are satisfied, the Home Secretary may grant leave to remain in the UK for up to 30 months; and para 276DE provides that, if an applicant has remained in the UK with continuous leave on the ground of private life for at least ten years, he or she may be granted indefinite leave to remain.
Thus it was that by letter dated 9 February 2018, the heading of which referred to Private Life Rules, the Home Secretary (to whom, for convenience, I will throughout refer as male) informed Ms Rhuppiah that he had granted her leave to remain in the UK for 30 months; that she could apply for further limited leave prior to the end of that period; and that, in the event that she were to complete at least ten years of continuous residence pursuant to leave to remain on the ground of her private life, she might then be eligible for a grant of indefinite leave to remain in the UK.
The result is that the Home Secretary then granted to Ms Rhuppiah all that she could have hoped to achieve in the present proceedings.
Thought then turned to the utility of any further prosecution of the present appeal.
In the event the court agreed with the parties that the appeal should proceed.
The court agreed that it was of general importance for it to offer a definitive interpretation of the word precarious in section 117B(5) of the 2002 Act.
It is also now clear, as both parties agree, that in any event the First tier Tribunal (and indeed the Court of Appeal) fell into error in a different respect and that, irrespective of whether it was material, the error requires to be rectified: see paras 51 to 57 below.
So the appeal has proceeded.
Were this court to conclude that the First tier Tribunal had been wrong in a material respect to dismiss Ms Rhuppiahs appeal against the Home Secretarys determination dated 6 June 2013, it would allow her appeal in the normal way and set aside the tribunals order.
That would render Ms Rhuppiahs appeal against it undecided.
But there is now no need for it to be decided.
So the court would not remit it to the tribunal for fresh determination.
The Facts
The relevant facts can be taken from a determination of conspicuous clarity and sensitivity made by Judge Blundell following a substantial oral hearing.
Ms Rhuppiah is a Tanzanian national, now aged 45.
She lived in Tanzania until 1997, when she entered the UK with leave to reside here as a student for three months.
Her mother and one of her brothers still reside in Tanzania.
Her father works for the UN in Sudan and regularly sends money to the UK for her support.
Her other brother lives in Basingstoke; and he has a daughter, aged nine, with whom she is on close terms.
There would, however, be no significant obstacle to the re integration of Ms Rhuppiah into society in Tanzania.
The Home Secretary granted further leave to Ms Rhuppiah to reside in the UK as a student on no less than 12 occasions.
The final grant expired on 30 November 2009.
But six of these further grants were made pursuant to applications made after the previous leave had expired.
Responsibility for the delay usually lay with the college to which Ms Rhuppiah had entrusted the task of making the applications on her behalf.
In making her applications for further leave to reside in the UK as a student, Ms Rhuppiah was required to demonstrate an intention to leave the UK at the end of her studies.
On each occasion she did so to the satisfaction of the Home Secretary.
In cross examination before the tribunal she accepted that she always expected to be required to leave the UK at some point.
As a result of her extensive studies in the UK, Ms Rhuppiah, who speaks English fluently, gained a variety of qualifications in business studies and associated fields.
In November 2009, at the time of the expiry of the final grant of leave, Ms Rhuppiah applied for indefinite leave to remain in the UK on the ground of continuous lawful residence in the UK for at least ten years pursuant to what was then para 276B(i)(a) of the rules.
The trouble was that her continuous residence had not always been lawful.
The Home Secretary refused her application and the First tier Tribunal dismissed her appeal against the refusal.
When, on 11 October 2010, the Upper Tribunal refused to grant her leave to appeal against the dismissal, Ms Rhuppiah became an unlawful overstayer in the UK.
Judge Blundell observed that, had it not been for the ineptitude of her college in failing to make timely applications for further leave on her behalf, her application for indefinite leave to remain would probably have succeeded.
Ms Rhuppiahs next attempt to apply for indefinite leave to remain in the UK met further ill fortune.
On 1 July 2012 she applied on the ground of continuous residence in the UK (whether or not lawful) for at least 14 years pursuant to what was then para 276B(i)(b) of the rules.
But she applied on the wrong form and enclosed an insufficient fee.
So on 12 July her application was returned to her.
On 24 July she re applied.
But by then, namely on 9 July, the rules had been amended so as to delete para 276B(i)(b) (Statement of Changes in Immigration Rules HC 194).
Judge Blundell observed that Ms Rhuppiah was justified in feeling cheated but he correctly held that a near miss was irrelevant.
He cited Patel v Secretary of State for the Home Department [2013] UKSC 72, [2014] AC 651, in which, at para 53, Lord Carnwath cited with approval an observation that a miss was as good as a mile.
When, belatedly, the Home Secretary addressed Ms Rhuppiahs re application dated 24 July 2012, he inevitably determined that it could not succeed under the rules.
He proceeded to consider whether it should succeed on a basis outside the rules, by reference to her right to respect for her private life under article 8.
His determination on that basis was also negative; and such has been the basis on which in these proceedings she has challenged the lawfulness of his determination to remove her from the UK.
There is a striking feature of the private life established by Ms Rhuppiah in the UK.
It concerns her friendship with Ms Charles.
She lives in the home of Ms Charles, which is, or was at the time of their oral evidence to Judge Blundell, in London.
Ms Charles is highly qualified in the field of IT and works as a systems engineer for Ministry of Defence projects and often in Bristol.
Ms Rhuppiah met Ms Charles when they were studying at the same college and they have resided together since 2001.
But it is not suggested and there is no need to consider whether it might have been suggested that Ms Rhuppiah pursues family life with Ms Charles within the meaning of article 8.
Ms Charles suffers from ulcerative colitis, a gravely debilitating condition.
She suffers frequent symptoms of diarrhoea, nausea, inability to eat, anaemia, fatigue, joint pain and reduced mobility.
She has had multiple admissions to hospital.
She is heavily dependent on Ms Rhuppiah both physically and emotionally.
Ms Rhuppiah cooks such food as Ms Charles can eat and accompanies her to Bristol, to hospital and in effect everywhere.
Ms Charles has ceded control of her financial affairs to her.
Instead of paying her for looking after her in these respects, Ms Charles provides her with largely free board and lodging.
Judge Blundell found that Ms Rhuppiah, who is a Seventh Day Adventist, cares for Ms Charles out of friendship, faith and habit.
He found that, were Ms Rhuppiah to leave the UK, Ms Charles would have to turn to the state to meet her need for care; that her physical health and her ability to continue to work in Bristol would be compromised, at least in the short term; and that her life would be turned upside down.
Sections 117A and 117B
Section 117B(5) falls within Part 5A of the 2002 Act, which was inserted into it, with effect from 28 July 2014, by section 19 of the Immigration Act 2014.
Part 5A is headed Article 8 of the ECHR: Public Interest Considerations.
Unfortunately it is necessary to set out a substantial amount of Part 5A, as follows: 117A Application of this Part (1) This Part applies where a court or tribunal is required to determine whether a decision made under the Immigration Acts (a) breaches a persons right to respect for private and family life under article 8, and as a result would be unlawful under (b) section 6 of the Human Rights Act 1998.
In considering the public interest question, the (2) court or tribunal must (in particular) have regard in all cases, to the considerations listed in (a) section 117B In subsection (2), the public interest question (3) means the question of whether an interference with a persons right to respect for private and family life is justified under article 8(2). 117B Article 8: public interest considerations applicable in all cases (1) The maintenance of effective immigration controls is in the public interest.
It is in the public interest, and in particular in the (2) interests of the economic well being of the United Kingdom, that persons who seek to enter or remain in the United Kingdom are able to speak English, because persons who can speak English are less of a burden on taxpayers, and (a) (b) are better able to integrate into society. (3) It is in the public interest, and in particular in the interests of the economic well being of the United Kingdom, that persons who seek to enter or remain in the United Kingdom are financially independent, because such persons (a) are not a burden on taxpayers, and (b) are better able to integrate into society. (4) Little weight should be given to a private life, or a relationship formed with a qualifying (a) (b) partner, that is established by a person at a time when the person is in the United Kingdom unlawfully. (5) Little weight should be given to a private life established by a person at a time when the persons immigration status is precarious. (6)
It will be seen that the considerations in each of the first five subsections of section 117B are all entitled public interest considerations.
On any view the considerations in the first three subsections relate to the public interest in the removal of a person present in the UK contrary to immigration law.
At first sight, however, one might consider that the considerations in the fourth and fifth subsections relate to the strength of the case which might weigh against that public interest.
The explanation for their inclusion as public interest considerations lies in the wide definition of the public interest question set out in section 117A(3) above.
See Deelah (section 117B ambit) [2015] UKUT 00515 (IAC), paras 18 and 21.
Section 117B(4) is not engaged in the present case: it is agreed that Ms Rhuppiah established her relevant private life in the UK, in particular her role in caring for Ms Charles, long before 2010 and at a time when her presence here was predominantly lawful.
Nevertheless it may be helpful to note the reference to a qualifying partner in section 117B(4)(b) and to glance at the definition of that phrase in section 117D(1).
It means a partner who is a British citizen or who is settled in the United Kingdom (within the meaning of the Immigration Act 1971 see section 33(2A) of that Act).
Section 33(2A) defines a person as settled in the UK if he is ordinarily resident there without being subject under the immigration laws to any restriction on the period for which he may remain.
Insofar as the courts inquiry into the meaning of a precarious status in section 117B(5) may be seen in what follows to require contrast with the meaning of a settled status, it may be helpful to bear in mind the definition of the word settled brought by section 117D(1) into the 2002 Act itself.
At last this judgment can proceed to address the primary question, namely the meaning of the word precarious in section 117B(5).
Section 117B(5)
Ms Rhuppiah accepts that a persons immigration status in the UK can be precarious when he or she is lawfully present in the UK; otherwise subsection (5) of section 117B would add nothing to subsection (4).
She suggests that, for example, asylum seekers pending determination of their applications and lawful visitors to the UK probably have a precarious immigration status.
But she contrasts their situation with that of persons who, albeit with a right to remain which is time limited, have a reasonable hope of permanent settlement in the UK or who (as is suggested by Richard Warren, Private life in the balance: constructing the precarious migrant, Journal of Immigration, Asylum and Nationality Law (2016) 124, 130) are on a potential path to settlement.
She contends that, with the grant to her of long periods of leave to reside as a student, she fell into the latter category.
Hope that circumstances might change to enable her to continue to live in the UK did not, says Ms Rhuppiah, invalidate her intention, when seeking extensions of her visa, to depart from the UK at the end of her studies.
That a potential path to settlement was open to her is, she contends, made clear by the fact that she came close to securing it both in 2010 and in 2012.
The Court of Appeal rejected Ms Rhuppiahs argument, along the lines of the above, that her immigration status prior to 2010 was not precarious.
But, when it turned to the Home Secretarys contrary argument, which was and is that all leave short of indefinite leave to remain in the UK gives rise to a precarious status, the court expressed provisional doubt.
Sales LJ said at para 44: There is a very wide range of cases in which some form of leave to remain short of ILR may have been granted, and the word precarious seems to me to convey a more evaluative concept, the opposite of the idea that a person could be regarded as a settled migrant for article 8 purposes, which is to be applied having regard to the overall circumstances in which an immigrant finds himself in the host country.
Some immigrants with leave to remain falling short of ILR could be regarded as being very settled indeed and as having an immigration status which is not properly to be described as precarious.
Such being the parameters of the issue surrounding the primary question, we must seek guidance in authority, first that of the ECtHR.
It was in its admissibility decision in Mitchell v United Kingdom, (Application No 40447/98) 24 November 1998, that the ECtHR appears first to have used the word precarious in the context of an application under article 8.
It rejected, as manifestly ill founded, a British citizens application that her husbands deportation to Jamaica had violated her right to respect for her family life.
Her husband had been admitted to the UK as a visitor for six months; and for the following five years, in the course of which the applicant had married him, he had remained in the UK unlawfully.
The court said, at p 4: An important though not decisive consideration will also be whether the marriage was contracted at a time when the parties were aware that the immigration status of one of them was such that the persistence of the marriage within the host state would from the outset be precarious.
The court considers that where this is a relevant consideration it is likely only to be in the most exceptional circumstances that the removal of the
non national spouse will constitute a violation of article 8
In its numerous subsequent reiterations of the consideration identified in the Mitchell case the ECtHR has adapted it so as to extend to cases in which the context of the alleged family life was not a marriage.
So the question became whether family life was created at a time when the parties were aware that the immigration status of one of them was such that the persistence of family life within the host state would from the outset be precarious: see, for example, Rodrigues da Silva, Hoogkamer v Netherlands (2007) 44 EHRR 34, para 39.
In that case a mother and her young daughter relied on their family life together.
At all times the mothers stay in the Netherlands had been unlawful and she had given birth to the daughter there.
It is implicit in the courts judgment that the persistence of their family life in the Netherlands was therefore known to be precarious and that it was only by virtue of exceptional circumstances that the court held article 8 to have been violated.
In what circumstances beyond those in which a participant in the family life was known to be present in the state unlawfully, would its persistence there be precarious?
61292/00) 11 April 2006, the ECtHR said, at p 9: In its admissibility decision in Useinov v Netherlands (Application No it is the applicants submission that he was allowed to live in the Netherlands pending the proceedings on his asylum application and his subsequent application for a residence permit for compelling reasons of a humanitarian nature, ie a total period of just over five years.
However, the court is of the view that this cannot be equated with lawful stay where the authorities explicitly grant an alien permission to settle in their country.
Therefore, the applicants stay in the Netherlands was precarious for most of it, and illegal for the remainder.
The court proceeded to hold, in apparent reference to the discussion in the Mitchell case, that there were no exceptional circumstances giving rise to a violation.
The final sentence of the above passage in the Useinov case presents a slight complication in that it pitches the word precarious into a slightly different context from that in which it had been placed in the Mitchell case, from which the court had just quoted.
For in the final sentence the court analysed whether the applicants stay had been precarious, not whether the persistence of family life there had been known to be precarious.
In that slightly different context it distinguished between a precarious stay, permitted by the state but only pending its determination of outstanding applications, and an illegal stay.
Had the court instead asked whether the persistence of family life had been known to be precarious, it would surely have answered affirmatively in relation both to the precarious and to the illegal periods of the applicants stay.
The more useful part of the above passage is in the distinction drawn between permission to stay pending determination of applications, which makes persistence of family life during that period precarious, and permission to settle, which (by implication) does not do so.
The distinction was reaffirmed in Nnyanzi v United Kingdom (2008) 47 EHRR 18, para 76.
The case of Butt v Norway (Application No 47017/09) 4 December 2012, sheds further light on the circumstances in which the persistence of family life would be precarious.
The family life of the applicant siblings in Norway had been created at a time when, with their mother, they had been granted a settlement permit which was later withdrawn because the mother had obtained it by the provision of false information.
The court held at para 79 that, to the mothers knowledge, the persistence of their family life was precarious but at para 90 that there were exceptional circumstances which gave rise to a violation.
But the most helpful decision of the ECtHR on this topic is that of the Grand Chamber in Jeunesse v Netherlands (2015) 60 EHRR 17.
The applicants husband and their three children were Dutch nationals.
But her family life with them in Holland was created at a time when, as a national of Suriname, her right to reside in Holland was no more than tolerated by the state pending its protracted determination of her various applications for residence permits and of her consequential appeals.
The court held that, to her knowledge, the persistence of their family life there was precarious.
In para 102 it echoed the contrast drawn in the Useinov and Nnyanzi cases with a grant of permission to settle.
In para 104 it proceeded as follows: The instant case may be distinguished from cases concerning settled migrants as this notion has been used in the courts case law, namely, persons who have already been granted formally a right of residence in a host country.
A subsequent withdrawal of that right, for instance because the person concerned has been convicted of a criminal offence, will constitute an interference with his or her right to respect for private and/or family life The significance of the passage mainly lies in the word withdrawal, which sheds light on the nature of the right of residence which the Grand Chamber had in mind.
For, as Sales LJ himself suggested in para 39 of his judgment, a right of residence which can be withdrawn, for instance because of a criminal conviction, is, in particular, a right of residence pursuant to indefinite leave to remain.
In relation to applications under article 8 arising prior to the introduction of section 117B(5), both the Home Secretary, in his Instructions to case workers, and the courts of England and Wales duly sought to take into account the consideration identified by the ECtHR in the Mitchell case and later adapted.
For example in R (Nagre) v Secretary of State for the Home Department [2013] EWHC 720 (Admin) Sales J rejected the applicants challenge to the lawfulness of a determination to remove him to India on the basis that persistence of his family life in the UK with his cohabitant had from the outset been precarious.
In fact at all material times the applicant had been in the UK unlawfully; so the basis for the judges decision was obvious and he was not required precisely to discern the boundary between when persistence of family life was and was not precarious.
In the Agyarko case, cited in para 4 above, the appellants had also formed the relevant relationships while they had been unlawfully in the UK.
But it is worthwhile to note the way in which Lord Reed expressed himself in a judgment with which the other members of the court agreed.
Having in para 49 addressed the Jeunesse case, he suggested in para 51 (and in effect repeated in para 54) that persistence of family life would be precarious if created when an applicant was in the UK unlawfully or was entitled to remain in the UK only temporarily.
In para 45 of his judgment in the present case Sales LJ recorded that it was common ground that the starting point for consideration of the proper construction of Part 5A of the 2002 Act is that sections 117A 117D are intended to provide for a structured approach to the application of article 8 which produces in all cases a final result which is compatible with, and not in violation of, article 8.
This remains common ground; and it is clearly correct.
But, insofar as the legislation is intended in all cases to produce a result compatible with the article, we will need to find somewhere within it provision for a degree, no doubt limited, of flexibility.
It is obvious that Parliament has imported the word precarious in section 117B(5) from the jurisprudence of the ECtHR to which I have referred.
But in the subsection it has applied the word to circumstances different from those to which the ECtHR has applied it.
In particular Parliament has deliberately applied the subsection to consideration only of an applicants private life, rather than also of his family life which has been the predominant focus in the ECtHR of the consideration identified in the Mitchell case.
The different focus of the subsection has required Parliament to adjust the formulation adopted in the ECtHR.
Instead of inquiry into whether the persistence of family life was precarious, the inquiry mandated by the subsection is whether the applicants immigration status was precarious.
And, because the focus is upon the applicant personally and because, perhaps unlike other family members, he or she should on any view be aware of the effect of his or her own immigration status, the subsection does not repeat the explicit need for awareness of its effect.
Apart from the judgment of Sales LJ in the present case, the leading authority on the meaning of the word precarious in section 117B(5) is the decision of the Upper Tribunal given by Deputy Upper Tribunal Judge Holmes on behalf of himself and Mr CMG Ockelton, the Vice President, in AM (S117B) Malawi [2015] UKUT 260 (IAC), [2015] Imm AR 5.
The appellant, a citizen of Malawi, entered the UK in 2006 on a student visa.
In 2007 his wife and daughter joined him from Malawi.
In 2011 a second daughter was born.
The immigration status of his wife and daughters was dependent upon his status.
In 2012 the final extension of his student visa expired.
The Home Secretary determined to remove all four members of the family to Malawi.
The appellant challenged the determination by reference to the private life of each of the four of them.
He could not rely on their right to respect for their family life because the proposed removal of all of them together would not interfere with it.
The Upper Tribunal upheld the conclusion of the First tier Tribunal that their private lives in the UK had been established when their immigration status had been precarious within the meaning of section 117B(5) and that his appeal against the determination to remove them should be dismissed.
In explaining its decision the Upper Tribunal (a) noted at para 20 that, prior to the introduction of section 117B(5), the word precarious had been applied both in the ECtHR and in domestic courts not only to the status of a person lawfully present for a limited period but also to the situation of a person unlawfully present; (b) considered however at para 23 that Parliament had in section 117B(4) and (5) drawn a sharp distinction between a person in the UK unlawfully and one whose immigration status was precarious, with the result that, under the statute, a precarious immigration status did not include the situation of a person unlawfully present; (c) held at para 27 that all those granted a defined period of leave to remain in the UK, including discretionary leave to remain as well as leave of limited duration, had a precarious immigration status, even if they had a legitimate expectation that their leave would ultimately be extended indefinitely; (d) therefore at para 32 formulated its central decision as being that a persons immigration status was precarious for the purpose of section 117B(5) if his continued presence in the UK would be dependent upon a further grant of leave; and suggested at para 33 that even a grant of indefinite leave to remain (e) might render the persons status precarious if the grant had been obtained by deception or if he or she had embarked on a course of criminal conduct which would justify its withdrawal.
In the Deelah case, cited in para 21 above, McCloskey J, sitting in the Upper Tribunal as its President, stressed at paras 17 and 29 that in the case before him no issue arose as to whether the immigration status of the appellants had been precarious.
As an aside, however, at para 30, he described as clear and concise the central decision which in the AM case the same tribunal had recently reached (see para 39(d) above) and advised judges and practitioners constantly to be alert to it.
The court understands that, contrary to the law report of the decision of the Court of Appeal in the present case, the AM case was cited to it.
At all events, for whatever reason, Sales LJ does not appear to have had in mind the strong indorsement in that case of the Home Secretarys contention that, for the purposes of section 117B(5), a person has a precarious immigration status if he or she has leave to remain in the UK which is other than indefinite.
The provisional view of Sales LJ, set out in para 25 above, was that leave to remain short of indefinite leave might sometimes confer on a person a status not properly to be described as precarious; and that the concept of precariousness might fall to be applied having regard to the persons overall circumstances.
The view of Sales LJ is entitled to great respect.
In para 36 above I have recognised the need for a degree, no doubt limited, of flexibility in the application of Part 5A of the 2002 Act.
But I will shortly explain how, elsewhere, the statute does permit a limited degree of it.
I do not consider that the ordinary meaning of the word precarious requires, or that in its context Parliament must have intended the word to require, that its application to the facts of a case should depend upon a subtle evaluation of the overall circumstances such as Sales LJ had in mind.
The bright line interpretation of the word precarious in section 117B(5), commended by the specialist tribunal with the maximum weight of its authority, is linguistically and teleologically legitimate; and, for that matter, it is consistent with the way in which the ECtHR expressed itself in the Jeunesse case (see para 34 above) and in which this court expressed itself in the Agyarko case (see para 35 above).
The answer to the primary question posed by the present appeal is therefore that everyone who, not being a UK citizen, is present in the UK and who has leave to reside here other than to do so indefinitely has a precarious immigration status for the purposes of section 117B(5).
It follows that Judge Blundell, upheld on this point in both the successive appeals, was correct to determine that Ms Rhuppiahs private life in the UK, having been established when, at any rate predominantly, she had leave to reside here as a student, was established at a time when her immigration status was precarious.
Irrelevant though it is, it may be worthwhile to note that even since 9 February 2018 her immigration status has been precarious.
Although she no doubt reasonably entertains a hope that in 2028 she may secure indefinite leave to remain, her present leave is to do so for 30 months: see para 6 above.
Another helpful feature of the Upper Tribunals decision in the AM case was its conclusion that the concept of a precarious immigration status under section 117B(5) did not include the situation of a person present in the UK unlawfully: see para 39(b) above.
It is well arguable in principle that a person unlawfully present has an immigration status to that effect and that, of course, it is precarious.
But in subsections (4) and (5) of section 117B Parliament has drawn a clear distinction between unlawful presence and a precarious immigration status.
In relation to a person unlawfully present, subsection (4) covers all the ground (indeed, at (4)(b), more than all the ground) which subsection (5) would cover; and there is nothing to indicate that, notwithstanding the clear distinction, Parliament intended subsection (5) to overlap with subsection (4).
The facts of the present case do not enable this court to appraise the further suggestion in the AM case that even a grant of indefinite leave to remain might yield a precarious immigration status in the circumstances identified at para 39(e) above.
The reader will however have noted that the suggestion derives partial support from the decision of the ECtHR in the Butt case, summarised at para 33 above.
It would be reasonable for this court to expect that its indorsement today of the conclusions in the AM case at paras 43 and 44 above will make it easier for decision makers to decide whether an immigration status was precarious at the relevant time.
In Ahmed v Secretary of State for the Home Department [2014] EWHC 300 (Admin) Green J observed, at para 44, that there was an element of precariousness but not a very strong one.
In Secretary of State for the Home Department v Thierno Barry [2018] EWCA Civ 790 Singh LJ observed at para 62 that the respondents position was not entirely precarious.
Neither case required consideration of section 117B(5); both courts were seeking outside the statute to weigh the consideration identified by the ECtHR in the Mitchell case in their appraisal of rights under article 8.
It is, however, to be hoped that decision makers will no longer need to wrestle with degrees of precariousness.
Section 117A(2)(a)
It was in section 117A(2)(a) of the 2002 Act that Parliament introduced the considerations listed in section 117B.
So, in respect of the consideration in section 117B(5), Parliaments instruction is to have regard to the consideration [that] [l]ittle weight should be given to a private life established by a person at a time when the persons immigration status is precarious.
McCloskey J suggested in para 23 of the Deelah case, cited in para 21 above, that the drafting wins no literary prizes.
But, as both parties agree, the effect of section 117A(2)(a) is clear.
It recognises that the provisions of section 117B cannot put decision makers in a strait jacket which constrains them to determine claims under article 8 inconsistently with the article itself.
Inbuilt into the concept of little weight itself is a small degree of flexibility; but it is in particular section 117A(2)(a) which provides the limited degree of flexibility recognised to be necessary in para 36 above.
Although this court today defines a precarious immigration status for the purpose of section 117B(5) with a width from which most applicants who rely on their private life under article 8 will be unable to escape, section 117A(2)(a) necessarily enables their applications occasionally to succeed.
It is impossible to improve on how, in inevitably general terms, Sales LJ in his judgment described the effect of section 117A(2)(a) as follows: 53.
Although a court or tribunal should have regard to the consideration that little weight should be given to private life established in [the specified] circumstances, it is possible without violence to the language to say that such generalised normative guidance may be overridden in an exceptional case
by particularly strong features of the private life in question
There was lively argument before the Court of Appeal about whether Judge Blundell understood the effect upon section 117B(5) of section 117A(2)(a), then recently enacted, and, if not, whether the advocates (none of whom appeared in this court) had failed to give him the necessary assistance in that regard.
For he concluded that he was required by statute to attach little weight to the aspects of her private life upon which Ms Rhuppiah relied and that he was bound to conclude that the harsh consequences which will flow from [her] removal are justified.
In the light of the now academic nature of the present appeal there is no need for this court either to explore this issue or to appraise the firm conclusion of Sales LJ at para 57, at first sight slightly surprising, that there were no such particularly strong features of Ms Rhuppiahs private life as would justify departure from the result indicated by section 117B(5).
Section 117B(3)
Section 117B(3) of the 2002 Act, set out in para 20 above, provides that it is in the public interest, and in particular in the interests of the economic well being of the UK, that persons who remain here are financially independent.
Then the subsection proceeds to give two reasons why their financial independence is in the public interest.
Judge Blundell held that, in that she was dependent on support from her father and from Ms Charles, Ms Rhuppiah was not financially independent and that this was a further consideration, negative to her claim under article 8, to which he was required to have regard.
The Court of Appeal, at paras 63 64, upheld his analysis and in doing so rejected the submission on behalf of Ms Rhuppiah that persons were financially independent for the purposes of section 117B(3) if they were not financially dependent upon the state.
The Home Secretary now agrees with the submission which was made, and which continues to be made, on behalf of Ms Rhuppiah about the meaning of financial independence in section 117B(3); but he adds uncontroversially that the evidence of support from third parties has to be credible and the support reliable.
This is the agreed area of error into which Judge Blundell and the Court of Appeal fell, to which reference was made in para 7 above.
The Home Secretary has changed his mind about the meaning of financial independence following the decision of this court in R (MM (Lebanon)) v Secretary of State for the Home Department [2017] UKSC 10, [2017] 1 WLR 771, which post dated the decision of the Court of Appeal in the present case.
In the MM and linked cases this court considered the financial requirements imposed by the rules upon non EEA family members wishing to join their relatives in the UK.
The court held that adherence to the rules, which had sought to exclude reliance on promises of third party support even if credible, might precipitate a violation of article 8.
The rules were changed accordingly.
The parties are correct to join in submitting to this court that financial independence in section 117B(3) means an absence of financial dependence upon the state.
Why would it be in the public interest that they should not be financially dependent on other persons? Why would it in particular be in the interests of the economic well being of the United Kingdom that they should not be dependent on them? Sales LJ suggested, at para 64, that the financial support provided to Ms Rhuppiah by her father and Ms Charles might cease, whereupon the obligation to maintain her would probably fall upon the state; but a cessation of a persons employment would probably have the same result.
Indeed the present case is a good example of the sometimes flimsy distinction between employment and third party support.
Anyone other than Ms Rhuppiah who provided extensive caring services to Ms Charles would need to be paid; and it is but an incident of their close friendship and of Ms Rhuppiahs legal inability to have taken employment prior to 9 February 2018 that instead the provision to her has taken the form of largely free board and lodging.
Regard must moreover be had to the first of the two reasons given in section 117B(3) for its statement as to where the public interest lay: because such persons are not a burden on taxpayers.
It was the view of Sales LJ at para 65 that, if the phrase financially independent referred to independence of the state, the quoted words were close to tautological.
Had those words been part of the statement as to where the public interest lay, one might more readily have agreed with his view.
But they are not part of the statement.
They are part of the explanation for it and in my view they unequivocally support the construction of section 117B(3) now agreed between the parties.
So Judge Blundell erred in concluding that Ms Rhuppiah was not financially independent within the meaning of section 117B(3).
The further submission on her behalf is and has been that the effect of section 117B(2) and (3) is to cast her ability to speak English and her financial independence as factors which positively weigh in her favour in the inquiry under article 8.
But the further submission is based on a misreading of the two subsections and was rightly rejected by Judge Blundell, upheld by the Court of Appeal, just as an analogous submission was rejected in para 18 of the decision in the AM case, cited at para 38 above.
The subsections do not say that it is in the public interest that those who are able to speak English and are financially independent should remain in the UK.
They say only that it is in the public interest that those who seek to remain in the UK should speak English and be financially independent; and the effect of the subsections is that, if claimants under article 8 do not speak English and/or are not financially independent, there is, for the two reasons given in almost identical terms in the subsections, a public interest which may help to justify the interference with their right to respect for their private or family life in the UK.
In seeking to portray the strength of their private or family life by reference to all their circumstances, claimants may wish to highlight their ability to speak English and/or their financial independence; but the legitimate deployment of such factors in that context is to be contrasted with the erroneous further submission that the subsections propel a conclusion that, where those factors exist, there is a public interest in favour of the claims.
Conclusion
It nevertheless follows that Judge Blundell erred in law in holding that section 117B(3) of the 2002 Act applied to Ms Rhuppiahs appeal and therefore that it identified an aspect of the public interest negative to her claim.
Was his error material? In any event section 117B(5) required him to give little weight to her private life.
But that requirement was subject to section 117A(2)(a), which conferred on him a limited degree of flexibility.
In the absence of his error in relation to section 117B(3), section 117A(2)(a) might properly have led him to uphold her claim, for which he had obvious sympathy.
I propose that we should allow Ms Rhuppiahs appeal to this court and should set aside his order upon her initial appeal; but that, for the reason given in para 8 above, we should not remit her initial appeal for fresh determination.
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Ms Rhuppiah, a Tanzanian national, entered the UK in 1997 with leave to reside here as a student for three months.
The Home Secretary granted further leave to her to reside in the UK as a student on 12 occasions, but some of these applications for leave were made after the previous leave had expired.
While they were studying at the same college, Ms Rhuppiah met Ms Charles, who suffers from ulcerative colitis, a gravely debilitating condition.
They have resided together since 2001.
Ms Rhuppiah cooks food suitable for Ms Charless medical condition and accompanies her to Bristol, to hospital and in effect everywhere.
Instead of paying her for looking after her in these respects, Ms Charles provides her with largely free board and lodging.
Ms Rhuppiah, a Seventh Day Adventist, cares for Ms Charles out of friendship, faith and habit.
Were Ms Rhuppiah to leave the UK, Ms Charless health would be compromised, her life turned upside down, and she would have to turn to the state for care.
After her final grant of leave expired in November 2009, Ms Rhuppiah twice failed to secure indefinite leave to remain in the UK, first because her residence here over the past ten years had not always been lawful, and second because she applied on the wrong form and by the time she reapplied the Immigration Rules, HC395 (the rules) had changed, fatally for her reapplication.
The Home Secretary was then obliged to determine whether her reapplication could nevertheless succeed outside the rules, on the basis of her right to respect for the private life she had established in the UK, including her friendship with Ms Charles, under article 8 of the European Convention on Human Rights.
The Home Secretarys determination on this basis was also negative.
Ms Rhuppiah challenged the Home Secretarys decision at the First tier Tribunal (FTT).
Under section 117B(5) of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act), little weight should be given to an applicants private life if it was established in the UK at a time when his or her immigration status was precarious.
The FTT dismissed Ms Rhuppiahs challenge on the basis that this provision applied to her; and that, besides, she was not financially independent (another consideration, which section 117B(3) of the 2002 Act required the Home Secretary to weigh against her right to respect for her private life) as she depended on support from her father and from Ms Charles.
Ms Rhuppiah appealed unsuccessfully to the Upper Tribunal and the Court of Appeal.
Her appeal has now become academic, because she has now lived continuously in the UK for long enough to secure leave to remain by a different route.
The Supreme Court nevertheless heard the appeal, because of the public importance of providing a definitive interpretation of the word precarious in section 117B(5).
The Supreme Court unanimously allows the appeal.
Lord Wilson gives the only judgment.
Section 6 of the Human Rights Act 1998 requires the Home Secretary to act compatibly with the rights contained in the European Convention on Human Rights, including the right under article 8 to respect for private and family life.
Removing an applicant from the UK may interfere with this right.
Therefore, if the Home Secretary refuses a persons application for leave to remain in the UK under the rules, he must nevertheless consider whether to grant leave on the basis of their right under article 8.
Article 8 gives him a limited discretion to determine whether the interference is justified [4].
Section 117A(2) of the 2002 Act prompts decision makers exercising this discretion to have regard to the public interest considerations in section 117B, which include: the maintenance of effective immigration controls; that persons in the UK can speak English and are financially independent; and that little weight should be given to a private life established by a person at a time when they are in the UK unlawfully or when the persons immigration status is precarious [20 21].
A persons immigration status in the UK can therefore be precarious even when he or she is lawfully present here [24].
Equally, the concept of little weight and the wording of section 117A(2) give decision makers a limited degree of flexibility to uphold an article 8 claim on the basis of the applicants right to respect for private life, even if it was established when the applicants immigration status was precarious [49].
The Court of Appeal accepted that Ms Rhuppiahs own immigration status was precarious, but suggested that some immigrants could have an immigration status which was not precarious even though they did not have indefinite leave to remain in the UK.
It added that the concept of precariousness might fall to be applied having regard to the persons overall circumstances.
The Supreme Court holds that the application of the concept of precariousness does not depend on such a subtle evaluation of the overall circumstances as suggested by the Court of Appeal [25, 42].
The European Court of Human Rights (ECtHR) has approached the concept of precariousness in the context of the right to family life by asking whether the family life was created at a time when the parties knew that the immigration status of one of them made its persistence in the host state precarious from the outset [28].
Therefore, it distinguished the situation of an applicant who (though not present unlawfully) was no more than tolerated by the host state while it determined her various applications for residence permits and consequential appeals, from that of settled migrants who had formally been granted a right of residence.
The Supreme Court has previously addressed this ECtHR decision, suggesting that family life will be precarious if created when an applicant was here unlawfully or had only a temporary right to remain in the UK [34 45].
Section 117B imports the concept of precariousness from the ECtHR case law.
But the section only applies to an applicants private life [37].
In a case not cited to the Court of Appeal, the Upper Tribunal previously held that a persons immigration status was precarious for the purpose of section 117B(5) if his continued presence in the UK would be dependent upon a further grant of leave [38 39].
The Supreme Court now approves this decision.
Everyone who, not being a UK citizen, is present in the UK and who has leave to reside here other than to do so indefinitely, has a precarious immigration status for the purposes of section 117B(5) [44].
This bright line interpretation is consistent with the ECtHR and Supreme Courts language in the decisions referred to above [43].
The FTT nonetheless erred in concluding that Ms Rhuppiah was not financially independent within the meaning of section 117B(3).
The Supreme Court holds that financially independent in section 117B(3) means not financially dependent upon the state.
It therefore allows Ms Rhuppiahs appeal [52 58].
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The Parliamentary Commissioner Act 1967 created for the first time in the United Kingdom an officer, the Parliamentary Commissioner for Administration, charged with investigating complaints of maladministration against government departments and a limited number of other public authorities exercising the functions of the Crown or controlled or funded by the Crown.
Since then, ombudsmen have come to fulfil an increasingly important role in mediating between the state and the public service on the one hand and the citizen on the other.
Commissioners have been established for complaints against the National Health Service since 1973, for complaints against local government since 1974 and for complaints against social housing landlords since 1996.
There are also separate Commissioners charged with examining complaints against public bodies or the providers of public services in Scotland, Wales and Northern Ireland.
There are currently 19 statutory officers charged with the handling of complaints against government departments, local government, the National Health Service and other public authorities or undertakers.
They are generally known as ombudsmen, after the officer of that title first established in Sweden in 1809.
In some cases, the same person performs the functions of more than one ombudsman, but each role has its own statutory basis.
The various enactments have a strong family resemblance.
But some of them have distinctive features which mean that considerable caution is required before principles derived from one legislative scheme can be read across to another.
In 1969, two ombudsmen were established for Northern Ireland.
The Parliamentary Commissioner Act (Northern Ireland) 1969 established a Northern Ireland Parliamentary Commissioner for Administration (later known as the Assembly Ombudsman for Northern Ireland).
His role and powers were closely modelled on those of the Commissioner established by the United Kingdom Act of 1967.
The Commissioner for Complaints Act (Northern Ireland) 1969 established a Northern Ireland Commissioner for Complaints.
I shall call him the Complaints Commissioner.
He is charged with reporting on complaints against bodies which were not within the jurisdiction of the Northern Ireland Parliamentary Commissioner, notably local authorities, the Northern Ireland Health Board and various public statutory undertakers.
Since 1972, the same person has held both offices.
But until recently (see below) his two roles have had distinct legislative foundations.
It is therefore necessary to have regard to the particular capacity in which an ombudsman is acting and the particular legislation governing that function in order to determine what his powers are.
The current legislation comprises two Orders in Council made on the same day in 1996, which repealed and replaced the corresponding Acts of 1969.
They are the Ombudsman (Northern Ireland) Order 1996 (SI 1996/1298 (NI 8)), governing the work of the Assembly Ombudsman, and the Commissioner for Complaints (Northern Ireland) Order 1996 (SI 1996/1297 (NI 7)), governing that of the Complaints Commissioner.
This appeal is about the powers of the Complaints Commissioner under the latter order, which I shall call the 1996 Order.
In particular it is about his powers in relation to general medical practitioners working in the National Health Service.
In Northern Ireland, as in other parts of the United Kingdom, the National Health Service is one of the main sources of complaints.
The original jurisdiction of the Complaints Commissioner extended to the various boards and committees responsible for the administration of the National Health Service in Northern Ireland.
But it was confined to maladministration and did not extend to any action in the discharge of a professional duty by a medical or dental practitioner, pharmacist, nurse, midwife or member of a profession supplementary to medicine in the course of diagnosis, treatment or care of a particular patient: see the
Commissioner for Complaints Act (Northern Ireland) 1969, Schedule 2, paragraph
That jurisdiction was preserved in the 1996 Order.
But the position was significantly altered by an amendment of 1997, which followed a similar amendment to the United Kingdom legislation.
Its effect was to extend the Complaints Commissioners jurisdiction to the merits of a decision to the extent that it was taken in consequence of the exercise of clinical judgment: see article 8(7) of the 1996 Order as amended. 4.
The main questions at issue in this appeal are whether, and if so in what circumstances, the Complaints Commissioner has power to recommend the payment of a money sum to a complainant; and whether in the event that that sum is not paid he has power to make a special report drawing the attention of the legislature to that fact.
The Northern Ireland Court of Appeal decided that the answer in each case was no.
These questions will shortly become moot.
The Public Services Ombudsman Act (Northern Ireland) 2016 abolishes the offices of both the Assembly Ombudsman for Northern Ireland and the Complaints Commissioner with effect from 1 April 2016, and combines their functions in a new officer, the Northern Ireland Public Services Ombudsman.
The jurisdiction and powers of the new office are in some respects greater than those of either of its predecessors, and his mode of operation different.
But the new Act has no bearing on the present appeal.
The transitional provisions provide for current matters to be transferred to the Public Services Ombudsman, but to be dealt with by him in accordance with the 1996 legislation.
We have been told that there are some 53 reports completed since the decision of the Court of Appeal which have been held back pending the determination of this appeal, and that in four further cases payment of a money sum has been recommended but the recommendation has not been followed.
The facts
The respondent is a general medical practitioner in sole practice in Northern Ireland.
The National Health Service operates in Northern Ireland through a Health and Social Care Board.
The respondent provides general medical services under contract with the board for his area under Part VI of the Health and Social Services (Northern Ireland) Order 1972 (SI 1972/1265 (NI 14)).
This means that complaints against him are liable to be investigated by the Commissioner under article 8 of the 1996 Order.
I shall deal below with the scope of that article.
The complainant is the widow of one of his patients, who has been referred to in this litigation as R. R died on 6 January 2009 of a myocardial infarction.
The complaint concerns the care and treatment received by him during the last eight months of his life.
He attended the respondents surgery on 30 May 2008 to ask for a heart screen.
Although he had no symptoms and was not complaining of chest pains, he was referred to a NHS hospital for a treadmill test.
The test was carried out in July, but terminated early due to fatigue.
The test recorded negative for ischaemic heart disease at the level of exercise attained at the time it was terminated.
A report to this effect was sent to the respondent, whose staff recorded it on the practice computer system, but no action was taken.
On 10 December 2008, R attended the surgery again, this time complaining of chest pains.
He was seen by a locum doctor, who noted typical angina pain but normal treadmill earlier in the year, but again, no action was taken.
R returned to the surgery on 15 December 2008 complaining of further chest pains.
He saw the respondent, who referred him to the Rapid Access Chest Pain Clinic at the same hospital.
The clinic, however, declined to give him an appointment, because the earlier treadmill test had been negative.
They suggested in a report dated 20 December that if any further medical review was required R should be referred to the outpatients department.
Their report arrived at the practice on Christmas Eve, and was input into the practice computer system.
The respondent was on holiday.
The locum was on duty, but she did not review the report because it was not marked urgent.
R returned to the surgery on 6 January 2009 to find out what had happened about the referral to the clinic.
The locum told him that an appointment had been refused, but referred him to the clinic as an outpatient for a treadmill test, as suggested in the report.
He died later that day, before anything had been done to follow up this suggestion.
Mrs R complained to the Complaints Commissioner.
She gave his officials to understand that she was not looking for compensation but wished to understand what had happened.
The Commissioner agreed to undertake the investigation, and in due course reported.
He concluded that the practice had failed to provide a reasonable level of care and treatment.
In particular, he found that it was guilty of maladministration in (i) failing to take action after the treadmill test, (ii) failing to follow up promptly the clinics failure to give R an appointment, and (iii) failing to refer R to the emergency services on 6 January 2009.
He also found that the respondent had acted inappropriately after Rs death in (iv) prematurely assigning responsibility to the hospital, (v) discouraging the family from making a complaint, and (vi) having promised to contact the hospital about Mrs Rs complaint against them, failing to get back to Mrs R after doing so.
The Complaints Commissioner made no finding that these failures caused the death of R, and the facts that he has found do not suggest that they did.
He specifically found that the failure to take appropriate action on 6 January 2009 made no difference to the outcome.
But at para 70 of his report he concluded: I have identified learning points earlier in this report for the Practice and I recommend that [the GP] acts upon them.
I also recommend that the Practice should pay [the complainant] 10,000 in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed.
The respondent has apologised to Mrs R and, as the Complaints Commissioners report observes, has put in hand changes to his practices procedures designed to avoid a recurrence of the administrative failings.
But, having taken legal advice, he has declined to pay the money sum recommended, on the ground that he was not legally bound to do so.
The Complaints Commissioner has responded by saying that in that case he was minded to issue a special report to the Northern Ireland legislature reporting the respondents failure to comply with the recommendation.
The Commissioner for Complaints (Northern Ireland) Order 1996
The Complaints Commissioner is empowered to investigate and report on complaints made to him by those claiming to have suffered injustice as a result of the conduct of certain bodies and persons.
The bodies and persons in question, and the matters which he is empowered to investigate are identified by articles 7 to 10 of the Order.
The scheme of these provisions is that article 7 provides for the investigation of complaints about maladministration by any of the bodies listed in Schedule 2.
These are all non departmental public bodies exercising functions conferred on them by statute.
Schedule 2 may be amended by Order, but article 7(3) provides that such an Order may extend its operation only to bodies which either exercise statutory functions or have their expenses substantially defrayed from public funds.
The investigation of Mrs Rs complaint against the respondent was conducted under article 8, which deals with the investigation of complaints against individuals who have undertaken to provide general medical, dental, ophthalmic or pharmaceutical services under Part VI of the Health and Social Services (Northern Ireland) Order 1972 or in certain circumstances those performing personal medical or dental services.
Unlike the bodies whose conduct may be investigated under article 7, the persons liable to be investigated under article 8 are not public bodies.
They are individuals like the respondent providing professional services under contracts or other consensual arrangements with the National Health Service.
The distinction is significant, as I shall explain. article 8(a) provides for the investigation of complaints against independent health and social care providers.
These are not public bodies either.
Like the individuals covered by article 8, they provide services under arrangements with the National Health Service.
Articles 9 and 10 restrict in certain respects the undertaking of investigations authorised under all three preceding provisions.
Article 9 is mainly concerned with the potential overlap between the Complaints Commissioners investigations and other remedies available to the complainant.
Article 9(3) and (4) provides: 9.
Matters not subject to investigation (3) Subject to paragraph (4) and to [section 78 of the Northern Ireland Act 1998], the Commissioner shall not conduct an investigation under this Order in respect of (a) any action in respect of which the person aggrieved has or had a right of appeal, complaint, reference or review to or before a tribunal constituted under any statutory provision or otherwise; any action in respect of which the person (b) aggrieved has or had a remedy by way of proceedings in a court of law. (4) The Commissioner may conduct an investigation
Article 11 provides, in relation to all three categories of investigation: (a) notwithstanding that the person aggrieved has or had such a right or remedy as is mentioned in paragraph (3), if the Commissioner is satisfied that in the particular circumstances it is not reasonable to expect him to resort to or have resorted to it; or (b) notwithstanding that the person aggrieved had exercised such a right as is mentioned in paragraph (3)(a), if he complains that the injustice sustained by him remains unremedied thereby and the Commissioner is satisfied that there are reasonable grounds for that complaint. 11.
Purposes of investigation The purposes of the investigation by the Commissioner shall be to ascertain if the matters alleged in the (a) complaint (i) may properly warrant investigation by him under this Order; (ii) are, in substance, true; and to effect a settlement of the matter (b) where it appears to the Commissioner to be desirable (i) complained of; or if that is not possible, to state what action (ii) should in his opinion be taken by the body concerned, the general health care provider concerned or the independent provider concerned (as the case may be) to effect a fair settlement of that matter or by that body or provider or by the person aggrieved to remove, or have removed, the cause of the complaint.
Articles 15 19 cover (among other things) enforcement.
Three modes of enforcement are provided for.
First, under article 15, the Complaints Commissioner is required to send a copy of the report of his investigation to specified people, including the complainant and the body or person investigated.
Where the investigation is carried out under article 8 into the conduct of an individual health provider, the report must be sent to the National Health Service entity with whom he or she has contracted or arranged to provide the service in question.
That body may take whatever disciplinary or other action is open to it under its arrangements with the practitioner.
Secondly, article 16 provides: 16.
Application for compensation by person aggrieved (1) Where on an investigation pursuant to a complaint under article 7 the Commissioner reports that a person aggrieved has sustained injustice in consequence of maladministration, the county court may, on an application by that person, by order award that person damages to be paid by the body concerned. (3) Damages awarded under this article shall be such as the county court may think just in all the circumstances to compensate the person aggrieved for any loss or injury which he may have suffered on account of expenses reasonably incurred by him in (a) connection with the subject matter of the maladministration on which his complaint was founded; and (b) his loss of opportunity of acquiring the benefit which he might reasonably be expected to have had but for such maladministration. (4) In calculating the amount of damages to be awarded by virtue of paragraph (3)(b) the county court shall apply the same rule concerning the duty of a person to mitigate his loss as applies in relation to damages recoverable at common law.
The third mode of enforcement is provided for by article 17.
The substance of this provision is that where the Complaints Commissioner conducts an investigation under article 7 and reports persistent or systemic maladministration, the Attorney General may, at his request, apply to the High Court for an injunction.
In court proceedings under article 16 or 17, article 18(1)(a) provides that a recommendation of the Commissioner and any report of the Commissioner relating to the complaint in connection with which the recommendation is made shall, unless the contrary is proved, be accepted as evidence of the facts stated therein.
It is, finally, necessary to refer to articles 19 and 21.
They provide as follows: 19.
Reports to the Assembly The Commissioner shall annually lay before the Assembly a general report on the performance of his functions under this Order and may from time to time lay such other reports before the Assembly as he thinks fit. 21.
Disclosure of information by Commissioner Information obtained by the Commissioner or his (1) officers in the course of, or for the purposes of, an investigation under this Order shall not be disclosed except as permitted by paragraph 1(B) or for the purposes of the investigation and any report to be made (a) thereon under this Order; (b) any proceedings for an offence under the Official Secrets Acts 1911 to 1989 alleged to have been committed in respect of information obtained by the Commissioner or any of his officers by virtue of this Order; (c) any proceedings for an offence of perjury alleged to have been committed in the course of an investigation under this Order; (d) an inquiry with a view to the taking of proceedings of the kind mentioned in sub paragraphs (b) and (c); or (e) any proceedings under article 14, 16 or 17.
Power to recommend monetary redress: Article 9(3) and (4)
On the particular facts of this case, there is a short answer to the Complaints Commissioners appeal.
Under article 9(3) of the 1996 Order, he may not carry out an investigation into any actions in respect of which the complainant has a remedy by way of proceedings in a court of law.
This is, subject to article 9(4), a condition precedent to his jurisdiction.
It follows, as a Divisional Court in England held about a similar provision limitation on the powers of the Commissioner for Local Administration under the Local Government Act 1974, that the operation of article 9(3) cannot depend on whether the complainants allegations are well founded.
For the purposes of article 9(3) she has a remedy by way of proceedings in a court of law if, on the assumption that her complaint was justified, she would have a remedy in court: see R v Commissioner for Local Administration, Ex p Croydon London Borough Council [1989] 1 All ER 1033, 1044.
By way of exception to the restriction in article 9(3), article 9(4) provides that the Complaints Commissioner may nevertheless conduct the investigation if he is satisfied that in the particular circumstances it is not reasonable to expect the complainant to resort to law.
This is primarily directed to cases where litigation would not be worth the cost and trouble involved.
But it may also apply in other cases, for example where the complainant is looking for explanations rather than money.
According to the evidence of the Commissioners staff, this was the position of Mrs R.
The Commissioner accepted that the complaint should be investigated because Mrs R said that she was not seeking monetary redress but only wanted to know what had gone wrong.
I agree that that was a proper basis on which to undertake the investigation.
The Commissioner could properly conclude that it would not have been reasonable to expect Mrs R to commence proceedings in court if she was not seeking financial relief.
But if the only basis on which the Commissioner felt able to undertake the investigation at all was that Mrs R did not want money, it could not be proper for him to recommend a payment of money and threaten to report on the respondents failure to pay it.
Power to recommend monetary redress: in general
There is, however, a more fundamental question, which is directly raised by the Court of Appeals judgment, namely whether the Complaints Commissioner has power to recommend monetary redress at all.
The Court of Appeal held that he did not.
If that is correct, it applies irrespective of the basis on which the Commissioner satisfied the conditions in article 9(4).
The starting point is the legal and constitutional status of the Complaints Commissioners reports.
The practice of the United Kingdom government is to comply with the recommendations of statutory ombudsmen unless the department in question can put forward good reasons for not doing so: see Handling of Parliamentary Ombudsman Cases (Cabinet Office, 1996), para 61, and Managing Public Money (HM Treasury, 2013), para 4.12.2.
This corresponds to what has been held to be the position of the United Kingdom government in relation to reports of the Parliamentary Commissioner for Administration.
In R (Bradley) v Secretary of State for Work and Pensions [2008] EWCA Civ 36; [2009] QB 114, the Court of Appeal in England accepted (para 63) that where a minister was responsible to Parliament for the public body in question, he was not bound to accept the Commissioners findings or recommendations, because Parliament cannot have intended to preclude the minister from explaining his rejection of them to Parliament.
Nevertheless, it was held (para 72) that he could not rationally reject them without cogent reasons.
The decision in Bradley raises delicate questions about the relationship between judicial and Parliamentary scrutiny of a ministers rejection of the recommendations of the Parliamentary Commissioner for Administration.
But they are not questions which arise on this appeal, because on any view the principle stated in Bradley cannot be transposed without modification to a case where the Complaints Commissioner recommends financial redress against a medical practitioner.
In the first place, as I shall explain below, the Complaints Commissioner has a very different relationship with the legislature.
Secondly, even in a case where his recommendation is directed to a public body, article 16, which has no equivalent in the United Kingdom legislation, provides for claims to compensation to be determined in adversarial litigation before a court.
The effect is to create a statutory cause of action for maladministration which would not necessarily exist otherwise.
The function of the court is to decide the issue on the merits, and not simply by way of judicial review of the Commissioners report.
The Commissioners recommendations and findings are no more than rebuttable evidence of the facts.
It necessarily follows that the public body in question is entitled to dispute them on any ground which may find favour with a court.
Third, and critically, the recommendation which is challenged in the present case was not directed to a public body.
A general practitioner working in the National Health Service is not a public body, but merely provides services to a public body under a contract or some other consensual arrangement.
The Complaints Commissioner is not a court.
He is an official, albeit an independent one, performing an investigatory and advisory function under statute.
Except in relation to compelling the attendance of witnesses and the production of documents (see article 13 of the 1996 Order), he has no powers of compulsion.
Subject to the terms of the practitioners agreement with the relevant NHS body and to any power of enforcement conferred by the relevant legislation, the Commissioners recommendations are not binding on any one as a matter of private law.
At best, they are legally enforceable only by virtue of the public law duty of a public body not irrationally to reject them.
But that duty is irrelevant to a person in the position of the respondent, who has no relevant public law duties.
The scheme of the 1996 Order, like that of the 1969 legislation which it replaced, is based upon a similar distinction between public and private bodies.
The right of a complainant to claim damages in court under article 16 is limited to cases of maladministration found in the course of an investigation conducted under article 7, ie by one of the public bodies to which that article applies.
The same limitation applies to the right to request the Attorney General to apply for an injunction under article 17.
Similarly, by article 21, the Complaints Commissioner is permitted to disclose information obtained in the course of or for the purpose of an investigation only for limited purposes.
They are conducting the investigation and preparing his report on it, defending himself and his officers against a charge of breach of the Official Secrets Acts, and taking proceedings for perjury or obstruction in the course of an investigation.
The information may also be made available for the purpose of enforcement proceedings under articles 16 and 17, both of which as I have pointed out are limited to investigations conducted under article 7.
Leaving aside the possibility of a special report, to which I shall return, there is no power to use the information for the purpose of enforcement measures of any other kind.
Article 11 of the 1996 Order empowers the Complaints Commissioner to try to effect a fair settlement of the complaint.
If that is not possible, he may state what action should in his opinion be taken by the object of the complaint in order to effect such a settlement.
In a case where the complainant has suffered loss in consequence of the defaults found by the Commissioner, a fair settlement is likely if not certain to require that that loss should be made good.
It follows that if the Commissioner chooses to operate the settlement procedure, and fails to achieve a settlement, he the respondent has accepted must be entitled to recommend in his report a monetary payment sufficient to bring about a fair settlement.
That power is available irrespective of the statutory basis of the investigation, and therefore whether the party investigated is a public or a private body.
But the power is not relevant here, because the Complaints Commissioner never sought to operate the settlement procedure.
If he had done, a settlement might well have been achieved without difficulty, since Mrs R had not sought monetary redress and the Commissioners other recommendations.
Article 18(1)(a) of the 1996 Order provides that the Commissioners recommendations as well as his findings may be relevant to an action for damages against a public body under article 16.
It is arguable that the Complaints Commissioner may also have power to make recommendations that would be relevant in such proceedings.
But since the respondent is not a public body and not amenable to proceedings under article 16, that question does not arise on this appeal and I should prefer to leave it open.
What is clear is that investigations under article 8 into the conduct of persons who are not public bodies are an entirely different matter.
It is one thing for a public officer performing an investigatory and advisory role to recommend a payment out of public funds.
It is another thing altogether for him to recommend the payment by a private individual out of his own pocket of a sum which that individual has no public or private law duty to pay.
Articles 16 and 17, as I have pointed out, have been deliberately limited to investigations under article 7 into the conduct of one of the public bodies identified in Schedule 2.
There is no statutory mode of enforcing a monetary payment against a private contractor to which the Complaints Commissioners recommendation could be relevant.
More generally, a private individual has no means open to him of challenging the Commissioners findings before a court, such as a public body enjoys under article 16, except by way of judicial review, which offers only limited scope for a review of the merits.
I can think of no rational reason why the draftsman of the 1996 Order should have intended that private individuals with no relevant duty of compliance should have a more limited right to challenge the Commissioners report than a public body.
On the contrary, the assumption must have been that the Commissioner would not make recommendations against private individuals of a kind which could have no legal effect directly or indirectly, either under the Order or under the general law.
This is, in substance, what the majority of the Court of Appeal decided.
In my opinion, as applied to investigations under article 8, their conclusion was correct.
Power to make a special report
The Complaints Commissioners main response to this is that his recommendations do not depend for their efficacy on their legal enforceability but on the power of publicity.
By publicising a respondents failure or refusal to comply with a recommendation, he can bring pressure to bear on him to comply notwithstanding the lack of any legal obligation to do so.
This is what the Commissioner hopes to achieve by issuing a special report.
Mr McGleenan QC, who appeared for the Commissioner before us, drew our attention to the observations of Wade and Forsyth, Administrative Law, 11th ed (2014), p 69, about the Parliamentary Commissioner Act 1967: An ombudsman requires no legal powers except powers of inquiry.
In particular, he is in no sense a court of appeal and he cannot alter or reverse any government decision.
His effectiveness derives entirely from his power to focus public and parliamentary attention upon citizens grievances.
But publicity based on impartial inquiry is a powerful lever.
Where a complaint is found to be justified an ombudsman can often persuade a government department to modify a decision or pay compensation in cases where the complainant unaided would get no satisfaction.
For the department knows that a public report will be made and that it will be unable to conceal the facts from Parliament and the press.
I have no difficulty with this proposition as applied to a public body and to the scheme of the United Kingdom Act.
The United Kingdom Parliamentary Commissioner for Administration is an officer of the legislature.
The White Paper which preceded the passing of the 1967 Act (The Parliamentary Commissioner for Administration, Cmnd 1965/2767) observes at para 4, that his office was conceived as supporting the traditional constitutional function of Parliament of receiving the grievances of citizens and holding ministers individually and collectively accountable for their amendment.
The Parliamentary Commissioner in the United Kingdom is empowered to investigate complaints referred to him by a Member of Parliament against government departments and other public bodies identified in Schedule 2: see sections 4 and 5 of the 1967 Act.
He has no power to investigate complaints against private individuals providing services to government departments or public bodies.
The Parliamentary Commissioners practice is, in appropriate cases, to recommend that the department or public body provides financial redress, generally on a compensatory basis.
If the department decides not to comply, he may make a special report under section 10(3), which provides as follows: (3) If, after conducting an investigation under section 5(1) of this Act, it appears to the Commissioner that injustice has been caused to the person aggrieved in consequence of maladministration and that the injustice has not been, or will not be, remedied, he may, if he thinks fit, lay before each House of Parliament a special report upon the case.
In all of these respects, the position of the Assembly Ombudsman for Northern Ireland under the Ombudsman (Northern Ireland) Order 1996 is the same.
Section 10(3) of the 1967 Act of the United Kingdom is reproduced by section 10(3) of the Parliamentary Commissioner Act (Northern Ireland) 1969, and then by article 17(2) of the Assembly Ombudsman (Northern Ireland) Order 1996.
But no corresponding power was conferred on the Complaints Commissioner either by the legislation of 1969 or by that of 1996.
The absence of a power in the Complaints Commissioner to make a special report of the kind which is expressly conferred on the Assembly Ombudsman was not an oversight.
It reflects a significant difference in their constitutional status.
The Assembly Ombudsman, like the United Kingdoms Parliamentary Commission for Administration, is an officer of the legislature.
Under the Ombudsman (Northern Ireland) Order 1996, he may investigate only such complaints as are made by a member of the public to a member of the Assembly and referred by the latter to him: article 9(2).
He reports to the member in question or another appropriate member, as well as to the public body under investigation: article 16.
In keeping with this scheme, the sole mode of enforcing his recommendations provided for by the legislation is a special report to the legislature under article 17(2).
These had also been features of the Parliamentary Commissioner Act (Northern Ireland) 1969.
Their effect is that the Assembly Ombudsmans recommendations are enforceable politically, but they are not enforceable legally save arguably by way of judicial review.
This reflects the fact that the bodies subject to investigation by the Assembly Ombudsman are government departments and public bodies for whom the relevant minister is responsible to the legislature.
The position of the Complaints Commissioner is different.
He is a public officer but he is not an officer of the legislature in the same sense as the Assembly Ombudsman.
Under the 1996 Order, he receives complaints directly from the public: articles 7(7) and 8(5).
He reports to the complainant and to the bodies and individuals whose conduct is at issue: article 15.
There is no power to make a special report to the legislature or to any one else on non compliance with his recommendations.
Instead, his recommendations and findings are legally enforceable by the court by the procedures set out in articles 16 and 17, but only as against public bodies investigated under article 7.
In 1969 and 1996, it was evidently not considered appropriate to confer enforcement powers against private individuals with no relevant duties either in public or private law, whether by way of resort to the courts or by denouncing the recalcitrant party to the legislature.
I do not accept the Complaints Commissioners submission that this deliberate scheme can be circumvented by resort to article 19 of the 1996 Order, which empowers him to lay before the Assembly an annual report on the performance of his functions and such other reports as he thinks fit.
Reports of his investigations are governed by article 15.
The context and the scheme of the legislation, both in 1969 and in 1996, show that article 19 is concerned with general reports on his work, and not with reports on individual cases.
The assumption of the Complaints Commissioner that he can make a special report to the legislature on a failure to comply with his recommendations confuses his two roles, which are legislatively distinct.
The position of the new Public Services Ombudsman under the 2016 Act will be different, because his power to issue a special report is wider: see section 46(2).
But that is not the legislation upon which this appeal turns.
The Commissioners recommendation in this case
I have quoted para 70 of the Commissioners report, in which he recommends a payment by the respondent of 10,000.
The respondent challenges the rationality of that recommendation.
On the view that I have reached about the limits of the Commissioners powers, this question does not arise.
However, I would not like to part with this case without commenting on the fact that the Commissioner thought it appropriate to make a recommendation in these terms, even on the footing that he was entitled to recommend monetary redress at all.
The Commissioners recommendations, in those cases where he is entitled to make them, are discretionary and he has more latitude in arriving at a figure than a court would have.
But a monetary recommendation, like any other, must be rational, and it must be explained.
The only explanation proffered is that the 10,000 should be paid in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed.
The report does not explain why these failings warrant a payment of 10,000 or how that figure has been arrived at.
It does not say whether Mr or Mrs R suffered any loss by the failings for which the 10,000 should be treated as compensation.
Some of the failings, notably the failure to take more urgent action on 6 January 2009 are found to have made no difference and others, such as the events which followed Rs death could not in the nature of things have done so.
It is possible that the recommendation was intended as a solatium for injured feelings, but the report does not say so, and in the absence of explanation 10,000 seems to be an excessive amount to recommend on that basis.
On the face of it, the figure has simply been plucked out of the air.
If I had concluded that the Complaints Commissioner had power to recommend a payment by the respondent, I would have regarded this particular recommendation as lacking any rational basis.
Conclusion
For these reasons I would dismiss the appeal.
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A patient, who was clinically asymptomatic at the time, requested that his GP refer him for a heart screen on 30 May 2008.
The GP referred him for an electrocardiogram (ECG) test in July 2008.
The test reported negative for ischaemic heart disease, and no further action was taken.
The patient made further complaints of chest pain to a locum doctor on 10 December 2008, and so his GP referred him to a chest pain clinic 5 days later.
The clinic declined to see him because of his earlier negative test, and sent a report to the practice on 20 December, which was not marked urgent or reviewed.
The patient attended the practice again on 6 January 2009 enquiring as to why he had not received an appointment.
The GP referred him for another ECG, but the patient died of a myocardial infarction later that day.
The patients widow complained to the Northern Ireland Commissioner for Complaints (the Complaints Commissioner).
Following an investigation, the Commissioner held that the practice had failed to provide a reasonable level of care and treatment and was guilty of maladministration.
He recommended that the GP make a payment of 10,000 to the widow.
The GP refused to make the payment, and so the Commissioner indicated that he would lay a special report about the matter before the Northern Ireland Assembly.
The Commissioners recommendation was upheld at first instance but quashed by a majority of the Court of Appeal.
The Commissioner appealed to the Supreme Court.
The Supreme Court unanimously dismisses the appeal by the Complaints Commissioner, holding that the Commissioner had (i) no power to recommend the payment of a money sum against an individual who was not a public authority in an investigation under article 8 of the Commissioner for Complaints (Northern Ireland) Order 1996 and (ii) no power to make a special report drawing the attention of the legislature to such a persons failure to comply with a recommendation.
Lord Sumption gives the judgment, with which the other Justices agree.
The Complaints Commissioners power to investigate the complaint were derived from article 8 of the Commissioner for Complaints (Northern Ireland) Order 1996, which deals with complaints against individuals, like the GP in this case, providing professional services under contracts or other consensual arrangements with the NHS [11].
The short answer to this appeal is that the Complaints Commissioner may not, under article 9 of the 1996 Order, carry out any investigations in respect of which the complainant has a remedy by way of proceedings in a court of law, unless it is not reasonable to expect the complainant to resort to law.
The widow had such a remedy but the Commissioner proceeded with the investigation because she
said that she only wished to find out what had gone wrong (and not to obtain money).
It was not open to the Commissioner, having proceeded on that basis, to recommend a payment to her [17].
More generally, the Complaints Commissioner does not have the power to recommend monetary redress against individuals in investigations under article 8.
This is because his recommendations are not binding as a matter of private law, and a private individual such as a GP has no relevant duties in public law.
Furthermore, a private individual has no means of effectively challenging the Commissioners findings on the merits of the case before a court [20, 24].
Nor does the Complaints Commissioner have a power to make a special report in default of payment.
Whilst the Parliamentary Commissioner and Assembly Ombudsman for Northern Ireland have such a power as against departments or public bodies that have been ordered to provide financial redress, the Complaints Commissioner does not.
This is because the Commissioners relationship with the legislature is different to that of other statutory ombudsmen in the United Kingdom.
The Commissioner is not an officer of the legislature, unlike the Assembly Ombudsman for Northern Ireland, but receives complaints from and reports to the complainant and individuals or bodies whose conduct is at issue.
He has no powers of compulsion, and limited powers to use information discovered during investigations for the purposes of enforcement [20 21, 26 28].
Article 19 of the 1996 Order is concerned with the presentation of annual reports before the Assembly, and not reports on individual cases such as this [29].
Lord Sumption further comments on the substance of the Commissioners recommendation that the GP pay 10,000 to the widow.
A monetary recommendation must be rational and capable of explanation.
The figure in the Commissioners report appears to have been plucked out of the air: it does not offer a coherent explanation or calculation, or identify the precise failings in respect of which it was made [30].
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This appeal raises two important questions, one procedural and the other substantive, arising out of the decision of a planning inspector under the Planning (Listed Buildings and Conservation Areas) Act 1990 (the Listed Buildings Act).
It concerns the correct treatment of a pair of early 18th century lead urns (or finials), attributed to the Flemish sculptor John van Nost, each resting on a limestone pedestal of a slightly later date.
The two vases, together in each case with its plinth, were described in the judgments below as the items.
I shall do the same.
There is no doubt as to their artistic significance, which led to them being sold at auction in 2009 for 55,000.
There is however a dispute as to whether they were properly treated as buildings under that legislation; but also a prior question as to whether such a dispute could and should have been addressed by the planning inspector in the proceedings before him.
Factual background
The items were originally at Wrest Park in Bedfordshire, owned by the first Duke of Kent.
According to the 2009 auction particulars Wrest Park was one of the grandest and most admired gardens established in England in the first part of the 18th century.
Apparently, a large plan of the garden by John Roque in 1735 showed the items flanking the entrance to the gardens.
They remained at Wrest Park until 1939, when it was sold by the then owner, Mr J G Murray, who took various items of statuary, including these items, with him to Coles Park, Buntingford in Hertfordshire.
In 1954 55, following the death of Mr Murray, his estate was left to a trust, with his grandson, Major R P G Dill, as a lifetime beneficiary.
In 1955 56, under Major Dill, Coles Park was sold and he took the items with him to the Dower House, Buntingford.
Major Dill sold the Dower House in 1962, when he moved to Badgers Farm, Idlicote, Warwickshire, again taking the items with him.
In 1973 he sold Badgers Farm and moved to Idlicote House.
He again took the items with him and placed them on either side of a path in the gardens which had served as the front drive to the house since the 1820s.
No alteration was made to the garden design to accommodate the items, which were free standing.
The piers were not attached to the ground and the urns were not attached to the piers.
In 1966 Idlicote House had been designated a Grade II listed building.
In June 1986 the items were themselves added to the list under section 54 of the Town and Country Planning Act 1971.
Each was described as follows in both of the list entries: Pier surmounted by urn C18.
Limestone and lead.
Square pier with panelled sides, moulded stone plinth and chamfered cornices.
Lead urn is decorated with high relief cherubs heads and flame finial.
The listing decision and paperwork on which it was based have not been found despite enquiries.
Although notice of the listing was required to be given to the owner or occupier by the local planning authority, there appears to be no extant record of such a notice.
However, in January1987 (six months after listing the delay has not been explained) the items were entered on the local land charges register.
The present owner, Mr Marcus Dill, acquired the house and the items in 1993.
He was not aware of the listing of the items, and does not understand that his father, Major Dill, was aware of it.
In 2009 he removed and arranged for sale of the items at auction.
English Heritage was notified in advance and was sent the auction catalogue (as a potential purchaser) but did not respond.
It is understood that they have since been removed from the United Kingdom.
As to the physical qualities of the items, and the method of removal, I take the following (which I do not understand to be contentious) from Mr Dills statement in the planning appeal: The piers consist of limestone pedestals of a slab rather than solid construction.
Consequently they were not especially heavy.
Together a pier and finial was 274cm high .
At Idlicote House the pedestals were resting on concrete slabs which were on the ground.
They were not fixed to the slabs.
The finials were also sitting on the pedestals without any attachment.
The top of the piers can be removed.
When they were taken from Idlicote House the finials and the top of the piers were lifted together and then the remaining part of each pier lifted.
The items were lifted onto a Hiab lorry by its crane.
Procedural history
In 2014 the local planning authority became aware that the items had been removed and began correspondence with Mr Dill.
On 29 April 2015 they wrote to Mr Dill informing him that listed building consent had been required for their removal and threatening formal action.
On 17 June 2015 Mr Dill made a retrospective application for listed building consent.
This was refused by the local planning authority on 11 February 2016.
In response to consultation on the application, Historic England had advised that the grounds for listing these structures were the same as for any listing, that is their special architectural and historic interest.
They observed that: Many garden items (as well as structures such as buildings relocated in open air museums), including statues and urns have been listed after they have been moved because they still qualify under that definition.
On 26 April 2016, the local planning authority issued a listed building enforcement notice requiring the reinstatement of the items at Idlicote House.
Mr Dill appealed to the Secretary of State against the refusal of listed building consent and the enforcement notice on several grounds, including that the items were not buildings.
The appeals were considered together by a planning inspector appointed by the Secretary of State, who gave his decision dismissing the appeals in a letter dated 19 January 2017.
He took the view, in summary, that the status of the items as buildings was established by the listing; that he could not reconsider that issue; and, that issues of property law or the so called Skerritts tests of size, permanence and degree of annexation (see below) were irrelevant.
The view that the status of the item as a building was not open to challenge was upheld by Singh J in the High Court ([2017] EWHC 2378 (Admin)) and by the Court of Appeal ([2018] EWCA Civ 2619; [2019] PTSR 1214).
In the leading judgment, Hickinbottom LJ (with the agreement of McCombe and Coulson LJJ) held: In my view, the wording of the relevant provisions in the Listed Buildings Act make clear that it was the intention of the statute that, for the purposes of applications for listed building consent and enforcement (and appeals from the same), being on the list is determinative of the status of the subject matter as a listed building, the protection given by the Act deriving from that status. (para 33) He thought that view was supported by the statutory background, and was not displaced by any of the authorities relied on by Mr Harwood QC for Mr Dill.
That conclusion made it unnecessary to consider the separate grounds relating to the correct test for categorisation of such items as buildings (paras 46 50).
McCombe LJ (para 61), concurring, noted the possible conflict with the view expressed by him at first instance in Chambers v Guildford Borough Council [2008] EWHC 826 (QB); [2008] JPL 1459, but agreed with Hickinbottom LJ (para 38) that the real issue in that case was different.
Two issues are agreed as arising before the Supreme Court, in short: i) Whether an inspector considering an appeal under section 20 or section 39 of the Listed Buildings Act can consider whether or not something on that list is a building. ii) (In so far as this issue arises) what criteria are relevant in determining whether an item appearing in its own right in the statutory list is a building for this purpose: whether concepts of property law (the extent and purpose of a structures annexation), or the criteria set out in Skerritts of Nottingham Ltd v Secretary of State for the Environment, Transport and Regions (No 2) [2000] JPL 1025 (size, permanence and degree of annexation).
Legislation
The current statutory provisions are contained in the Listed Buildings Act.
They are subject to minor variations in the same form as enacted in the Town and Country Planning Act 1968, and repeated in subsequent consolidations.
For present purposes it is sufficient to refer to the current Act.
Section 1(1) requires the Secretary of State to compile lists of buildings of special architectural or historic interest.
Section 1(5) provides: In this Act listed building means a building which is for the time being included in a list compiled or approved by the Secretary of State under this section; and for the purposes of this Act a) any object or structure fixed to the building; b) any object or structure within the curtilage of the building which, although not fixed to the building, forms part of the land and has done so since before 1 July 1948, shall be treated as part of the building.
Subsection (5A) enables the list to indicate that particular objects or structures mentioned in subsection (5)(a) or (b) are not to be treated as part of the building for the purposes of this Act; or that any part or feature of the building is not of special architectural or historic interest.
In this judgment I shall refer to the second part of subsection (5) (and for the purposes of ) as the extended definition.
I shall refer to objects or structures within paragraph (b) as curtilage structures.
The word building is not separately defined in this Act.
By section 91(2), except where the context otherwise requires, it has the same meaning as in section 336 of the Town and Country Planning Act 1990 which provides: Building includes any structure or erection, and any part of a building, as so defined, but does not include plant or machinery comprised in a building.
Section 7 provides that no person shall execute or cause to be executed any works for the demolition of a listed building or for its alteration or extension in any manner which would affect its character as a building of special architectural or historic interest, unless the works are authorised under section 8.
By section 9(1), if a person contravenes section 7, he shall be guilty of an offence.
Section 8 provides for listed building consent to be granted by a local planning authority or the Secretary of State, and section 10 makes provision for the making of applications for such consent.
Section 16(1) provides that the local planning authority or the Secretary of State may grant or refuse an application for listed building consent and, if they grant consent, may do so subject to conditions.
By section 16(2), in considering whether to grant consent, the local planning authority or the Secretary of State: shall have special regard to the desirability of preserving the building or its setting or any features of special architectural or historic interest which it possesses.
Section 20(1)(a) confers the right to appeal to the Secretary of State against a refusal of consent by a local planning authority.
By section 21(3): The notice of appeal may include as the ground or one of the grounds of the appeal a claim that the building is not of special architectural or historic interest and ought to be removed from any list compiled or approved by the Secretary of State under section 1.
By section 22(1), on an appeal the Secretary of State may deal with the application as if it had been made to him in the first instance, and may exercise his power under section 1 to amend any list compiled under section 1 by removing from it the building to which the appeal relates.
Section 20 appeals may be determined by a person appointed by the Secretary of State (in other words a planning inspector) who has the same powers as the Secretary of State.
Section 62 provides: (1) Except as provided by section 63, the validity of [a decision on an appeal under section 20] shall not be questioned in any legal proceedings whatsoever.
Section 63(1) provides for a challenge by way of application to the High Court on legal grounds.
Section 38 confers a power on a local planning authority to issue listed building enforcement notices.
Section 39(1) provides for an appeal from such a notice to the Secretary of State on any of the following grounds (so far as potentially relevant to this appeal): (a) interest; (b) section 9(1) have not occurred; that the building is not of special architectural or historic
that the matters alleged to constitute a contravention of
Section 41(6): that those matters (if they occurred) do not constitute (c) such a contravention; (d) ; (e) that listed building consent ought to be granted for the works, or that any relevant condition of such consent which has been granted ought to be discharged, or different conditions substituted; On the determination of an appeal the Secretary of State may (a) grant listed building consent for the works to which the listed building enforcement notice relates or for part only of those works; (b) ; (c) if he thinks fit, exercise his power under section 1 to amend any list compiled or approved under that section by removing from it the building to which the appeal relates.
Section 64 provides: The validity of a listed building enforcement notice shall not, except by way of an appeal under section 39, be questioned in any proceedings whatsoever on any of the grounds on which such an appeal may be brought.
Section 65 gives a right to appeal to the High Court on legal grounds against a decision of the Secretary of State or inspector on an enforcement appeal under section 39.
The first issue is designation as a listed building conclusive?
Without disrespect to the courts below, I can deal with the first issue relatively shortly.
The principles are not in doubt.
As Mr David Elvin QC for the Secretary of State rightly accepts (in the words of his written submissions, citing Boddington v British Transport Police [1999] 2 AC 143): The issue of statutory construction is subject to the rule of law that individuals affected by legal measures should have a fair opportunity to challenge these measures and to vindicate their right in court proceedings, and there is a strong presumption that Parliament will not legislate to prevent individuals from doing so.
The same principle is reflected in the European Convention on Human Rights article 6, under which an individual must have a clear, practical opportunity to challenge an act that is an interference with his rights: Bellet v France CE:ECHR:1995:1204JUD002380594, para 36.
However, as Mr Elvin also correctly submits, that principle needs to be read in the context of the particular statutory scheme in question (citing Lord Hoffmann in R v Wicks [1998] AC 92, 117B).
In the present scheme, he submits, identification as a building is not one of the matters that can be questioned through the statutory appeal route; but the right to challenge the validity of the listing by judicial review provides the fair opportunity required by the principle.
Wicks is of particular relevance because it arose under the parallel enforcement provisions for breach of planning control.
It concerned a prosecution for failure to comply with an enforcement notice for breach of planning control under the Town and Country Planning Acts.
The relevant statute had a provision (in similar terms to section 64 of the Listed Buildings Act: see para 19 above) excluding challenges to the validity of an enforcement notice other than by the statutory appeal procedure.
It was held that on a proper construction of the relevant provisions all that was required to be proved in the criminal proceedings for breach of an enforcement notice was that the enforcement notice issued by the local planning authority was formally valid, and that it was not open to the defendant to raise other public law challenges to its validity, such as bad faith, bias or procedural impropriety (residual grounds), by way of defence to the charge.
In my view that authority if anything supports the appellants case.
There was no issue but that the enforcement appeal could encompass every aspect of the planning case.
As Lord Hoffmann said (p 122D): I do not think that in practice hardship will be caused by requiring the residual grounds to be raised in judicial review proceedings.
The statutory grounds of appeal are so wide that they include every aspect of the merits of the decision to serve an enforcement notice.
The residual grounds will in practice be needed only for the rare case in which enforcement is objectively justifiable but the decision that service of the notice is expedient is vitiated by some impropriety.
As Keene J said in the Court of Appeal, the owner has been served with the notice and knows that he has to challenge it or comply with it.
His position is quite different from that of a person who has contravened a byelaw, who may not have heard of the byelaw until he contravened it. (Emphasis added) If in that context fairness requires that the grounds of appeal should extend to every aspect of the merits of the enforcement action in planning cases, it is hard to see why it should be any different in the context of a listed building enforcement notice.
In particular, as will appear from the cases considered later in this judgment, whether a particular structure constitutes a building, and its erection a building operation, is an issue which may undoubtedly be raised in the context of a planning enforcement appeal.
As those cases show, it may raise difficult issues of factual judgement, which are much more appropriate for a planning inspector than for the High Court in judicial review.
No convincing reason was offered as to why the question whether something qualifies as a building should be treated in a different way in the listed building context.
One advantage of allowing these issues to be dealt with through the planning appeal route is that it enables the inspectorate, with appropriate legal advice, to develop workable criteria on a case by case basis.
Mr Elvin points to the desirability of certainty as to the identification of listed buildings, which may have to be considered as material considerations in various statutory contexts.
He cites for example Lord Hope of Craighead in City of Edinburgh Council v Secretary of State for Scotland [1997] 1 WLR 1447: The Act assumes, in regard to the statutory procedures, that the question whether or not the building is a listed building can be determined simply by inspecting the list which the Secretary of State has prepared.
That of course is correct as a general proposition, but it says nothing about the circumstances in which a listing may be questioned.
Similar uncertainty attaches to the possibility of a successful appeal (under ground (a)) on the grounds of lack of special interest.
Against the desirability of certainty, is the fact that (unlike breach of planning control) contravention of listed building control is a criminal offence, whether or not an enforcement notice is served.
In that context the starting point must be the presumption that the accused should be able to raise any grounds relating to the lawfulness of the proceedings on which the prosecution is based (see eg R v Wicks at p 106 per Lord Nicholls of Birkenhead).
Furthermore, Mr Elvins argument overlooks the form of the statutory definition of listed building.
A listed building means a building which is included in [the] list .
Thus there are two essential elements: it must be both a building and it must be included in [the] list .
If it is not in truth a building at all, there is nothing to say that mere inclusion in the list will make it so.
Section 7 prohibits the demolition of a listed building, and section 9(1) makes contravention of section 7 a criminal offence.
There is nothing to prevent the accused arguing that the item on the list is not a building and so not within the definition.
Short of a specific provision that the listing is to be treated as conclusive for such purposes, there is no reason to displace the ordinary presumption that the accused may raise any relevant defence.
Notably there is no equivalent to the exclusivity provision of section 64.
If that is the case under section 9, then the same approach applies to the grounds of appeal under section 39.
Under section 39(1)(c) the appellant can argue that the the matters alleged to constitute a contravention of section 9(1) do not constitute such a contravention.
If there would be no contravention of section 9(1), because the relevant item is not a building, there is no reason why the same point cannot be taken under section 39.
If that ground is made out on the facts, the Secretary of State has power to deal with the matter by removing it from the list.
There might be a theoretical question whether this would operate retrospectively, so as to preclude any further action based on the original listing.
However, I do not see that as a practical problem, given that there would be an authoritative decision by the Secretary of State to cancel the listing, specifically on the grounds that the items were not properly categorised as buildings.
That would carry with it the clear implication that they should never have been listed in the first place, and should be sufficient in practice (if not in law) to protect the owner against any further proceedings.
Accordingly, I would allow the appeal on the first issue.
In principle (subject to consideration of the second issue), this means that the enforcement appeal must be remitted to the Secretary of State for redetermination.
I am conscious that there is before us also an appeal in respect of the
application for listed building consent.
Although this may in theory raise different legal issues, I do not understand them to have any practical consequences in this case which cannot be dealt with in the context of the enforcement appeal.
Subject to any submissions to the contrary, it should be possible to leave that aspect to be dealt with so far as necessary by agreement between the parties.
The second issue were they buildings?
On one view, if the appeal has to be remitted to the Secretary of State in any event, it might be better to leave the second issue for consideration at that level.
However, there is in my view a need for more general guidance as to the legal principles in play.
This case has revealed a disturbing lack of clarity about the criteria which have been adopted by the relevant authorities, not only in this instance but more generally, in determining whether free standing items such as these are regarded as qualifying for listing protection, whether as curtilage structures, or as separate buildings as in this case.
Even now, in spite of the issue having been raised by Mr Dill in 2015, and after a planning appeal and three court hearings, he has had no official explanation of the criteria by which it was determined that these items qualified as buildings.
It is useful to begin by looking at the wide variety of items which may fall to be considered, before going on to look at the development of the relevant legislation, and case law, and its application to different categories, including the items in issue in this case.
Garden and Park Structures
A good idea of the significance and variety of structures under potential consideration for listing purposes is given by a publication by Historic England Garden and Park Structures Listing Selection Guide (December 2017).
This is one of 20 listing selection guides issued by Historic England, which has adapted and updated the selection guides originally issued by English Heritage in 2011.
The Garden and Park Structures guide overlaps with other listing selection guides, including those for commemorative structures and for street furniture (including items such as fountains).
The introduction explains its purpose: This selection guide is devoted to individual built structures found in gardens and parks, rather than the designed landscapes themselves All designed landscapes are likely to contain buildings and other hard landscaping features such as balustraded terraces that will often make a positive contribution to the overall character of the place.
This selection guide helps identify which structures meet the test of special interest for listing. (p 1)
The following pages contain a fascinating historical survey of the role of such structures in designed landscapes, parks and gardens since medieval times.
It makes clear the extraordinary variety of objects or structures apparently considered for listing, by no means limited to features such as balustraded terraces.
I take three examples: i) Wrest Park itself, as it was in the 19th century (p 5), is given as an example of reversion to the severely formal fashions of the 17th and earlier 18th centuries: with terraces, balustrades, vases, basins and fountains, elaborate steps and gateways, seats, summerhouses, and statuary.
Some of these latter features, it is said, were industrially produced, moulded from terracotta, Coade stone, or cast iron.
A photograph shows the restored parterre at Wrest Park, with formal planting and some large classical statues, which appear to be an intrinsic part of the design.
We were informed by Mr Elvin that these are not fixed in place other than by their own weight, and are separately listed as buildings in their own right.
On the same page, the guide also refers to raised terraces, which were sometimes decorated with elaborate flower urns.
At p 10 the guide refers to statuary, urns and other features such as sundials and astronomical devices which adorned formal gardens; and at p 11 it states that even when these have been moved from elsewhere, pre 1850 examples will generally merit designation. ii) A more recent item is shown by a photograph of Henry Moores Reclining Woman (1947), at Dartington Hall, a large stone sculpture resting on a substantial stone base, said to be listed Grade II (p 7). iii) Perhaps the most unusual example is the group of 27 life size Crystal Palace dinosaurs (listed Grade I), survivors from an exceptional High Victorian pleasure ground created in the early 1850s, [which] show the singularity park features could sometimes attain. (p 18)
Although the guide gives much useful information about the assessment of the historic interest of such objects and uses the word structures to describe them, it contains no discussion of the criteria by which they are to be treated as buildings within the statutory definition, nor in particular whether they are thought to qualify in their own right, or under the extended definition.
I will return to this issue in the next section of this judgment.
In considering the correct legal and policy approach to such garden and park structures, it is also important to bear in mind the limited protection available for the gardens and parks themselves.
It was not until 1983 that there was any statutory recognition of the need to identify and safeguard historic gardens.
Section 8C of the Historic Buildings and Ancient Monuments Act 1953, introduced by paragraph 10 of Schedule 4 of the National Heritage Act 1983, provided for the preparation by English Heritage of a register of gardens and other land situated in England and appearing to them to be of special historic interest.
No doubt for practical reasons, there is no statutory protection for the garden layout itself nor any restriction on works within a registered garden, but being on the register may be required to be taken into account as a material factor in a range of planning decisions.
There is no protection for garden and park structures as part of a registered garden as such.
If the garden is attached to a listed building, they may be protected as curtilage structures, under the extended definition, but as part of the listed building, not of the garden.
Identifying a building legislation and case law
As has been seen, although listed building control has a long history, dating back before the Town and Country Planning Act 1947, the provisions were substantially recast in the Town and Country Planning Act 1968. (There is a detailed history in Shimizu (UK) Ltd v Westminster City Council [1997] 1 WLR 168, 175 per Lord Hope.
That case itself was concerned with a relatively narrow issue relating to the scope of demolition and is of no direct assistance in this case.)
Protection is given to buildings as defined.
For this purpose, as already noted, the statute adopts the ordinary planning definition of building as including a structure or erection.
The one significant variation comes in the extended definition, that is the provision that certain objects or structures are to be treated as part of the building, if they are either fixed to the building or within the curtilage of the building and form[ing] part of the land (subject, since 1986, to an exception for those placed since July 1948).
It is important to note that the extended definition does not result in the item in question becoming a listed building in its own right; it merely results in its being treated as part of the building to which it is attached, or in whose curtilage it stands.
That is to be distinguished from the circumstances in which a garden object or structure may qualify for listing as a building in its own right.
Unfortunately, this critical distinction is blurred in the other official guidance to which we were referred.
That is a Department for Digital, Culture, Media and Sport publication Principles of Selection for Listed Buildings (November 2018).
This states: For the purposes of listing, a building includes any structure or erection and a listed building includes any object or structure: (a) fixed to it; or (b) within its curtilage which, although not fixed to it, forms part of the land and has done so since before 1 July 1948, unless the list entry expressly excludes such things.
In some cases, such as for works of art or sculptures, it will be necessary to consider the degree and purpose of annexation to the land or building to determine whether it may be listed under the 1990 Act. (para 6) This acknowledges (rightly as will be seen) the relevance of the degree and purpose of annexation in considering whether a work of art or sculpture forms part of the land under the extended definition.
But the second sentence might be taken to confuse that issue, relevant to whether the sculpture is to be treated as part of a building already on the list, with the distinct question whether the sculpture itself may be listed under the 1990 Act as a separate entry.
This depends upon whether the sculpture constitutes a building, in the sense of being a structure or erection within the statutory definition, in relation to which the degree and purpose of annexation to the land may be relevant factors but are not necessarily conclusive.
In what follows it will be convenient to consider first the application of the extended definition to free standing objects such as sculptures, before considering the criteria by which they might be treated as buildings in their own right.
Garden objects or structures under the extended definition
The extended definition, first introduced in the Town and Country Planning Act 1968, seems to have been designed to clarify the position following the case of Corthorn Land and Timber Co Ltd v Minister of Housing and Local Government (1966) 17 P & CR 210.
Corthorn concerned a building preservation order made under section 30(1) of the Town and Country Planning Act 1962, prohibiting the removal from a listed building of various portrait panels, wooden panels, a large wood carving of the Crowning with Thorns, and a large wooden equestrian figure of St George and the Dragon.
The issue was whether they were part of the listed building.
In deciding that they were, Russell LJ applied a property law approach, saying: It is not, in my judgment, open to serious doubt that these items were all fixed and annexed in their places as part of the overall and permanent architectural scheme and intended in every sense to be annexed to the freehold (p 217) In Debenhams plc v Westminster City Council [1987] AC 396, 408 409 Lord Mackay of Clashfern confirmed that the word fixed in the extended definition was to have the same connotation as in the law of fixtures so that any object or structure fixed to a building should be treated as part of it, thereby put[ting] beyond question the matter that was decided by Russell LJ in the Corthorn case .
Corthorn was not concerned with objects or structures within the curtilage of a listed building.
We were not referred to any contemporary information as to the derivation of that part of the extended definition in the 1968 Act.
It can be assumed to have been a recognition of the important part often played by such objects in the overall architectural composition or setting of a listed building, even though the architectural quality of the curtilage structure itself is not part of the test.
The requirement that they should form part of the land is clearly designed to tie this part of the definition, like the first part, to real property concepts under the common law.
It is not known what if any assumptions would have been made in 1968 about how the common law would treat statues or other ornamental objects resting only by their own weight.
Reliance may have been placed on the then current edition of Megarry & Wade, The Law of Real Property, 3rd ed (1966) which stated: Statues, figures, vases and stone garden seats have been held to become part of the land because they are essentially part of the design of the house and grounds, even though standing by their own weight.
This was supported by a footnote reference to DEyncourt v Gregory (1866) LR 3 Eq 382, but with a cautionary note: the authority of this decision is not great; see De Falbe [1901] 1 Ch 523, at 531, 532.
Some years after the 1968 Act the treatment of such objects in real property law was considered by the Court of Appeal in Berkley v Poulett [1977] 1 EGLR 86.
The dispute was about certain pictures and other objects which, it was said, should pass as fixtures on the sale of a house.
The disputed items included a statue and sundial in the garden.
The court was agreed that the sundial was a chattel, but there was disagreement as to the sculpture.
Scarman LJ, in the leading judgment (pp 88 89), with which Stamp LJ in substance agreed (p 96), explained that, following Leigh v Taylor [1902] AC 157: The answer today to the question whether objects which were originally chattels have become fixtures, that is to say part of the freehold, depends upon the application of two tests: (1) the method and degree of annexation; (2) the object and purpose of the annexation.
Having discussed the principles and the other objects in dispute, he turned to the statute and sundial.
The latter was a small object which had been detached from its pedestal many years earlier and thus ceased to be part of the realty.
Of the statue he said: The statue was heavy.
It weighed 10 cwt and stood 5 ft 7 in high on its plinth.
There is an issue as to whether it was cemented into the plinth or rested on its own weight.
The question is not decisive, for, even if it was attached by a cement bond, it was (as events proved) easily removable.
However, upon the balance of probability, I agree with the Vice Chancellor in thinking it was not attached.
The best argument for the statue being a fixture was its careful siting in the West Lawn so as to form an integral part of the architectural design of the west elevation of the house.
The design point is a good one so far as it goes: it explains the siting of the plinth, which undoubtedly was a fixture.
But what was put upon the plinth was very much a matter for the taste of the occupier of the house for the time being.
We know that at one time the object on the plinth had been a sundial.
At the time of the sale it was this statue of a Greek athlete.
The plinths position was architecturally important: it ensured that whatever stood on it would be correctly positioned.
But the object it carried could be whatever appealed to the occupier for the time being.
Sundial or statue it did not matter to the design, so long as it was in the right place a result ensured by the plinth which was firmly fixed into the ground.
Being, as I think, unattached, the statue was, prima facie, not a fixture, but, even if it were attached, the application of the second test would lead to the same conclusion.
Goff LJ took a different view of the statue (p 90) which had been placed at a focal point in the grounds, not for better enjoyment as a chattel but for the permanent enhancement of the beauty of the grounds, a case where resting upon its own bulk was a sufficient annexation.
On that point he regarded DEyncourt v Gregory (1866) LR 3 Eq 382 as still authoritative, not overlooking the criticisms in In re De Falbe [1901] 1 Ch 523, which in his view related to the inferences drawn from the facts, rather than the principle that a thing may be a fixture because it is part of the architectural design.
As I read the judgments the difference was not as to the principle, but as to its application to the particular facts.
This view accords with the current 9th edition of Megarry & Wade, (2019) para 22.010, which repeats the relevant passage from the earlier editions, with the same case references, but adds: the principle that an object resting on its own weight can be a fixture if it is part of the overall design of the property has been approved: Berkley v Poulett [1977] 1 EGLR 86 at 89.
Although that is not a precise formulation, it follows in my view that a statue or other ornamental object, which is neither physically attached to the land, nor directly related to the design of the relevant listed building and its setting, cannot be treated as a curtilage structure and so part of the building within the extended definition.
Further confirmation of that approach can be found in a much more recent judgment of the High Court.
It was held that a Henry Moore bronze sculpture Draped Seated Women, weighing 1,500 kg and resting on a plinth, which in 1962 had been placed by the London County Council in a new housing estate, under its policy of promoting works of art in public places, remained a chattel rather than part of the land (Tower Hamlets London Borough Council v Bromley London Borough Council [2015] EWHC 1954 (Ch); [2015] LGR 622).
The judge (Norris J) noted as material that the sculpture was an entire object in itself, resting by its own weight on the ground, and able to be removed without damage, and that it did not form part of an integral design of that estate (para 17).
Garden objects or structures as buildings
object or structure may qualify as a listed building in its own right.
Both sides have referred to the so called Skerritts test, that is a three fold test which involved considering size, permanence and degree of physical attachment.
That formulation was derived from the judgment of Schiemann LJ in the Court of Appeal in Skerritts of Nottingham Ltd v Secretary of State for the Environment, Transport and the Regions (No 2) [2000] JPL 1025, para 39.
It can in I turn to the criteria which might be relevant in determining whether such an turn be traced back through the leading planning case on the definition of building in the planning statutes (Barvis Ltd v Secretary of State for the Environment (1971) 22 P & CR 710, DC), and to the judgment of Jenkins J in a rating case Cardiff Rating Authority v Guest Keen Baldwins Iron and Steel Co Ltd [1949] 1 KB 385.
The Cardiff case was concerned with a different expression (plant in the nature of, a building or structure) in a different statutory context.
In Barvis and Skerritts, however, the decisions turned on whether the item in question qualified as a building for the purpose of the definition in the relevant planning statute, which is the same definition (now contained in section 336 of the Town and Country Planning Act 1990) which applies for the purposes of the Listed Buildings Act.
They refer to the Cardiff case for that purpose.
The meaning of building was relevant to deciding whether the operations in issue qualified as building operations, as part of the statutory definition of development.
The Cardiff case is relevant principally for a passage in the judgment of Jenkins J (pp 402 403) from which the three fold test was later derived.
In addressing the question whether certain apparatus was or was in the nature of a building or structure, he said (as quoted by Bridge J in giving the leading judgment in Barvis (1971) 22 P & CR 710, 716): The general range of things in view consists of things built or constructed.
I think, in addition to coming within this general range, the things in question must, in relation to the hereditament, answer the description of buildings or structures, or, at all events, be in the nature of buildings or structures.
That suggests built or constructed things of substantial size: I think of such size that they either have been in fact, or would normally be, built or constructed on the hereditament as opposed to being brought on to the hereditament ready made.
It further suggests some degree of permanence in relation to the hereditament, ie, things which once installed on the hereditament would normally remain in situ and only be removed by a process amounting to pulling down or taking to pieces.
I do not, however, mean to suggest that size is necessarily a conclusive test in all cases, or that a thing is necessarily removed from the category of buildings or structures or things in the nature of buildings or structures, because by some feat of engineering or navigation it is brought to the hereditament in one piece.
The question whether a thing is or is not physically attached to the hereditament is, I think, certainly a relevant consideration, but I cannot regard the fact that it is not so attached as being in any way conclusive against its being a building or structure or in the nature of a building or structure.
Nor can I regard the fact that a thing has a limited degree of motion in use, either in relation to the hereditament or as between different parts of itself, necessarily prevents it from being a structure or in the nature of a structure, if it otherwise possesses the characteristics of such.
As Bridge J held in Barvis at pp 716 717, in a judgment with which Lord Parker CJ and Widgery LJ agreed, if one substitutes throughout that passage the phrase structure or erection for the phrase structure or in the nature of a structure, this guidance is fully applicable to the considerations which govern the application of the definition in the Town and Country Planning Act 1962 (ie in section 221 of that Act, now re enacted as section 336 of the 1990 Act).
Barvis was concerned with alleged development comprising the laying of a length of steel track and the mounting thereon of a moveable tower crane some 89 feet in height.
The court upheld the Secretary of States view (disagreeing with the planning inspector) that it involved a building operation.
Bridge J, giving the leading judgment, cautioned against reliance on the application of tests from real property law as to what amount to fixtures, rather than focusing on the statutory definition in the Act.
He asked himself if the crane when erected was a building as defined, and said that if it was: I should want a great deal of persuading that the erection of it had not amounted to a building or other operation.
Building includes any structure or erection.
If, as a matter of impression, one looks objectively at this enormous crane, it seems to me impossible to say that it did not amount to a structure or erection.
He found nothing in the statutory context to displace that impression: I would be very surprised if the planning legislation did not give to a planning authority the opportunity to control this kind of operation, and, in my judgment, this crane was not the less a structure or erection by reason of its limited degree of mobility on its rails on the site, nor by reason of the circumstance that at some future date, uncertain when it was erected, the appellants contemplated that it would be dismantled and the rails and beams broken out of their concrete beds and that it would be transported in pieces to other sites where it would be re erected for use in contract work. (pp 715 716) That view was confirmed by reference to the passage cited above from the judgment of Jenkins J in the Cardiff case.
Bridge J distinguished a previous planning case, Cheshire County Council v Woodward [1962] 2 QB 126, DC, in which it was held that the Minister of Housing and Local Government had not erred in finding that the placing on a site of a mobile hopper and a mobile conveyancer, some 16 to 20 feet high, did not amount to development.
Skerritts itself is of importance, both because it was the first time that the issue was considered at Court of Appeal level, and also because the three fold test derived from the Cardiff case was treated as of general application in the planning context.
It is also useful as an illustration of how the planning inspector was able to treat those tests as workable guidance in a very different factual situation from that considered in the earlier cases.
In the definition of building, Parliament has used the general concepts of erection and structure, rather than more precise and specific terms, and these are applicable across a very wide range of cases.
Therefore, the application of the definition requires an evaluative judgment to be made.
The Court of Appeal confirmed that where the relevant decision maker, in that case the inspector, directs himself by reference to Barvis and the guidance in the Cardiff case and arrives at a rationally defensible conclusion, his decision on the application of the statutory definition will be upheld as lawful.
The case itself related to a marquee erected in the grounds of a hotel, and retained on site between February and October each year.
On appeal against an enforcement notice, the inspector had concluded that it was to be regarded as a building for planning purposes and that its erection was a building operation requiring planning permission.
In respect of its size and method of assembly he said: The marquee is a substantial object which is about 40m long, including the additions, and some 17m wide and the ridge height is around 5m There is no direct evidence before me of the assembly method or period, but from my inspection, I consider that it took several days with a number of erectors and amounted to a sizable and protracted event.
I imagine that its dismantling follows much the same process.
It is assembled on site, not delivered ready made.
I do not regard its considerable bulk to be de minimis in relation to planning controls.
It was sitting on square metal plates which are spiked to the soil beneath and appeared to be held in place by its own considerable weight, the internal bracing and the ground spikes.
The timber floor was supported by metal ground beams resting on the land.
He concluded: I conclude that, as a matter fact and degree, the marquee, due to its ample dimensions, its permanent rather than fleeting character and the secure nature of its anchorage, is a structure which is to be regarded as a building for planning purposes The main issue in the Court of Appeal was whether the marquee had a sufficient degree of permanence to qualify as a building.
The court held that the inspector had been entitled to arrive at the conclusion that he did.
None of these cases is of direct assistance in deciding how to categorise an object of artistic significance in the listed building context.
It is notable that in both Barvis and Skerritts there was a clear move away from real property analogies.
That seems to me correct.
As has been seen, real property concepts are relevant to the extended definition, but there is nothing to import them into the basic definition of building.
Skerritts provides clear authority at Court of Appeal level for the three fold test, albeit imprecise, of size, permanence and degree of physical attachment.
No preferable alternative has been suggested in this court.
Given that the same definition of building is adopted in the Listed Building Act, it is difficult to see any reason in principle why the same test should not apply.
On the other hand, notwithstanding the apparent width of the statutory definition, the mere fact that something had been erected on land was not sufficient to make it a building.
Skerritts is a good illustration of the practical application of the relevant tests, and in particular of the importance of the method of erection (a sizable and protracted event It is assembled on site, not delivered ready made).
In addition to the fact that installation occurred by erection, the degree of permanence of the location of the item on the site was significant.
In the listed building context that need for something akin to a building operation when the structure is installed can be seen as the counterpart to the reference to works for the demolition as the relevant contravening act under section 7 of the Listed Buildings Act, which clearly envisages some form of dismantling (ie pulling down or taking to pieces in the words of Jenkins J in the Cardiff case) when the item is removed from the site.
It is also important to keep in mind the purpose of listed building control, which is to identify and protect buildings of special architectural or historic interest.
It is not enough that an object may be of special artistic or historic interest in itself; the special interest must be linked to its status as a building.
That is implicit in the reference to architectural interest.
But it is relevant in my view also to the concept of historic interest.
The historic interest must be found not merely in the object as such, but in its erection in a particular place.
For completeness I should note that no assistance is to be gained from another case mentioned by the inspector: R (Judge) v First Secretary of State [2005] EWHC 887 (Admin); [2006] JPL 996.
The inspector cited Sullivan Js statement (para 17) that the treatment of items as a matter of property law was wholly irrelevant.
But that was said in relation to the quite different question whether the dismantled components of something which had unquestionably been a listed building could, by the process of dismantling, become chattels rather than buildings and thereby lose their statutory protection as such.
Not surprisingly the court rejected that interpretation as wholly incompatible with the purpose of the legislation.
It throws no light on the present issue.
At this point, it may be useful to consider how the Skerritts criteria might apply to the various forms of garden structure identified in the guide discussed in the previous section.
In doing so I emphasise that we have not heard any detailed submissions on these matters.
Nor were we shown any commentary which was critical of the existing guides from the Department for Digital, Culture, Media & Sport and Historic England.
Taking the three examples selected above from the Historic England guide (para 31), the latter two are readily understandable.
Even if the Dartington statue is resting by its own weight, the plinth appears as a substantial built structure, and together they appear to form an integral design for the site in which it is placed.
Similarly, the Crystal Palace dinosaurs, having regard to their relative size and permanence (whether or not physically attached to the land) could reasonably have been seen as buildings in their own right.
But the first of the examples is more debatable.
It is hard to see how it could be appropriate to include without discrimination items such as vases, basins seats, . and statuary, without any indication of how they might be brought within any part of the definition, whether as separate buildings or as curtilage structures under the extended definition.
In particular, most ordinary forms of garden vases or seats would be unlikely to have become part of the land in real property terms, nor would they naturally be regarded as buildings under any of the tests considered above.
The present case
I return finally to the two items at issue in this case.
It is not, as I understand it, suggested that they would have qualified for protection as curtilage structures within the extended definition.
I agree.
It seems clear that, whatever might have been the position had they remained in Wrest Park, the vases and their piers did not fall to be treated as part of the listed building of Idlicote House.
Not only had they had been placed on the land after July 1948, but also, being freely movable, there is no suggestion that they were related in any relevant way to the design of that particular listed building and its setting.
The applicable real property tests were not satisfied.
How then might they fare under the Skerritts criteria: size, permanence and degree of physical attachment? Again in the absence of full submissions anything we say can only be provisional.
There are arguments both ways.
On the one hand, it can be said, they comprised a set of elements which had to be assembled together (a structure), required a small crane to move them and to assemble them (as an erection), and were intended to occupy a stable and near permanent position in situ (with greater permanence than the marquee in Skerritts).
On the other hand, they are not particularly large, compared for example with the items considered in the three planning cases.
It may also be relevant that the vases themselves, which are the real focus of the special interest, are physically separate.
If they had been resting on the ground, rather than a plinth, I doubt if it would have occurred to anyone that they might qualify as buildings.
Relevant also is the apparent ease of their installation and removal (as compared for example to the works in Skerritts).
These are issues which can only be satisfactorily investigated and determined in the context of a renewed appeal.
Conclusion
The second agreed issue asks us simply to determine whether the Skerritts criteria for identifying a building are also relevant in the listed building context.
For the reasons given above I would answer that question in the affirmative.
As indicated above, I do not think it is possible or appropriate for us to reach a concluded view on how those tests should be applied in this case.
Not only do we not have a full view of the facts, but the issue also involves questions of factual evaluation which are best dealt with by a planning inspector in the context of a renewed appeal.
I would in any event urge those responsible on the part of the Secretary of State to consider the criticisms I have made about the lack of reliable guidance in the existing publications on this subject.
I understand that this will be deeply frustrating for Mr Dill.
There is as I
understand it no suggestion that he acted other than in good faith in disposing of items which he believed to be his own disposable property, and had been so treated by his family for several decades.
Since this problem was first drawn to his attention by the local authority in April 2015 he has been attempting to obtain a clear ruling on that issue.
On the view I have taken, that opportunity has been wrongly denied to him for five years.
Even if his appeal were ultimately to fail, the practicability of restoring the vases to their previous location in the grounds of Idlicote House is uncertain.
Accordingly, this courts formal order for remittal should not prevent the respondents from giving serious consideration to whether in all the circumstances it is fair to Mr Dill or expedient in the public interest to pursue this particular enforcement process any further.
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This appeal raises two important questions about the interpretation and application of the Planning (Listed Buildings and Conservation Areas) Act 1990 (the Listed Buildings Act).
The case concerns the correct treatment of a pair of early 18th century lead urns resting on limestone pedestals (the items).
The items were originally commissioned for a historic garden at Wrest Park in Bedfordshire where they remained until 1939 but have been moved a number of times since then.
In 1973 they were moved by Major Dill (Mr Dills father) to the garden of Idlicote House.
In June 1986 the items were added to the list of listed buildings under s.54 of the Town and Country Planning Act 1971.
There is no record of notice of the listing having been served, but in due course it was included in the register of local land charges.
In 1993 the Mr Dill (the appellant) acquired the house and the items.
He was not aware of the items presence on the list.
In 2009 he sold them at auction.
On 29 April 2015 the district council (the second respondents) wrote to the Mr Dill informing him that listed building consent had been required for the items to be removed.
His retrospective application for consent was refused on 11 February 2016, following which on 26 April 2016 the council issued a listed building enforcement notice requiring the reinstatement of the items at Idlicote House.
He appealed against the refusal of listed building consent and the issuing of the enforcement notice to the Secretary of State for Housing, Communities and Local Government (the first respondent).
The grounds of appeal included the argument that the items were not buildings for the purposes of the Listed Buildings Act.
The appeals were dismissed by a planning inspector on 19 January 2017.
He took the view that the status of the items as buildings was established by the listing; that he could not reconsider the issue.
Mr Dills appeal was rejected by the High Court (Singh J) and the Court of Appeal (McCombe and Coulson LJJ).
Both courts below held that listing was conclusive of the items being buildings.
The Supreme Court unanimously allows the appeal.
Lord Carnwath gives the sole judgment, with which the other Justices agree.
Whether listing is conclusive of the items being buildings for the purposes of the Listed Buildings Act It is a principle that individuals affected by a legal measure should have a fair opportunity to challenge the measure and to vindicate their rights in court proceedings.
In applying this principle, the context of the particular statutory scheme in question is relevant [20].
In the parallel context of breach of planning control, the statutory grounds of appeal are so wide that they include every aspect of the merits of the decision to serve an enforcement notice.
It is hard to see why it should be any different in the context of a listed building enforcement notice.
Indeed, the question of whether something is a building may raise difficult issues of factual judgment which an inspector appointed under the statutory scheme is more appropriately placed to decide than the High Court on judicial review [22].
Under the statutory scheme a listed building means a building which is included in [the] list.
It is an essential element that the thing in issue be a building.
If it is not in truth a building at all, there is nothing to say that the mere inclusion in the list will make it otherwise.
Section 7 prohibits the demolition of a listed building, and s.9(1) makes contravention of that prohibition a criminal offence.
But there is nothing to prevent the accused arguing that the item demolished is not a building and so not within the definition [24].
As such, the question of whether the thing listed is in fact a building can be considered by the inspector on a statutory appeal [25].
The enforcement appeal must be remitted to the First Respondent for redetermination [26].
The application for listed building consent can be dealt with by agreement [27].
The relevant test for a building There is a need for general guidance on the legal principles in play in determining whether something constitutes a building [28].
In Skerritts of Nottingham v Secretary of State for the Environment Transport and Regions [2000] JPL 1025 a three fold test was adopted considering size, permanence and degree of physical attachment [46].
This case is important as the three fold test was treated as of general application in the planning context [50].
Along with other jurisprudence, it indicated a move away from real property analogies.
Lacking a preferable alternative, and as the same definition of building as was in issue in Skerritts was adopted in the Listed Buildings Act, it is difficult to see any reason in principle why the same test should not apply [52].
The application of this test to the items is something to be considered in the context of the remittal of the appeal to the First Respondent [58].
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